Smt. M.T.P. Kunhamina Umma v. The Competent Authority (SAFEMA and NDPS Acts), Appellate Authority for Forfeited Property, and State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 24TH SEPTEMBER 2008 / 2ND ASWINA 1930 OP.No. 27169 of 2000(H) ----------------------- PETITIONER(S): --------------- SMT.M.T.P.KUNHAMINA UMMA, W/O.MUTHALIB HAJEE PALATHARA, VELLUR, PAYYANNUR, KERALA. BY ADV. SRI.T.M.SREEDHARAN SRI.N.UNNIKRISHNAN SMT.M.LALITHA NAIR RESPONDENT(S): - --------------- 1. THE COMPETENT AUTHORITY (SAFEM [FOP] AND NDPS ACTS) 64/1, G.N.CHETTY ROAD, T.NAGAR, CHENNAI-17. 2. THE APPELLATE AUTHORITY FOR FORFEITED PROPERTY, REP. BY REGISTRAR,4TH FLOOR, 'A' WING LOK NAYAK BHAVAN, KHAN MARKET, NEW DELHI. 3. THE STATE OF KERALA, REP. BY THE CHIEF SECRETARY, SECRETARIAT, TRIVANDRUM. ADV. SRI.JAGDEESH LAKSHMAN, ADDL.CGSC,FOR R1 & 2 GOVERNMENT PLEADER SHRI.M.R.SABU THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 18/09/2008, THE COURT ON 24.9.2008 DELIVERED THE FOLLOWING: ## O.P.NO.27169/00. ## APPENDIX ## PETITIONER'S EXHIBITS: - P1. COPY OF THE LETTER DTD.18.9.81 TO ITO CANNANORE. P2. COPY OF THE INCOME AND EXPENDITURE ACCOUNT ENDED 30.6.81. P3. COPY OF THE -DO- 30.6.82 P4. COPY OF THE ASSESSMENT ORDER DTD.10.9.84. P5. COPY OF THE S.B.ACCOUNT NO.1392 OF FEDERAL BANK OF THE PETITIONER. - P6. COPY OF THE LETTER DTD.22.7.99 FROM THE BANK. P7. COPY OF THE NOTICE DTD.12.9.88. P8. COPY OF THE REASONS FOR P7 NOTICE. - P9. COPY OF THE LETTER DTD.24.11.95. - P10. COPY OF THE LETTER DTD.25.9.95 TO R1. - P11. COPY OF THE REPLY DTD.13.10.95 BEFORE R1. P12. COPY OF THE LETTER DTDE.22.1.99. - P13. COPY OF THE ORDER DTD.24.2.99. - P14. COPY OF THE ORDER DTD.12.7.00. sdk+ ///True copy/// P.A. to Judge ## S.SIRI JAGAN, J. ================== ## O.P.No.27169 of 2000 ================== Dated this the day of September, 2008 J U D G M E N T The petitioner is the brother's wife of one A.C.Abdulla, a person in respect of whom an order of detention has been passed under the COFEPOSA. She has filed this writ petition challenging Exts.P13 and P14 orders, which are the original and appellate orders under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA), whereby her right title and interest in the partnership firm M/s.Avva Umma & Co., Main Road, Payyannur, was declared as forfeited to the Central Government, by virtue the provisions of Section 7 of the SAFEMA by the 1[st] respondent and her appeal under Section 12 thereof was dismissed by the Appellate Authority. The brief facts leading to Exts.P13 and P14 may be summarised as under. 2. Sri.A.C.Abdulla was detained under the COFEPOSA by order dated 7.5.1981. By Ext.P7 notice dated 12.9.1988 accompanied by Ext.P8 reasons recorded as required under the SAFEMA, the 1[st] respondent, pursuant to Section 6(1) thereof, 2 o.p.27169/00 called upon the petitioner to indicate to him the sources of income, earnings or assets, out of which or by means of which rd she has acquired “[1] /3 share in the right, title and interest of the partnership firm, M/s.Avva Umma & Co. Main Road, Payyannur, represented by credit balance as on 30.6.1982 in the capital account of the firm; Rs.1,23,960/- with accretions thereto”. In Ext.P8 reasons it was stated that the petitioner was the sister of Sri.A.C.Abdulla, that having regard to the unlawful activities of her brother, there is reason to believe that the investment made in the firm by the petitioner partakes the character of illegally acquired property, which qualifies for forfeiture under the SAFEMA and that the 1[st] respondent is satisfied that it is a fit case for issue of notice under Section 6(1) of the Act. It appears that the petitioner did not respond to the notice. In the writ petition she does not say that she did not receive Exts.P7 and P8, but only says that it is doubtful whether she has received the same since the 1[st] respondent had again issued Ext.P10 notice dated 25.9.1995, enclosing therewith copies of Exts.P7 and P8. To Ext.P10, the petitioner submitted Ext.P11 reply dated 13.10.1995, informing the 1[st] respondent that the petitioner is 3 o.p.27169/00 not the sister of Sri.A.C.Abdulla, but his brother's wife, that she had already explained her investments and source of funds in M/s.Avva Umma & Co. to the income tax officer, which records are that available with the Income Tax Department, Kannur, and that she is not in a position to verify the details furnished by her to the Income Tax Department since copies of her records were lost by fire on 25.11.1992. She further stated therein that she has no connection with A.C.Abdulla and therefore, the proceedings under the Act may be dropped. 3. On receipt of Ext.P10, the 1[st] respondent issued Ext.P9 dated 24.11.1995, stating that she was treated as a relative of Sri.A.C.Abdulla and hence is a 'person' within the meaning of Section 2(2)(c) read with the explanation 2 thereunder of the Act. She was accordingly informed that the change in relationship with the detenu as claimed by her, does not affect the proceedings in any way, as the relationship she has admitted with the detenu is also classified under the definition of 'relative' in the Act. By that letter she was again directed to furnish the details as called for in Ext.P7 along with a copy of the same. 4. Since the petitioner did not respond, another notice 4 o.p.27169/00 was issued by the 1[st] respondent, dated 22.1.1999, Ext.P12 informing her that from the income tax records it is seen that she has claimed that the bulk of the investment made by her in the firm, represented funds drawn from her account maintained in Federal Bank, Payyannur and the credit therein represented remittances received from her husband Shri. Muthalib Haji, who was carrying on business in Malaysia and Singapore and that she has claimed as having borrowed the balance funds for investment in business, from one Smt. T.V. Aisha Umma. By that letter, the petitioner was directed to specify the details as to the avocation of her husband abroad with documentary evidence, the duration of stay abroad, his earnings, savings and remittances therefrom, copies of her bank passbooks for proof of withdrawals, her personal financial status, latest copy of balance sheet of partnership firm with names and addresses of other partners, their relationship with her, and the present position of the firm with documentary evidence. Personal hearing was also fixed on 16.2.1999. The petitioner did not respond to the same. Therefore, the 1[st] respondent proceeded to decide the matter on the basis of materials available on record and passed Ext.P13 o.p.27169/00 5 order holding that the investment made by the petitioner is nothing but the illegal earnings of Shri. A.C. Abdulla and the asset mentioned in Ext.P7 is therefore liable for forfeiture under the Act. Accordingly, the same was declared as forfeited under Section 7(3) of the Act. The petitioner filed an appeal before the 2[nd] respondent Tribunal, which was dismissed by Ext.P14 order confirming Ext.P13. Petitioner is challenging Exts.P13 and P14. 5. The first respondent has filed a counter affidavit supporting the impugned orders. 6. I have heard Counsel at length. 7. The petitioner is challenging Exts.P13 and P14 on the following grounds: (a) There is considerable delay in initiating and concluding the proceedings under the Act which itself vitiates the entire proceedings. (b) Only if the 1[st] respondent prima facie shows a connecting link between the detenu and the property of the petitioner, the petitioner is expected to discharge her burden under Section 8. Since the 1[st] respondent has not been able to show any connecting link between herself and Sri. A.C. Abdulla, 6 o.p.27169/00 the entire proceedings are vitiated. (c) The reason for the 1[st] respondent to believe that the properties are illegally acquired by the petitioner contained in Ext.P8 is on the wrong premise that the petitioner is the sister of the detenu which is patently wrong. Therefore the proceedings initiated on that belief is ab initio void. (d) The petitioner has already explained her source for the subject investment to the income tax authorities, from which only the 1[st] respondent has obtained information about the investment and the income tax department having completed income tax assessment of the petitioner accepting the same, the 1[st] respondent has no reason to proceed further in the matter. (e) Exts.P1 to P5, which are documents produced before the income tax department, sufficiently explains the source of her investment and therefore there is no basis for the finding by the 1[st] respondent that her investment has any connection with the detenu. (f) The Tribunal illegally denied permission to the petitioner to adduce evidence in support of her case on technical grounds and therefore the Tribunal should be directed to reconsider the 7 o.p.27169/00 matter after accepting the documents. (g) Counsel for the petitioner also relies on a host of decisions in support of the above contentions. 8. At the outset, I must note certain admitted facts which stands out in the contextual scenario. The petitioner is the brother's wife of the detenu. Smt. T.V.Aisha Umma, one of the partners of the firm, the investment of the petitioner in which is the subject matter of the proceedings, is the wife of the detenu. The said Smt. T.V. Aisha Umma was also proceeded against under SAFEMA in respect of her investment in the firm. The said Smt. T.V. Aisha Umma did not have any known independent source of income other than through her husband. Part of the investment made by the petitioner in the firm was borrowed from the said Smt. T.V. Aisha Umma. In spite of repeated notices the petitioner did not care either to reply to the notices (except to issue Ext.P11) and to explain her source other than stating that the same has been explained to the income tax authorities. Her main source of the investment was stated to be that of her husband. Nowhere does the petitioner give the details of her husband, his avocation etc. or present whereabouts. In Ext.P11 8 o.p.27169/00 the petitioner claimed that her records relating to income tax was destroyed by fire in 1992. After Ext.P13 order was passed she suddenly springs a surprise by producing some of those documents before the Tribunal and in the writ petition without even attempting to explain the sudden availability of the same. Even in the writ petition, no details whatsoever of her husband finds a place. 9. The petitioner's case should be appreciated in the background of the above facts. Delay is certainly a factor which has to be taken into account in deciding the validity of such orders. But I am unable to persuade myself to hold in this case that the delay is fatal to the case of the respondents. The detention was in 1981. Ext.P7 notice was issued in 1988. The 1[st] respondent would certainly require sometime to detect possible investment of the ill-gotten money of the detenu. He ultimately got the same from the income tax records. Delay by itself cannot be a vitiating factor. Prejudice must have occasioned to the party on account of delay in initiating proceedings. Here the prejudice pleaded is that after all these years documents proving the source is not expected to be available. But documents were 9 still admittedly with the petitioner when the 1[st] notice was issued, receipt of which is not actually denied by the petitioner. In fact documents have actually been produced now by the petitioner. Again, even without documents also the petitioner could have proved her source through her husband, the availability of whom is not disputed. She could have proved the source by getting her husband to depose as to the same, since the only contention of the petitioner is that the source is her husband who is alive. Therefore, it cannot be held that the delay in initiating proceedings has prejudiced the defence of the petitioner in any manner. Without prejudice having been shown, delay alone cannot be the sole ground for holding that the proceedings are vitiated. Therefore, I am not inclined to hold that the proceedings are vitiated on account of delay in initiating the proceedings. 10. It is true that while considering the validity of SAFEMA, ## the Supreme Court had in _**Attorney General of India** v._ _**Amratalal Prajivandas**_ (AIR 1994 SC 221) held thus: “43 ..........It is equally necessary to reiterate that the burden of establishing that the properties mentioned in the show cause notice issued under Section 6, and which are held on that date by a relative or an associate of the convict/detenu are not the illegally acquired properties of the convict/detenu, lies upon such 10 o.p.27169/00 relative/associate. He must establish that the said property has not been acquired with the monies or assets provided by the detenu/convict or that they in fact did not or do not belong to such detenu/ convict. We do not think that the Parliament ever intended to say that the properties of all the relatives and associates may be illegally acquired, will be forfeited just because they happen to be the relatives or associates of the convict/detenu. There ought to be the connecting link between those properties and the convict/detenu, the burden of disproving which, as mentioned above, is upon the relative/ associate. .............” But here in this case, there is a very strong connecting link. The petitioner is the brother's wife of the detenu. The petitioner and the detenu's wife are partners of the firm in which the petitioner made the investment and the petitioner claims to have borrowed part of the very same investment from the detenu's wife. That would constitute a more than sufficient link for issuing notice under Section 6, which only has been done in this case. Therefore there is no merit in the second contention of the petitioner and therefore the burden of proof squarely falls on the petitioner to prove that the property is not illegally acquired property, as specified in Section 8 of the Act. 11. Despite the repeated assertion by the counsel for the petitioner that the wrong mentioning of the relationship between the petitioner and the detenu would vitiate the entire proceedings, I am not satisfied that the same is material at all. Both sister and spouse of brother are relatives liable under the 11 o.p.27169/00 Act, as provided in Explanation 2 of Section 2(2)(b) of the Act. As such the fact that the 1[st] respondent originally thought the petitioner as the sister of the detenu does not materially affect the validity of the proceedings in so far as admittedly she is the brother's wife, who is also a relative as defined in Explanation 2 of Section 2(2)(b) and I am unable to find any vitiating factor in the impugned proceedings on that ground. 12. Relying on several decisions of the Appellate Tribunal for forfeited property, the counsel for the petitioner would argue that generally the Tribunal had accepted the income tax assessment as sufficient discharge of burden of explaining source. I am of opinion that there cannot be any such absolute rule. As stated in the counter affidavit, the income tax authority does not probe deep into the licit nature of the source and the first respondent has to ascertain not only the source, but also the source of the source. As such, there is some difference in the nature of the proceedings before the income tax authority and the 1[st] respondent. Therefore, simply because the income tax authorities had, for the purpose of income tax assessment accepted the explanation of the source is not sufficient discharge o.p.27169/00 12 of the burden cast upon the petitioner by Section 8 of the Act. Hence, contention of the petitioner in that regard is also of no avail to her. 13. Even otherwise I am not satisfied that the explanation given to the income tax authorities would hold water. In Ext.P1 it is only stated that the petitioner has contributed Rs.1,07,000/towards acquisition of property and construction of building of the firm; that in her S.B. account with the Federal Bank there were deposits amounting to Rs. 92,316.85 from which Rs.92,000/- was withdrawn and that Rs.10,500/- was obtained as loan from Smt. T.V. Ayisha. That document does not explain how the amount has come to her account. Therefore, that document does not, to any extent, explain the source of the money which have been deposited in the petitioner's account. In Ext.P1, 13 credit entries are shown in the petitioner's account with the Federal Bank. The petitioner's claim is that all the amounts have been sent by her husband from Malaysia and Singapore. There, all the entries are deposits by Demand Drafts, except three which are by cash and interest, for the periods from 13.9.1977 to 13.2.1981. But in Ext.P6 certificate from the Federal Bank, there were only 5 credit o.p.27169/00 13 entries relating to foreign remittance. The deposit dated 26.4.82 shown in Ext.P6 does not find a mention in the details of bank deposits in Ext.P1. As per Ext.P1 the purchase of property for the firm was in 1975 and completion of building was in May 1981. Going by Ext.P6, foreign remittance in the account of the petitioner is between 9.10.1978 and 26.4.1982. The total amount covered by Ext.P6 is only Rs.58,948.30, out of which Rs.14,966.90 came after May 1981. Therefore, assuming that the amounts came from her husband, it comes to only Rs.43,981.40 i.e. less than half of the Rs.90,000/- claimed by her to have been furnished by her husband. Further, the purchase of the property was in 1975, the source for investment for which is not explained at all. The petitioner does not claim to have any other source of income also. Further her husband appears to be a phantom eluding appearance before others. Even in the writ petition, the petitioner does not give any details as to his avocation, source of income etc. If he was in fact earning at Malaysia and Singapore, the simplest of simple way of proving the petitioner's case was to get him to depose before the 1[st] respondent as to the fact about his having provided the 14 o.p.27169/00 money to the petitioner. Not only has the petitioner not chosen to do so, nor does she even now give the details of her husband or as to why his evidence could not have been furnished. Therefore, the best evidence was kept away from the 1[st] respondent and the Tribunal. As such I am satisfied that whatever little attempt the petitioner has made to discharge her burden under Section 8 of the Act has ended in utter failure. Therefore, I have no hesitation to uphold the findings in the impugned orders that the petitioner has not explained the source of her investment as she was bound to do to escape action under Section 7 of the Act. Therefore, the irresistible conclusion is that the source was the ill-gotten money of the detenu. 14. In view of my findings as above, based on the very same documents, which she complains that the Tribunal has refused to accept, the last contention loses all relevance. Moreover the Tribunal cannot be found fault with for viewing those documents suspiciously. After having claimed that the documents were destroyed in a fire in 1992, and having not chosen to produce the same before the 1[st] respondent at any time between 1988 and 1992 despite Ext.P7 notice, the petitioner 15 o.p.27169/00 produces those documents before the Tribunal without offering any explanation as to how she got the documents which were destroyed by fire. Therefore, she has clearly not shown sufficient grounds for acceptance of documents at the appellate stage. Even then, in Ext.P14, the Tribunal has stated that, as I have done herein, they had also looked into the documents and did not find them in any way helpful to the appellant, for explaining the initial source of investment of a large sum. In this judgment, after considering the very same documents, I have gone a step further and found that those documents actually go against the petitioner. 15. As far as the arguments based on the decisions cited by the counsel for the petitioner are concerned, in view of the above discussion, they are not sufficient to offset my findings and in any event they being decisions of the Appellate Tribunal and the High Courts, are not binding on me. 16. The result of the above discussion is that I do not find any merit in the original petition. Accordingly, the same is dismissed. sdk+ Sd/S.SIRI JAGAN, JUDGE ///True copy/// P.A. to Judge 16 o.p.27169/00 S.SIRI JAGAN, J. ================ O.P.No.27169 of 2000-H ================ J U D G M E N T 24[th] September, 2008 o.p.27169/00 17