Partly allowed

Saifudeen v. the Competent Authority, Smugglers and Foreign Exchange Manipulators

Kerala HC5 Dec 2016WP(C)/34072/2015

Case brief

AI extract

What is this about?

The court dismissed the writ petition seeking to quash a forfeiture notice under the NDPS Act. It held that the petitioner must exhaust statutory remedies before approaching the court. Regarding seized cash, the court directed the Sessions Court to decide its disposal before the demonitization date.

What did the court decide?

Petitioner directed to approach Competent Authority with explanation within 30 days. Sessions Court directed to decide on cash disposal within 3 weeks.

Saifudeen Vs the Competent Authority, Smugglers and Foreign… — Money Laundering | 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 MR. JUSTICE RAJA VIJAYARAGHAVAN V

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MONDAY, THE 5TH DAY OF DECEMBER 2016/14TH AGRAHAYANA, 1938

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WP(C).No. 34072 of 2015 (H) ----------------------------

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PETITIONER:

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SAIFUDEEN, S/O.MONU,HOUSE NO.XIII/436,POKKAKKILLATH HOUSE, ERANELLOR VILLAGE,PERUMANNU DESOM,KUNNAMKULAM-680501.

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BY ADV. SRI.P.K.ANIL

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RESPONDENTS:

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1. THE COMPETENT AUTHORITY, SMUGGLERS AND FOREIGN EXCHANGE MANIPULATORS, (FORFEITURE OF PROPERTY)ACT,1976 & NARCOTIC DRUGS AND PSYCHOTROPIC SUBSTANCES ACTS 1985,UTSAV,64/1,G.N.CHETTY ROAD, T.NAGAR,CHENNAI-600017.

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2. THE DEPUTY DIRECOTOR OF INCOMETAX(INV), AAYAKAR BHAVAN,S.T.NAGAR,THRISSUR-680 001.

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3. GOVERNMENT OF INDIA, MINISTRY OF FINANCE,DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA,NEW DELHI-110001.

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R1&3 BY ADV. SRI.B.RAMACHANDRAN, CGC R2-R3 BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX R2-R3 BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) R BY SRI.N.NAGARESH, ASSISTANT SOLICITOR GENERAL

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 05-12-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 34072 of 2015 (H) ----------------------------

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APPENDIX

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PETITIONER'S' EXHIBITS

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P1 TRUE COPY OF THE FIRST INFORAMATION REPORT IN CR.2518/2012

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P2 TRUE COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER DATED 21.7.2015

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P3 TRUE COPY OF THE NOTICE ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER ON 20.7.2015.

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RESPONDENTS' EXHIBITS

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ANNEXURE R2(A): COPY OF THE REPORT OF THE DEPUTY DIRECTOR OF INCOME TAX (INV), THRISSUR.

TRUE COPY

P.A. TO JUDGE.

RAJA VIJAYARAGHAVAN.V., J

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- - - - W.P.(C). No. 34072 of 2015

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- - - - Dated 5^th December, 2016

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JUDGMENT

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1.This petition is filed with a prayer to quash Exhibit P2

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notice issued by the competent authority under Section 68H(1) of the Narcotic Drugs and Psychotropic Substances Act , 1985.

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2.Facts in brief :-

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For his involvement in drug related crimes a person by name Gireeshkumar @ Alibhai was convicted by a competent Court in Kuwait. The aforesaid Gireesh Kumar is alleged to have acquired various assets in this country using proceeds of various crimes committed by him. The petitioner is alleged to be one of his associates. On the basis of reliable source information, the residential premise of the petitioner was searched and a sum of Rs.53,80,900/- in cash, along with two passports and gold ornaments were found. This cash seized is said to be the illegal proceeds of the Crime

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W.P.(C) No.34072/2015

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committed by Gireeh Kumar @ Alibhai. Consequently, Crime No. 2518 of 2012 of the Kunnamkulam Police Station was registered alleging offences punishable under Sections 468, 471, 419 of the IPC, Section 12(1) (b) of the Passport Act, 1967 and Sections 27A and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (hereinafter referred to as the 'NDPS Act' for short). The petitioner herein is the first accused in the aforesaid crime.

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3.The Police have passed freezing orders in respect of the properties which included the cash seized from the possession of the petitioner.

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4.While the matter was pending as aforesaid, Ext.P2 notice was issued under Section 68H(1) of the NDPS Act by the competent authority calling upon Gireeshkumar @ Alibhai, the 2^nd accused in the aforesaid crime, to indicate the source of income, earnings or assets out of which or by means of which he had acquired the properties. It is stated in the above notice that the

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W.P.(C) No.34072/2015

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authority had reason to believe that various assets which stands in the name of Alibhai , which include the cash seized from the possession of the petitioner are illegally acquired properties. Copy of the said notice was also served on the petitioner. It is aggrieved by the above notice that this petition is filed with a prayer to quash the same .

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5.Heard the learned counsel appearing for the petitioner

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as well as the Assistant Solicitor General for respondents 1 and 3 and the Standing Counsel for the 2^nd respondent.

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6.According to the learned counsel appearing for the petitioner, Exhibit P2 notice cannot be sustained under law and the cash seized from his possession cannot be the subject matter of forefeiture as the petitioner stands exempted from the ambit of Section 68H of the NDPS Act. Referring to Clause (cc) of Sub Section (2) of Section 68A, it is submitted by the learned counsel that it is undisputed that the petitioner has been arrested

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W.P.(C) No.34072/2015

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and he is accused in the crime. In view of the said fact, proviso to sub-clause (2) to Section 68H will be attracted and on that sole ground itself the notice is liable to be quashed in so far as it concerns the cash seized from the possession of the petitioner.

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7.The learned counsel would further submit that enough materials are in his possession to show that the currency seized from his possession was legally acquired and that his implication in the above matter, on the premise that he is an associate of Alibhai cannot be sustained. Referring to the criminal proceedings pending against him, it is contended that though the crime was registered in the year 2012, the final report has not been laid till date. According to the Counsel, this would vindicate his assertion that the allegations are false. It is urged that the proceedings pending before the Principal Sessions Court will have precedence over the initiation of proceedings against the petitioner under Chapter V of the NDPS Act in view of Section 68Z

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of the NDPS Act. According to the leared Counsel, as and when the petitioner is acquitted or discharged from the charges of criminal prosecution, the cash is bound to be refunded back to him and if that be the case, the notice of forfeiture issued to the petitioner by the competent authority cannot be sustained.

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8.While the proceedings were pending, I.A. No 19091 of 2016 was filed by the petitioner with a prayer to release the cash to the petitioner by substituting the same with the title deeds of immovable properties for the same value in view of the demonitization drive. According to the learned Counsel, if urgent orders are not passed the sum of Rs.53,80,900/- seized from the possession of the petitioner would be rendered invalid.

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9.The learned Assistant Solicitor General on the other hand refuted the submission of the learned counsel and submitted that the contention of the petitioner that he is entitled to the exemption provided under sub clause

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(2) of proviso (c) of Section 68H cannot be sustained.

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W.P.(C) No.34072/2015

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It is submitted by the learned Assistant Solicitor General that the competent authority under Section 68D(1) of the Act, on the basis of sufficient and relevant materials had reason to believe that the properties which were seized from the possession of the petitioner was illegally acquired within the meaning of clause (g) to Section 68B of the Act. It is further urged that the petitioner is an associate of Gireeshkumar @ Alibhai and in addition to falling under Section 68A sub clause (2) (cc), the petitioner would also fall within the ambit of Section 68(2) sub clause (e) of the NDPS Act and since the petitioner has dual capacities, the issuance of forfeiture notice is legal and valid. Referring to the stringent provisions of the Act, it is submitted that the intention of the legislature was to provide for forfeiture of property which was illegally acquired and in the facts and circumstances, the contention raised by the petitioner has absolutely no basis.

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10.The learned Standing Counsel appearing for the 2^nd

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respondent has also filed a statement wherein it is stated that an enquiry as requested by the competent authority under the NDPS Act was undertaken and it was revealed that the petitioner herein had failed to provide clear source of income. It is submitted that he is liable to be proceeded against under Section 147 of the Income Tax Act for the relevant period.

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11.I have considered the rival submissions and have taken note of the materials produced. What is under challenge is Ext.P2 notice issued under Section 68H (1) of the NDPS Act issued to Gireeshkumar @ Alibhai. The specific case of respondents 1 and 3 is that the petitioner was having in his possession large cache of illegally acquired money being proceeds of the crime committed by Alibhai @ Gireesh Kumar, a convictee. It is the specific case of the petitioner that the notice of forfeiture issued against him cannot be sustained as he is exempted from the provisions of the Act as he is a person who was arrested and also he is an accused in

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the aforesaid crime which was registered by the police on the basis of allegations. It is also the submission of

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the learned counsel that the cash seized has been produced before the competent Sessions Court and the same is pending consideration.

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12.After having considered the rival submissions and after going through the materials on record, I am of the considered view that these are aspects that are to be considered by the competent authority under the Act. Admittedly, only a show cause notice was issued to the petitioner. Section 68 I of the Act clearly provides that the competent authority will have to consider the explanation offered to the show cause notice and after considering the materials and after giving an opportunity to the person affected (and in a case where the person affected holds any property specified in the notice through any other person, to such other person also) record appropriate findings on facts. Proviso to sub-clause (3) of Section 68 I exempts a person

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referred to in clause (cc) of sub-section (2) of section 68 A or relative of a person referred to in that clause or associate of a person referred to in that clause. Against the findings of the competent authority an appellate remedy is also provided. In that view of the matter, I am of the considered view that the petitioner ought to have exhausted his remedies under the statute before approaching this Court under Article 226 of the Constitution of India. As the matter was stayed by this Court and taking note of the peculiar nature of the instant case, I am of the view that the petitioner can be permitted to raise all his contentions before the Competent Authority.

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13.However, till matters are finally disposed off, necessary orders are to be passed in respect of the cash which is produced before the Principal Sessions Court, Thrissur. It is submitted by the learned Counsel that the currency seized from the possession of the petitioner is of 500 and 1,000 rupee denominations. The

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currency is now in the custody of the Sessions Court, Thrissur. In view of the demonitization, the currency will cease to have any value and it is prayed that necessary directions be issued to deposit the currency in the Treasury or in a nationalised Bank subject to final result in the proceedings. This prayer is opposed by the learned Assistant Solicitor General and it is submitted that the seized property is to be administered by the Administrator who is specially empowered to perform the functions of the Administrator. The learned counsel for the petitioner, on the other hand, submitted that the proceedings pending before the Court of Sessions will have precedence over the initiation of proceedings under the NDPS Act and therefore, the property cannot be entrusted with management to the administrator appointed under the Act.

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14.Having regard to the facts and circumstances, I am of the view that the learned Sessions Court, before which the cash has been produced, can be directed to consider

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the question of deposit of the money seized in the appropriate manner. I find merit in the submission of the learned counsel that the cash will be rendered valueless, if the same is not deposited before the Treasury or the Bank, as the case may be. If any such application is filed, appropriate orders shall be passed by the learned Sessions Judge expeditiously, at any rate, within a period of three weeks from the date of receipt of a copy of this order.

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15.In the result, this petition is disposed of directing the petitioner to approach the competent authority and file proper explanation to Exhibit P2 show cause notice issued to him. If explanation to Exhibit P2 show cause notice is filed within a period of 30 days from the date of this Order, the competent authority shall consider the explanation offered by the petitioner and pass appropriate orders on its merits within a period of two months from the date of filing of the explanation. In so far as the cash of Rs.53,80,900/- seized from the

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possession of the petitioner is concerned, the petitioner is permitted to file an application before the Court below to deposit the same in the Treasury or before a nationalised Bank, as the case may be. The respondents 1 and 3 can raise their objection as per law. The learned Sesssions Judge shall consider the same and pass appropriate orders on its merits and in accordance with law, expeditiously, at any rate, within a period of three weeks from the date of production of a copy of this order.

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Sd/-

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RAJA VIJAYARAGHAVAN.V., JUDGE

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kp/-7.12.16

Saifudeen v. the Competent Authority, Smugglers and Foreign Exchange Manipulators

Case brief

What is this about?

What did the court decide?

Saifudeen v. the Competent Authority, Smugglers and Foreign Exchange Manipulators

Case brief

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