ORDER C.M. NAYAR, J.
1. The petitioner has filed this writ petition impugning the Order in appeal dated October 31, 1977 passed by the Appellate Tribunal for forfeited property. The Order was passed by the Competent Authority under Section 7(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 whereby the initiating properties were ordered to be forfeited to the Central Government:-
(i) Investment in business.
Gulati General Store, Hall Bazar, Amritsar.
(ii) House Property No.168, Shivala Road, Amritsar.
2.The petitioner who has since expired and is now represented by his legal representatives had been detained under the COFEPOSA Act, 1974 on December 19, 1974 and was thus a person covered by the provisions of Section 2(2)(b) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter referred to as the "Act"). The Competent Authority issued a show-cause notice under Section 6(1) of the Act on November 8, 1976 after recording reasons to believe that the properties mentioned above had been illegally acquired by the petitioner. The showcause notice mentioned one other property also viz. Shop No.B-1-15/30-3, Hall Bazar, Amritsar as having been illegally acquired. Since the period within which the petitioner had to comply with the show-cause notice was not mentioned therein the Competent Authority issued another notice to the petitioner dated November 16, 1976 under Section 6(1) of the Act in respect of the of the other properties and this notice was duly served on November 26, 1976. The petitioner filed his written explanation dated January 25, 1977 and was given hearing under Section 7(1) on February 22, 1977 and March 11, 1977 when he was still lodged in the Central Jail, Patiala. After hearing the petitioner, the Competent Authority passed the order under Section 7(1) on April 27, 1977 ordering forfeiture of two of the properties mentioned earlier.
3.The appellate Tribunal considered the pleas of the petitioner and recorded the findings as referred in para 3 of the Order which reads as under:-
"At the hearing under Section 7(1) on 11.3.1977 the appellant hadbeen required to produce the valuer's certificate for the cost ofconstruction of the house. The Competent Authority had alsodirected the appellant to produce his valuer on that date. Itwould appear that Shri K. John Surgeon, Valuation Officer of theIncome-tax Department was also present on 11.3.77 along with theCompetent Authority when the hearing took place under Section7(1) of the Act. During this hearing the appellant made availablethe valuation certificate of Shri S.C. Vermani, Registered Valuer as per which the construction cost, excluding the value of Landwas determined at Rs. 34,000/-. The Registered Valuer of the Appellant, Shri Vermani was not present during this hearing. Itwould appear that the appellant requested that the competentauthority to summon the valuer if his examination was considerednecessary and that he was prepared to deposit the diet money etc.The Competent Authority however, did not comply with this requestof the appellant. Shri Sen representing the competent authority,submitted that during the proceedings under Section 7(1) of theAct on 11.3.1977 in the Jail premises, the Competent Authorityhad recorded a statement of Shri K.John Surgeon, DepartmentalValuation Officer and a copy of this statement was furnished tous. From a perusal of this statement we find that after makingsome brief remarks about the valuation certificate produced bythe appellant and referring to some alleged miscalculations ofrelevant areas, Shri K.John Surgeon stated that according to hisestimate the cost of construction till, the end of 31.3.74 wouldbe Rs. 59,000/-. The learned counsel for the appellant has assailed the entire procedure adopted by the Competent Authority inthis regard. He contended that in fairness to the appellant theCompetent Authority should have made available to him a copy ofthe valuation report, if any prepared by Shri K. John Surgeon,that a copy of the statement of Shri K. John Surgeon recorded on11.3.1977, should also have been available and that as per thewritten request of the appellant the Competent Authority shouldhave summoned the Registered Valuer Shri Vermani for a properexamination of the valuation report submitted by him. Shri Kapoor, the learned counsel for the appellant, further voiced hisreservations as to whether Shri K.John Surgeon could have beenvisited this property for inspection particularly since no intimation had been given either to the appellant or his counsel or any other person connected with the appellant about the intendedinspection of the property in Shivala Road. We were constrained to take notice of these serious allegations. Having heard thearguments from both sides on this point, it appeared to us thatwe might have to refer this matter back to the Competent Authority with a direction to appoint a third valuer acceptable to bothsides for determining afresh the cost of construction of thisproperty, however at this stage, the learned counsel for theappellant indicated that his client would be prepared to acceptthe valuation of Shri K. John Surgeon of the cost of constructionof the house at Rs. 59,000/- provided the Tribunal was satisfiedwith his explanation and arguments that the business of Generalmerchandise in the name of Gulati General Store had been acquiredin a legitimate manner as it would go to establish that theconstruction costs to the extent debited in the books of accounts, would stand explained. He 'therefore' submitted that in such an event, it would be necessary for the Competent Authority to consider the application of Section 9 of the Act in view ofthe fact that more than 50% of the cost of construction wouldhave been explained as having come from legal source. Since wehave held in favour of the appellant regarding the initial investment in the business of Gulati General Store, Amritsar, any other investment which is directly traceable to the funds of Gulati General Store cannot be held to have come out of illegalsource. Since Rs. 34,000/- (Approx) stands debited to the building account in the books of accounts of Gulati General Store,such amount has also to be held as having come out of legalsources. In other words, more than half the amount invested inthe construction of the building has been explained to have comefrom legal source. It is, therefore necessary for the CompetentAuthority to give an option under Section 9 of the Act to theAppellant. We, therefore, send back the case to the CompetentAuthority with the direction that he will comply with the provisions of Section 9 of the Act and pass fresh orders according tolaw. The order of the Competent Authority is modified accordingly.
4.The learned counsel for petitioner does not assail the reference to the Competent Authority to give an option to the petitioner under Section 9 of the Act and remand of the case to the Competent Authority with the direction that he will comply with the provisions of Section 9 of the said Act and pass order according to law.
5.In view of the above the order of the Appellant Authority is upheld and the matter if remanded to the Competent Authority to dispose of the same in pursuance to the provisions of Section 9 of the Act. The present petition is disposed of in these terms. There will be no order as to costs.