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2005 DIGILAW 129 (KAR)

R. KODANDARAMA REDDY v. UNION OF INDIA

2005-02-17

K.L.MANJUNATH

body2005
( 1 ) IN these petitions, the petitioners are challenging the order passed by the Competent Authority dated 10-1-2000 under Section 68-1 of the narcotic Drugs and Psychotropic Substances Act, 1985, so far as it relates to the property bearing No. 467 (renumbered as 7/1 and 7/2), situated at S. R. Layout, Murugeshpalya, Bangalore, contending that they are full and absolute owners of site No. 467, S. R. Layout, murugeshpalya, Bangalore, and that they had entered into an agreement with one Smt. Suganthi under Joint Development Agreement dated 4-3-1996. In terms of the agreement, Smt. Suganthi was required to complete the project within 24 months from the date of commencement of construction on the site and after completion of the building, 40% of the constructed area shall be given to the petitioners and 60% of undivided share along with building constructed thereon shall be held by the developer Smt. Suganthi who is third respondent in the petition. Annexure-A has been passed by the Competent Authority on the ground that one Mannivannan Mahadevan alias Rupen was found to be in possession of Narcotic Drugs and Proceedings were initiated against him under the provisions of Narcotic Drugs and psychotropic Substances Act, 1985. On interrogation, it was found that said business was looked after on behalf of Mannivannan Mahadevan alias Rupen by one Pakeerathan alias Ravi was the husband of third respondent-Suganthi and that Suganthi did not had income of her own and that out of income of drug trafficking business, her husband had invested money in the name of the third respondent. Accordingly, an order of forfeiture was passed in respect of the properties held by the third respondent as per Annexure-A. The third respondent aggrieved by the order passed by the Competent Authority filed an appeal before the appellate Tribunal for forfeited property, New Delhi. The appeal filed by the third respondent before the Appellate Tribunal for forfeited property was also dismissed on 4-12-2001. Pursuant to the confirmation order of the Competent Authority by the Appellate Tribunal, possession of the property of the petitioners was taken over by the respondent as per the order dated 22-3-2004. Therefore, the present petitions are filed challenging the order of the Competent Authority in forfeiting the properties of the petitioners. Pursuant to the confirmation order of the Competent Authority by the Appellate Tribunal, possession of the property of the petitioners was taken over by the respondent as per the order dated 22-3-2004. Therefore, the present petitions are filed challenging the order of the Competent Authority in forfeiting the properties of the petitioners. ( 2 ) ACCORDING to the petitioners, the first petitioner is the father of the petitioners 2 to 4 and they being the owners of the property had entered into the Joint Development Agreement on 4-3-1996 with the third respondent Smt. Suganthi. The copy of the Joint Development agreement is produced as Annexure-B. On the same day, to enable the third respondent to proceed with the construction, they also executed a registered power of attorney in favour of third respondent, which is produced as Annexure-C. The petitioners on the ground that the third respondent did not comply with the terms and conditions of the Joint development Agreement, have revoked power of attorney as per annexure-D. The Joint Development Agreement was also terminated on 23-8-2001 by issuing a legal notice as per Annexure-E. Similarly they have also issued public notice intimating the public about the cancellation of Joint Development Agreement with the third respondent. The petitioners contend that they are in possession of the property as absolute owners in view of the third respondent not performing her part of contract as per the Joint Development Agreement and that the Joint development Agreement has not been acted upon; and as no building was constructed by the third respondent, property of the petitioners could not have been taken over by the second respondent, by passing an order of forfeiture. Therefore, they contend that the order passed by the competent Authority as per Annexure-A which has been confirmed by the Appellate Tribunal as per Annexure-J and order of taking over possession of the petitioner's property by the Competent Authority are to be quashed. ( 3 ) ACCORDING to the respondents 1 and 2, out of income of drug trafficking, the third respondent has invested on the property bearing no. ( 3 ) ACCORDING to the respondents 1 and 2, out of income of drug trafficking, the third respondent has invested on the property bearing no. 467, S. R. Layout, Murugeshpalya, Bangalore, and that she had paid entire consideration payable by her to the petitioners herein and therefore, Annexure-C namely power of attorney was executed by the petitioners in her favour and that on the date of order of forfeiture and on the date of initiation of proceedings under the provisions of Narcotic drugs and Psychotropic Substances Act, 1985, the third respondent was in possession as an absolute owner of the property. Therefore, the competent Authority had every right to forfeiture the property in question. In the circumstances, they request the Court to dismiss the petition. ( 4 ) HAVING heard the learned Counsels for the parties, the following points would emerge for consideration by this Court in these writ petitions: (1) Whether the third respondent was the full and absolute owner of House No. 467, S. R. Layout, Murugeshpalya, bangalore and whether the Joint Development Agreement was acted upon? (2) Whether Smt. Suganthi had become the absolute owner by virtue of power of attorney executed by the petitioners herein? (3) If Smt. Suganthi had not acquired absolute ownership in respect of the property in question, whether the same can be forfeited? and (4) Whether the Competent Authority was justified in passing an order of forfeiture without hearing the petitioners? ( 5 ) IN a connected matter in respect of Priya Apartments, this Court has held that the husband of the third respondent was involved in drug trafficking and out of the income of drug trafficking, he had invested in the name of third respondent in order to acquire certain properties. Order under Section 68-1 of the Narcotic Drugs and Psychotropic substances Act has been passed by the Competent Authority as per annexure-A, after hearing the third respondent alone. According to the competent Authority, Smt. Suganthi to whom the show-cause notice was served has not given reasonable explanation regarding source to acquire the properties mentioned in the show-cause notice. In the show-cause notice, the property involved in the present case has been shown as item No. 4. In the order passed by the Competent Authority, no finding has been given in regard to ownership of Suganthi, in respect of premises No. 467, S. R. Layout, Murugeshpalya, Bangalore. In the show-cause notice, the property involved in the present case has been shown as item No. 4. In the order passed by the Competent Authority, no finding has been given in regard to ownership of Suganthi, in respect of premises No. 467, S. R. Layout, Murugeshpalya, Bangalore. Without giving any finding on the question of ownership of Suganthi, the authority should not have forfeited the property in question. From the perusal of the Joint Development Agreement, it is clear that on 4-3-1996, the petitioners have entered into agreement with the third respondent and third respondent had agreed to develop the property within twenty-four months and after developing the property, the petitioners herein are entitled to 40% of undivided share along with the constructed area. On the date of agreement, the developer has paid certain amount as security deposit to the petitioners as shown in Clause 23 of the Joint Development Agreement. From looking into the power of attorney produced before this Court vide Annexure-C, it is clear that power of attorney is executed in order to develop the property in terms of Joint Development Agreement. But there is nothing to show that annexure-C was executed for consideration and that Suganthi had become the absolute owner in respect of the property in question. Annexure-D is the deed of revocation and Annexure-E is the notice of termination of contract. The third respondent has not disputed annexures-D and E and so also Annexure-F. There is nothing to show that in terms of Joint Development Agreement, entire property was developed in full. According to the petitioners, only a shell was constructed by the third respondent and thereafter she had abandoned the project. These facts are not disputed. The respondents also admit that third respondent did not complete the project. If the third respondent had not completed the project, even if it is held that suganthi had invested on the construction out of income from the drug trafficking, it was the duty of the Competent Authority to give its finding in regard to total investment made by Suganthi on the project and the rights of Suganthi on the property in question and after ascertaining the extent of rights of the third respondent in the property in question, the Competent Authority could have forfeited only to that extent. In the instant case, the petitioners are contending that in view of termination of agreement, the third respondent has no right over the property and therefore the property cannot be forfeited by the competent Authority. When there is no clear-cut finding has been given by the Competent Authority in regard to the share of the third respondent, the order of forfeiture passed by the Competent Authority in respect of the property in question has to be set aside. In the instant case, though the Competent Authority had the Joint Development agreement with it, for the reasons best known to the Competent authority, no notice was issued to the petitioners herein and the petitioners were not heard in the matter. Whether the petitioners can unilaterally terminate the contract entered into between them and third respondent has to be ascertained by the Competent Authority. If the petitioners have no right to terminate the contract, in such circumstances also, a duty is cast upon the Competent Authority to find out the percentage rights of Suganthi over the property. Even though suganthi had right over the property in terms of the agreement, suganthi not being the owner of entire property, the property of the petitioners cannot be forfeited without giving an opportunity to them as required under Section 68-K of the Narcotic Drugs and Psychotropic substances Act. ( 6 ) FROM the above discussion, it is clear to me that the order passed by the Competent Authority in respect of the property in question is held to be bad in law, as the petitioners have not been heard in the matter and right of the petitioners has not been adjudicated by the competent Authority. In the circumstances, the order passed by the competent Authority insofar as it relates to the property of the petitioners is concerned and further orders passed by he Competent authority in taking over possession of the same are required to be set aside and the matter is required to be reconsidered by the Competent authority in the light of observations made above. In the result, the writ petitions are allowed. The matter is remitted back to the Competent Authority by directing Competent Authority to hold fresh enquiry in accordance with law by giving reasonable opportunity to the petitioners. It is open for the petitioners to file detailed objections and to adduce evidence thereon. In the result, the writ petitions are allowed. The matter is remitted back to the Competent Authority by directing Competent Authority to hold fresh enquiry in accordance with law by giving reasonable opportunity to the petitioners. It is open for the petitioners to file detailed objections and to adduce evidence thereon. After hearing the parties, the Competent Authority shall dispose of the case on merits and in accordance with law. --- *** --- .