2014 (12) TMI 356 - HC - Customs

Court upholds validity of show cause notice under SAFEMA, stresses combating smuggling. Exhaust SAFEMA remedies before Art. 226 relief.

COMPETENT AUTHORITY & ADMIN. SAFEMA/NDPS Versus MITHU BAWA PADHIYAR

COMPETENT AUTHORITY & ADMIN. SAFEMA/NDPS Versus MITHU BAWA PADHIYAR - 2014 (307) E.L.T. 253 (Guj.) Issues Involved:1. Validity of the second show cause notice under Section 6(1) of the SAFEMA.2. Availability and appropriateness of alternative remedies.3. Delay in initiating proceedings under the SAFEMA.4. Application of the principles of natural justice and subjective satisfaction.5. Jurisdictional error and the scope of writ jurisdiction under Article 226 of the Constitution of India.Issue-wise Detailed Analysis:1. Validity of the Second Show Cause Notice:The primary issue was whether the second show cause notice issued under Section 6(1) of the SAFEMA was valid. The respondents argued that the second notice was issued without application of mind and after an unreasonable delay of 17 years. The court observed that the properties in question were in existence when the earlier notices were issued and should have been included then. However, the court emphasized the broader perspective, considering the deleterious effect of smuggling and foreign exchange manipulations on the national economy. The court concluded that the competent authority had sufficient reasons to believe that the properties were illegally acquired, and the second notice was justified.2. Availability and Appropriateness of Alternative Remedies:The appellant-competent authority argued that the original petitioners had alternative remedies available under the SAFEMA, such as filing an appeal before the Appellate Tribunal. The court noted that the SAFEMA provides a complete machinery for redressal of grievances and that the High Court should not entertain writ petitions under Article 226 when effective alternative remedies are available. The court cited several Supreme Court decisions supporting this principle and held that the learned single Judge erred in entertaining the writ petitions.3. Delay in Initiating Proceedings:The respondents contended that there was an unreasonable delay in initiating proceedings under the SAFEMA. The court acknowledged the delay but emphasized that in cases involving smuggling and foreign exchange manipulations, delay is not a material ground. The court noted that persons engaged in such activities do not keep regular accounts, making it difficult to locate properties and assets. The court concluded that the delay did not invalidate the proceedings.4. Application of the Principles of Natural Justice and Subjective Satisfaction:The respondents argued that the second show cause notice violated the principles of natural justice and was issued without subjective satisfaction. The court examined the notice and found that the competent authority had recorded sufficient reasons to believe that the properties were illegally acquired. The court emphasized that the burden of proving that the properties were not illegally acquired lies with the affected party. The court held that the impugned notice was issued with proper subjective satisfaction and did not violate the principles of natural justice.5. Jurisdictional Error and the Scope of Writ Jurisdiction:The court disagreed with the learned single Judge's conclusion that the second show cause notice was issued without jurisdiction. The court cited the Supreme Court's decision in Whirlpool Corporation's case, which held that the existence of alternative statutory remedies is not a constitutional bar to the High Court's jurisdiction in certain contingencies. The court found that none of the contingencies applied in this case and that the writ petitions were premature. The court emphasized that the SAFEMA is a complete code in itself and that the writ Court should not have entertained the petitions under Article 226 at the notice stage.Conclusion:The court allowed the appeals, quashed the impugned judgment and order passed by the learned single Judge, and directed the original petitioners to respond to the impugned show cause notices within two months. The competent authority was instructed to consider their replies in accordance with the law and render its decision within a reasonable time.