TMI Blog2014 (3) TMI 210X X X X Extracts X X X X X X X X Extracts X X X X ..... cy of the reasons recorded is different from no reasons recorded. Whether reasons stated in the notice would satisfy the requirement is the question not for this Court to go into it, as the same is the subjective satisfaction of the competent authority. The notice issued under Section 6(1) is in accordance with law and does not vitiate the proceedings. - Decided against the petitioners. Principle of natural justice - Held that:- Apex Court has found that non-supply of documents relied on by the respondent therein will not amount to violation of principles of natural justice, where there is substantial compliance of natural justice and no prejudice is caused on account of non-supply. It is found by the competent authority that wives have no independent sources of income and they have acquired the properties only through the illegal income derived by the husband/detenu. By perusing the passports filed by the husband, the competent authority has come to the conclusion that during the relevant period the detenu was not employed in Dubai but he was available only in India and that the remittances during that period have been made not from his own earnings made at Dubai. Thus, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.No. 16341 of 2000. 5. On 20.6.1996, the competent authority passed a common order forfeiting certain properties and leaving certain properties from the proceedings. Aggrieved against the composite order passed by the competent authority, the petitioners filed separate appeals to the Tribunal viz., the first respondent herein. On 19.5.2000 the Tribunal dismissed all the three appeals. Thus aggrieved against the same the present writ petitions were filed . 6. The second respondent filed a counter affidavit wherein it is stated as follows:- The petitioner is a person as per the definition of Section 2(a) of the Act. The notice under Section 6(1) was issued on 18.2.1986 after receiving the letter from the Government of Kerala where he was detained under COFEPOSA. The supplementary notice dated 29.11.1990 was issued after receiving the details from the Inspector of the second respondent Office at Calicut vide his report dated 5.11.1990 . In the instant case, the relevant details submitted by the competent authority are borne out by records. All those information and materials need not be stated in the 6(1) notice and it is enough if the competent authority has sufficient informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice under Section 6(1) have not been deleted. This shows non-application of mind. 7.2 The orders passed by the authorities have violated the principles of natural justice. The competent authority has relied upon a statement said to have been given by the detenu on 6. 2.1984 for negativing the claim of the detenu that the properties were purchased out of the remittances through banking channel from Dubai and that the properties were purchased out of that money. The said statement dated 6.2.1984 was not communicated to the petitioners. The Tribunal has also relied upon such uncommunicated statement to reject the claim of the petitioner. Thus, it violates the principles of natural justice. 7.3. The learned Senior Counsel relied on the decision reported in AIR 1994 SC 2179 (Attorney General for India Vs. Amratlal Prajivandas and Others) to contend that the independently acquired properties belonging to the relatives of the detenu cannot be proceed against. He relied on the decision reported in 2003 (7) SCC 436 (Fathima Amin Vs. Union of India) to substantiate his contention in respect of the validity of the notice. The learned Senior Counsel urged that in the absence of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enami properties of the detenu. 10. In respect of W.P.No. 16342 of 2000, the learned Senior Counsel further submitted as follows:- The petitioner was a detenu under the COFEPOSA Act and the first notice under Section 6(1) was issued to him on 18.2.1986. The said notice mentioned a property wherein the detenu was having one sixth share only. The said notice was invalid since no value of the property was given therein and it did not mention anything about his earnings. A supplementary notice was issued on 29.11.1990 wherein 13 properties were mentioned. This notice is also invalid as it does not satisfy the requirement of law and it does not mention anything about the income and earnings of the petitioner. Thus the law laid down in Aslam Mohammed Case and R.Ramakrishnan case has been violated. The writ petitioners as appellants before the Tribunal sought to lead additional evidence in the form of a Certificate from the employer of K.P.Abdul Majeed at Dubai to prove that they had indeed made remittances to the NRI account. The Tribunal did not consider the same. In this regard, the learned Senior Counsel relied on the decisions reported in AIR 1957 SC 882 (Union of India Vs. T.R.V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between 1986 to 1989. In the second notice issued to Abdul Majeed and Umaiba it was mentioned as supplementary notice. But no such mention was made in the notice issued to Rukhiya. This was done only to remind them that there was a prior notice in respect of those two persons. The caption "supplementary" cannot make the second notice supplement to the first notice in the absence of any such purpose of supplementing the first notice. Nature of notice cannot be decided by its nomenclature and only the contents of the documents are relevant. The second notice is independent notice, in respect of other properties with separate reasons recorded. 11.4 The detenu has filed wealth tax and income tax returns collectively for the first time in 1990 for the assessment year 1989-90 and they were accepted by the ITO in the year 1992. Though the wealth and income have been shown in those returns, there was no evidence for licit or legal source of such income or wealth. Thus it undoubtedly raise a doubt about the legal source of funds wherefrom the aforesaid properties were acquired at the relevant time . The remittances in NRE Account only shows mode of transaction. But the petitioners have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that the authority has relied on the statement of the detenu to come to such conclusion. The petitioner has to show the nature of the prejudice caused to him by not supplying the said statement. The petitioners failed to show the nature of the prejudice. 11.7. The decision reported in AIR 1996 (SC) 1669 ( State Bank of Patiala Vs. S.K.Sharma ) is relied on by the learned counsel for the respondents to contend that mere non-supply of documents will not amount to violation of principles of natural justice where there is substantial compliance of the same and where no prejudice is caused on account of it. 11.8. He further contends that the judgment made in Kesar Devi case confirms and in consonance with the Attorney General case. The other three subsequent decisions viz., Fatima Mohd Amin ; P.P.Abdulla ; Aslam Md. cases are rendered by the Benches comprised of lesser number of Judges. The law laid by the Constitution Bench at paragraph 44 that the burden or disproving the connecting link between those properties in the name of the relative and the detenu is upon the relative/ associate still holds the field. The nexus need not be established where the property concerned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; or (ii) 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 in respect of which any such law has been contravened; or (iii) 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 the source of which cannot be proved and which cannot be shown to be attributable to any act or thing done in respect of any matter in relation to which Parliament has no power to make laws ; or (iv) any property acquired by such person, whether before or after the commencement of this Act, for a consideration, or by any means, wholly or partly traceable to any property referred to in sub-clauses (i) to (iii) or the income or earnings from such property; and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 6 is not illegally acquired property shall be on the person affected. " 14.6. Section 12 deals with Constitution of Appellate Tribunal and its powers. Section 15 contemplates that the competent authority and the Appellate Tribunal shall have the powers of Civil Court in respect of the following matters: (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavits; (d) requisitioning any public record or copy thereof from any Court of office; (e) issuing commissions for examination of witness or documents; (f) any other matter which may be prescribed. 14.7. Section 18 empowers the competent authority to conduct any inquiry or investigation or survey in respect of any person, place, property ,assets, documents, books of account or any other relevant matters for the purposes of any proceedings under the said Act or any initiation of any such proceedings. 15. From the facts and circumstances as placed by both the parties, there is no dispute to the fact that this Act shall apply to the writ petitioners herein since one of the writ petitioners is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Majeed and Umaiba are concerned, Section 6(1) notice was termed as supplementary. However insofar as the other wife viz., Rukhiya is concerned, only one notice was issued to her on 29.11.1990 mentioning two properties under the schedule. 20. The contentions of the petitioners is that the notice dated 29.11.1990 does not satisfy the mandatory requirement contemplated under Section 6(1) of the said Act. The crux of the contention of petitioners are as follows:- a) The competent authority did not expressly state that the money for acquisition of the properties have flown from the detenu. b) The reasoning stated in the said notice, that husband has been indulging in smuggling activities and therefore the investment has emanated from illegal source, is insufficient. c) It must state that wives have no independent income. d) A nexus must be shown between the detenu and the illegally acquired property . 21. In this connection, the learned Senior Counsel for the petitioners strongly relied on the following decisions :- 1. 2003 (7) SCC 436 ( Fatima Mohd. Amin Vs. Union of India) 2. 2007 (2) SCC 510 (P.P. Abdulla and Another vs. Competent Authority and Others) 3. 2008 (14 ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement, title or ownership of the property. Direction to forfeiture of a property is in two parts. Firstly, it has to be identified in terms of Section 68-F of the Act. For the said purpose, a satisfaction must be arrived at by the authority specified therein to the effect that the person concerned had been holding any illegally acquired property. Secondly, on the basis of such information, he is entitled to take steps for tracing and identifying the property. The Authority is also entitled to seize or freeze such a property. 30. Before, however, the actual order of forfeiture of such illegally acquired property is passed, issuance of a notice to show cause is essential so as to fulfill the requirements of natural justice. Such a notice is to be issued by the Authority having regard to: (i) The value of the property held by the person concerned, (ii) His known source of income, earning or assets, (iii) Any other information or material made available as a result of a report from any officer making an investigation under Section 68-E of the Act or otherwise. When the aforementioned conditions are satisfied, the competent authority would be entitled to issue a show cause notice, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials before him. If no such material had been placed before him, he cannot initiate a proceeding. He cannot issue a show cause notice on his own ipse dixit. A roving enquiry is not contemplated under the said Act as properties sought to be forfeited must have a direct nexus with the properties illegally acquired. 41. It is now a trite law that whenever a statute provides for `reason to believe', either the reasons should appear on the face of the notice or they must be available on the materials which had been placed before him." To come to such conclusion, the Apex Court has found that the show cause notices issued therein did not contain any reason so as to satisfy the requirements of Section 68H (1) of the NDPS Act. 25. From the perusal of the above decision of the Apex Court it could be seen that what is required under Section 6(1) notice is that the property which is sought to be forfeited must be the one which has a direct nexus with the income etc., derived by way of contravention of any of the provisions of the Act or any property acquired therefrom. 26. Here in this case, notice dated 29.11.1990 was issued on the three petitioners out of which two notices wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dt. 2.1.89 (Rs.2,55,000), including cost of stamp Name paper etc., (vi) 19.80 cents of land in R.S.No.5-2 in Vengeri Jointly held Amsom, Calicut, purchased as per document by the AP No. 2642/87 dt. 16-10-87 for Rs. 47,520/- with his wife Smt. Umaiba. (vii) 13.05 cents of land in R.S.No.5-2 in Vengeri Amsom, Calicut, purchased as per document -do- No. 2677 dt. 21-10-87 for Rs. 48,285/- (viii) Residential building under construction in the above plots (amount so far spent upto -do- 31.3.89 Rs.2,25,000) (ix) Residential building at Beach Road, Jointly held purchased on 3.12.1988 by the AP as per document No.2487/88 with his wife for Rs. 2,75,000/-. Smt. Rukhiya (x) 11 cents of garden land in Chevayoor in Jointly held R.S.No. 122/1 as per document No. 4960/87 by the AP dated 14.12.87 for Rs. 11,000/-. with his wife Smt. Rukhiya (xi) 4 rooms with upstairs (Building No. Jointly held by the 10/17/18 19 of Calicut Corporation at AP with his S.M.Street, Calicut in S.No.69/1A, 1C and brother Shri R.S.No.10-2-39 of Nagaram Amsom of K.P. Abdul Khader Calicut District purchased on 7.12.1988 value Rs.8 lakhs. (xii) 14 cents of coconut garden in R.S.No. 21-28-731 of Panniyankara V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , her husband, has been indulging in smuggling activities, the acquisition of the above said properties is to be considered as having arisen out of illegal sources of income. They are, therefore, liable for forfeiture under the provisions of SAFEM (FOP) Act, 1976. Accordingly, I have reason to believe that this is a fit case to issue supplementary notice under Section 6(1) of the SAFEM (FOP) Act, 1976 to Smt. P.K.Umaiba in respect of the above mentioned properties. " 29. In the case of Rukhiya who is the petitioner in W.P.No. 16341 of 2000 the following are the reasons recorded . "Mrs. Rukhiya is the wife of Shri Kundirikkal Parambil Abdul Majeed, a person detained under the COFEPOSA Act. She is, therefore, a 'relative' within the meaning of clause (i) of Explanation 2 to Section 3(2) of the SAFEM (FOP) Act, 1976. She is found to have acquired the following properties jointly within her husband :- (i) Residential Building at Beach Road, purchased on 3.12.1988 as per document No.2467/88 for Rs. 2,75,000/- R.S.No. 1.12.474. (ii) 11 Cents of Garden land in Chevayoor in R.S.122/1 (Half share) purchased on 14.12.87 as per document No.4960/87 for Rs. 11,000/-. The sources of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red having arisen out of illegal sources of income. Similar is the reasons recorded in the other wife also. 33. From the perusal of the notices issued and the reasons recorded therein, as discussed supra, I am of the view that the notices issued by the competent authority against these petitioners under Section 6(1) are valid and in accordance with law. 34. In this case, it is to be borne in mind that the parties are not merely relatives but are spouses. Therefore, in my considered view, the presumption would be that the properties were acquired out of the illegal source of income, when admittedly the husband of other two petitioners was a detenu under the COFEPOSA. As I have already pointed out, it is only a show cause notice and the persons against whom such notices were issued have got ample opportunities to disprove such belief before the competent authority. The very reading of Section 6(1) would show that the persons against whom such notices were issued are given not less than 30 days time to indicate the sources of their income , earnings or assets and the evidence on which they rely and other information and particulars and prove before the competent authority that suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was never challenged by the petitioners either before the competent authority or before the appellate authority. It is only their case that the reasons recorded therein were not sufficient. As rightly pointed out by the learned counsel for the respondents, the notice contained the value of the properties and prima facie belief of the competent authority that those properties were to be considered as having arisen out of the illegal sources of income of the detenu. Thus in my considered view, the said notice satisfies the requirement of law and therefore the consequent composite order issued is not at all vitiated on the reasons set out by the petitioners. 39. Learned counsel for the respondents strongly relied on the Constitution Bench decision of the Apex Court rendered in Attorney General case and reported in 1994 (5) SCC 54 . In paragraph 43 and 44 the Apex Court has observed as follows:- "43. .... We can take note of the fact that persons engaged in smuggling and foreign exchange manipulations do not keep regular and proper accounts with respect to such activity or its income or of the assets acquired therefrom. If such person indulges in other illegal activity, the pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elationship of the second respondent with the detenu was also indicated in the show cause notice. Therefore, the word "unaccounted money" as indicated in the show cause notice, was used only with reference to the money contributed by the detenu under COFEPOSA. Since the Competent Authority clearly indicated the reasons for taking action under SAFEMA, naturally burden of proof shifted on the First Respondent to prove that the property was not illegally acquired property. ..... ...... ..... 45. The learned counsel for the First Respondent challenged the order under Section 6(1) on the ground that sufficient reasons were not indicated and in the absence of the same, question of burden of proof loses significance. The First Respondent has no case before the Statutory Authorities that the show cause notice was defective. The First Respondent in his explanation attempted to justify the purchase by showing the persons from whom he received money. ....:" 52. The satisfaction recorded by the Competent Authority was on the basis of materials. The explanation submitted by the First Respondent was considered threadbare and detailed reasons were given. The Tribunal in its well considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs have been given full opportunity to furnish the documents which they would like to rely upon. The only grievance set out in these writ petitions on the question of principles of natural justice is that the competent authority relied upon a statement of the petitioner dated 6.2.1984 said to have been given under the COFEPOSA proceedings. According to the petitioners, the copy of the said statement was not furnished to the petitioners and therefore it violates the principles of natural justice. In fact a perusal of the order of the competent authority would show that he has not come to the conclusion based on the said statement alone and on the other hand he has reasoned out for his conclusion at paragraph No.4 itself based on the passports produced by the detenu/petitioner. The relevant paragraph No.4 of the competent authority is extracted hereunder:- "4. .... To substantiate the contention that PA1 went abroad and made his earnings there, he has produced photo copies of his passport J518769 issued on 16.06.73, which was valid upto June, 1983. PA1 also furnished a coy of another passport U086552 dated 23.04.83 issued at Dubai and valid upto 22.04.1988. A scrutiny of the depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t period have been made not from his own earnings made at Dubai. Thus, in the absence of any other materials placed before the competent authority, he has rightly come to the conclusion that those remittances were made not through the legal source of income derived by the detenu. The petitioners have miserably failed to discharge their burden to disprove the said contention as required under Section 8 of the said Act. 44. Further, it is admitted by the wives in their respective affidavit filed in support of their writ petition that they acquired the properties out of the money advanced to them from NRE account of the detenu. It is not their case that they have any other independent source of income. In the absence of such contention and in view of their categorical admission, I find that the competent authority has rightly come to the conclusion that the properties under dispute are illegally acquired properties. 45. The petitioners filed appeal before the Appellate Tribunal as against the composite order. There also the matter was dragged for nearly five years. Even then the petitioners were given adequate opportunity to put forth their case and they were represented by their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s maintained by the assessee have been duly taken into consideration by the authorities below. The transactions though apparent were held to be not real ones. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence." 46. Further, in a decision reported in 2011 (3) CTC 345 (The Competent Authority Vs. Hameed Abdul Kader and Another), the Hon'ble Division Bench of this Court has held as follows:- "50. The First Respondent has shown the loan amount in his income tax returns and that was accepted by the Income Tax Department. Mere acceptance of the said return would not absolve the First Respondent from his liability to prove the acquisition of property inasmuch as the burden is on him to demonstrate that the property was not illegally acquired SAFEMA nowhere provides that the Competent Authority is bound by by the Income -tax returns submitted by the person against whom action was taken. These two enactments operate in two different fields. The authorities under SAFEMA are at liberty to take the assistance of the Customs Department, Central Excise Department, Income Tax Department, Police Department and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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