2014 (2) TMI 715 - SC - Customs

Appeals dismissed, notice under SAFEMA Act upheld, forfeiture valid, no Article 20 violation, no remittance.

The court dismissed the appeals, upholding the validity of the notice under Section 6 of the SAFEMA Act, ruling that the forfeiture did not violate ... Validity of statutory show-cause notice - communication of reasons for administrative action - forfeiture as deprivation of property versus penalty under Article 20 - non conviction based civil forfeiture - scope of appellate and writ review of factual appreciationValidity of statutory show-cause notice - communication of reasons for administrative action - Notice issued under section 6(1) was not vitiated by initial non communication of recorded reasons where reasons were subsequently supplied, the noticee was afforded opportunity to reply and to be heard, and appellate remedy was available and availed of. - HELD THAT: - The Court examined the chronology: an initial notice under section 6(1) was issued while the appellant was under detention; recorded reasons were supplied subsequently (in 1988); the appellant filed a rejoinder and was heard before forfeiture under section 7 was ordered; an appeal was preferred and partly allowed. The Court held there is no express statutory requirement to communicate reasons contemporaneously with the notice under section 6(1). In the factual matrix, delayed supply of reasons did not vitiate the proceedings because the appellant had the opportunity to meet the case and pursue appellate remedies. The Court distinguished Ajantha Industries (which concerned a statutory regime with no corrective forum and an express need to communicate reasons) and held Narayanappa controlling for cases where opportunity to meet the case and appellate review exists. Accordingly the High Court was incorrect to set aside the show cause process on the ground of initial non supply of reasons in these circumstances. [Paras 13, 19]Initial omission to supply reasons did not invalidate the section 6(1) proceedings where reasons were later supplied, opportunity to reply and hearing were afforded, and appellate remedy was available and exercised.Forfeiture as deprivation of property versus penalty under Article 20 - non conviction based civil forfeiture - Forfeiture under the Act is not attributable to Article 20 as a prohibited ex post facto criminal penalty and the Act's non conviction based forfeiture regime does not offend Article 20 in the statutory scheme and factual setting considered. - HELD THAT: - The Court analysed the scheme of the Act: application is limited to specified classes of persons, and forfeiture under section 7 follows an enquiry under sections 6 and 7 with a shifted evidential burden under section 8; conviction or detention under section 2 is only a factor to identify persons to whom the Act applies and not the operative cause of confiscation. The Court reviewed authorities distinguishing punitive forfeiture from measures of recovery or preventive civil forfeiture and emphasised contextual statutory construction. For four of the five categories to whom the Act applies, forfeiture is not a consequence of conviction; even for the convicted class the Act requires an independent enquiry as to whether particular properties are illegally acquired. The Court concluded that deprivation of unlawfully acquired property is consistent with constitutional guarantees (including Articles 14 and 300A) and that the Act does not amount to a criminal penalty within Article 20 in the circumstances considered; the Court also noted the Act's inclusion in the Ninth Schedule as an additional protection. [Paras 25, 40, 45]The forfeiture regime under the Act does not attract the prohibition in Article 20 and is constitutionally sustainable as a non penal civil mechanism directed at illegally acquired property.Scope of appellate and writ review of factual appreciation - No remand for re appreciation of evidence to the High Court was warranted where the writ petition did not plead a challenge to the factual findings and the High Court in writ jurisdiction would not ordinarily re appreciate evidence. - HELD THAT: - The appellant sought, for the first time on appeal, a re appraisal of the competent authority's conclusion that specific properties were illegally acquired. The Court observed that such a plea was not framed in the writ petition before the High Court and that writ jurisdiction is not ordinarily a forum for re appreciation of evidence. Absent pleaded grounds in the writ and in light of the parties' opportunity to be heard and availability of appellate remedy, the Court found no reason to remit the matter for fresh consideration by the High Court. [Paras 46, 47, 48]The request for remand for re appreciation of evidence is rejected; no remand ordered.Final Conclusion: Appeals dismissed. The Court upheld the appellate decision: delayed supply of reasons did not vitiate the section 6(1)/7 proceedings in the facts; the forfeiture scheme is not struck down under Article 20; and no remand to re appreciate evidence was ordered. Issues Involved:1. Legality and validity of the notice under Section 6 of the SAFEMA Act.2. Whether the forfeiture under the SAFEMA Act violates Article 20 of the Constitution of India.3. Whether the High Court failed to consider the legality of the order of forfeiture and if the matter should be remitted for reconsideration.Detailed Analysis:1. Legality and Validity of the Notice under Section 6 of the SAFEMA Act:The appellant contended that the notice issued under Section 6 of the SAFEMA Act was defective and illegal as it did not contain the reasons which made the competent authority believe that the properties were illegally acquired. The judgment under appeal noted that although the reasons were not initially provided in the notice dated 4th March 1977, they were subsequently supplied in 1988. The appellant was given an opportunity to respond and was heard before the order of forfeiture was passed. The court concluded that the delayed supply of reasons did not vitiate the subsequent orders of the competent authority and appellate authority. The court rejected the appellant's reliance on *Ajantha Industries v. Central Board of Direct Taxes* (1976) 1 SCC 1001, distinguishing it from the current case as the SAFEMA Act does not expressly require the communication of reasons along with the notice. The court upheld the validity of the notice under Section 6.2. Whether the Forfeiture under the SAFEMA Act Violates Article 20 of the Constitution of India:The appellant argued that the forfeiture under the SAFEMA Act is violative of Article 20 of the Constitution, which prohibits ex post facto laws and double jeopardy. The court examined the provisions of the SAFEMA Act, noting that it applies to persons specified in Section 2(2), including those convicted under certain laws or detained under COFEPOSA. The Act provides for the forfeiture of 'illegally acquired property' after an appropriate inquiry under Sections 6 and 7. The court held that the forfeiture is not a penalty but a deprivation of property of persons who cannot explain their legitimate sources of income. The court cited precedents, including *The State of West Bengal v. S.K. Ghosh* (AIR 1963 SC 255) and *R.S. Joshi v. Ajit Mills Ltd.* (1977) 4 SCC 98, to support its conclusion that forfeiture is not a punishment within the meaning of Article 20. The court also noted that the SAFEMA Act is included in the Ninth Schedule, making it immune from challenges based on fundamental rights violations.3. Whether the High Court Failed to Consider the Legality of the Order of Forfeiture and if the Matter Should be Remitted for Reconsideration:The appellant argued that the High Court failed to consider the legality of the forfeiture order and requested a remittance for proper consideration. The court reviewed the writ petition and found that the appellant had not raised any grounds challenging the correctness of the forfeiture order apart from the legal grounds already discussed. The court emphasized that the High Court, in its writ jurisdiction, does not normally reappreciate evidence. Therefore, the court found no reason to remit the matter to the High Court for reconsideration.Conclusion:The appeals were dismissed as devoid of merit. The court upheld the validity of the notice under Section 6 of the SAFEMA Act, ruled that the forfeiture did not violate Article 20 of the Constitution, and found no basis to remit the matter to the High Court for reconsideration.