IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.01.2011 CORAM: THE HONOURABLE MR.JUSTICE VINOD K.SHARMA W.P. No.910 of 2001 and M.P.No.1238 of 2001 M.A.Haja Mohideen .. Petitioner. Vs. 1. The Registar Appellate Tribunal for Forfeited Property, Loknaik Bhavan, 4th Floor, Khan Market, New Delhi – 3. 2. The Competent Authority, 64/1, G.N.Chetty Road, Utsav Building, T.Nagar, Chennai-17. .. Respondents. Writ petition is filed under Article 226 of Constitution of India for the issuance of a writ of Certiorari, calling for the records of the first respondent in F.P.A.No.32/MDS/97 dated 13.11.2000 confirming the finding of the 2nd respondent and quash the same as illegal and arbitrary. For Petitioner : Mr.A.Thiagarajan, Senior Counsel For Mr.S.Ramesh Kumar For Respondents: Mr.S.Haja Mohideen Ghisthi Senior Central Govt. Standing Counsel O R D E R The petitioner has invoked the writ jurisdiction of this Court to challenge the order passed by the first respondent in F.P.A.No.32/MDS/97 dated 13.11.2000, confirming the finding of the second respondent. 2. The petitioner was detained under the Preventive Detention Laws in 1974 and was released in the month of March, 1977. He was detained under the Preventive Detention Laws, on the ground that he was involved in violation of Foreign Exchange Regulation At. The case of the petitioner is that the violations alleged by Enforcement Wing Officials, were set aside by Foreign Exchange Regulation Board, New https://hcservices.ecourts.gov.in/hcservices/ Delhi on 22.07.1986. The petitioner claims that there were no proceedings under the Foreign Exchange Regulation Act against him in the eyes of law. In support of this averment, the petitioner has placed on record the Order No.SDE(RS)/IV/17/86 dated 24.07.1986, passed by the Special Director, Enforcement Directorate, Foreign Exchange Regulation Act, New Delhi. In view of the detention of the petitioner, the competent authority, under Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (herein referred to as the Act), issued a show cause notice under Section 6 (1) of the Act, calling upon petitioner to file objection within 35 days of the notice. The petitioner filed objection to show cause notice, issued under Section 6(1) of the Act, giving therein sources for acquisition of properties, which were sought to be forfeited. 3. The petitioner claims that he took a stand that provisions of the Act would not be attracted, as his detention was deemed to have been revoked, when he was released by the Government on revocation of National Emergency. It is also the case of the petitioner that the departmental proceedings also resulted in exonerating him from all charges. The petitioner, in the reply, disclosed the cost of construction as Rs.2,18,000/-, on the land bearing No.42, Pudumanai Street, which was met by him by utilizing his savings of Rs.1,20,000/- and also from loans obtained from M/s. Mohamed Rahamatullah and Mr.M.A.Sahul Ameed. The amount of loan advanced by these persons were said to be Rs.25,000/- each, whereas, another sum of Rs.28,000/- was drawn from M/s.Ama Travels and Rs.20,000/- from his wife. The petitioner also claims that he, being an income tax assessee, had already explained this to the Income Tax Authority. In support of proof of loan, he had placed a confirmation letter. The petitioner also gave an explanation about acquisition of title and interest in Ama Travels. The explanation filed by the petitioner was not accepted and vide order dated 29.07.1997, the properties were ordered to be forfeited under Section 7(1) of the Act, leaving the land alone of the premises No.42, Pudumanai Street, Adiramapattinam, Tanjore District. The petitioner preferred an appeal before the Appellate Tribunal, New Delhi, where again, he has submitted his explanation. However, appeal was also dismissed. The petitioner seeks quashing of orders passed by the respondents inter alia on the following grounds: i) that the respondent authorities failed to take note of the fact that the proceeding under Provisions of Foreign Exchange Regulation Act was dropped by Special Director, Enforcement, vide order dated 24.07.1986 and therefore, whole proceedings were without jurisdiction. ii) that detention order of the petitioner was revoked, when the Emergency was lifted by the new Government. Therefore, the petitioner claims that action, in forfeiting the property, was in violation of Section 2 of the Act. https://hcservices.ecourts.gov.in/hcservices/ iii) Further more, in view of the explanation given by the petitioner, showing sources of income for acquisition of property, the orders are illegal, being arbitrary. iv) That the finding of the respondent authorities is based on presumption on account of non maintenance of accounts, whereas, no such requirement was there to maintain accounts with regard to petty transactions. 4. On the ground referred to above, the petitioner prays that the order of forfeiture as well as that of Appellate Authority be quashed. 5. The writ petition was opposed by the respondents on the plea that the impugned order of forfeiture was issued by the Competent Authority, after having reasons to believe that properties, sought to be forfeited, are illegally acquired. The petitioner was afforded opportunity and it was after consideration of explanation, given by him, that the order under Section 7(1) of the Act was passed, which was rightly upheld by the Appellate Authority. 6. An Additional counter was also filed on 16.11.2010, enclosing reasons recorded for issuing notice under Section 6(1) of the Act, wherein, it was mentioned that sources of investment with regard to property were not properly explained, therefore, notice was issued under Section 6(1) of the Act with respect to the following properties: 1. Property at Door No.42, Pudumalai St., Adirampattinam, Tanjore Dt. 2. Right, title and interest in M/s.Ama Travels, 152, Angappa Naicken St., Madras-1. 3. Investment in M/s.Dhall India Corporation. 4. Investment in 2 acres of land at Neelankarai (S.No.92/70) in the name of wife Smt.Zohora – value Rs.15,000/-. 5. Investment in L.I.P.No.43885762. 7. Learned Senior Counsel appearing on behalf of the petitioner challenges the impugned order by contending therein that notice, issued by the respondents under Section 6(1) of the Act itself, was bad in law, as it did not disclose any reason, warranting forfeiture, nor did it show any link or nexus between properties, sought to be forfeited and illegally acquired money. https://hcservices.ecourts.gov.in/hcservices/ 8. The notice of forfeiture, being invalid, was liable to be set aside. In support of this contention, learned Senior Counsel has placed a reliance on the judgment of the Hon'ble Supreme Court in the case of P.P.Abdulla & another vs. The Competent Authority & others reported in 2007 Crl.L.J.1449. 9. It is also the contention of the learned Senior Counsel that the Special Director, Enforcement, Directorate, Foreign Exchange Regulation Act, New Delhi, vide order dated, 24.07.1986, had exonerated the petitioner of charges under Section 8(1) of Foreign Exchange Regulation Act, 1973, there was no material whatsoever with the respondents to record that the property was acquired from illegal money, so as to pass orders impugned in this writ. 10. It was the contention of the learned Senior Counsel that the impugned orders also cannot be sustained, as the petitioner had discharged the burden under Section 8(1) of the Act, by explaining sources of income for acquiring the property, but Appellate Authority, without meeting with the explanation, held the petitioner guilty only on the presumption, in view of the fact that the petitioner was detained under the provisions of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 and that the order of detention was not revoked on the advice of Advisory Board and the Court of Competent jurisdiction. The impugned order was also challenged in view of the finding that there were no necessity to give reasons under Section 6(1) of the Act, as reasons were recorded, in the file, which was not necessary to be disclosed. 11. Learned Senior Central Government Standing Counsel appearing on behalf of the respondents, on the other hand, opposed the writ by contending that the judgment of the Hon'ble Supreme Court in the case of P.P.Abdulla & another vs. The Competent Authority & others (supra) would not be applicable to the facts of the present case, as the respondents, by way of additional counter, have placed on record reasons for forming the opinion to issue notices under Section 6(1) of the Act. 12. Learned Senior Central Government Standing Counsel for the respondents, by placing reliance on the judgment of the Hon'ble Supreme Court in the case of Attorney General of India & others vs. Amratlal Prajivandas & others, reported in AIR 1994 SC 2179, contended that once the validity of the Act was upheld by the Constitutional Bench of Hon'ble Supreme Court, action taken therein cannot be challenged for want of jurisdiction, especially, when valid reasons are disclosed. 13. It was also the contention of the learned Senior Central Government Standing Counsel appearing for the respondents that under Section 8 of the Act, the onus to prove the source of acquisition was on the petitioner and once, he failed to show sources of acquisition https://hcservices.ecourts.gov.in/hcservices/ of properties, the impugned orders are passed in consonance with the provisions of the Act. 14. It is also the contention of the learned Senior Central Government Standing Counsel for the respondents that as reasons were mentioned in the note, prior to issuance of notice. Therefore, the order would be valid. In support of this contention, learned Senior Central Government Standing Counsel placed reliance on the judgment of the Hon'ble Supreme Court in the case of Smt.Kesar Devi vs. Union of India & others reported in 2003 (7) SCC 427, wherein, the Hon'ble Supreme Court was pleased to lay down that the only requirement under law is that the Competent Authority should have reasons to believe, which need not be recorded in writing. Once the opinion is formed, the burden shifts to the person to whom, notice is issued, to prove that the property was not illegally acquired. 15. The contention of the learned Senior Central Government Standing Counsel further was that the order passed was in consonance with the order passed in the case of Smt.Kesar Devi vs. Union of India & others (supra), therefore, it does not call for any interference by this Court. 16. It is further contended that impugned order shows that valid reasons were given for not accepting the explanation, given by the petitioner. Therefore, it cannot be said that the impugned order suffers from non consideration of defense, taken by the petitioner under Section 8(1) of the Act, therefore, the writ petition deserves to be dismissed. 17. On consideration, I find force in the contention raised by the learned Senior Counsel for the petitioner. The Hon'ble Supreme Court, in the case of Smt.Kesar Devi vs. Union of India & others (supra), was pleased to lay down that requirement of the Competent Authority is to have reasons to believe that the property was illegally acquired, though the same may not be mentioned in the notice under Section 6(1) of the Act. 18. Whereas, in the later judgment in the case of P.P.Abdulla & another vs. The Competent Authority & others (supra), the Hon'ble Supreme Court was pleased to lay down that in case, reasons are not disclosed in the notice issued under Section 6(1) of the Act, showing the nexus between the properties, sought to be forfeited and illegally acquired money, notice would be bad. 19. The findings recorded by the Hon'ble Supreme Court in the case of P.P.Abdulla & another vs. The Competent Authority & others (supra), read as under: "7. Learned counsel submitted that it has been expressly stated in Section 6(1) that the reason to believe https://hcservices.ecourts.gov.in/hcservices/ of the competent authority must be recorded in writing. In the counter affidavit, it has also been stated in paragraph 8 that the reasons in the notice under Section 6(1) were recorded in writing. In our opinion, this is not sufficient. Whenever the statute required reasons to be recorded in writing, then in our opinion, it is incumbent on the respondents to produce the said reasons before the Court so that the same can be scrutinized in order to verify whether they are relevant and germane or not. This can be done either by annexing the copy of the reasons along with the counter-affidavit or by quoting the reasons somewhere in the counter-affidavit. Alternatively, if the notice itself contains the reasons of belief, that notice can be annexed to the counter-affidavit or quoted in it. However, all that has not been done in this case. 8. It must be stated that an order of confiscation is a very stringent order and hence, a provision for confiscation has to be construed strictly, and the statute must be strictly complied with, otherwise the order becomes illegal. 9. In our opinion, the facts of the case are covered by the decision of this Court in Fatima Mohd.Amina (dead) through LRs. vs. Union of India & Anr. In the present case, the contents of the notice, even if taken on face value, do not disclose any sufficient reason warranting the impugned action against the appellant as, in our opinion, the condition precedent for exercising the power under the Act did not exist. Hence, the impugned orders cannot be sustained. 10. In the present case, in the notice dated 15.03.1988 issued to the appellant under Section 6(1) of the Act (copy of which is annexed as Annexure P1 to this appeal), it has not been alleged therein that there is any such link or nexus between the property sought to be forfeited and the alleged illegally acquired money of the appellant." 20. As per the law of precedent, in case of conflict of opinion of a Co-ordinate Bench, one later in time, is to be followed and the notice, issued under Section 6(1) of the Act is held to be bad in law. 21. However, In the present case, the judgment in Smt.Kesar Devi vs. Union of India & others (supra) would not be applicable to the facts of the present case, as even in the reasons given, the nexus between illegally begotten money and purchase of property is https://hcservices.ecourts.gov.in/hcservices/ not disclosed. The petitioner was exonerated by the Special Director, Enforcement Directorate, vide order dated 24.07.1986, by recording positive finding that the petitioner had no concern with the money, said to have been illegally begotten. 22. There was no other charges against the petitioner nor the reasons or notice or note disclose any such reasons, which could lead to presumption that the property was acquired by illegal means. 23. The petition deserves to be allowed on the ground of non validity of notice, issued under Section 6(1) of the Act. The contention of the learned counsel for the petitioner that the Act was not applicable and the proceedings, without jurisdiction or that no reasons have been given to reject the explanation submitted, cannot be sustained, as the case of the petitioner fell under the provisions of the Act, due to his detention, which was neither revoked by competent authority or revisory board. 24. The reading of the impugned orders would also show that the explanation given by the petitioner was duly considered and reasons given for rejecting the said application. 25. However, as already observed above, this writ petition deserves to be allowed, as the notice issued under Section 6(1) of the Act, was not a valid notice, as no reasons were given for forming an opinion. Therefore, notice under Section 6(1) of the Act cannot be sustained in view of the law, laid down by the Hon'ble Supreme Court in the case of P.P.Abdulla & another vs. The Competent Authority & others (supra). 26. The note submitted with the additional counter also does not give any reason to show an opinion formed with regard to acquisition of forfeited property by illegally begotten money. The acquisition by illegal money is a pre-requisite to form an opinion, which should also have the link with property, sought to be forfeited. 27. In the present case, it may also be noticed that there is no allegation of illegally begotten money, as the Special Director, Enforcement Directorate, New Delhi, had already acquitted the petitioner of the charge and no other charge was shown or even mentioned in the note. 28. Consequently, the writ petition is allowed and the impugned notice issued under Section 6(1) of the Act, order passed under Section 7(1) of the Act and that of the Appellate Authority are ordered to be quashed. No costs. Consequently, connected miscellaneous petition is closed. https://hcservices.ecourts.gov.in/hcservices/ To 1. The Registrar Appellate Tribunal for Forfeited Property, Loknaik Bhavan, 4th Floor, Khan Market, New Delhi – 3. 2. The Competent Authority, 64/1, G.N.Chetty Road, Utsav Building, T.Nagar, Chennai-17. + 1 cc to Mr. Rameshkumar, Advocate SR.4572 W.P. No. 910 of 2001 KJ(CO) Eu 14.2.11 https://hcservices.ecourts.gov.in/hcservices/