1995 (12) TMI 338 - AT - FEMA

Tribunal upholds forfeiture ruling under Smugglers & Foreign Exchange Manipulators Act, 1976

The Tribunal upheld the forfeiture proceedings against the appellant, ruling that the revocation of the detention order did not exempt her from the ... - Issues Involved:1. Applicability of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.2. Validity of the forfeiture order based on the revocation of the detention order.3. Legitimacy of the properties acquired by the appellant.4. Specific conditions for the non-forfeiture of 'Hotel Saira.'Issue-wise Detailed Analysis:1. Applicability of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976:The appellant contested the applicability of the Act, arguing that the revocation of the detention order by the State of Gujarat should exempt her and her deceased husband from the Act's provisions. The Tribunal noted that the revocation order was issued under section 11(1)(a) of the COFEPOSA after the Advisory Board had confirmed the detention order. The Tribunal concluded that revocation under section 11(1)(a) does not equate to setting aside or quashing by a court, as contemplated by the provisos to section 2(2)(b) of the Act. Therefore, the forfeiture proceedings were rightly continued against the appellant.2. Validity of the forfeiture order based on the revocation of the detention order:The appellant argued that the revocation of the detention order should have the same effect as setting aside by a court, thereby nullifying the forfeiture proceedings. The Tribunal disagreed, emphasizing that the specific provisions of the Act govern the proceedings and that mere revocation under section 11(1)(a) of the COFEPOSA does not meet the conditions set out in the provisos to section 2(2)(b) of the Act. The Tribunal referred to the Supreme Court's distinction between 'revocation' and 'setting aside' in the case of Ibrahim Bachu Bafan v. State of Gujarat, underscoring that revocation by the same authority does not nullify the original order as a court's setting aside would.3. Legitimacy of the properties acquired by the appellant:The Tribunal found that the properties held by the appellant were acquired from her husband, who was detained under COFEPOSA, and were not explained as having come from lawful sources. The Competent Authority's detailed examination, supported by the Settlement Commission's findings under section 245D(4) of the Income-tax Act, revealed that the properties were acquired from the husband's unlawful activities. The appellant failed to provide satisfactory evidence to counter these findings, and the Tribunal upheld the forfeiture order for the properties listed in annexure 'A' to the order under section 19(1) of the Act.4. Specific conditions for the non-forfeiture of 'Hotel Saira':For 'Hotel Saira,' the Competent Authority found that more than 50% of the investment was from lawful sources, with only Rs. 50,000 unexplained. As per section 9(1) of the Act, the appellant could avoid forfeiture by paying a fine of Rs. 60,000, which is 120% of the unexplained amount. The Tribunal upheld this finding, noting that failure to pay the fine within two months would result in the property's forfeiture.Conclusion:The Tribunal concluded that the forfeiture proceedings were valid and correctly applied. The appellant's arguments on the revocation of the detention order and the legitimacy of the properties were rejected. The order for 'Hotel Saira' was upheld, with conditions for avoiding forfeiture clearly outlined. The appeal was disposed of accordingly.