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2008(5) Supreme 309
Supreme Court of india
S.B. Sinha and V.S. Sirpurkar, JJ.
Aslam Mohd. Merchant — Appellant
versus
Competent Authority & Ors. — Respondent
Criminal Appeal No. 1053 of 2003
with
Crl. A. Nos. 1054-1057 of 2003
Decided on : 08-07-2008
(b)Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 – Section 68-F – A link must be found between the property sought to be forfeited and the income or assets or properties which were illegally acquired by the person concerned. (Para 24)
(c)Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 – Section 68-H – The statutory elements, namely, ‘reason to believe’ and ‘recording of reasons’ must be premised on the materials produced before the competent authority – The notices do not contain any reason so as to satisfy the requirements of sub-section (1) of Section 68H of the Act – A proper application of mind on the part of the competent authority is imperative before a show cause notice is issued. (Paras 28 and 29)
(1994)5 SCC 54; (2003)7 SCC 436 – Relied upon.
(2003)7 SCC 427 – Distinguished.
(d)Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 – Sections 68-I and 68-J – A person affected would be called upon to discharge his burden provided a link or nexus is traced between the holder of the property proceeded against and an illegal activity of the detenu – Such a formation of belief is essential. (Para 34)
(1968)3 SCR 746 – Relied upon.
(2007)2 SCC 510; (1973)1 SCC 372 – Distinguished.
(e)Words and Phrases – Reasons to believe – Belief can nly be formed on the basis of specific, reliable and relevant information coming to the possession of the concerned authority subsequently. (Para 38)
(1993)203 ITR 456; (1976)103 ITR 437; 2007 (8) SCALE 396 – Relied upon.
(f)Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 – Section 68-F – Once the show cause notice is found to be illegal, the same would vitiate all subsequent proceedings. (Para 39)
(2007)6 SCC 329 – Relied upon.
(g)Interpretation of statutes – Right to hold property although no longer a fundamental right, is still a constitutional right – It is a human right – Provisions of the Act must be interpreted in a manner so that its constitutionality is upheld – At the same time when stringent laws become applicable as a result whereof some persons are to be deprived of his/her right in a property, scrupulous compliance of the statutory requirements is imperative. (Para 44)
Facts of the case :
1.One Iqbal Mohammed Memon alias Iqbal Mirchi is related to the appellants.
2.An order of preventive detention was passed against him for his alleged involvement in illicit trafficking under the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 on or about 29.9.1994. The same, however, could not be served on him as he had left India.
3.A pre execution writ petition filed on his behalf was dismissed. The said order of detention is still operative.
4.The said Iqbal Mirchi is, thus, a ‘person’ within the meaning of Section 68A(C) of the Act. Appellants being his relatives in terms of Section 68H of the Act were issued with notices directing them to show cause as to why the properties mentioned therein should not be forfeited being ‘illegally acquired properties’. Whereas some of the properties belonging to the appellants were directed to be forfeited, some were released.
5.The Appellate Tribunal affirmed the said findings. Some more properties, however, were directed to be released opining that they did not come within the purview of the defeinition of ‘illegally acquired properties’.
6.Writ Petitions preferred thereagainst by the appellants have been dismissed by the High Court by reason of the impugned judgment, holding that the proceedings were validly initiated against them.
Findings of the Court :
The show cause notices isued were not legally valid. Hence the whole proceeding becomes vitiated.
Result : Appeals allowed.
Key Points: - The judgment emphasizes that a link must exist between forfeitable property and illegally derived income (Sections 68-F, 68-H, 68-J) (!) (!) (!) - It holds that "reason to believe" and recording of reasons must be based on material before the authority; otherwise, initiation of proceedings is invalid (Section 68-H(1)) (!) (!) (!) - If the show cause notice is illegal or the authority lacks sufficient material, the entire proceeding is vitiated and the appeals may be allowed (non-application of mind; invalid notice) (!) (!) (!) - The decision discusses the need for strict compliance with natural justice and the requirement that reasons be disclosed and scrutinizable (!) (!) - The Court references prior SAFEMA and NDPS jurisprudence establishing nexus and proper initiation requirements, and sets aside challenged judgments for failure to meet these standards (!) (!)
Judgment
S.B. Sinha, J. —
INTRODUCTION
1.Interpretation and application of Chapter VA of the Narcotic Drugs and Psychotropic Substances Act, 1985 (for short, “the Act”) providing for forfeiture of property derived from or used in illicit traffic, is in question in this batch of appeals which arise out of a Judgment and Order dated 27.11.2002 passed by the High Court of Bombay in Criminal Writ Petition No. 1095 of 2002.
OVERVIEW
2.One Iqbal Mohammed Memon alias Iqbal Mirchi (“Mirchi”, for short) is related to the appellants. aPPELLANT No. 2 is his first wife, Appellant No.3 is second wife, Appellant No. 4, Abdul Kadar Mohd. Merchant, is one of his brothers, Appellant No. 5, Shir Firoz Mohd. Memen, is his second brother whereas Petitioner No. 6, Aslam Mohd. Merchant, is his third brother. Appellant No.7, Nazma Aslam Merchant, is his brother’s wife, Appellant No.8, Zaibunnisa Memon, is his sister and Appellant No. 9, Arij Mohd. Merchant, is the brother-in-law of the said Iqbal Mohammed Memon.
An Order of preventive detention was passed against him for his alleged involvement in illicit trafficking under the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 (for short the “PITNDPS”) on or about 29.9.1994. The same, however, could not be served on him as he had left India. A pre execution writ petition filed on his behalf was dismissed. The said Order of detention is still operative.
3.The said Iqbal Mirchi is, thus, a ‘person’ within the meaning of Section 68A(C) of the Act. Appellants being his relatives in terms of Section 68H of the Act were issued with notices directing them to show cause as to why the properties mentioned therein should not be forfeited being ‘illegally acquired properties’. Causes were shown pursuant thereto. Opportunities of hearing were also afforded. Whereas some of the properties belonging to the appellants were directed to be forfeited, some were released.
The Appellate Tribunal on appeals having been preferred thereagainst by the appellants by a common Order dated 26.7.2002 affirmed the said findings. Some more properties, however, were directed to be released opining that they did not come within the purview of the defeinition of ‘illegally acquired properties’.
4.Writ Petitions preferred thereagainst by the appellants have been dismissed by the High Court by reason of the impugned Judgment, holding that the proceedings were validly initiated against them.
CONTENTIONS
5.Whereas, on one hand, the submissions of the learned counsel appearing on behalf of the appellants is that the conditions precedent for initiating a valid proceeding, namely, formation of ‘reason to believe’ on the part of the authority wherefor reasons are required to be recorded in writing had not been fulfilled, the submission of Mr. B.B. Singh, the learned counsel appearing on behalf of the respondent on the other hand, is that a notice containing general allegations would meet the requirements of law. According to the learned counsel, once the noticees were informed that they were relatives of the ‘person’ referred to in Section 68A and valuable properties stand in their name, which were acquired beyond their known source of income, it will be for them to satisfy the authority that acquisition of the property by them has nothing to do with the purported income derived by ‘Mirchi’ out of illicit trafficking of narcotic, drug and psychotropic substances.
On behalf of the appellants, it was furthermore urged :
(i)Even a perusal of from the Order passed by the competent authority, it would appear that one of the properties had been purchased by one of the appellants herein much prior to her marriage to ‘Mirchi’ and as such the question of such a property having been acquired out of the “illegally acquired property” does not and cannot arise.
(ii)Appellants having filed their income tax returns and wealth tax returns wherein the properties were shown to have been purchased from their own income, the impugned Order
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