SUPREME COURT OF INDIA
P.P. Abdulla and Another
Vs
Competent Authority and Others
Appeal (Crl.) 1318 of 2006 (Arising Out of Slp (Criminal) No. 2225/2006)
(S. B. Sinha and Markandeya Katju, JJ)
14.12.2006
MARKANDEY KATJU, J.
Leave granted.
This appeal has been filed against the impugned judgment of the Kerala High
Court dated 31.1.2006 in W.A. No.1541 of 2005.
Heard learned counsel for the parties and perused the record.
The facts of the case are that the appellant was convicted under the Customs Act, 1962 in a case relating the seizure of 700
bars of foreign gold from him. Alleging that certain properties purchased by
the appellant and the building constructed thereon attracted the provisions of
the Smugglers and Foreign Exchange Manipulators (Forfeiture
of Property) Act, 1976 (hereinafter referred to as "the Act").
Ext. P1 notice was issued to the appellant under Section 6(1) of the said Act
in a proceeding for forfeiture of the property. The proceedings culminated in
Ext.P5 order of the concerned authority whereby he found that the appellant
could not sufficiently prove that the property specified in the notice was not
his illegally acquired property. It was held that the appellant could explain
only to the extent of Rs.26, 500/- as the source for acquiring the said
property and the building thereon which was valued at Rs.1, 36, 134/-.
Accordingly, the authority by virtue of the powers under Section 7(1) of the
Act ordered forfeiture of the property to the Government of India free of all
encumbrances vide Ext.P5. The appeal preferred by the appellant before the
appellate authority was dismissed, upholding the order of the authority vide
Ext.P6. The appellant challenged Exts.P5 and P6 orders in O.P. No.27488/2000
which was allowed by the learned Single Judge of the High Court relying on the
decision of the Supreme Court in Fatima Mohd. Amina (dead) through LRs. vs.
Union of India & Anr. reported in (followed), holding that since
there is no allegation regarding the existence of any link or nexus between the
property sought to be forfeited and the illegally acquired money of the detenu
under the Act, the orders of forfeiture could not be maintained.
Against the aforesaid judgment of the learned Single Judge the competent authority
and Union of India filed an appeal before a Division Bench of the High Court
which was allowed by the impugned judgment, hence this appeal.
Learned counsel for the appellant has invited our attention to Section 6(1) of
the Act which states:
"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 to be illegally acquired properties and forfeited to the Central
Government under this Act."
Learned counsel submitted that it has been expressly stated in Section 6(1)
that the reason to believe of the competent authority must be recorded in
writing. In the counter-affidavit it has also been stated in paragraph 8 that
the reasons in the notice under Section 6(1) were recorded in writing. In our
opinion this is not sufficient. Whenever the statute required reasons to be
recorded in writing, then in our opinion it is incumbent on the respondents to
produce the said reasons before the Court so that the same can be scrutinized
in order to verify whether they are relevant and germane or not. This can be
done either by annexing the copy of the reasons along with the counter-
affidavit or by quoting the reasons somewhere in the counter-affidavit.
Alternatively, if the notice itself contains the reason of belief, that notice
can be annexed to the counter-affidavit or quoted in it. However, all that has
not been done in this case.
It must be stated that an order of confiscation is a very stringent order and
hence a provision for confiscation has to be construed strictly, and the
statute must be strictly complied with, otherwise the order becomes illegal.
In our opinion, the facts of the case are covered by the decision of this Court
in Fatima Mohd. Amina (dead) through LRs. Vs. Union of India & Anr (supra).
In the present case the contents of the notice, even if taken on face value, do
not disclose any sufficient reason warranting the impugned action against the
appellant as, in our opinion, the condition precedent for exercising the power
under the Act did not exist. Hence, the impugned orders cannot be sustained.
In the present case, in the notice dated 15.3.1988 issued to the appellant
under Section 6(1) of the Act (copy of which is annexed as Annexure P1 to this
appeal), it has not been alleged therein that there is any such link or nexus
between the property sought to be forfeited and the alleged illegally acquired
money of the appellant.
Hence, in view of the decision of this Court in Fatima Mohd. Amina's case
(supra), the said notice dated 15.3.1988 has to be held to be illegal.
Consequently the order passed in pursuance of the said notice is declared as
null and void. The appeal is, therefore, allowed and the impugned orders of the
High Court and the concerned Authorities are set aside. No costs.