2017 (1) TMI 1114 - HC - FEMA

Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 - forfeiture order - detention of the original petitioners - Held that - In the present case, the original petitioner is not a person of no means. Her father owned properties and wrote a will. Later, it was cancelled and the family members had a registered deed of partition among themselves. Further, her father was a gold and silver merchant and has declared jewellery under the Gold Control Act to the Superintendent of Central Excise. All these documents have been accepted by the authorities but only doubts have been thrown without any legal basis. The original petitioner had submitted proper records to shift the burden of proof on the department. The mere fact that the Act does not require the competent authority to record a finding that the forfeited property was purchased by monies received from smuggling activities does not end the matter. The burden no doubt is on the person who is in possession of the property to explain their sources. But, once an explanation is forthcoming, then, naturally it is for the competent authority to prove the contrary. This Court is not satisfied with the order of the Appellate Authority. As can be seen from Section 15, the Appellate Authority has ample power to call for any records from anyone and if they were not satisfied with the receipts produced by the petitioner, they could have summoned such of those documents from necessary quarters or examined witnesses in that behalf. This is especially when a property of a person is sought to be confiscated. This Court is satisfied that the original petitioner had discharged her obligation of proving her source of wealth in purchasing the property and in these two decades of litigation, she had also passed away. This is not a matter where a further remand is necessary. Further, the very same properties were under orders of forfeiture in connection with the detention of the original petitioners another son and that was released by the very same Tribunal. Again, the Tribunal, instead of relying upon the full order of that Tribunal chose to rely upon a portion of the order without any reason. The Tribunal also did not keep in mind the order of this Court made earlier remanding the matter. This Court has no hesitation to set aside the order of the 2nd Respondent Tribunal made confirming the forfeiture order of the 1st Respondent.

Issues Involved:
1. Substitution of petitioners after the death of the original petitioner.
2. Legality of the forfeiture order under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA).
3. Validity of the evidence and documents submitted by the petitioner.
4. Impact of previous legal proceedings and decisions on the current forfeiture case.
5. Burden of proof regarding the legality of the property acquisition.
6. Compliance with principles of natural justice and procedural requirements.

Issue-Wise Detailed Analysis:

1. Substitution of Petitioners:
The original petitioner, the mother of petitioners 2 to 7, passed away on 4.9.2001, and her husband died on 4.1.2002. Petitioners 2 to 7 sought to substitute themselves in place of the original petitioner, which was ordered. Applications to set aside abatement and condone the delay in filing were allowed on 22.10.2003.

2. Legality of the Forfeiture Order:
The original petitioner challenged the forfeiture order dated 28.7.1995 by the competent authority, which was confirmed by the Appellate Tribunal on 9.1.2001. The property in question was allegedly acquired through illegal means linked to the petitioner's son, who was detained under COFEPOSA. The Tribunal dismissed the appeal and the Miscellaneous Petition for receiving documents.

3. Validity of Evidence and Documents:
The original petitioner claimed the property was purchased with legitimate funds, including inherited assets and sale of jewellery. The Tribunal initially dismissed the appeal for lack of original documents. Upon remand, the Tribunal again dismissed the appeal, disbelieving the explanation and documents provided. The Court noted that the Tribunal should have considered photocopies as secondary evidence and scrutinized the original receipts produced later.

4. Impact of Previous Legal Proceedings:
The petitioner's other son had been detained under COFEPOSA, and a similar forfeiture notice was previously set aside by the Tribunal when his detention was quashed. The current proceedings were based on the detention of another son, and the Tribunal failed to consider the implications of the earlier order.

5. Burden of Proof:
Under SAFEMA, the burden of proving that the property was not acquired through illegal means lies on the person affected. The petitioner provided evidence of legitimate sources, including a registered will and partition deed, and declarations under the Gold Control Act. The Court emphasized that once an explanation is provided, the burden shifts to the authority to prove otherwise.

6. Compliance with Natural Justice and Procedural Requirements:
The Court found that the Tribunal did not adhere to the principles of natural justice by failing to consider the evidence properly and not summoning necessary records or witnesses. The stringent nature of SAFEMA requires strict compliance with procedural requirements, which was not followed in this case.

Conclusion:
The Court set aside the order of the 2nd Respondent Tribunal dated 9.1.2001 and the forfeiture order of the 1st Respondent dated 28.7.1995, allowing the writ petition. The Court held that the original petitioner had discharged her obligation to prove the source of wealth, and the authorities failed to provide contrary evidence. The petition was allowed without costs.

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