2010 (8) TMI 795 - HC - Indian Laws

Whether competent authority, in the notice issued under 6(1) of the Act, had not indicated the reasons which made him to believe that the properties are illegally acquired properties in terms of the Act? Whether the Chartered Accountant who appeared on behalf of the petitioner had produced all the records showing the income of the petitioner from out of which the burden of the petitioner under Section 8 of the Act had been discharged? Held that - The right to hold a property, though no more a fundamental right, still, is a constitutional right under Article 300A of the Constitution of India. Depriving a citizen of his legally acquired property otherwise than in accordance with law, will be unconstitutional. Therefore, every endeavour should be made to find as to whether the properties are really illegally acquired properties from out of the earnings of the convict. The nexuses, as discussed above, should be established. It is needless to point out that while holding such an enquiry, for the purpose of deciding the above issues, the competent authority is expected to strictly adhere to the principles of natural justice also. In this case, in my considered opinion, the competent authority has given a go by to all the above basic principles resulting in injustice to the petitioner. First of all, a Chartered Accountant is not a competent person to practise as a counsel to represent the petitioner before the competent authority. In view of the above, the writ petition is allowed; the impugned orders are set aside; and the matter is remitted back to the 2nd respondent who shall hold a fresh enquiry as indicated above , afford sufficient opportunity to the petitioner to let in evidence, both oral and documentary, if any, and pass final order in accordance with law.

Issues Involved:
1. Validity of the notice issued under Section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.
2. Requirement of recording reasons for belief in writing by the competent authority.
3. Necessity of issuing notice to the convict under Section 6(2) of the Act.
4. Nexus between the properties and the alleged illegal earnings of the convict.
5. Burden of proof under Section 8 of the Act.
6. Adherence to principles of natural justice by the competent authority.

Detailed Analysis:

1. Validity of the Notice under Section 6(1):
The petitioner contended that the notice issued under Section 6(1) did not indicate the reasons for the belief that the properties were illegally acquired. The court referred to the Supreme Court judgment in *Kesar Devi v. Union of India* which states that the competent authority must have "reason to believe" that the properties are illegally acquired, and these reasons must be recorded in writing. The court found that the competent authority had indeed recorded such reasons on 28-7-1988, detailing the dates of possession and costs of the properties, thus satisfying the requirements of Section 6(1). Therefore, the notice was held valid.

2. Recording Reasons for Belief in Writing:
The petitioner argued that the competent authority failed to record the belief in writing before issuing the notice. The court examined the records and confirmed that the competent authority had documented the reasons for the belief, including references to the convict and the properties. The court held that the detailed documentation indicated proper application of mind by the competent authority, thereby rejecting the petitioner's contention.

3. Necessity of Issuing Notice to the Convict:
The petitioner claimed that the notice under Section 6(2) should have been issued to the convict. The court referred to the Kerala High Court's judgment in *Saitha and Others v. The Competent Authority* and the Supreme Court's confirmation that non-issuance of notice to the convict does not vitiate the proceedings against the relative. The court held that the notice served on the petitioner was sufficient and sustainable.

4. Nexus Between Properties and Illegal Earnings:
The petitioner argued that there was no prima facie material to show a nexus between the properties and the convict's illegal earnings. The court noted that under Section 8 of the Act, there is a presumption that properties of the relatives of the convict are illegally acquired. The petitioner failed to rebut this presumption with sufficient evidence. The court found that the competent authority had drawn a reasonable presumption based on the unexplained investments and the Voluntary Disclosure Scheme, which the petitioner failed to counter.

5. Burden of Proof Under Section 8:
The court emphasized that the burden of proof to show that the properties were not illegally acquired lies on the petitioner. The petitioner had not provided sufficient evidence to discharge this burden. The court criticized the competent authority for not allowing the petitioner to present oral or documentary evidence properly, highlighting the need for adherence to principles of natural justice.

6. Adherence to Principles of Natural Justice:
The court found that the competent authority failed to follow the principles of natural justice by not permitting the petitioner to present evidence adequately. The court stressed the importance of these principles, as they are fundamental rights under Articles 14 and 21 of the Constitution of India. The court concluded that the competent authority's approach resulted in injustice to the petitioner.

Conclusion:
The writ petition was allowed, and the impugned orders were set aside. The matter was remitted back to the competent authority for a fresh inquiry, with directions to afford the petitioner an opportunity to present evidence and to adhere to the principles of natural justice. The competent authority was directed to complete the exercise within three months.

← Previous Next →