Kerala High Court
N.A.Nazar vs Union Of India on 29 October, 2008
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR
&
THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON
TUESDAY,THE 27TH DAY OF MAY 2014/6TH JYAISHTA, 1936
WA.No. 106 of 2009
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O.P.NO. 11811/1999 OF THIS HONOURABLE COURT, DATED 29.10.2008
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APPELLANTS/PETITIONER NOS. 2,3,4,6,7 & 9 :
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1. N.A.NAZAR, (WRONGLY SHOWN AS N.S.NAZEER IN OP)
S/O.MOIDUNNY, VARNAT HOUSE,
ORUMANAYUR P.O., CHOWGHAT TALUK,
THRISSUR.
2. SUHARA, W/O.MOIDUNNY,
-DO- -DO-
3. N.A.THAHIRA, D/O.MOIDUNNY,
IYYATHU MAHAR, ORUMANAYUR P.O.,
CHOWGHAT TALUK, THRISSUR DISTRICT.
4. NASEEMA, D/O.MOIDUNNY,
VALCHA HOUSE, ORUMANAYUR P.O.,
CHOWGHAT TALUK, THRISSUR DISTRICT.
5. N.A.SAMITHA, D/O.MOIDUNNY,
SIRAJ MANZIL, ORUMANAYUR P.O.,
CHOWGHAT TALUK, THRISSUR DISTRICT.
6. N.A.SHABHANU, D/O.MOIDUNNY,
VARNAT HOUSE, ORUMANAYUR P.O.,
CHOWGHAT TALUK, THRISSUR DISTRICT.
BY ADV. SRI.MILLU DANDAPANI
RESPONDENTS/RESPONDENTS & PETITIONERS 1,5,8 & 10 :
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1. UNION OF INDIA,
REPRESENTED BY THE COMPETENT AUTHORITY,
SAFEEMA & NDPS ACT, CHENNAI - 17.
2. THE DISTRICT COLLECTOR,
THRISSUR, KERALA.
..2/-
..2..
WA.No. 106 of 2009
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3. N.A.SIDDIQUE, S/O.MOIDUNNY,
VARNAT HOUSE, ORUMANAYUR P.O.,
CHOWGHAT TALUK, THRISSUR.
4. N.A.NIZAR, S/O.MOIDUNNY,
VARNAT HOUSE, ORUMANAYUR P.O.,
CHOWGHAT TALUK, THRISSUR DISTRICT.
5. N.A.NISHAD, S/O.MOIDUNNY,
VARNAT HOUSE, ORUMANAYUR P.O.,
CHOWGHAT TALUK, THRISSUR DISTRICT.
6. N.A.SAMAD, S/O/MOIDUNNY,
VARNAT HOUSE, ORUMANAYUR P.O.,
CHOWGHAT TALUK, THRISSUR DISTRICT.
R1 BY ADV. SRI.T.SANJAY, CGC
R2 BY SPL.GOVERNMENT PLEADER SMT.GIRIJA GOPAL
BY SRI.P.PARAMESWARAN NAIR, ASST.SOLICITOR
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 27-05-2014,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Msd.
MANJULA CHELLUR, C.J. & P.R.RAMACHANDRA MENON, J.
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W.A.No.106OF 2009
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Dated this the 27th day of May, 2014
JUDGMENT
RAMACHANDRA MENON, J.
Appellants are the legal heirs of late Moidunny. When he was alive, he acquired properties, which according to the petitioners, was out of the funds derived by him from the business being carried out in Malaysia. But he was proceeded against for 'FERA' (Foreign Exchange Regulation Act 1973) violation and on conclusion of the proceedings Ext.P1 order came to be passed imposing penalty upon him. The amount which was lying in the concerned bank account was adjusted towards the penalty and the balance penalty amount was remitted by him. Subsequently, Ext.P2 show cause notice was issued to Moidunny, to show cause why the properties described in the schedule annexed therewith should not be declared to be illegally acquired properties and forfeited to the Central Government under the 'SAFEMA' (The W.A.No.106 OF 2009 : 2 : Smugglers & Foreign Exchange Manipulators Act, 1976). Admittedly, no explanation was offered and he rushed to the High Court of Madras by filing W.P.No.1835/1978 challenging the constitutional validity of the 'SAFEMA' (The Smugglers & Foreign Exchange Manipulators Act, 1976) itself and obtained a stay of the proceedings under the Act. The stay was subsisting for several years and the petitioner did not choose to submit any explanation for the source of money. Above writ petition was finally disposed of by the High Court of Madras on 18.7.1994, allowing the competent authority under the Act to continue and complete the proceedings in accordance with law.
2. Pursuant to said verdict, notice was issued to Moidunny, being the 'person affected' under the 'Act'. The said notice was returned with the postal endorsement, "expired". Thereafter, the petitioners were issued with notice as legal heirs of the deceased Moidunny. Petitioners appeared before the competent authority and submitted that they were not in a position to furnish material to explain the source of income of late Moidunny for acquiring the subject properties. It is also submitted by them that Moidunny was W.A.No.106 OF 2009 : 3 : working in Malaysia and was doing business there from 1952 to 1972. After considering the facts and figures, the competent authority passed Ext.P4 order directing forfeiture of nine items of properties mentioned in the said order. Against Ext.P4 order, the appellants filed appeal. During the pendency of the appeal, the first respondent issued Ext.P5 order under Section 19(1) of the Act to surrender the properties to the District Collector. The appellate authority dismissed the appeal by Ext.P6 order dated 17.11.1998. Later, by Ext.P7 order the competent authority directed the petitioners to surrender/deliver possession of the properties mentioned in Ext.P4 order. The petitioners approached this court challenging the said orders by filing O.P.No.11811 of 1999. After hearing both sides, intervention was declined by the learned Single Judge holding that the opportunity contemplated under the statute was given to both deceased Moidunny and his legal heirs. But the same was not utilized by them to establish the fact that the properties were acquired with funds obtained through legal sources. Accordingly, the original petition was dismissed as per judgment W.A.No.106 OF 2009 : 4 : dated 29.10.2008. Hence this writ appeal is filed with a prayer to set aside the impugned judgment of the learned Single Judge and allow the Original Petition No.11811/1999.
3. Heard learned counsel for the parties and perused the materials available on record.
4. During the course of hearing, learned counsel for the petitioners submits that the petitioners were not in a position to give the details of the transactions and the source of the properties acquired by deceased Moidunny. It is submitted that he was having income from the avocation/business in Malaysia. It is also submitted by the learned counsel that some of the properties mentioned in the schedule to the order were purchased much prior to the impugned proceedings and hence these properties are not liable to be forfeited under the 'SAFEMA' (The Smugglers & Foreign Exchange Manipulators Act, 1976).
5. We have gone through the relevant provisions which are mainly Sections 4, 6, 7 and 8 respectively of the 'SAFEMA' (The Smugglers & Foreign Exchange Manipulators Act, 1976), which are W.A.No.106 OF 2009 : 5 : quoted below for ready reference:
4. Prohibition of holding illegality acquired property:
(1) As from the commencement of this Act, it shall not be lawful for any person to whom this Act applies to hold any illegally acquired property either by himself or through any other person on his behalf.
(2) Where any person holds any illegally acquired property in contravention of the provisions of sub-section (1), such property shall be liable to be forfeited to the Central Government in accordance with the provisions of this act.
6. Notice of forfeiture: (1) If, having regard to the value of the properties held by any person to whom this Act applies, either by himself or through any other person on his behalf, his known sources of income, earnings or assets, and any other information or material available to it as a result of action taken under Section 18 or otherwise, the competent authority has reason to believe (the reasons for such belief to be recorded in writing) that all or any of such properties are illegally acquired properties, it may serve a notice upon such person (hereinafter referred to as the person affected) calling upon him within such time as may be specified in the notice which shall not be ordinarily less than thirty days, to indicate the sources of his income, earnings or assets, out of which or by means of which he has acquired such property, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties, as the case may be, should not be declared o be illegally acquired properties and forfeited to the Central Government under this Act. (2) Where a notice under sub-section (1) to any person specifies any property as being held on behalf of such person by any other person, a copy of the notice shall also be served upon such other person.
W.A.No.106 OF 2009 : 6 :
7. Forfeiture of property in certain cases: (1) The competent authority may, after considering the explanation, if any, to the show cause notice issued under Section 6, and the materials available before it and after giving to the person affected (and in a case where he person affected holds any property specified in the notice through any other person, to such other person also) a reasonable opportunity of being heard by order, record a finding whether all or any of the properties in question are legally acquired properties.
(2) Where the competent authority is satisfied that some of the properties referred to in the show cause notice are illegally acquired properties but is not able to identify specifically such properties, then it shall be lawful for the competent authority to specify the properties which, to the best of its judgment, are illegally acquired properties and record a finding accordingly under sub-section (1). (3) Where the competent authority records a finding under this section to the effect that any property is illegally acquired property it shall declare that such property shall, subject to the provisions of this Act, stand forfeited to the Central Government free from all encumbrances. (4) Where any share in a company stand forfeited to the Central Government under this Act, then the company shall, notwithstanding anything contained in the Companies Act, 1956, or the articles of association of the company, forthwith register the Central Government as the transferee of such shares.
8. Burden of proof: In any proceedings under this Act, the burden of proving that any property specified in the notice served under Section 6 is not illegally acquired property shall be on the person affected.
W.A.No.106 OF 2009 : 7 :
6. Going by Ext.P4, it is very much clear that there is an absolute prohibition in holding illegally obtained property. A forfeiture notice was issued to the deceased Moidunny under Section 6(1) of the 'SAFEMA' (The Smugglers & Foreign Exchange Manipulators Act, 1976)on 24.2.1978, as he was a detenue under the provisions of the 'COFEPOSA' (Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974), proposing forfeiture of the properties mentioned therein as the properties were believed to have been acquired through illegal sources. Another contention raised by learned counsel is that the properties mentioned in the schedule to Ext.P5 were acquired by late Moidunny even before the alleged commission of offences by utilizing his income from the business at his native place and Malaysia and that there is no nexus between the said property and the alleged offences by virtue of which they are not liable to be forfeited under 'SAFEMA' (The Smugglers & Foreign Exchange Manipulators Act, 1976). As per Section 8, in any proceedings under this Act, the burden of proving that any property specified in the notice served under Section 6 is not illegally acquired W.A.No.106 OF 2009 : 8 : property, shall be on the 'person affected'. Neither the deceased Moidunny nor his legal heirs was/were able to establish the lawful sources for the acquisition of the properties.
7. It is also equally important to note that the contention raised by the parties concerned mainly was that legal heirs cannot be proceeded against in respect of the properties in question. The legal heirs have not been able to furnish any explanation or evidence for the legal acquisition of the properties by the 'person affected'. The fact remains that the source of income for acquisition of the properties stands unexplained either by the deceased Moidunny or his legal heirs. The parties were ample opportunities to defend their case, but the chance given to the 'person affected' and the legal heirs to redeem the property has not been utilized.
8. The provisions of the statutes 'FERA' (Foreign Exchange Regulation Act 1973), 'COFEPOSA' (Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974) and 'SAFEMA' (The Smugglers & Foreign Exchange Manipulators Act, 1976), etc. are to be strictly interpreted and enforced particularly taking note of the object W.A.No.106 OF 2009 : 9 : of the statutes. As the very name of the statute itself 'SAFEMA' (The Smugglers & Foreign Exchange Manipulators Act, 1976) indicates, it is in respect of the manipulation of Foreign Exchange being pursued by unscrupulous persons, adversely affecting the national economy of the country. There cannot be any compromise with such attempts; lest it should tilt the fiscal balance.
Considering the entire facts and circumstances, we do not find any reasons to interfere with the matter. Writ appeal fails and it is dismissed accordingly.
MANJULA CHELLUR, Chief Justice P.R.RAMACHANDRA MENON, Judge jes