The Competent Authority & Administrator & Anr. vs Manilal Jalal & Anr.

Joymalya Bagchi, J.: These two appeals being directed against the same

judgement and order dated 23.09.2009 passed by the learned Judge in W.P. No.

229 of 2003 were taken up for hearing analogously.

In the writ petition, the petitioner had challenged the order dated 11th

December, 2002 passed by the Appellate Tribunal under Smugglers and Foreign

Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter referred to

as SAFEMA) affirming the order dated 18th February, 1999 passed by the

Competent Authority under SAFEMA, declaring that the properties and assets of

late Sarbani Devi Jalan (mother of the writ petitioner) as described in the notice

under Section 6(1) of SAFEMA, including property lying and situated at 10,

Digambar Jain Temple Road, Kolkata 700 007 (hereinafter referred to as the said

house at Calcutta) are illegally acquired properties and forfeited to the Central

Government free from all encumbrances.

At the outset, Mr. Roy, learned senior counsel appearing for the

respondents in A.P.O. No. 107 of 2013 submitted that the said appeal preferred

on behalf of the Union of India had abated due to non‐substitution of the legal

heirs of respondent no. 1/writ petitioner, Manilal Jalan, since deceased. He relied

on State of Gujarat Vs. Sayed Mohd. Bakir El Edross, AIR 1981 SC 1921 in

support of his submission.

Mr. Tarafder, learned counsel, appearing for the appellant/Union of India,

admitted that no steps had been taken to substitute the heirs of respondent no. 1.

He, however, submitted that the department would be at liberty to agitate its

case in the appeal preferred by the writ petitioner. Accordingly, A.P.O. No. 107

of 2013 having abated is dismissed.

Other appeal being A.P.O. No. 297 of 2009 which was preferred by the

writ petitioner and is presently being prosecuted by his legal heirs is taken up for

hearing.

The facts giving rise to the instant proceeding are as follows :

One Sarbani Devi Jalan, since deceased, was the wife of late Nathmal

Jalan. Amongst other assets, Sarbani Devi Jalan had purchased a house property

situated at 10, Digambar Jain Temple Road, Kolkata - 700 007 on 11th December,

1958 for Rs. 1,20,000/‐ and had expended a sum of Rs. 5,933/‐ only for registration

purposes. It appears that Nathmal Jalan had been detained pursuant to an order

of detention dated 10th December, 1974 under The Conservation of Foreign

Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred

to as COFEPOSA).

Such order of detention was neither set aside nor revoked by the Central

Government.

Sarbani Devi Jalan being the wife of a detenu under COFEPOSA whose

order of detention had not been set aside and/or revoked by the Central

Government was subject to the provisions of SAFEMA by operation of Section

(2) (ii) (c) of the Act. A show cause notice under Section 6(1) of SAFEMA dated

17th July, 1976 was issued from the office of the Competent Authority upon

Sarbani Devi Jalan calling upon her to indicate the source of her income, earnings

or assets from which she had acquired the properties and/or assets described in

the said notice and to show cause as to why the said properties and/or assets be not declared as "illegally acquired property" under Section 3(1)(c)(iii) and

3(1)(c)(iv) of SAFEMA and be not forfeited to the Central Government.

Sarbani Devi Jalan replied to the said show cause notice by letter dated

17th August, 1976, inter alia, claiming that the said notice was devoid of material

particulars and that some of the properties mentioned therein were non‐existent.

She also requested for inspection of the reasons recorded by the Competent

Authority in writing before initiating the proceeding against her.

Thereafter, the Competent Authority issued another notice dated 17th

November, 1976 under Section 6 (1) of SAFEMA upon the said Sarbani Devi

Jalan in respect of the self‐same properties and/or assets.

Sarbani Devi Jalan by letter dated 23rd December, 1976 gave an elaborate

reply to the said notice. She relied on her income tax returns and/or assessment

orders to establish that each and every item covered under the said notice was

self‐acquired property and none of the said items, including the house at

Calcutta, ought to have been held to be "illegally acquired property" under

SAFEMA and that the proceedings against her was liable to be dropped.

After consideration of such reply, the Competent Authority issued notice

under Section 7(1) of SAFEMA calling upon Sarbani Devi Jalan for an oral

hearing at Calcutta.

Sarbani Devi Jalan by letter dated 29th April, 1977 again called upon the

Competent Authority to disclose the reasons in writing for arriving at a reasonable belief as contemplated under Section 6 (1) of the Act. The Competent

Authority, however, declined to do so.

Under such circumstances, Sarbani Devi Jalan moved a writ petition

before this Court challenging the constitutional validity of the provisions of

SAFEMA. In the course of hearing of the said writ petition, His Lordship the

Hon'ble Mr. Justice T.K. Bose (as His Lordship then was) directed the Competent

Authority to disclose materials/reasons on the basis of which notice dated 7th

March, 1977 was issued under Section 6(1) of the said Act.

Pursuant to such order, the Competent Authority under cover of letter

No. CA/Cal(36)SAFEM(FOP)A/661 dated 15th November, 1977 disclosed the

resume materials and/or reasons recorded by the said Authority culminating in

the issuance of the aforesaid show cause notice.

The writ petition preferred by Sarbani Devi Jalan and other similar writ

petitions were transferred to the Supreme Court of India wherein the

constitutional validity of the Act was under considered.

Finally, by judgement and order dated 12.05.1994, the apex Court

dismissed the challenge to constitutional validity of the Act in the case of

Attorney General for India Vs. Amratlal Prajivandas, AIR 1994 SC 2179.

In the meantime, Sarbani Devi Jalan died on 23rd April, 1994. Her

husband, Nathmal Jalan, also expired on 4th January, 1996.

After the dismissal of the proceedings challenging the constitutional

validity of the legislation, as aforesaid, the Competent Authority issued fresh notices on 14th December, 1995 and 8th April, 1996 under Section 7(1) of the said

Act upon the writ petitioner and his brother as the legal heirs of Nathmal Jalan

and Sarbani Devi Jalan for oral hearing.

Notices were received by the writ petitioner and his brother. In spite of

receipt of such notices, they merely forwarded the income tax returns of their

deceased mother but chose not to appear personally in the course of oral hearing.

Finally, by order dated 18.02.1999, the Competent Authority after analysis of the

entire materials on record came to a finding that the assets, including the house

at Calcutta covered under notice under Section 6(1) of SAFEMA, were illegally

acquired property and stood forfeited to the Central Government free from all

encumbrances.

The writ petitioner appealed before the Appellate Tribunal but by order

dated 11.12.2002 the Appellate Tribunal dismissed the appeal and upheld the

finding of the Competent Authority that the said properties were illegally

acquired properties and had been rightly forfeited to the Central Government.

The aforesaid order passed by the Appellate Authority affirming the order of the

Competent Authority was challenged in the writ petition.

Learned Single Judge dismissed the challenge thrown to the findings of

the Appellate Tribunal and the Competent Authority to the effect that the

properties covered by the notice under Section 6(1) of the Act are illegally

acquired properties and were liable to forfeiture to the Central Government.

Learned Single Judge further held that as the Competent Authority had recorded that Sarbani Devi had made an independent investment of Rs. 19,853/‐ for

purchase of the house at Calcutta the writ petitioner ought to be permitted to

redeem the said property on payment of find in lieu of forfeiture in terms of

Section 9 of SAFEMA and granted such relief to him.

The writ petitioner preferred appeal being APO No. 297 of 2009 against

the order of the learned Single Judge to the extent the order of the learned Single

Judge dismissed his writ petition challenging the finding of the Appellate

Tribunal and the Competent Authority that the properties and/or assets were

illegally acquired properties and liable to be forfeited to the Central Government.

The writ petitioner having died during the pendency of the appeal, the present

appellants being his legal heirs have been substituted and are prosecuting the

said appeal.

The department had, on the other hand, challenged the order of the

learned Single Judge to the extent it permitted the house at Calcutta to redeem on

payment of fine in lieu of forfeiture in terms of Section 9 in APO No. 297 of 2009

The said appeal has abated due to non‐substitution of the legal heirs of the

respondent no.1 /writ petitioner.

Mr. Roy, learned senior counsel, appearing for the appellants submitted

that no proceeding under SAFEMA had been initiated against the detenu

Nathmal Jalan, during his lifetime although he was alive till 1996, whereas

proceeding had been initiated against his wife Sarbani Devi Jalan in 1976 by

issuance of show cause notice under Section 6(1) of SAFEMA. He submitted that the failure to initiate proceeding against Nathmal Jalan, the detenu himself,

denuded the authorities of requisite jurisdiction to proceed against his wife

Sarbani Devi Jalan. Drawing our attention to the finding of the Competent

Authority that assets were nothing but assets acquired by Nathmal Jalan in the

name of his wife out of illegal and undisclosed source of income, he further

submitted that notice of hearing upon Nathmal Jalan was a condition precedent

for initiating such proceeding against his wife, Sarbani Devi Jalan. Secondly, he

submitted that in the resume of materials and/or reasons no reasonable nexus is

disclosed connecting properties proceeded against with the illegal income of the

detenu, Nathmal Jalan. Thirdly, he submitted that Sarbani Devi Jalan having

expired in the midst of the proceeding prior to issuance of notice under Section

7(1) of SAFEMA the said proceeding ought to be abated upon her death and

could not have been proceeded with against the writ petitioner and/or his

brother as the legal heirs of Nathmal Jalan and Sarbani Devi Jalan. He

strenuously argued that the provisions of SAFEMA being penal in nature ought

to receive the strict construction and there was no scope of enlarging the scope of

persons affected in Section 7 of the Act to include legal heirs of such person. He

supplemented such submission by emphasising that oral hearing in the case

ought to have been given to Sarbani Devi Jalan herself and an offer of such

hearing to writ petitioner and his brother was not in accordance with the

procedure laid down in SAFEMA and amounted to violation of principles of

natural justice.

He further submitted that undue protraction of the proceedings which

was initiated in 1976 had severely prejudiced the writ petitioner in effectively

defending himself as the facts relating to the acquisition of the properties in

question were in the personal knowledge of the parents of the writ petitioner

who had already died at the time of the oral hearing.

Mr. Tarafdar, learned advocate, appearing for the department submitted

that Sarbani Devi Jalan was a person covered under SAFEMA in terms of Section

2(2)(c) thereof being the wife of the detenu, Nathmal Jalan. Drawing our

attention to the notice under Section 6(1) of the Act he submitted that Sarbani

Devi Jalan was proceeded under the Act for being in possession of "illegally

acquired property" in view of Section 3(c) (iii) and (iv) of SAFEMA.

He further submitted that in terms of the order passed by this Court in the

earlier writ petition resume of materials and/or reasons recorded in writing by

the Competent Authority had been supplied to Sarbani Devi Jalan. It cannot be

argued by the appellants or their predecessor‐in‐interest that the principles of

natural justice had been violated in the instant case. He further submitted that

delay in completion of the proceeding was due to factors beyond the control of

the authorities as the constitutional validity of the Act was under consideration

in numerous proceedings, including one initiated at the behest of Sarbani Devi

Jalan herself which finally stood concluded by the judgement of the apex Court

delivered on 12.05.1994 in the case of Attorney General for India Vs. Amratlal

Prajivandas (supra). He submitted that after the demise of Sarbani Devi Jalan the writ petitioner and his brother as legal heirs of Nathmal Jalan and Sarbani Devi

Jalan were given notice inasmuch as they had an interest in the property sought

to be forfeited by way of succession. That apart, the writ petitioner being the son

of Nathmal Jalan, the detenu, was in his independent capacity a person covered

by the Act in terms of Section 2(2)(c) thereof.

He further submitted that the writ petitioner and his brother had chosen

not to appear in the course of oral hearing in spite of notice. The defense taken by

Sarbani Devi Jalan and thereafter the writ petitioners were essentially based on

records and/or assessment order passed therein and no defense relatable to the

personal knowledge of deceased Sarbani Devi Jalan was even alluded to in her

reply to the show cause notice which was admittedly filed during her lifetime.

He, therefore, submitted that no case of violation of principles of natural justice

has been made out in the facts of the instant case.

The first issue raised by the senior counsel of the appellant is that whether

Sarbani Devi Jalan could have been proceeded under SAFEMA without initiating

proceeding under the said Act against her husband, Nathmal Jalan, the detenu,

during his life time.

Section 2 of SAFEMA enumerates the persons against whom said Act

applies.

Relevant portions of Section 2 are as follows :

"2. Application: ‐ (1) The provisions of this Act shall apply only to the persons specified in sub‐section (2).

(2) The persons referred to in sub‐section (1) are the following, namely : -

(a) every person-

......................................................

(b) every person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974):

Provided that-

(i) such order of detention, being an order which the provisions of section 9 or section 12A of the said Act do not apply, has not been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board or before making a reference to the Advisory Board; or

(ii) such order of detention, being an order to which the provisions of section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the review under sub‐section (3) of section 9 or on the report of the Advisory board under section 8, read with sub‐section (2) of section 9, of the said Act; or

(iii) such order of detention, being an order to which the provisions of section 12A of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the first review under sub‐ section (3) of that section, or on the basis of the report of the Advisory Board under section 8, read with sub‐section (6) of section 12A, of that Act; or

(iv) such order of detention has not been set aside by a Court of competent jurisdiction;

(c) every person who is a relative of person referred to in clause (a) or clause (b);

..............................................

Explanation 2: -For the purposes of clause (c), "relative", in relation to a person, means -

(i) spouse of the person;

(ii) brother or sister of the person;

(iii) brother or sister of the spouse of the person;

(iv) any lineal ascendant or descendant of the person;

(v) any lineal ascendant or descendant of the spouse of the person;

(vi) spouse of a person referred to in clause (ii), clause (iii), clause (iv) or clause (v);

(vii) any lineal descendant of a person referred to in clause (ii) or clause (iii)."

A bare perusal of Section 2 of the Act would show that the Act not only

applies to the detenu but also to the relations and/or associates of such detenu.

Nowhere the said provision of law mandates that a proceeding against a relative

of a detenu can be initiated only if such detenu is proceeded against under

SAFEMA. Such right to proceed against the relative/associate is independent of

any action taken against the detenu under SAFEMA. It is wholly fallacious to

argue that the detenu must be proceeded against under SAFEMA as a condition

precedent for any action against a relative of such detenu. The properties and/or

assets which were sought to be forfeited were standing in the name of Sarbani

Devi Jalan herself and therefore respondent authorities rightly issued a notice

under Section 6 of the Act upon her as "person affected" for the purpose of initiating a proceeding of forfeiture of such property. There is nothing in the law

that the property standing in the name of a relation of a detenu which is sought

to be proceeded against must require a notice to be issued upon the detenu also.

To infer such a requirement when the same is not provided in law would

amount to rewriting the statutory provision which is unwarranted. This

submission of the appellants being unfounded must therefore fail.

The second issue, which has been argued on behalf of the appellants, is

that the resume of materials and/or reasons do not establish a nexus between the

properties sought to be forfeited and the illegally acquired money of the detenu.

Mr. Roy, learned senior counsel, relied on Fatima Mohd. Amin Vs. Union

of India & Another (2003) 7 SCC 436 and P.P. Abdulla & Another Vs.

Competent Authority & Others (2007) 2 SCC 510 in support of his contention.

The aforesaid resume of facts/reasons were supplied to Sarbani Devi

pursuant to direction given to this Court in the earlier writ proceeding. Hence it

cannot be said that the notice under Section 6(1) of SAFEMA was bereft of

reasons or that the same had not been supplied to Sarbani Devi Jalan resulting in

infraction of the principles of natural justice.

We have perused the resume of materials and/or reasons in the instant

case. In the said resume of materials/reasons, the Competent Authority has

recorded as thus :

"She purchased house property at 10, Digambar Jain Temple Road, Calcutta (formerly, 10, Dayahatta Road, Calcutta) on 15.12.1958 for a cost of Rs. 120000/‐ and incurred registration charges of Rs. 5933/‐ (total Rs. 125933/‐). She declared income of Rs. 89,500/‐ in respect of the income tax assessment years 1951‐52 to 1959‐60 against which taxes paid amount to Rs. 9647/‐ leaving a balance of Rs. 79853/‐. Besides, she declared initial capital in the business at Rs. 5000/‐ and a gift of Rs. 15000/‐ from her mother Smt. Sarawati Devi which were stated to be utilized in the purchase of property. The maximum amount which she could have for investment had been made out to be Rs. 99853/‐ against the aggregate investment made of Rs. 125933/‐. This leaves an unexplained and unproved investment of Rs. 26018/‐.

There is also evidence to show that Sarbani Devi had been made further construction, renovation and alternation to the house in the years subsequent to its purchase. It is noticed that on the details furnished in a Valuation Certificate by her in the Wealth‐tax proceedings, the I.T.O. estimated that Rs. 50000/‐ was spent on such further construction, renovation and alternation during the financial years 1960‐61 and treated this amount as her income from undisclosed sources for the income‐tax assessment year 1961‐62. This assessment has been set aside by the A.A.C. with the direction to re‐ examine the question of renovation, alternation afresh. It is thus evident that not only substantial investment in the purchase of house but also in further construction, renovation and alternation has come out of earnings, income or assets the validity of which has not been proved. The house property at 10, Digambar Jain Temple Road, Calcutta, thus, constitute proportion coved by sec. 3(1)(c) (iv) of the SAFEM (FOP)A. Smt. Sarbani Devi Jain purchased another house property No. K‐17/12(Old No. K‐40/45) at Shital Lane, near Bharrawanath Benaras (Varanasi) on 26.07.1962 for Rs. 16,000/‐ from Shri Madhav Sahu, son of Madhu Sahu. This property is shown to have been purchased by debiting the capital account with Rs. 16000/‐ for the cost of the property, since this property has to be purchased entirely out of accumulation of income from 10, Digambar Jain Temple Road, Calcutta property and the said property has been held as property covered by Sec. 3(1)(c )(iii) of the SAFEM (FOP)A, the Beneras (Varanasi) property is hit by the provisions of Section 3(1)(c)(iii) and 3(1)(c)(iv) of the SAFEM (FOP)A."

Section 3 of the Act defines "illegally acquired property" which is as

follows :‐

"3. "illegally acquired property", in relation to any person to whom this Act applies, means-

...........................................

(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 which Parliament has no power to make laws; or

(iv) any property acquired by such person, whether before or after the commencement of this Act, for a consideration, 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;"

Section 3(i)(c)(iii) of SAFEMA, inter alia, provides that any property

acquired by a person to whom the Act applies is liable to be forfeited if it cannot

be proved that the said property was acquired from known sources of income,

earnings or assets of such person is attributable to any act to which legislative

competence of the Parliament does not extend.

Section 3(i)(c)(iv), inter alia, provides that any property acquired by such

person for a consideration or by any means wholly or partly traceable to any

property referred to in Section 3(i)(c)(iii) (supra) is also illegally acquired

property. Section 8 of SAFEMA puts the burden of proof upon such person to

establish that the properties proceeded against are not illegally acquired

properties.

Resume of materials/reasons in the instant case shows that the house

property at Calcutta of Sarbani Devi Jalan was valued at Rs. 1,25,933/‐. The

maximum amount she could have invested from her known sources of income

was 99,853/‐. Therefore, a part of the value of the said property standing in the

name of Sarbani Devi Jalan could not be proved to be from any known source of

income or assets and hence, prima facie, such property was reasonably believed

to be illegally acquired property in terms of Section 3(i)(c)(iii) of SAFEMA.

Similarly, the other house property at Varanasi was shown to have been

purchased from the income of house property at Calcutta which was covered

under Section 3(i)(c)(iii) and accordingly the Varanasi property was also liable to

forfeiture in terms of Section 3(i)(c)(iv) of the said Act.

The aforesaid facts clearly demonstrate that Sarbani Devi Jalan, the wife of

the detenu, Nathmal Jalan, did not have known sources of income, assets or

earning to acquire the properties standing in her name. These facts give rise to an

irresistible inference that the said properties were acquired from the ill‐gotten

gains of detenu Nathmal Jalan. The foundation of such belief can neither be said to be arbitrary or unreasonable. It is trite law that a reasonable belief can be

derived on the basis of either primary facts inferential or facts deducible from

such primary facts.

In a similar situation, the apex Court in Kesar Devi (Smt.) Vs. Union of

India & Ors. (2003) 7 SCC 427 held as follows:‐

"12 ............................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 detenuʹs wifeʹs sisterʹs 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 a very remote one, the competent authority may have to indicate some link or nexus while recording reasons for belief that the property is an illegally acquired property. But cases where relationship is close and direct like spouse, son or daughter or parents stand on an 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.

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 fact, if such a condition is imposed, the very purpose of enacting SAFEMA would be frustrated, as in many case 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."

In the said judgement the apex Court considered the case of Fatima

Mohd. Amin Vs. Union of India, (2003) SCC 436 and distinguished the said

judgement in the following manner:

"16. The judgement in Fatima Mohd. Amin 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."

The facts of this case are exactly the same as in Kesar Devi (Smt.) Vs.

Union of India & Ors. wherein properties in the name of the wife, Kesar Devi

were sought to be forfeited on the premise that her husband was detained under

COFEPOSA. Applying the ratio in Kesar Devi (Smt.) Vs. Union of India & Ors.

to the facts of the instant case, we hold the resume of facts and/or reasons

accompanying the notice give rise to an irresistible inference of reasonable nexus

between the properties acquired by Sarbani Devi and the illegitimate income of

her husband.

The decision in Fatima Mohd. Amin (Supra) does not apply in the facts of

this case as no reasons had been given in the notice of Section 6(1) of SAFEMA in

the said case as held in Para - 8 of Kesar Devi (Supra) as foundational

facts/reasons in support of such notice.

In P.P. Abdulla & Another (Supra) the apex Court followed Fatima

Mohd. Amin (Supra) as the facts of that case were covered by Fatima Mohd.

Amin Vs. Union of India (Para - 9).

We are of the opinion that factual foundation/reasons disclosing the

requisite reasonable nexus has been disclosed in the instant case. Thus the

decisions in Fatima Mohd. Amin (Supra) and P.P. Abdulla & Another (Supra)

are distinguishable on facts from this case whereas the ratio of Kesar Devi

applies with full force to the same. We are therefore unable to accept the

argument of learned Senior Counsel of the Appellant that there was no

reasonable belief as required under law for issuing notice under Section 6(1) of

SAFEMA or that the same was not communicated to the other.

Thirdly it has been argued that the proceeding under SAFEMA ought to

have abated upon the demise of Sarbani Devi Jalan and the same could not have

been proceeded against the writ petitioner who was the son and legal heir of

Sarbani Devi Jalan and the detenu, Nathmal Jalan. It was strenuously argued that

the proceeding under SAFEMA being penal in nature must receive strict

construction and the expression "person affected" cannot include legal heirs of

such person. Learned senior counsel relied on Tolaram Relumal Vs. State of

Bombay, AIR 1954 SC 496 in support of his contention.

SAFEMA was enacted in 25th January, 1976. The Preamble of the Act

reads as follows:

"An Act to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matter connected therewith or incidental thereto.

Whereas for the effective prevention of smuggling activities and foreign exchange manipulations which are having a deleterious effect on the national economy it is necessary to deprive persons engaged in such activities and manipulations of their ill‐ gotten gains;

And whereas such persons have been augmenting such gains by violations of wealth‐tax, income‐tax or other laws or by other means and have been increasing their resources for operating in a clandestine manner;

And whereas such persons have in many cases been holding the properties acquired by them through such gains in the names of their relatives, associates and confidants;"

From the statements and objects of the aforesaid legislation it is clear that

the law was enacted to deprive persons, their relations, associate and/or

confidantes from enjoying illegal gains of smuggling and foreign exchange

manipulations by forfeiting illegally acquired properties standing in their names.

Under the scheme of the Act, forfeiture of "illegally acquired property" was

therefore speedier means of recovering such property in favour of the

Government and denying the wrongdoer, his relatives, associates or confidants

from enjoying such property. The act of forfeiture in the scheme of this

legislation, though undoubtedly an act of grave civil consequence against the

person affected, is not in the nature of punishment for commission of a crime. Or

in other words "forfeiture" contemplated under the Act is not in the nature of punishment as understood in criminal law. It is reparative in nature and seeks to

recover in favour of the State the illegal gains of smuggling and foreign exchange

manipulations. Judged from this angle it cannot be said that the forfeiture under

the Act is a punishment and the proceedings in relation thereto must be in

personem and must abate upon the death of the noticee.

In State of WB Vs. SK Ghosh, AIR 1963 SC 255, the apex Court had the

occasion of dealing with the question as to whether forfeiture under Section 13

(3) of Criminal Law Ordinance, 1944, amounted to 'punishment' under Penal

Code. The said section provided for forfeiture of property of a convicted person

which had been procured by means of such offence. The apex Court held as

follows:‐

"This forfeiture by the District Judge under Section 13(3) cannot be equated to forfeiture of property which is provided in Section 53 of the Penal Code."

(para 14) "Forfeiture provided in Section 13(3) in case of offences which involved the embezzlement etc. of government money or property is really a speedier method of realising government money or property as compared to a suit which the Government could bring for realising the money or property and is not punishment or penalty within the meaning of Article 20(1)." (para 15) Order of forfeiture of under SAFEMA is of the same species as in Section

13(3) of the Criminal Law Ordinance, 1944. Accordingly, such order of forfeiture

cannot be said to be held to be a 'punishment' under Section 53 of the Penal Code

and the proceedings cannot be said to in personem as in a criminal trial so as to abate upon the death of the initial notice, but can be proceeded against his legal

heirs who have an interest in the property sought to be forfeited, more

particularly, when such legal heir is also a person covered under SAFEMA being

the son of the detenu, as in the present case. Hence the continuation of the

proceeding against the writ petitioner being the son of the detenu, Nathmal Jalan

and the legal heir of Sarbani Devi, the noticee under Section 6 of SAFEMA cannot

be said to be illegal in law.

The other argument advance by the learned Senior Counsel that the writ

petitioner was prejudiced in the course of oral hearing under Section 7 of

SAFEMA inasmuch as he and his brothers were minors at the time of acquisition

of the properties by their late mother in 1958 is also wholly without substance.

The writ petitioner in the in the instant case did not participate in the oral

hearing before the competent authority in spite of notice and therefore cannot be

heard on the score of denial of effective opportunity to defend himself in

violation of principles of natural justice. Notice under Section 6(1) of the Act was

served upon the mother Sarbani Devi Jalan. During her lifetime, she submitted

an elaborate reply to such notice. There was no reference to any fact pertaining to

her personal knowledge in the said reply relating to the acquisition of the

properties in question. Her defence was wholly based upon income tax returns

and the assessment orders passed by the income tax authorities. In view of the

nature of her defence as disclosed in her reply which was wholly based on

record, we are of the view that her death prior to the opportunity of oral hearing given to her son i.e. the writ petitioner could not have prejudiced the latter in his

defence. Delay in the said proceeding therefore did not prejudice the defence of

the writ petitioner in any manner inasmuch as their defence was entirely based

on income tax returns and other documentary evidence which had already been

brought on record and considered by the authorities. The delay caused in the

SAFEMA proceeding was primarily due to the challenge thrown by Sarbani Devi

Jalan and others to the constitutionality of the law which was finally decided by

the apex Court in Attorney General for India Vs. Amratlal Prajivandas (Supra)

on 12.05.1994. It was not attributable to the authorities in any manner

whatsoever. Therefore the manner of conducting the proceeding in the instant

case cannot be said to be unfair, unjust or contrary to the principles of natural

justice. The principles of natural justice are not a strait‐jacketed formula. Whether

a procedure followed in a particular case achieves the benchmark of fair play and

just opportunity must be judged on the touchstone of prejudice of the factual

matrix of the said case. The bogey of denial of natural justice ought not to be

permitted to scuttle legitimate and just proceedings when no prejudice can be

demonstrated to have been caused to the person proceeded against. Krishna Iyar,

J. (as His Lordship then was) in his inimitable style summarised the philosophy

of natural justice as follows:‐

"13. Natural justice is no unruly horse, no lurking land mine, nor a judicial cure‐all. If fairness is shown by the decision‐maker to the man proceeded against, the form, features and the fundamentals of such essential processual property being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating. We can neither be finical nor fanatical but should be flexible yet firm in this jurisdiction. No man shall be hit below the belt - that is the conscience of the matter."

We also find no illegality in the direction given by the learned Single

Judge in permitting the writ petitioner to redeem the house property at Calcutta

on payment of fine in lieu of forfeiture in terms of Section 9(a) of SAFEMA.

Competent Authority shall pass appropriate order in that regard within two

months from date.

The order of the learned Single Judge is upheld. The appeal (APO No. 297

of 2009) and other connected applications are accordingly dismissed.

(Joymalya Bagchi, J.) (Arun Mishra, Chief Justice.) P.A. to J. Bagchi, J.