BARIUM CHEMICALS LTD. & ANR. versus SH. A. J. RANA & ORS.

Citation: [1972] 2 S.C.R. 752 · Decided: 07-11-1971 · Supreme Court of India · Bench: S.M. SIKRI · Disposal: Case Partly allowed
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Judgment (excerpt)

752 
BARIUM CHEMICALS LTD, & ANR. 
v. 
SH. A. J. RANA & ORS. 
December 7, 1971 
[S. M. S!KRI, C.J., J. M. SHELAT, I. D. DUA, H. R. KHANNA 
AND G. K. MITTER, JJ.] 
Foreign Exchange Regulations Act, 1947 (VII of 1941)-Sub-section 
(2) of S. 19-"Constders it necessary or expedient," scope of-Application 
of mind regarding necessity to obtain and examine all the documents men· 
tioned in the order necessary condition-The order must specify the "In· 
formation, book or other document.'' 
Ad1n1nistra~ive la1v-"Central 0Uverhn1ent 
conside1's it necessal"\' or 
cspedielll," scope of-Foreign E.tclw11ge Regulation Act, 1947, S. 19(2). 
After this Court's decision in the BtJriw11 Chemicals Ltd. v. The Com-
P<lllY Law Board [1966 3 S.C.R.] quashing the order of the Company 
Law Board passed under Cl. (b) of s. 237 of the Companies Act, 1956. 
the Court ordered that all the books papers and other documents seized 
under the order of the Board be deposited in Court and that the appellants 
would be entitled to receive them from the custody of the Court. On 
May 22, 1966, an order was passed under s, 19(2) of the Foreign Ex· 
change Regulation Act, 1947, stating that "the Central Government con-
siders it necessary to obtain and examine certain papers and documents'' 
and requiring the appellant company and/or its Managing Director to 
furnish to the Enforcement Officer the documents specified in the sche· 
dule to the Order on obtaining the same from the custody of the Court, 
The first six items in the Schedule related to five letters and one telegram 
while the s·zventh item mentioned all other books papers and other docn· 
ments rehting to Ill', appellants in the custody of the Court. 
Sub-section (2) of s. 19 of the Foreign Exchange Regulation Act 
provides : "Where for the purpose of this Act the Central Govern· 
ment or the Reserve Bank considers it necessary or expedient to obtain 
and examine any information, book or other document in the posses-
. sion of any person or which in the opinion of the Central Government 
or the Reserve Bank it is possible for such person to obtain and furnish. 
the Central Government or, as the case may be, the Reserve Bank 
may, by order in writing, require any such person (whose name shall 
be specified in the order) to furnish, or to obtain and furnish, to the 
Central Government or the Reserve Bank or any person specified in 
the order with such information, book or other document." 
The appellants filed petitions under article 226 of the Constitution in 
the High Court to quash the Order dated May 22, 1966 on the ground. 
illter alia, that the order was not in conformity with the requirements of 
sub-s. (2) of s .. 19. The High Court dismissed the petition. In appeals 
hy special leave. 
HELD : The impugned order is liable to be quashed on the ground 
that it doc< not satisfy the requirements of sub-section (2) of s. 19 of the 
Act. 
(i) 'fh!.! .'ccasion for the exercise of the power under the sub.section 
Jri'>es \vhcn the Central Governn1ent considers it necessary or cxpedienr 
for the purpose of the Act to obtain and examine am· information. book or 
A 
B 
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E 
F· 
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A 
B 
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D 
E 
G 
BARIUM CHEMICALS v. A. J. RANA (Khanna, J.) 
753 
document. It is only when the said requirement is satisfied that the 
central Government can proceed in the manner indicated in the sub-section. 
[760 HJ 
(ii) The word "considers it necessary" postulate that the authority 
concerned has thought over the matter deliberately and with care and it 
has been found necessary as a result of such thing to pass the order; 
Therefore. due application of the mind regarding the necessity to obtain 
and examine the documents in question is sine qua non for the making 
of the orJer. [761 D] 
(iii) A necessary corollary is that mind has to be applied .with regard 
;to the necessity to obtain and examine all the doc11ments mentioned in the 
order.. An application of the mind with regard to the necessity to obtain 
and examine only a few of the many documents mentioned in the order, 
.while there has been no such application of mind in respect of the remain-
ing documents, would not be sufficient compliance with the requirements 
of the statute. [761 G] 
(iv) The language of s. 19(2) of the Act points to the conclusion that 
while an order under it may be made with respect to "any information, 
book or other document" it is essential that "such information book or 
other documents" should be specified in the order.
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