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2000 DIGILAW 103 (DEL)

OM PRAKASH GULATI v. UNION OF INDIA

2000-02-02

C.M.NAYAR

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C. M. NAYAR ( 1 ) THE petitioner has filed this writ petition impugning the Order in appeal dated October 31, 1977 passed by the Appellate Tribunal for forfeited property. The Order was passed by the Competent Authority under Section 7 (1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 whereby the initiating properties were ordered to be forfeited to the Central Govemment:- (I) Investment in business. Gulati General Store, Hall Bazar, Arnritsar. (II) House Property No. 168, Shivala Road, Arnritsar. ( 2 ) THE petitioner who has since expired and is now represented by his legal representatives had been detained under the COFEPOSA Act, 1974 on December 19, 1974 and was thus a person covered by the provisions of Section 2 (2) (b) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter referred to as the "act" ). The Competent Authority issued a show-cause notice under Section 6 (1) of the Act on November 8, 1976 after recording reasons to believe that the properties mentioned above had been illegally acquired by the petitioner. The show-cause notice mentioned one other property also viz. Shop No. B-1 15/30-3, Hall Bazar, Amritsar as having been illegally acquired. Since the period within which the petitioner had to comply with the show-cause notice was not mentioned therein the Competent Authority issued another notice to the petitioner dated November 16, 1976 under Section 6 (1 ) of the Act in respect of the of the other properties and this notice was duly served on November 26, 1976. The petitioner filed his written explanation dated January 25, 1977 and was given hearing under Section 7 (1 ) on February 22, 1977 and March 11, 1977 when he was still lodged in the Central Jail, Patiata. After hearing the petitioner, the Competent Authority passed the order under Section 7 (1) on April 27, 1977 ordering forfeiture of two of the properties mentioned earlier. ( 3 ) THE appellate Tribunal considered the pleas of the petitioner and recorded the findings as referred in para 3 of the Order which reads as under- " At the hearing under Section 7 (1) on 11. 3. 1977 the appellant had been required to produce the valuer s certificate for the cost of construction of the house. The Competent Authority had also directed the appellant to produce his valuer on that date. 3. 1977 the appellant had been required to produce the valuer s certificate for the cost of construction of the house. The Competent Authority had also directed the appellant to produce his valuer on that date. It would appear that Shri K. John Surgeon, Valuation Officer of the Income-tax Department was also present on 11. 3. 77 along with the Competent Authority when the hearing took place under Section 7 (1) of the Act. During this hearing the appellant made available the valuation certificate of Shri S. C. Vermani, Registered Valuer as per which the construction cost, excluding the value of Land was determined at Rs. 34;000. 00. The Registered Valuer of the Appellant, Shri Vermani was not present during this hearing. It would appear that the appellant requested that the competent authority to summon the valuer if his examination was considered necessary and that he was prepared to deposit the diet money etc. The Competent Authority however, did not comply with this request of the appellant. Shri Sen representing the competent authority, submitted that during the proceedings under Section 7 (1 ) of the Act on 11. 3. 1977 in the Jail premises, the Competent Authority had recorded a statement of Shri K. John Surgeon, Departmental Valuation Officer and a copy of this statement was furnished to us. From a perusal of this statement we find that after making some brief remarks about the valuation certificate produced by the appellant and referring to some alleged miscalculations of relevant areas. Shri K. John Surgeon stated that according to his estimate the cost of construction till, the end of 31. 3. 74 would be Rs. 59. 000. 00. The teamed counsel for the appellant has assailed the entire procedure adopted by the competent Authority in this regard. He contended that in fairness to the appellant the Competent Authority should have made available to him a copy of the valuation report, if any prepared by Shri K. John Surgeon, that a copy of the statement of Shri K. John Surgeon recorded on 11. 3. 1977, should also have been available. and that as per the written request of the appellant the competent Authority should have summoned the Registered Valuer Shri Vermnani for a proper examination of the valuation report submitted by him. 3. 1977, should also have been available. and that as per the written request of the appellant the competent Authority should have summoned the Registered Valuer Shri Vermnani for a proper examination of the valuation report submitted by him. Shri Kapoor, the learned counsel for the appellant, further voiced his reservations as to whether Shri K. John Surgeon could have been visited this property for inspection particularly since no intimation had been given either to the appellant or his counsel or any other person connected with the appellant about the intended inspection of the property in Shivala Road. We were constrained to take notice of these serious allegations. Having heard the arguments from both sides on this point, it appeared to us that we might have to refer this matter back to the Corppetent Authority with a direction to appoint a third valuer acceptable to, both sides for determining afresh the cost of construction of this property, however at this stage, the learned counsel for the appellant indicated that his client would be prepared to accept the valuation of Shri K. John Surgeon of the cost of construction of the house at Rs. 59. 000. 00 provided the Tribunal was satisfied with his explanation and arguments that the business of General merchandise in the name of Gulati General Store had been acquired in a legitimate manner as it would go to establish that the construction costs to the extent debited in the books of accounts, would stand explained. He therefore submitted that in such an event, it would be necessary for the Competent Authority to consider the application of Section 9 of the Act in view of the fact that more than 50% of the cost of construction would have been explained as having come from legal source. Since we have held in favour of the appellant regarding the initial investment in the business of Gulati General Store, Arnritsar, any other investment which is directly traceable to the funds of Gulati General Store cannot beheld to have come out of illegal source. Since Rs. 34. 000. 00 (Approx) stands debited to the building account in the books of accounts of Gulati General Store, such amount has also to be held as having come out of legal sources. Since Rs. 34. 000. 00 (Approx) stands debited to the building account in the books of accounts of Gulati General Store, such amount has also to be held as having come out of legal sources. In other words, more than half the amount invested in the construction of the building has been explained to have come from legal source. It is, therefore necessary for the Competent Authority to give an option under Section 9 of the Act to the Appellant. We, therefore, send back the case to the Competent Authority with the direction that he will comply with the provisions of Section 9 of the Act and pass fresh orders according to law. The order of the Competent Authority is modified accordingly. ( 4 ) THE learned counsel for petitioner does not assail the reference to the Competent Authority to give an option to the petitioner under Section 9 of the Act and remand of the case to the Competent Authority with the direction that he will comply with the provisions of Section 9 of the said Act and pass order according to law. ( 5 ) IN view of the above the order of the Appellant Authority is upheld and the matter if remanded to the Competent Authority to dispose of the same in pursuance to the provisions of Section 9 of the Act. The present petition is disposed of in these terms. There will be no order as to costs.