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2016 (9) TMI 166 - MADRAS HIGH COURT

2016 (9) TMI 166 - MADRAS HIGH COURT - [2016] 387 ITR 390 - Defective notice - Whether the Tribunal was right in holding that the notice is defective and unsustainable? - Whether the Tribunal was right in holding that the independent properties of a relative of a convict or detenu,cannot be forfeited? - Held that:- As already held that the notice does not establish any link between the convict and the properties. It is also not the case of the petitioner that the properties were purchased out of .....

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equires to be express, cannot be left to be inferred. This court after careful consideration of the relevant provisions accepts the findings of the tribunal and holds that the notice under section 6 must establish the link or nexus and in the absence of the same, the entire proceedings would stand vitiated. - The returns and the explanations must have been considered. The notice itself, proceeds on the basis that many properties are agricultural lands. There is also a reference to revenue re .....

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purchased out of smuggling activities or by illegal means in violation of the provision of the SAFEM Act cannot be permitted to be enjoyed by the convict/detenu or a relative holding the property as benami. The forfeiture of a relative’s property has to be read in the context and objects of the Act. It is only when the link or nexus of the properties with the convict/detenue or to the income from such illegal activity is established, the properties standing even in the name of a relative can be .....

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er of the 2nd respondent dated 30.7.2010, setting aside the order of forfeiture dated 30.9.2005 passed by the petitioner. 2. The facts of case, in a nutshell, of the petitioner are that the wife of the 1st respondent Halthija Maimoon was convicted for violation of Foreign Exchange Regulation Act (herein after called as FERA) for foreign currency violations by order dated 1.9.1986 of the Additional Chief Magistrate, Madurai. The 1st respondent being the spouse of the convict, comes within the def .....

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iture of the properties. As against the same, the 1st respondent preferred an appeal before the 2nd respondent in FPA NO.33/MDS/2005, which was allowed by the impugned order dated 30.7.2010, setting aside the order of forfeiture passed by the petitioner. Hence, contending that the impugned order is contrary to law, weight of evidence and all probabilities of the case, this writ petition has been filed. 3. This court heard the learned counsel on either side. 4. The learned Assistant Solicitor Gen .....

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upon the 1st Respondent to indicate the sources of income, failing which the same would be forfeited. c. The 2nd Respondent also failed to note that the Petitioner need not spell out any link or nexus either in the reasons recorded for the belief to issue a show cause notice or in the show cause notice issued under section 6(1). The provisions of the act in section 2(2)(c) along with explanation 2, section 3(1)(c)(iii) and section 6(1) do not speak about the illegally acquired properties of the .....

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easons the competent authority rightly taken into account the presumption under section 8 and passed the order of forfeiture under section 7(1). e. Any finding rendered by any other authorities would not bind the petitioner as contemplated under section 21, which states, no findings of any officer or authority under any other law shall be conclusive for the purposes of any proceedings under this act. The 2nd Respondent has totally misconceived the law while setting aside the order of forfeiture .....

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red by illegal means and that Rule 6 only requires a reasonable belief to be entertained by the competent authority as the properties held by any person to whom the Act applies are illegally acquired properties and that in section 3 no where it is stated that the illegally acquired property must be of the convict and that the properties in question do not fall within the meaning of illegally acquired property, as only illegally acquired property of the detenu/convict as defined under section 2(2 .....

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onsidering all the aspects, the same does not warrant any interference. The learned senior counsel also placed reliance upon the Judgment reported in 2008 (14) SCC 186 (Aslam Merchant Vs. Competent Authority). 7. This court considered the rival submissions on either side and also perused the materials placed on record, including the relevant provisions of the act. 8. The points for determination can be narrowed down as under:- a. Whether the Tribunal was right in holding that the notice is defec .....

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o show that these were the properties acquired by the convict in the name of the 1st respondent. The statement of reasons, which have been recorded has not been referred in the notice. A perusal of the statement of reasons indicates that the petitioner has initiated the proceedings based on the income tax proceedings of the 1st respondent, wherein certain explanations of the 1st respondent was accepted by the income tax authorities. The petitioner has in the statement of reasons concluded that t .....

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tional Solicitor General has also relied upon the judgement of Honourable Supreme Court reported in 2003 (7) SCC 427 cited supra, in support of his contentions. In the said decision, in paragraph 13, it has been held as under:- 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 .....

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y provided by her husband. 11. The above judgement has been rendered by the apex court holding that the judgement of the constitutional bench in 1994 (5) SCC 54 does not explicitly lay down that it must be established that a link between the convict and the source must be established. However, the apex court in the subsequent judgement reported in 2008 (14) SCC 186, while dealing with similar provisions under the NDPS Act has held as follows: 27. It is, therefore, evident that the property which .....

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nd the income or assets or properties which were illegally acquired by the person concerned. 39. Section 68-H of the Act provides for two statutory requirements on the part of the authority viz: (i) he has to form an opinion in regard to his reason to believe'; and (ii) he must record reasons therefor. 45. . Our attention, however, has been drawn to a decision of a two Judge Bench of this Court in Kesar Devi (Smt.) Vs. Union of India and Others [(2003) 7 SCC 427] wherein Fatima Mohd. Amin (s .....

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. 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 .....

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o with the money provided by her husband." We, with utmost respect to the learned Judges express our inability to agree to the said observations. The necessity of establishing link or nexus in our opinion is writ large on the face of the statutory provision as would appear from the definition of illegally acquired property' as also that of property'. The purport and object for which the Act was enacted point out to the same effect. 47. In the final order, the rule of evidence as env .....

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dge bench following 1994 (5) SCC 54 and in the judgement reported in 2007 Crl. L.J 1449 to hold that to initiate proceedings for forfeiture of properties, a link must be established between the properties and to the convict. It has been contended that the judgement in Aslam Mohammed Merchant s case is under the NDPS Act and therefore has no application. This court is unable to accept the contention. Upon perusal of the relevant provisions under the NDPS Act, It is evident that section 68 is pari .....

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k between the properties and the convict/detenu as per the law laid down by the apex court. 13. Reliance was also placed by the learned Additional Solicitor General on the judgement reported in CDJ 2011 MHC 3203 (The competent authority vs Hameed Abdul Kader). Upon perusal of the judgement, it is evident that the facts and the averments in the notice are different from that of the case on hand. In that case, it was not disputed that the convict also contributed to the purchase of the properties .....

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ld not have dropped the proceedings. Though the burden of proof lies on the person affected under section 18, the statutory requirement for commencement of the proceedings cannot be forfeited to forfeit the properties. That stage would arise only when the notice is as per the statute. What by law requires to be express, cannot be left to be inferred. This court after careful consideration of the relevant provisions and the judgements referred to above, accepts the findings of the tribunal and ho .....

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