Madras High Court
Rukhiya vs The Registrar on 19 August, 2024
Author: S.M.Subramaniam
Bench: S.M.Subramaniam
W.A.Nos.320, 321 & 322 of 2014
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 24.07.2024
PRONOUNCED ON : 19.08.2024
CORAM
THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM
and
THE HONOURABLE MR. JUSTICE C.KUMARAPPAN
W.A.Nos.320, 321 & 322 of 2014
and
M.P.Nos. 1, 1 & 1 of 2014
Rukhiya ... Appellant in W.A.No.320/2014
Abdul Majeed ... Appellant in W.A.No.321/2014
P.K.Umaiba ... Appellant in W.A.No.322/2014
Vs.
1.The Registrar,
The appellate Tribunal for
Forfeited Property, 4th Floor,
Lok Nayak Bhavan, Khan Market,
New Delhi-100 002.
2.The Competent Authority,
Smugglers & Foreign Exchange Manipulators
(Forfeiture of properties) Act 1976,
Utsav, No.1, 64/1, G.N.Chetty Street,
Chennai – 17. ... Respondents in all the Writ Appeals
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Prayer in W.A.No.320/2014 :- Writ Appeal filed under Clause 15 of Letters
Patent, praying to set aside the order passed in W.P.No.16341/2000 dated
03.01.2014.
Prayer in W.A.No.321/2014 :- Writ Appeal filed under Clause 15 of Letters
Patent, praying to set aside the order passed in W.P.No.16342/2000 dated
03.01.2014.
Prayer in W.A.No.322/2014 :- Writ Appeal filed under Clause 15 of Letters
Patent, praying to set aside the order passed in W.P.No.16343/2000 dated
03.01.2014.
For Appellants in
all the Writ Appeals : Mr.B.Kumar, Senior Counsel for
Mr.S.Ramachandran
For Respondents in
all the Writ Appeals : R1-Tribunal
: Mr.N.Ramesh (for R2)
COMMON JUDGEMENT
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(Judgement was delivered by S.M.Subramaniam J.)
FACTUAL MATRIX:
The preliminary facts are that an order of detention by the Government
of Kerala was issued on 14.08.1984 detaining Mr.K.P.Abdul Majeed from
June 1984 to June 1985. The authorities under the Smugglers & Foreign
Exchange Manipulators (Forfeiture of Properties) Act 1976 (herein after
referred as SAFEMA) received information from the office of the Collector
Customs Cochin on 16.01.1985 that Mr.K.P.Abdul Majeed holds 1/5th share
in joint property. Notice under Section 6(1) of SAFEMA was issued on
18.02.1986 in respect of 1/6th share in joint property. Mr.K.P.Abdul Majeed
submitted his defence statement that it was his ancestral property.
Subsequently, the said notice had been withdrawn.
2. In the year 1987, Mr.K.P.Abdul Majeed married Mrs.Rukhiya as
his second wife. On 10.10.1988, an order of detention was issued by the
Government of Tamil Nadu against Mr.K.P.Abdul Majeed in G.O.No.SR-
1/1070-10/88. Yet another order of detention dated 19.07.1990 was issued
by the Government of India in F.No.673/228/90-Cus.VIII, by Joint Secretary.
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Subsequently, on 05.11.1990 Inspector of SAFEMA submitted a report along
with the copies of statement of Income / Net Wealth filed by K.P.Abdul
Majeed. Notice under Section 6(1) dated 21.11.1990 was issued to Mr.Abdul
Majeed in respect of the properties mentioned in the net wealth report filed by
the Inspector of SAFEMA. Consequently, Notice under Section 6(1) was
issued on 29.11.1990 to the two wives of K.P.Abdul Majeed in respect of the
properties mentioned in the report. On 19.04.1995, enquiry was held after
affording sufficient opportunity and personal hearing and the noticees were
permitted to be represented by lawyers of their choice. The competent
authority under Section 7(1) of SAFEMA passed a composite order on
20.06.1996. The appeal filed was dismissed by the Appellate Tribunal on
19.05.2000. Thereafter, an order of forfeiture, under Section 19(1) of
SAFEMA was passed on 28.08.2000. Further an order of detention by the
Government of India was issued on 06.10.2003 in F.NO.673/8/2003-
Cus.VIII, by Joint Secretary.
3. The admitted facts between the parties to the lis on hand are that on
14.08.1984, one of the appellant Mr.K.P.Abdul Majeed suffered detention.
The other appellants namely Mrs.Rukhiya and Mrs.P.K.Umaiba are the
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wives of Mr.K.P.Abdul Majeed. All of them fall within the definition of
“Person” within the meaning of Section 2(2) of SAFEMA.
4. Notices dated 18.02.1986 under Section 6(1) were issued to
Mr.K.P.Abdul Majeed in respect of 1/6th share in joint property and
Mrs.P.K.Umaiba in respect of 0.24 cents of lands. After enquiry, both the
above properties were released by accepting the explanations submitted by
the above two persons that the said property was ancestral property of
Mr.K.P.Abdul Majeed. Thereafter on 21.11.1990, Notices under Section 6(1)
were issued to Mr.K.P.Abdul Majeed (2nd Notice), Smt.Umaiba (2nd Notice)
and Smt.Rukhiya (1st Notice). The said Notices were issued in respect of the
properties purchased after 1986 (i.e., after issuance of 1st Notice).
5. On 19.04.1995, Mr.K.P.Abdul Majeed produced copies of his two
passports and other documents. Written statement of defence were submitted
by the persons and several personal hearings were afforded to them by the
competent authorities. Enquiry was held. All the three persons were
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represented by lawyers of their choice. Sufficient opportunities were afforded
to them.
6. Pertinently, the validity of Section 6(1) Notice was not challenged by
the Noticees at that point of time. It is admitted that all the properties
mentioned in the three Notices were purchased by Mr.K.P.Abdul Majeed,
either in his name or with the joint names of his wives. It is further admitted
that the purchase money for all these properties were drawn from the account
of detenu Mr.K.P.Abdul Majeed. On 20.06.1996, orders were passed by
competent authorities, forfeiting the properties, except some properties for
which explanations were accepted.
7. Three separate appeals were filed by Mr.K.P.Abdul Majeed and by
his two wives on 12.08.1996. Curiously, in the appeals, it was admitted that
the properties were purchased in the name of all the three persons out of the
funds drawn from the account of detenu Mr.K.P.Abdul Majeed. Even at that
point of time, the validity of Notice under Section 6(1) was not challenged.
The main contention in the grounds of appeal by three appellants was that the
sources of purchase of money have been shown from NRE account and the
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same should have been accepted.
8. The statement made in the affidavit by the petitioners that the detenu
Mr.K.P.Abdul Majeed did not undergo any further detention after 1st Notice
was factually incorrect. Though, it is contended on behalf of the appellants
that the detention orders were revoked, it is immaterial as far as the
provisions of the SAFEMA are concerned. The application of the Act is well
defined under Section 2. Therefore, revocation of detention has no
implication or impediment for invoking the provisions of SAFEMA.
9. During the pendency of the appeal before the Appellate Tribunal,
the detenu Mr.K.P.Abdul Majeed transferred some of the properties, under
order of stay, to his wife. On complaint to the Tribunal, detenu undertook to
re-transfer.
SUBMISSIONS OF THE APPELLANTS:
10. The learned Senior Counsel Mr.B.Kumar, appearing on behalf of
the appellants would submit that Section 6(1) Notice is invalid. Irrelevant
wordings are not deleted from Section 6(1) Notice. The requirements under
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Section 6 of the SAFEMA have not been complied with. Notice of forfeiture
can be issued if the known sources of income and the link or nexus between
the purchase of property and ill-gotten money are established. In the absence
of any such material available on record, the requirement under Section 6(1)
is not satisfied. Therefore, in the present case, Section 6(1) Notice is null and
void.
11. Mr.B.Kumar, learned Senior Counsel articulated by stating that
Section 6(1) Notice can be issued if the details and the value of the properties
along with the nexus or link with the detenu and the ill-gotten money, if any,
are to be established at the first instance for the purpose of forming an
opinion and to issue notice under Section 6(1).
12. In this context, the learned Senior counsel mainly relied on the
principles considered by the learned Single Judge of this Court in the case of
R.Ramakrishnan Vs. Appellate Tribunal1, for forfeiture property. It is
contended that the entire position of law has been considered by the learned
Single Judge of this Court and the legal principles are summarised. Applying
the said legal principles, Section 6(1) Notice issued against the appellants
1 2011(2) MWN (Crl) 582
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herein are invalid and not in compliance with the requirements as
contemplated under Section 6(1) of SAFEMA.
13. The learned Senior Counsel referred paragraph no.44 of the
Judgement in the case of Attorney General of India Vs. Amratlal
Prajivandas and others2. Nine Judges Bench of the Hon'ble Supreme Court
of India has considered the principles, which would prevail over all other
judgements. The Judgement of the Three Judges Bench of the Supreme Court
India in the case of Fatima Mohm Amin Vs. Union of India3 wherein
paragraph no.6, the Three Judges Bench relied on the principles laid down in
Amratlal Prajivandas case (supra) . In the said case, it is reiterated that the
properties acquired by the detenu or his relatives, must be a benami property
or acquired illegally, is to be proved. In the event of no allegation in specific,
link or nexus, notices are to be declared as non-est and violative of Section 6
of SAFEMA.
14. In the case of Kesar Devi Vs. Union of India4, the Supreme Court
2 1994 (5) SCC 54
3 2003 (7)SCC 436
4 2003 (7)SCC 427
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again referred paragraph no.44 of Amratlal Prajivandas case cited supra.
The case of Aslam Mohammed Merchant vs. Competent Authority and
others5, is relied upon by the appellants. However, the said case was relating
to the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act).
The provisions of the NDPS Act and SAFEMA are in-comparable. Thus, the
ingredients, required for initiation of action are distinct and different. Thus,
the principles in Aslam Mohammed Merchant's case cited supra, in respect
of the provisions under NDPS Act, may not have application in respect of
the cases under SAFEMA. Thus, the analogy made on behalf of the appellant
deserves no merit consideration.
15. The appellants have further relied on the judgement of the Division
Bench of this Court in the case of Competent Authority SAFEMA and
NDPS Acts UTSAV Vs. M.Khader Moideed 6. The Division Bench has
referred Aslam Mohammed Merchant's case cited supra and the nine Judges
Bench judgement in the case of Amratlal Prajivandas case.
16. Mr.B.Kumar, learned Senior Counsel, mainly relied on the legal
5 2008 (14) SCC 186
6 2017 (1) LW (Crl) 139
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principles culled out by the learned Single Judge of this Court in the case of
R.Ramakrishnan (supra). It is reiterated that the said principles are carved
out from and out of the judgements of the Supreme Court. Therefore, it is to
be followed in the present case. The Division Bench judgement of this Court,
in the case of M.Khader Moideed (supra) has been further followed by
another Division Bench of this Court in the case of Competent Authority Vs.
Smt.Ayisath Munawara7.
17. It is contended that the detention orders were revoked
subsequently. Therefore, all further actions are necessarily to be dropped. The
nexus between money in possession of the detenu and purchase of property
in joint name are not established. Therefore, the issuance of 6(1) Notice, in
the absence of materials, are untenable.
SCOPE OF SECTION 6 OF SAFEMA:
18. Section 6(1) reads as under:
“6. Notice of forfeiture.—(1) If, having regard to
the value of the properties held by any person to
whom this act applies, either by himself or
7 W.P.No.1333 of 2018 dated 13.10.2022
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through any other person on his behalf, his known
sources of income, earnings or assets, and any
other information or material available to it as a
result of action taken under section 18 or
otherwise, the competent authority has reason to
believe (the reasons for such belief to be recorded
in writing) that all or any of such properties are
illegally acquired properties, it may serve a notice
upon such person (hereinafter referred to as the
person affected) calling upon him within such time
as may be specified in the notice, which shall not
be ordinarily less than thirty days, to indicate the
sources of his income, earnings or assets, out of
which or by means of which he has acquired such
property, the evidence on which he relies and
other relevant information and particulars, and to
show cause why all or any of such properties, as
the case may be, should not be declared to be
illegally acquired properties and forfeited to the
Central Government under this Act.”
Careful reading of Section 6(1) is of paramount importance, since
Section 6(1) Notice is the basis for all further actions to be continued under
the provisions of SAFEMA. The first phrase of Section 6(1) indicates that
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having regard to the value of the properties held by any person to whom this
Act applies, either by himself or through any other person on his behalf. It
speaks about the application of the Act under Section 2 of SAFEMA.
Therefore, the authority competent must first ensure that the provisions of
SAFEMA is applicable to a person for issuance of Notice under Section 6(1)
of the Act. The second phrase indicates that known sources of income,
earnings or assets, any other information or material available to it as a result
of action taken under Section 18 or otherwise. Therefore, a report submitted
by the Inspector under Section 18 of the Act can be taken into consideration
or the materials available on record or the information thereon may also be
considered by the authority competent. Known sources of income, earnings,
assets and any other information or materials are the prima facie materials/
informations required for the purpose of forming an opinion that the
competent authority has “reason to believe”, that all or any such properties
are illegally acquired properties.
19. The very purpose of description regarding the known sources of
income or earnings or assets or information or a report under Section 18 is to
ensure that the competent authority apply his mind for forming an opinion
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that he has reason to believe that such properties are acquired illegally.
20. The phrase “reason to believe” has live link between the materials /
informations or reports available and application of mind on the part of the
competent authority. Therefore the requirements contemplated under Section
6(1) are to be taken into consideration by the competent authority for forming
an opinion that he has “reason to believe” that all or any of such properties
are illegally acquired properties.
21. It is amply clear that the competent authority has to form an
opinion and that he has reason to believe to form such an opinion to issue
Notice under Section 6(1) of the Act. It is absolutely unnecessary for the
competent authority to arrive at a final decision in respect of the legality of
the details of the properties, materials which all are necessary for the purpose
of issuing Notice under Section 6(1) of SAFEMA.
22. To reiterate, Section 6(1) of SAFEMA require some materials on
record and such materials shall prima facie establish that all or any of such
properties are illegally acquired properties. If the competent authority has
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reason to believe that such properties are illegally acquired properties, such
reasons would be sufficient for issuing a Notice under Section 6(1) of
SAFEMA.
23. The argument on behalf of the appellant that “there must be a
conclusive material for the purpose of forming an opinion” is incorrect since
it is only a Notice issued calling upon the persons to show cause, why all or
any of such properties, as the case may be, should not be declared to be
illegally acquired properties and forfeited to the Central Government under
the provisions of SAFEMA. Since Section 6(1) Notice is a Show Cause
Notice, to provide opportunity to the persons to whom the Act applies, it
becomes unnecessary for the authorities to arrive at a final decision or collect
all the materials necessary for the purpose of exercising the powers under
6(1) of SAFEMA.
24. A fine distinction can be drawn between Notice under Section 6(1)
and an order of forfeiture to be passed under Section 7(1) of SAFEMA.
However, considering the Right to Property under Article 300A of the
Constitution of India, the Parliament thought fit and imposed certain pre-
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requisite conditions, for forming prima facie opinion and to arrive at a
conclusion that the authority has reason to believe that all or any of such
properties are illegally acquired properties.
25. Strict availability of documents and evidences required to invoke
Section 7(1) may not be required for issuing Notice under Section 6(1) of
SAFEMA. Even after issuance of Section 6(1) Notice, the competent
authority is empowered to conduct inquiry and drop all further proceedings.
Therefore, the requirements of Section 6(1) need not be conclusive. It would
be sufficient if prima facie materials are available on record to form an
opinion that the authority has reason to believe that the properties are illegally
acquired property.
26. The phrase “reason to believe” is the subjective satisfaction of the
competent authority. Therefore, it is not necessary that all the informations
and materials, for the purpose of invoking Section 7(1), is to be made
available at the time of issuance of Section 6(1) Notice. Further enquiry after
Notice under Section 6(1) may throw more light on the issues for the purpose
of invoking the provisions of SAFEMA. Since such probabilities are inbuilt
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under the scheme of the Act, the scope of ingredients for issuing Notice under
Section 6(1) of SAFEMA need not be expanded so as to defeat the very
purpose and object of SAFEMA.
27. The very object of SAFEMA is for the effective prevention of
smuggling activities, and foreign exchange manipulations, which are having a
deleterious effect on the national economy. It is necessary to deprive persons
engaged in such activities and manipulations of their ill-gotten gains.
Therefore, mere issuance of Notice, based on certain prima facie material,
would not cause prejudice to the persons since enquiry will be conducted for
the purpose of arriving at a decision to invoke Section 7 of the Act. Thus, the
arguments advanced on behalf of the appellants that Section 6(1) Notice is
invalid, is unacceptable and stands rejected.
28. The requirements of material contemplated under Section 6(1) of
SAFEMA is only to establish a prima facie case for forming an opinion that
the authority has reason to believe that all or any of such properties are
illegally acquired properties. Once Section 6(1) Notice is issued, burden of
proof lies on affected person. The noticee, on receipt of Notice is at liberty to
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disprove the prima facie opinion formed by the competent authority.
Therefore, Section 6(1) Notice can be issued if the competent authority has
reason to believe, based on the materials available on record. Such materials
may be insufficient for forfeiture of property under Section 7.
SUBMISSIONS OF THE RESPONDENTS:
29. Mr.N.Ramesh, learned Senior Panel Counsel for the Government
of India, appearing on behalf of the second respondent would strenuously
oppose the contentions of the appellants.
(I) Validity of Notice issued under 6(1) of SAFEMA;
30. (a) Validity of Section 6(1) Notice was never challenged either
before the competent authority or before the appellate authority. It is not the
case of the appellants that no reasons were recorded but the reasons recorded
were not sufficient.
(b) Value of the properties, 'known sources of income' of the
relative/holder of properties and other information were considered and stated
in the notice. The said notice was issued based on the statement of wealth
return filed by the petitioners for the first time before the income tax
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authorities, which were obtained as a result of enquiries under Section 18.
Reasons were recorded. Thus the competent authority has complied with all
the requirements, while issuing Notice under Section 6(1) of the Act.
(c) It is to be noted that all the mentioned properties have been
purchased either in the name of detenu or jointly with detenu. It is admitted
case of the wives before the authorities and also in the affidavit before this
Court that the money has flown from the detenu/husband. It is not the case of
the wives- petitioners that they purchased the properties separately out of
their independent earnings. On the other hand it was the specific case of the
petitioners before the competent authority that the properties were purchased
by the detenu in the name of his wives benami.
(d) In the wealth statement, the appellants have mentioned that the
purchase money was drawn from NRI account of husband. Therefore, in the
reasons recorded, it was stated that the wives have no known sources of
income and that husband is a detenu. Therefore logical inference is that the
properties should have been purchased from the money of the detenu. The
reasons recorded are sufficient in view of facts and circumstances of the case
from the view point of Competent Authority. For the sake of argument, even
if the reasons recorded were insufficient, the admission would ratify such
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deficit. It is settled law that the reasons recorded are to be to the subjective
satisfaction of the Competent Authority. The sufficiency of reasons recorded
need not be gone into at the time of review under Article 226 of Constitution
of India.
(e) It has been clarified by the Hon'ble Supreme Court in Attorney
General for India & Ors, vs. Amratial Prajivanda & Ors.8, as follows in
paragraph- 44:
"It is equally necessary to reiterate that the burden of
establishing that the properties mentioned in the show-cause
notice issued under Section 6, and which are held on that
date by a relative or an associate of the convict/detenu, are
not the illegally acquired properties of the convict/detenu,
lies upon such relative/associate. He must establish that the
said property has not been acquired with the monies or
assets provided by the detenu/convict or that they in fact did
not or do not belong to such detenu/convict. We do not think
that Parliament ever intended to say that the properties of all
the relatives and associates, may be illegally acquired, will
be forfeited just because they happen to be the relatives or
associates of the convict/detenu. There ought to be the
connecting link between those properties and the
convict/detenu, the burden of disproving which, as mentioned
8 (1994) 5 SCC 54
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above, is upon the relative/associate. In this view of the
matter, the apprehension and contention of the petitioners in
this behalf must be held to be based upon a mistaken
premise.
As clarified above in the judgement, the "connecting link" is required only in
case if the properties stood in the name of wife and acquired from their
individual income. In the present case all the properties are in the joint name
of detenu and wives. It is further seen from the wealth return and as admitted,
money has been drawn from detenu's account. Therefore the requirement of
connecting link loses its-significance.
(f) Kesar Devi vs Union of India9 is in conformation with the
Attorney general case. In Kesar Devi case (supra), the petitioner was wife of
the detenu. She was never assessed to tax and had no known sources of
income. In the notice under Section 6(1) it was simply stated that Kesar Devi
was the wife of detenu and therefore a person under the Act. The Court
accepted the reasons recorded as sufficient.
(g) In view of law laid down in the above two cases, the notice issued
to the detenu and his two wives are perfectly valid.
(h) Therefore reasons recorded in the show cause notice issued under
9 2003 (7)SCC 427
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Section 6(1) is valid. Contentions of the appellants are baseless, contrary to
the facts of the case and liable to be rejected.
(II) Whether "Supplementary" Notice are unsustainable in view of
dropping of proceeding under 1st Notice;
31. (a) The 1st notices were issued on 18.2.1986 each to detenu
K.P.Abdul Majeed and his wife Smt. Umaiba. No notice was issued to Smt.
Rukhiya as she was not married and she was married only in the year 1987.
The reply submitted by the petitioners to the 1st notice was accepted and the
properties there under were released.
(b) 2nd notices were issued on 21.11.1990 each to detenu K.P.Abdul
Majeed and his two wives. The properties mentioned in the 2nd notice were
different from 1st notice. Those properties were admittedly purchased after
the issuance of 1st notice, i.e., from 1986 to 1989.
(c) In the 2nd notice issued to Mr.K.P.Abdul Majeed and to Smt.
Umaiba, it was mentioned on the head as "supplementary notice". No such
mention is there in the notice issued to Smt. Rukhiya. This was done in order
to maintain the continuity of the file in the competent authority's office and to
remind that there is prior notice in respect of two persons.
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(d)The caption "supplementary" cannot make the 2nd notice
supplement to the 1st notice in the absence of any such purpose of
supplementing the 1st notice. It is well settled that nature of document cannot
be decided by its name (nomenclature) and the contents/recitals of document
are relevant.
(e) Label or name to be ignored. Another facet of principle is that the
form of a transactions may be ignored in certain circumstances is that a
document should not be construed purely from their legal or technical aspects
and by attaching undue significance to the names, labels, or words used
rather than to the true intention of the parties (Ref: Neelkant Narayanasingh
(Sri Sri) vs CIT, 1951, 20 ITR 8 (Pat).
(f) Thus mere mentioning of "supplementary" will not make the 2nd
notice as supplementary to the 1st notice. The 2nd notice is independent
notice, in respect of other properties with separate reasons recorded.
(III) Whether the remittances made through NRE account should be
treated as legal source;
32. (a) The detenu had filed wealth tax and income tax returns,
collectively for the first time in 1990 for the assessment year 1989-90, i.e.,
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just prior to the issuance of 2nd notice. The I.T. Returns were accepted by the
ITO in the year 1992. Thus at the time of issuance of notice, his IT returns
were not even accepted by the IT Department. Though the wealth and income
has been shown, there is no evidence for licit or legal source of such income
or wealth. On such basis, the "reasons to believe" as recorded in the present
case by the competent authority undoubtedly raise a doubt about the legal
source of funds wherefrom the aforesaid properties were acquired at the
relevant time.
(b) The remittances in NRE Account only show the mode of
transaction. But the petitioners have not proved the licit or legal source of
such money. This is Important wherein
- the detenu's passport shows that during the period of remittances he
was very much within India.
- In the wealth tax assessment order it is stated that the detenu has
been in lodging business and that he is resident during the relevant period.
(c) In Commissioner Of Income Tax Vs P.Mohanakala 10, the
Supreme Court said that mere remittance from a foreign country through
banking channels was not sufficient to explain its genuineness and further
said in concluding para that;
10 2007(6) SCC 21
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"The doubtful nature of the transaction and the manner in
which the sums were found credited in the books of accounts
maintained by the assessee have been duly taken into
consideration by the authorities below. The transactions
though apparent were held to be not real one. May be the
money came by way of bank cheques and paid through the
process of banking transaction but that itself is of no
consequence. No question of law much less any substantial
question of law had arisen for consideration of the High
Court. The High Court misdirected itself and committed error
in disturbing the concurrent findings of facts."
(d) The detenu was a smuggler. Many detention orders were clamped
against Person Affected No.1 for his repeated indulging in smuggling during
1984 to 2005. It is well known that the money earned by violation of law in
India are transmitted out through hawala transaction and then sent back via
NRE account. Where such specific allegations are raised, the detenu must
prove his legal source.
(e) Section 21 of SAFEMA provides that findings under the other Laws
not conclusive for proceedings under SAFEMA. Therefore the acceptance of
returns by Assessing officer has no relevance for the proceedings under the
Act. This has been held and confirmed by Division Benches of this Court.
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(IV) Whether non supply of his own confession statement which has been
referred to by the CA amounts to violation of natural justice;
33. (a) Any proceeding under SAFEMA commences and the
Competent Authority gets jurisdiction on the basis of order of
detention/conviction. The proceedings under SAFEMA were in consequence
of detention of K.P.Abdul Majeed. The grounds of detention clearly refer to
giving copy of the statement to the Person Affected. SAFEMA is only a
logical extension and continuation of the detention proceedings under
COFEPOSA. Person Affected made the voluntarily statement before the
Customs authorities and same remained un- retracted. Since a copy is already
given to him as evidenced in the grounds of detention there is no need for
giving one more copy to him.
(b) The appellant had not made any request to the Competent
Authority seeking supply of materials to be relied on by him. Therefore, it is
not a case of refusal.
(c) It can be seen from the proceedings that principles of natural justice
have been complied with in every step of the proceeding and due opportunity
was given at every stage. The appellants were permitted to engage a lawyer of
their choice. Personal hearings were given.
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(d) The Competent Authority has relied upon two passports produced
by the appellants to come to the decision/conclusion. The confession
statement has been referred to by the Competent Authority after his
conclusion paragraph. It can be seen from the order that even without
referring to the confession statement, the conclusion has been arrived at. The
paragraph, in which the confession statement has been referred to, if
removed, the reasons and decision will stand. Therefore, it cannot be said the
authority has relied upon the statement to come to his conclusion.
(e) To allege violation of natural justice, the appellant has to show the
nature of prejudice caused to him. It is argued that had confession statement
been supplied, the appellant would have produced his second passport. On
the contrary, it is seen from the order that the appellant had already produced
his 2nd passport and the decision was based only on such passports.
Therefore, the appellants failed to show the nature of prejudice.
(f) As held in State Bank of Patiala vs S.K. Sharma11 mere non
supply of document relied upon will not amount to violation of natural justice
where there is substantial compliance of natural justice and that where no
prejudice caused on account of it.
11 CDJ 1996 SC 067 = 1996 AIR (SC) 1669
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(V) Appellants relying on Precedents which are distinguishable and
inapplicable:
34. (a) By the decision in Attorney General of India & Ors. vs.
Amratlal Prajivanda & Ors.(supra), the SAFEMA provisions and Act were
held to be constitutionally valid by the 9 Judges bench of Supreme Court. The
next judgment in Kesar Devi vs Union of India (supra) confirms and in
consonance with the attorney general case.
(b) The other three subsequent decisions which are cited, namely,
(i)Fatima Mohd. Amin (Dead) through Lrs v. Union of
India12,
(ii)P.P.Abdulla & Anr. v. Competent Authority & Ors.13, and
(iii) Aslam Md. Merchant Vs. Competent Authority14
have to be read in the light of the Constitution Bench decision since they are
decisions by Benches comprised of lesser number of Judges. It is obvious that
none of these subsequent decisions could have intended taking a view
contrary to that of the Constitution Bench in Attorney General vs. Amratlal
Prajivandas case. The law laid down in para-44 by the Constitution Bench
that there ought to be the connecting link between those properties in the
12 (2003) 7 SCC 436
13 (2007) 2 SCC 510
14 (2008) 14SCC 186
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name relative/associate and the convict/detenu, the burden of disproving
which as mentioned above is upon the relative/associate.
(i) In Fatima Mohd. Amin (Dead) Through Lrs v. Union of India
& Anr.15, , the Supreme Court held that the contents of 6(1) notice
therein 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. It may be noted that, 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 ill
gotten monies.
- In the present case, admittedly the said properties are
purchased by the detenu in his name and jointly in the name of his
wives. The link or nexus is not required in view admitted flow of
fund from the detenu. Therefore on facts the above citation in Fatima
15 2003 (7) SCC 436
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Md. Amin is not applicable to the present case.
- In Kesar Devi case (supra), the Court had distinguished the
Fatima Md Amin case.
(ii) In P.P.Abdulla & Anr. v. Competent Authority & Ors.16,
the Supreme Court applied the decision in Fatima Mohd. Amin
(supra). The Supreme Court observed as follows:
"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".
- In the case on hand, sufficient reasons have been duly
recorded. On facts, the above judgement is not applicable to the facts
of this case.
- According to the clarification given by constitutional bench in
Attorney General's case (supra), the link or nexus is required to be
16 2007 (2) SCC 510
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mentioned only in case of relative/associate. The subsequent
judgement in Kesar Devi vs. union of India 17 was also of the same
view.
- Unfortunately Attorney General case (Supra) and Kesar Devi
case (Supra) were not brought to notice of the court while deciding
P.P.Abdulla case.
- P.P.Abdulla case has incorrectly held that link or nexus has to
be mentioned in the notice even for detenu which is contrary to the
constitutional bench case. In the above cited case, P.P.Abdulla was
detenu. Thus the above judgement in P.P.Abdulla has been rendered
per incuriam.
(iii). In Aslam Mohd. Merchant Vs Competent Authority &
Ors18, the Court has observed in para-36 that the Competent Authority
himself was not satisfied as to the reasons. The Hon'ble Court was of
NDPS Act. Under the NDPS Act, the authorities had power of
"freezing" "tracing" "identifying" the properties and were therefore
bound to establish the proof that the property was derived from illicit
17 2003 (7)SCC 427
18 2008 (14)SCC 186
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traffic. Further the definition of "Property" and "illegally acquired
property” under NDPS Act is different from the definition of
SAFEMA. Therefore on facts, the Court in Aslam Merchant held that,
under the scheme of the NDPS Act, the necessity of establishing link
or nexus is writ large on the face of the statutory provision as would
appear from the definition of 'illegally acquired property' (under
NDPS) as also that of 'property' (NDPS). On the other hand, under the
provisions of SAFEMA there is no requirement of establishing the
link. Thus on facts, Aslam Merchant case (supra) is not applicable to
the case on hand.
(c)That is, 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.
(d)A perusal of the said subsequent judgments indicates that none of
these Judgments have considered para-44 of Attorney General's case (supra)
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in proper perspective. The observations made in the above judgments that
even in the cases where the property is held by the detenu himself, there
should be connecting link or nexus, should be held as made in ignorance of
and without considering the law laid down in para 44 which was binding.
35. Therefore, not only the decision in Attorney General's case (supra)
must be followed on account of the larger strength of the Bench that delivered
it but all the subsequent decisions, which taken contrary view to the Attorney
General case (supra) and Kesar Devi case (supra) must be held to be per-
incuriam and hence not binding since they have not taken into account the
ratio of the judgment of the Constitution Bench. As per the doctrine of 'per
incuriam', any judgment which has been passed in ignorance of or without
considering a statutory provision or a binding precedent is not good law and
the same ought to be ignored.
36. Therefore, the notice issued by Competent Authority is valid and in
accordance with the provisions and the properties mentioned therein are
liable to be forfeited to the Government.
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37. In the case of Biswanath Bhattacharya vs.Union of India and
others19, the Apex Court held as follows:
“39. If a subject acquires property by means
which are not legally approved, the sovereign would be
perfectly justified to deprive such persons of the
enjoyment of such ill-gotten wealth. There is a public
interest in ensuring that persons who cannot establish
that they have legitimate sources to acquire the assets
held by them do not enjoy such wealth. Such a
deprivation, in our opinion, would certainly be
consistent with the requirement of Articles 300-A and 14
of the Constitution which prevent the State from
arbitrarily depriving a subject of his property.
38. The question of principles of natural justice has been dealt with in
the case of Smt.Rukhiya vs. The Registrar the Appellate Tribunal for
Forfeited Property20 as under:
“42. I have carefully gone through the order passed
by the competent authority dated 20.6.1996. I am unable
to accept the contention of the petitioners that there is a
19 2014 (4)SCC 392
20 2014 SCC OnLine Mad 20
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violation of principles of natural justice. A perusal of the
order would show that the petitioners were given
sufficient opportunity by the competent authority before
passing the composite order. A common reply was filed by
the petitioners on 30.3.1996 followed by personal
hearings on several dates. During the course of the
proceedings, the petitioners filed written replies on
24.12.88, 18.1.89, 18.3.91, 21.3.91, 19.4.95 and 25.5.95.
Through those replies, the petitioners had explained the
sources of acquisition of the properties under notice.
Thus, after hearing the petitioners and perusing their
written objections, the competent authority passed the
composite order. He has also recorded that during the
course of the proceedings, copies of several documents
such as purchase deeds, passport of the detenu, SSLC
Certificate, NRE Account, details of cheques issued, pass
book of share and loan account of the petitioners have
been filed. Thus, it is clear that the petitioners have been
given full opportunity to furnish the documents which they
would like to rely upon. The only grievance set out in
these writ petitions on the question of principles of
natural justice is that the competent authority relied upon
a statement of the petitioner dated 6.2.1984 said to have
been given under the COFEPOSA proceedings. According
to the petitioners, the copy of the said statement was not
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furnished to the petitioners and therefore it violates the
principles of natural justice. In fact a perusal of the order
of the competent authority would show that he has not
come to the conclusion based on the said statement alone
and on the other hand he has reasoned out for his
conclusion at paragraph No. 4 itself based on the
passports produced by the detenu/petitioner.”
39. The learned Single Judge in the writ order elaborately considered
the grounds raised by the appellants herein. The learned Single Judge also
relied on the judgement of 9 Judges Bench of the Hon'ble Supreme Court of
India in the case of Prajivandas (supra) and factually distinguished the
other cases relied on by the appellants/ petitioners. The documents produced
by the detenu and the report submitted by the authorities were also taken into
consideration. Since some of the cases relied on by the appellants are
distinguishable on facts, the same cannot be followed as precedent in the
present case. The legal principles in the case of Prajivandas (supra)
enumerates that the burden of establishing that the properties, mentioned in
the Showcause Notice issued under Section 6 and which are held on that date
by the relative or an associate of the convict / detenu, are not illegally
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acquired properties of the convict / detenu, lies upon such relative /
associates. He must establish that the said property has not been acquired
with the moneys or assets provided by the detenu / convict or that they in fact
did not or do not belong to such detenu / convict.
40. The Hon'ble Supreme Court reiterated that there ought to be a
connective link between those properties and the convict/ detenu, the burden
of disproving which, as mentioned above, is upon the relative / association.
In view of the said legal principles settled by the 9 Judges Bench of the
Supreme Court of India, the arguments advanced on behalf of the appellants
that even before issuance of 6(1) Notice, there must be complete materials
available on record and link between the properties and the detenu must be
established is incorrect proposition and if such an argument is accepted, the
very purpose and object of SAFEMA would be defeated. Rule of constructive
interpretation of statute became imminent in order to ensure that the
objectives of the enactment is fulfilled.
41. Therefore, the appellant has not established any ground for the
purpose of entertaining the present writ appeal. The writ order and the
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findings of the learned Single Judge are candid and convincing and it does
not require any interference.
42. Accordingly, the writ appeals are dismissed. Consequently,
connected miscellaneous petitions are closed.
(S.M.S.J.,) (C.K.J.,)
19.08.2024
Index : Yes/No
Internet: Yes/No
Speaking order/Non-Speaking order
Neutral Citation : Yes/No
(sha)
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To
1.The Registrar,
The appellate Tribunal for
Forfeited Property, 4th Floor,
Lok Nayak Bhavan, Khan Market,
New Delhi-100 002.
2.The Competent Authority,
Smugglers & Foreign Exchange Manipulators
(Forfeiture of properties) Act 1976,
Utsav, No.1, 64/1, G.N.Chetty Street,
Chennai – 17.
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S.M.SUBRAMANIAM, J.
and
C.KUMARAPPAN, J.
(sha)
Pre-Delivery Order in
W.A.Nos.320, 321 & 322 of 2014
19.08.2024
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