1 cri-wp-868-11 pdp IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO. 868 OF 2011 Smt. Yamini S. Bhagwanji .. Petitioner Vs. 1. Union of India and ors. .. Respondents Mr. B. Sheshgopalan i/by Mr. Girish R. Agrawal for petitioner. Mr. S. K. Shinde for respondent no.1. Mr. P. A. Pol, PP for State. CORAM: B. H. MARLAPALLE & U. D. SALVI, JJ. RESERVED ON: JULY 20, 2011. PRONOUNCED ON : JULY 27, 2011 JUDGMENT (PER B. H. MARLAPALLE,J.): 1. Rule. By consent, Rule is made returnable forthwith. 2. In this petition, filed under Article 226 of the Constitution, the petitioner seeks to challenge the order of forfeiture passed by the Competent Authority under Section 7 of the Smugglers and Foreign 2 cri-wp-868-11 Exchange Manipulators (Forfeiture of Property) Act, 1976 (for short “SAFEMA”) on 7/12/2007 thereunder forfeiting three immovable properties and further duly confirmed by the Appellate Tribunal for Forfeited Property, New Delhi by its order dated 11/1/2011 in Appeal No. FPA2/BOM/2008 filed under Section 12(4) of the said Act. 3. The petitioner was married to Dr. Ashok Sharma on 14/12/1985 and she begotten two children from the said marriage, son – Kunal Sharma and daughter – Roochi Sharma. However, petitioner obtained a divorce from Dr. Ashok Sharma and married to one Shri Surendra Bhagwanji of Bahrain on 22/2/1999. Consequently, she shifted to Bahrain. When she was at the Mumbai International Airport on 4/10/2000, foreign currency equivalent to Indian Rs.70.54 lakhs was recovered and seized from her by the Customs Department and proceedings under the said Act were initiated against her. These proceedings attained finality when the revision application filed by her came to be decided by the Government of India as per the order dated 29/10/2004. The absolute confiscation of foreign currency seized from the petitioner was converted into confiscation on payment of 3 cri-wp-868-11 redemption fine of Rs.10 lakhs and penalty of Rs.4 lakhs under the said order dated 29/10/2004. The balance amount of Rs.61,60,992/- was refunded to the petitioner by the Customs Department vide Remand Order No. AIR-Cus/39R/18/05. 4. In the meanwhile, a detention order dated 25/5/2001 was issued against the petitioner (hereinafter referred to as Affected Person or AP) and consequently a show-cause notice was served on her and her father on 13/3/2002 proposing forfeiture of the following properties under SAFEMA:- (i) Flat No.B-17, B-Wing of Sai Milap CHS Ltd. Sai Baba Complex, Ciba Geigy Road, Goregaon (E), Mumbai 400 063. (ii) Flat No. 1105, 11th Floor, Building No.B-29 Silver Arch, Shastri Nagar, Deluxe Phase, Off J.P. Road, Vill Oshiwara, Andheri (W), Mumbai – 400 053. (iii) Flat No. 1106, 11th Floor, Building No.B-29 4 cri-wp-868-11 Silver Arch, Shastri Nagar, Deluxe Phase, Off J.P. Road, Vill Oshiwara, Andheri (W), Mumbai – 400 053. (iv) Saving Bank Account(NRE) No.01192084184 In State Bank of India, Kandivali (W), Mumbai – 62. (v) Saving Bank Accounts (NRE) No.5-897400-113 City Bank, Mumbai. (vi) An amount of Rs.61,60,992/- (Amount of Sale proceeds of seized currency refunded By the Customs Department after adjusting Redemption fine and penalty). As the detention order was revoked on 28/12/2005, the show-cause notice dated 13/3/2002 came to be withdrawn. 5. In CC No.37/CW/2004 the petitioner – accused came to be convicted for the offence under Section 135(1)(a) read with Section 135(1)(ii) of the Customs Act, 1962 and she was sentenced to suffer SI for 14 days and to pay a fine of Rs.50,000/- in default to suffer further 5 cri-wp-868-11 SI for six months. She was given set off under Section 428 of Cr.P.C. This order of conviction and sentence passed by the learned Chief Metropolitan Magistrate, Mumbai was the basis to undertake fresh proceedings for forfeiture of the illegally acquired property and the provisions of Section 2(2)(a)(i) became applicable to her. 6. The initial enquiries regarding the above stated immovable properties and Mila Co-op. Hsg. Society Ltd. informed that Flat No. B-17 was standing in the name of Smt. Yamini Ashok Sharma. However, the petitioner’s father by his letter received on 6/5/2002 stated that the marriage between petitioner and Dr. Ashok Sharma was dissolved by a decree of divorce dated 4/4/1998 and Flat No. B-17 of Sai Mila CHS Ltd., Goregaon (E) was purchased by Dr. Ashok Sharma, the former husband of the AP in July 1987 and the entire consideration amount was paid by Dr. Sharma from his income deposited after returning to India from Libya where he was employed for seven years. It was further stated that after the divorce, the AP had handed over the said flat to Shri Kailash Viyala, her brother. The agreement dated 10/10/1987 revealed that the AP had agreed to purchase the said flat being constructed by M/s. Express national Builders on ownership 6 cri-wp-868-11 basis for a consideration of Rs.1,60,500/- and only an amount of Rs. 35,000/- was paid on the day of the agreement through two different cheques issued from State Bank of India, Kandivali (W) and Karnataka Bank Limited, Kandivali (W). So far as the second immovable property is concerned, i.e. Flat No. 1106, 11th Floor, Building No. 29, Silver Arch, M/s. Ajmera Housing Corporation (for short M/s. Ajmera) vide its letter dated 20/4/2002 informed that as per the agreement dated 12/7/2000 said flat was purchased by Mrs. Yamini Surender Bhagwanji from Shri Bajaran R. Gupta. An amount of Rs.47,000/- was paid to M/s. Ajmera and Rs. 5,17,000/- was paid to Shri Gupta. M/s. Ajmera had allotted the said flat consisting of 940 sq.ft. (Super Built Up) to Bajarang R. Gupta for consideration of Rs.5,64,000/- and he had paid an amount of Rs. 5,17,000/- till 12/7/2000. It was further stated that Shri Gupta had agreed to sell the said flat to the AP for total consideration of Rs. 22,09,000/- vide the agreement dated 12/7/2000 and the AP had paid an amount of Rs.3,31,400/- by a cheque drawn on Bahrain International Exchange and agreed to pay the balance amount of Rs.18,30,600/- after obtaining the loan from financial institution. By a subsequent 7 cri-wp-868-11 letter dated 6/5/2002 M/s. Ajmera informed the AP to take possession of Flat No. 1106 by making the balance payment of Rs.86,140/-. By its letter dated 20/4/2002, M/s. Ajmera informed the details about Flat No. 1105 of the very same building and on 11th Floor and admeasuing 610 sq.ft. (Super Built Up). It was stated that the said flat was purchased by one Mrs.Pushpadevi B. Gupta for a total consideration of Rs.3,66,000/- and she had paid an amount of Rs.3,20,000/-. However, vide the agreement dated 12/7/2002 the said Mrs. Gupta sold the said flat to AP for a total consideration of Rs.14,33,500/-. The AP had paid an amount of Rs.2,15,000/- to Mrs. Gupta by a cheque drawn on India International Exchange and Rs.46,000/- to M/s. Ajmera. She had agreed to pay balance amount of Rs.11,72,500/- after getting loan from financial institution. She was advised by letter dated 6/5/2002 to take possession of Flat No. 1105 on making the balance payment of Rs. 57,910/-. Thus the AP had claimed to have availed a loan of Rs.33.12 lakhs to aquire both the flats in Building No. 29 of Silver Arch. During the enquiry, it was also revealed that as on 30/9/2003 the AP had an outstanding loan amount of Rs.49,34,264/- to be paid to the HDFC and till 17/1/2006 a total amount of Rs.40,08,285/- was repaid against the said loan amount. Saving Bank Accounts (NRE) No. 01192/084184 8 cri-wp-868-11 with the State Bank of India, Kandivali, indicated that a total amount of Rs.5,39,900/- was credited, out which an amount of Rs.3,24,000/-was transferred from Bahrain and the balance amount as on 1/2/2006 in the said account was only Rs.4840/-. Whereas Saving Bank Accounts (NRE) No. 5-897400-113 with City Bank, Mumbai indicated that an amount of Rs.4,98,200/- was credited on 26/5/2005 and the balance as on 16/2/2006 was only Rs.17,063.31. 7. A fresh show-cause notice dated 29/11/2006 was issued under Section 6(1) of SAFEMA to the AP by the Competent Authority and she reply to the same on 20/2/2007. Personal hearing was granted to the AP and she reiterated her written submissions. The impugned order dated 7/12/2007 came to be passed forfeiting the following three immovable properties on the ground that they were illegally acquired properties in terms of Section 3(1)(c) of the SAFEMA: (i) Flat No.B-17, B-Wing of Sai Milap CHS Ltd. Sai Baba Complex, Ciba Geigy Road, Goregaon (E), Mumbai 400 063. 9 cri-wp-868-11 (ii) Flat No. 1105, 11th Floor, Building No.B-29 Silver Arch, Shastri Nagar, Deluxe Phase, Off J.P. Road, Vill Oshiwara, Andheri (W), Mumbai – 400 053. (iii) Flat No. 1106, 11th Floor, Building No.B-29 Silver Arch, Shastri Nagar, Deluxe Phase, Off J.P. Road, Vill Oshiwara, Andheri (W), Mumbai – 400 053. The AP challenged the said order in Appeal No. FPA2/BOM/2008 filed under Section 12(4) of the SAFEMA and the appeal came to be dismissed by the Appellate Tribunal on 11/1/2011. 8. It was submitted by the learned counsel for the petitioner that the Competent Authority as well as the Appellate Tribunal had disregarded the order passed by the revisional authority on 29/10/2004 under the Customs Act, the evidence on record submitted by the AP was not taken into consideration, principles of natural justice have been violated. It is alleged that the Appellate Tribunal’s order dated 11/1/2011 appeared to have been signed by one of the members i.e. 10 cri-wp-868-11 Shri S.C. Gupta on 11/1/2011, but he signed the same only on 18/2/2011 and he had retired in the meanwhile on 13/1/2011. It is also submitted that the judgments of the Supreme Court were not considered and it is claimed that the show-cause notice dated 29/11/2006 ought to have been held as illegal. The findings arrived at by the Competent Authority as well as the Appellate Tribunal are perverse. The conclusions drawn by the Appellate Tribunal that the funds for acquisition of the property from the individual account of the petitioner instead of joint NRE account of the petitioner and her husband and non consideration by the Competent Authority while passing the forfeiture order, are perverse finding. It is also claimed that one of the members of the Appellate Tribunal, namely, Shri Dinesh Kacker had heard the revision application and passed the order dated 29/10/2004. His own decision was cited and relied upon by the petitioner and, therefore, the Tribunal was bound by the said order. The finding of the Tribunal that the transfer of Rs.20 lakhs from Dr. Ashok Sharma’s NRE account to NRO account before transfer to the loan account of the petitioner with HDFC and that the said amounts were transferred by three cheque amounts is nothing but a perverse finding on the face of the record. It is further submitted that the fact of transfer of funds from NRO account 11 cri-wp-868-11 of Dr.Ashok Sharma after being credited to his NRE account would show that no illegality could be tagged with the transfer. It is also alleged that the impugned orders suffer from arbitrariness as the evidence placed on record was not considered. The Appellate Tribunal erred in holding that the petitioner was required to discharge the burden of proof cast upon her under Section 8 of the SAFEMA, without initial burden of proof being discharged by the Competent Authority. On all these grounds, it was submitted by the learned counsel for the petitioner that the impugned order passed by the Appellate Tribunal was illegal, bad in law and deserves to be quashed and set aside along with the order passed by the Competent Authority. 9. Mr. Shinde, the learned Standing Counsel for the Union of India, on the other hand, supported the impugned orders and submitted that all the material placed before the Competent Authority was considered by it while passing the forfeiture order. The Appellate Tribunal again reappreciated the evidence and by a detailed judgment confirmed the forfeiture order in respect of three immovable properties. As per Mr. Shinde, there is no error apparent on the face of the record to cause interference in the concurrent findings recorded by the two 12 cri-wp-868-11 authorities below and hence the petition deserves to be dismissed. 10. Section 4 of the SAFEMA prohibits holding of illegally acquired properties and it reads as under:- “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 acquired property in contravention of the provision of sub- section (1), such property shall be liable to be forfeited to the Central Government in accordance with the provisions of this Act.” The term “illegally acquired property” has been defined under Section 3(1) (c) of SAFEMA and it means, (i) any property acquired by such person, 13 cri-wp-868-11 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 14 cri-wp-868-11 which Parliament has no power to make laws; or (iv) any property acquired by such person, whether before or after commencement of this Act, for a considerations, 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 includes – (A) any property held by such person which would have been, in relation to any previous holder thereof, illegally acquired property under this clause if such previous holder had not ceased to hold it, unless such person or any other person who held the property at any time after such previous holder or, where there are two or more such previous holders the last of such previous holders is or was a transferee in good faith for adequate consideration. (B) any property acquired by such person, whether 15 cri-wp-868-11 before or after the commencement of this Act, for a consideration, or by any means, wholly or partly traceable to any property falling under item (A), or the income or earnings there from;” 11. Section 6 of SAFEMA provides for notice of forfeiture and sub-section (1) of the said Section reads as under:- “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 or such properties are illegally acquired properties, it may serve a notice upon such person (hereinafter 16 cri-wp-868-11 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.” 12. Section 21 of SAFEMA states that no finding of any officer or authority under any other law shall be conclusive for the purposes of any proceedings under this Act. It is pertinent to note that the issue before the revisional authority was whether the seized foreign currency was required to be confiscated under the Customs Act or it should be allowed to be redeemed on payment of redemption fine and penalty. Revisionary Authority was not called upon to decide the issue as to whether AP holds any illegally acquired property as defined under 17 cri-wp-868-11 SAFEMA and whether the said property was required to be forfeited. The fact that the foreign currency was allowed to be redeemed by the revisionary authority for the reasons stated in his order, could not be a reason for initiating the forfeiture proceedings by issuing the notice under Section 6 of SAFEMA. Similarly, the fact that the detention order passed under the COFEPOSA was revoked by the Government cannot be the reason for not initiating the forfeiture proceedings against the AP and more so when she was convicted under the Customs Act in relation to goods of a value exceeding Rs.1 lakh. The proceedings initiated by the Competent Authority by issuing the show-cause notice under Section 6 (1) of SAFEMA were different from the proceedings before the Commissioner of Customs (Appeals). Hence, the Appellate Tribunal rightly rejected the petitioner’s reliance on the order passed by the revisionary authority. 13. As per Section 7(1) of the SAFEMA 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 a reasonable opportunity of being heard, by order, record a finding whether all or any of the 18 cri-wp-868-11 properties in question are illegally acquired properties. Whereas Section 7(2) of the said Act states that where the competent authority records a finding thereunder to the effect that any properties are illegally acquired properties, it shall declare that such properties stand forfeited to the Central Government free from all encumbrances. Section 8 of the SAFEMA states that in any proceedings under it, 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. Thus after the AP submitted a reply to the show cause notice and tried to defend her case that three immovable properties sought to be forfeited could not be said to be illegally acquired properties on the grounds stated therein i.e. the reply to the show cause notice, the burden of proving those grounds squarely rested on her. For example if she took the defence that she borrowed loan from the Banks or her former husband borrowed the money and she repaid to him or in spite of the divorce he came forward to financially support her, it is imperative for her to explain the sources of these investments and the repayment of loans. Even if the factum of borrowing money from the Banks was proved by her, that by itself will not be sufficient to take the property out of the term “illegally acquired property”, unless she 19 cri-wp-868-11 explained the source of money for repayment of the Bank loan. This, in our opinion, is the view correctly taken by both the authorities below. 14. In the case of Attorney General for India v. Amratlal Prajivandas and ors. [AIR 1994 SC 2179], a Constitution Bench of nine Judge interpreted the definition of “illegally acquired property” under SAFEMA in the following words, “The definition of “illegally acquired properties” is Clause (c) of Section 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 Clause (c) further widen and elaborate its ambit. The definition thus takes in not 20 cri-wp-868-11 only the property acquired after the Act but also the property acquired before the Act, whatever be the length of time. Secondly, it taken in property which may have been acquired partly from out of illegal activity in which case, of course, the provision in Section 9 would be attracted. Illegal activity is not confined to violation of the laws mentioned in Section 2 but all laws which the parliament has power to make....” In the case of Kesar Devi v. Union of India and ors [(2003) 7 SCC 427] the Supreme Court stated, “... The combined effect of section 6(1) and section 8 is that the competent authority should have reason to believe (which reasons have to be recorded in writing) that properties ostensibly standing in the name of a person to whom the Act applies are illegally acquired properties, he can issue a notice to such a person. Thereafter, the burden of proving that such property is not illegally acquired property will be upon the person to whom notice has been 21 cri-wp-868-11 issued....” In the case of Aslam Mohd. Merchant Vs. Competent Authority & ors. [(2008) 14 SCC 186], the Supreme Court stated, “22. Once the notice to show cause is found to be satisfying the statutory requirements which are condition precedent therefor, a valid proceeding can be said to have been initiated for forfeiture of the property. Only in a case where a valid proceeding has been initiated, the burden of proof that any property specified in the notice is not illegally acquired property, would be on the `person’ affected.” 23. Before, however, an order of forfeiture can be passed, the Competent Authority must not only comply with the principles of natural justice, he is also required to apply his mind on the materials brought before him. It is also necessary that a finding that all or any of the properties in question were illegally acquired properties is 22 cri-wp-868-11 recorded.” 15. We proceed, therefore, to test the impugned orders on the backdrop of the above stated well settled legal principles and examine each of the three properties acquisitions: Flat No.B-17, B-Wing of Sai Milap CHS Ltd.: As noted earlier AP’s father Shri Vishwnath Viyala vide his letter dated 6/5/2002 had stated that this flat was purchased vide agreement dated 10/10/1987 by Dr. Ashok Sharma in the name of AP for a total consideration of Rs. 1,60,000/- and an amount of Rs.35,000/- was paid on the day of the agreement through two different cheques, one drawn on State Bank of India, Kandivali Mumbai and the other drawn on Karnataka Bank Ltd., Kandivali (West), Mumbai. The balance of Rs.1,25,000/- was claimed to have been paid by Dr. Ashok Sharma from State Bank of India, Nariman Point. It was also claimed that Dr. Ashok Sharma was in Libya from July 1980 to May 1987 and the AP and Dr. Sharma were married on 14/12/1985 and their marriage was dissolved by way of a decree of divorce on 4/4/1998. Thus money in the account with State Bank of India, Nariman Point was claimed to have been transferred by 23 cri-wp-868-11 Dr.Sharma from Libya (Tripoli). Both the authorities below have accepted that cheque no. 471827 dated 10/10/1987 for an amount of Rs. 25,000/- from State Bank of India, Kandivali Branch and another cheque bearing no.268231 dated 10/12/1987 fro Rs.10,000/- was drawn on Karnataka Bank, Kandivali Branch and the said payment was received by the builder by way of initial payment for purchase of the