G. Abdul Kader v. Union of India

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN** **FRIDAY, THE 11TH APRIL 2008 / 22ND CHAITHRA 1930** **OP.No. 3625 of 2000(F)** - **---------------------------------** **PETITIONER:** - **-------------------** ## **G.ABDUL KADER, S/O. MOHAMMED KUN HI, MAYIPADI, PATLA P.O., PATLA VILLAGE, KASARAGOD TALUK.** **BY ADV. SRI.H.B.SHENOY SRI.B.ASHOK SHENOY SMT.LAKSHMI B.SHENOY** **RESPONDENTS:** **-----------------------** **1. UNION OF INDIA REP.BY THE SECRETARY TO GOVERNMENT, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI.** **2. APPELLATE TRIBUNAL FOR FORFEITED PROPERTY, 4TH FLOOR, ''A'' WING, LOK NAYAK BHAVAN, KHAN MARKET, NEW DELHI 110 003.** **3. THE COMPETENT AUTHORITY, SMUGGLERS & FOREIGN EXCHANGE MANIPULATORS (FORFEITURE OF PROPERTY) ACT 1976 AND NARCOTIC DRUGS & PSYCHOTROPIC SUBSTANCES ACT 1985, NO.64/1, G.N. CHETTY ROAD, T.NAGAR, CHENNAI 600 017.** - **BY ADV. SRI.P.PARAMESWARAN NAIR,ASST.SOLICITOR SRI.JOHN VARGHESE, ASSISTANT SG** **THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 07/03/2008, THE COURT ON 11.04.2008 DELIVERED THE FOLLOWING:** ## **OP. NO.5976/2000** ## **ORDER ON CMP. NO.5976/2000 IN OP. NO. 3625/2000** ## **DISMISSED** ## **11.04.2008** ## **SD/- P.N.RAVINDRAN, JUDGE** ## **APPENDIX** ## **PETITIONERS EXHIBITS** ## **EXT.P1:- COPY OF THE NOTICE NO.OCA/MIDS/2719/88 DT. 15.3.88 ISSUED BY 3RD RESPONDENT TO PETITIONER.** **EXT.P2:- COPY OF THE REPLY DT. 29.12.1988 SUBMITTED BY PETITIONER TO THE 3RD RESPONDENT.** **EXT.P3:- COPY OF THE ORDER NO.OCA/MDA/2719/88 DT. 6.1.95 PASSED BY 3RD RESPONDENT.** **EXT.P4:- COPY OF THE ORDER DT. 3.2.99 PASSED BY 2ND RESPONDENT IN PETITIONER'S APPEAL FPA NO.111/MDS /95.** ## **EXT.P5:- COPY OF THE WRITTEN BRIEF DT. 5.3.99 SUBMITTED BY PETITIONER'S COUNSEL BEFORE THE 3RD RESPONDENT.** **EXT.P6:- COPY OF THE LETTER NO.OCA/MDS/2719/88 DT. 31.3.99 SENT BY 3RD RESPONDENT TO 2ND RESPONDENT ALONG WITH COMMENTS ON ADDITIONAL EVIDENCE.** **EXT.P7:- COPY OF THE OBJECTIONS DT. 30.6.99 FILED BY PETITIONER BEFORE 2ND RESPONDENT AGAINST EXT.P6.** **EXT.P8:- COPY OF THE ORDER DT. 29.11.99 PASSED BY 2ND RESPONDENT IN PETITIONER'S APPEAL FPA NO.111/MDS /95.** _**/**_ **TRUE COPY/** **P.S. TO JUDGE** **tss** ## **P.N.Ravindran, J. ============== O.P.No.3625 of 2000** ## **===============** ## **Dated this the 11[th] day of April, 2008.** ## **JUDGMENT** The petitioner was prosecuted along with another person for offences punishable under the Customs Act, 1962. They were convicted by the Court of the Judicial First Class Magistrate, Coimbatore. The judgment of conviction and sentence was delivered on 28.12.1992. Five years thereafter, the third respondent served on the petitioner, Ext.P1 notice dated 15.3.1988 issued under Section 6(1) of the Smugglers And Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, hereinafter referred to as the "Act" for short. By Ext.P1 notice, the petitioner was called upon to show cause why the properties described in the schedule thereto should not be declared to be "illegally acquired properties" and forfeited to the Central Government under the Act. 2. It appears that the petitioner did not submit his reply in OP 3625/00 -: 2 :- time. However, he submitted Ext.P2 reply dated 29.12.1988, the date on which the third respondent personally heard the petitioner at Kasaragod. Thereafter, on 6.1.1995, the third respondent issued Ext.P3 order under Section 7(1) of the Act, whereby the properties described therein were forfeited to the Central Government. It was also declared that any transfer effected in respect of the said properties after 15.3.1988, the date of issue of Ext.P1 notice will be ignored. It was also declared that any such transfer will be null and void in terms of Section 11 of the Act. 3. The petitioner carried the matter in appeal before the second respondent, the appellate authority constituted under Section 12 of the Act. In the appeal, the petitioner contended that he did not get sufficient opportunity to produce the documents relied on by him before the third respondent and that the written request for adjournment made on his behalf on 20.9.1994 by his counsel to enable him to produce documents and evidence was not taken note of or considered when Ext.P3 order was passed. The petitioner contended that after the hearing held on 29.12.1988, there were further hearings on OP 3625/00 -: 3 :- 11.5.1994, 14.7.1994, 23.8.1994 and 20.9.1994 and that on 20.9.1994, his counsel requested the third respondent for an adjournment of the hearing to enable him to produce documents in evidence. By Ext.P4 order passed on 3.2.1999, the appellate authority after noticing that the order passed by the third respondent does not refer to the request for adjournment made by the petitioner on 20.9.1994, directed the competent authority to give an opportunity to the petitioner to adduce evidence and raise his contentions. The appellate authority also directed the petitioner to appear before the third respondent on 4.3.1999 along with the documents and to make his submissions. The third respondent was directed to consider the documents produced and the submissions made by the petitioner and to enter a finding and to submit it to the Tribunal within four weeks thereafter. It is also held that the petitioner will be free to submit his objections to the findings within two weeks after they are received by the appellate authority. As directed in Ext.P4, the petitioner appeared before the third respondent and made his submissions. The third respondent thereafter submitted the findings evidenced by Ext.P6 to the appellate authority. The OP 3625/00 -: 4 :- petitioner submitted Ext.P7 objection to the findings in Ext.P6. The Appellate Tribunal, thereafter heard the petitioner on 27.10.1999 and by Ext.P8 order passed on 29.11.1999 rejected the petitioner's appeal and upheld Ext.P3. Hence this original petition challenging Exts.P3 and P8. 4. Though various contentions have been raised in the original petition, the learned counsel appearing for the petitioner confined the challenge to Exts.P3 and P8 on one ground, namely, that Ext.P1 notice is not one validly issued under the Act and therefore, the entire proceedings including Ext.P1 notice, Ext.P3 order of the third respondent and Ext.P6 appellate order are liable to be invalidated. Reliance was placed in support of the said contention on the decisions of the Apex Court in **Fatima Mohd. Amin** v. **Union of India and another** - (2003) 7 S.C.C. 436 and **P.P.Abdulla and another** v. **Competent Authority and others** - (2007) 2 S.C.C. 510. This contention is also reflected in ground B of the original petition wherein it has been specifically alleged that Exts.P3 and P8 orders have been issued on the basis of Ext.P1 notice which is one issued in total defiance of the provisions of the Act. It has been specifically alleged in OP 3625/00 -: 5 :- ground B that Ext.P1 notice issued under Section 6(1) of the Act is illegal and without jurisdiction as the conditions precedent, prescribed in Section 6 of the Act have not been satisfied and therefore, Exts.P3 and P8 orders are also without jurisdiction. The petitioner has further urged that an order of forfeiture can be passed under Section 7 of the Act only after a valid notice is issued under Section 6 of the Act. 5. A counter affidavit has been filed on behalf of respondents 1 to 3 wherein the respondents have justified the order of forfeiture evidenced by Ext.P3 and the appellate order evidenced by Ext.P8. It is contended that it is not necessary to furnish the reasons based on which the competent authority had come to the conclusion that the properties described in Ext.P1 notice were "illegally acquired properties" within the meaning of Section 3(1) of the Act and it was enough if the petitioner is put on notice and given an opportunity of being heard before an order of forfeiture is passed. It is further contended that the Act does not require communication of the reasons which persuaded the competent authority to issue Ext.P1 notice to the petitioner. 6. When the case was called on for hearing on 7.3.2006, OP 3625/00 -: 6 :- there was no representation on the side of the respondents. The only contention raised by the learned counsel for the petitioner is that Ext.P1 notice is bad in law and therefore Exts.P3 and P8 orders are liable to be set aside. In **Fatima Mohd. Amin** v. **Union of India and another** - (2003) 7 S.C.C. 436, the Apex Court after noticing that the show cause notice issued under the Act did not disclose any reason warranting action against the appellant under the Act, relying on the decision in **Attorney General for India** v. **Amratlal Prajivandas** - (1994) 5 S.C.C. 54, held that the order of forfeiture and the appellate order affirming it cannot be sustained. In **P.P.Abdulla and another** v. **Competent Authority and others** - (2007) 2 S.C.C. 510, which also arose under the Act, the Apex Court interfered with the order of forfeiture and the appellate order passed under the Act on the short ground that the notice issued under Section 6 of the Act did not disclose any sufficient reason warranting action under the Act. The Apex Court held as follows: "7. Learned counsel submitted that it has been expressly stated in Section 6(1) that the reason to believe of the competent authority must be recorded OP 3625/00 -: 7 :- in writing. In the counter-affidavit it has also been stated in para 8 that the reasons in the notice under Section 6(1) were recorded in writing. In our opinion this is not sufficient. Whenever the statute requires reasons to be recorded in writing, then in our opinion it is incumbent on the respondents to produce the said reasons before the court so that the same can be scrutinised in order to verify whether they are relevant and germane or not. This can be done either by annexing the copy of the reasons along with the counter-affidavit or by quoting the reasons somewhere in the counter-affidavit. Alternatively, if the notice itself contains the reasons of belief, that notice can be annexed to the counter-affidavit or quoted in it. However, all that has not been done in this case. 8. It must be stated that an order of confiscation is a very stringent order and hence a provision for confiscation has to be construed strictly, and the statute must be strictly complied with, otherwise the order becomes illegal. 9. In our opinion, the facts of the case are covered by the decision of this Court in _**Fatima Mohd. Amin**_ v. _**Union of India.**_ In the present case the contents of the notice, even if taken on face value, do not disclose any sufficient reason OP 3625/00 -: 8 :- 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." 7. In the instant case, Ext.P1 show cause notice issued under Section 6(1) of the Act does not disclose the reasons which persuaded the competent authority to believe that the properties described therein are illegally acquired properties within the meaning of Section 3(1) of the Act. No reasons are not set out in Ext.P1. In the counter affidavit also no reasons are set out. On the other hand, the stand taken by the respondents in the counter affidavit is that it is not necessary to furnish the reasons either in the show cause notice or by other means. Ext.P1 show cause notice reads as follows: "Whereas, I, .......... being the Competent Authority under Sec.5 of the Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (13 of 1976), have on the basis of relevant information and/or relevant material available to me, reason to believe that the property/properties described in the Schedule annexed hereto which is/are held by you or on your behalf, is/are illegally OP 3625/00 -: 9 :- acquired property/properties within the meaning of clause (c) of sub section (1) of Sec. 3 of the said Act; Now, therefore, in pursuance of sub section (1) of section 6 of the said Act, I hereby call upon you by this notice to indicate to me within 35 days of the service of this notice, the sources of your income, earnings or assets, out of which or by means of which you have acquired the aforesaid property/properties, the evidence on which you rely and other relevant information and particulars and to show cause why the aforesaid property/properties should not be declared to be illegally acquired property/properties and forfeited to the Central Government under the said Act." 8. It is contended in paragraph 8 of the counter affidavit as follows: "8. The 3rd respondent before initiating the proceedings against the petitioner had recorded his reasons to believe that the subject properties came out of illegal sources. Further as stated earlier, the 3rd respondent is not legally required to communicate his reasons to believe that the properties have been acquired through illegal sources to the petitioner. On the contrary after the issuance of notice, the petitioner is legally required to prove OP 3625/00 -: 10 :- that the source for the acquisition of the properties under notice came out of legal sources. In other words, the burden of proof squarely lies on the petitioner to discharge his onus under Sec.8 of the act...." 9. Again in paragraph 12 of the counter affidavit it is stated as follows: "12. The ground raised is unsustainable and liable to be rejected. The 3rd respondent before initiating the proceedings against the petitioner had recorded his reasons to believe that the subject properties were acquired illegally. Since, the petitioner had not discharged his onus in proving the licit nature for the acquisition of properties despite ample opportunities, the 3rd respondent is right in holding that the properties of the petitioner came out of illegal sources and ordered for forfeiture." 10. From a reading of Ext. P1 notice issued under Section 6 (1) of the Act and the averments in the counter affidavit referred to above, it is evident that neither the notice nor the counter affidavit disclose the reasons which persuaded the competent authority to come to the belief that the properties mentioned in Ext.P1 notice are illegally acquired properties within the meaning OP 3625/00 -: 11 :- of Section 3(1)(c) of the Act. As noticed by the Apex Court, an order of forfeiture/confiscation is a stringent order and hence, the provision enabling forfeiture/confiscation has to be construed strictly and the statute must be strictly complied with. In the instant case, as noticed by the Apex court in the aforesaid decisions, Ext.P1 show cause notice does not disclose any reason which persuaded the competent authority to come to the belief that the properties mentioned therein are illegally acquired properties within the meaning of Section 3(1)(c) of the Act. Therefore, the condition precedent for exercising the power under Section 7 of the Act did not exist and hence, Ext.P3 order passed by the competent authority and the appellate order evidenced by Ext.P8 affirming Ext.P3 cannot be sustained. 11. In that view of the matter, I hold that the proceedings under the Act were not validly initiated or concluded against the petitioner. Ext.P3 order of forfeiture has been passed pursuant to Ext.P1 notice. I therefore declare that Ext.P1 notice does not satisfy the requirement of Section 6(1) of the Act and has not been issued in terms thereof. Consequently, Exts.P3 and P8 are liable to be set aside. I do so. However, this will not stand in the OP 3625/00 -: 12 :- way of the respondents from proceeding afresh against the petitioner under the Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, if it is permissible under law. The original petition is allowed as above. No costs. P.N.Ravindran, Judge. ess 30/3