Express confiscation required for seized currency; a mere finding of liability to confiscation does not deprive property

Property cannot be treated as confiscated unless the competent authority expressly orders confiscation in clear and unequivocal terms. An observation that seized currency is liable to confiscation under the Foreign Exchange Regulation Act, 1973 does not by itself effect confiscation, especially where the order itself states that no confiscation order was passed. Because confiscation is penal and deprivation of property requires authority of law, ambiguity must operate against the Revenue. On that reasoning, the seized currency was held not to have been confiscated and refund was due, without interest for the earlier period.

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Issues: Whether the seized currency of Rs. 4,13,600 was validly confiscated under the order passed by the Enforcement Directorate, and if not, whether the petitioner was entitled to refund.

Analysis: The order of the Assistant Director recorded that the petitioner had contravened Section 8(1) of the Foreign Exchange Regulation Act, 1973 and that the currency was liable to confiscation under Section 63 of that Act, but it also stated in clear terms that no order of confiscation was passed. Confiscation being penal in nature, it must be ordered specifically and in the clearest possible terms; it cannot be assumed from an observation that the property is liable to confiscation. The subsequent conduct of the Customs authorities, who sought clarification whether confiscation had in fact been ordered, reinforced the conclusion that the order was ambiguous and did not effect confiscation. In view of the constitutional protection against deprivation of property without authority of law, the ambiguity had to operate against the Revenue.

Conclusion: The currency was not confiscated by the order dated 22-10-2001, and the petitioner was entitled to refund of Rs. 4,13,600, though without interest for the earlier period.

Ratio Decidendi: A finding that property is liable to confiscation does not amount to confiscation unless the competent authority expressly orders confiscation in clear and unequivocal terms; a vague or inferential confiscation order cannot deprive a person of property.

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