2006 (12) TMI 139 - SC - Customs

In the present case the contents of the notice even if taken on face value do not disclose any sufficient reason warranting the impugned action against the appellant as in our opinion the condition precedent for exercising the power under the Act did not exist. Hence the impugned orders cannot be sustained. In the present case in the notice dated 15-3-1988 issued to the appellant under Section 6(1) of the Act (copy of which is annexed as Annexure P1 to this appeal) it has not been alleged therein that there is any such link or nexus between the property sought to be forfeited and the alleged illegally acquired money of the appellant. As the said notice dated 15-3-1988 has to be held to be illegal appeal allowed and the impugned orders of the High Court and the concerned Authorities are set aside. 11. Hence in view of the decision of this Court in Fatima Mohd. Amina s case (supra) the said notice dated 15-3-1988 has to be held to be illegal. Consequently the order passed in pursuance of the said notice is declared as null and void. The appeal is therefore allowed and the impugned orders of the High Court and the concerned Authorities are set aside. No costs.

Summary

Issues:
Appeal against forfeiture of property under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.

Analysis:
The case involved an appeal against the forfeiture of property under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. The appellant was convicted under the Customs Act, 1962 for the seizure of foreign gold bars. The appellant's properties were alleged to have been illegally acquired, leading to a notice under Section 6(1) of the Act for forfeiture. The authority found the appellant's explanations insufficient, resulting in the forfeiture of the property to the Government of India. The appellate authority upheld this decision, which was challenged in a writ petition. The Single Judge allowed the petition, citing a Supreme Court decision that required a link between the property and illegally acquired money for forfeiture. However, a Division Bench of the High Court overturned this decision, leading to the current appeal before the Supreme Court.

The appellant argued that the reasons for belief by the competent authority, as required under Section 6(1) of the Act, must be recorded in writing. The Court emphasized the strict construction of provisions for confiscation, requiring strict compliance for legality. It was noted that the reasons for belief were not produced before the Court, either in the counter-affidavit or through annexation of the notice containing the reasons. The Court reiterated that confiscation orders must be stringent and strictly complied with.

The Supreme Court found that the case fell within the precedent set by a previous decision, where the notice under Section 6(1) did not disclose sufficient reasons for the forfeiture action. The Court highlighted that the notice failed to establish a link or nexus between the property and the alleged illegally acquired money of the appellant. Therefore, based on the precedent and the lack of essential elements in the notice, the Court declared the notice and subsequent orders as null and void. Consequently, the appeal was allowed, and the impugned orders of the High Court and the concerned authorities were set aside, with no costs imposed.