1994 (9) TMI 314 - AT - FEMA

Appellate Tribunal overturns forfeiture order due to lack of hearing, stresses procedural fairness

The Appellate Tribunal for Forfeited Property set aside the Competent Authority's order of forfeiture of a property in Napean Sea Road, Bombay, under the ... - Issues:1. Interpretation of provisions under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.2. Validity of forfeiture order regarding a property in Napean Sea Road, Bombay.3. Compliance with procedural requirements under sections 6 and 7 of the Act.4. Right to be heard and opportunity for explanation before passing a final order under section 7(1) of the Act.Analysis:The appeal before the Appellate Tribunal for Forfeited Property challenges the Competent Authority's order of forfeiture of a property in Napean Sea Road, Bombay, under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. The appellant, wife of a detenu under related acts, was proceeded against under section 2(2)(c) of the Act due to her husband's detention on multiple occasions. Previous proceedings in 1975 led to a forfeiture order, which was later quashed by the High Court, necessitating de novo proceedings based on detention orders from 1985 and 1992. The appellant failed to respond to a show-cause notice issued in 1994, leading to the Competent Authority's order of forfeiture under section 7(1) of the Act.The appellant contended that the Competent Authority lacked jurisdiction due to the non-enforcement of the earlier order and the quashing of the detention order. However, the Tribunal rejected this argument, citing the statutory basis provided by subsequent detention orders. The appellant later raised additional grounds, asserting independent residence in the flat since 1971 and lawful purchase from her own income, supported by income tax returns.During the hearing, the appellant claimed to possess evidence demonstrating the property's legitimate acquisition, but the Tribunal refrained from examining this factual aspect due to the lack of submission before the Competent Authority. Instead, the Tribunal focused on the legal issue raised by the appellant's counsel regarding the Competent Authority's obligation to provide a hearing under section 7(1) of the Act, even in the absence of an explanation from the affected party.The Tribunal found merit in the argument that the Competent Authority failed to grant a hearing before passing the impugned order, thereby necessitating a remittance of the matter for a fresh hearing. It directed the Competent Authority to afford the appellant a reasonable opportunity to be heard, consider any submissions or materials provided, and pass a new order after a full application of mind. The Tribunal emphasized the importance of complying with procedural requirements and ensuring fairness in the adjudicatory process.In conclusion, the Tribunal set aside the Competent Authority's order, emphasizing the need for a hearing and proper consideration of submissions before reaching a final decision. It instructed the Competent Authority to conduct a new hearing, provide reasons for the decision, and issue a fresh order within a specified timeframe, ensuring procedural fairness and adherence to legal requirements.