2023 (11) TMI 480 - SC - FEMA

SAFEMA forfeiture proceedings valid despite revocation of COFEPOSA detention order, exceptions don't apply Proceedings

THANESAR SINGH SODHI (D) THR. LRS. Versus UNION OF INDIA AND ORS. And SUJATA S. SHETTY Versus UNION OF INDIA AND ORS.

SC held that SAFEMA forfeiture proceedings remain valid despite revocation of COFEPOSA detention order. Court ruled that SAFEMA applies to all persons ... Validity of order of forfeiture of properties u/s 7 of SAFEMA consequent to revocation of the detention order passed under COFEPOSA - as argued that as detention order passed u/s 3 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 [COFEPOSA] has been subsequently revoked/withdrawn as such SAFEMA proceedings would become non est and untenable HELD THAT:- SAFEMA was enacted to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matters connected therewith or incidental thereto as such activities were having a deleterious effect on the national economy. Section 2 provided for the application of the provisions of the Act only to the persons specified in sub-section (2) thereof. According to sub-section (2)(b) every person in respect of whom an order of detention has been made under COFEPOSA, the Act would be applicable subject to four clauses mentioned under the proviso thereto. A perusal of the above quoted provision makes it clear that apart from the four contingencies given in clauses (i) to (iv) above, every person against whom an order of detention has been passed under COFEPOSA, the provisions of SAFEMA would apply. In the present case, it is an admitted position that an order of detention under COFEPOSA was made against the appellants. The order of detention had not been revoked on the report of the Advisory Board or before the receipt of the report of Advisory Board or before making a reference to the Advisory Board. Further, it was an order of detention passed under Section 3 of COFEPOSA. Section 9 and Section 12 A of COFEPOSA had no application to the detention order. As such, clause (i) would not be applicable. Clause (ii) would also not be applicable in as much as neither the detention order was made to which provisions of Section 9 of COFEPOSA would apply nor had it been revoked before the expiry of the time on the basis of review on the report of the Advisory Board. Further, clause (iii) would also not be applicable as Section 12A of COFEPOSA had no application to the detention order.Lastly, the detention order had not been set aside by the Court of competent jurisdiction. Therefore, clause (iv) would have no application. To the contrary, in the present case against the detention order, the appellant had made a representation which had been rejected. Thereafter the said order was challenged before the High Court by way of a writ petition which had also been dismissed on merits by a detailed order upholding the detention order. The revocation however had been made on a statement given on behalf of the Union of India before this Court in order to institute a complaint under the relevant statute. The said revocation is not contemplated under Section 2(2)(b) and its proviso, and, therefore, no benefit can be extended to the appellant(s) on the said count. Therefore, in our view, the impugned judgment does not suffer from any infirmity warranting interference. The appeals lack merit and are, accordingly dismissed. Dismissal of the complaint and the withdrawal of the penalty under the Act 1962 and Act 1968 - This argument has no relevance to the applicability or non-applicability of the impugned proceedings and forfeiture under SAFEMA. They were independent proceedings under the provisions of the Act 1962 and the Act 1968. Issues Involved:1. Validity of SAFEMA proceedings after revocation of COFEPOSA detention order.2. Impact of discharge in criminal complaint under the Customs Act, 1962 on SAFEMA proceedings.Summary:Issue 1: Validity of SAFEMA proceedings after revocation of COFEPOSA detention order:The primary ground of challenge was that the revocation of the detention order under section 3 of COFEPOSA should render SAFEMA proceedings non est and untenable. The Supreme Court scrutinized the facts and law and concluded that the argument must fail. The Court noted that SAFEMA was enacted to forfeit illegally acquired properties of smugglers and foreign exchange manipulators. Section 2(2)(b) of SAFEMA applies to every person against whom an order of detention has been made under COFEPOSA, subject to four exceptions. The Court found that none of the exceptions under the proviso to section 2(2)(b) were applicable in this case. The detention order was not revoked based on the Advisory Board's report or set aside by a competent court. The revocation was based on a statement by the Union of India to institute a complaint, which does not fall under the exceptions. Therefore, SAFEMA proceedings could be maintained despite the revocation of the COFEPOSA detention order.Issue 2: Impact of discharge in criminal complaint under the Customs Act, 1962 on SAFEMA proceedings:The appellant argued that the dismissal of the criminal complaint and the withdrawal of penalties under the Customs Act, 1962, and the Gold (Control) Act, 1968 should render SAFEMA proceedings untenable. The Court held that these proceedings were independent of SAFEMA. The discharge in the criminal complaint and the withdrawal of penalties had no relevance to the applicability of SAFEMA. The Court emphasized that SAFEMA proceedings are based on the existence of a detention order under COFEPOSA, which was validly made and upheld by the High Court. The subsequent revocation of the detention order did not affect the applicability of SAFEMA.Conclusion:The Supreme Court dismissed the appeals, holding that the SAFEMA proceedings were valid and could be maintained despite the revocation of the COFEPOSA detention order and the discharge in the criminal complaint. The impugned judgment did not suffer from any infirmity warranting interference.