& Anr Vs. The Competent Authority & Ors  Insc 963 (14 December 2006)
B. Sinha & Markandey Katju
out of SLP (Criminal) No. 2225/2006) MARKANDEY KATJU, J.
appeal has been filed against the impugned judgment of the Kerala High Court
dated 31.1.2006 in W.A. No.1541 of 2005.
learned counsel for the parties and perused the record.
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.
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 (2003) 7 SCC 436, 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.
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.
counsel for the appellant has invited our attention to Section 6(1) of the Act
which states :
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
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.
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.
opinion, the facts of the case are covered by the decision of this 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.
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.
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.