TMI Blog2014 (1) TMI 1021X X X X Extracts X X X X X X X X Extracts X X X X ..... tition dismissed. - W. P. No. 2939 of 2011 and M. P. No. 1 of 2011 - - - Dated:- 17-4-2012 - K. Chandru,JJ. For the Petitioner : Mr. M. L. Ramesh, Senior Panel Counsel For the Respondents : Mr. B. Kumar,Senior Counsel for Mr. M. A. Abdul Huck for R1 and R2 ORDER Prologue:- "Among the truly dangerous government powers is the federal asset forfeiture law, which allows the government to seize and basically keep any property supposedly used in the commission of a crime. Under this law your property is charged with the offense, which makes it a civil action rather than a criminal case. Even if your are never charged with a crime, or are charged and acquitted, it can take years and cost you a fortune to get back your own property. But if your are convicted of the crime the government is entitled to sell your property, with the proceeds divided among all the agencies participating in the original seizure. It's an outrageous program. The L.A.Sheriff's Department, for example, depended on the money raised by selling assets seized and forfeited in drug cases to supplement its inadequate yearly budget. (p.231) Many white people watch quietly as law enforcement officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the activities of smuggling and illegal export of foreign exchange through carriers. The first respondent had himself admitted this fact in a statement recorded under Section 108 of the Customs Act. These proceedings are deemed to be judicial proceedings. According to the petitioner, the first respondent was apprehended by the customs authorities while attempting to export out of India foreign currencies to the tune of Rs.72,62,570/-, the same was seized by the authorities. The first respondent admitted in his statement that the foreign currencies seized belonged to him. These statements are sufficient reason to believe that he had no legal source of income and he was fully involved in smuggling of currency and it was his source of earnings. Hence, it was believed that the property in his name is a tainted property acquired through illegal income. Therefore, the competent authority by exercise of power under Section 6(1) of the SAFEMA, 1976 issued a notice to the first respondent on 15.09.2004 in respect of the property held in his name. He was asked to prove that his properties were acquired through legal sources of income. 9. However, detention order passed against the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income earned by the first respondent cannot be said to be illegally earned. The earnings of the first respondent at Singapore cannot be a subject matter of which the Parliament can enact law. The first respondent had clearly stated that he had a full fledged Travel Agency at Singapore and earned income as a consultancy commission for foreign client. He was not charge sheeted by the Government of Singapore for earning money at Singapore or for bringing silver and gold to India or selling the same in India under the Customs Act. It cannot be said to be contravening the Customs Act or Foreign Exchange Regulation Act (FERA) or Foreign Exchange Maintenance Act (FEMA). He brought to India gold and silver after paying duty. Selling of silver and gold and earnings derived from them were shown in the Income Tax Returns. He has legally explained the source of income. Merely because two persons who were in possession of Foreign Currency mentions the name of the first respondent during the year 1999 and he was convicted on account of the same was not a ground to say that the acquisition of the property in the year 1995 was illegal acquisition of properties. 13. The Tribunal also referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Government has framed Rules known as Smugglers and Foreign Exchange Manipulators (Appellate Tribunal for Forfeited Property) Rules, 1977. Rule 7 reads as follows:- "7. Procedure after registration of appeal. -(1) After an appeal is registered, one copy of the memorandum of appeal and annexures thereto shall be served as soon as possible on the competent authority either by registered post, acknowledgment due, or by delivering or tendering them to the said authority through messenger. (2) The parties shall be informed of the date and place of hearing of the appeal either by registered post, acknowledgment due, or by notice served on them through messenger: Provided that where the parties are present before the Tribunal, it may inform them the date and place of hearing of the appeal. (3) Any petition for summoning witnesses or documents, or the like, filed by a party may be heard, if necessary, after giving notice to the other party. (4) Every requisition, direction, letter, authorisation, or written notice to be issued by the Tribunal shall be signed by the Registrar or any other officer authorised by the Chairman in this behalf and shall be sent by registered po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valaya Films ((2007) 2 MLJ 604). In para 22, it was observed as follows:- "22. In our opinion, it is doubtful whether these appeals are maintainable, in view of the decision of the Supreme Court in Union of India -vs- K.M.Shankarappa, AIR 2000 SC 3678: (2001) 1 SCC 582: (2001) 1 MLJ 146(SC)." 9.In the present case, except that the petitioner was very sensitive about his own order being reversed by the Tribunal, there is no case for them to come to this Court challenging the order of the Tribunal, which had given sound reasoning for reversing the order passed by the first respondent." 16. Taking note of the first objection by the employer regarding the maintainability of the writ petitions, this Court is of the view that the writ petitions cannot be rejected on the ground of locus standi of the APFC. Taking note of the peculiar position that the PF authorities are to play under the PF Act, the challenge by the authorities of the order of the Tribunal cannot be rejected on the ground of want of jurisdiction. It must be noted that the authorities are playing multifarious role under the provisions of the PF Act including investigation, enforcement, quasi judicial determination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal is manifestly erroneous or passed without jurisdiction, the authority can challenge the same in a writ petition under Article 226 of the Constitution." 19. Per contra, Mr.B.Kumar, learned Senior Counsel referred to the judgment of this Court reported in AIR 1981 Madras 80 [Director of Enforcement, Madras v. Rama Arangannal and another] to contend that the order of adjudication passed by the Director of Enforcement cannot be challenged by him. In such cases, it is only the Central Government which can be an aggrieved party and not the Director of Enforcement. 20. The learned Senior Counsel submitted that the said case came to be referred to and approved by the Supreme Court vide judgment reported in (2007) 8 SCC 254 [Mohtesham Mohd. Ismail v. Spl. Director, Enforcement Directorate] and therefore contended that the Competent Authority has no locus standi to file a writ petition. He placed reliance on the following passages found in paragraphs 16 to 18:- "16. An adjudicating authority exercises a quasi-judicial power and discharges judicial functions. When its order had been set aside by the Board, ordinarily in absence of any power to prefer an appeal, it could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73 shows that locus standi vested with the Central Government and therefore, it was held that the writ at the instance of the Director of enforcement is not maintainable. 22. But in the present case, the Scheme of the Act as decided in the case of the Provident Fund Organisation's case (cited supra) gives locus standi to the competent authority as a matter of right but also in case of any grievance, certainly it is open to him to challenge the same. Hence, the ratio laid down by this Court in the case of Provident Fund Organisation's case (cited supra), cited by Mr.M.L.Ramesh, learned Senior Counsel, case will apply to the case on hand. 23. The preliminary objection raised by the learned Senior Counsel for the contesting respondents is hereby overruled. 24. On the merits of the case, Mr.M.L.Ramesh learned Senior Counsel for the Competent authority placed reliance on the judgment of the Supreme Court reported in (2003) 7 SCC 427 [Kesar Devi v. Union of India]. He relied on the following passages found in paragraphs 10 and 12:- "10. ....The condition precedent for issuing a notice by the competent authority under Section 6(1) is that he should have reason to believe that all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhukar Dalvi v. Assistant Commissioner of Income Tax and Others) for contending that merely because an order quotes a wrong provision of law, it will not become invalid and the procedural provision cannot be said to be mandatory in nature. Reliance was placed on the following passages found in paragraphs 37 to 39:- "37. In the case of State of Kerala vs. Muniyalla, AIR 1985 SC 470, it is held that merely because an order is purported to be made under a wrong provision of law, it does not become invalid so long as there is some other provision of law. 38. In the case of Hukumchand Mills Ltd. vs. State Pradesh of Madhya Pradesh, AIR 1964 SC 1329, the Apex Court has ruled that mere mistake in the opening part of the notification in reciting the wrong source of power does not affect the validity of the amendments made. 39.In the case of State Bank of Patiala v. Sharma S.K.Sharma (1996) 3 SCC 364, the Apex Court ruled that in case of a procedural provision which is not of a mandatory character, the complaint of violation has to be examined from the stand-point of substantial compliance. The order passed in violation of such provision can be set aside only where such violation has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er alia, opining that no nexus or link between the money of the debt and property sought to be forfeited is required to be established under the scheme of the Act, stating: (Kesar Devi case3, SCC pp. 432 434, paras 10 13) "10. ...The condition precedent for issuing a notice by the competent authority under Section 6(1) is that he should have reason to believe that all or any of such properties are illegally acquired properties and the reasons for such belief have to be recorded in writing. The language of the section does not show that there is any requirement of mentioning any link or nexus between the convict or detenu and the property ostensibly standing in the name of the person to whom the notice has been issued... * * * 13. We are, therefore, clearly of the opinion that under the scheme of the Act, there is no requirement on the part of the competent authority to mention or establish any nexus or link between the money of the convict or detenu and the property sought to be forfeited. In fact, if such a condition is imposed, the very purpose of enacting SAFEMA would be frustrated, as in many cases it would be almost impossible to show that the property was purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Senior Counsel further submitted that even for initiating proceedings, the Competent Authority must record that he has reason to believe there exist a link between the property sought to be forfeited and illegally acquired money and referred to the following judgment reported in (2003) 7 SCC 436 [Fatima Mohd. Amin v. Union of India]. Reliance was placed on the following passages found in paragraphs 7 to 9:- "7. We have heard the learned counsel for the parties and gone through the reasons recorded by the competent authority along with the show-cause notice. We do not find any averments to the effect that the property acquired by the appellant is a benami property of her son or the same was illegally acquired from her son. 8. The contents of the said notices, even if taken at their face value do not disclose any reason warranting action against the appellant. No allegation whatsoever has been made to this effect that there exists any link or nexus between the property sought to be forfeited and the illegally acquired money of the detenu(s). 9. As the condition precedent for initiation of the proceedings under SAFEMA did not exist, the impugned orders of forfeiture cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the statutes, the authorities are required to follow the procedure. This cannot be equated with a case of mere prejudice. On the other hand, such a defect relating to absence of notice under Section 6(1) on the convict is a jurisdictional defect and the authorities concerned cannot be heard to say that no prejudice is caused. Law is well settled that the authorities vested to do a particular matter in a manner contemplated, such action has to be taken, in accordance with the manner contemplated or not at all. (See AIR 1969 SC 634; AIR 1969 SC 267 and 2002 (1) SCC 630)" 33. In this case, while issuing notice under Section 6, the Competent Authority recorded that he had reason to believe that the property owned by the first respondent was acquired out of his illegal earnings and therefore, he should be put on notice. 34. Accepting the contesting respondents' appeal, the Tribunal (ATFP) in the impugned order, recorded the following findings:- "5. ....A reading of the recorded reasons to believe, on the basis of which the show cause notice was issued in this case, it is clear that the entire proceedings are based on issuance of the order of detention against the appellant. But, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia under the Customs Act or FERA or FEMA. He has brought gold and silver after paying duty and sold the same and deposited the proceeds in the bank. Selling of silver and gold and earning were shown in the income tax returns and therefore he has legally explained the source of his income. In 1999 merely because two persons who were in possession of foreign currencies mentioned about the appellant's name and appellant was thereafter convicted is not a ground to say that his acquisition of property in 1995 was illegal acquisition. 15. ...The entire proceedings are illegal. We are also of the opinion that even if the show cause notice is valid, by preponderance of probabilities appellant also had discharged the burden cast on him in proving the legal source of his invested income." 35. As correctly found by the Tribunal, the show cause notice issued by the writ petitioner suffers from manifest irregularity, non-application of mind and in total perversion of SAFEMA. Though this Court has held that in a given case, there is no impediment for the competent authority to file a writ petition, the said discretion must be properly exercised by the authority. It is only in cases where Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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