Legal Issues

Passport to crime?

Print edition : July 10, 2015

Lalit Modi speaking to the media after an Income Tax raid at the IPL headquarters and his office in Mumbai in the wee hours of April 16, 2010. Photo: PTI

A view of South Block, which has the offices of the Defence and External Affairs Ministries and the Prime Minister's Office. Photo: .V.V KRISHNAN

The arguments for and against revoking Lalit Modi’s passport expose the loopholes in India’s legal framework that make it difficult to check white-collar crimes.

THE REVOCATION and restoration of the former Indian Premier League (IPL) Commissioner Lalit Modi’s passport within a span of three and a half years may appear to be based on sound legal reasoning offered at high judicial forums. But a closer examination of the issues exposes the flaws in the regulatory framework aimed at checking misappropriation of foreign exchange and money laundering and bringing back fugitives to the country for proper investigation.

On March 3, 2011, the Regional Passport Officer (RPO), Mumbai, revoked Lalit Modi’s passport on the request of the Directorate of Enforcement (DoE) on the grounds that he was avoiding its summons. On October 31, 2011, the Chief Passport Officer (CPO), New Delhi, rejected Lalit Modi’s appeal against the revocation of his passport. A light blue alert notice (No. 01/2010) was issued against Lalit Modi by the Directorate of Revenue Intelligence (DRI), New Delhi, on October 1, 2010. The Delhi High Court found on January 16, 2013, that the DoE had issued 14 summonses to him to appear before it.

Lalit Modi’s passport was revoked under Section 10(3) (c) of the Passports Act “in the interests of general public”. The RPO also found that he was avoiding summons raising the bogey of security threat, which was virtually non-existent. It found that in addition to the security agencies already at his continuous service, Lalit Modi was offered police protection by the Mumbai Police. Moreover, before the summonses were issued, Lalit Modi was travelling around the country despite the “security threat”.

As he was deliberately hampering the investigations, the RPO concluded that no person should be allowed to subvert the legal provisions by avoiding legal processes on one pretext or the other as it was in the interest of the general public that the law of the land operated.

The RPO cited other reasons, as well. The IPL scam had brought the sport of cricket to disrepute apart from causing foreign exchange losses to the nation. It was in the interest of cricket and the public in general that the case needed to be investigated properly for which the interrogation of Lalit Modi was required, the RPO concluded. The CPO, who heard Lalit Modi’s appeal against the revocation of his passport, held that cricket was the most popular sport in India with a huge public sentiment attached to it. Therefore, it was in the interest of the public that the present case needed to be investigated thoroughly. Rejecting the alternative method of questioning Lalit Modi through videoconferencing, he said the DoE was justified in insisting on his physical presence in India for interrogation as he would have to be confronted with documents face to face.

It is interesting to note that the phrase “in the interest of general public” has been interpreted differently by different authorities. Both the RPO and the CPO have assumed that the very fact that cricket is a popular sport in India is sufficient to satisfy one that the case will attract the interests of the general public.

The single judge of the Delhi High Court, Rajiv Shakdher, held on January 16, 2013, that the revocation of Lalit Modi’s passport was valid because the inputs provided by the statutory authorities and other wings of the government to the RPO were in the nature of actionable material. The RPO was not expected to evaluate the merit of the allegation made by the DoE, he said.

The judge also held that the summons issued under the Foreign Exchange Management Act (FEMA) for unravelling the details of the transactions were in public weal. He agreed that during the course of the examination, Lalit Modi might have to be confronted with material that might be in the possession of the DoE officers concerned. Therefore, he did not believe that there was no element of public interest in the passport authorities exercising their powers under Section 10(3)(c) of the Passports Act.

Justice Shakdher noted that Lalit Modi did not raise any doubt with regard to the interpretation of the expression “in the interest of the general public”, while challenging the revocation of his passport. His counsel argued that although his client did not appear in person when the DoE issued summonses on August 2, 2010, and August 24, 2010, he cooperated with the agency and provided all the details and documents it had sought.

The Division Bench of the Delhi High Court comprising Justices Badar Durrez Ahmed and Vibhu Bakhru, in their judgment delivered on August 27, 2014, found that the DoE required Lalit Modi’s presence to tender evidence as well as documents and it was not for the purpose of interrogation or examination, which were the powers that were available to it under the Foreign Exchange Regulation Act (FERA), 1973. FEMA, which replaced FERA, does not give similar powers to the DoE. The bench thus set aside Justice Shakdher’s order upholding the revocation of Lalit Modi’s passport.

It also held that in the adjudication process stipulated under the relevant legal provisions, the personal appearance of persons against whom a complaint had been made was not necessary as he/she could be represented by a legal practitioner or a chartered accountant duly authorised by him/her.

More important, the bench found that no order imposing a penalty pursuant to the complaint dated September 16, 2010, had been passed by the adjudicating authority under FEMA. It was only when the defaulter did not comply with the orders passed by the adjudicating authority with regard to payment of penalty that he/she was liable to civil imprisonment. As the Lalit Modi case had not reached that stage at the time, the bench concluded that the question of his arrest and imprisonment did not arise.

When the passport revocation order was passed, Lalit Modi was already in the United Kingdom. The direct consequence of the order was that he could not travel to any country outside of the U.K. He could not attend any conferences or meetings in any other country where he could have expressed his views on cricket or on the organisation and administration of cricket. Therefore, the bench held that the direct and inevitable consequence of the revocation order would impinge on his freedom of speech and expression.

However, it added that the revocation order would have been legitimate had it been limited to the interests of “public order, decency or morality”, as mentioned in Article 19(2) of the Constitution. Lalit Modi’s refusal to comply with the summons could hardly be stated to fall foul of “public order, decency or morality”, the bench held.

It pointed out that the RPO’s and CPO’s reasoning that since cricket was a popular sport in India it attracted “public interest” would still not fall in the categories of “public order, decency or morality”.

The bench felt the revocation order was far too wide, excessive and/or disproportionate to the mischief or the evil of non-compliance of summons issued by the DoE. In such a circumstance, the order cannot be saved by Article 19(2) or Article 19(6). It was not convinced by the DoE’s decision to reject the alternative mode of examination through videoconferencing.

The bench did not believe that the DoE would have requested the RPO to take action under the Passports Act had Lalit Modi been present in India. He was already in the U.K., whereas the passport was essentially required for departure from India, the bench reasoned.

It is not clear how the bench could arrive at two contrary conclusions. The DoE would have requested revocation of passport even if Lalit Modi was present in India, in order to prevent him from leaving India and thus scuttle the investigation. Again, although he had already left India, revocation of passport was found necessary to further restrict his movements outside the U.K.

It appears that there were strong legal grounds for appealing in the Supreme Court against the Division Bench’s judgment. The Ministry of External Affairs’ failure to appeal against the High Court judgment is, therefore, intriguing. Reports suggest that a belated appeal will be filed by the Ministry, and backed by the DoE, in order to help the Modi government tide over the crisis.

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