Kundan Das v. Union of India — 1991 DIGILAW 1330 (ALL)

JUDGMENT K. Narayan, J. - Through this petition the petitioner has desired that the order dated 30th April, 1977 made by the Competent Authority and dated 17th May, 1978, made by the Appellate Tribunal evidenced by Annexures 8 and 9 be quashed. The facts material for the purpose of the present petition are that the petitioner was arrested on 5-3-1976 and after the same was served with the order dated 1-1-1976 directing his detention under Clauses 1 and 2 of Section 3 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter called as COFEPOSA). Alongwlth the above order, a declaration was also served on him under Section 12 (A) of the said Act. The petitioner remained under detention till the emergency was revoked. Before release another notice was issued by the Competent Authority, desiring Sri Kundan Dass, the petitioner here to show cause why the proceedings under Section 6 (1) of the Smugglers and Foreign Exchange Manipulators, (Forfeiture of Property) Act, 1976 be not taken and his house be not forfeited. The petitioner filed objections to the same, which were considered by the Competent Authority and the matter was disposed of in two parts; in the first order, dated April 15, 1977, regarding an observation in respect of the objections of the petitioner that the Act was not applicable to him and in the second part regarding finding of fact. In nutshell, the Competent Authority directed forfeiture of the house. The petitioner preferred an appeal against the order dated April 15, 1977 and the said appeal was dismissed on 17-5-1978. The Union of India and other authorities, subordinate to it i. e. respondent Nos. 2 and 3 have not controverted the facts alleged in the affidavit of the petitioner. The State of W. P. has filed counter affidavit and from these two the undisputed facts come out in the form that the petitioner had been dealing with in the clothes was an income tax payer and had acquired this property through various transactions spread over a period of years. The main ground of attack put forward on behalf of the petitioner has been the availability of Section 2 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 for use against him. In order to properly appreciate this argument, a reference to the Act as a whole will be of use. The main ground of attack put forward on behalf of the petitioner has been the availability of Section 2 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 for use against him. In order to properly appreciate this argument, a reference to the Act as a whole will be of use. The Act unlike the other Acts of Parliament has not been made applicable to all under Section 2 of the Act, the provisions thereof are to apply only to the persons specified in sub-section (2). It will be worth while to quote this section as a whole in order to appreciate it properly. "2. Application (1) The provisions of this Act shall apply only to the persons specified in sub-section(2). It will be worth while to quote this section as a whole in order to appreciate it properly. "2. Application (1) The provisions of this Act shall apply only to the persons specified in sub-section(2). (2) The persons referred to in sub-section (1) are the following, namely : (a) every person - (i) who has been convicted under the Sea Customs Act, 1878 (8 of 1878), or the Customs Act, 1962 (52 of 1962), of an offence in relation to goods of a value exceeding one lakh of rupees; or (ii) who has been convicted under the Foreign Exchange Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), of an offence, the amount or value involved in which exceeds one lakh of rupees; or (iii) who having been convicted under the Sea Customs Act, 1878 (8 of 1878), or the Customs Act, 1962 (52 of 1962), has been convicted subsequently under either of those Acts: or (iv) who having been convicted under the Foreign Exchange Regulation Act, 1947, (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), has been convicted subsequently under either of those Acts; (b) every person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974) Provided that- (i) Such order of detention, being an order to which the provisions of Section 9 or Section 12-A of the said Act do not apply, has not been revoked on the report of the Advisory Board under Section 8 of the said Act or before the receipt of the report of the Advisory Board or before making a reference to the Advisory Board; or (ii) such order of detention, being an order to which the provisions of Section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of the review under subsection (3) of Section 9, or on the report of the Advisory Board under Section 8, read with sub-section ~2) of Section 9 of the said Act; or (iii) Such order of detention, being an order to which the provisions of Section 12-A of the said Act apply, has not been revoked before the expiry of the time for or on the basis of, the first review under subsection (3) of that section, or on the basis of the report of the Advisory Board under Section 8, read with sub-section (6) of Section 12-A, of that Act; or (iv) such order of detention has not been set aside by a Court of competent jurisdiction; (c) every person who is a relative of a person referred to in clause (a) or clause (b); (d) any holder (hereafter in this clause referred to as the present holder) of any property which was at any time previously field by a person referred to in clause (a) or clause (b) unless the present holder or, as the case may be, any one who held such property after such person and before the present holder, is or was a transferee in good faith for adequate consideration. Explanation I - For the purpose of sub-clause (i) of clause (a), the value of any goods in relation to which a person has been convicted of an offence shall be the whole sale price of the goods in the ordinary course of trade in India as on the date of the commission of the offence. Explanation 2. Explanation I - For the purpose of sub-clause (i) of clause (a), the value of any goods in relation to which a person has been convicted of an offence shall be the whole sale price of the goods in the ordinary course of trade in India as on the date of the commission of the offence. Explanation 2. -For the purpose of clause .c) "relative", in relation to a person, means - (i) spouse of the person; (ii) brother or sister of the person; (iii) brother or sister of the spouse of the person; (iv) any lineal ascendant or descendant of the person; (v) any lineal ascendant or descendant of the spouse of the person; (vi) spouse of a person referred to in clause (ii), -clause (iii), clause (iv) or clause (v); (vii) any lineal descendant of a person referred to in clause (ii) or clause (iii); Explanation 3.-For the purposes of clause (d), "associate" in relation to a person means- (i) any individual who had been or is residing in the residential premises (including out houses) of such person; (ii) any individual who had been or is managing the affairs or keeping the accounts of such person; (iii) any association of persons, body of individuals, partnership firm, or private company within the meaning of the Companies Act, 1956 (1 of 1956), of which such person 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 within the meaning of the Companies when such person had been or is a member, partner or director of such association, body, partnership firm or private Company; (v) any person who had been or is managing the affairs, or keeping the accounts, of an association of persons, body of individuals, partnership firm or private company referred to in clause (iii): (vi) the trustee of any trust, where; (a) the trust has been created by such person; or (b) the value of the assets contributed by such person (including the value of the assets, if any, contributed by him earlier) to the trust amounts, on the date on which the contribution is made, to not less than twenty per cent, of the value of the assets of the trust on that date; (vii) Where the competent authority, for reasons to be recorded in writing, considers that any properties of such person are held on his behalf by any other person, such other person; Explanation 4. -For the avoidance of doubt, it is hereby provided that the question whether any person is a person to whom the provisions of this Act apply 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. The Competent Authority seems to have proceeded with a superficial impression that since there was detention order under Section 12-A of the COFEPOSA, the petitioner could be covered in the definition of every person in Section 2 (2) (b) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. The situation seems to be that though in Section 2 (2) (b) all detention under the COFEPOSA have been covered, they have also been subjected to certain provisions; i. e. provisions (i), (ii), iii) and (iv) and unless the detention order would not be excluded in application to the individual, the provisions of Section 2 (2) (b) would not be available to the authorities and the individual would not be a "person" within the meaning of Section 2 (i) of the Act. In order to properly appreciate the value of Section 12-A of the COFEPOSA, the same need be reproduced, but before that a little history of this Section will also be material as it will help in understanding the purport and the interpretation off the section. This Section was introduced by an Amendment Act 35 of 1975 w. e. f. 1-7-75. It is true that there have also been amendments in this Section by Act 19 of 1976, effective from 16-6-1976, but that will not be of much value. This Section was brought on the Statute Book for the purposes of emergency and was by its own language limited to that period. COFEPOSA 12-A. Special provision for dealing with emergency.-(1) Notwithstanding anything contained in this Act or any rules of natural justice, the provisions of this section shall have effect during the period of operation of the proclamation of emergency issued under Clause (1) of Article 352 of the Constitution on 3rd day of December, 1971 or the Proclamation of Emergency issued under that clause on the 2501 day of June, or a period of (twenty four months) from 25th day of June, 1975, whichever period is the shortest. (2) When making an order of detention under this Act against any person after the commencement of the Conservation of Foreign Exchange and Prevention of Smuggling Activities (Amendment) Act, 1975, the Central Government or the State Government, or, as the case may be, the officer making the order of detention shall consider whether the detention of such person under this Act is necessary for dealing effectively with the emergency in respect of which the proclamation referred in sub-section (i) have issued (hereinafter in this section-referred to as the emergency) and if on such consideration, the Central Government or the State Government or, as the case may be, the officer is satisfied that it is necessary to detain such person for effectively dealing with the emergency, tact Government or officer may make a declaration to that effect and communicate a copy of the declaration to the person concerned : Provided that where such declaration is made by an officer, it shall be reviewed by the appropriate Government, within fifteen days from the date of making of the declaration and such declaration shall cease to have effect unless it is confirmed by that Government, after such review, within the said period of fifteen days. (3) The question, whether the detention of any person in respect of whom a declaration has been made under sub-section (2), continues to be necessary for effectively dealing with the emergency shall be reconsidered by the appropriate Government within four months from the date of such declaration and thereafter at intervals not exceeding four months, and if on such reconsideration, it appears to the appropriate Government that the detention of the person is no longer necessary for effectively dealing with the emergency, that Government may revoke the declaration. (4) In making any consideration, review or reconsideration under sub-section (2) or (3), the appropriate Government or officer may, if such Government or officer considers it to be against the public interest to do otherwise, act on the basis of the information and materials in its or his possession without disclosing the fact or giving an opportunity of making a representation to the person concerned. (5) It shall not be necessary to disclose to any person detained under a detention order to which the provisions of sub-section (2) apply, the grounds on which the order has been made during the period the declaration made in respect of such person under that sub-section is in force, and, accordingly such period shall not be taken into account for the purposes of sub-section (3) of Section 3. (6) In the case of every person detained under a detention order to which the provision of sub-section (2) apply, being a person in respect of whom a declaration has been made thereunder, the period during which such declaration is in force shall not be taken into account for the purpose of computing - (i) the periods specified in clauses (b) and (c) of Section 8; (ii) the periods of one year and "five weeks" specified in sub section (1) of the period of "one year" specified in subsection (2) (i) and the period of "six months" specified in subsection (3) of Section 9. Sub-section (1) of the above Section 12-A makes it clear that this was not going to be a permanent feature and the law was introduced in a self exhausting form whether there was any other amendment repealing the Act or not. This section was to come to an end on expiry of 12 months from 25th June, 1975 (There appears some anomaly in the use of words, the shortest period, it cannot go beyond 25th June, 1976). Be it whatever it may be the only use of this sub-section was that during the validity of this sub-section, the provisions of the said section shall have overriding effect on other provisions of the same Act and may be even rules of natural justice also. We are not concerned with the legislative validity of these provisions in this petition and what we wish to emphasise is that even the Section as it was, was to give only few advantages over the other provisions of the Act itself and nothing much. During the validity of sub-section (1) the authorities concerned were clad with additional powers mentioned in subsequent sub-sections. During the validity of sub-section (1) the authorities concerned were clad with additional powers mentioned in subsequent sub-sections. In sub-section (2) the officer making order of detention under the Act was to consider whether the detention of such person was necessary for effectively dealing with the emergency, in respect of which the proclamation referred to in subsection (1) had been issued. Though the declaration under Section 12-A made in respect of this petitioner did not give any detail we would again skip it and ignore this requirement of law in its application to the case of this petitioner. But would emphasise that the words "this Act" in sub-section (2) could refer to the principal Act, i. e. COFEPOSA 1974, and not the amending Act which has been referred to in full in the next breath in the same clause. This simply shows that Section 12-A did not authorise the beginning of any detention itself which could be there by enforcement of Section 3 etc. and it only clad the authorities with more and additional privileges. Sub-section (3) directed that the question whether detention was required to continue for dealing effectively with the emergency would be reconsidered by the appropriate Government every four months. Sub-section (4) authorises the officers and authorities to withhold in the opinion, the materials that were in their possession and sub-section (5) directed that it would not be necessary to disclose to the detenu the grounds etc. Sub-section (6) strictly laid down the overriding effects on certain provisions of the Act itself. They say that in respect of a person detained under the declaration made under sub-section (2) the period for which such declaration would be in force shall not be taken into account for the purpose of computing the periods specified in sub-sections (b) and (c) of Section 8 and the period of one year and five weeks specified in subsection (3) of Section 9 shall be replaced by one year and six months. Thus the section as a whole shows that it does not create any law or authorisation for detention of a person by itself. It comes into operation only when another order of detention is being or has been made under the provisions of the Said Act and after the commencement of the Amendment Act of 1975. Thus the section as a whole shows that it does not create any law or authorisation for detention of a person by itself. It comes into operation only when another order of detention is being or has been made under the provisions of the Said Act and after the commencement of the Amendment Act of 1975. The other sections under which an order of detention could be made applicable to the present case was section 3, sub-section (1) clauses 1 and 3 under which this order of detention, as evidenced by Annexure-l was made. In nutshell it can be said that the State Government had directed an order of detention under Section 3 (1) of the COFEEPOSA and made declaration of application of Section 12 (c) of the Act. As already said above a review was necessary under sub-section (3) of COFEPOSA after four months. There is nothing to show that any such review was made. This omission would invite Clause `has not been revoked before the expiry of the time for, or on the basis of the first review under sub-section (3) of that section' of Section 2 (2) (b) (iii) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. Again Section 12-A clause 3 made it mandatory for the State Government to reconsider the matter every four months and in any case, immediately within four months from the date of such declaration. Whatever be the reason if such reconsideration is not made, the detention thereafter would be illegal. Only inference can be. that the order stood revoked for failure of the Government to reconsider the same. However, it may also be said that language of the section, howsoever, hard it may have been, required that the Government was to reconsider an order of detention. It-could be, that such a continuation of the detention might have been set aside and the omission shall be of much value as it has not been done so far. The other aspect of Section 2 (2) (b) of SAFEMA was the requirement of the report of Advisory Board under Section 8 read with Section 12-A (6) of COFEPOSA. It-could be, that such a continuation of the detention might have been set aside and the omission shall be of much value as it has not been done so far. The other aspect of Section 2 (2) (b) of SAFEMA was the requirement of the report of Advisory Board under Section 8 read with Section 12-A (6) of COFEPOSA. It will be worthwhile to recall here that the detention order could be made and has been made in this case under Section 3 of COFEPOSA only and law required vide Section 8 of the Act, that the case of detention will be re examined by an Advisory Board constituted under Section 8 of the Act. Clauses (b) and (c) of Section 8 requires that the Government shall within five weeks from the date of detention of a person make a reference to the Advisory Board. Clause (c) required a similar action within eleven weeks, These periods were to remain suspended under clause (6) of Section 12-A of COFEPOSA. It would not be that they became nonexistent. The provisions of Section 8 (b) and (c) were to be applied, after one year from 25th June, 1975 and if they were not so applied the position would boil down to a situation that there was detention under Section 3 of the Act and there was no report of the Advisory Board under Section 8 of the Act. With this deduction the provisions of Section 2 (2) (b) proviso 3 are to be read. The requirement is not only that there should have been an order under Section 12-A. The requirement is that said order under Section 12-A should not suffer from the weaknesses mentioned in proviso 3. The weaknesses were that the detention have not been revoked before the expiry (i) of the time for or (a) on the basis of first review or (b) on the basis of the report of Advisory Board. The clause "expiry of the time for" would cover and qualify both the requirements of review under Section 3 or the report of the Advisory Board under Section 8. The clause "expiry of the time for" would cover and qualify both the requirements of review under Section 3 or the report of the Advisory Board under Section 8. Once Section 12-A of COFEPOSA ceased to apply for any reason on expiry or withdrawal of emergency or whatever it may be, the matter was to be referred to the Advisory Board for compliance of the provisions of Section 8 and if it has not been done, the time for the same would exhaust itself and the order would be deemed to have been revoked before the expiry of the time for or for obtaining the report of the Advisory Board under Section 8 of the Act. Since the matter of this petitioner was never taken to the Advisory Board, his case would stand covered by proviso 3 of Section 2 (2) (b) of the SAFEMA and, therefore, he could not be considered to have been a "person" within the meaning of Section 2 (2) of the said Act. The proceedings under Section 6 of the said Act would, therefore, be incompetent and without jurisdiction. We may also mention before concluding that the validity of detention and other factors were also put forward before us by the learned counsel for the petitioner, but we do not consider it worthwhile to go into them in view of the above observations. This petition should, therefore, succeed and accordingly the proceedings taken by the Competent Authority and the Appellate Authority evidenced by Annexures 3, 5, 8 and 9 are hereby quashed.