. • '":\ 1 A

UNION OF INPIA & O'fHERS

HAJI MASTAN MIRZA B

-y

February 23, 1984

(S. MURTAZA FAZAL ALI, A. VARADARAJAN AND

RANGAJ; IATH MISRA, JJJ c

. Smutgler; and Foreign ExchanKe Manipulators (Forefeiture of Prop, rty) -dct, 1976, Setions 2, 6 and 7 read with Section 3(1) of Conservation of Foreign

and Prevention of Smuggling Activities Act, 1973 Scope of-Whether an appeal preferred and Pending under the Provision of SAFEMA, a bar for the maintain ., ability ofa writ petition unaer Article ~26 4 the Constiiution chaUenglng. the detention under COFEPOSA and for an Incidental prayer quashing the notice • D issued under SAFEMA P Non Supply of copies of mat, rlal documents based on which a deentlon order ; is pa!sed vitiates the detentfon and the explanation for non sripply cannot be ~Ub$f/tute for the copies of the docuinent. ' •

Haji Mastan Mir .. war detained under Section 3(1) (c) of the Main.

tenanc~ of Inteinal Security Act, by order dated 17·9-1974. There was a formal release of the respondent from, deten lion under the MISA on 19!2·1974, hut 'E ., he was-immediately detained under, Section 3(1) of COFEPOSA by an order 'dited 19-12-1974 passed by the Minister of Finance of the Government of ludia on the basis of the ma teriais placed before him ... by bis Joint Secretary.

The grounds of detention. were served on the respondent on 23-12·1974. A deCJaration under Section 5(1) of COFEPOSA was served on him on 19-1-1976. 'Emersency. wa~ procJalrned throughout the country ~Y the President on F --~"{'<: 25-6'1975 and it continued to be in force until 21-3-1977o The respondent • was released on 23-3-1977 •

Founded on the detention of the respondent under the order dated ..., 19-12-1974, aftc, r issuing a show cause notice u/s 6(1) of SAFBMA' to the respondent and his relatives and alleged associates, an order u/s 7 ofSAFBMA was, passed f!Jrfeiting the properties of the refoondent and his rc1atives~ G Appeals preferred by all but one are , pending be ore the Appellate Tribunal . comtituted under that Act. The Misce!Jiineo,1.is Petition. No. 548/7-7 filed by these affected parties challenging the viresof certain previsions of COFEPOSA and SAFEMA in the Bombay fliah Court are still pending.

A crjmial Application No. 780/1977 was filed by the respondent' under H

-~ Article 226 of the Constitution and under Section 482 of the Code of Criminal

Proedvre in t!>e jlombay Hi$h Court in April 1981, chal!en$iD$ the validity . .

• •

• •

. . of the impugned Order of detention dated 19·12~1974 and the dec1aratidn dated 18-1-1975 under COFEPOSA for holding that the action taken under

SAFE~IA is unsustainable. The High Court of Bombay, aCcepted the plea that non sllpply of copiC:s of the material dccuments affected the making of effectivC representation and thus held that thC act!on taken under Sections 6(1) and 7 of SAFBMA was invalid. The J-Iig; h Court restrained -the _appellants from taking any actidn under SAFEMA based on the said order dated

19-12-1974. Hence the ppeal by special leave;

DisiSsing the appeal, the_ Court

HELD :-1.2: The respondent's petiiion under Art. 226 of the Constitu .. tion and S. 48.i of the Code of Criminal Procedure_ is m.lintainable. [6D]

C 1.2_, The pendncy of the appeal filed under the provisions of SAFEMA .

against the ofder for forfeiture of the respondent's properties made under the provisions of that Act is not a bar to the presnt proc<!ding. [6A]

t.3 : The fact that the respondent did not challenge his det_ention. under COFEPOSA before his release cannot operate as estoppel against his right, or moving the court for having the order Or detention quashed when that order was sought to be used as a basis for taking action against him under ss. 6 and 7 of SAFEMA. The respondent was in detention under MiSA frotll 17-9-1974 to 19-12-1974 and thereafter under COFEPOSA until 23-3-1977.

Durini thC period of. his detention under. COFEPOSA from 19.;.1z..1974 to 23-3-19n proclamation of emer8:ency in the country was in force from 25-6-1975•

to --.21-3-1977. ·: Theiefore, "for a major part or the respondeht's detention under COFEPOSA he could not move -any court of taW for redresS agaizist his detention anci be was released on 23-3-1977 soon after the emergency was' lifted on 21-3-1977. [6C; BJ

2.f: A re.ading of Seio~ 6(1) Of SAFEMA would show that actiori under Sections 6 and 7 can be taken against only persons to whom that Act applies, that is as specified in section 2(1).

Sub-sectiOn 2 of secti6n 2 says that the Act applies to every person. ill Jespect of whom an order for detention has been made under COFEPOSA provided that such order of detention has. not been set aside by a court of GOmpetent jufisdiction. In the present.case action bas been taken against the respondent under Sections 6(1J n_d _ 7 read Only

with Section 2(2) of the Act._ Therefore, a valid order ot detention under COFEPOSA 'is a conditiol) precedent to proceedings being aken ·under Sections. 6 and 7 of SAFEMA. If the impugned order of detention dated ,19-.12-1974 is set aside for any reason~ the proceedings taken under _Sections (i

and 7 of SAFEMA cannot stand. [7G-H; SA]

2.2: Th~ failure to sUi)ply copies of documents referied to and relied upon in the grounds of detention under COFEPOSA vitiates. the detention -itself. as the detenu could -not make any effective representation in tho . -absence of those doclljllents. [SE] ·

Gurdip Singh v. Union of India & Others, [l9S!] I.S.C.C. 419, referred to. - 2.3' The explanation. offere<, I throu¥h the co11nter-affidavit by the

{ ..

• •

UNiON v. HAii MASTAN MIIUA (Varadafajan, J.) 3

detaining Authority for the non supply of the copies of ._the material documents cannot be a substitute for the copies of the documents. without which the detenu coufd not have made any effective representation .against his dete11tion. [SD]

3. In the present case also copies of do.cuments which were indisputably material documents and were referred to in the gounds of detntion were admittedly not supplied to th; respondent. Therefore, the detention of the . respondent was bad in law and the ordtr, of detention could not .. be sustained Consequently, action taken under Sections 6 and 7 of SAFEMA is baseles~· and unsustainable in law. [SH ;'9A-B]

CRIMINAL APPELLATE 1URISDICTION;: Criminal Appeal.No. 3~

of 1982.

Appeal by Special leave from. the 1udgment and Order dated the 20th/24th/25th November, 1981 of the Bombay High Court in Criminal Application No. 780 of 1981.

K. G. Bhagat, Addi. Sol. General, N. C., Tal11kdar and D Miss A. Subhashinl for, the Appellants. ··

Ram Jethamalani, M. G. Karma!, Madhu Patel, Shri Narain Mathur, K. V. Desai and M/38 Rani Jethamalanl for the Respondent.

lbe Judgment of the Court was deli"vered by

VARADARAJAN, ]. This appeal by.special leave is directed against the judgment of the Bombay High Court in Criminal Application No. 780of1981 filed by the respondent Haji Mastan Mirza, allowing the criminal appeal and deelaring that the order of detention dated 19.12.11174 passed by the Minister of Finance, Government of India under s. 3(1) of the Conservation of Foreign Exchange and Prevention of Smuing Activities Act, 1973, (COFEPOSA) is illegal, nhll and void ab initio and inoperative, and quashing that order as well as the declaration under s. 5(1) of the COFEPO§A made on 18.1.1975 and also consequently quashing the notice. under s. 6(1) and theorder made under s. 7 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, (SAFEMA) 1976 and restraining the appellant from taking any action whatsover on the basis of the order of detention dated 19.12.1974.and the declaration dated 18.1.1975 were quashed by the learned Judges of the High Court is that the respondent w.as not served with copies of documents referred to and relied npoo in

the i:rounds of detention' served on the respondent on 19.12. 1974 .

. '

An order dated 17.9.1974 was passed for detention of the respondent under s. 3(1)(c) of the Maintenance of Internal S"ecuri!y Act (MISA) and the grounds of detention were served on him oh 23.9 . .1974 after he surrendered on 18.9.1974.· There was a formal release of the respondent from detention under the M!SA on 19.12.1974, and he \vas immediately detained' under , s. 3(1) of the COFEPOSA by th, e aforesaid order dated 19.12°.1974 passed by the Minis.ter of Finance of the Government of India on the basis of the materials placed before him by his Joint Secretary.

The grounds of detention were served on the respondent on 23.12.1974. declaration under s. 5(1) of COFEPOSA was served oa the respondent on 19.1.1,75. Emergency was proclaimed through- , out the country by the President on 25.6.1975 and.it continued to be in force until 21.3.1977. The respondent was released on 23.3. 19°77.

A show cause notice under s. 6(1) of SAFEMA was issued to the respondent and bis relatives and alleged associates founded on the respondent's detention under the aforesaid order dated 19.12.1974 made under s. 3(1) of COFEPOSA. Pursuant to that notice an order under s. 7 of SAFEMA was passed forfeiting the properties of the respondent and bis relatives. The respondent and all the other aggrieved persons except one filed appeals against that order before the Appellat~ Tribunal constituted under the provisions of that .. A.ct. '(hose appeals are said to be still pending, The persons who filed those. appeals have filed Miscellaneous. Petition No. 548 of 1977 on or about 25.4.1977 in the Bombay High Court, challepging the vires of certain provisions of

COFEPOSA and SAFEMA. That petition is pending even now.

The respondent filed the criminal application No. 780 of

19~1 nder Art. 226 of the Constitution and s. 482 of thel Code o'f Criminal Procedure in the Bqmbay High Court in April 1981, challenging the validity of the impugned order of detention dated 19.12.1974 and the declaration dated 1,8.1.1975, passed and made under s. 3(1) and &. 5(1) of COFEPOSA for showing that the action taken under s. 6(1) and s. 7 of ~AFEMA is unsustainable.

• The learned counsel for the respondent conceded before us that the respondent is not challenging the vires of any of the provisions of COFEPQSA and' Si\FEMI\ in the present appeal .

iJNio'N v. ii:Ail MASTAN' MIRJA (Varadarajan, i.)

The said petition nnder. Art. 226 of the Constitu.tion and .s. 482 of the Code of Criminal Procedure challenging the validity of the

order of detention and deelaration passed under COFEPOSA and the notiCe and order issnecj under s. 6(1) and 7 of SAFEMA was . heard by Gadgil and Kotwal, JJ constituting t.he Division llench of the Bombay High Court. Koiwal, J consi, dered all the grounds urged before him and accepted most of them including two grounds viz. non-applicatien of mind of the Detaining Authority to the material placed before him before he passed the impugned order of detention dated 19.12.1974 and the failure of the appel- lant to supply copies of th_e documents clearly and unmistakably. relied upon. for arriving at the subjective satisfaction that the respondent's detention under .COFEPOSA is necessar~ and referred .to in the grounds of detention served upon him for holding lhat the order of detention passed under s. 3(1). and declaration made "under s. 5(1) of COFEPOSA is void ab inititl and that the '- . ' ' action taken under s, 6(1) and s. 7 of SAFEMA pursuant to that order of dete11tion is liable to be struck down while holding that the petition under Art. 226 of the Constitution and s .. 482 of the Code of Criminal .Procedure is maintainable. and that the effect of, . the ordr of detention dated 19.12.1974 could not said to be no longer.in force after the respondent had been. released from detention on 23.3.1977 inasmuch as action under s. 6(1) and s. 7 of SAFEMA has been taken only pursuant to that order of deten tion.

Gadgil; J while disagreeing with Kotwal, J on the question of teapplicati9n of the mind of the Detaining Authority to the • materials placed before him bfore he passed the impugned order of detention clearly agreed with Kotwal, J•that the responde11t was not supplied with the. copies of the documents relied upon in tire grounds of detention supplied to him and consequently Gadgil, J also held that the respondent is entitled to the relief claimed by him .before the High Court. Thus both the learned Judges agreed ·• in holding that the impugned order of detention dated 19.12. 1974 .. and the" declaration dated 18.]. 1975- NSSed ahd made under

ss. 3(1) and 5(1) respectively of COFEPOSA and the notice and order for forfeiture of the respond$ln!'s propertips issued and made under s. 6(1) and s. 7. respecti'.'.ely of SAFEMA are Invalid and restrained the appellants from taking any action under SAFEMA based on the said order of detention dated 19.12.1974.

J);

SUPREME COUJ!.T RBMRfS. [f984) 3 s.c.R..

The pendency of the appeal filed under the provisions of SAFEMA against tbe order for forfeiture of the respondent's propertil)S made under the provisions of that Act is not a bar to the . present proceeding.

The respondent was in detention under

MISA from 17.9.1974 to 19.12.1974 and thereafter' under COFEPOSA until 23.3.1977. During the period of his detention . under COFEPOSA froJD 19.12:1974 to_.?3.3.1977 proclamation

ofemergency in the country was in force from 25.6.1975 to 21.3.1977.

Therefore, 'for a major part 9f the period of the respondent's detention under COFEPOSA he could not move • any court of law for .redress against his detention and he was released on 23.3.1977 soon after the emergency was lifted on 21.3.1977.

In these . circumstances the fact that the respondent did not cqall.enge his detention under COFEPOSA before his release cannot operate as estoppel against his right of moving the court for having the order of detention quashed when that order was scught to be used as a basis for taking action against him nnder ss. 6 and 7 of SAFEMA. We therefore hold.that the res pondent's petition under, Art. 226 of the Constitution ands. 482 of the Code of Criminal Procedure is maiqtainable, We may state that this question of maintainability. of the respondent's petition was not disputed by the lear.ned counsel for the appellant before us.

S. 6(1) of SAFEMA providing for the issue of notice before proceedings ean be taken for forefeiture of properties of the persons governd by the provisions of that Act reads thus : ·

"If, having regard to the value of the properties held by any person to whom this Act applies, either by hiniself or through any other person. on his behalf, . his known . sources of income, earnings or assets, and 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 of such properties are illegally acquired properties, it may serve a notice upon such person (hc; reinafter 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 indi- . cate the sources of his "income, earnings or assets;_out of

which or by means of w'.1ich he has acquired such property,

'-\

UNION v. HAJI MA~TAN MIRZ~ (VaraJirajan, J.) 7

tlie evidence on which he relied. an<l other relevant inforllla tion and particulars, . and to show cause why all or any of such properties, as the case may be, should not be de.clared to be illegally acquired properties and forefeited to the Central Government under this Act,'.'

s. 7 the. Act which empowers the competent authority to the Centr, al Governmentany property held by the competent authority to have been illegally acquired reads thus :

"7(1) The competent authority may, after considering the explanation, if any, to the show-cauie notice issued under section 6, and the materials available before it and after Jlivlng to the person afected and in a case where the person affected holds any property specified in the notice through any other person, to such bther person also a reasonable opportunity of being heard, by order, record a finding whether ail or any of the properties in question are illegally acquired properties. ·

(2) Where the. competent authority is satisfied that some of the properties refetred to in the show-ca11se notice are illegally acquired propertiesbut is not able to identify specifically such properties, then, it shall be lawful for tl)e competent authority to specify the.properties which, fo the best of its judgment, are illegally acquired properties and record a finding accord, ingly under sub-section (1).

(3) Where the competent authority records a finding under this section to the effect that any property is illegally •acquired property, it shall declare that such property shall; subject to the provisions of this Act, stand forfeited to the Central Government free froll\oall encumbrances." ·

A reading of s. 6(1) of SAFEMA would show that action ULder ss. 6 and 7 can he taken against only persons to whom that Act applies. S. 2(1) of that Act specifies the persons to whom the Act arplies. Sub-section 2 of s. 2 says that the Act applies to every person in respect of whom at order for detention has been. made under COFEPOSA provided that such order of detention has not been set aside by a court of competentjnrisdiction. In the present case action has been taken against the rpondent under ss. 6(1) and 7 read only with s. 2(2) of the A9t. Therefore, a valid order f detention under CO FEPOSA is a com)ition precedent to proceedings being taken under ss. 6 md. 7 of

SUPREME COURT REPORTS (19841 3 s.c.it

A SAFEMA. If the impugned order of detentidn dated 19.12.1974

-is set aside for any reason, the proceedings taken under ss. 6 and 7 of SAFEMA cannot stand. Therefore, we have to consider whether the impugned order of detention dated 19.12.1974 under

COFEPOSA is void and has to be quashed;:

It is seen from para 17 of the judgment of Kotwal, J that it was not disputed before the learned Judges of the High Court that no copy of any of the .dbcuments was ever supplied to the respondent. That fact was admitted in unmistakable terms not only in• the counter-affidavit. filed on behalf of the respondents before the High Court QUI also in the course of the arguments of th.eir learned counsel. Kotwal, J has held that the duments referred to in the grounds and re'lied upon -for the purpose of the respondent's detention are such that without copies thereof belngsupplied to the respondent he could not liave been in at position to .make any effective representation against his detention.

There was no dispute before the le.arned Judges of the High Com that the documents referred to. in the grounds of detention and relied upon for the purpose of detention are material documents and that the respondent could not ave made any effective repre-. sentation without cppies of those documents. The respondents

before the High C9urt however sought by their counter-affidavit to justify the non-supply of the copies of the documents. The explanation for the non-supply of the documents cannot be a substitute for the copies of the documents without which the respondent could not have made any effective representation against his detention. This Court has repeatedly held in. several decisions that the failure to supply copies of documents referred to ana relied upon in the grounds of detention for the purpose of detention under COFEPOSA vitiates the detention itself. In Gurdip Sinzh v. Union. of India and Others(') the person detained under s. 3(1) of COFEPOSA applied for the supply of copies of the documents forming the material on whicn.ihe order of detention had been made but they \Vere refused _to be supplied to him. Nor were the grounds supplied to the ctetenu accompa oied by the copies of documents forming the basis thereof. It was held in that decision to which bne of us is a party that the detention was bad ln law.

In the present case also copies of documents which were indisputably material documents and were referred . to in the

(I) [1981] 1 S.C.C 419 ..

tiNION f, HAil MAStAN MIRZA (Varadarajan, J.) 9

. ' . grounds of deiention and relied upon for the purpose of detention were admittedly not supplied to the respondent. Therefore, the detention of the respondent was bad .in law and the order of detention could not be .sustained and js liable .to be quashed ..

Consequently. action ta!<en under ss. 6 & 7 of SAFEMA is baseless • and unsustainable in law. The conclusion reached by the learned Judges of the High Court based on that ground is correct.- The appeal accordingly fails and is dismissed.

S.R.

( ' ...

Appeal di:; pzissed