Delhi High Court
Kamal Kumar vs Union Of India & Others on 25 November, 2011
Author: Vipin Sanghi
R-4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 25.11.2011
% W.P.(C) 2276/1996
KAMAL KUMAR ..... Petitioner
Through: Mr. L.P. Dhir and Mr. Vikas
Nautiyal, Advocates.
versus
UNION OF INDIA & OTHERS ..... Respondents
Through: Mr. Baldev Malik, Advocate
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
VIPIN SANGHI, J. (Oral)
1. This petition has been preferred under Article 226 of the
Constitution of India to assail the order dated 28.11.1994 passed under
section 7(1) and 7(3) of Smugglers And Foreign Exchange Manipulators
(Forfeiture of Property) Act, 1976 (SAFEMA), passed by the competent
authority; the appellate tribunal order dated 08.03.1996 in FPA
No.4/DLI/95, and; the rectification order dated 08.05.1996 under
section 20 of SAFEMA.
2. The petitioner, Piare Lal was served with a detention order dated
08.11.1976 issued in the name of Governor of Punjab, inter alia,
stating that with a view to prevent him from dealing in smuggled
goods, it is necessary that he be detained. A declaration was also
issued by the Governor of Punjab under section 12A(2) of the
Conservation of Foreign Exchange and Prevention of Smuggling
Activities Act, 1974 („COFEPOSA‟) declaring that the detention is
necessary, and that it is not in public interest to disclose the facts or to
give an opportunity of making a representation to the detenu.
3. Following the said detention, which was unsuccessfully
challenged by the petitioner, a notice dated 10.05.1978 was issued by
the competent authority under section 6 of SAFEMA stating that he had
reason to believe that the properties mentioned in the schedule have
been acquired by him illegally within the meaning of clause (c) of sub
section (1) of section 3 of SAFEMA. The petitioner was required to
indicate the sources of his income, earnings and assets out of which, or
by means of which the petitioner had acquired the scheduled
properties, and also to show cause as to why they should not be
declared as illegally procured properties and forfeited under the Act.
The said notice pertained to the following properties:
"THE SCHEDULE
Description of the property Name of the present
holder of property
1) Plot Nos.35 to 38, Chandrauli, Delhi Shri Piara Lal
2) Plot No.13/1, 14/15, bearing Khasra
No.21-24 in village Karawal Nagar, "
Ilaqa Shahdra, Delhi
3) Plot No.2, B-Block, Laxmi Industrial
Enclave, V, Gharota, Pargna Loni, "
Tehsil Ghaziabad, Meerut
4) 1/2 share in plots bearing Khasra "
Nos.13 to 17 in Karawal Nagar,
Ilaqa Shahdra, Delhi
5) 110 Tolas gold ornaments "
6) Cash in Hand "
4. Section 6 of SAFEMA obliges the competent authority to record
his reasons to believe that the properties in respect whereof the notice
is issued are illegally acquired properties. The "reasons to believe"
recorded by the competent authority in this case were to the effect
that the Commissioner of Income Tax, vide letter dated 24.02.1977
had furnished certain information. The position of the petitioner‟s
income tax returns and assessment was disclosed as follows:
Asst. Years Income returned Income assessed
1967-68 11,300 P
1968-69 11,300 P
1969-70 11,300 P
1970-71 11,300 P
1971-72 11,300 11,500
1972-73 11,300 22,050
1973-74 11,300 12,500
1974-75 11,300 36,062
1975-76 11,300 25,000
5. The competent authority recorded :
"A perusal of the above chart bring out one striking
feature. The income returned for all the years from
1967-68 to 1975-76 is the same viz. Rs.11,300, all the
returns have been filed on one date viz. 21.1.76 and all
the assessments have also been completed on a single
date viz. 19.1.77. The source of this income is stated to
be Dalali business, but no accounts are stated to have
been maintained. Assessments have been completed
for the assessment years 1971-72 to 1975-76. It will be
noted that in each year additions have been made to
the income returned, the heaviest being in assessment
years 1972-73, 1974-75, 1975-76. The additions in
these years are on account of various investments
made and expenditure incurred by Piara Lal in these
years. As a perusal of para 3 would indicate, Piara Lal's
investments in real estate were made in the periods
relevant to assessment years 1972-73 and 1974-75. In
the period relevant to assessment year 1972-73, Piara
Lal has made an investment of Rs.10,800 in the
Chandrauli Plot in Delhi. In the course of assessment
proceedings, being unable to explain the source of his
investment, Piara Lal has surrendered the amount of
investment for assessment. Similarly in the period
relevant to assessment year 1974-75, Piara Lal has
made investments in real estate listed at S. No.2,3 and
4 in para 2. The aggregate of these investments comes
to about Rs.16,000. Here again, unable to explain the
source of this investment, Piara Lal has surrendered the
same for assessment. In this year an addition has also
been made on account of inadequate marriage
expenses and inadequate household expenses. It will
thus be abundantly clear that although Piara Lal's
various investments have been considered in the course
of assessment proceedings, the source of these
investments has at no stage, been proved. Since the
source of investment in properties listed at S. No.1 to 4
of para 3, has not been explained and proved, those
properties fall squarely within the purview of sec.
3(1)(c)(iii) of the SAFEMA. Similar is the position with
regard to the assets listed at S. Nos.5 and 6 of para 3,
whose source of acquisition has never been
proved".(emphasis supplied).
6. The competent authority further recorded that the aforesaid
properties had been wholly or partially acquired out of, or by means of
income, earnings or assets, the source of which has not been proved
"and which has not been proved and which has not been shown to be
attributable to any Act or thing done in respect of any matter in
relation to which Parliament has no power to make laws and is thus hit
by the provisions of section 3(1)(c)(iii) of SAFEMA".
7. In para-6 of the reasons to believe, the competent authority
recorded:
"6. I have, therefore, reason to believe that the
undermentioned properties held by Piara Lal are illegally
acquired properties within the meaning of sec. 3(1) (c) of
the Smugglers and Foreign Exchange Manipulators
(Forfeiture of Property) Act, 1976 and a notice under sec.
6(1) of the Act should be issued to him to indicate the
sources of his income, earnings or assets, out of which or
by means of which he acquired these properties, the
evidence on which he relies and other relevant
information and particulars and to show cause why these
properties should not be declared to be illegally acquired
properties and forfeited to the Central Government".
8. Following the initiation of the said proceedings under Section 6 of
SAFEMA, the impugned orders came to be passed against the
petitioner, first by the Competent Authority, and therafter by the
Appellate Authority. Consequently, this petition was preferred by the
petitioner, who has died during its pendency and the same is being
pursued by his legal representatives. The first submission of learned
counsel for the petitioner, Sh. L.P. Dhir is that the "reasons to believe",
as aforesaid, did not show the existence of any nexus between the
alleged smuggling activity of the petitioner and the acquisition of the
aforesaid properties. He submits that the petitioner has never been
convicted for any offence, and it has not been established that he was
engaged in the activity of smuggling of goods. Even otherwise,
without existence of source material to connect the alleged activity of
smuggling to the source of funds from which the scheduled properties
were acquired, the competent authority did not even derive the
jurisdiction to issue the said notice under Section 6 of SAFEMA. He
places reliance on the following decisions:
i) Fatima Mohd. Amin (Smt) (Dead) Through Lrs v. Union of
India & Anr., (2003) 7 SCC 436
ii) P.P. Abdulla & Anr. v. Competent Authority & Ors.,
(2007) 2 SCC 510
iii) Attorney General for India & Ors. v. Amratlal Prajivanda &
Ors., (1994) 5 SCC 54
iv) Shri Gian Chand Garg v. Union of India & Ors. in W.P.(C.)
No. No.4581/1996 decided on 04.09.2007 by S. Ravindra Bhat, J.
9. On the other hand, the submission of learned counsel for the
respondent, Mr. Malik is that the "reasons to believe" recorded by the
competent authority are sufficient. He submits that nexus between
the income derived from illegal activity and the acquisition of the
property need not be established where the property concerned is that
of the detenu himself. The said nexus is required to be established
only when the detenu‟s property is held benami in the name of any
other person or relative. It is only in such cases that the nexus
between the income derived from illegal activity, and the property is
required to be established.
10. He has further placed reliance on section 8 of SAFEMA, which
provides that in any proceedings under this Act, the burden of proving
that any property specified in the notice served under section 6 is not
illegally acquired property shall be on the person affected. He submits
that the petitioner had not been able to explain the source of his
income, wherefrom the aforesaid properties had been acquired by him.
Even if the belatedly filed returns were to be accepted, the amount
apparently spent on purchase of properties in a few years was far in
excess of the income shown for those years, as noticed in the recorded
"reasons to believe".
11. In Fatima Mohd. Amin (supra), the Supreme Court held that the
contents of the notice even if taken on their face value did not disclose
any reason warranting action against the appellant. It was observed
that no allegation whatsoever has been made to the effect that there
exists any link or nexus between the property sought to be forfeited
and the illegally acquired money of the detenu. I may note that in this
case, the property that was sought to be forfeited belong to the
mother, whereas the detenus were her two sons and it was the case of
the respondent that the illegal activity was carried out by two sons,
and the property was acquired in the name of the mother from the
illgotten monies.
12. In P.P. Abdulla (supra), which was a case pertaining to property
of the detenu himself, the Supreme Court applied the decision in
Fatima Mohd. Amin (supra). In this case, the appellant had been
convicted under the Customs Act in a case relating to seizure of 700
bars of foreign gold recovered from him. The detenu himself was
issued a notice under section 6(1) of SAFEMA for forfeiture of his
property. The property was forfeited by the order of the competent
authority and the appellate tribunal also rejected his appeal. The writ
petition was allowed by the learned Single Judge of the High Court.
However, the Division Bench reversed the judgment of the learned
Single Judge. The Supreme Court, after perusing the record of the
"reason to believe", observed as follows:
"8. It must be stated that an order of confiscation is a
very stringent order and hence a provision for
confiscation has to be construed strictly, and the statute
must be strictly complied with, otherwise the order
becomes illegal.
9. In our opinion, the facts of the case are covered by
the decision of this Court in Fatima Mohd. Amina v.
Union of India (supra). In the present case the
contents of the notice, even if taken on face value, do
not disclose any sufficient reason warranting the
impugned action against the appellant as, in our
opinion, the condition precedent for exercising the
power under the Act did not exist. Hence, the impugned
orders cannot be sustained.
10. In the present case, in the notice dated 15.3.1988
issued to the appellant under Section 6(1) of the Act
(copy of which is annexed as Annexure P1 to this
appeal), it has not been alleged therein that there
is any such link or nexus between the property
sought to be forfeited and the alleged illegally
acquired money of the appellant.
11. Hence, in view of the decision of this Court in
Fatima Mohd. Amina's case (supra), the said notice
dated 15.3.1988 has to be held to be illegal.
Consequently the order passed in pursuance of the said
notice is declared as null and void. The appeal is,
therefore, allowed and the impugned orders of the High
Court and the concerned Authorities are set aside. No
costs". (emphasis supplied)
13. In Gian Chand Garg (supra), the facts of the case were
somewhat similar. Like in the present case, the detenu had filed
income tax returns collectively for five previous years (in the present
case, they were filed for nine previous years), prior to the passing of
the detention order. The detention order was passed after the filing of
the said returns, like in the present case as well. The Court held that
there was not a whisper that any enquiry or investigation under section
18 of the Act preceded the notice.
14. To counter the submission of Mr. Malik founded upon section 8 of
the Act, Mr. Dhir has placed reliance on the judgment of this Court in
Shanti Devi v. Union of India & Ors., 73 (1998) DLT 477 (DB). The
Division Bench in this case held that the question of applying the rule
of evidence enacted by section 8 of SAFEMA, casting the burden of
proof on the person affected, shall come into play only on some
connecting link or nexus being established or traced between the
holding of the property or assets by the person proceeded against, and
illegal activity of the detenu/convict.
15. The "reasons to believe" as recorded in the present case by the
competent authority undoubtedly raise a doubt about the source of
funds wherefrom the aforesaid properties were acquired at the
relevant time. However, they do not go on to state that there was a
nexus between the income derived from the alleged activity of
smuggling and the scheduled properties acquired by the detenue, and
the said "reasons to believe" do not show as to how a nexus is sought
to be established between the income allegedly derived from the
illegal activity of smuggling, and the acquisition of the said properties.
16. In the light of the aforesaid discussion, since the "reasons to
believe", as recorded by the competent authority appear to be wholly
insufficient, the notice issued under section 6(1) of SAFEMA cannot be
said to have been issued validly. The competent authority did not
derive the jurisdiction to issue the same in the absence of the
recording of the valid "reasons to believe". Consequently, the orders
passed on the said notice by the competent authority on 28.11.1994,
and by the appellate tribunal on 08.03.1996 and the rectification order
dated 08.05.1996 cannot be sustained and are, accordingly, quashed.
Parties are left to bear their respective costs.
VIPIN SANGHI, J
NOVEMBER 25, 2011
'SR'
R 1-3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 25.11.2011
% W.P.(C) 260/1995
KAMLAWATI (DECD.) TH. KAMAL KUMAR ..... Petitioner
Through: Mr. L.P. Dhir and Mr. Vikas
Nautiyal, Advocates.
versus
UNION OF INDIA & OTHERS ..... Respondents
Through: Mr. Baldev Malik, Advocate
% W.P.(C) 302/1996
KAMAL KUMAR ..... Petitioner
Through: Mr. L.P. Dhir and Mr. Vikas
Nautiyal, Advocates.
versus
UNION OF INDIA & OTHERS ..... Respondents
Through: Mr. Baldev Malik, Advocate
% W.P.(C) 303/1996
RAMAN KUMAR ..... Petitioner
Through: Mr. L.P. Dhir and Mr. Vikas
Nautiyal, Advocates.
versus
UNION OF INDIA & OTHERS ..... Respondents
Through: Mr. Baldev Malik, Advocate
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
VIPIN SANGHI, J. (Oral)
I have already quashed the notice issued to the detenu under
section 6(1) of SAFEMA and the consequent orders of forfeiture passed
by the competent authority and by the appellate tribunal in CWP
No.2276/1996. The "reasons to believe" as recorded in that case have
been found to be deficient.
The same "reasons to believe" have been recorded by the
competent authority in these cases as well, while issuing the impugned
notices which form the basis of the forfeiture orders. Consequently,
the forfeiture orders passed in these cases by the competent authority
and the orders of the appellate tribunal upholding the same also
cannot be sustained and are, accordingly quashed. Parties are left to
bear their respective costs.
VIPIN SANGHI, J
NOVEMBER 25, 2011
'SR'
