2008 (7) TMI 852 - SC - Customs

Interpretation and application of Chapter VA of the Narcotic Drugs and Psychotropic Substances Act, 1985 providing for forfeiture of property derived from or used in illicit traffic Held that - Dealing in narcotics is a social evil that must be curtailed or prohibited at any cost. Chapter VA seeks to achieve a salutary purpose. But, it must also be borne in mind that right to hold property although no longer a fundamental right is still a constitutional right. It is a human right. The provisions of the Act must be interpreted in a manner so that its constitutionality is upheld. The validity of the provisions might have received constitutional protection, but when stringent laws become applicable as a result whereof some persons are to be deprived of his/her right in a property, scrupulous compliance of the statutory requirements is imperative. For the reasons aforementioned, the impugned judgments cannot be sustained. Appeal allowed.

Issues Involved:
1. Interpretation and application of Chapter VA of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act).
2. Validity of the proceedings initiated for forfeiture of property under the NDPS Act.
3. Compliance with the statutory requirements for initiating forfeiture proceedings.
4. Burden of proof in forfeiture proceedings under the NDPS Act.
5. Application of mind by the competent authority before issuing a show cause notice.

Detailed Analysis:

1. Interpretation and Application of Chapter VA of the NDPS Act:
The judgment revolves around the interpretation and application of Chapter VA of the NDPS Act, which deals with the forfeiture of property derived from or used in illicit traffic. The court emphasized that the property sought to be forfeited must have a direct nexus with the income derived from the contravention of any provision of the Act. The definition of "illegally acquired property" under Section 68B(g) and the procedural requirements under Sections 68H and 68I were scrutinized.

2. Validity of the Proceedings Initiated for Forfeiture of Property:
The court examined whether the proceedings initiated for the forfeiture of property were valid. The core question was whether the statutory requirements for initiating a valid proceeding were met. The court noted that the competent authority must have "reason to believe" that the properties are illegally acquired, and such reasons must be recorded in writing. The court found that the show cause notices issued did not contain specific reasons to satisfy the statutory requirements, thus invalidating the proceedings.

3. Compliance with the Statutory Requirements for Initiating Forfeiture Proceedings:
The court emphasized the importance of compliance with statutory requirements before initiating forfeiture proceedings. It highlighted that the competent authority must form an opinion based on materials gathered during the investigation and must record reasons for the belief that the properties are illegally acquired. The court found that the competent authority failed to demonstrate proper application of mind and did not have sufficient material to justify the issuance of show cause notices.

4. Burden of Proof in Forfeiture Proceedings under the NDPS Act:
The judgment clarified that the burden of proof lies on the person affected to prove that the property specified in the notice is not illegally acquired. However, this burden arises only if a valid proceeding has been initiated. Since the show cause notices were found to be invalid, the competent authority did not have the jurisdiction to shift the burden of proof to the appellants.

5. Application of Mind by the Competent Authority Before Issuing a Show Cause Notice:
The court scrutinized the application of mind by the competent authority before issuing the show cause notices. It was found that the inclusion of unrelated properties and the lack of specific reasons in the notices demonstrated non-application of mind. The court held that proper application of mind is imperative, and the competent authority must base its "reason to believe" on concrete materials.

Conclusion:
The judgment concluded that the impugned judgments of the lower courts could not be sustained due to the failure to comply with statutory requirements and the lack of proper application of mind by the competent authority. The court set aside the judgments and allowed the appeals, granting the respondents the liberty to initiate fresh proceedings in accordance with the law. The judgment underscores the necessity of scrupulous compliance with statutory requirements when dealing with stringent laws that affect property rights.

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