Recorded reasons and burden of proof under SAFEMA: non-supply without prejudice did not invalidate notice, and probabilities defeated forfeiture.

Non-supply of the recorded reasons with a section 6 notice under SAFEMA did not vitiate the proceedings because the notice contained the essential particulars and no material prejudice was shown. On the burden under section 8, the Court held that the affected person could rebut forfeiture by establishing lawful acquisition on a preponderance of probability where direct proof was not readily available. Considering the surrounding circumstances, including remittance from abroad, the timing of acquisitions and the financial background, the appellants discharged that burden. The forfeiture orders were therefore unsustainable and the properties were not liable to forfeiture.

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Issues: (i) Whether non-supply of the recorded reasons to believe along with the section 6 notice vitiated the proceedings under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976; (ii) Whether the appellants discharged the burden under section 8 of the Act and established that the properties were not illegally acquired.

Issue (i): Whether non-supply of the recorded reasons to believe along with the section 6 notice vitiated the proceedings under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.

Analysis: Section 6 required the Competent Authority to consider the value of the properties, the known sources of income, earnings or assets, and other relevant material, and to record reasons to believe in writing before issuing notice. The recorded reasons were meant to safeguard the affected person and prevent unjustified notices. However, the mere failure to furnish the recorded reasons did not automatically invalidate the proceedings unless material prejudice was shown. On the facts, the notices contained the essential particulars of the properties, dates and prices, and no prejudice was established.

Conclusion: The objection failed and did not vitiate the proceedings.

Issue (ii): Whether the appellants discharged the burden under section 8 of the Act and established that the properties were not illegally acquired.

Analysis: Section 8 placed the burden on the affected person to prove that the properties specified in the notice were not illegally acquired. The Court accepted that strict foolproof proof was not always possible where the acquisitions were old, and that probabilities could suffice. The remittance of Rs. 3,50,000 from abroad, the timing and circumstances of the acquisitions, the participation of Ajaib Singh in the transaction, and the overall financial background supported the inference that the properties were acquired from lawful means. The letter relied upon by the Competent Authority was not treated as sufficient evidence against the appellants in the absence of sworn testimony and cross-examination. The preponderance of probability favoured the appellants.

Conclusion: The appellants discharged the burden under section 8 and the forfeiture was not justified.

Final Conclusion: The impugned forfeiture orders could not be sustained and the properties were held not liable to forfeiture under the Act.

Ratio Decidendi: A notice under section 6 is not automatically vitiated by non-supply of recorded reasons unless material prejudice is shown, and under section 8 the affected person may discharge the burden by establishing probabilities from the surrounding circumstances where direct proof is not reasonably available.

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