TMI Blog1999 (6) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... ts between the years 1991-1996. It was alleged that Harshad P. Mehta was an active participant in the conspiracy of carrying out illegal hawala transactions running into crores of rupees by way of effectively managing the affairs pursuant to the conspiracy and was an associate of the other detenus. Though the detention order against him was revoked, the competent authority, finding that Harshad P. Mehta is a “person” within the meaning of section 2(2)(d) of the SAFEMA, issued notices to Harshad P. Mehta and the other appellants under section 6(1) of the SAFEMA dated August 29, 1997, to show cause as to why the properties mentioned in the schedule should not be forfeited as illegally acquired properties. In response to the said show-cause notices, the appellants sought for time which was granted by the competent authority from time to time and a final opportunity was granted by fixing the date of hearing on April 20, 1998. The appellants failed to attend and did not reply to the show-cause notices, nor did they submit their explanations. The competent authority, therefore, proceeded on the basis of the materials available on record and passed the impugned order, directing forfeitur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of Rs. 9,50,000 in the hands of Ashish Patel who held a sale agreement dated June 1, 1994, for the property standing at Sl. No. (b) Row House No. 18, at Ahmedabad, as Ashish Patel failed to give details of the sale proceeds. In view of the rival contentions, the questions for consideration are as under : (i) Whether the properties standing in the name of Harshad P. Mehta are liable for forfeiture as an associate of the detenus ? (ii) Whether the properties standing in the names of the relatives of Harshad P. Mehta are liable to be forfeited ? (iii) Whether the amount of Rs. 9,50,000 was rightly forfeited in the hands of Ashish Patel ? The contention of learned counsel, based on the decision in Attorney General for India v. Amratlal Prajivandas [1995] 83 Comp Cas 804, 842 (SC) is erroneous. It is not necessary that the properties of the detenus should have been transferred to the affected persons, to bring them within the ambit of clause (d) of section 2(2), SAFEMA, the relevant portions of which are extracted hereunder : “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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e SAFEMA. Under clause (c), every person who is a relative of a convict or detenu is also a “person” covered by the provisions of the Act. The spouse of the detenu or convict or any lineal descendant is also a person covered by the Act. “Associate”, for the purposes of clause (d) of section 2(2) means any individual 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 under clauses (iii) and (v) of Explanation 3 to section 2(2). Harshad P. Mehta admitted in his letter dated July 22, 1997, which was filed during the investigation stage that his major source of earnings is from the commission he earned through hawala activities and it was this earning which has been deposited into various bank accounts and which has been utilised for acquisition of various assets. Under section 132 of the Income-tax Act, 1961, a search was conducted against Harshad P. Mehta on November 24, 1994, resulting in seizure of huge amounts of cash, jewellery and other assets. In the assessment order dated March 31, 1997, for the assessment year 1994-95, it is stated that the assessee declared a sum of Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 6(1) are not illegally acquired properties. Even before us, the contention made on their behalf by learned counsel is that Harshad P. Mehta was not a detenu and hence his properties cannot be forfeited unless they are traced to the detenus and that the properties of the relatives cannot be forfeited as Harshad P. Mehta was not a detenu. No material was placed at any stage and no evidence was let in, as required by section 8 and the appellants failed to discharge the burden cast on them. The appellants were given ample opportunity by the competent authority but they failed to discharge the burden cast on them under section 8 of the SAFEMA which is as follows : “8. Burden of proof.-In any proceedings under this Act, the burden of proving that any property specified in the notice served under section 6 is not illegally acquired property shall be on the person affected.” As held by the Supreme Court in Attorney General for India v. Amratlal Prajivandas [1995] 83 Comp Cas 804 referred to while interpreting section 8 (page 844) : “It is equally necessary to reiterate that the burden of establishing that the properties mentioned in the show-cause notice issued under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the meaning of the Act is based on a misconception that only the properties of the detenu/convict in the hands of the relatives can be forfeited. It was nowhere stated in Attorney General for India v. Amratlal Prajivandas [1995] 83 Comp Cas 804 (SC), that the detenu/convict alone is “person” covered by the Act. It was not laid down that the properties of relatives of “associate” of detenu/convict, who are also “persons” covered by the Act cannot be forfeited, even though those assets are traced to the earnings of the associate. It is not lawful for any person to whom the Act applies to hold any illegally acquired property by himself or through any of the persons on his behalf and if any person holds any illegally acquired property, such property shall be liable to be forfeited. Section 4 of the Act clearly lays down the said proposition and is in the following terms : “4. Prohibition of holding illegally acquired property.- (1) As from the commencement of this Act, it shall not be lawful for any person to whom this Act applies to hold any illegally acquired property either by himself or through any other person on his behalf. (2) Where any person holds any illegally acquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the competent authority has rightly directed the forfeiture of the properties standing in the names of the relatives. Shri J. S. Arora argued that the provisions of the SAFEMA are draconian and hence should be strictly construed and took us through the preamble of the Act to impress upon us that the Act is meant only to take away the properties of the detenu/convict held in the names of relatives, associates and confidants. It is well-settled law that the preamble to an enactment is not a part of the statute. It can be looked into only for the purpose of the intendment of Parliament in enacting the law. Far from supporting the contention of learned counsel, a reading of the preamble would show that the Act was enacted for the effective prevention of smuggling activities and foreign exchange manipulations which are having a deleterious effect on the national economy and it is necessary to deprive persons engaged in such activities and manipulations of their ill-gotten gains. An associate of the detenu/convict who was engaged in the activity of foreign exchange manipulations which has a deleterious effect on the national economy, cannot be permitted to get away with his ill-got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the competent authority and we have gone through the records and the memorandum of appeal. The grounds of appeal are very vague and the appellant failed to show as to how the order of the competent authority is erroneous, though ground No. 1 of the grounds of appeal refers to forfeiture of Rs. 30 lakhs being advance given to Radhe Construction, we do not find forfeiture of the said amount in the hands of Ashish P. Patel, from a reading of the order of the competent authority. Ground No. 2 which relates to the forfeiture of Rs. 9,50,000 in the hands of Ashish P. Patel does not show as to how the order of the competent authority is erroneous. The appellant did not produce any material before the competent authority in support of the contention now raised in the memorandum of appeal, that he did not retain any amount with him and that he passed on the money to Raksha H. Mehta. In the absence of any material placed before him, the competent authority was justified in directing the forfeiture of Rs. 9,50,000 in the hands of Ashish P. Patel. No other contentions were raised before us. For all the aforesaid reasons, we do not find any reason to interfere with the order of the competent a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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