TaxTMI 
TaxTMI 
2014 (1) TMI 1021
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....seized and forfeited in drug cases to supplement its inadequate yearly budget. (p.231) Many white people watch quietly as law enforcement officers trample all over the rights of minorities under the guise of crime prevention. And a lot of them are sympathetic, too. They honestly feel sorry for the victims. But they watch from a very safe place, feeling sorry for the victims, but believing as long as they themselves remain law-abiding citizens it cant' happen to them. Donald Scott believed that, too." (p.236) - A Lawyer's Life - Johnnie Cochran - ST.Martin's Press, New York - 2002 The said observations were made by a leading civil rights lawyer of USA in the context of the American law allowing forfeiture of properties of narcotic offenders. The indignation expressed therein will set the tone for this order and hence those statements were quoted. 2. In this case, the question is whether in taking over the property of the contesting respondents, the procedure established by law has been followed by the writ petitioner. 3. This writ petition came to be posted before this Court on being specially ordered by the Hon'ble Chief Justice vide order dated 04.08.2011. 4. The petitione....
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....ked to prove that his properties were acquired through legal sources of income. 9. However, detention order passed against the first respondent under COFEPOSA was set aside by the Supreme Court. But the proceedings under SAFEMA, 1976 was continued as he was convicted under the Customs Act, 1962 on 18.06.2003 by the Judicial Magistrate, Alandur. Therefore, he continued to be a person covered by SAFEMA, 1976. Despite sufficient opportunities given, the first respondent could not prove his legal source of income, therefore by an order dated 08.06.2009 his properties were forfeited. 10. It was also further stated by the petitioner that on investigation against the first respondent, it was found that he gave Rs.7 lakhs to his wife, who is the second respondent and she had constructed a house in her name at Tiruchirapalli. Therefore, a notice under Section 6(1) of the SAFEMA, 1976 was served on her on 24.08.2007. she was given necessary opportunity in conformity with the principles of natural justice. As it was found that the property acquired by her was directly attributable to the income of the first respondent which was earned out of illegal means, the property was also forfeited by....
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....ay that the acquisition of the property in the year 1995 was illegal acquisition of properties. 13. The Tribunal also referred to a Division Bench judgment of the Kerala High Court in W.A.No.1645 of 2007(E) dated 24.02.2009 [Kannanchery Abdu v. The Competent Authority under SAFEMA and others], in support of their conclusions. In that case, the Division Bench presided by Acting Chief Justice J.B.Koshy, incidentally became the Chairman of the Appellate Tribunal. Therefore, he quoted from his own judgment, delivered as an High Court Judge. In that case, it was held that a person who earns money in Dubai cannot be a subject matter of investigation by the Indian authorities. Income earned therein cannot be shown as illegally acquired income in India. 14. Before proceeding to deal with the matter on merits, it is necessary to deal with the preliminary objection raised by Mr.B.Kumar, learned Senior Counsel appearing for respondents 1 and 2 on behalf of Mr.A.Abdul Huck, learned counsel, regarding the maintainability of the writ petition at the instance of the Competent Authority. 15. It was contended by the learned Senior Counsel that the competent authority viz., the writ petitioner is....
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....igned by the Registrar or any other officer authorised by the Chairman in this behalf and shall be sent by registered post, acknowledgment due. (Emphasis added) 18. In this context, Mr.M.L.Ramesh, learned Senior Counsel relied on a decision of this Court reported in CDJ 2011 MHC 3966 [Provident Fund Organisation, Coimbatore and others v. Employees Provident Fund Appellate Tribunal (Ministry of Labour and Employment, Government of India), New Delhi and others] and contended that the power of the Competent Authority is similar to that of the Provident Fund authorities and hence, the writ petition is maintainable. He referred to the following passages found in paragraphs 8,9,16 to 18:- "8. Per contra, various learned counsels appearing for the employers contended that the APFC had no locus standi to file writ petitions challenging the orders passed by the PF Tribunal. The authorities are quasi judicial authorities. Therefore, having determined the liability of the employers and when their orders are challenged before the judicial Tribunal, viz., EPF Tribunal, then any determination by the Tribunal is binding on the parties. Hence, the authority cannot file such writ petitions chall....
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....role under the provisions of the PF Act including investigation, enforcement, quasi judicial determination of the rights of the parties, prosecution of the erring employers as well as securing the rights of workmen, who also contribute PF subscriptions. 17. The Bombay High Court in the judgment in Nirmitee Holidays's case (cited supra) proceeded on the basis that the quasi judicial authorities are not expected to defend their proceedings before appellate forum and hence they cannot challenge the orders of the Tribunal cannot be accepted. Under Section 7K(2) of the PF Act, the Act provides for the authority to authorize one or more legal practitioners to present its case with reference to any appeal before the Tribunal. Further under Section 7L of the PF Act, the Tribunal is expected to give opportunities to the parties to the appeal and to pass such orders as it may think fit. Under Section 7L(3) of the Act, the Tribunal is mandated to give copies of its orders to both parties to the appeal. Though under Section 7L(4) of the PF Act, it is stated that any order made by the Tribunal finally disposing of an appeal shall not be questioned in any Court of law, the same has no relevance....
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....er had been set aside by the Board, ordinarily in absence of any power to prefer an appeal, it could not do so. The reasonings of the High Court that he had general power, in our opinion, is fallacious. For the purpose of exercising the functions of the Central Government, the officer concerned must be specifically authorised. Only when an officer is so specifically authorised, he can act on behalf of the Central Government and not otherwise. Only because an officer has been appointed for the purpose of acting in terms of the provisions of the Act, the same would not by itself entitle an officer to discharge all or any of the functions of the Central Government. Even ordinarily a quasi-judicial authority cannot prefer an appeal being aggrieved by and dissatisfied with the judgment of the appellate authority whereby and whereunder its judgment has been set aside. An adjudicating authority, although an officer of the Central Government, should act as an impartial tribunal. An adjudicating authority, therefore, in absence of any power conferred upon it in this behalf by the Central Government, could not prefer any appeal against the order passed by the Appellate Board. 17. The Madras....
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....y the competent authority under Section 6(1) is that he should have reason to believe that all or any of such properties are illegally acquired properties and the reasons for such belief have to be recorded in writing. The language of the section does not show that there is any requirement of mentioning any link or nexus between the convict or detenu and the property ostensibly standing in the name of the person to whom the notice has been issued. Section 8 of the Act which deals with the burden of proof is very important. It lays down that in any proceedings under the Act, the burden of proving that any property specified in the notice served under Section 6 is not illegally acquired property, shall be on the person affected. The combined effect of Section 6(1) and Section 8 is that the competent authority should have reason to believe (which reasons have to be recorded in writing) that properties ostensibly standing in the name of a person to whom the Act applies are illegally acquired properties, he can issue a notice to such a person. Thereafter, the burden of proving that such property is not illegally acquired property will be upon the person to whom notice has been issued. T....
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....rder passed in violation of such provision can be set aside only where such violation has occasioned prejudice to the subject. It further went on to observe that even mandatory requirement can be waived by the person concerned, if such mandatory provision of law is conceived in his interest and not in the public interest. The conduct of the subject must be borne in mind while examining a compliant of non-observance of procedural rules governing such enquiries. As a rule, all such procedural rules are designed to afford a full and proper opportunity to the subject to defend himself." 26. The learned Senior counsel also referred to a Division Bench judgment of this Court reported in CDJ 2011 MHC 3203 [The Competent Authority v. Hameed Abdul Kader and another], wherein this Court held that the finding of fact recorded by the Competent Authority cannot be interfered with. Reliance was placed on the following passage found in paragraph 53:- "53. The question is whether it is open to this Court exercising jurisdiction under Article 226 of the Constitution of India to re-appreciate the materials and arrive at a different conclusion. The power of judicial review is concerned only with th....
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.... many cases it would be almost impossible to show that the property was purchased or acquired from the money provided by the convict or detenu. In the present case, the appellant is the wife of the detenu and she has failed to establish that she had any income of her own to acquire the three properties. In such circumstances, no other inference was possible except that it was done so with the money provided by her husband." We, with utmost respect to the learned Judges, express our inability to agree to the said observations. The necessity of establishing link or nexus in our opinion is writ large on the face of the statutory provision as would appear from the definition of "illegally acquired property" as also that of "property". The purport and object for which the Act was enacted point to the same effect." 29. Mr.B.Kumar, learned Senior Counsel referred to the constitutional bench of the Supreme Court reported in (1994) 5 SCC 54 Attorney General for India v. Amratlal Prajivandas, and contended that the Scheme and purpose of enactment is to forfeit the illegally acquired properties of a convict/detenu and not to forfeit the independent properties of his relatives. The Supreme C....
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....eedings under SAFEMA did not exist, the impugned orders of forfeiture cannot be sustained. In that view of the matter, the appeals deserve to be allowed. The order under challenge is set aside." 31. He further referred to the following passages in the judgment of the Division Bench of the Kerala High Court in W.A.No.1645 of 2007(E) dated 24.02.2009 [Kannanchery Abdu v. The Competent Authority under SAFEMA and others], which was relied on by the Tribunal in the impugned order, which are as follows:- "The NRE passbook is sufficient to prove the source of income. The finding of the competent authority as well as the appellate authority was that, there was no evidence to show that how they earned money in Dubai, as books of accounts in Dubai was not produced. How he earned money in Dubai is not a matter that can be looked into by the authorities as no law can be enacted regarding the source of income or accounting procedure in Dubai. No action has been taken against the detenu under the FERA or FEMA for illegal remittances of money to India. From the NRE account money was withdrawn and they purchased the properties. We are of the view that the detenu has explained the source of mone....
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....on issuance of the order of detention against the appellant. But, the above order was set aside by the Hon'ble Supreme Court years before the issuance of the show cause notice. Therefore, on the basis of the above show cause notice, no further proceedings can be made and we agree with the learned counsel for the appellant on this point. 6. ....The contention of the appellant that the has admitted the guilt only to avoid difficulties cannot be accepted and the fact that he is convicted cannot be disputed and he is covered under section 2(2) of the Act. The competent Authority ought to have issued fresh show cause notice after recording the reasons....... ........The reasons recorded in 2004 was not placed before us. It was not given to the appellant and, in any event, on the basis of that reasons said to be recorded in 2004, no show cause notice was issued. Section 6(1) provides that reasons should be recorded first before issuing the show cause notice. It other words, issuance of show cause notice should be preceded by recording of reasons. In this case, since no show cause notice was issued on the basis of conviction, we are of the view that the property of AP1 cannot be forfeite....
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.... exercised by the authority. It is only in cases where Tribunal's order is perverse, the question of entertaining a writ petition will arise. It is not a fit case where any interference is called for in the impugned order of the third respondent Tribunal. 36. Once again the Supreme Court in the judgment reported in (2007) 2 SCC 510 [P.P.Abdulla and another v. Competent Authority and others] went into the issue relating to confiscation of the properties of smuggler under the SAFEMA. It was held that Section 6(1) of the SAFEMA will have to be strictly followed and the authority's satisfaction must be recorded in writing, failing which, the notice is liable to be quashed. It is necessary to extract paragraphs 6 to 11, which are as follows:- "7. Learned counsel submitted that it has been expressly stated in Section 6(1) that the reason to believe of the competent authority must be recorded in writing. In the counter-affidavit it has also been stated in para 8 that the reasons in the notice under Section 6(1) were recorded in writing. In our opinion this is not sufficient. Whenever the statute requires reasons to be recorded in writing, then in our opinion it is incumbent on the respo....