Smt. Kesar Devi vs Union Of India & Ors

1. This appeal has been preferred by special leave against the judgment

and order dated 12.1.1996 of a Division Bench of Rajasthan High Court by

which the special appeal preferred by the appellant against the judgment and

order dated 19.7.1995 of a learned Single Judge was dismissed and the order

passed by the Appellate Tribunal for Forfeited Property, New Delhi, was

affirmed.

2. The appellant is widow of late Jagannath Sharma. The Customs and

Central Excise Authorities of Jaipur recovered 5 gold bars from Jagannath

Sharma on 24.7.1969. On 8.4.1972 Police Authorities recovered 15 gold

bars from Radha Ballabh and on 15.11.1972 two gold bars of foreign origin

were recovered from Ram Parekh and both of them gave statements that

they had bought the same from Jagannath Sharma. On 11.10.1973 police

recovered 38 gold bars from one Ram Prasad Sharma and the documents

showed that the same belonged to Jagannath Sharma. Jagannath Sharma

was then detained under MISA on 8.10.1974, but the detention order was

revoked and he was released in November, 1974. Thereafter, he was again

detained on 4.8.1975 under COFEPOSA Act by an order passed by the

Deputy Secretary to the Home Department, Government of Rajasthan,

Jaipur. The detention order was passed on the ground that the State

Government was satisfied that with a view to prevent Jagannath Sharma

from dealing in smuggled goods and engaging in transporting or concealing

or keeping smuggled goods, it was necessary to make an order under Section

3(1) of the COFEPOSA Act to detain him.

3. Proceedings for forfeiture of three properties, namely, (1) House

property No. D-48, Bapu Nagar, Jaipur; (2) House property known as Haldia

House, Johari Bazar, Jaipur (Municipal No.JD-JMC-1/106/1948); and (3)

House Property in Mehandi Ka Chowk, Ramganj Bazar, Jaipur (Municipal

No.GD-JMC-1/276/1948) were initiated under the Smugglers and Foreign

Exchange Manipulators (Forfeiture of Property) Act, 1976 (for short

"SAFEMA"). A notice under Section 6(1) of SAFEMA (hereinafter

referred to as "the Act") was issued to the appellant Smt. Kesar Devi with

regard to Bapu Nagar property and a similar notice was issued to the

appellant's husband Jagannath Sharma with regard to the other two

properties, namely, Haldia House and Mehandi Ka Chowk. Jagannath

Sharma gave a reply that the aforesaid two properties did not belong to him

but belonged to his wife. Thereafter, the competent authority issued a letter

dated 27.4.1977 purporting to be a notice under Section 6(2) of the Act to

the appellant. In this letter apart from enclosing a copy of the notice under

Section 6(1) issued to Jagannath Sharma as required by clause (2) of Section

6, the competent authority called upon the appellant "to produce evidence if

she was the real owner of the aforesaid property, and if so, to indicate the

source of her income, earnings or assets out of which or by means of which

she had acquired the properties." In her reply dated 5.5.1977, the appellant

asserted that she was the absolute and exclusive owner of all the three

properties and the same had been purchased out of her own individual

income and they had nothing to do with her husband Jagannath Sharma.

The competent authority, after considering the material on record passed an

order under Section 7(1) of the Act on 28.7.1977 against the appellant

forfeiting Bapu Nagar property. A separate order was passed against

Jagannath Sharma on the same date forfeiting the other two properties. The

orders were passed on the finding that though the ostensible owner of the

properties was Smt. Kesar Devi but the real owner was her husband

Jagannath Sharma. In appeal, the appellate Tribunal vide its order dated

26.10.1977 set aside the order and remanded the matter to the competent

authority to enable the appellant and her husband to cross-examine the

witnesses and also to produce such witnesses in support of their case, as they

may desire. Thereafter, the competent authority, after affording an

opportunity of hearing and leading evidence, passed a fresh order, forfeiting

all the three properties, namely, properties at Bapu Nagar, Haldia House and

Mehandi Ka Chowk.

4. Feeling aggrieved by the said order, the appellant preferred an appeal

before the appellate Tribunal. The appellate Tribunal held that in the notice

issued to the appellant under Section 6(1) of the Act, two properties, namely,

Haldia House and Mehandi Ka Chowk were not included. The Tribunal did

not accept the contention of the representative of the Department that the

letter dated 27.4.1977 forwarding to the appellant a copy of the notice under

Section 6(1) issued to her husband Jagannath Sharma, was not only a notice

under Section 6(2) to her but also a notice under Section 6(1) in respect of

these two properties. After consideration of the evidence adduced by the

parties, the Tribunal agreed with the finding of the competent authority that

there was no evidence to support the assertion that the appellant was

carrying on any business and that any savings were thus available to her for

making investment in the properties acquired. Accordingly, the appeal was

allowed qua (1) Haldia House property and (2) Mehandi Ka Chowk

properties and the order of forfeiture passed regarding the aforesaid

properties was set aside. The appeal was, however, dismissed with regard

to house property No.D-48, Bapu Nagar, Jaipur and its forfeiture as directed

by the competent authority was upheld.

5. The appellant then preferred a writ petition before the Jaipur Bench of

Rajasthan High Court challenging the orders of the competent authority and

of the appellate authority. During the course of hearing of the writ petition,

three main contentions assailing the detention of Jagannath Sharma were

raised, namely, (1) when challenge is made regarding forfeiture of the

property under SAFEMA, the Court is competent to examine the orders

passed under COFEPOSA Act; (2) the order passed by the State

Government for detaining the appellant's husband under COFEPOSA Act

was bad in law; and (3) the grounds of detention under COFEPOSA Act

were not communicated. It was also urged that reasons for belief had not

been recorded as provided under Section 6(1) of the Act. The finding of

the authorities that the appellant had failed to establish that she had

purchased the property from her own income, was also assailed. The

learned Single Judge did not accept the contentions raised on behalf of the

appellant and after a detailed consideration of the same dismissed the writ

petition. The special appeal preferred by the appellant was dismissed

summarily by the Division Bench of the High Court.

6. In support of the contention that it is open to a person to assail the

validity of a detention order passed under COFEPOSA Act while

challenging the proceedings initiated under SAFEMA regarding forfeiture of

property, the appellant before the High Court had placed reliance on Union

of India Vs. Haji Mastan Mirza (1984) 2 SCC 427. However, this decision

has been expressly overruled by a Bench of nine Judges in Attorney General

for India v. Amratlal Prajivandas (1994) 5 SCC 54, wherein it has been held

as under:

"Thus the conclusion is that an order of detention to

which Section 12-A is applicable as well as an order of

detention to which Section 12-A was not applicable can serve

as the foundation, as the basis, for applying SAFEMA to such

detenu and to his relatives and associates provided such order

of detention does not attract any of the sub-clauses in the

proviso to Section 2(2)(b). If such detenu did not choose to

question the said detention (either by himself or through his

next friend) before the Court during the period when such order

of detention was in force, - or is unsuccessful in his attack

thereon – he, or his relatives and associates cannot attack or

question its validity when it is made the basis for applying

SAFEMA to him or to his relatives or associates."

In view of this authoritative pronouncement by this Court, the main

grounds of challenge raised before the High Court have no legs to stand.

7. The competent authority as also the appellate authority considered the

evidence adduced by the appellant and came to the conclusion that there was

no evidence to support the appellant's claim that she was carrying on any

business and that any savings were thus available to her for making

investment in the acquired property. The finding is based upon a thorough

and proper appraisal and consideration of the evidence on record and we

find no reason to differ from the same. In the special leave petition, the

grounds taken relate to the validity of the detention order passed under

COFEPOSA Act against Jagannath Sharma and also to the correctness of the

finding recorded by the authorities that the appellant did not have any

individual income of her own to purchase the properties. These grounds, in

our opinion, have no substance for the reasons indicated above and they

were rightly not very seriously pressed by the learned counsel before us.

8. An application was moved by the appellant on 24.3.2003 for

producing additional documents and for urging additional grounds.

Learned counsel has submitted that the notice issued under Section 6(1) of

SAFEMA does not show as to how any link or nexus is established between

the properties sought to be forfeited and the alleged illegally acquired money

of the detenu Jagannath Sharma. It has been urged that unless the notice

itself showed the link or nexus between the illegally acquired money of the

detenu and the property sought to be forfeited, no order for forfeiture under

Section 7 could be passed. In support of his submission, learned counsel

has placed reliance on a decision of this Court in Civil Appeal No.7400-

7401 of 1996 (Smt. Fatima Mohd. Amin (dead) through LR v. Union of

India & Anr.) decided on 16.1.2003.

9. Section 2(1) of SAFEMA lays down that the provisions of the said

Act shall apply only to the persons specified in Sub-section (2) of that

Section. Sub-section (2) of Section 2 gives a long list of different categories

of persons to whom the Act shall apply and they include those who have

been convicted under the Customs Act, 1962; Sea Customs Act, 1878;

Foreign Exchange Regulation Act, 1947 or 1973, where the value of goods

or the amount involved exceeds Rs.1 lakh or have been convicted

subsequently under the aforesaid Acts. Clause (b) of this Sub-section

includes a person against whom an order of detention has been made under

COFEPOSA Act and is not covered by the proviso to this clause. Clause

(c) to Sub-section (2) includes every person who is a relative of the person

referred to in clause (a) or clause (b). Explanation (2) gives a long list of

relatives for the purpose of clause (c) and in view of clause (i) thereof, Kesar

Devi being the spouse of Jagannath Sharma is clearly covered by the

provisions of the Act. Section 6 of the Act lays down that if, having regard

to the value of the properties held by any person to whom the Act applies,

either by himself or through any other person on his behalf, his known

source 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 calling upon him to

indicate the sources of his income, earnings or assets, out of which or by

means of which, he has acquired such property 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. The

condition precedent for issuing a notice by the competent authority under

Section 6(1) is that he should have reason to believe that all or any of such

properties are illegally acquired properties and the reasons for such belief

have to be recorded in writing. 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. Section 8 of the Act which

deals with burden of proof is very important. It lays down that in any

proceedings under the Act, 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. 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 issued. The statutory provisions do not

show that the competent authority, in addition to recording reasons for his

belief, has to further mention any nexus or link between the convict or

detenu (as described in Sub-section (2) of Section 2) and the property which

is sought to be forfeited in the sense that money or consideration for the

same was provided by such convict or detenu. If a further requirement

regarding establishing any link or nexus is imposed upon the competent

authority, the provisions of Section 8 regarding burden of proof will become

otiose and the very purpose of enacting such a Section would be defeated.

10. The requirement of establishing a "link or nexus" between the

illegally acquired money of the convict or detenu as described in Sub-section

(2) of Section 2 of the Act and the properties sought to be forfeited is sought

to be derived from certain observations made by this Court in Attorney

General for India v. Amratlal Prajivandas (supra) in paragraph 44 of the

Reports. If paragraph 44 is read as a whole, it will be clear that no such

requirement of establishing any link or nexus on the part of the competent

authority has been laid down therein. In the said paragraph, the Bench

dealt with contention of the counsel for the petitioners that extending the

provisions of SAFEMA to the relatives, associates and other "holders" is

again a case of overreaching or of over-breadth, as it may be called – a case

of excessive regulation. The relevant part of para 44 (page 92 of the

Reprots) is being reproduced below :

"……. The language of this section is indicative of the

ambit of the Act. Clauses (c) and (d) in Section 2(2) and the

Explanations (2) and (3) occurring therein shall have to be

construed and understood in the light of the overall scheme and

purpose of the enactment. The idea is to forfeit the illegally

acquired properties of the convict/detenu irrespective of the fact

that such properties are held by or kept in the name of or

screened in the name of any relative or associate as defined in

the said two Explanations. The idea is not to forfeit the

independent properties of such relatives or associates which

they may have acquired illegally but only to reach the

properties of the convict/detenu or properties traceable to him,

wherever they are, ignoring all the transactions with respect to

those properties. By way of illustration, take a case where a

convict/detenu purchases a property in the name of his relative

or associate – it does not matter whether he intends that such a

person to be a mere name lender or whether he really intends

that such person shall be the real owner and/or possessor

thereof – or gifts away or otherwise transfers his properties in

favour of any of his relatives or associates, or purports to sell

them to any of his relatives or associates – in all such cases, all

the said transactions will be ignored and the properties

forfeited, unless the convict/detenu or his relative/associate, as

the case may be, establishes that such property or properties are

not "illegally acquired properties" within the meaning of

Section 3(c). …………………………………………………

….…………… It is equally necessary to reiterate that the

burden of establishing that the properties mentioned in the

show-cause notice issued under Section 6, and which are held

on that date by a relative or an associate of the convict/detenu,

are not the illegally acquired properties of the convict/detenu,

lies upon such relative/associate. He must establish that the

said property has not been acquired with the monies or assets

provided by the detenu/convict or that they in fact did not or do

not belong to such detenu/convict. We do not think that

Parliament ever intended to say that the properties of all the

relatives and associates, may be illegally acquired, will be

forfeited just because they happen to be the relatives or

associates of the convict/detenu. There ought to be the

connecting link between those properties and the

convict/detenu, the burden of disproving which, as mentioned

above, is upon the relative/associate. ………….."

11. The judgment of a Court has not to be interpreted like a Statute where

every word, as far as possible, has to be given a literal meaning and no word

is to be ignored. The observations made have to be understood in the

context of the facts and contentions raised. As mentioned earlier,

Explanation (2) appended to Clause (c) of Sub-section (2) of Section 2 gives

a very long list of relations. The combined effect of clauses (iii) and (vii) of

the Explanation is that a convict or detenu's wife's sister's lineal descendant

whether male or female and howsoever low is also included even though the

relationship is quite remote. In those cases where the relationship is very

remote one, the competent authority may have to indicate some link or nexus

while recording reasons for belief that the property is illegally acquired

property. But cases where relationship is close and direct like spouse, son

or daughter or parents stand on altogether different footing. Here no link or

nexus has to be indicated in the reasons for belief between the convict or

detenu and the property as such an inference can easily be drawn.

12. 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 fact, if such a condition is

imposed, the very purpose of enacting SAFEMA would be frustrated, as in

many cases it would be almost impossible to show that the property was

purchased or acquired from the money provided by the convict or detenu.

In the present case, the appellant is the wife of the detenu and she has failed

to establish that she had any income of her own to acquire the three

properties. In such circumstances, no other inference was possible except

that it was done so with the money provided by her husband.

13. In order to examine whether the notice issued by the competent

authority satisfies the requirement of Section 6, it is necessary to reproduce

the same and the same reads as under :

"1. Kesar Devi alias Kani Devi, of DG-JMC-1/169/1948,

Bakshiji-Ki-Gali, Mehandi Ka Chowk, Ramganj Bazar, Jaipur

is the wife of Jagan Nath Sharma in respect of whom an order

of detention under the Conservation of Foreign Exchange and

Prevention of Smuggling Activities Act, 1974 was made on

4.8.1975. She is, therefore, a person covered by Sec. 2(2)(c)

of the Smugglers and Foreign Exchange Manipulators

(Forfeiture of Property) Act, 1976 (hereinafter referred to as the

SAFEMA).

2. The Commissioner of Income-tax, Jaipur has, vide his

D.O. No.ADI/JPR/COFEPOSA/350 dated 1.9.1976, furnished

information under Sec. 16(2) of the SAFEMA regarding the

illegally acquired properties of Kesar Devi.

3. Kesar Devi has never been assessed to tax nor has she

ever filed her return of income. Kesar Devi is the holder of

house property D-48, Bapu Nagar, Jaipur. Kesar Devi, in her

statement on 22.7.1976 before Sh. S.P. Gupta, Inspector, Jaipur

has stated that she purchased the plot of land D-48, Bapu

Nagar, about 13 years back and immediately thereafter

constructed a house on this plot. She admitted that she did not

remember the price paid for the purchase of the above plot but

stated that the house, including the plot, cost her about

Rs.30,000. She further stated that she received money from

her mother-in-law and father-in-law for the construction of the

house, besides the sale proceeds of her ornaments. She also

asserted that she used to earn income from stitching of gota on

sarees and that this income was available to her. When

specifically questioned about evidence in respect of the

assertions made by her regarding the source of investment in

the plot or the construction of the house, she in no unequivocal

terms, admitted that she had no evidence. Kesar Devi is

reported to have had no known sources of income. The source

of investment in the house, therefore, remains unproved. The

house property thus constitutes property which has, wholly or

partly, come 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 and accordingly is a property within the meaning of

Sec. 3(1)(c)(iii) of the SAFEMA.

4. I have, therefore, reason to believe that the property

mentioned below held by Kesar Devi is illegally acquired

property within the meaning of Sec. 3(1)(c) of the SAFEMA in

respect of which a notice under Section 6(1) of the Smugglers

and Foreign Exchange Manipulators (Forfeiture of Property)

Act, 1976 should be served on her to indicate the sources of her

income, earnings or assets, out of which or by means of which

she acquired this property, the evidence on which she relies and

other relevant information and particulars and to show cause

why this property should not be declared to be illegally

acquired property and forfeited to the Central Government."

The notice clearly records the reasons for belief and, therefore, it fully

complies with the requirement of law and there is no infirmity in the same.

14. The judgment in Civil Appeal No.7400-7401 of 1996 relied upon by

the learned counsel for the appellant can be of no assistance to him. On

facts, the Court found that the notice issued by the competent authority did

not disclose any reasons and thus the same did not meet the requirement of

Sub-section (1) of Section 6 of the Act. As shown above, this is not the

case here as the reasons for belief have been clearly recorded by the

competent authority.

We, therefore, find no merit in the appeal and the same is hereby

dismissed.