Dismissed

K.Sridevi Amma v. Appellate Tribunal

Kerala HC27 Sept 2016OP/27680/2002

Case brief

AI extract

What is this about?

This High Court of Kerala dismissed an original petition challenging property forfeiture orders under SAFEMA. The court rejected the argument that detention expiry by efflux of time invalidates subsequent forfeiture proceedings. It held the petitioners failed to discharge the burden of proof regarding lawful sources of property.

What did the court decide?

The original petition challenging the forfeiture of properties was dismissed in its entirety. The orders (Ext.P9, P11, P12) were upheld without interference.

K.Sridevi Amma Vs Appellate Tribunal — Constitutional and Fundamental Rights | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE SMT. JUSTICE P.V.ASHA

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TUESDAY, THE 27TH DAY OF SEPTEMBER 2016/5TH ASWINA, 1938

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OP.No. 27680 of 2002 (T)

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PETITIONER(S):

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*1. K.SRIDEVI AMMA, (DIED) ''JAYA NIVAS'', KANAMBA DESOM, PUNAMOOD, VARKALA, THIRUVANANTHAPURAM.

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*2. JAYAKUMAR, -DO- -DO(DECEASED)

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3. SREEKUMAR, -DO- -DO-

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*ADDL.R4 TO R6 IMPLEADED

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*Addl. R4. MINI, W/O. JAYAKUMAR, 'JAYA NIVAS', KANAMBA DESOM, PUNAMOOD, VARKALA, THIRUVANANTHAPURAM.

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*Addl. R5. SREEKUTTAN, S/O. JAYAKUMAR, 'JAYA NIVAS', KANAMBA DESOM, PUNAMOOD, VARKALA, THIRUVANANTHAPURAM.

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*Addl. R6. MINNU, D/O.JAYAKUMAR, 'JAYA NIVAS', KANAMBA DESOM, PUNAMOOD, VARKALA, THIRUVANANTHAPURAM.

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*ADDL.PETITIONERS 4 TO 6 ARE IMPLEADED AS THE LEGAL HEIRS OF THE DECEASED 2ND PETITIONER AS PER ORDER DATED 27/5/2016 IN IA.NO.169/2016.

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BY ADV. SRI.MILLU DANDAPANI

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RESPONDENT(S):

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1. THE APPELLATE TRIBUNAL FOR FORFEITED PROPERTY 4TH FLOOR, LOK NAYAK BHAWAN, KHAN MARKET, NEW DELHI - 110 003.

2/-

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OP.NO.27680/2002

2. THE COMPETENT AUTHORITY, OFFICE OF THE COMPETENT AUTHORITY, SMUGGLERS AND FOREIGN EXCHANGE, MANIPULATORS (FORFEITURE OF PROPERTY) ACT, 1976, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT OF INDIA, 'UTSAV', NO.64/1, G.N.CHETTY ROAD, T. NAGAR, CHENNAI-600 017.

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BY SRI.K.A.BALAN, CGC SRI.N.NAGARESH, ASST.SOLICITOR GENERAL SRI.T.SANJAY, CGC SRI.JOHN VARGHESE, SCGSC

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THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 27-09-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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OP.NO.27680/2002

APPENDIX

PETITIONER'S EXHIBITS:

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P1 COPY OF THE ORDER NO.673/77/75-CUS. VIII DATED 9/7/1975 ISSUED BY THE GOVERNMENT OF INDIA TO P.KUTTAN PILLAI.

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P2 COPY OF THE NOTICE NO.CCA/MDS/2276/81 DATED 24/3/1981 ISSUED BY THE 2ND RESPONDENT TO 1ST PETITIONER.

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P3 COPY OF THE REPLY SUBMITTED BY THE 1ST PETITIONER BEFORE THE 2ND RESPONDENT ON 19/10/1996.

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P4 COPY OF THE NOTICE NO.CCA/MDS/2276/81 DATED 19/1/1998 ISSUED BY THE 2ND RESPONDENT TO PETITIONERS 2 & 3

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P5 COPY OF THE REPLY GIVEN ON BEHALF OF THE PETITIONERS BEFORE THE 2ND RESPONDENT ON 20/7/1998

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P7 COPY OF THE AFFIDAVIT SUBMITTED BY GOPALA PILLAI GOPINATHAN NAIR, DATED 31/7/1996 REFERRED TO IN THE ORIGINAL PETITION

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P8 COPY OF THE AFFIDAVIT SUBMITTED BY AYYAPPAN PILLAI BHASKARA PILLAI, DATED 31/7/1996 REFERRED TO IN THE ORIGINAL PETITION

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P9 COPY OF THE ORDER F.NO.CCA/MDS/2276/81 DATED 28/2/2000 OF THE 2ND RESPONDENT ISSUED TO THE PETITIONERS.

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P10 COPY OF THE APPEAL NO.FPA 41/2000 PREFERRED BY THE PETITIONERS BEFORE THE 1ST RESPONDENT ON 15/4/2000

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P11 COPY OF THE ORDER NO.41/MDS/2000/470 DATED 5/7/2002 OF THE 1ST RESPONDENT ISSUED TO THE PETITIONERS

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P12 COPY OF THE ORDER F.NO.CCA/MDS/2276/81 DATED 18/9/2002 OF THE 2ND RESPONDENT ISSUED TO THE PETITIONERS.

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RESPONDENT'S EXHIBITS: NIL

/TRUE COPY/

P.S.TO JUDGE

sts

P.V.ASHA, J.

O.P.No.27680 of 2002-T

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Dated this the 27^th day of September, 2016

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JUDGMENT

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The widow and 2 sons of Late Kuttan Pillai filed this Original petition challenging the order Ext.P9 passed by the 2^nd respondent forfeiting the properties listed therein, Ext.P11 order of the appellate Tribunal upholding Ext.P9 and Ext.P12 order issued in implementation of Ext.P9 order directing the petitioners to surrender/deliver possession of the properties. During the pendency of the writ petition, petitioners 1 and 2-i.e widow and the elder son, passed away and legal heirs of the 2^nd petitioner got impleaded as additional petitioners 4 to 6.

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Late Kuttan Pillai was a contractor in Singapore. Ext.P1 order of detention was issued against him on 9.7.1975 under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (`COFEPOSA' for short). On expiry of 3 months, he got released from the detention, by efflux of time, without any adjudication with respect to Ext.P1 order. He expired in the year 1977. On

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24.3.1981, Ext.P2 notice was issued to the widow of Kuttan Pillai, under Section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act of 1976 (hereinafter referred to as `SAFEMA’ for short) asking her to show cause within 35 days as to why the properties mentioned in the schedule thereto should not be forfeited, alleging that the said properties were illegally acquired within the meaning of clause (c) of sub section 1 of Section 3 of the Act. The schedule contained 14 items of movable/immovable properties, out of which all the properties except those at sl.no 13 and 14 were found to have been acquired by late Kuttan Pillai, during 19611966. It was stated that the 2^nd respondent got information that late Kuttan Pillai was involved in compensatory payment racket and the properties were not acquired legally. It is stated in the O.P that the widow had submitted a detailed reply in answer to Ext.P2, which was followed by another reply Ext.P3 dated 19.10.1996. Ext.P4 notice was thereafter issued to the 2 sons of late Kuttan Pillai on 19.01.1998, when they sought time as per Ext.P5 letter and thereafter submitted Ext.P6 reply and two affidavits Exts.P7 and P8 from 2 persons, who were in Singapore at the time when late Kuttan Pillai was in Singapore. Thereafter,

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the competent authority issued Ext.P9 order forfeiting the properties/portion of properties described in Sl.Nos.1, 3,4,5,6,7,8 and 14, as proposed in Ext.P2 notice. The petitioners challenged Ext.P9 before the 1^st respondent-the appellate tribunal filing Ext.P10 appeal and the Tribunal rejected the appeal as per Ext.P11. Consequent to this, the competent authority issued Ext.P1 order under Section 7 (1) of SAFEMA directing the petitioners to surrender/deliver possession of the properties, as mentioned in the schedule.

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The case of the petitioners in the O.P is that, there is no finding in Ext.P9 that the properties were illegally acquired; detention itself of late Kuttan Pillai was illegal, as documents supporting the detention were not supplied to him, etc. The contention raised at the time of hearing is that since the detenu was released without any adjudication into the validity of detention, by efflux of time, no proceedings could have been initiated under SAFEMA and hence the entire proceedings based on Ext .2 notice issued on 24.03.1981 are without any authority and illegal. It is their further contention that, it is after a period of 6 years of the release of the detenu in October 1975 that Ext.P2 notice was issued for the first time, on 24.3.1981,

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proposing forfeiture of properties to the widow; the notice to the children of late Kuttan Pillai was issued only as per Ext.P4 in the year 1998 after 23 years of the release of detenu; the widow who was the 1^st petitioner, died on 23.3.2003; thereafter the elder son who was the 2^nd petitioner also died and now there is only one son -the 3^rd petitioner, alive; this court has stayed the further proceedings pursuant to Ext.P12 in the year 2002 and at this distance of time, no further action is called for.

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The respondents have filed a counter affidavit stating that late Kuttan Pillai who sufferred detention as per Ext.P1 order was a person attracting the provisions of Section 2(2)(b) of SAFEMA and since investigations revealed that he acquired several movable and immovable properties, which were believed for reasons recorded in writing to have been acquired through illegal sources; since the detention order was not set aside either by the advisory board or a court of law, proceedings under SAFEMA is legal; investigations about the properties of detenu were initiated in 1975 itself, immediately after the order of detention; the widow had appeared before the department in 1980; notice under Sub section 1 of section 6 was issued to the widow as the legal representative of late Kuttan Pillai as per

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Ext.P2 on 24.03.1981, proposiing forfeiture of the properties listed therein; subsequently notices were issued to both the children of the detenu, since 2 of the properties were in the name of the widow, notice was issued to her under sub section 2 of section 6 also; the order Ext.P9 was passed in accordance with law, after hearing the legal heirs, as they could not establish the legal sources for acquiring the properties under Section 8 of SAFEMA, legally; sufficient opportunity was given to all the legal heirs to defend the proposed action under SAFEMA and orders were passed after considering each of the contentions put forward by them and their chartered accountant; there is no statutory time limit for proceeding under the Act.

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The learned Senior counsel Sri. K.P.Dandapani, appearing for the petitioners, relied on the judgments of the Apex Court in Union of India v. Haji Mastan Mirza: [ AIR 1984 SC 681] : [(1984) 2 SCC 427], Union of India v. Manoharlal Narang [(1987) 2 SCC 241] and Karimaben K.Bagad v. State of Gujarat & Ors [AIR 1998 SC 2938] and argued that since the detenu was already released, no action under SAFEMA can be pursued and that the detenu or his legal heirs cannot be made to suffer on the basis of an order of

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detention which elapsed by efflux of time. The pre-requisites for initiation of proceedings under the Act were not available in the present case so as to proceed under SAFEMA and such proceedings are bad in the light of the judgments in Fatima Mohd. Amin v. Union of India [(2003) 7 SCC 436], Aslam Mohammad Merchant v. Competent Authority and others [(2008) 14 SCC 186] and P.P.Abdulla v. Competent Authority [(2007) 2 SCC 510]. The learned Senior Counsel also relied on a common judgment of this Court in W.A Nos.1645, 1658 & 1659 of 2007.

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On the other hand, the learned Central Government Standing Counsel Sri K.A.Balan argued that, the impugned orders are perfectly in accordance with the provisions contained in the Act, after coming to the conclusion that the properties mentioned in the impugned order were not acquired through lawful sources after considering all the contentions of the petitioners; the burden of proof that the property under notice is not illegally acquired, were on the petitioners/legal heirs of the detenu as per Section 8 of the Act, but they failed to prove the same; the competent authority passed the order in accordance with law and it was affirmed by the appellate Tribunal; the

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proceedings got protracted only on account of the adjournments sought by the petitioners and replies submitted from time to time, which is evident from the reply of the widow in Ext.P3 itself; the proceedings cannot be dropped on account of delay; all the legal heirs were given sufficient opportunity of hearing; orders were passed after considering all the contentions and there is no ground for intereference by this court.

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In order to examine the validity of the impugned orders it is necessary to look into the relevant provisions of SAFEMA. The impugned proceedings were initiated as per Ext.P2 notice issued under Section 6(1) and (2) issued to the legal heirs of the detenu under COFEPOSA. The provisions under the SAFEMA are applicable to those coming under section

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2 of that Act, relevant portion of which read as follows:

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“2. Application.—(1) The provisions of this Act shall apply only to the persons specified in sub-section (2).

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(2) The persons referred to in sub-section (1) are the following, namely:

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(a) every persons

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(i) xxxxxxx

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(b) every person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974):

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Provided that—

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(i) such order of detention, being an order to which the provisions of Section 9 or Section 12-A of the said Act do not apply, has not been revoked on the report of the Advisory Board under Section 8 of the said

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Act or before the receipt of the report of the Advisory Board or before making a reference to the Advisory Board; or

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(ii) such order of detention, being an order to which the provisions of Section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the review under sub-section (3) of Section 9, or on the report of the Advisory Board under Section 8, read with sub-section (2) of Section 9, of the said Act; or

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(iii) such order of detention, being an order to which the provisions of Section 12-A of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the first review under subsection (3) of that section, or on the basis of the report of the Advisory Board under Section 8, read with sub-section (6) of Section 12-A, of that Act; or

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(iv) such order of detention has not been set aside by a court of competent jurisdiction;

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(d) every associate of a person referred to in clause (a) or clause (b);

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(e) any holder (hereafter in this clause referred to as the present holder) of any property which was at any time previously held by a person referred to in clause (a) or clause (b) unless the present holder or, as the case may be, anyone who held such property after such person and before the present holder, is or was a transferee in good faith for consideration.”

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Admittedly the order of detention was not challenged before any court. It is the case of the petitioners themselves that the detenu was released because of the expiry of three months time. In other words the order of detention was never revoked before the expiry of time or on the basis of any advice from the advisory board. The detenu as well as the legal heirs are therefore persons against whom the provisions under SAFEMA are applicable. Ext.P2 notice was issued to the widow and children under Section 6(1) and (2) of SAFEMA proposing forfeiture of the properties illegally acquired by the detenu.

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Illegally acquired property is defined under clause c of subsection 1 of Section 3 as follows:

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“3. Definitions .—(1) In this Act, unless the context otherwise requires,—

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xxxxxx

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(i) any property acquired by such person, whether before or after the commencement of this Act, wholly or partly out of or by means of any income, earnings or assets derived or obtained from or attributable to any activity prohibited by or under any law for the time being in force relating to any matter in respect of which Parliament has power to make laws; or

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(ii) any property acquired by such person, whether before or after the commencement of this Act, wholly or partly out of or by means of any income, earnings or assets in respect of which any such law has been contravened; or

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(iii) any property acquired by such person, whether before or after the commencement of this Act, wholly or partly out of or by means of any income, earnings or assets the source of which cannot be proved and which cannot be 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; or

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(iv) any property acquired by such person, whether before or after the commencement of this Act, for a consideration, or by any means, wholly or partly traceable to any property referred to in sub-clauses (i) to (iii) or the income or earnings from such property;

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and includes—

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(A) any property held by such person which would have been, in relation to any previous holder thereof, illegally acquired property under this clause if such previous holder had not ceased to hold it, unless such person or any other person who held the property at any time after such previous holder or, where there are two or more such previous holders, the last of such previous holders is or was a transferee in good faith for adequate consideration;

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(B) any property acquired by such person, whether before or after the commencement of this Act, for a consideration, or by any means, wholly or partly traceable to any property falling under item (A), or the income or earnings therefrom;”

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Section 6 which provides for initiating action for forfeiture of illegally acquired properties read as follows:

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“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 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.

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(2) Where a notice under sub-section (1) to any person specifies any property as being held on behalf of such person by any other person, a copy of the notice shall also be served upon such other person.”

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Section 7 of the Act provides for forfeiture after hearing the

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parties, which read as follows:

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“7. (1) The competent authority may, after considering the explanation, if any, to the show-cause notice issued under Section 6, and the materials available before it and after giving to the person affected and in a case where the person affected holds any property specified in the notice through any other, to such other person also a reasonable opportunity of being heard, by order, record a finding whether all or any of the properties in question are illegally acquired properties.

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(2) Where the competent authority is satisfied that some of the properties referred to in the show-cause notice are illegally acquired properties but is not able to identify specifically such properties, then, it shall be lawful for the competent authority to specify the properties which, to the best of its judgment, are illegally acquired properties and record a finding accordingly under sub-section (1).

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(3) Where the competent authority records a finding under this section to the effect that any property is illegally acquired property, it shall declare that such property shall, subject to the provisions of this Act, stand forfeited to the Central Government free from all encumbrances.

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Therefore, for issuing a notice under Section 6, there should be

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reasons to believe that the propeties are illegally acquired and

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those reasons should be recorded in it. A perusal of Ext.P2 notice

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would show that the 2^nd respondent has recorded the reasons based on which he came to believe the properties mentioned in the list were not acquired out of lawful sources. The notice proceeded saying that, out of 14 items of properties listed in the schedule, all except Sl.Nos.13 and 14 were found to have been illegally acquired during the years 1961-66, by the detenu, who was carrying on some petty contract works till 1966 in Singapore i.e till he returned from Singapore and settled down in his native place at Varkala. There was no proof for the sources of fund by which he acquired out the properties, i.e to show that it was out of his earnings through legal means. At the same time, it was stated that the investigations revealed that the detenu was indulged in compensatory payment racket and therefore it was reasonably presumed that all those properties were acquired from out of his accounts from such illegal activities. With reference to each item of the properties mentioned in the schedule, the 2^nd respondent had stated the circumstance under which it came to reasonable belief that those properties were illegally acquired. By Ext.P2 notice the widow was granted opportunity to show cause against the proposed forfeiture. From the reply Ext.P3 submitted by the 1^st petitioner widow on

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19.10.1996, it can be seen that she referred to the earlier interactions/discussions that were going on with the competent authority, since the receipt of the notice Ext P2. She stated that as the detenu was dead and gone and the legal heir was bedridden and his sons were small boys at the time of charge, the proceedings be dropped. She stated that most of the properties were obtained jointly. Eventhough there was no documentary evidence, the deceased had business activities out of which he could acquire the assets. It was after Ext.P3 reply was furnished that, copy of Ext.P2 notice was issued to the 2 sons of late Kuttan Pillai who also come under the definition of a person under Section 2(2) (b) of the SAFEMA. After seeking time for furnishing reply, they submitted Ext.P6 reply through their Chartered Accountant. Exts.P7 and P8 are affidavits from 2 persons saying that they were working in Singapore when the detenu was there and that he had returned to India transferring his contract to his brother. The 2^nd respondent passed Ext.P9 order considering each and every contention raised in the replies and those raised by the Chartered Accountant on behalf of the petitioners in the hearing. In Ext.P9 the competent authority has stated that investigation in respect of the properties of detenu

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started in 1975 itself; the widow had appeared before the department on 18.3.1980 before notice was issued to her in March, 1981 and she was given sufficient opportunity to explain. However, it was found that, the widow was not able to explain the sources. The 2^nd respondent has dealt with the entire proceedings thereafter initiated by issuing Ext.P2 notice of 24.3.1981, several communications in between, for affording the petitioners effective opportunities. The competent authority also refers to a reply given through chartered accountant on 10.09.1991 requesting to consider the circumstantial evidences. The petitioners were not able to furnish any evidence about business activities of the detenu and his brother in Singapore as well as the evidence of earnings made there. The evidence furnished were found to be of general nature without containing any worthy facts or regarding the quantum of earnings or remittance made by the detenu. There was no reason for producing any documentary evidence in case the detenu was a registered contractor. It was also found that even in the affidavits furnished, which cannot be relied on at all, nothing was stated regarding the earnings of the detenu. It is thereafter that Ext.P9 order was passed and finally the orders were passed

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thereafter considering all their contentions. In Ext.P9 the 2^nd respondent found that the detenu had suffered detention on account of his involvement in the compensatory payment racket as a distributor and that the properties/part of the properties mentioned in Sl.Nos.1, 3 to 8 and 14 were illegally acquired properties liable to be forfeited. The Tribunal in Ext.P11, while upholding Ext.P9 order, found that the delay in finalising the proceedings after issuing notice Ext.P2 was attributable to the petitioners and on account of the fact that the provisions contained in SAFEMA was kept in abeyance till 1994 due to pendency of writ petition in the apex court. The petitioners were not able to establish that the properties were not illegally acquired and they failed to discharge their burden under Section 8 of the Act. It was found that the action under SAFEMA was rightly initiated under SAFEMA and that the competent authority passed the order Ext.P9, in accordance with law. Sectin 8 of SAFEMA reads as follows:

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“8. Burden of proof .— 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.”

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The contention raised by the petitioners is that the

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onus under Section 8 comes only when there are valid proceedings initiated under the SAFEMA, and when the detenu was released without adjudication the proceedings were illegal and therefore Section 8 did not attract in the case. It was also argued that there was link stated in the notice or order connecting the income and the properties forfeited. But those contentions cannot be accepted as I have already found that the proceedings are valid. The notice as well as the order are issued considering the link between the income and the properties acquired.

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Now I shall examine the applicability of the judgments relied on by the learned Senior Counsel. In Haji Masthan's case (supra), he was detained under Section 3(1) of the COFEPOSA by order dated 19.12.1974. The grounds of detention were served on him 23.12.1974. A declaration under Section 5(1) of COFEPOSA was served on the respondent on 19.01.1975. Emergency proclaimed in the country on 25.06.1975 was in force till 21.03.1977 and he was released on 23.03.1977. He had not challenged the order of detention. However when notice under Section 6(1) of SAFEMA were issued, he challenged those proceedings as well as the order of detention. The High Court

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found that he was unable to approach the court against the order of detention, since major portion of the detention was during the period of emergency and therefore it was held that the fact that there was no challenge against detention under COFEPOSA before his release cannot operate as estoppel against his right of moving the court for challenging the same when proceedings under SAFEMA were initiated based on such a detention. The learned Senior Counsel placed much reliance on paragraph 10 of the judgment which reads as follows:

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“10. A reading of Section 6(1) of SAFEMA would show that action under Sections 6 and 7 can be taken against only persons to whom that Act applies. Section 2(1) of that Act specifies the persons to whom the Act applies. Sub-section (2) of Section 2 says that the Act applies to every person in respect of whom an order for detention has been made under COFEPOSA provided that such order of detention has not been set aside by a Court of competent jurisdiction. In the present case action has been taken against the respondent under Sections 6(1) and 7 read only with Section 2(2) of the Act. Therefore, a valid order of detention under COFEPOSA is a condition precedent to proceedings being taken under Sections 6 and 7 of SAFEMA. If the impugned order of detention dated December 19, 1974 is set aside for any reason, the proceedings taken under Sections 6 and 7 of SAFEMA cannot stand. Therefore, we have to consider whether the impugned order of detention dated December 19, 1974 under COFEPOSA is void and has to be quashed.”

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In this case the contention is that there was no necessity for the detenu to challenge Ext.P1 since he was released on expiry of 3 months' time. Therefore the circumstances which arose in the present case were different. It cannot be said that there was no

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valid proceedings to proceed under SAFEMA. The only contention raised on Ext P1 was that the detenu in this case was on a better footing than Haji Mastan since he was released on efflux of time. The further contention was relying on paragraph 18 of the judgment in Manoharlal Narang' s case (supra) which read as follows:

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“18. In view of the above conclusions we do not think it necessary to consider the question whether the authorities acted rightly in not considering the representation made by the respondent. It cannot be disputed that provisions of SAFEMA cannot be invoked in cases where there is no valid order of detention. We agree with the High Court that the order of detention is bad on the ground discussed above. Consequently we hold that the High Court was justified in quashing the notice issued under Section 6 and the proceeding initiated under Section 7 of the SAFEMA. We accordingly dismiss the appeal.”

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The judgment in Manoharlal 's case (supra) does not apply in the factual circumstances of this case. There the apex court had in an earlier occasion passed an interim order allowing the detenu at large on conditions stipulated. But the detaining authority did not consider it as a relevant material. On being dissatisfied with the reply of the Government of India, it was held bad in not considering it as a relevant material. Apex court found that on 1-7-1975, when the order of detention against Ramlal was passed, the order dated 1-5-1975 passed by the apex court was in force, permitting Ramlal to be at large on conditions.

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Seeing that the order of the apex court which was a relevant material for the detaining authority to consider when the detention order was passed and the Government did never had a case that it was not a relevant material or that this order was considered by the detaining authority and dissatisfied with the reply of the Government of India in answer to those contentions, the apex court held that the order of detention dated 1-7-1975, and consequent declaration were illegal and hence in the absence of any valid order of detention, the proceedings under SAFEMA are also illegal.

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In Karimaben K.Bagad's case (supra) , the proceedings were initiated under the SAFEMA after the order of detention was revoked and the detenue died pending such proceedings. The widow took up the contention that the order of detention against her husband was not legal since the writ petition filed by him challenging the detention was dismissed as infructuous, without adjudicating the matter. The High Court took the view that revocation of the order of detention was inconsequential. There contention of the widow was that after dismissal of the writ petition against the detention order in the year 1977, proceedings based on that cannot be revived after a

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period of 20 years. There the order of detention was on 25.01.1977. The proceedings were initiated in the year 1993. It was thereupon held that the widow was entitled to question the correctness of the grounds of the detention when she was faced with proceedings under SAFEMA. It was held that, she could not have been denied her right to challenge the same on the ground that 20 years had elapsed after issuing the order of detention. Seeing that the High Court was not correct in considering her plea against the order of detention, the apex court remanded the matter to high court to dispose it of on merits. The judgment of the apex court only shows that the widow was entitled to challenge the order of detention. In this case, no arguments were addressed on the validity of the order of detention. On the other hand, what was argued was that the detenu was on a better footing than those who challenged the proceedings.

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In Fatima Mohd. Amin's case (supra) apex court found that the notice issued under Section 6(1) of the SAFEMA did not disclose any reason warranting action against appellant therein, who was the father of the two detenus. It was also found that the existence of any link or nexus between the property sought to be forfeited and the illegal acquiring by the

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detenus was not substantiated or even referred to in the notices and hence the proceedings were illegal. The orders of detention of 2 sons of the appellant were on 18.2.1977 and 4.3.1976 under Section 3 of the COFEPOSA. Show cause notice was issued to the appellant father on 29.10.1976 as to why forfeiture of his properties mentioned therein shall not be effected. There further reasons were stated in another notice dated 29.04.1980 and another show cause notice was issued on 5.5.80, followed by order dated 12.8.1980. When the appellant challenged the proceedings on the ground that the detention order against the son had already been set aside by the high court, the tribunal before which the appeal was filed, remanded the matter to the competent authority for further investigation. Thereupon the competent authority recorded fresh reasons and another order was passed in the year 1986. That order was again challenged and in the SLP the apex court found that there was no finding as to the link between the properties forfeited and the illegally acquired properties. Only if it was found that the property was illegally acquired as defined under Section 3(c), the properties could have been forfeited. The apex court found that there was no averment in the show cause notice that the property acquired

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by the appellant was a property of her son or the same was illegally acquired from her son. Therefore, it was further found that even if it was taken for face value those notices did not disclose any reason for warranting action against the appellant. The petitioners herein did not raise any argument that the properties did not have any connection or that it is not illegally acquired.

¶147

In P.P.Abdulla's case (supra), the apex court found that as per Section 6(1), the competent authority has to record in writing the reasons based on which it believed that the properties held were illegally acquired properties. In paragraph 7 of the judgment it was held that whenever the statute requires reasons to be recorded in writing, it is incumbent on the respondent to produce the said reasons before the court so that the same can be scrutinized in order to verify whether they are relevant or they are not. Following the judgment in Fatima ’s case (supra), it was held that in the absence of any reasons stated in the notice to show the link with the properties to be forfeited, the initiation of proceedings under Section 6 was illegal. In Aslam Mohammad Merchant's case (supra) the apex court was considering a case where proceedings for

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forfeiting the properties out of the income derived by way of contravention of the provisions under the NDPS Act were under challenge. It was held that the competent authority is required to apply its mind on all the materials before it. A finding that all or any of the properties were illegally acquired properties should be recorded. Under Section 58(h) of the NDPS Act, the competent authority has to form an opinion that the properties are to be forfeited, recording the reasons for the same and the materials gathered during the investigation based on which he formed the opinion to proceed under the Act. He cannot initiate any proceedings in case no such material is placed before him. It was further held that, application of mind subsequent to issuance of notice will not cure the defect. Referring to Section 68(j) & (h), it was held that the onus to prove that any property specified in the notice is not illegally acquired comes to the person affected, only in a case where proceedings initiated for forfeiture of property are valid. It was further held that the provisions of the Act have to be interpreted in a manner that its constitutionality is upheld. The learned senior counsel relied on paragraph 32 of the judgment wherein it was held that, the competent authority must not only comply with principles of

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natural justice but he is also required to apply his mind on the materials brought before him and there should be a finding that all or any of the properties in question were illegally acquired properties and that finding was recorded. Paragraph 32 reads as follows:

¶153

“32. Before, however, an order of forfeiture can be passed, the competent authority must not only comply with the principles of natural justice, he is also required to apply his mind on the materials brought before him. It is also necessary that a finding that all or any of the properties in question were illegally acquired properties is recorded.”

¶154

The order Ext.P9 was passed after affording sufficient opportunity of hearing after issuing the notices Exts. P2 and P4, in which reasons were recorded for believing that the properties were acquired illegally, after considering the replies submitted and after hearing the legal heirs of detenu in compliance of principles of natural justice.

¶155

In the common judgment of this court in W.A No.1645 of 2007 and connected cases, relied on by the learned Senior Counsel, the question which arose for consideration was with respect to the proceedings initiated under Section 6(1) of the SAFEMA against the appellant, his brothers and his parents for forfeiture of property. In the order it was stated that they were not able to explain the source for purchase of immovable and

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movable properties mentioned in the schedule and hence those properties were liable to be forfeited The notices were issued on 18.2.1986. Reply to that was given in March, 1986. The order Ext.P1 therein forfeiting the properties was issued after 12 years, on 30.06.1998. Thus 25 items of immovable properties and 4 items of movable properties were forfeited. Referring to the definition of `relative’ under explanation to section 2 and section 4 which provides for prohibition of holding the illegally acquired property, this court held that in order to come within the definition of illegally acquired property, the property should be one acquired wholly or partly by means of any income or earning or assets derived or obtained from or attributable to any activity prohibited under law. There notices were issued to the relatives of PA1. This court found that there was no allegation in the show cause notice issued to them, that they were holding the property on behalf of PA1 or that the properties were illegally acquired or that those properties were purchased by means of any income or assets out of any activity prohibited under law. The show cause notice itself was held bad and therefore the action initiated based on that also was held illegal. This court found that in the absence of any allegation in the show cause

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notice that the properties were purchased by the detenue with the illegally obtained money and in the absence of a valid show cause notice the proceedings were liable to be set aside. Referring to judgments in Fatima Mohd. Amin's case, Kesar Devi's case and and P.P.Abdulla's case (supra) it was held that, since the competent authority did not allege any link or nexus between the income and the properties sought to be forfeited, the order of forfeiture cannot stand in the eye of law. Accordingly, the proceedings initiated against PA2 and PA3 were held not maintainable. The factual circumstances arising in these cases are entirely different from that of the present case and the common judgment cannot be applied .

¶160

As rightly contended by the learned Standing Counsel, Section 8 of the SAFEMA provides that the burden of proof that property is not illegally acquired is on the person affected. From the pleadings and records available, it is clear that the petitioners have not proved the same. The only contention raised is that no action is called for, at this distance of time, when there is only one son surviving and the properties listed in the schedule are of small extent. Another contention is that in the light of the judgments supra, the proceedings under

¶161

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SAFEMA are bad since there was no order of detention. Under Section 2(2), the provisions contained in SAFEMA apply against every person and every person who is a relative of the person against whom an order of detention has been made under COFEPOSA. A case where the detenue was released by efflux of time, is no where seen exempted.

¶164

It is relevant to note that the constitution Bench of the

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Apex court had, as early as in 1994, disapproved the judgment in Haji Mastan's case in Attorney General for India v. Amratlal Prajivandas, (1994) 5 SCC 54, In para 56, it was held as follows :

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56.xxx

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(b) An order of detention to which Section 12-A is applicable as well as an order of detention to which Section 12-A was not applicable can serve as the foundation, as the basis, for applying SAFEMA to such detenu and to his relatives and associates provided such order of detention does not attract any of the subclauses in the proviso to Section 2(2)(b). If such detenu did not choose to question the said detention (either by himself or through his next friend) before the Court during the period when such order of detention was in force, — or is unsuccessful in his attack thereon — he, or his relatives and associates cannot attack or question its validity when it is made the basis for applying SAFEMA to him or to his relatives or associates.

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(4) xxxx

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(5) The application of SAFEMA to the relatives and associates [in clauses (c) and (d) of Section 2(2)] is equally valid and effective inasmuch as the purpose and object of bringing such persons within the net of SAFEMA is to reach the properties of the detenu or convict, as the case may be, wherever they are, howsoever they are held and by whomsoever they are held. They are not conceived with a view to forfeit the independent properties of such relatives and associates as explained in this judgment. The position of ‘holders’ dealt with by clause (e) of Section 2(2) is different as explained in the body of the

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judgment.”

¶173

In this case, the competent authority as well as the Appellate Tribunal have found that the properties in question are illegally acquired, coming under Section 2(2) (b) of the Act.

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In the above circumstances, I do not find any reason to interfere with the orders Exts.P9, P11 or P12. The Original Petition is accordingly dismissed.

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Sd/-

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(P.V.ASHA, JUDGE)

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rtr/

K.Sridevi Amma v. Appellate Tribunal

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K.Sridevi Amma v. Appellate Tribunal

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