TaxTMI 
TaxTMI 
TaxTMI 
1998 (5) TMI 405
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....l, Chandni Chowk, Delhi-110006. (b) Shri Ramesh Chand, 5 Hastings Lane, New Delhi. (c) Skytone Electrical (India) Manufacturer of Cables and Wires, 43. Industrial Area, Faridabad-121001 (d) M/s. Pragati Construction Co. Engineers & Contractors, W-49, Greater Kailash 1, New Delhi-11048. (e) M/s. Ganpat Rai Jagdish Narain, General Cloth Merchants & Commission Agents, Katra Marwari, Nai Sarak, Delhi-6. (f) Shri Hira Chand Jain, Delhi (iii) Credit balance in Saving Bank AC (S.B. Sarafa (Market, (Chandni Chowk, (iv) F.D.R. in Union Bank of India (Delhi. 3. The petitioner Shanti Devi was the wife of one Basant Lal. The marriage had taken place in the year 1945. On 30.7.75 Basant Lal was ordered to be detained under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 with a view to preventing him from dealing in smuggled goods viz. foreign marked smuggled gold otherwise then by engaging in transporting or concealing or keeping smuggled goods. 3.1. On 27.9.77, the Income-tax Office, Spl.Circle-VI (Addl,), New Delhi furnished an information under Section 16(2) of the Act to the Competent Authority. By reference to the propert....
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....t of one-half; the other half having been purchased in the name of Smt. Kalawati, the mother-in-law of the petitioner. Before her death Smt. Kalawati executed a Will as to her half share bequeathing (he same to the eldest daughter-in-law of Smt. Shanti Devi, whose name is Smt.Veena Devi. Proceedings under the Act have been initiated only against the petitioner Smt. Shanti Devi. No proceedings appear to have been initiated by the Competent Authority against the legal heirs of Smt. Kalawati Devi in respect of other one-half share in the property. Hence it is the one-half share of Smt. Shanti Devi in the house property which alone is under scrutiny. 7. The Appellate Tribunal has recorded a finding in its appellate order that Basant Lal had been the subject of search by the Custom Preventive Staff in 1967 when on the search of the business premises of Basant Lal four gold biscuits with foreign markings weighing 10 tolas each and 13 gold ginnis and ₹ 10,000/- in Indian currency were found. 5 gold ginnis were recovered from the residence of Basant Lal. The house property was purchased by Smt. Shanti Devi in 1961. In the opinion of the Appellate Tribunal the event of purchase of ho....
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....any such properties were illegally acquired properties. Sections 4 prohibits as from the commencement of this Act any person to whom this Act applies to hold any illegally acquired property either by himself or through any other person on his behalf. 9.3. Vide Section 2, the provisions of the Act are applicable to a person in respect of whom an order of detention has been made under COFEPOSA 1974 amongst others and also to every person who is a relative of such a person. 'Relative' includes spouse of such person. Explanation 4 provides for the avoidance of doubt that the question whether any person is a person to whom the provisions of this Act applied may be determined with reference to any facts, circumstances or events including any conviction or detention which occurred or took place before the commencement of this Act. 9.4. Illegally acquired property has been defined by Clause (c) of Sub-Section (1) of Section 3. The definition is very wide and sweeping. It includes every acquisition by illegal means and not satisfactorily explained. Section 8 is a very significant provision which provides that in any proceedings under this Act the burden of proving that any propert....
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....s reason that the burden of proving mat the properties specified in the show cause notice are not illegally acquired properties is placed upon the person concerned. May be this is a case where a dangerous disease required a radical treatment. Bitter medicine is not bad medicine. In law it is not possible to say that the definition is arbitrary or is couched in unreasonably wide terms." (pages 2202-2203) 10. 2. What their Lordships have held (in para 43) while clearing with Question No. 5, needs to be extracted and reproduced extensively for in our opinion the law laid down by their Lordships provides key to solving the riddle posed before us. Their Lordships have held : "43. Question No. 5 : It is contended by the Counsel for the petitioners that extending the provisions of SAFEMA to the relatives, associates and other holders is again a case of over-reaching or of over-breadth, as it may be called - a case of excessive regulation. It is submitted that the relatives or associates of a person falling under Clause (a) or Clause (b) of Section 2(2) of SAFEMA may have acquired properties of their own, may be by illegal means but there is no reason why those properties be....
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....able to the convict/detenu, are not sought to be forfeited nor are they within the purview of SAFEMA**. We may proceed to explain what we say. Clause (c) speaks of a relative of a person referred to in Clause (a) or Clause (b) (which speak of a convict or a detenu). Similarly, Clause (d) speaks of associates of such convict or detenu. If we look to Explanation (3) which specifies who the associates referred to in clause (d) are, the matter becomes clearer. "Associates" means : (i) any individual who had been or is residing in the residential premises (including outhouses) of such person ("such person') refers to the convict or detenu, as the case may be, referred to in Clause (a) or Clause (b); (ii) any individual who had been or is managing the affairs or keeping the accounts of such convict/detenu; (iii) any association of persons, body of individuals, partnership firm or private company of which such convict/detenu had been or is a member, partner or director; (iv) any individual who had been or is a member, partner or Director of an association of persons, body of individuals, partnership firm or private company referred to in Clause (iii) at any time when su....
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....r otherwise transfers his properties in favour of any of his relatives or associates, or purports to sell them to any of his relatives or associates--in all such cases, all the said transactions will be ignored and the properties forfeited unless the convict/detenu or his relative/associate, as the case may be, establishes that such property or properties are not "illegally acquired properties" within the meaning of Section 3(c). In this view of the matter, there is no basis for the apprehension that the independently acquired properties of such relatives and associates will also be forfeited even if they are in no way connected with the convict/detenu. So far as the holders (not being relatives and associates) mentioned in Section 2(2)(e) are concerned, they are dealt with on a separate footing. If such person proves that he is a transferee in good faith for consideration, his property--even though purchased from a convict/detenu is not liable to be forfeited. It is equally necessary to reiterate that the burden of establishing that the properties mentioned in the show cause notice issued under Section 6, and which are held on that date by a relative or an associate of t....
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....ue a notice of forfeiture under Section 6 of the Act the rule of evidence enacted by Section 8 casting the burden of proof on the person affected would come into play. In the total absence of such connecting link or the nexus being available the said rule of evidence enacted by Section 8 would not be attracted. 12. A perusal of the order of the Appellate Tribunal shows that though the petitioner had tried to explain and establish the source of acquisition of the said house property as accountable to her own means, but the Tribunal found such explanation extending only to part of the value of the property and not the entire value of the property. However, the fact remains that on the record mere is nothing available to show the detenu Basant Lal having indulged into any illegal activity prior to the year 1967. It was not disputed by the learned Counsel for the respondents that on the material as available on record and dealt with by the Competent Authority and the Appellate Tribunal, the earliest period to which the illegal activities of the detenu Basant Lal could be suggested to have extended was the year 1967. 13. Mr. Arun Jaitely, the learned Senior Counsel for the petitioner ....
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....desired to repress some type of conduct thought to be harmful, to do so by the machinery of the civil rather than of the criminal law. The means so chosen was called a penal action, as being brought for the recovery of a penalty and it might be brought according to the wording of the particular statute creating the penal action, either by the Attorney-General on behalf of the State, or by a common informer on his own account." Since penal actions follow all the forms of civil actions, and are governed by the same rules, we must regard them as civil actions, and ignore for the purpose of classification their resemblances to criminal law. 15.1. The necessity of proof has led to development of rules of evidence. One of me rules of evidence is conditional presumptions or rebutable presumptions. The learned author states : "Many of these presumptions are based on no real estimate of probabilities, but are established for the purpose of placing the burden of proof upon the party who is best able to bear it or who may most justly be made to bear it." (Salmond, supra, at p. 130) 16. Presumptions arise as follows : They are either, (1) a procedural expedient, or (2) a rule....
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.... cases prove to be too hard but has to be sustained in the interest of society at large. While applying the rule controlling standards shall have to be associated with its applicability else the rule may turn out to be 'law beyond the law' to borrow the phrase from Lloyd. Such 'controlling standards' are to be found in the Act itself and in the law laid down by their Lordships in the case of Attorney General v. Amrit Lal (supra). 20. The language of Section 8 itself is suggestive of its applicability depending on availability of two factors, namely : (1) there must be proceedings under this Act, (ii) there must be a notice under section 6 specifying the property as illegally acquired property. Section 6 provides the third relevant factor (iii) the Competent Authority must have reason to believe that such properties are illegally acquired properties. Their Lordships have held in Amrit Lal's case (supra) that the purpose and object of the Act is to reach the properties of the detenu or the convict; the Act is not conceived to forfeit the independent properties of relatives and associates. These, are the 'controlling standards' over the rule of evidence ex....