2014 (2) TMI 715 - SC - Customs

Legality of notice u/s 6 and Forfeiture of properties u/s 7 of Smugglers and Foreign Exchange Manipulators (Forefeiture of Property) Act, 1976 (SAFEMA) - Violation of principle of natural justice - Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred to as the COFEPOSA ) - Reasons were not communicated to the appellant - whether such forfeiture violated Article 20 of the Constitution of India - Held that - there is no express statutory requirement to communicate the reasons which led to the issuance of notice under Section 6 of the Act. - the reasons, though not initially supplied alongwith the notice dated 4.3.1977, were subsequently supplied thereby enabling the appellant to effectively meet the case of the respondents. - an order of forfeiture is an appealable order where the correctness of the decision under Section 7 to forfeit the properties could be examined. - Decided against the appellant. Forfeiture of illegally acquired property - The submission of the appellant is that since the Act provides for a forfeiture of the property of the appellant on the ground that the appellant was detained under the COFEPOSA, the proposed forfeiture is nothing but a penalty within the meaning of the expression under Article 20 of the Constitution - Held that - the properties of persons belonging to any one of the said five categories only could be forfeited under the Act. Even with reference to the properties held by any one falling under any of the abovementioned five categories, their entire property cannot be forfeited except the property which is determined to be illegally acquired property as defined under section 3(c) of the Act. Of all the five categories of persons to whom the Act is made applicable, only one category specified under section 2(2)(a) happens to be of persons who are found guilty of an offence under one of the enactments mentioned therein and convicted. The other four categories of persons to whom the Act is applicable are persons unconnected with any crime or conviction under any law while the category of persons falling under section 2(2)(b) are persons who are believed by the State to be violators of law. Article 20 would have no application for the reason, conviction is only a factor by which the Parliament chose to identify the persons to whom the Act be made applicable. The Act does not provide for the confiscation of the properties of all the convicts falling under Section 2(2)(a) or detenues falling under Section 2(2)(b). Section 6 of the Act authorises the competent authority to initiate proceedings of forfeiture only if it has reasons to believe (such reasons for belief are required to be recorded in writing) that all or some of the properties of the persons to whom the Act is applicable are illegally acquired properties. The conviction or the preventive detention contemplated under Section 2 is not the basis or cause of the confiscation but the factual basis for a rebuttable presumption to enable the State to initiate proceedings to examine whether the properties held by such persons are illegally acquired properties. It is notorious that people carrying on activities such as smuggling to make money are very clandestine in their activity. The Act is not violative of Article 20 of the Constitution. Even otherwise as was rightly pointed out by the learned Addl. Solicitor General, in view of its inclusion in the IXth Schedule, the Act is immune from attack on the ground that it violates any of the rights guaranteed under Part III of the Constitution by virtue of the declaration under Article 31-B. Except challenging the order of forfeiture on the two legal grounds discussed earlier in this judgement, there is no other ground on which correctness of the order of forfeiture is assailed in the writ petition. For the first time in this appeal, an attempt is made to argue that the conclusions drawn by the competent authority that the properties forfeited are illegally acquired - is not justified on an appropriate appreciation of defence of the appellant. In other words, the appellant seeks reappreciation of the evidence without even an appropriate pleading in the writ petition. It is a different matter that the High Court in exercise of its writ jurisdiction does not normally reappreciate evidence - Decided against assessee.

Summary

Issues Involved:
1. Legality and validity of the notice under Section 6 of the SAFEMA Act.
2. Whether the forfeiture under the SAFEMA Act violates Article 20 of the Constitution of India.
3. Whether the High Court failed to consider the legality of the order of forfeiture and if the matter should be remitted for reconsideration.

Detailed Analysis:

1. Legality and Validity of the Notice under Section 6 of the SAFEMA Act:

The appellant contended that the notice issued under Section 6 of the SAFEMA Act was defective and illegal as it did not contain the reasons which made the competent authority believe that the properties were illegally acquired. The judgment under appeal noted that although the reasons were not initially provided in the notice dated 4th March 1977, they were subsequently supplied in 1988. The appellant was given an opportunity to respond and was heard before the order of forfeiture was passed. The court concluded that the delayed supply of reasons did not vitiate the subsequent orders of the competent authority and appellate authority. The court rejected the appellant's reliance on *Ajantha Industries v. Central Board of Direct Taxes* (1976) 1 SCC 1001, distinguishing it from the current case as the SAFEMA Act does not expressly require the communication of reasons along with the notice. The court upheld the validity of the notice under Section 6.

2. Whether the Forfeiture under the SAFEMA Act Violates Article 20 of the Constitution of India:

The appellant argued that the forfeiture under the SAFEMA Act is violative of Article 20 of the Constitution, which prohibits ex post facto laws and double jeopardy. The court examined the provisions of the SAFEMA Act, noting that it applies to persons specified in Section 2(2), including those convicted under certain laws or detained under COFEPOSA. The Act provides for the forfeiture of "illegally acquired property" after an appropriate inquiry under Sections 6 and 7. The court held that the forfeiture is not a penalty but a deprivation of property of persons who cannot explain their legitimate sources of income. The court cited precedents, including *The State of West Bengal v. S.K. Ghosh* (AIR 1963 SC 255) and *R.S. Joshi v. Ajit Mills Ltd.* (1977) 4 SCC 98, to support its conclusion that forfeiture is not a punishment within the meaning of Article 20. The court also noted that the SAFEMA Act is included in the Ninth Schedule, making it immune from challenges based on fundamental rights violations.

3. Whether the High Court Failed to Consider the Legality of the Order of Forfeiture and if the Matter Should be Remitted for Reconsideration:

The appellant argued that the High Court failed to consider the legality of the forfeiture order and requested a remittance for proper consideration. The court reviewed the writ petition and found that the appellant had not raised any grounds challenging the correctness of the forfeiture order apart from the legal grounds already discussed. The court emphasized that the High Court, in its writ jurisdiction, does not normally reappreciate evidence. Therefore, the court found no reason to remit the matter to the High Court for reconsideration.

Conclusion:

The appeals were dismissed as devoid of merit. The court upheld the validity of the notice under Section 6 of the SAFEMA Act, ruled that the forfeiture did not violate Article 20 of the Constitution, and found no basis to remit the matter to the High Court for reconsideration.