Pre-detention assets and separate property assessment under SAFEMA: notice can extend to earlier acquisitions, but clubbing properties for fine is impermissible.

Section 6(1) of SAFEMA permits notice in respect of any properties of an affected person where the authority has reason to believe they are illegally acquired, and the provision is not confined to assets acquired after detention; the challenge on pre-detention acquisition was rejected. Section 9 requires each property to be examined separately to determine the proved and unproved source of acquisition, and multiple properties cannot be clubbed as one unit for computing fine in lieu of forfeiture; the clubbing approach was held illegal. On that basis, the forfeiture order was set aside and the matter remitted for fresh consideration.

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Issues: (i) Whether notice under section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 could be issued in respect of properties acquired before the detention of the affected person; (ii) whether, for the purpose of section 9 of the Act, multiple properties of the affected person could be clubbed and treated as one unit while granting the option to pay fine in lieu of forfeiture.

Issue (i): Whether notice under section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 could be issued in respect of properties acquired before the detention of the affected person.

Analysis: Section 6(1) authorises the Competent Authority, having regard to the value of properties held by a person to whom the Act applies, his known sources of income, earnings or assets, and other material available, to issue notice if there is reason to believe that any such properties are illegally acquired. The provision contains no limitation that notice may be issued only for properties acquired after detention. The legislative scheme applies to all properties of a person covered by section 2(2), irrespective of whether the acquisition preceded or followed detention.

Conclusion: The contention was rejected and the authority had jurisdiction to proceed against properties acquired before detention.

Issue (ii): Whether, for the purpose of section 9 of the Act, multiple properties of the affected person could be clubbed and treated as one unit while granting the option to pay fine in lieu of forfeiture.

Analysis: Section 9(1) applies where only a part of the income, earnings or assets used for acquisition of a property remains unproved, and the fine is linked to that part. The structure of section 9 shows that each property must be considered separately for deciding the extent of proved and unproved sources. Two or more properties cannot be aggregated and treated as a single unit for computing the fine or the consequence of forfeiture. The impugned order proceeded on an impermissible clubbing of the house and the motorcycle.

Conclusion: The clubbing of properties under section 9 was held to be illegal and the order was unsustainable.

Final Conclusion: The appeal succeeded, the forfeiture order was set aside, and the matter was sent back for fresh consideration in accordance with law.

Ratio Decidendi: Under the Act, notice under section 6(1) may extend to all properties of an affected person regardless of the date of acquisition, and section 9 requires each property to be assessed separately rather than clubbed with others for the purpose of fine in lieu of forfeiture.

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