Madras High Court
1 M Kalyansundaram (F. P. A. No. 17 (Mad) ... vs Competent Authority. on 21 December, 1990
Equivalent citations: [1991]188ITR35(MAD)
ORDER
This order will dispose of two connected appeals M. Kalyanasundaram v. Competent Authority, Madras 9FPA No. 17 (Mad) of 1990) and Sethuraman V. Competent Authority, Madras (FPA No. 24 (Mad) of 1990) which are directed against the same order of the Competent Authority, Madras, dated February 16, 1990.
Kalyanasundaram, the appellant in Appeal No. 17 (Mad) of 1990, was detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, and as such is an affected person in terms of section 2(2) (b) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, (hereafter the "Act"). A notice under section 6(1) of the Act dated August 29, 1979, was issued to him in relation to the following items of property directing him to indicate the source of his income, earnings or assets by means of which he had acquired the same :
(1) Survey No. 104/1 and 2-Keezhakadu Village (Keeladu Village) (84 cents) (wet lands) purchased on May 14, 1972, for Rs. 8,820 and after adding expenses, the investment came to Rs. 9,751;
(2) Survey No. 18/1 of Pudukottagam Village (1.32 acres) (dry lands) purchased on July 20, 1972 for Rs. 8,000 and after adding expenses, total investment came to Rs. 8,833.50; and (3) Survey No. 18/1 of Pudukottagam Village - 44 centrs (dry lands) purchased on July 20, 1972, for Rs. 2,000 and after adding expenses, total investment came to Rs. 2,211.
The items of properties detailed above are ostensibly owned by his son, Sethuraman (appellant in FPA No. 24 (Mad) of 1990). He was a minor at the time the notice under section 6(1) of the Act was issued to Kalyanasundaram. The ostensible owner of the properties is also entitled to be served with a notice under section 6(2). The Competent Authority, Madras, therefore, sent the notice under section 6(2) of the Act in the name of Sethuraman, minor, through his natural guardian, Kalyanasundaram, at the latters address by registered post. Kalyanasundaram refused to accept the notice received in the name of Sethuraman, minor. In view of the "refusal" report recorded by the postal authorities on the registered envelope, the Competent Authority concluded that the minor has been served. Kalyanasundaram had been putting in appearance on various dates before the Competent Authority, but only on his own behalf and not a s guardian of his minor son, Sethuraman. After the completion of investigation and trial, the Competent Authority, vide order dated February 16, 1990, forfeited all the three items of properties detailed above. It is against this order that Kalyanasundaram has filed Appeal No. 17 (Mad) of 1990 and Sethuraman Appeal No. 24 (Mad) of 1990.
Learned counsel for the appellants has argued that the impugned order of the Competent Authority is bad because Sethuraman was a minor in 1979 when notice under section 6(2) was issued to him and his natural guardian refused to accept the same. The refusal of the registered notice sent to Kalyanasundaram as natural guardian of his minor son, Sethuraman, did not amount to proper service on the minor. The Competent Authority thus passed the impugned order without issuing a notice under section 6(2) of the Act to Sethuraman, minor, whose interests have been prejudicially affected. The order of the Competent Authority is, therefore, liable to be set aside on this ground alone. The contention of the learned counsel for the appellants must prevail.
Sethuraman was admittedly a minor in 1979 when notice under section 6(2) of the Act was issued in his name through his father and natural guardian, Kalyanasundaram, by registered post. As stated earlier, Kalyanasundaram refused to accept it. No other step was taken by the Competent Authority for arranging representation on behalf of the minor before him and he rather concluded that a notice under section 6(2) of the Act had been served on the minor. The approach of the Competent Authority is erroneous. It is admitted that the ostensible owner of the properties which have been ordered to be forfeited is Sethuraman. During the pendency of the proceedings before the Competent Authority, Sethuraman became major. After attaining majority, he did not associate himself in the proceedings pending before the Competent Authority.
The ostensible owner of the properties, which are the subject-matter of notice under section 6(1) of the Act, is also entitled to a similar notice (or a copy thereof) under section 6(2) of the Act. The omission on the part of the Competent authority to serve a notice to the ostensible owner of the properties under section 6(2) of the Act is fatal to the proceedings. The conclusion arrived at by the Competent Authority is that service had been effected under section 6(2) of the Act with the refusal report of the postal authorities on the registered envelope sent in the name of Sethuraman, minor, through his father and natural guardian, Kalyanasundaram. In other words, the Competent Authority, treating the service as proper, decided to proceed ex parte against Sethuraman, minor.
It is clear that the ex parte proceedings had been taken against Sethuraman, minor, and not against Kalyanasundaram who had been appearing before the Competent Authority. The point for consideration, therefore, is whether the Competent Authority was justified in proceeding ex parte against Sethuraman, minor. The obvious answer to this query is that the Competent Authority could not proceed ex parte against Sethuraman, minor and, in the event of his natural guardian having refused to accept the registered notice, it was incumbent upon him to make appropriate arrangements for proper representation on behalf of the minor. If nothing else, the Competent Authority should have appointed a court guardian of the minor for the purposes of the proceedings before him. This course was not adopted.
Under these circumstances, it will be proper to hold that the order was passed by the Competent authority without issuing a notice under section 6(2) of the Act to Sethuraman, minor, which lapse is fatal. The order of the Competent Authority is, therefore, liable to be set aside on this ground.
Learned counsel for the appellants has stated that Sethuraman is present in the court, that he accepts notice under section 6(2) of the Act and that the Competent Authority may proceed afresh against him and Kalyanasundaram. In view of the statement made by the learned counsel for the appellants and in all fairness, the Competent Authority shall treat Sethuraman, who is now major, as having been served with notice under section 6(2) of the Act. Kalyanasundaram has already been served with a notice under section 6(1) of the Act.
In the result, both the appeals are allowed and the order of the Competent Authority dated February 16, 1990, set aside. The Competent Authority shall decide the matter afresh. The appellants are directed to appear before the Competent Authority, Madras, on January 21, 1991.