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1994 (5) TMI 235 - SC - FEMAWhether Parliament was not competent to enact COFEPOSA and SAFEMA? Whether an order of detention under Section 3 read with Section 12-A of COFEPOSA made during the period of emergency proclaimed under Article 352(1) of the Constitution of India, with the consequent suspension of Article 19 and during which period the right to move the court to enforce the rights conferred by Articles 14, 21 and 22 was suspended can form the foundation for taking action under Section 6 of SAFEMA against the detenu, his relatives and associates? Whether the application of SAFEMA to the relatives and associates of detenus is violative of Articles 14, 19 and 21? Whether the inclusion of the said Act in the Ninth Schedule cures such violation, if any? Whether Section 5-A of COFEPOSA is violative of clause (5) of Article 22? Held that - Appeal dismissed. Parliament was perfectly competent to enact both the COFEPOSA and the SAFEMA. No opinion on the validity of the 39th and 40th Amendment Acts to the Constitution of India placing COFEPOSA and SAFEMA in the Ninth Schedule as assume them to be good and valid. No arguments have also been addressed with respect to the validity of 42nd Amendment Act to the Constitution either. An order of detention made under Section 3 of COFEPOSA, which was governed by Section 12-A thereof is yet an order of detention for the purpose of and within the meaning of Section 2(2)(b) of SAFEMA. 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 sub-clauses in the proviso to Section 2(2)(b). The definition of illegally acquired properties in clause (c) of Section 3 of SAFEMA is not invalid or ineffective. 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. Section 5-A of COFEPOSA is not invalid or void. It is not violative of clause (5) of Article 22. Petitioners have failed to establish that any of the provisions of SAFEMA are violative of Articles 14, 19 or 21 apart from the protection they enjoy by virtue of the inclusion of the Act in the Ninth Schedule to the Constitution.
Issues Involved:
1. Competence of Parliament to enact COFEPOSA and SAFEMA. 2. Validity of detention orders under COFEPOSA during the emergency for action under SAFEMA. 3. Testing the validity of detention orders with reference to the law at the time of making the order versus the law at the time of issuing the show-cause notice under SAFEMA. 4. Definition of "illegally acquired property" under SAFEMA and its compliance with Articles 14, 19, and 21. 5. Application of SAFEMA to relatives and associates of detenus and its compliance with Articles 14, 19, and 21. 6. Validity of Section 5-A of COFEPOSA in light of Article 22(5). Detailed Analysis: Issue 1: Competence of Parliament to Enact COFEPOSA and SAFEMA The court held that Parliament was competent to enact COFEPOSA and SAFEMA. COFEPOSA is related to Entry 3 of List III and Entry 9 of List I, dealing with the security of the State and India respectively. SAFEMA is designed to protect the economy and discourage economic violations, and thus Parliament has the competence to enact these laws. Issue 2: Validity of Detention Orders Under COFEPOSA During the Emergency for Action Under SAFEMA The court found that detention orders made under Section 3 of COFEPOSA during the emergency, governed by Section 12-A, are valid for the purpose of SAFEMA. The orders were valid when made and continued to be so until the cessation of the Presidential Order. These orders can serve as the foundation for action under SAFEMA against detenus, their relatives, and associates. Issue 3: Testing the Validity of Detention Orders The validity of detention orders should be tested with reference to the law obtaining at the time of making the said order and during its period of operation. The court held that a person who did not challenge the detention order during the emergency or who challenged it unsuccessfully cannot challenge it later when it is made the basis for SAFEMA action. Issue 4: Definition of "Illegally Acquired Property" Under SAFEMA The definition of "illegally acquired property" in Section 3(1)(c) of SAFEMA is not invalid. The definition is wide but justified given the nature of the activities it seeks to curb. The court found no substance in the argument that the definition is arbitrary or discriminatory. The inclusion of SAFEMA in the Ninth Schedule provides it immunity from challenges based on Part III of the Constitution. Issue 5: Application of SAFEMA to Relatives and Associates The application of SAFEMA to relatives and associates of detenus is valid. The purpose is to ensure that properties acquired by detenus through illegal means, even if held in the names of relatives or associates, do not escape forfeiture. The court clarified that the Act targets properties traceable to the detenu, not the independent properties of relatives or associates. Issue 6: Validity of Section 5-A of COFEPOSA Section 5-A of COFEPOSA is not invalid. It is not violative of Article 22(5). The section creates a legal fiction that each ground of detention is a separate order, thus sustaining the detention order even if one or more grounds are vague, non-existent, or irrelevant. Conclusion: 1. Parliament was competent to enact COFEPOSA and SAFEMA. 2. Detention orders under COFEPOSA during the emergency are valid for SAFEMA action. 3. Validity of detention orders should be tested with reference to the law at the time of making the order. 4. The definition of "illegally acquired property" under SAFEMA is valid. 5. Application of SAFEMA to relatives and associates is valid. 6. Section 5-A of COFEPOSA is valid and not violative of Article 22(5). All writ petitions, transferred cases, and appeals were disposed of accordingly, and the proceedings under SAFEMA should be concluded with all deliberate speed.
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