Mohinder Kaur vs Union Of India & Ors.
2011 Latest Caselaw 2194 Del

        IN THE HIGH COURT OF DELHI AT NEW DELHI

                W.P. (C) 53/2000 & CM No. 12314/2010 (for stay)

        MOHINDER KAUR                                         ..... Petitioner
                    Through :                Ms. Maneesha Dhir with
                                             Ms. Geeta Sharma, Advocates.

                       versus

        UNION OF INDIA & ORS.                              ..... Respondents
                      Through :              Mr. Mohit Auluck, Advocate for
                                             Mr. Neeraj Chaudhari, CGSC
                                             for UOI.

        CORAM: JUSTICE S. MURALIDHAR

        1. Whether Reporters of local papers may be
            allowed to see the order?                             No
        2. To be referred to the Reporter or not?                 Yes
        3. Whether the order should be reported in Digest?        Yes

                                ORDER

26.04.2011

1. The Petitioner challenges an order dated 2nd November 1999 passed

by the Appellate Tribunal for Forfeited Properties (hereinafter „the

Tribunal‟) dismissing the Petitioner‟s appeal against an order dated 4 th

February 1992 passed by the Competent Authority („CA') under

Sections 7(1) and (3) of the Smugglers & Foreign Exchange

Manipulators (Forfeiture of Property) Act, 1976 („SAFEMA‟).

2. This Court has heard the submissions of Ms. Maneesha Dhir, learned

counsel for the Petitioner and Mr. Mohit Auluck, learned Advocate

appearing for the Union of India.

3. The Petitioner who at present is over 83 years old was married to late

Shri Sohan Singh of village Sur Singh in 1946. The Petitioner claims

that in 1957 a residential plot measuring 719.8 sq. m. was purchased for

a sum of Rs. 5,700/-. Further, her father Shri Chuhar Singh purchased a

house in Rani-ka-Bagh locality in Amritsar for Rs. 25,000/- in her name

and gifted it to her on 3rd March 1967. Agricultural land measuring 40

acres was purchased in 1957 and the appropriate consideration was paid

in six installments between 2nd December 1957 and 11th January 1960.

4. Shri Sohan Singh was first detained under the Conservation of

Foreign Exchange and Prevention of Smuggling Activities Act, 1974

(„COFEPOSA‟) on 1st July 1976. It is stated that he was never supplied

with the grounds for the detention. The second detention order was

passed on 1st December 1976 and again no grounds for detention were

furnished to him. Shri Sohan Singh was released with the lifting of the

internal emergency on 22nd March 1977. This Court takes judicial

notice of the fact that during the time when the internal emergency was

in force the right of a detenu to file a writ petition in the High Court

challenging an order of detention was suspended. During this entire

period, no steps were taken to invoke the provisions of SAFEMA

against Shri Sohan Singh.

5. A third detention order was passed against Shri Sohan Singh on 8th

November 1978. In the said detention order it was alleged that after

Shri Sohan Singh was released on 22nd March 1977 he had been

involved in certain other illegal activities. It was alleged that on 27th

February 1978 Shri Sohan Singh, along with others, was returning to

India with 15 biscuits of gold when he was detained by the Border

Security Force.

6. Shri Sohan Singh challenged the aforementioned detention order

dated 8th November 1978 by filing a Criminal Writ Petition No. 51 of

1979 in the High Court of Punjab and Haryana. By an order dated 3 rd

May 1979 passed by that High Court the said detention order was

quashed. Consequently, the third detention order dated 8 th November

1978 and the grounds on the basis of which the said detention order was

passed no longer survived to enable the CA under SAFEMA to take

note of for the purposes of initiating proceedings under SAFEMA.

7. Nearly five years after the first two detention orders dated 1 st July

1976 and 1st December 1976 were passed, a notice was issued to the

Petitioner by the CA under Section 6(1) SAFEMA on 6th February

1981. The notice simply stated that the CA had "on the basis of relevant

information" "reason to believe" that the properties described in the

Schedule to the notice, held by the Petitioner, were "illegally acquired

properties within the meaning of clause (c) of sub-section (1) of Section

3" SAFEMA.

8. The Petitioner states that even before issuance of the said notice, her

husband Shri Sohan Singh had filed an affidavit dated 28 th May 1990

with the CA stating that he belongs to a family of agriculturists and that

he, along with his other two brothers, jointly owned 395 kanals and 7

marlas in village Naushera Dhalla. Affidavits dated 2nd October 1981

and 16th December 1982 on the same lines were submitted by him to the

CA. Copies of the said affidavits have been enclosed with the writ

petition. It is stated that pursuant to the aforementioned notice dated 6th

February 1981 issued Section 6(1) SAFEMA, counsel for the Petitioner

had filed before the CA copies of the documents and the statement filed

with the income tax authorities about the acquisition of the properties in

question. Copies of the assessment orders passed by the Wealth Tax

Department were also furnished to the CA.

9. It appears from para 5 of the order dated 4th February 1992 of the CA

that the case before the CA was fixed for hearing on 26th April 1984

and notice had been issued under Section 7(1) SAFEMA requiring the

Petitioner to produce her brother Shri Joginder Singh, whose affidavit

dated 28th May 1980 had been filed, for cross-examination. Despite two

adjournments Shri Joginder Singh was not produced. For nearly six

years thereafter there were no proceedings. Meanwhile, Shri Sohan

Singh died on 22nd January 1988. On 21st February 1990 a letter was

received from the son of the Petitioner by the CA stating that on

account of old age of the Petitioner she could not appear at the hearing.

The CA noted in the order dated 4th February 1992 that the further

notice sent to the Petitioner was received back with remarks „refused‟.

In the circumstances, the impugned order dated 4 th February 1992 came

to be passed in the absence of the Petitioner.

10. The CA further noted in para 7 of the order dated 4th February 1992

that Shri Sohan Singh and the Petitioner‟s brother Shri Joginder Singh

were detained under the SAFEMA. The CA observed that "the husband

of the A.P. was actively engaged in smuggling of gold across the Indo-

Pakistan border and its subsequent disposal within the country and his

only lawful source of income had been, out of his inherited agricultural

land of 20 acres." At this stage, it requires to be noticed that there is no

such averment in the show cause notice under Section 6(1) SAFEMA

issued on 6th February 1981. Also as already noticed hereinbefore, the

third detention order dated 8th November 1978 which contained similar

allegations was quashed by the High Court of Punjab and Haryana on

3rd May 1979. The CA does not appear to have taken note of the above

facts in the impugned order.

11. The CA then went into the details of the explanation offered by the

Petitioner as to the source of her income as regards the seven room

house at village Sur Singh, 40 acres of agricultural land at the same

village, the house at Amritsar and one international tractor. While

holding that the source of income for purchasing the tractor was

properly explained, the CA concluded that the Petitioner could not

explain the source for acquiring the other three properties.

12. The Tribunal has, by the impugned order dated 2nd November 1999,

dismissed the Petitioner‟s appeal and concurred with the CA that there

was nothing on record except the affidavit filed by the Petitioner‟s

brother to indicate that the Petitioner had an independent income and

that her parents had gifted money to enable the house at Amritsar to be

bought. The Tribunal concluded that "the detenue had extremely

meager resources of legitimate income and the acquisition of properties

of a very substantial scale in the name of the detenue‟s wife clearly

indicated that Sohal Lal had been indulging in smuggling from a very

early date."

13. Neither the notice under Section 6(1) SAFEMA nor the order of the

CA indicates the period during which the Petitioner‟s late husband Shri

Sohan Singh is alleged to have indulged in illegal activities. The

absence of this detail renders the notice vague and lacking in material

particulars. The very object of the SAFEMA is to ensure that the

properties acquired through income from illegal activities should not be

allowed to be retained by the person indulging in such illegal activities.

There has to be shown to exist a nexus between the earnings from the

illegal activities and the properties acquired. For this nexus to be

established, it would have to be shown that the properties in question

were acquired around the time when the detenu indulged in illegal

activities that provided the income for the acquisition of the properties.

Significantly, in the instant case the properties in question which

formed the subject matter of forfeiture under the SAFEMA were

admittedly purchased or acquired between 1957 and 1967. The CA was

required be satisfied that these properties were acquired from the

income earned by Shri Sohan Singh from illegal activities during this

period. There is nothing in the notice under Section 6(1) SAFEMA or in

the order of the CA that demonstrates this nexus. In other words there is

no determination by the CA that during the time when these properties

were acquired, i.e., between 1957 and 1967, Shri Sohan Singh had

indulged in any illegal activity and that these properties were acquired

with the earnings from such illegal activity. This therefore renders both

the notice under Section 6(1) SAFEMA and the consequential order

dated 4th February 1992 passed by the CA unsustainable in law.

14. The CA also does not appear to have noticed the absence of any

satisfactory explanation for the delay in initiating the proceedings under

SAFEMA. The first detention order against Shri Sohan Singh was

passed on 1st July 1976, at least nine years after the acquisition of the

last property in 1967. The notice under Section 6 SAFEMA was issued

in 1982, more than five years after the detention.

15. While it may have been sufficient for the purposes of initiation of

the SAFEMA proceedings under Section 6(1) that there was a valid

detention order against Shri Sohan Singh, for the purposes of the final

adjudication it had to still be shown that there was nexus between the

illegal earnings and the properties sought to be forfeited. In this context

the CA was required to take note of the fact that the two detention

orders dated 1st July 1976 and 1st December 1976 could not have been

challenged on account of the internal emergency during which there

was a suspension of the provisions of the Constitution permitting the

detention orders to be challenged by way of a writ petition in a High

Court. It may be recalled that Shri Sohan Singh was released

simultaneously with the lifting of the emergency on 27th March 1977.

The second factor was that the further detention order passed on 8th

December 1978 stood quashed by the High Court of Punjab and

Haryana on 3rd May 1979. There was no basis, therefore, for the CA to

observe that Shri Sohan Singh was indulging in smuggling activities for

a long number of years. In any event, there was absolutely no material

to enable the CA to be satisfied that Shri Sohan Singh was indulging in

smuggling activities during the period when the properties in question

were purchased by the Petitioner or in her name.

16. This Court finds that the impugned order dated 4th February 1992 of

the CA in its dealing with the explanation offered by the Petitioner

regarding her source of income reads more like an assessment order in

proceedings under the Income Tax Act. The CA failed to appreciate

that establishment of the nexus between the income from the alleged

illegal activities of the Petitioner‟s husband and the purchase or

acquisition of the properties in question was essential in order to legally

sustain the proceedings under Section 6 SAFEMA. The imperative need

to establish such nexus has been explained in several decisions

including PP Abdulla v. Competent Authority (2007) 2 SCC 510, Shri

Gian Chand Garg v. Union of India [decision dated 14th September

2007 in Writ Petition (Civil) No. 4581 of 1996] and Shanti Devi v.

Union of India 73 (1998) DLT 477.

17. For the aforementioned reasons, this Court sets aside the impugned

order dated 4th February 1992 of the CA and the order dated 2nd

November 1999 of the Tribunal and quashes the proceedings initiated

against the Petitioner emanating from the notice dated 6th February

1981 under Section 6(1) SAFEMA.

18. The writ petition is allowed and the pending application is disposed

of in the above terms.

S. MURALIDHAR, J APRIL 26, 2011 ak