Madras High Court
Sugan Devi (Deceased) vs The Competent Authority on 4 September, 2014
Author: K.B.K.Vasuki
Bench: K.B.K.Vasuki
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 04.09.2014
CORAM
THE HON'BLE Ms. JUSTICE K.B.K.VASUKI
Writ Petition Nos.7139 and 7140 of 1998
1.Sugan Devi (deceased)
represented by her power of attorney
Mittalal Jain
2.Gulabdevi Jain
3.Chandrakala Jain
4.Reena Jain
5.Chandrakala Jain
6.Rajesh Jain
7.Pankaj Jain
8.Shakuntala Babel
9.Asha Khicha
10.Prakash Jain
11.Simla Chordia
(P2 to P11 substituted as legal heirs
of the first petitioner by order dated 7.3.2014
in WP.MP.300 & 351 of 2011) ... Petitioners
in WP.7139/1998
Hukmichand
represented by his power of attorney
Mittalal Jain ... Petitioner
in WP.7140/1998
vs.
1.The Competent Authority
SAFEM (FOP) & NDPS Act
Chennai-17.
2.The Appellate Tribunal for forfeited Property
4th Floor, Loknayak Bhavan
Khan Market, New Delhi. ... Respondents
in both WPs
Writ petitions filed under Article 226 of the Constitution of India to issue a writ of Certiorari to call for the records of the respondents culminating in the order of the second respondent dated 18.3.1998 in F.P.A.Nos.86/MDS/95 and 87/MDS/95 and to quash the same.
For Petitioners : Mr.T.Mohan
For Respondents : Mr.M.Gopikrishnan (R1)
C O M M O N O R D E R
Both the writ petitions are filed, by challenging the order of the second respondent Appellate Tribunal, confirming the orders of the first respondent, thereby forfeiting the properties standing in the name of the petitioners by names Sugan Devi and Hukmichand.
2.During the pendency of the writ petitions, the petitioner in WP.7139/1998 by name Sugan Devi died and her legal heirs were impleaded as the petitioners 2 to 11.
3.The deceased first petitioner Sugan Devi in WP.7139/1998 and the petitioner in WP.7140/1998 were the wife and son of one Harakchand. The said Harakchand was detained in November 1974 under the Maintenance of Internal Security Act,1971 and in December 1974 under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter shortly called as 'COFEPOSA Act'). While so, the husband Harakchand and Wife Sugan Devi and the son Hukmichand were during 1976, issued with notice under section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter shortly referred to as 'SAFEMA Act') stating that the first respondent competent authority under section 5 of SAFEMA Act, on the basis of the relevant information and/or relevant material available to him, has reason to believe that the properties described in the Schedule which are held by them or on their behalf, is/are illegally acquired properties within the meaning of clause (c) of sub section (1) of section 3 of the Act. The noticees were called upon to indicate to him, within 35 days of the service of the notice, the sources of their income, earnings or assets, out of which or by means of which they have acquired the properties, the evidence on which they rely and other relevant information and particulars and to show cause why the aforesaid properties should not be declared to be illegally acquired properties and forfeited to the Central Government under the Act.
4.The wife Sugan Devi and son Hukmichand on receipt of notice, filed WP.4074/1977 and 3977/1977 against the proceedings initiated under the SAFEMA Act. The writ petitions were disposed of by directing the competent authority to proceed with and complete the proceedings within 6 months, with liberty given to the persons affected to file their objections if any to the show cause notice and to duly appear before the competent authority. During the pendency of the enquiry before the first respondent competent authority, the persons affected sought for the copy of the reasons recorded by the competent authority, prior to issuance of section 6(1) notice for arriving at the conclusion that the properties were illegally acquired and they were furnished with the copy of the reasons recorded on 14.03.1995 and 17.02.1995. Thereafter, the first respondent competent authority, notwithstanding the failure of the persons affected to appear before him, along with the particulars sought for, proceeded to decide the issue and arrived at the conclusion that the persons affected have not furnished any evidence whatsoever about the activity of lending the money for earning interest, as such, the activity of money lending was a created story for capital building so as to explain the sources of investment made in the assets acquired through illegal sources and the assets under notice were liable for forfeiture under the Act. Similar order was passed in respect of the assets covered under section 6(1) notice issued to the husband Harakchand. Aggrieved against the separate forfeiture orders passed by the first respondent competent authority, the husband, wife and son filed three appeals in F.P.A.Nos.88/MDS/95, 86/MDS/95 and 87/MDS/95 before the second respondent Appellate Tribunal for Forfeited Property, New Delhi.
5.During the pendency of the appeals, the petitioners produced additional evidence annexed with their respective memorandum of Appeals, which were admitted by the Appellate Tribunal at the time of hearing. The second respondent Appellate Tribunal pending three appeals on its file, called for the findings of the first respondent competent authority with reference to the additional evidence. The first respondent competent authority in compliance with the direction of the Appellate Tribunal, held enquiry on the additional evidence, after giving the persons affected an opportunity of personal hearing and arrived at the finding that the plea that the source claimed for acquisition of all the properties was the earnings made from the money lending business started with the cash gifts received by the mother at the time of her marriage in 1950 and on the occasion of birth of their son Hukmichand in 1953 is not substantiated and no books of accounts have been produced for the period prior to the Assessment Year 1969-70 and the confirmatory letters indicating the receipt of cash gifts at the time of marriage were not contemporaneous evidence and the income tax assessment order was totally silent on the money lending business and the capital build up therefrom during the period prior to the Assessment year 1969-70 and the persons affected thus failed to discharge the onus cast on them under section 8 of the SAFEMA Act and have not established that the opening balance in the capital account for the Assessment year 1969-70 was generated from the money lending business carried on by the mother from the cash gifts received on both occasions, as such, the properties under notices have been acquired from tainted sources. The finding so rendered by the first respondent competent authority was placed before the second respondent Appellate Tribunal. The persons affected also filed their objections against each of the additional findings rendered by the first respondent competent authority.
6.The second respondent Appellate Tribunal however arrived at the conclusion that the names of the persons affected were utilised by the husband to make investments of the money earned by him from his illegal activities, as such, forfeiture of all the assets under the notices was justified. The second respondent Appellate Tribunal accordingly disposed of all the appeals. Aggrieved against the common order of the second respondent Appellate Tribunal, the persons affected i.e., wife and son are before this court by way of present two writ petitions.
7.Both the writ petitioners have in their writ petitions challenged the propriety, validity and enforceability of the impugned orders on the following grounds: (i)section 6(1) notices issued to the petitioners are vitiated, as the same do not satisfy the statutory requirements by not disclosing any reason and by not making any allegations regarding the existence of any link or nexus between the properties sought to be forfeited and the illegally acquired money of the detenu. (ii)section 6(1) notices are defective in nature for total non-application of mind of the competent authority and the same renders the initiation of the proceedings under SAFEMA Act to be one without jurisdiction, which inturn would render the forfeiture orders to be legally unsustainable. (iii)Both the authorities below erred in not placing due reliance on confirmatory letters received from several donors to prove the receipt of cash gifts by the persons affected at the time of marriage and birth of her son, capital accounts, Income Tax Assessment Orders and trial balance for the relevant years and the reasons given for rejecting the documents are arbitrary, unreasonable and unjustified. (iv)The impugned orders of forfeiture as passed by the first respondent competent authority and as confirmed by the second respondent Appellate Tribunal are based on presumption and assumption, without giving any valid reason for disbelieving the theory of money lending business carried on by the persons affected and the accumulation of income through the same, which was utilized for acquiring the assets. (v)The finding of the respondents that the properties are illegally acquired from and out of the income of the detenu by carrying on illegal activities, is mainly on the ground that the persons affected were unable to explain the sources of investment made in the assets acquired, which is not the sole criteria to decide the issue on hand.
8.The learned counsel for the petitioners in support of his contention raised above, cited the following authorities:
(i)(2003) 7 SCC 436 (Larger Bench of Apex Court consisting of 3 judges) (Fatima Mohd. Amin (dead) through LRs v. Union of India and another
(ii)(2003) 7 SCC 427 (Kesar Devi v. Union of India and others)
(iii)(2007) 2 SCC 510 (P.P.Abdulla v. Competent Authority)
(iv)(2008) 14 SCC 186 (Aslam Mohammad Merchant v. Competent Authority and others
(v)(2011) 4 MLJ 692 (SC) (State of Orissa v. Mamata Mohanty)
(vi)(2011) 6 MLJ 661 (R.Ramakrishnan v. Appellate Tribunal for Forfeited Property, New Delhi)
9.Per contra, the learned standing counsel for the respondent officials would defend the impugned orders of forfeiture by contending that (i) in the cases, where the relationship is close and direct like spouse, son or daughter or parents, which stand on altogether different footing, no link or nexus has to be indicated in the reasons for belief between the convict or detenu and the property; (ii)the omission to strike off the irrelevant or inappropriate portions/column in the notice is only in the nature of clerical omission and the same cannot be fatal to very validity of the proceedings. (iii)the reasons recorded are sufficient enough to believe to initiate proceedings under SAFEMA Act and the onus is only on the persons affected to prove that the properties put to notice are not illegally acquired properties under section 8 of SAFEMA Act, however, the persons affected have not satisfactorily discharged the burden cast on them before the Authorities concerned and the documents produced on the side of the petitioners are rejected for the well considered reasons recorded in the impugned orders.
10.The learned standing counsel for the respondents in support of his contention, cited the following authorities before this court:
(i)1995 (101) Crl.J. 0426 SC (Constitutional Bench consisting of 9 judges of Hon'ble Supreme Court) (Attorney General for India v. Amratlal Prajivandas and others)
(ii)2003 (5) Supreme 425 (Kesar Devi v. Union of India and others),
(iii)Civil Appeal Nos.772 and 773 of 2014 dated 21.1.2014 (Biswanath Bhattacharya v. Union of India and others)
(iv)1985 (152) ITR 238 (Andhra Pradesh) (Commissioner of Income Tax v. Chandulal)
(v)1995 (216) ITR 660 (Bombay) (Commissioner of Income Tax v. Kaushalya and others)
(vi)(2014) 1 MLJ (Crl) 142 (Rukhiya and others v. Registrar, Appellate Tribunal for Forfeited Property, New Delhi and another)
11.Heard the rival submissions made on both sides and perused the records.
12.The subject matter of section 6 (1) notice issued to the Sugan Devi is totally numbering 6 properties viz., first item is half share in the house property at Door No.20-A, Kuttiappa Gramani Street, Madras-10; items 2 to 4 are cash accounts held in three companies; item 5 is Rs.69/- held in the account of Canara Bank and 6th item is the cash on hand at Rs.2,438/- as on 13.11.1974. The assets covered under section 6(1) notice issued to other writ petitioner Hukmichand are (i)half share in the house property at Door No.20-A, Kuttiappa Gramani Street, Madras-10 and items (ii) to (v) relate to cash accounts. The first respondent competent authority passed the orders of forfeiture, in respect of all the properties under notices. Whereas the second respondent Appellate Tribunal, while confirming the findings of the first respondent competent authority, excluded the last two items i.e., amount held in Canara Bank and cash of Rs.2,438/- in hand insofar as Sugan Devi is concerned and excluded the fifth item of cash on hand to the tune of Rs.4,522/- insofar as Hukmichand is concerned and confirmed the orders of forfeiture in respect of other assets under notices.
13.Admittedly, the assets do stand in the name of the deceased Sugan Devi and Hukmichand, who are the wife and son of one Harakchand, who was admittedly detained in 1974 under the relevant provisions of COFEPOSA Act. Before going into the case of the writ petitioners that the assets in question were not illegally acquired properties, but were acquired from and out of the income derived by them through money lending business, it is but necessary to go into the propriety and validity of section 6(1) notices. Though the husband was detained under COFEPOSA Act in December 1974 and the assets covered under section 6(1) notices were acquired much before the same, section 6(1) notices were issued only on 27.12.1976 i.e, two years after the detention of the detenu.
14.For better appreciation, Section 6(1) of SAFEMA Act is extracted hereunder:
S.6(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, 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 to be illegally acquired properties and forfeited to the Central Government under this Act.
15.In the following judgments, the Hon'ble Supreme Court has dealt with the particulars to be mentioned in section 6(1) notice and in the reasons recorded, warranting action against the person concerned:
(i)(2003) 7 SCC 436 (Larger Bench of Apex Court consisting of 3 judges) (Fatima Mohd. Amin (dead) through LRs v. Union of India and another
(ii)(2003) 7 SCC 427 (Kesar Devi v. Union of India and others)
(iii)(2007) 2 SCC 510 (P.P.Abdulla v. Competent Authority)
(iv)(2008) 14 SCC 186 (Aslam Mohammad Merchant v. Competent Authority and others
16.In Fatima Mohammed Amin's case, 3 judges larger bench of Apex Court, has dealt with the appeals, arising out of similar order of forfeiture passed under the SAFEMA Act by the Authorities. In the case above cited, the order of forfeiture passed by the competent authority was confirmed by the Appellate Tribunal and by the High Court and the son of the appellant before the Supreme Court was the detenu. The Apex Court, having considered the reasons recorded by the competent authority along with show cause notice and having found the absence of any averments to the effect that the property acquired by the appellant was a benami property of her son or the same was illegally acquired from her son and further having found the absence of any allegations whatsoever 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, was of the view that the contents of the notices even if taken at their face value do not disclose any reason warranting action against the appellant and the condition precedent for initiation of the proceedings under SAFEMA did not exist and consequently held the impugned orders of forfeiture not sustainable and accordingly allowed the appeals.
17.It may be true that in Kesar Devi's case, the Hon'ble Supreme Court distinguished the decision of Fatima Mohammed Amin case and was of the view that no link or nexus has to be indicated in the reasons for belief between the convict or detenu and the property, in the cases where the relationship is close and direct like spouse, son or daughter or parents which stand on an altogether different footing as such an inference can easily be drawn and on the failure of the appellant to establish that she had any income of her own to acquire the properties, no other inference was possible except that it was done so with the money provided by the husband/detenu. The Apex Court in para 14 of the same decision, reproduced the copy of the notice issued under section 6 and in para 15 held that the notice clearly records the reasons for belief and therefore it fully complies with the requirement of law and there was no infirmity in the same. It is further held in para 16 that the notice issued by the competent authority in Fatima Mohd. Amin's case, did not dislcose any reasons and thus the same did not meet the requirement of sub section (1) of section 6 of the Act, but in Kesar Devi's case, the reasons for belief have been clearly recorded by the competent authority in section 6(1)notice.
18.In Aslam Mohammad Merchant's case, the core question which arose for consideration was that what are the statutory requirements for initiating a valid proceeding for forfeiture of the property. It is held therein that before the actual order of forfeiture of such illegally acquired property is passed, issuance of a notice to show cause is essential so as to fulfill the requirements of natural justice. Such a notice is to be issued by the competent authority having regard to: (i)the value of the property held by the person concerned (ii)his known source of income, earning or assets, (iii)any other information or material made available as a result of a report from any officer making an investigation under Section 68-E of the Act or otherwise. When the said conditions are satisfied, the competent authority would be entitled to issue a show cause notice, if he has reason to believe, where for reasons are to be recorded in writing that the properties are illegally acquired properties. It is further held therein that a proper application of mind on the part of the competent authority is imperative before a show cause notice is issued. The competent authority is required to apply his mind on the materials brought before him. It is also necessary that a finding that all or any of the properties in question were illegally acquired properties is recorded. Section 68-H of the NDPS Act provides for two statutory requirements on the part of the authority viz., (i)he has to form an opinion in regard to his reason to believe and (ii)he must record reasons therefor. Both the statutory elements, namely reason to believe and recording of reasons must be premised on the materials produced before him. Such materials must have been gathered during the investigation carried out in terms of Section 68-E or otherwise. Indisputably, therefore, he must have some materials before him. If no such material had been placed before him, he cannot initiate a proceeding. He cannot issue a show cause notice on his own ipse dixit. A roving enquiry is not contemplated under the Act concerned as properties sought to be forfeited must have a direct nexus with the properties illegally acquired. A valid proceeding can be said to have been initiated for forfeiture of the property when the notice to show cause is found to be satisfying the statutory requirements which are condition precedent therefor.
19.The Apex Court in the same Aslam Mohammed Merchant's case, having found that the statutory requirements have not been fulfilled, as no material has been brought on record to show that any nexus or a link with the properties sought to be forfeited exists and the show cause notices do not contain any reason so as to satisfy the requirements of Section 68 H(1) of NDPS Act, held the show cause notice to be illegal and the same would vitiate all the subsequent proceedings. The Apex Court, while arriving at such conclusion, observed that the application of mind on the part of the competent authority and the Appellate Tribunal at the subsequent stage was not in question and what was the question was non-application of mind on the part of the authority prior to issuance of the notice. The person affected would be called upon to discharge his burden provided a link or nexus is traced between the holder of the property proceeded against and an illegal activity of the detenu and such a formation of belief is essential. The Apex Court in para 45 of Aslam Mohammed Merchant's case, expressed its inability to agree with the observation of the Supreme court in Kesar Devi case, opining that no nexus or link between the money of the debt and property sought to be forfeited is required to be established under the scheme of the Act. Though the same is arising out of Narcotic Drugs and Psychotropic Substances Act, the provisions of SAFEMA and NDPS Act are pari materia and the principles laid down by the Supreme Court in that case can be applied to the proceedings initiated under SAFEMA Act.
20.In P.P.Abdulla case, the question arose as to whether it would be sufficient to state that the authority has recorded the reasons in writing. The Hon'ble Supreme Court held that it is incumbent for the competent authority to produce the reasons before the court so that the same can be scrutinised in order to verify whether they are relevant and germane or not and this can be done by annexing the copy of the reasons along with the counter affidavit or by quoting the reasons in the counter affidavit or if the notice itself contains the reason of belief that notice can be annexed to the counter affidavit or quoted in it. The Supreme Court further having found that as the notice does not allege any link or nexus between the property and illegally acquired money of the appellant therein, held that the notice issued by the competent authority under section 6(1) was illegal and the consequential order as null and void.
21.The learned brother judge of this court has in the common order passed by him in two writ petitions [(2011) 6 MLJ 661 - R.Ramakrishnan v. Appellate Tribunal for Forfeited Property, New Delhi], made interpretation and application of the provisions of SAFEMA Act and the effect of the orders passed under the Act, which were challenged before the learned single judge, at the instance of the relatives of detenu/convict. The learned single judge after detailed discussion of the objects and reasons of SAFEMA Act and after reproducing the relevant provisions of the Act and after analysing the principles laid down by the Hon'ble Apex Court in various judgments in detail, summarised the legal principles. The learned brother judge, while doing so, referred to the following decisions: (i)Attorney General of India v. Amratlal Prajivandas- AIR 1994 SC 2179 (9 Judges Bench) (ii)Fatima Mohd. Amin v. Union of India (2003) 7 SCC 436 (iii)Kesar Devi v. Union of India- AIR 2003 SC 4195 (iv)Sajitha v. Competent Authority (2005) Crl.LW 3255 (DB) (v)(2007) 2 SCC 510 P.P.Abdulla v. Competent Authority (vi)(2008) 14 SCC 186 (Aslam Mohammed Merchant v. Competent Authority (vii) V.Mohan v. Income Tax Officer (2008) Crl.LJ 2582 (viii)(2011) 4 MLJ 692 (SC) State of Orissa v. Mamata Mohanty and the legal principles which were culled out from the decisions cited supra are summarised by the learned brother judge as follows:
21. Thus, on a careful analysis of the decisions cited supra, the legal principle which could be culled out could be broadly summarised as follows:-
(a) Notice issued under Section 6(1) of the Act shall be issued by the competent authority having regard to (i)the value of the property held by the person concerned, (ii) his known source of income, earning or assets, (iii) any other information or material made available as a result of a report from any officer making an investigation under Section 18 of SAFEMA the Act or otherwise.
(b) When the aforementioned conditions are satisfied, the competent authority would be entitled to issue show cause notice, if has reason to believe, which are to be recorded in writing that the properties are illegally acquired.
(c) A valid proceedings can be said to have been initiated for forfeiture, upon satisfying the statutory requirement, which are condition precedent.
(d) Only in case where a valid proceeding has been initiated, the burden of proof would be on a person affected.
(e) Before passing an order of forfeiture the competent authority must comply with the principles of natural justice and apply his mind on the materials placed before him.
(f) It is necessary to record a finding that all or any of the properties in question were illegally acquired properties.
(h) Competent authority is not bound by any finding of any officer or authority under any other law as the same would not be conclusive for the purpose of any proceeding under SAFEMA.
(i) That a link must be found between the property sought to be forfeited and income or assets which where illegally acquired by the person concerned.
(j) The idea is to forfeit the illegally acquired properties of the convict/detenue irrespective of the fact that such properties are held by are kept in the name of or screened in the name of any relative or associate as defined in the explanation in Section 2(2).
(k) Only the properties of the convict/detenue are sought to be forfeited wherever they are.
(l) The idea is to reach the properties of the detenue/convict, whosoever's name they are kept or by whosoever they are held.
(m) The idea is not to forfeit the independent properties of such relatives or associates which they may have acquired illegally, but only to reach the properties of the convict/detenue or properties traceable to him, wherever they are ignoring all transaction with respect to those properties.
(n) Proper application of mind on the part of the competent authority is imperative before a show cause notice is issued.
(o) The competent authority has to form an opinion in regard to his reason to believe and he must record reasons there for.
(p) Reason to believe and Recording of reasons must be premised on the materials produced before the competent authority. Such materials must have been gathered during investigation carried out in terms of the Act or otherwise.
(q) If no materials have been placed before the competent authority he cannot issue proceedings.
(r) A rowing enquiry is not contemplated under the Act as the properties sought to be forfeited must have a direct nexus with properties illegally acquired.
(s) The reasons should appear on the face of the notice or they must be available on the materials placed before the competent authority.
(t) The competent authority has to produce the reasons before the court so that the same can be scrutinised in order to verify whether they are relevant or germane or not?
(u) The burden of establishing that the properties mentioned in the show cause notice are not illegally acquired properties of the convict/detenue lies upon such relative/associate.
(v) Relative/associate must establish that the said property has not been acquired with the monies are assets provided by the detenue/convict.
(w) The connecting link between the properties and the convict/detenue, the burden of disproving is upon the relative/associate.
(x) The necessity of establishing the link or nexus is writ large on the face of the statutory provision as would appear from the definition illegally acquired property as also that of Property.
(y) A person affected would be called upon to discharge his burden provided a link or nexus is traced between the holder of the property proceeded against and an illegal activity of the detenue and such a formation of belief is essential.
(z) The Court can examine whether there was any material available on record from which the requisite believe could be formed by the authority.
(aa) Once show notice is found to be illegal, the same would vitiate all subsequent proceedings.
(ab) Failure to delete the inappropriate words in a standard performa notice indicates non-application of mind.
(ac) It cannot be disputed that the object of SAFEMA is to achieve a salutary purpose, but it is to be borne in mind that the right to hold property, although no longer a fundamental right, is still a constitutional right. It is a human right.
(ad) When stringent laws like SAFEMA become applicable as a result of which some persons are deprived of their right in a property, scrupulous compliance with the statutory requirements is imperative.
(ae) If notice issued under Section 6(1) is found to be defective and consequently, the order of forfeiture is set aside, it would be open to the competent authority to initiate a fresh proceedings in accordance with law.
22.Out of the two writ petitions decided by the learned brother judge, one of the writ petitioners was the brother's son of convict and is a person as defined under section 2(2)(c) of the Act. In other writ petition dealt with by the learned brother judge, the writ petitioner was the wife of the detenu. The The learned brother judge while dealing with the validity of identical section 6(1) notice, observed that the printed format was adopted by the competent authority in issuing section 6(1) notice and the relevant particulars have not been marked and the same does not contain the details as regards the value of the property held by the petitioner regarding his known source of income or earning and the availability of any material or information, as such, the three pre-conditions as required under section 6(1) notice are missing and the same is primary indication of non-application of mind. It is further observed therein that the reasons recorded by the competent authority does not satisfy the primary requirement for issuance of a notice under section 6(1) inasmuch as it does not establish a link between the property sought to be forfeited and the income or assets which were illegally acquired by the person concerned and in the absence of the connecting link, the burden does not shift upon the petitioner, who is the relative of the convict for disproving the allegation and without tracing the link, the petitioner cannot be directed to show cause as to why the properties should not be forfeited, as such, the notice issued under section 6(1) does not satisfy the test laid down by the Hon'ble Supreme Court in the decisions cited supra and is found to be illegal and consequently, the subsequent proceedings initiated for forfeiture is also vitiated. The learned brother judge, by observing so allowed the writ petitions thereby quashing the impugned orders of forfeiture.
23.In the present case, Section 6(1) notice issued to both the writ petitioners i.e, wife and son of the detenu simply read that the competent authority under section 5 of SAFEMA Act have on the basis of relevant information and/or relevant material available to him, reason to believe that the properties described in the Schedule annexed hereto which are held by them or on their behalf, are illegally acquired properties within the meaning of clause (c) of sub section (1) of Section 3 of the said Act. If the notice issued under section 6(1) to the petitioner in both the writ petitions is viewed in the light of legal premises as laid down by the Apex Court and as summarised by the learned single judge of our High Court in the authorities cited supra, it would undoubtedly go to show that the same are bald and vague and are an indication of non application of mind on the part of the first respondent competent authority and the same do not satisfy the statutory requirements as laid down by the Hon'ble Supreme Court and as followed by the learned brother judge of this court. As rightly pointed out by the learned counsel for the petitioners, section 6(1) notice does not even read whether the properties are illegally acquired properties either under section 3(1)(c)(i) to 3(1)(c)(iv) or under section 3(1)(A) or 3(1)(B). It also does not even refer to the name of the husband or father as the case may be to draw an inference regarding the existence of any link or nexus between the property covered under section 6(1) notices which are sought to be forfeited and the illegally acquired money of the detenu. Further, the irrelevant portions were also not struck off so as to ascertain whether the reason to believe is based on any information or relevant material and there is no indication in section 6(1) notice that it was issued having regard to other particulars as referred to in section 6(1). On this score alone, section 6(1) notices based on which the impugned orders of forfeiture were passed, are bad in law and vitiated and are liable to be set aside.
24.As far as the reasons recorded by the first respondent competent authority is concerned, the same, except referring to the name of the husband and his detention under COFEPOSA Act and except referring to non-availability of evidence or details to prove the receipt of cash gifts and the persons to whom the money was lent and interest was earned and the capacity with which the activity of money lending was started and except stating that the source of the funds with which the activity of money lending was started was from unexplained sources and subsequent accretions also partake of the same nature, do not disclose any allegation whatsoever regarding the existence of any link or nexus between the property sought to be forfeited and the illegally acquired money of the detenu. The reasons recorded would only disclose that the belief is based on the failure of the noticees to explain the source of investments and not because of the link or nexus between the property sought to be forfeited and illegally acquired money of the detenu. When that being the particulars mentioned in section 6(1) notices and the reasons recorded in writing, the same are defective and in non-compliance with the statutory requirements and when there is no satisfactory fulfillment of the pre-conditions for valid proceedings of the Act, the defective nature of section 6(1) notice and the reasons recorded by the competent authority would render the proceedings initiated on the strength of the same to be invalid and without jurisdiction and the same would inturn vitiate and nullify the orders of forfeiture which are impugned herein.
25.Even otherwise, the reading of the reasons recorded by the competent authority would show that what is disbelieved by the competent authority is not the plea regarding money lending business carried on by the mother and son. Both the show cause notices and the reasons recorded by the competent authority would only say that in the absence of any details or evidence as to the availability of cash with which the activity of money lending was started, the activity of money lending started was from unexplained sources and subsequent accretions also partake of the same nature. That being so, it cannot be presumed the properties sought to be forfeited by the impugned orders are the illegally acquired properties from the income earned by the husband by illegal business.
26.As far as the orders of forfeiture of the first respondent competent authority are concerned, the same are passed without giving due opportunity of personal hearing to the persons affected. From the facts made available herein, it is now seen that section 6(1) notices were issued on 27.12.1976 and the reasons were purportedly recorded on the same day by the competent authority, but the copies of the same were furnished to the persons affected only on 14.3.1995 and 17.2.1995 i.e., nearly after 20 years that too after repeated demands made by the noticees and much after the disposal of the writ petitions on 18.7.1994. One of the objections raised by the noticees in the earlier writ petitions is that the writ petitioners were not served with the copy of the reasons recorded by the competent authority. As rightly argued by the learned counsel for the petitioners, non-production of the necessary particulars at the right time to the petitioners would defeat their right to effectively contest their case and providing appropriate opportunity at appropriate time will help the parties to canvass their contention in an appropriate way and failure to provide one such opportunity will circumvent the proceedings, which inturn result in adverse findings against the parties.
27.After the receipt of the reasons recorded, there were two hearings and adjourments were sought for by the persons affected on both the occasions and the request for adjournment on the first occasion, to collect more particulars was granted and the request for adjournment on the second occasion on the ground that the parties were out of station, was rejected and the competent authority proceeded to decide the matter and disposed of the same through the impugned order dated 16.8.1995. The reading of the impugned order would reveal that the orders of forfeiture are based solely on the ground that the persons affected have not furnished any evidence for the activity of money lending for capital building. Though it is stated that the cash gift of Rs.6,780/- was a very large amount in the year 1950, there is no specific finding in the order either that the theory of receipt of cash gifts is unbelievable or as to why the theory is unbelievable. In the absence of one such finding, the impugned orders of forfeiture passed by the first respondent competent authority are contrary to the reasons recorded by him regarding the theory of money lending business, which was not initially disbelieved by him. What was disbelieved by the first respondent competent authority in the reasons recorded is that the capital with which the activity of money lending started was from the unexplained sources. Thus, the combined appreciation of the reasons recorded and the impugned orders of forfeiture passed by the Competent authority would only disclose inconsistency in the findings of the first respondent.
28.Be that as it may, such finding by the competent authority is, as rightly pointed out by the learned counsel for the petitioners, without duly considering the confirmatory letters issued by the donors, capital accounts and the trial balance sheet and the Income Tax assessment orders passed by the authorities concerned regarding the income derived from such money lending business. It is but relevant to mention at this juncture that the writ petitioners became the income tax assessees much before the enactment of COFEPOSA and SAFEMA Acts, came into force in 1974 and 1976 respectively. Both the writ petitioners/mother and son filed their returns during 1971 for the Assessment Years 1969-70 to 1971-72 along with the copies of capital account from the Assessment Years 1951-52 to 1968-69 and trial balance sheets for the Assessment years 1969-70 and 1971-72. As far as Sugan Devi is concerned, extract of books of accounts and other documents as above referred to along with Income Tax Assessment orders from Assessment Years 1969-70 onwards were produced before the Appellate Tribunal. As far as Hukmichand is concerned, the documents produced were trial balance, profit and loss account and capital account. The petitioners also stated about their purchase of a house property in 1972 in their income tax returns for the assessment year 1973-74. The Income Tax Authorities, after having inspected all the accounts relating to the money lending business carried on by the petitioners and after having satisfied themselves as to the source and deployment of the capital, finalised the same under section 143(3) of the Income Tax Act. The facts above stated would go to show that the transactions were duly entered in cash book and Income Tax returns were duly filed and the same were considered by the Income Tax Assessment Officer in the light of the documents filed along with the same and the Income Tax Officer, having duly accepted the same, passed appropriate orders accepting the statement of total income and purchase of house from and out of the income so derived. The income tax authorities did not dispute the capital account of the petitioners and were satisfied as to the source of funds. However, the respondents failed to take note of the same on the ground that it appears to be a summary assessment order.
29.As far as the Income Tax Assessment Orders are concerned, it is true that they are not binding on the respondents herein. But the documents could have been attached some evidenciary value to decide the issue as to whether the persons affected received cash gifts and whether the cash gifts received are the sources for money lending business and the income earned and the earnings so accumulated was utilised for the purchase of property etc. The respondents 1 and 2 without doing so, have simply ignored the documents made available before them solely for the reason that supporting books of accounts were not produced. Such conduct on the part of the respondents in ignoring the documents produced, is totally contrary to the procedure laid down under law and is in violation of the principles of natural justice and is arbitrary and apparently error on the face of records.
30.The petitioners/persons affected have also before the second respondent Appellate Tribunal produced confirmatory letters from the donors who made cash gifts to Sugan Devi at the time of marriage in 1950 and on the birth of her son Hukmichand in 1953. It is also note worthy to mention at this juncture that the persons affected belong to Jain community, which is rich in financial status and money lending is their common business. As the marriage is one time occasion in every one's life and the Jain community is normally rich in status, the marriage will be conducted by performing various rites and rituals, by using horse etc and in lavishly and variety and costly gifts would be presented to the brides and bridegrooms. That being their social status, the activity of money lending ought to have been, in the light of the fact that the deceased Sugan Devi had come from affluent family, started from the cash gifts received and the issue relating to quantum of cash gifts on her marriage occasion and on the occasion of her son's birth could have been decided on the basis of the status of her parents family. The fact that the receipt of cash gifts on the occasion of one's wedding and on child birth is only as per customs and convention accepted in all the communities and cultures, cannot at all be disputed. Equally the quantum of such cash gifts on both the occasions cannot at all be disbelieved, disputed or denied for any reason. As a matter of fact, no reason at all is given by either of the respondents 1 and 2 for disbelieving the theory of receipt of cash gifts, especially in the light of the fact that there were confirmatory letters from identified individuals, who were available for cross examination in this regard and a list of the surviving donors has also been furnished to the respondents. The petitioners had produced confirmatory letters from several donors, whose addresses were also available with the first respondent confirming the gifts made by them, but the respondents failed to take account of the same. The failure on the part of the respondents, to verify the genuineness of the same, has only resulted in adverse orders of forfeiture of the properties, which were acquired by the petitioners on their own from the money lending business carried on with such cash gifts. There is absolutely no explanation forth coming on the side of the respondents for rejecting the confirmatory letters, without ascertaining the truthfulness of the contents of the confirmatory letters from the authors of the same, as such, the ground that the confirmatory letters are not contemporaneous letters, is lacking in bonafide and logic. It cannot be expected that the cash gifts on any special or festive occasion shall be normally accompanied by confirmatory letters and the necessity to obtain confirmatory letters would not have arisen on the date of receipt of cash gifts and the necessity arose only when the dispute arises, that too nearly after 25 years and such confirmatory letters obtained for the purpose of establishing their case before the authorities concerned, cannot be contemporaneous letters. In such circumstances, what is required on the part of the official concerned, is only to ascertain the truthfulness of the same by summoning the authors for enquiry or by obtaining any statement from them and the rejection of those letters, without doing so, by the respondents 1 and 2 is hence arbitrary, totally erroneous, unjustified and unreasonable.
31.As far as the capital accounts and trial balance are concerned, the respondents ought not to have for want of books of accounts rejected the same, when their inability to produce the same was duly explained on the side of the persons affected. it is the case of the petitioners that they had produced the books of account before the Income Tax Authorities during the relevant period and the same were subsequently misplaced. It is also noteworthy to mention at this juncture that the petitioners have stated each and every accounts meticulously, even small withdrawals of Rs.1,873/- in the year 1953-54 and Rs.267/- withdrawn subsequently and gift of Rs.3000/- on 23.10.1957 and Rs.3,007/- on 31.10.1959. As rightly argued by the learned counsel for the petitioners, the manner in which, the accounts were written and brought forward and the quantum of amount entered therein and the withdrawal of amounts as shown in the accounts and the accounts relating to third parties tallying with that of the amounts borrowed from the petitioners, would probablise their theory relating to nature and the manner of business carried on by the petitioners and the accumulation of income which are sufficient enough to show that the properties covered under section 6(1) notices are not illegally acquired properties. That being so, the respondents, notwithstanding the non-availability of books of accounts could have considered the authenticity of capital accounts and trial balance sheet having regard to the fact that the books of accounts, capital accounts and trial balance were filed along with Income tax returns before the Income Tax Authority concerned.
32.The mere fact that the husband was detained in COFEPOSA Act, will not construe the properties standing in the name of his wife and son as illegal properties or acquired by illicit means. It is relevant to point out at this juncture that the detenu was subsequently said to be acquitted from all the charges framed against him. In that event, it cannot be presumed that the properties held in the name of the petitioners were acquired through ill-gotten wealth and the same causes serious threat to the Government economy etc. It is not the case, wherein the owners of the properties were totally unable to explain the sources of their income to purchase the property, but it is the case wherein, the persons affected were in the custody of relevant documents during the relevant point of time and were unable to produce some of the documents before the competent authority and Appellate Tribunal and that by itself cannot be the sole reason to hold that the source for purchase of the assets covered under section 6(1) notices remained unexplained and they are illegally acquired properties from the income of the detenu. It is at the risk of repetition stated that the properties were purchased much before the Enactment of SAFEMA Act and when the passing of such Act is not in contemplation of legislative authority. In that event, there is absolutely no reason to disbelieve that the assets in question are illegally acquired properties as contemplated under the SAFEMA Act which was enacted much after the purchase of the properties. That being so, the impugned orders of forfeiture passed by the first respondent competent authority as confirmed by the second respondent Appellate Tribunal are totally based on inconsistent stand and contrary to the material evidence and apparently error on the face of the records and are arbitrary and perverse.
K.B.K.VASUKI, J.
rk
33.Thus, for the discussion held above, this court is of the view that the impugned orders of forfeiture of the properties belonging to the deceased Sugan Devi and Hukmichand are both factually and legally unsustainable and are liable to be set aside.
34.In the result, both the writ petitions are allowed and the impugned orders of the respondents 1 and 2 stand quashed. No costs.
rk
Index: Yes/No
Internet:Yes/No 04-09-2014
To
1.The Competent Authority
SAFEM (FOP) & NDPS Act
Chennai-17.
2.The Appellate Tribunal for forfeited Property
4th Floor, Loknayak Bhavan, Khan Market, New Delhi.
WP Nos.7139 and 7140 of 1998