Forfeiture fine under SAFEMA must reflect unexplained acquisition value, not later market value, unless statute says otherwise.

Section 9 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 applies where the unexplained source of acquisition is less than one-half of the consideration, enabling an option to pay fine in lieu of forfeiture. The fine is to be computed on the proportionate value of the unexplained part at the time of acquisition, not on later market value, unless the statute expressly adopts market value. On the facts noted, the bank balance was excluded from forfeiture as negligible, while forfeiture of the shares was sustained because no sufficient lawful source was established.

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Issues: (i) Whether section 9 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 was attracted on the facts, and (ii) if so, whether the fine in lieu of forfeiture had to be computed on the basis of the value of the property at the date of acquisition or on its market value; and whether the forfeiture of the bank balance and shares could be sustained.

Issue (i): Whether section 9 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 was attracted on the facts

Analysis: The unexplained portion of the consideration for the flat, after taking into account the employer's loan and the sale proceeds of shares, was held to be less than one-half of the total consideration. The evidence regarding sale of shares was accepted, and the unexplained amount was found insufficient to justify total forfeiture under section 7 without the benefit of section 9.

Conclusion: Section 9 was attracted and the appellant was entitled to invoke the option of fine in lieu of forfeiture.

Issue (ii): Whether the fine in lieu of forfeiture had to be computed on the basis of the value of the property at the date of acquisition or on its market value; and whether the forfeiture of the bank balance and shares could be sustained

Analysis: The text of section 9, especially the Explanation to sub-section (1), was read as requiring the proportionate part of the full value of the consideration for acquisition to be taken as the basis for computation, not the later market value. The contrast with section 68K of the Narcotic Drugs and Psychotropic Substances Act, 1985 showed that where Parliament intended market value it said so expressly. The bank balance was found negligible and was not justified for forfeiture, while the forfeiture of shares was sustained because the appellant had not established sufficient lawful source from his meagre salary.

Conclusion: The fine had to be calculated on the value attributable to the unexplained part at acquisition, not on market value, and the bank balance was excluded from forfeiture while forfeiture of the shares was upheld.

Final Conclusion: The appellant obtained only partial relief: the matter was confined to an option to pay fine in lieu of forfeiture for the unexplained component, with deletion of the bank balance from forfeiture and confirmation of the remaining adverse finding.

Ratio Decidendi: Under section 9 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, where less than one-half of the source of acquisition remains unexplained, the fine in lieu of forfeiture must be computed with reference to the value of the unexplained part at the time of acquisition, not market value, unless the statute expressly provides otherwise.

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