JUDGMENT

B.P. Jeevan Reddy, J.

1. With a view to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators, the Parliament enacted, in the year 1976, The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, being Act No. 13 of 1976. The Preamble to the Act sets out the objective which the Act seeks to achieve. It says:

"WHEREAS for the effective prevention of smuggling actlVll1es and foreign exchange manipulations which are having a deleterious effect on the national economy it is necessary to deprive persons engaged in such activities and manipulations of their ill-gotten gains:

AND WHEREAS such persons have been augmenting such gains by violations of wealth-tax, income-tax or other laws or by other means and have thereby been increasing their resources for operating in a clandestine manner;

AND WHEREAS such persons have in many cases been holding the properties acquired by them through such gains in the name of their relatives, associates and confidants."

2. It would equally be relevant to notice the Statement of Objects and Reasons appended to the Bill. The Statement sets out the mischief the Act was intended to meet and counter-act. It reads:

"Smuggling activities and foreign exchange manipulations are having a deleterious effect on the national economy. Persons engaged in such malpractices have been 0 augmenting their ill-gotten gains by violation of laws relating to income-tax, wealth-tax or of other laws. In many cases, such persons have been holding properties acquired through ill-gotten gains in the names of their relatives associates and confidants. This accumulation of ill-gotton wealth gives increasing power, influence and resources to those who carry on such clandestine activities and even tend to confer social status and prestige which is quite contrary to the healthy socio-cultural norms. These activities pose a serious threat to the economy and the security of the nation. In conjunction with various other steps taken by the Government in recent months for cleansing the social fabric and resuscitating the national economy, it became necessary to assume powers to deprive such persons of their illegally acquired properties so as to effectively prevent the smuggling and other clandestine operations. The President promulgated on the 5th November, 1975 the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Ordinance 1975."

3. The Act was preceded by an Ordinance issued on 5th November, 1975. For that reason, the Act, when made, was given effect to from the said date. The object with which the Act was made is, without a doubt, highly laudable.

4. The provisions of the Act apply to persons specified in Sub-section (2) of Section 2. Persons who have been convicted under the Sea Customs Act, 1878/Customs Act, 1962, persons convicted under the Foreign Exchange Regulation Act, 1947/Foreign Exchange Regulation Act, 1973 constitute the first category. The second category is of the persons who have been detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1947 (COFEPOSA), provided the said order has not been revoked or withdrawn by the Competent Authority before the completion of the period prescribed or set aside by a competent Court. The third category is of the relatives and associates of persons falling under categories 1 and 2. The fourth category is of the transferees from the persons falling in category 1 and 2. Clause (c) in Section 3 defines the expression "illegally acquired property". It means, in short, any property acquired, by a person, whether before or after the commencement of the Act from out of any income or assets derived or attributable to the prohibited activity. Section-4 declares that as from the commencement of the Act it shall not lawful for any person, to whom the Act applies, to hold any illegally acquired property either by himself or through any other person on