Supreme Court - Daily Orders
Chandra Kumar Jain (Dead) By Lrs. vs Union Of India . on 5 November, 2014
Bench: J. Chelameswar, S.A. Bobde
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO.1501 OF 2007
Chandra Kumar Jain (Dead) by LRs. ...Appellants
Versus
Union of India & Others …Respondents
ORDER
This appeal arises out of a judgment of the Delhi High Court dated 28th May, 2004 by which a Habeas Corpus Petition filed by one Chandra Kumar Jain was dismissed.
The said Chandra Kumar Jain was preventively detained by an order dated 05.05.2003 issued under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred to as “COFEPOSA Act”). The background on which the detention order came to be passed is as follows:-
Chandra Kumar Jain was intercepted on 7.3.2003 while he was about to board a flight scheduled to leave from Delhi to Dubai from the Indira Gandhi International Airport by the Custom Authorities. A Signature Not Verified Digitally signed by Deepak Mansukhani Date: 2014.11.08 12:44:50 IST Reason: Foreign and Indian currency cumulatively valued at Rs. 64,26,756/- 1 (Rupees Sixth Four Lacs Twenty Six Thousand Seven Hundred Fifty Six) was seized from him, the details of which are mentioned in the judgment under appeal. He was an employee of the Government of India working with the CBI from 1984. The High Court recorded that Chandra Mohan made 161 personal trips abroad mostly without taking any permission from the Government.
The High Court rejected the challenge to the said detention order and the writ petition holding that “the detention order was passed with due care and deliberation and taking into consideration all the facts and surrounding circumstances”.
Hence this appeal.
During the pendency of the appeal, it appears that the abovementioned Chandra Kumar Jain died. By an order dated 09.05.2008 of this Court, three of his legal representatives came to be substituted as appellants in the said appeal.
The preventive detention order is for the year 2003 for a period of one year. It expired by afflux of time. Chandra Kumar Jain had, in fact, been detained in custody for one full year under the abovementioned order.
Confronted with the question as to the need to examine the 2 correctness of the detention order today, the learned counsel for the appellants submitted that proceedings under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter being referred to as “SAFEMA”) have been initiated for forfeiture of certain properties on the ground that these properties are the ill-gotten wealth of deceased appellant Chandra Kumar Jain. Such proceedings could be initiated only against a limited class of persons. One of the classes being persons who had been detained under the provisions of COFEPOSA Act (under Section 2(2b) of the Act). If the detention order is held to be illegal, such proceedings under the SAFEMA cannot be continued and, therefore, this Court is required to examine the legality of the detention order.
We are of the opinion that this appeal need not be examined because under the Scheme of the SAFEMA, properties of five classes of persons could be forfeited by the Government only after an appropriate inquiry contemplated under the provisions of the Act. The persons whose properties are liable for such forfeiture are:
(i) Persons who are found guilty of the various offences specified under Section 2(2a);
(ii) Persons who have been detained under the COFEPOSA Act;
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(iii) Every person who is a relative of a person falling under Section 2(2a) or (2b);
(iv) Associates of a person falling under Section 2(2a) or (2b); and
(v) Holders of any property which was at any time previously been held by persons referred to in Section 2(2a) and (2b). The expression ‘relative’ and ‘associate’ are explained in Section 2.
Section 2 of the SAFEMA reads as under:
“Section 2. Application—(1) The provisions of this Act shall apply only to the persons specified in sub-section (2). (2) The persons referred to in sub-section(1) are the following, namely:—
(a) every person—
(i) who has been convicted under the Sea Customs Act, 1878 (8 of 1878), or the Customs Act, 1962 (52 of 1962), of an offence in relation to goods of a value exceeding one lakh of rupees; or
(ii) who has been convicted under the Foreign Exchange Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), of an offence, the amount of value involved in which exceeds one lakh of rupees; or
(iii) who have been convicted under the Sea Customs Act, 1878 (8 of 1878), or the Customs Act, 1962 (52 of 1962), has been convicted subsequently under either of those Acts; or
(iv) who having been convicted under the Foreign Exchange Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), has been convicted subsequently under 4 either of those Acts;
(b) every person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and prevention of Smuggling Activities Act, 1974 (52 of 1974):
Provided that—
(i) such order of detention being an order to which the provisions of section 9 or section 12A of the said Act do not apply, has not been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board or before making a reference to the Advisory Board; or
(ii) such order of detention being an order to which the provisions of section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the review under sub-section (3) of section 9 or on the report of the Advisory Board under section 8, read with sub-section (2) of section 9 of the said Act; or
(iii) such order of detention, being an order to which the provisions of section 12A of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the first review under sub-section (3) of that section, or on the basis of the report of the Advisory Board under section 8, read with sub-section (6) of section 12A, of that Act; or
(iv) such order of detention has not been set aside by a court of competent jurisdiction;
(c) every person who is a relative of a person referred to in clause (a) or clause (b);
(d) every associate of person referred to in clause (a) or clause (b);
(e) any holder of any property which was at any time previously held by a person referred to in clause (a) or clause (b) unless the present holder or, as the case may be, any one who held such property after such person and before the present holder, is or was a transferee in good faith for adequate consideration.
Explanation 1.— For the purposes of sub-clause (i) of clause (a), the 5 value of any goods in relation to which a person has been convicted of an offence shall be the wholesale price of the goods in the ordinary course of trade in India as on the date of the commission of the offence.
Explanation 2.— For the purpose of clause (c), “relative” in relation to a person, means—
(i) spouse of the person;
(ii) brother or sister of the person;
(iii) brother or sister of the spouse of person;
(iv) any lineal ascendant or descendant of the person;
(v) any lineal ascendant or descendant of the spouse of the person;
(vi) spouse of a person referred to in clause (ii), clause (iii), clause (iv) or clause (v);
(vii) any lineal descendant of a person referred to in clause (ii) or clause (iii).
Explanation 3.— For the purposes of clause (d), “associate”, in relation to a person, means—
(i) any individual who had been or is residing in the residential premises (including out houses) of such person;
(ii) any individual who had been or is managing the affairs or keeping the accounts of such person;
(iii) any association of persons, body of individuals, partnership firms, or private company within the meaning of the Companies Act, 1956 (1 of 1956), of which such person had been or is a member, partner or director;
(iv) any individual who had been or is a member, partner or director of an association of persons, body of individuals, partnership firm, or private company within the meaning of the Companies when such person had been or is a member, partner or director of such association, body, partnership firm of a private company;
(v) any person who had been or is managing the affairs, or keeping the accounts, of any association of persons, body of individuals, partnership firm or private company referred to in clause (iii);
(vi) the trustee of any trust, where,—
(a) the trust has been created by such person; or
(b) the value of the assets contributed by such person
(including the value of the assets, if any,
contributed by him earlier) to the trust amounts, on the date on which the contribution is made, to not less than twenty per cent, of the value of the 6 assets of the trust on that date;
(vii) where the competent authority, for reasons to be recorded in writing considers that any properties of such person are held on his behalf by any other person, such other person.
Explanation 4.— For the avoidance of doubt, it is hereby provided that the question whether any person is a person to whom the provisions of this Act apply may be determined with reference to any facts, circumstances or events including any conviction or detention which occurred or took place before the commencement of this Act. The identification of the persons against whom SAFEMA could be invoked is only the first step under the scheme of the SAFEMA Act. After such a person is identified in a given case, the competent authority must be satisfied that the properties held by such a person are illegally acquired properties of such person having regard to the known sources of income, earnings or assets, or any other information or material available to the competent authority. Only then, proceedings could be initiated for forfeiture of such properties by issuing a notice under Section 61. Upon receipt of the said notice, it is open2 to the recipient of the notice to place all relevant material 1
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 writting) 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 to be illegally acquired properties and forfeited to the Central Government under this Act.
(2) Where a notice under sub-section (1) to any 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. 2
7. Forfeiture of property in certain cases.
7 before the competent authority to establish that the property which is the subject matter of the notice is not illegally acquired property. Such a course of action is open to the noticee notwithstanding the fact that he is a person to whom the Act is applicable.
The identification of Chandra Kumar as a person against whom the SAFEMA Act could be invoked is established by the order of the preventive detention against him.
The tenability of the order of preventive detention against Chandra Kumar Jain (the original appellant herein) was examined by one constitutional Court i.e. the Delhi High Court. We do not see any (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 the 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 illegally acquired properties.
(2) 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 the 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 illegally 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 shares in a company stand forfeited to the Central Government under this Act, then, the company shall, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or the articles of association of the company, forthwith register the Central Government as the transferee of such shares. 8 reason for undertaking a second level of scrutiny in exercise of the discretionary jurisdiction of this Court under Article 136 of the Constitution examining the legality of the preventive detention order, more particularly, when the appellants have a clear opportunity to convince the competent authorities that the properties sought to be proceeded against under the provisions of the SAFEMA are not ill-gotten wealth of the deceased/appellant.
It is brought to our notice that during the pendency of the present appeal, this Court by its order dated 9.5.2008 directed as follows:-
“Heard learned counsel for the parties. The criminal miscellaneous petition for substitution is allowed.
It is directed that pending disposal of the appeal, the proceeding under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, shall continue, but the petitioners shall not be dispossessed from the property in their possession. The petitioners are restrained from creating any third party right in the aforesaid property.” We are informed by the learned counsel for the respondents that though notices were issued to the appellants herein from time to time, to appear before the competent authority, for taking appropriate decision in the matter, the appellants have not produced any material so far. On the other hand, learned counsel for the appellants submitted that in view of the pendency of the instant appeal, the 9 appellants did not produce any material before the competent authority that they may be given an opportunity to produce such material in defence of their legitimate claims over the property.
Having regard to the facts and circumstances, we deem it appropriate to direct the respondents to permit the appellants herein to produce such material as they deem fit in their defence. The competent authority will examine the material (to be produced by the appellants) in accordance with law and take an appropriate decision.
In view of the long pendency of the matter, we also deem it appropriate to direct the competent authority that the entire exercise be completed within a period of three months from today.
Until the final decision is taken by the respondents, the appellants shall not create any third party rights on the properties in issue.
The appeal stands disposed of accordingly.
………………………….J. (J. Chelameswar) …………………………..J. (S.A. Bobde) New Delhi;
November 05, 2014
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ITEM NO.114 COURT NO.7 SECTION II
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Criminal Appeal No(s). 1501/2007
CHANDRA KUMAR JAIN (DEAD) BY LRS. Appellant(s)
VERSUS
UNION OF INDIA & ORS. Respondent(s)
(with appln. (s) for stay and office report) Date : 05/11/2014 This appeal was called on for hearing today. CORAM :
HON'BLE MR. JUSTICE J. CHELAMESWAR HON'BLE MR. JUSTICE S.A. BOBDE For Appellant(s) Mr. V. Giri, Sr. Adv.
Mr. K. V. Mohan,Adv.
Mr. Md. Sadique, Adv.
For Respondent(s) Mr. K. Radhakrishna, Sr. Adv.
Ms. Ranjana Narayan, Adv.
Mr. B.K. Prasad, Adv.
Mr. P.K. Dey, Adv.
Mr. M. Khairati, Adv.
Mr. B.V. Balram Das, Adv.
Mrs. Anil Katiyar,Adv.
Mr. P. Parmeswaran,Adv.
UPON hearing the counsel the Court made the following O R D E R The appeal is disposed of in terms of the signed order.
(DEEPAK MANSUKHANI) (INDU BALA KAPUR)
COURT MASTER COURT MASTER
(Signed order is placed on the file)
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