[Swapna Suresh Bail] Gold smuggling threat to economic security but not terrorist act under UAPA: Kerala High Court

The Kerala High Court recently held that, while gold smuggling could threaten economic security of a country, the same is not covered by the provisions of the Unlawful Activities (Prevention) Act (UAPA) [Swapna Prabha Suresh v. Union of India]..A Division Bench of Justices K Vinod Chandran and C Jayachandran made the observation while granting bail to Swapna Suresh and seven other accused in the infamous gold smuggling case of 2020. .The Bench observed that while smuggling of gold could be very well be a threat to the economic security of the nation, the same was not contemplated by the parliament to be hit by UAPA as was evident from the debates on the amendment by which Section 15 (1) (a) (iiia) was inserted into UAPA."In fact in our humble view even smuggling of gold and other precious metals which aims at destabilizing the economy would be covered under threats to economic security, as generally understood. But this element was not contemplated by the Parliament as is evident from the debates on the bill, which the members of the Treasury Bench supported on the specific ground of state/sovereign sponsored counterfeiting from across the borders," the judgment said..Section 15 (1) (a) (iiia) of UAPA reads as follows15. Terrorist act — (1) Whoever does any act with intent to threaten or likely to threaten the unity, integrity, security, [economic security,] or sovereignty of India or with intent to strike terror or likely to strike terror in the people or any section of the people in India or in any foreign country,—(a) by using bombs, dynamite or other explosive substances or inflammable substances or firearms or other lethal weapons or poisonous or noxious gases or other chemicals or by any other substances (whether biological radioactive, nuclear or otherwise) of a hazardous nature or by any other means of whatever nature to cause or likely to cause—(iiia) damage to, the monetary stability of India by way of production or smuggling or circulation of high quality counterfeit Indian paper currency, coin or of any other material;.Elaborating on the point, the Court said that if the intention of the parliament was to widen the definition of terrorism to bring in acts such as gold smuggling which could destabilise the economy, it had the opportunity to do so. However, the amendment restricted the definition of terrorist activity destabilising the economy to counterfeiting of high quality currency or coins."True; acts of destabilization of the economy, as distinguished from a physically violent subversive act could also be deemed to be a subversive act against the nation. If the intention was to widen the definition of terrorism, to bring in acts, destabilizing the economy; surely the Parliament had the power. But, the Parliament by inserting economic security in Sec. 15(1) and simultaneous insertion of sub-clause (iiia) of clause (a) by the very same amending act, restricted the definition of a terrorist activity, in so far as destabilizing the economy, to counterfeiting of high quality currency or coins," the Court said..Therefore, it held that gold smuggling simpliciter does not come under the ambit of UAPA."We are of the opinion that counterfeiting; that too of high quality currency notes or coins and any material so to do is the only specie included under section 15(1)(a)(iiia)."Moreover, expanding the current definition would only undermine the intention of the parliament, the Court said."According to us, in the guise of a purposive interpretation, the intent to threaten or the likelihood of threatening economic security in Section 15(1), if given a more expansive meaning, then it would be undermining the very intention of the Parliament which is explicit in sub-clause (iiia) of clause (a)," the judgment stated..The order was passed on a batch of appeals filed by eight of the twenty accused in the gold smuggling case, including Swapna Suresh.They had been arrested along with 12 other persons after investigation conducted by various agencies unearthed massive gold smuggling through diplomatic channels.In February 2021, a Division Bench of Justices A Hariprasad (now retired) and MR Anitha, in Muhammed Shafi P. v. NIA Kochi, had allowed bail to several of the accused persons in the case.The Division Bench had held that the mere act of gold smuggling, covered under the Customs Act, will not amount to a "terrorist act" under the provisions of the UAPA unless the same is done with the intention to threaten the economic security of the nation.The Court had then allowed bail to twelve of the accused and only eight were denied bail after they were identified as "front-runners.On March 22, 2021, a Special Court for offences under the NIA Act had rejected the bail plea moved by the accused leading to the present appeal before the High Court..The contentions of the appellants were primarily based on the decision of the Court in Mohammed Shafi which has been appealed by the NIA before the Supreme Court.The Court observed that as the Division Bench order of the High Court has not yet been stayed by the Supreme Court, it is bound by the same. .Counsel for the appellants also took the Court through the explanation of the Ministry of Home Affairs before the Department Related Parliamentary Standing Committee on Home Affairs to further buttress the above contention. The attempt of the parliament was only to curb State sponsored counterfeiting from across the borders of the nation, they argued. They also contended that, in the final report filed before the Special Court, there was not even an iota of evidence of a terrorist act having been committed by the accused..The Court observed that, in Muhammed Shafi P, it was held that Section 15(1)(iiia) can only rope in production, smuggling or circulation of high quality counterfeit Indian paper currency, coin or any other material; the last of which is relatable solely to Indian currency or coin. "The Judges (in Muhammed Shafi P) relied on the principles of 'ejusdem generis” and 'noscitur a sociis', to hold that the arrangement of words in the provision would not include gold smuggling with a mere motive for illegal profiteering; which cannot, by any means, be defined to be a 'terrorist act'. Nor was it the intention of the legislature when 'economic security' was incorporated," the Court observed..The Court paid particular heed to the presentation made by the Ministry to the Parliamentary Standing Committee of the Home Affairs when the amendments were recommended by the Financial Act Task Force (FATF)..The argument that counterfeiting is not the only activity which could threaten the economic security of a nation and it is also not the mere use of explosive substances or lethal weapons that could be brought within the ambit of a terrorist act as understood under Section 5 of the UAPA, was accepted by the Court However, it adverted to the decision of the Supreme Court in State of Kerala v. Mathai Varghese in which it was held that “... a purposeful interpretation should effectuate the intention of the legislature and not a purposeless one to defeat that intention...”.The Court reiterated that the legislature has the power to bring in any act threatening the 'economic security' as a terrorist act, but the insertions by amendments, confined it to counterfeiting of high quality currency.Expanding the meaning of threat to economic security under the guise of purposeful interpretation would do more harm than good, it opined."If we do that then we would violate the dictum in Mathai Varghese and would be recasting, redesigning and rewriting the provision thus embarking upon a legislative exercise; which power this Court and every Court lacks," the Court reiterated..Going by the parliamentary debates and reading Section 15(1) and the various acts enumerated in the body of the provision with the clauses incorporated, the Court found no reason to differ from Muhammed Shafi P.Therefore, it allowed the bail applications.[Read Judgment]