2014 (3) TMI 210 - HC - FEMA

Forfeiture of property - Joint ownership being wives - scope of the term relative and the illegally acquired property - validity notice issued u/s 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property ) Act 1976 (SAFEMA) - principles of natural justice - validity of composite orders - Proceeding under COFEPOSA - Held that - or issuing notice under Section 6(1), the competent authority need not come to a conclusion that the properties under the said notice are illegally acquired properties. Such conclusion is warranted only after hearing the person to whom Section 6(1) notice is issued. But what is necessary is that the competent authority must have reason to believe that all or any of such properties are illegally acquired properties, for the purpose of issuing notice under Section 6(1). If the competent authority has reasons to believe that the properties under dispute were acquired out of illegal sources of income such satisfaction is enough to call upon the concerned person to show cause. Insufficiency of the reasons recorded is different from no reasons recorded. Whether reasons stated in the notice would satisfy the requirement is the question not for this Court to go into it, as the same is the subjective satisfaction of the competent authority. The notice issued under Section 6(1) is in accordance with law and does not vitiate the proceedings. - Decided against the petitioners. Principle of natural justice - Held that - Apex Court has found that non-supply of documents relied on by the respondent therein will not amount to violation of principles of natural justice, where there is substantial compliance of natural justice and no prejudice is caused on account of non-supply. It is found by the competent authority that wives have no independent sources of income and they have acquired the properties only through the illegal income derived by the husband/detenu. By perusing the passports filed by the husband, the competent authority has come to the conclusion that during the relevant period the detenu was not employed in Dubai but he was available only in India and that the remittances during that period have been made not from his own earnings made at Dubai. Thus, in the absence of any other materials placed before the competent authority, he has rightly come to the conclusion that those remittances were made not through the legal source of income derived by the detenu. The petitioners have miserably failed to discharge their burden to disprove the said contention as required under Section 8 of the said Act. - Decided against the petitioners - all petitions dismissed.

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. Violation of principles of natural justice in the proceedings.
3. Validity of the composite order passed by the competent authority under Section 7(1) of the Act.
4. Necessity for interference with the order of the Appellate Tribunal passed under Section 12 of the Act.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 6(1):

The petitioners contended that the notices issued on 29.11.1990 did not satisfy the mandatory requirements under Section 6(1) of the Act. They argued that the notices did not expressly state that the money for acquiring the properties flowed from the detenu, and that the reasoning provided was insufficient. The court found that the notices issued by the competent authority were valid and in accordance with law. The court emphasized that these were show cause notices, giving the petitioners ample opportunity to disprove the belief of the competent authority. The court also noted that the term "reason to believe" in the notice is a prima facie belief and not a final determination by the competent authority.

2. Violation of Principles of Natural Justice:

The petitioners argued that the competent authority relied on a statement given by the detenu on 6.2.1984 without furnishing a copy to the petitioners, thus violating the principles of natural justice. The court found that the petitioners were given sufficient opportunity to present their case and documents. The court noted that the competent authority's conclusion was based on the verification of the detenu's passports, which showed that he was in India during the period of remittances, and not solely on the statement given on 6.2.1984. Therefore, non-furnishing of the statement did not vitiate the proceedings.

3. Validity of the Composite Order Passed by the Competent Authority:

The court observed that the petitioners were given adequate opportunities to present their case before the competent authority, who passed a composite order after considering their objections and documents. The competent authority found that the petitioners failed to prove the legal sources of income for acquiring the properties. The court upheld the composite order, noting that the petitioners did not challenge the validity of the Section 6(1) notice before the competent authority or the appellate authority. The court concluded that the notice and the subsequent composite order were valid and in accordance with law.

4. Necessity for Interference with the Order of the Appellate Tribunal:

The petitioners contended that the Appellate Tribunal did not consider additional evidence they sought to present. The court found that the Tribunal rightly rejected the additional evidence, as the petitioners were given adequate opportunities before the competent authority. The Tribunal also confirmed the findings of the competent authority, noting that the detenu was in India during the period of remittances and could not have earned the money legally in Dubai. The court held that the Tribunal's order did not warrant interference, as it was based on proper appreciation of facts and law.

Conclusion:

The court dismissed the writ petitions, holding that the notices issued under Section 6(1) were valid, there was no violation of principles of natural justice, the composite order passed by the competent authority was valid, and there was no need to interfere with the order of the Appellate Tribunal. The court emphasized that the burden of proving that the properties were not illegally acquired lay on the petitioners, which they failed to discharge.

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