High Court of KeralaSingle Judge2013-01-16The impugned orders under SAFEMA/COFEPOSA are s...

C. H. Arifa v. Competent Authority, SAFEMA & NDPS Acts; Appellate Tribunal of Forfeited Property; Income Tax Officer, Kannur

Case / Petition Number:OP Nos. 28572/2001 and 28798/2001

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: B.P. Ray
Judgment Date: 2013-01-16
Court Decision / Holding: O.P. Nos. 28572 & 28798 of 2001 disposed of. The impugned orders are set aside and the matter remitted to the Competent Authority for readjudication in accordance with law. A fresh show cause notice shall be issued within two weeks, with the petitioner given an opportunity to respond. The petitioner shall appear before the competent authority on 15.03.2013; replies must be filed within one month; proceedings to be concluded within three months thereafter. The competent authority may hold sittings in Cochin if requested.
Final Disposition: The impugned orders under SAFEMA/COFEPOSA are set aside; the matter is remitted to the Competent Authority for readjudication in accordance with law. Fresh show-cause notice to be issued within two weeks; petitioner to receive documents and respond within one month; proceedings to be concluded within three months; optional Cochin sittings if requested; petitions disposed accordingly.

Parties to the Case

Appellants / Petitioners

Mrs. C. H. Arifa, wife of M.C. Musthafa, Kannur

Respondents

The Competent Authority, SAFEM (FOP) & NDPS Acts, Utsav, 64/1, G.N. Chettry Road, TSS Nagar, Chennai 600 017
The Appellate Tribunal of Forfeited Property, 4th Floor, Lok Nayak Bhavan, Khan Market, New Delhi 110 003
Income Tax Officer, Ward I, Kannur

Legal Representation & Advocates

Counsels for Petitioners

• T. M. Sreedharan
• T. S. Arunkumar

Counsels for Respondents

• P. Parameswaran Nair

Case Synopsis & Summary

This petition challenges a common order dated 30.08.2001 under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) and the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) forfeiting four properties allegedly connected to illicit wealth of the petitioner's husband, who was detained under COFEPOSA. The petitioner, Mrs. C. H. Arifa, contends there is no demonstrable nexus between the detenue’s money and the properties sought to be forfeited; there is no assertion that the properties are benami or that they belong to the petitioner. The notice and the order rely on an Income Tax report, yet the show-cause notice did not disclose the documents or grounds, violating principles of natural justice and restricting effective defence. The respondents argue that SAFEMA does not require an express nexus between the detenu’s money and the property, and that the appellate tribunal’s order was proper; they rely on various precedents to uphold forfeiture without explicit nexus in every case. The learned judge finds that essential documentary materials were not supplied with the show-cause notice, and the matter requires re-adjudication. The order is set aside and remitted to the competent authority for a fresh show cause and a time-bound readjudication, with the petitioners to be provided all relevant documents and opportunities, including Cochin sittings if requested.

Provisions of Law Cited

Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 – Section 6(1)Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 – Section 6(2)Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 – Section 7(1)Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners argued there is no nexus between the alleged illegally acquired money of the detenue and the properties forfeited under SAFEMA; no nexus pleaded or proved that the property is benami or linked to the detenue's wealth; the show-cause notice and relied documents were not supplied, violating natural justice; the competent authority cannot re-appraise or substitute the Income Tax Department's assessment; fresh show cause and a proper readjudication are required, with opportunity to defend and access to all documents; request for remand and, if needed, Cochin hearings to expedite disposal.

Contentions of Respondents

The respondents contended that SAFEMA does not require an express nexus between the money of the detenu and the forfeited property; the statutory framework permits forfeiture where there is a link to illicit activity, not necessarily a direct nexus; reliance on Income Tax materials is permissible; the absence of all documents in the show-cause can be cured by remand; prior decisions cited by petitioners are not controlling; the tribunal's order should be sustained and the matter duly adjudicated.

Cited Precedents (6)

Case Name	Citation	Treatment	Explanation
Fatima Mohd. Amin v. Union of India	(2003) 7 SCC 436	Mentioned Only	Petitioners relied on this decision; the judgment does not indicate it was applied or distinguished in the present case.
P. P. Abdulla v. Competent Authority	(2007) 2 SCC 510	Mentioned Only	Cited in the discussion, with no explicit treatment or application in the decision.
Kesar Devi v. Union of India & others	2003(7) SCC 427	Mentioned Only	Cited by respondents; no explicit adoption or rejection discussed.
Attorney General for India v. Amratlal Prajivandas	(1994) 5 SCC 54	Mentioned Only	Referenced among authorities; not expressly applied.
Competent Authority, SAFEMA v. M.H. Hameed & another	(2009) 3 KHC 295	Mentioned Only	Cited without explicit treatment in the judgment.
W.A. No. 1645 of 2007 and connected cases	W.A. No. 1645 of 2007	Mentioned Only	Mentioned as a related matter; no substantive treatment in the decision.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE B.P.RAY** ## **WEDNESDAY, THE 16TH DAY OF JANUARY 2013 / 26TH POUSHA 1934** ## **OP.No. 28572 of 2001(B)** **---------------------------------** ## **PETITIONER(S):** **-----------------------** **MRS. C.H.ARIFA, WIFE OF M.C.MUSTHAFA, AGED 51 RESIDING AT ALFAJAR, NO.K.R.XXXI/287, OLD P.O.ROAD, KANNUR – 1.** - **BY ADV. SRI.T.M.SREEDHARAN SRI.T.S.ARUNKUMAR** ## **RESPONDENT(S):** **------------------------** **1. THE COMPETENT AUTHORITY, SAFEM (FOP) & NDPS ACTS, UTSAV, 64/1, G.N. CHETTY ROAD, TSS.NAGAR, CHENNAI 600 017.** **2. THE APPELLATE TRIBUNAL OF FORFEITED PROPERTY, 4TH FLOOR, LOK NAYAK BHAVAN, KHAN MARKET, NEW DELHI 110 003.** **3. INCOME TAX OFFICER, WARD I, KANNUR.** ## **BY ADV. SRI.P.PARAMESWARAN NAIR** **THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 16/01/2013 , ALONG WITH OP NO. 28798 OF 2001 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **tss** ## **OP. NO.28572/2001** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:-** **P1:- COPY OF ORDER F.NO.OCA/MDS/2816/91 DTD. 28.10.1998 OF THE IST RESPONDENT.** **P2:- COPY OF MEMORANDUM APPEL DTD. 30.11.1998.** **P3:- COPY OF ORDER DT. 30.8.2001 OF THE 2ND RESPONDENT.** **P4:- COPY OF ORDER DTD. 9.6.2001 IN CMP.21842/2000 IN OP.13396/2000.** **P5:- COPY OF ORDER PA. 46-01-PT-7004 /CNR/W-1 DTD. 5.2.1990 OF THE 3RD RESPONDENT.** ## **TRUE COPY** **P.A. TO JUDGE** **tss** ## **B.P. RAY, J.** **- - - - - - - - - - - - - - - - - O.P. Nos. 28572 & 28798 of 2001 - - - - - - - - - - - - - - - - Dated this the 16[th] day of January, 2013.** ## **JUDGMENT** Heard the learned Senior Counsel for the petitioners, Shri. T.M. Sreedharan and the learned Assistant Solicitor General of India, P. Parameswaran Nair. 2. The petitioners who are husband and wife, approached this Court challenging the common order dated 30.08.2001 passed by the 2[nd] respondent under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. The petitioner in O.P. No. 28798 of 2001 suffered detention under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. Proceedings were initiated under the Act by issuing a notice under Section 6(1) of the Act. He was released from jail when National Emergency was lifted. Thereafter, the petitioner was served with notice in terms of Section 6(2) of the Act proposing forfeiture of four items of properties. The 3[rd] item is 11 cents of land in RS No. 325, Ward No. III of Kannur Municipality (Door No. XXXI/294, new No. KR XXXI/287 belonging to the petitioner's wife, who is the O.P. Nos. 28572 & 28798 of 2001 -:2:- petitioner in O.P. No. 28572/2001. The petitioners furnished explanation before the Competent Authority, the 1[st] respondent with regard to the source for acquisition of the properties. The 1[st] respondent rejected the explanation and passed an order under Section 7(1) of the Act forfeiting the properties. Aggrieved by the same, the petitioner filed an appeal before the Appellate Tribunal. The Appellate Tribunal by order dated 30.08.2001 dismissed the appeal. Hence these Original Petitions. 3. The learned Senior Counsel for the petitioners vehemently argued that there is no nexus between the so-called illegal property acquired by the petitioner as alleged. The learned counsel for the petitioner further argued that no allegation whatsoever has been made to the effect that there exists any link or nexus between the property sought to be forfeited and the illegally acquired money of the detenu and therefore, the impugned order cannot be sustained and there is no averment to the effect that the property acquired by the petitioner is a benami property of his wife and the same was illegally acquired from his wife. It is further argued that since the reasons recorded by the competent authority did not allege O.P. Nos. 28572 & 28798 of 2001 -:3:- any link or nexus between the property sought to be forfeited and the money alleged to have been illegally acquired by the petitioner, the order of forfeiture cannot be sustained. 4. The learned Senior Counsel for the petitioners placed reliance upon the decision reported in (2003) 7 SCC 436 - **Fatima Mohd. Amin v. Union of India** - (2003) 7 SCC 436 and **P.P. Abdulla v. Competent Authority** (2007) 2 SCC 510 and also the judgment in W.A. No. 1645 of 2007 and connected cases. 5. The learned Asst. Solicitor General appearing for the respondents placing reliance upon the decisions reported in **Kesar Devi v. Union of India & others** - 2003(7) SCC 427, **Attorney General for India v. Amratlal Prajivandas** - 1994(5) SCC 54 & **Competent Authority, SAFEMA vs. M.H. Hameed & another** - 2009(3) KHC 295 contended that there is no requirement on the part of the respondents to mention or establish any nexus or link between the money of the convict or detenu and the property sought to be forfeited. 6. I find that the documents relied on by the Department has not been supplied to the petitioners along with the show cause notice. Therefore, the petitioner was denied to file an O.P. Nos. 28572 & 28798 of 2001 -:4:- effective show cause and to prove his case particularly when the allegations against the petitioner was not known to him. The learned counsel for the petitioners further submitted that the Department has relied upon the report of the Income Tax Inspectors. 7. The Income Tax Department while assessing the tax has accepted the source of income of the petitioner as explained by him and has assessed the income of the petitioner during the relevant period. Therefore, the competent authority cannot sit in appeal over the judgment of the Income Tax Authorities. This requires detailed examination by the competent authority. Therefore, I have no hesitation to set aside the impugned orders and remit the matter to the competent authority for readjudication in accordance with law. The petitioner shall be issued with a fresh show cause notice explaining the grounds on which the Department wants to proceed against the petitioner, within two weeks from the date of appearance of the petitioner. The petitioner by himself or through his counsel shall appear before the competent authority on 15.03.2013 without any further notice. If the petitioner appears before the competent authority, he will be served with show cause notice along with O.P. Nos. 28572 & 28798 of 2001 -:5:- relevant documents. The petitioner shall file reply to the show cause within one month from the date of supply of the relevant documents and the proceedings shall be concluded within three months thereafter. The competent authority may hold its sittings in Cochin, if requested by the petitioner. These Original Petitions are disposed of as above. **B.P. RAY, JUDGE.** rv O.P. Nos. 28572 & 28798 of 2001 -:6:-