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Calcutta High Court · body

2009 DIGILAW 771 (CAL)

Manual Jalan v. UNION OF INDIA

2009-09-23

DEBASISH KAR GUPTA

body2009
Judgment :- (1.) This writ application is filed by the petitioner assailing the order dated February 18, 1999 passed by the respondent No. 1 under sub-sections (1) and (3) of Section 7 of Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter referred to as the said SAFEMA) also the order dated December 11, 2002 passed by the respondent No. 2 under sub-section(5) of Section 12 of SAFEMA declaring the house property lying and situated premises No. 10, Digambar Jain Temple Road, Kolkata-700007 as "illegally acquired property" and forfeiting the same to the Central Government free from all encumbrances. (2.) The backdrop of this case in a nutshell is discussed below : - The mother of the petitioner, namely Late Sarbani Devi Jalan purchased the house property lying and situated at 10, Digambar Jain Temple Road, Kolkata-700 007 (hereinafter referred to as the said house property) on December 15, 1958 for Rs. 1,20,000/- only as also spent sum of Rs. 5,933/- only for registration expenses. (3.) An order of detention dated December 10, 1974 under conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 was passed against Late Natmal Jalan who happened to be the husband of the aforesaid Late Sarbani Devi Jalan. (4.) A show-cause notice dated July 17, 1976 was issued from office of the competent authority, Head Quarters, New Delhi against the aforesaid Late Sarbani Devi Jalan under sub-section (1) of Section 6 of the said SAFEMA alleging illegal acquisition of the said house property, amongst other properties, within the meaning of Clause (c) of subsection (1) of Section 3 of the said SAFEMA. Late Sarbani Devi Jalan submitted her reply dated August 17, 1976 against the above show-cause notice seeking inspection of the reasons recorded in writing before initiating the above proceeding as also praying for at least 30 days time from the date of such inspection to deal with those reasons. No further step was taken by the respondent authorities on the basis of aforesaid notice dated July 17, 1976. (5.) A subsequent notice dated March 7, 1977 was issued by the respondent No. 1 against the aforesaid Late Sarbani Devi Jalan under sub-section (1) of Section 6 of the said SAFEMA on the self-same ground of acquiring the same house property, amongst others, within the meaning of Clause(c) of sub-section(1) of Section 3 of SAFEMA Act, 1976. (5.) A subsequent notice dated March 7, 1977 was issued by the respondent No. 1 against the aforesaid Late Sarbani Devi Jalan under sub-section (1) of Section 6 of the said SAFEMA on the self-same ground of acquiring the same house property, amongst others, within the meaning of Clause(c) of sub-section(1) of Section 3 of SAFEMA Act, 1976. The said Late Sarbani Devi Jalan submitted her reply dated April 13, 1977 to the above show-cause notice seeking disclosure of the reasons for issuing the aforesaid show-cause notice. Since no reason was disclosed by the respondent No. 1 to Late Sarbani Devi Jalan in support of issuing the above show-cause notice, she filed an application under Section 226 of the constitution of India before this High Court challenging that above notice. Pursuant to an interim order passed in the above writ application the respondent No. 1 forwarding letter dated November 15, 1977 supplied a resume of the materials and reasons recorded on the basis of which notice under subsection (1) of Section 6 of the SAFEMA was issued against the said Late Sarbani Devi Jalan. (6.) The above writ application was transferred to the Honble Supreme Court along with number of other writ applications for analogous hearing. Those writ application were disposed of by a constitution Bench of Nine Judges of the Honble Supreme Court by delivering a common Judgment on May 12, 1994 upholding the constitutional validity of SAFEMA. After disposal of the above writ application of Late Sarbani Devi Jalan a notice dated December 14, 1995 was issued by the respondent No. 1 addressing Late Sarbani Devi Jalan to attend the hearing on December 29, 1995. The respondent No. 1 issued a further notice date April 8, 1996 addressing Late Sarbani Devi Jalan to attend the hearing on April 15, 1996. (7.) During the intervening period of issuing the show-cause notice dated March 7, 1997 and the date of hearing on December 29, 1995, Late Sarbani Devi breathed her last on April 23, 1994. Her husband died on January 4, 1996. (8.) Ultimately, a notice dated February 18, 1998 was issued against the petitioner to attend the hearing on March 11, 1998 in connection with the above hearing. Her husband died on January 4, 1996. (8.) Ultimately, a notice dated February 18, 1998 was issued against the petitioner to attend the hearing on March 11, 1998 in connection with the above hearing. After giving opportunity of hearing to the petitioner the impugned order dated February 18, 1999 was passed by the respondent No. 1 under sub-section (3) of Section 7 of the said SAFEMA. The petitioner preferred an appeal against the aforesaid order dated February 18, 1999 and the same was dismissed by the respondent No. 2 by passing an order dated December 11, 2002 under sub-section (5) of Section 12 of the said SAFEMA after considering the documents on record and after giving an opportunity of hearing. (9.) It is submitted by Mr. Tarun Kumar Roy, Senior learned Advocate appearing for the petitioner, that the notice dated March 7, 1977 did not show any connecting link of the house property in question with the unlawful income of Late Natmal Jalan. It is submitted by Mr. Roy that though the resume of the reasons for issuing the aforesaid notice was served upon the mother of the petitioner at a subsequent stage, reasons in details were not disclosed to the petitioner or to his mother at any point time. Therefore, according to him, the assumption of jurisdiction of the respondent authority was bad in accordance with the provisions of sub-section (1) of Section 6 of SAFEMA. Mr. Roy submits that no notice was served upon Late Natmal Jalan under sub-section (1) of Section 6 of SAFEMA. According to Mr. Roy notice was required to be served upon Late Sarbani Devi Jalan Late Natemal Jalan under sub-section (2) of Section 6 of SAFEMA. The above notices were required to be served in view of the conclusive finding of the respondent authority in its impugned order dated February 18, 1999 that Natmal Jalan acquired the house property in question out of his illegal income. Mr. Roy also submits that in a panel statute if two constructions are possible the one leaning to the subject should be accepted. (10.) Mr. Roy further submits that no opportunity of hearing was given to the mother of the petitioner as prescribed in sub-section (1) of Section 7 of SAFEMA. Because the notice of hearing was issued after death of the mother of the petitioner. (10.) Mr. Roy further submits that no opportunity of hearing was given to the mother of the petitioner as prescribed in sub-section (1) of Section 7 of SAFEMA. Because the notice of hearing was issued after death of the mother of the petitioner. According to him no justiciable ground was shown for connecting the house property in question with the detention of Late Natmal Jalan. He pointed out that the property was purchased in 1958. While the order of detention was passed in the year 1974 in connection with smuggling activities of Late Natmal Jalan from the year 1971. It is also submitted by Mr. Roy that the findings of the Income Tax authority with regard to the purchase of the house property in question by the mother of the petitioner was not accepted by the respondent authority. The Income Tax authority held that the house property in question was acquired by the mother of the petitioner with her income from business of speculation. According to him no weightage was given to such findings of the Income Tax authority in violation of the provisions of Sections 17 and 18 of SAFEMA. (11.) According to Mr. Roy, a notice of forfeiture was required to be served upon the petitioner after the death of his aforesaid mother. Instead a notice under sub-section (1) of Section 7 of SAFEMA was served upon him. According to Mr. Roy, the above noncompliance of the provisions of sub-section (1) of Section 6 of SAFEMA resulted in violation of principles of natural justice. It is also submitted by Mr. Roy that the source of only a part, being less than one half of the income, with which the said house property had been purchased was not proved to the satisfaction of the competent authority. So, the petitioner was entitled to get a notice under sub-section (1) of Section 9 of the SAFEMA. (12.) According Mr. Roy there was violation of the provisions of Article 300A of the Constitution of India for the reasons mentioned hereinabove. According to Mr. Roy the appellant authority failed and or neglected to consider the aforesaid improprieties. (13.) Mr. Roy relies upon the decisions of Attorney General for India etc. v. Amratlal Prajivandas and Ors. reported in AIR 1994 SC 2179 , Fatima Mohd. Amin v. Union of India reported in (2003) 7 SCC 436 , P. P. Abdulla and Anr. According to Mr. Roy the appellant authority failed and or neglected to consider the aforesaid improprieties. (13.) Mr. Roy relies upon the decisions of Attorney General for India etc. v. Amratlal Prajivandas and Ors. reported in AIR 1994 SC 2179 , Fatima Mohd. Amin v. Union of India reported in (2003) 7 SCC 436 , P. P. Abdulla and Anr. v. Competent Authroity and Ors. reported in (2007)2 SCC 510 , Union of India and Ors. v. Flight Cadet Ashish Rai reported in (2006)2 SCC 364 , Jayrajbhai Jayantibhai Patel v. Anilbhai Nathubhai Patel reported in (2006)8 SCC 200 and Kishan Lal v. Bhanwar reported in AIR 1954 SC 500 in support of his above submissions. (14.) Mrs. Chandrima Bhattacharya, learned Advocate appearing on behalf of the respondents, submits that the SAFEMA came into force in I976. That was the first opportunity to invoke the provisions of the above Act. The first notice was issued under the above act on July 17, 1975. But that was not given further effect due to technical defect. The next notice on the basis of which the proceeding under reference continued was issued on March 7, 1977. According to Mrs. Bhattacharya the seizures of smuggling goods took place on October 29,1971, May 22,1974 and August 14,1974. That does not mean that the smuggling activities of Late Natmal Jalan started in the year 1971. According to respondent authorities there was continuous activity of smuggling which caused the seizures on the aforesaid dates. Mrs. Bhattacharya further submits that as per communication dated November 15, 1977 the reasons were supplied to the mother of the petitioner. Though in the forwarding letter the term "resume" was mentioned, entire reasons as available on records of the respondents were supplied to the mother of the petitioner. According to her, sufficiency of reasons cannot be questioned in course of judicial review. Only objective satisfaction of the authority can be examined. She further points out that prior to supply of the reasons, the mother of the petitioner submitted her reply to the show-cause notice. Drawing the attention of this Court towards authorised provisions of Clause (c) of sub-section (1) of Section 3, sub-section (2) of Section 4 and Section 6, it is submitted by Mrs. She further points out that prior to supply of the reasons, the mother of the petitioner submitted her reply to the show-cause notice. Drawing the attention of this Court towards authorised provisions of Clause (c) of sub-section (1) of Section 3, sub-section (2) of Section 4 and Section 6, it is submitted by Mrs. Bhattacharya that the SAFEMA was applicable to the petitioner as also to his mother and his mother was the person affected with regard to illegally acquired property under reference. Drawing the attention of this Court towards the provisions of Section 8 of SAFEMA it is submitted by Mrs. Bhattacharya that once there was service of a notice under sub-section (1) of Section 6 of the above Act upon the WBLR-59 person affected, the burden of disproving the allegation was upon the mother of the petitioner. According to Mrs. Bhattacharya, since the petitioner inherited the aforesaid house property as a co-owner, no notice was required to be served upon him. However, opportunity of hearing was given to him. According to Mrs. Bhattacharya no notice could be served under sub-section (1) of Section 7 of the above Act in the matter prior to delivery of the judgment in the matter of Amratlal Prajivandas (supra) on May 12, 1994. But it was served immediately thereafter on December 14,1995. According to Mrs. Bhattacharya there was no provision in the above act to serve a notice upon the detenue. (15.) According to Mrs. Bhattacharya Section 18 of the above Act empowers the competent authority to exercise certain powers. But there was no mandate to act on the findings of the Income Tax Authority with regard to the acquisition of the house property in question or that such findings were conclusive in nature. According to Mrs. Bhattacharya the house property in question was acquired illegally. Therefore, there was no manner of application of the provisions of Article 300A of the Constitution of India. (16.) It is further submitted by Mr. Bhattacharya that according to the competent authority the source of a good amount remained unexplained. As a result there was no manner of application of the provisions of Section 9 of the SAFEMA in the instant case. (17.) Mr. Bhattacharya relies upon the decisions of Amratlal Prajivandas (supra) and Smt. Kesar Devi v. Union of India, reported in (2003)7 SCC 427 in support of her submissions. As a result there was no manner of application of the provisions of Section 9 of the SAFEMA in the instant case. (17.) Mr. Bhattacharya relies upon the decisions of Amratlal Prajivandas (supra) and Smt. Kesar Devi v. Union of India, reported in (2003)7 SCC 427 in support of her submissions. (18.) I have heard the parties at length and I have considered the facts and circumstances of this case on the basis of the materials available on record. (19.) It is not in dispute that the father of the petitioner, namely Late Nathmal Jalan, was detained under a "Detention Order" dated October 3, 1974 in accordance with the provisions Maintenance of Internal Security Act, 1974 dated September 17, 1974 as amended by ordinance No. 11 of 1974 dated September 17, 1974. After the introduction of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, the aforesaid Nathmal Jalan was brought within the ambit of the above Act and the detention continued. (20.) SAFEMA came into force with effect from November 5, 1975 to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matters connected therewith or incidental thereto. That was the occasion when the "Detention order" dated October 3, 1974, passed against the .aforesaid Late Nathmal Jalan could constitute a basis for taking action under SAFEMA. The show-cause notice dated July 17, 1976, which was issued to the mother of the petitioner under sub-section (1).of Section 6 of SAFEMA, was the outcome. There was no fault in the decision of the respondent authority in not giving further effect to that notice due to technical defect of granting inadequate time to the mother of the petitioner to give reply. (21.) Admittedly, a further show-cause notice dated March 7, 1977, was issued to the mother of the petitioner on the ground that the said house property held by her, amongst other properties, was illegally acquired property within the meaning of Clause (c) of sub-section (1) of Section 3 of SAFEMA. (21.) Admittedly, a further show-cause notice dated March 7, 1977, was issued to the mother of the petitioner on the ground that the said house property held by her, amongst other properties, was illegally acquired property within the meaning of Clause (c) of sub-section (1) of Section 3 of SAFEMA. (22.) After going through the resume of the materials and reasons recorded by the competent authority as also considering the show cause notice under reference I find that the competent authority took into consideration the income of the mother of the petitioner for the assessment year 1951-52 to 1955-56 on the basis of her Income Tax returns which fell short of her investment for purchasing and renovating the said house property, amongst other properties, and that was the reason for the competent authority to believe that the said house property, amongst others, was illegally acquired property as defined in Clause(C) of sub-section (1) of Section 3 of SAFEMA, the father of the petitioner being a detenue under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. So, the show-cause notice under reference, the resume of materials and reasons recorded were served upon the mother of the petitioner as the person affected. Therefore, allegation of existence of connecting link or nexus between the property sought to be forfeited and the illegally acquired money of the detenue was present therein. So, there is no substance in the submissions made on behalf of the petitioners in this regard. (23.) I find substance in the submissions made on behalf of the respondents that though seizures of smuggling goods took place in 1971 and 1974, there was possibility of continuous smuggling activities on the part of the father of the petitioner which could be the reasons for the competent authority to believe as justifiable ground for connecting the said house property, amongst others, to the "Detention orders" dated December 10,1974. (24.) In this regard the settled principles of law as decided in the matter of Amratlal Prajivandas (supra) (at page 2202) are quoted below : -"42. Question 4 : The definition of "illegally acquired properties" in Cl.(c) of S. 3(1) of SAFEMA is undoubtedly quite wide. It means and includes "any property acquired by such person, whether before or after the commencement of this Act. Question 4 : The definition of "illegally acquired properties" in Cl.(c) of S. 3(1) of SAFEMA is undoubtedly quite wide. It means and includes "any property acquired by such person, whether before or after the commencement of this Act. wholly or partly out of or by means of any income, earnings or assets derived or obtained from or attributable to any activity prohibited by or under any law for the time being in force relating to any matter in respect of which Parliament has power to make laws" [vide sub-clause (i)]. Sub-clauses (ii), (iii) and (iv) of CL (c) further widen and elaborate its ambit. The definition thus takes in not only the property acquired after the Act but also the property acquired before the Act, whatever be the length of time............." (25.) Regarding the next ground for challenge of violation of the provisions of subsection (2) of Section 6 of SAFEMA on the ground of non-service of copy of the show-cause notice upon the father of the petitioner, the above provisions are quoted below : "6. Notice of forfeiture. - (1) If, having regard to the value of the properties held by any person to whom this Act applies, either by himself or through any other person on his behalf, his known sources of income, earnings or assets, any other information or material available to it as a result of action taken under Section 18 or otherwise, the competent authority has reason to believe (the reasons for such belief to be recorded in writing) that all or any of such properties are illegally acquired properties, it may serve a notice upon such person (hereinafter referred to as the person affected) calling upon him within such time as may be specified in the notice, which shall not be ordinarily less than thirty days, to indicate the sources of his income, earnings or assets, out of which or by means of which he has acquired such property, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties, as the case may be, should not be declared to be illegally acquired properties and forfeited to the Central Government under this Act. (2) Where a notice under sub-section (1) to any person specifies any property as being held on behalf of such person by any other person, a copy of the notice shall also be served upon such other person." (26.) The above provisions purported service of a copy of the notice upon such other person who held any property on behalf of any person upon whom a show-cause notice under sub-section (1) of Section 6 was served. But in the instant case the notice under sub-section (1) of Section 6 of SAFEMA was served upon the mother of the petitioner who held the said house property and there was no scope of service of a copy of that notice upon any other person for holding the said house property on behalf of the mother of the petitioner. So, I find no substance in the above submissions. (27.) With regard to the alleged non-compliance of the provisions of sub-section (1) of Section 7 of the SAFEMA, the above provisions are quoted below : "7. Forfeiture of Property in certain cases. - (1) The competent authority may, after considering the explanation, if any, to the show-cause notice issued under Section 6, and the materials available before it and after giving to the person affected (and in a case where the person affected holds any property specified in the notice through any other person, to such other person also) a reasonable opportunity of being heard, by order, record a finding whether all or any of the properties in question are illegally acquired properties." (28.) It has already been discussed hereinabove that the mother of the petitioner was the person affected and she availed of the opportunity of filing reply to the show-cause notice. It has further been revealed from the facts of this case that in view of disposal of the case of Amartlal Pranjivan Das (supra) with other cases on May 12, 1994, it could not be possible for the competent authority to serve a notice under sub-section (1) of Section 7 of the SAFEMA upon the mother of the petitioner prior to that date. Consequent thereupon, such a notice was served upon the mother of the petitioner on December 14, 1995. It was followed by another notice dated April 15, 1996, But the mother of the petitioner had died on April 23, 1994. Consequent thereupon, such a notice was served upon the mother of the petitioner on December 14, 1995. It was followed by another notice dated April 15, 1996, But the mother of the petitioner had died on April 23, 1994. The competent authority could not extend the benefit of an opportunity of hearing to her due to supervening impossibility. (29.) During the pendency of the proceeding, the petitioner stepped into the shoe of his deceased Mother. The competent authority was under obligation to continue with the proceeding adhering to all the provisions of SAFEMA from the stage of affording opportunity of hearing to the petitioner considering him as person affected. I find that the competent authority discharged that obligation by issuing the notice dated February 18,1998 to the petitioner as also giving him an opportunity of hearing. (30.) Regarding the alleged violation of the provisions of Sections 17 and 18 of the SAFEMA, I am of the view that it was open for the competent authority and the Appellate Tribunal to take into consideration the order passed by the Income Tax Authority for assessment of the income of mother of the petitioner or to take the assistance from an officer of the Income Tax Department for the purpose referred to in sub-section (1) of Section 18 of the SAFEMA. But those were not mandatory for the competent authority or the Appellate Tribunal. Nor there was any mandate upon them to accept the finding of the Income Tax Authority as conclusive piece of evidence in the proceeding under SAFEMA. (31.) It is noteworthy at this juncture that in accordance with the provisions of Section 8 of the SAFEMA, the onus is upon the person affected to disprove the allegation of acquiring a property illegally as defined in the SAFEMA, I find no impropriety in the decision making process of the competent authority or of the Appellate Tribunal with regard to the decision that no satisfactory explanation or valid evidence was made available before them on behalf of the person affected regarding a part of the sources of acquisition of the said house property. (32.) Since, the proceeding under reference was in accordance with the provisions of the SAFEMA, the ground of challenging the same for alleged violation of Article 300A of the Constitution of India cannot be sustained in law. (32.) Since, the proceeding under reference was in accordance with the provisions of the SAFEMA, the ground of challenging the same for alleged violation of Article 300A of the Constitution of India cannot be sustained in law. (33.) Now, the only question which is left for consideration is the scope of invoking the provisions of Section 9 of the SAFEMA in the instant case. Admittedly, the competent authority held in his impugned order (at pages 148 and 149 of this writ application) that, the total investment towards the said house property was about Rs. 1,75,933/-only. Admittedly, the competent authority further held that the maximum amount which the person affected could conceivably had for investment was Rs. 99,853/- only. The Appellate Tribunal also accepted that findings. On the basis of above finding of the respondent authorities, the source of a part, being less than one-half of the income with which the said house property had been acquired, was not proved to the satisfaction of the competent authority. For proper adjudication of this issue, the provisions of subsection (1) of Section 9 of the SAFEMA are quoted below : "9. Fine in lieu of forfeiture. - 1) Where the competent authority makes declaration that any property stands forfeited to the Central Government under Section 7 and it is a case where the source of only a part, being less than one-half of the income, earnings or assets with which such property was acquired has not been proved to the satisfaction of the competent authority, it shall make an order giving an option to the person affected to pay, in lieu of forfeiture, a fine equal to one and one-fifth times the value of such part. Explanation For the purpose of this sub-section, the value of any part of income, earnings or assets, with which any property has been acquitted, shall be-(a) in the case of any part of income or earnings, the amount of such part of income or earnings ; (b) in the case of any part of assets, the proportionate part of the full value of the consideration for the acquisition of such assets." (34.) In view of the above, the impugned order of the competent authority and that of the Appellate Tribunal suffered from impropriety of non-considering the scope of imposing fine in lieu of forfeiture of the said household property. (35.) I do not find that the decision of Amartlal Prajivandas (supra) helps the case of the petitioners. The decisions of Fatima Mohd. Amin (supra), P. P. Abdulla (supra), Flight Cadet Ashish Rai (supra) or Jayrajbhai Jayantibhai Patel (supra) are not applicable in this case in view of the distinguishable features of this case as discussed herein above. The decision of Kishan Lal (supra) has a limited scope of application in this case in non-considering the scope of imposing fine in lieu of forfeiture of the said house property. (36.) In view of the discussions and observations made hereinabove, the impugned order of the competent authority and that of the Appellate Tribunal are quashed and set aside partially only up to the extent of directing the competent authority to make an order within two months giving an opportunity to the petitioner to pay, in lieu of forfeiture, a fine in accordance with the provisions of Section 9 of the SAFEMA. (37.) This writ application is thus allowed partially up to the extent indicated hereinabove. (38.) There will be, however, no order as to costs. Urgent Xerox certified copy of this judgment, if applied for, be given to the parties, as expeditiously as possible, upon compliance with the necessary formalities in this regard. Later: Date-September 23, 2009. After delivery of this judgment a prayer is made on behalf of the petitioner for staying of operation of this order. Such prayer is rejected.