2017 (11) TMI 265 - HC - Indian Laws

Offence under SAFEMA - validity of detention orders - Held that - In this case, the entire basis of the notice appears to be a detention, the challenge to which was declined. Here, it is important to remember that the detenue s access to Article 226 of the Constitution of India was doubted; nine High Courts held that access existed. The Supreme Court, however overturned their rulings in ADM Jabalpur v Shivakant Shukla 1976 (4) TMI 211 - SUPREME COURT , in its majority judgment. This meant that even petitions challenging validity of detention orders, on the ground that no valid rationale for detention existed under the COFEPOSA could not be entertained. The internal emergency that existed at the time, was lifted; liberties that were taken away or suspended, were restored. And yet, late Piare Lal s troubles were far from over. The wheels of bureaucracy grind- inexorably. For Piare Lal (the father of two petitioners and husband of the third and their common predecessor in interest) there appeared to be no respite or exit, from the black hole which he entered into, on account of the notices issued under SAFEMA. The rationale for that notice was a valid COFEPOSA detention (in his case, its legality was undisputable, because he was denied the liberty of challenging it). The other rationale was suspicion, based on rejection of the income tax authorities orders. The importance of establishing a link- howsoever rudimentary, but real nevertheless, between an individual and some smuggling activities, can be the only basis of a valid reason to believe under Section 6(1) of the Act. Otherwise, there is a danger of SAFEMA or any other authority concluding that since the subject is unable to establish the legitimacy of his source of income, it must be on account of smuggling. In other words, suspicion is elevated into certainty or a finding. Clearly, that occurred in the facts of this case. The court is therefore of the opinion that the notices initiating the proceedings, in these cases were vitiated and unsustainable. The Union s argument regarding Kamla Vati s acquisition of property is unpersuasive. The Benami Properties (Prohibition) Act, 1988 was not in existence, when the notice was issued; in any case, even if it were assumed that the properties were acquired with Piare Lal s funds, nevertheless, the same infirmity, i.e absence of any link with smuggling activities, applies to those properties too. The argument therefore, fails. It is held that in view of the above conclusions, the appeals are to fail.

Summary

Issues Involved:
1. Validity of the reasons to believe recorded by the competent authority under Section 6(1) of SAFEMA.
2. Connection between the alleged smuggling activities and the acquisition of properties.
3. Burden of proof under Section 8 of SAFEMA.
4. Validity of the orders of forfeiture passed by the competent authority and the appellate tribunal.

Detailed Analysis:

1. Validity of the reasons to believe recorded by the competent authority under Section 6(1) of SAFEMA:
The Union of India challenged the judgment that invalidated the reasons to believe recorded by the competent authority. The competent authority had issued a notice under Section 6 of SAFEMA based on the belief that the properties were illegally acquired. The court observed that the reasons recorded did not establish a nexus between the alleged smuggling activities of Piare Lal and the acquisition of properties. It was noted that the reasons to believe should be recorded in writing and should indicate that the property sought to be forfeited was illegally acquired. The court found that the reasons recorded were insufficient, and thus, the notice issued under Section 6(1) of SAFEMA was not validly issued.

2. Connection between the alleged smuggling activities and the acquisition of properties:
The writ petitioners argued that there was no nexus between the alleged smuggling activities of Piare Lal and the acquisition of properties. The competent authority's reasons to believe did not establish any connection between the income derived from smuggling and the scheduled properties. The court emphasized the importance of establishing a link between smuggling activities and the acquisition of assets. The absence of such a link rendered the proceedings vitiated and unsustainable. The court referred to previous judgments, including Fatima Mohammed Amin and P.P. Abdulla, which highlighted the need for a connection between smuggling activities and the acquisition of properties for SAFEMA proceedings to be valid.

3. Burden of proof under Section 8 of SAFEMA:
The Union of India argued that Section 8 of SAFEMA shifts the burden of proving that the properties were not illegally acquired onto the person affected. However, the court held that this burden only comes into play if a valid notice under Section 6(1) is issued. Since the notice in this case was found to be invalid due to the lack of a nexus between smuggling activities and the acquisition of properties, the burden of proof did not shift to the respondents. The court reiterated that the basic premise for shifting the burden of proof is the issuance of a valid notice, which was missing in this case.

4. Validity of the orders of forfeiture passed by the competent authority and the appellate tribunal:
The court found that the orders of forfeiture passed by the competent authority and the appellate tribunal were based on invalid reasons to believe and an invalid notice under Section 6(1) of SAFEMA. Consequently, the orders of forfeiture dated 28.11.1994, the appellate tribunal's decision dated 08.03.1996, and the rectification order dated 08.05.1996 were quashed. The court dismissed the appeals filed by the Union of India, holding that the initiation of SAFEMA proceedings and the subsequent orders were unsustainable due to the lack of a valid nexus between the alleged smuggling activities and the acquisition of properties.

The judgment highlighted the necessity of proper application of mind and subjective satisfaction of the competent authority in recording reasons to believe under Section 6(1) of SAFEMA. It emphasized that the absence of a link between smuggling activities and the acquisition of properties renders the proceedings and subsequent orders invalid. The appeals were dismissed without any order on costs.