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High Court of Judicature at Madras
K. CHANDRU
The Competent Authority Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976
Versus
A. Sowkath Ali & Others
W.P.No.2939 of 2011 & M.P.No.1 of 2011
Decided On : 17-04-2012
Asset Forfeiture - Procedure Established by Law - SAFEMA, 1976 - Section 6(1), Section 8 - Division Bench judgment of the Kerala High Court in W.A.No.1645 of 2007(E) - [KEYWORD] - [SUBJECT] - [SAFEMA, 1976 - Section 6(1), Section 8]
Fact of the Case:
The writ petitioner, the competent authority under SAFEMA, 1976, challenged an order passed by the Appellate Tribunal For Forfeited Property, New Delhi, which set aside the order of the competent authority forfeiting the properties of the first and second respondents. The first respondent was detained under COFEPOSA Act and proceedings were initiated under SAFEMA, 1976. Despite opportunities, the first respondent could not prove his legal source of income, leading to the forfeiture of his properties. The second respondent's property was also forfeited as it was found to be directly attributable to the illegal income of the first respondent.
Finding of the Court:
The Tribunal found that the investigation was tainted and violated the principles of natural justice. It also held that the income earned by the first respondent cannot be said to be illegally earned. The Tribunal referred to a Division Bench judgment of the Kerala High Court, which supported its conclusions. The Tribunal also found that the show cause notice issued by the competent authority suffered from manifest irregularity and non-application of mind.
Issues: The issues revolved around the legality of the forfeiture of properties under SAFEMA, 1976, the violation of principles of natural justice, and the sufficiency of the show cause notice issued by the competent authority.
Ratio Decidendi: The Court held that the show cause notice issued by the competent authority suffered from manifest irregularity and non-application of mind, and the investigation was tainted. It emphasized the necessity of establishing a link or nexus between the properties and the convict/detenu under SAFEMA, 1976.
Final Decision: The writ petition was dismissed with costs payable to the respondents, and the connected miscellaneous petition was closed.
1. Prologue:-
"Among the truly dangerous government powers is the federal asset forfeiture law, which allows the government to seize and basically keep any property supposedly used in the commission of a crime. Under this law your property is charged with the offense, which makes it a civil action rather than a criminal case. Even if your are never charged with a crime, or are charged and acquitted, it can take years and cost you a fortune to get back your own property. But if your are convicted of the crime the government is entitled to sell your property, with the proceeds divided among all the agencies participating in the original seizure. It's an outrageous program. The L.A.Sheriff's Department, for example, depended on the money raised by selling assets 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 petitioner is the competent authority and the administrator of Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (for short SAFEMA, 1976). In this writ petition, the petitioner challenges an order passed by the Appellate Tribunal For Forfeited Property, New Delhi, dated 06.09.2010.
5. By the impugned order, the Tribunal which heard the appeal filed by the first and second respondent in FPA No.12/MDS/2009 and FPA No.13/MDS/2009 set aside the order of the competent authority dated 08.06.2009.
6. The writ petition was admitted on 08.02.2011. Pending the writ petition, an interim stay was granted for a period of four weeks. Subsequently, it was extended till 29.04.2011.
7. Heard the arguments of Mr.M.L.Ramesh, learned Senior Panel counsel for the petitioner, Mr.B.Kumar, learned Senior Counsel appearing for Mr.M.A.Abdul Huck, learned counsel for respondents 1 and 2.
8. The first and second respondents are husband and wife. The first respondent is the resident of Triplicane, Chennai -5. He was detained under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (for short COFEPOSA Act) on 23.12.1999. Subsequent to his detention, proceedings were initiated under SAFEMA, 1976. According to the petitioner, the investigation revealed that the first respondent was engaged in the activities of smuggling and illegal export of foreign exchange through carriers. The first respondent had himself admitted this fact in a statement recorded under Section 108 of the Customs Act. These proceedings are deemed to be judicial proceedings. According to the petitioner, the first respondent was apprehended by the customs authorities while attempting to export out of India foreign currencies to the tune of Rs.72,62,570/-, the same was seized by the authorities. The first respondent admitted in his statement that the foreign currencies seized belonged to him. These statements are sufficient reason to believe that he had no legal source of income and he was fully inv
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