Allowed

FPA-17/BOM/2012 of Mahesh Kantilal Soni v/s The Competent Authority, Mumbai

ATFP19 May 2017FPA-17/BOM/2012

Case brief

AI extract

What is this about?

The Tribunal set aside an impugned order forfeiting properties worth less than one lakh rupees. The court held that proceedings could not be pursued despite a later withdrawal of an instructive circular, as the cause of action arose while the instruction prohibiting such proceedings was in force. Additionally, it was observed that properties claimed by a third-party proprietor cannot be forfeited

What did the court decide?

The impugned order declaring properties as illegally acquired and forfeited was set aside with consequential relief to the appellants.

FPA-17/BOM/2012 of Mahesh Kantilal Soni v/s The Competent… — Property and Title | ATFP (2017)

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APPELLATE TRIBUNAL FOR FORFEITED PROPERTY AT NEW DELHI

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Date of Decision: 19^th May, 2017.

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MP-60/BOM/2012 MP-61/BOM/2012 & FPA-17/BOM/2012

Mahesh Kantilal Soni

… Appellant

Versus

The Competent Authority, Mumbai

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… Respondent

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Advocates/Authorized Representatives who appeared

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For the appellant	: Sh. Aseem L. Thakkar, Chartered Accountant
For the respondent	: Sh. Siddharth Majumdar, I.O.
CORAM
JUSTICE MANMOHAN SINGH	: CHAIRMAN
SHRI KAUSHAL SRIVASTAVA	: MEMBER
SHRI ANAND KISHORE	: MEMBER

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JUDGMENT

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MP-60/BOM/2012, MP-61/BOM/2012 & FPA-17/BOM/2012

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The present appeal is filed against the impugned order dated 06.06.2012 passed by the Competent Authority, Mumbai in which the following properties were declared as illegally acquired properties and forfeited to Central Government free from all encumbrances.

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S.No. Description of the property

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i). Shop No. 1160, Madan Gopal Haveli Road, Manek Chowk, Ahmedabad.

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ii). Right, title and interest of AP-1 or his legal heirs in ‘Gayatri Jewellers’ being run at Shop No. 1160, Madan Gopal Haveli Road, Manek Chowk, Ahmedabad.

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iii). House No. 1223, Rupasurchand Pole, Khadia, Ahmedabad.

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FPA-17/BOM/2012 Page 1 of 8

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In brief, the facts of the case are as under: Late Mahesh Kantilal Soni (hereinafter referred to as AP-1) was convicted by Judicial Magistrate, F.C. Ahmadabad (Rural) in Criminal Case No. 1308/85 dated 25.10.1988 u/s 135-A of the Customs Act and this conviction order was not set aside by any court of competent jurisdiction. Smt. Kailashben M. Soni (hereinafter referred to as AP-2) is the wife of AP-1, therefore proceeding under the SAFEMA for forfeiture of properties were initiated against them as they fell within the definition of persons to whom the Act is applicable as given under Section 2(2)(a) & (c) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter referred as SAFEMA).

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After issue of notice under Section 6 of SAFEMA to the APs and in the absence of any response from them, the properties in question were forfeited by the order dated 28.02.2008 passed ex-parte. Aggrieved with the aforesaid forfeiture order, appeals (FPA Nos. 16 & 17/BOM/2008) were filed by the APs before this Appellate Tribunal and vide it’s order dated 11.05.2011, the matter was remanded back to the Competent Authority for passing the fresh order after considering all the documents and evidence filed by the appellants.

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On remand, it was submitted by the APs that residential house no. 1223 situated at Rupasurchand Pole, Khadia, Ahmedabad, was purchased on 25.08.1977 on payment of consideration amount Rs. 55,000/- out of which an amount Rs. 10,000/- was paid by cheque dated 26.04.1977 and the rest of the amount was paid in cash after withdrawing from the bank. The shop no. 1160, Madan Gopal Haveli Road, Manek Chowk, Ahmedabad was purchased on 07.07.1980 for the consideration amount of Rs. 31,000/- which was paid by cheque. It is their submission that both these properties were purchased before the date of conviction of AP-1, therefore, there is no nexus between the

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FPA-17/BOM/2012 Page 2 of 8

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acquisition of the property and the activity of the person convicted. As regards the right, title and interest in the Gayatri Jewellers’ it was their submission that it is a proprietorship concern belonging to Mr. Diptesh Maheshbahi Soni to whom no notice was issued and the noticees have nothing to do with the business and/or ownership of the said shop and have no rights therein which could be forfeited. The contentions were however, rejected vide the impugned order. Being aggrieved, the present appeal is filed.

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During the proceedings of the appeal, an application for raising the following additional grounds was filed by the appellant/applicant, namely

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(i) the learned Competent Authority SAFEMA/NDPS, Mumbai has erred in issuing notice dated 06.12.2006 under Section 6(1) of the SAFEMA with a copy of reasons recorded after an inordinate delay i.e. after period of approx. 20 years after conviction and also of getting the knowledge of the properties proposed to be forfeited. The issuance of such notice after inordinate and unreasonable delay without any reasonable cause is illegal and bad in law and the forfeiture in pursuance thereof is liable to be quashed.

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(ii) The learned Competent Authority has erred in ordering the forfeiture of properties in contradiction of the Instruction in F.No. 12(23)/93-C.A. dated 23.06.1994 not to pursue cases where the value of the properties were less than Rs. 1,00,000/-.

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5.1 The additional grounds sought to be raised being legal grounds and it being settled law that legal grounds can be raised at any stage of the appeal, the application of the appellant for raising additional grounds was allowed. Opportunity was given to the respondent to file the reply to the additional grounds raised. In response it was submitted that though

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FPA-17/BOM/2012 Page 3 of 8

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the conviction order was passed on 25.10.1988 and the notice under Section 6(1) was issued on 06.12.2006, this could not be said to be inordinate delay as contended by the appellant. Observations of the Hon’ble Supreme Court in the case of Attorney General of India vs. Amratlal Prajivandas , AIR 1994 SC 2179 were referred. In the said judgment the Hon’ble Supreme Court has observed that persons engaged in smuggling do not keep regular and proper accounts with respect to such activities and very often, such persons screen the properties acquired so that they made not be traced. In the nature of things, the Authorities required time to trace those properties.

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5.2 As to the instruction vide F.No. 12(23)/98-CA dated 23.06.1994 which provided not to pursue cases where the value of the property was less than Rs. One Lakh, it was submitted that the said instruction had been withdrawn by the Ministry’s vide letter dated 26.02.2002. Hence, the contention raised in the additional ground in this regard was required to be rejected.

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During the hearing before the Tribunal, elaborate arguments with reference to both the additional grounds were made on behalf of the appellant. On the aspect of delay, it was basically submitted that after conviction of the AP-1 under the Customs Act in 1988, the SAFEMA Authorities had made enquiries near about that time and had identified the related properties as early as 1989/1990, but till December, 2006, neither the reasons nor the notice under Section 6 of the Act were issued to the AP proposing the forfeiture of the properties in question. In support of their claim, copies of the order sheet from file of the Competent Authority obtained by the appellant in pursuance of a RTI application have also been produced. They have also submitted that though no specified time limit is prescribed under SAFEMA for the issue of show cause notice, the Hon’ble ATFP in the case of Mohd. Gulam Rasul

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FPA-17/BOM/2012 Page 4 of 8

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Mia Vs. Competent Authority (1990-) 181 ITR 206 (ATFP) has, on drawing support from various High Court and Supreme Court decisions, reached the conclusion that in cases where there was inordinate delay in initiating proceedings which could not be explained and were without justification, the proceedings could not be sustained.

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6.1 With regard to the second ground namely, that the proceedings were not in accordance with the instructions in F.No. 12(23) / 93-CA dated 23.06.1994 of the Ministry of Finance, Department of Revenue, the said instruction advised the Competent Authorities not to pursue cases where the value of the property was less than Rs. One Lakh. According to the appellant, the value of the individual properties forfeited in this case was Rs. 55,000/- ( House No. 1223, Rupa Surchanda Ni Pole, Khadia, Ahmedabad) and Rs. 31,000/ (Shop No. 1160, Madan Gopal Ni Haveli Road, Manek chowk, Ahmedabad) and therefore the aggregate value of the properties being less than Rs. One Lakh, the circular was attracted and the case ought not to have been pursued.

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6.2 It was also argued that in a similar case, the Learned Competent Authority in the case of Abdul Hamid Kunji Ahmed in his order passed u/s 7 of the SAFEMA dated 05.04.2011 had, on the basis of the aforesaid instruction, dropped the proceedings against the properties frozen in that case on the ground that their value was less than Rs. 1 lakh. Copy of the aforesaid order was also enclosed.

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6.3 Regarding the third property forfeited in this case namely “right, title and interest of AP-1 or his legal heirs in the business of Gayatri Jewellers being run from the shop no. 1160, it is submitted by the appellant that none of the noticees viz., AP-1 or his wife Smt. Kailashben M. Soni (AP-2) were doing any business there and had nothing to do with the same. The said shop was run as a proprietorship concern belonging to Mr. Diptesh Maheshbhai Soni and to whom no notice was issued in FPA-17/BOM/2012 Page 5 of 8

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the case. Therefore, the finding of the Competent Authority in respect of such property was unsustainable and required to be quashed.

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On consideration, we find that the appeal can be disposed off on the ground that the related show cause notice was issued in contradiction to the instruction dated 06.12.1994 of the Ministry not to pursue cases where the value of properties involved is less than Rupees One Lakh.

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7.1 Before dealing further with this issue, it may be mentioned that in respect of the property at serial no. (ii) namely, right title and interest of AP-1 or his legal heirs in ‘Gayatri Jewellers’ being run at Shop No. 1160, Madan Gopal Haveli Road, Manek Chowk, Ahmedabad i.e. the same shop as frozen vide serial no. (i) above, the contention of the appellant is that the said business of ‘Gayatri Jewellers’ was belonging to Mr. Diptesh Maheshbhai Soni who was its proprietor and that the noticees had nothing to do with the said business and had no legal rights therein which could be forfeited. No notice was issued in the case to the said Mr. Diptesh Maheshbhai Soni. These contentions have not been accepted by the Competent Authority on the ground that no evidence has been produced by the noticees in support of such contention. It is further stated that if the noticees had no right, title and interest in the aforesaid property/business, then they should not have any grievance if the property is forfeited. It is seen that it has been the consistent stand of the noticees throughout the proceedings that the shop in question viz. Gayatri Jweellers is being run by Mr. Diptesh Maheshbhai Soni as a proprietory business. This contention is not rebutted by the prosecution in any manner either during the investigations or in the impugned order or in the reply filed to the appeal / during the oral arguments. We are therefore inclined to agree with the submission of the appellant that AP-1 or his legal heirs did not have any right, title or interest in the said

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FPA-17/BOM/2012 Page 6 of 8

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business of Gayatri Jewellers and therefore, the forfeiture of the said property as held vide the impugned order is unsustainable. This leaves us with the properties as at serial no. (i) and (iii) herein above, the combined value of which is Rs. 86,000/- (55,000/-+31,000/-) which is of an aggregate value of less than Rs. one lakh. We now examine the question whether the appellants are entitled to the benefit of the circular dated 06.12.1994 which provided that cases involving property of value less than Rs. One lakh may not be pursued further even though the said circular was withdrawn in 2002.

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It is an admitted position that the AP-1 was convicted in this case under the Customs Act in 1988 due to which he came to be covered under Section 2 of SAFEMA and the subject proceedings were initiated. It is also an admitted position that the properties sought to be forfeited in this case were identified in the period up to 1990 itself. It is therefore clear that the cause of action in the case arose at a time when the Ministry’s instruction dated 23.06.1994 was very much in existence and its withdrawal in 2002 would not take the case away from the coverage under the said instruction. It is argued by the appellant that the Competent Authority, Mumbai himself vide the order dated 5^th April 2011, in the case of Abdul Hamid Kunji Ahmed ( supra ) dropped the proceedings relating to forfeiture of the property involved in the said case of a value of less than Rs. 1 lakh on the basis of the said circular. The fact that the show cause notice in this case was issued in 2006 by which time the related circular had been withdrawn would not take the case away from coverage under the circular as this is to be determined by the period when the cause of action arose. As the aggregate value of the two properties of the noticees forfeited in this case is less than Rs. One lakh, we find that the appellants are in law entitled to the benefit of the referred instruction dated 06.12.1994 of the Ministry. Accordingly, the

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FPA-17/BOM/2012 Page 7 of 8

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case ought not to have been pursued further in light of the said instruction dated 06.12.1994 and the impugned order is liable to be set aside on this ground itself.

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As the impugned order is not sustainable on account of the above mentioned ground, we do not go into the other ground of inordinate delay in issue of the show cause notice as raised by the appellant.

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The impugned order is set aside with consequential relief to the appellants.

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(Justice Manmohan Singh) Chairman

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(Kaushal Srivastava) Member

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(Anand Kishore) Member

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New Delhi,

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19^th May, 2017