Madras High Court
A.M.Abdul Latheef vs The Appellate Tribunal For Forfeited … on 5 December, 2024
Author: S.M.Subramaniam
Bench: S.M.Subramaniam
2025:MHC:144
W.P.Nos.11228 & 16262 of 1997
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 05.12.2024
CORAM :
THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM
AND
THE HONOURABLE MR. JUSTICE M.JOTHIRAMAN
W.P.Nos.11228 & 16262 of 1997
W.P.No.11228 of 1997:
A.M.Abdul Latheef
S/o Mohamed Noordeen,
Jawahar Street,
Athikkadai, Thanjavur District.
Represented by Power of Attorney
Holder A.A.Noor Mohamed,
237, Angappa Naicken Street,
Chennai – 1. ... Petitioner
Vs.
1.The Appellate Tribunal for Forfeited Property,
4th Floor, Lok Nayak Bhavan,
Khan Market,
New Delhi – 110 003.
2.The Competent Authority,
Smugglers and Foreign Exchange Manipulators
(Forfeiture of Property) Act, UTSAV,
No.64/1, G.N.Chetty Road,
T.Nagar, Chennai – 600 017. ... Respondents
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W.P.Nos.11228 & 16262 of 1997
Prayer: Writ Petition filed under Article 226 of the Constitution of India,
praying for the issuance of Writ of Certiorari, calling for the records relating
to the order of the 1st respondent order No.F.P.A.No.8/MAD/89 dated
23.05.1997 confirming the order dated 25.01.1989 of the 2nd respondent
made in OCA/MDS/547/77 and quash the same.
For Petitioner : Mr.B.Kumar
Senior Counsel
Assisted by Mr.S.Rama Chaudray
For Mr.M.Abdul Nazeer
For Respondents : Mr.AR.L.Sundaresan
Additional Solicitor General of India
Assisted by Mr.Rabu Manohar
Senior Panel Counsel
W.P.No.16262 of 1997:
1.Smt.Zubaida Begum
2.S.Mohamed Jailani
3.S.M.Jamal
4.Smt.S.Nageeni Begum
5.Smt.S.Jabeen ... Petitioners
Vs.
1.The Appellate Tribunal for Forfeited Property,
No.123, 'C' Wing,
4th Floor, Lok Nayak Bhavan,
Khan Market,
New Delhi – 110 003.
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2.The Competent Authority,
Smugglers and Foreign Exchange Manipulators
(Forfeiture of Property) Act, 1976,
'UTSAV',
No.64/1, G.N.Chetty Road,
T.Nagar, Chennai – 600 017.
3.The Government of India,
Represented by its Secretary,
Ministry of Finance,
Department of Revenue,
New Delhi.
4.The District Collector,
Trichy District. ... Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India,
praying for the issuance of Writ of Certiorari, calling for the records relating
to the order of the 1st respondent order No.F.P.A.No.8/MAD/89 dated
23.05.1997 confirming the order dated 25.01.1989 of the 2nd respondent
made in OCA/MDS/547/77 and quash the same.
For Petitioners : Mr.B.Kumar
Senior Counsel
Assisted by Mr.S.Rama Chaudray
For Mr.M.Abdul Nazeer
For R1 to R3 : Mr.AR.L.Sundaresan
Additional Solicitor General of India
Assisted by Mr.Rabu Manohar
Senior Panel Counsel
For R4 : Mr.R.Kumaravel
Additional Government Pleader
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COMMON ORDER
[Order of the Court is made by S.M.SUBRAMANIAM, J.]
The writ petition in W.P.No.11228 of 1997 has been instituted
challenging the order dated 23.05.1997 passed by the Appellate Tribunal for
Forfeiture of Property confirming the order of the competent authority dated
25.01.1989.
2. The writ petition in W.P.No.16262 of 1997 has been instituted
challenging the common order dated 31.07.1997 passed by the Appellate
Tribunal for forfeiture of property confirming the order of the competent
authority dated 31.09.1995 under the provisions of the Smugglers and
Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976
[hereinafter referred to as SAFEMA].
3. The facts in brief required for consideration in W.P.No.16262 of
1997 are that;
(a) The Late Mr.A.G.Shajudeen was detained under the Conservation
of Foreign Exchange and Prevention of Smuggling Activities Act, 1974
[hereinafter referred to as ‘COFEPOSA’]. He had purchased a house property
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bearing No. 2, Workattamalai, Tanjore Road, Trichy, in his name on
21.02.1973;
(b) Another House property, bearing No.28, Alimal Street, Trichy was
purchased on 11.06.1973 in the name of Mrs.Zubaida Begum, the wife of
Mr.A.G.Shajudeen.
(c) Mr. A.G. Shajudeen also held bank balances and cash amounting
to Rs. 4,000/-. On 10.04.1973, a search was conducted at the business
premises of Jamal Textiles, which was run by Mr. A.G. Shajudeen, and
incriminating documents related to immovable and movable assets were
seized.
4. On 03.04.1974, a show cause notice was issued to
Mr.A.G.Shajudeen for violating the Foreign Exchange Regulation Act, 1973
[hereinafter referred to as ‘FERA’]. He submitted his explanations on
24.04.1974. The Special Director of the Enforcement Directorate passed an
adjudication order on 20.01.1978, imposing a penalty of Rs.1,00,000/- for
the violations of FERA. An appeal was filed in Appeal No.126 of 1978, but
the FERA Appellate Board dismissed it on 31.10.1981. However, the Board
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reduced the penalty from Rs.1,00,000/- to Rs.70,000/-.
5. In the above backdrop, a notice under Section 6(1) of SAFEMA was
issued to the detenu, Mr.A.G.Shajudeen on 13.07.1976. The said notice was
communicated to his wife, Mrs.Zubaida Begum, and the Agent, Canara
Bank. On 19.07.1976, affected person Mr.A.G.Shajudeen submitted his
explanations in detail and appeared before the authorities, whose statements
were recorded. He filed writ petition in W.P.No.3415 of 1977 and an interim
stay was granted. However, affected person Mr.A.G.Shajudeen died on
21.05.1985. The interim stay granted in W.P.No.3415 of 1977 was vacated on
18.07.1994. Subsequently, a personal hearing was conducted on 15.02.1995
and the competent authority heard the parties, affording them an opportunity
to present their case. Consequently, the competent authority passed a final
order under Section 7(1) of SAFEMA in proceedings dated 31.03.1995,
forfeiting the immovable properties referred in S.Nos.1 and 2 of the notice.
The amount of Rs.4000/- was seized by the Enforcement Directorate. Two
appeals were filed against the order passed by the competent authority, one
by the legal representative of the affected person Mr.A.G.Shajudeen
including his wife Mrs.Zubaida Begum and another by Mrs.Zubaida Begum
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in her individual capacity, as one of the properties was purchased in her
name. The Appellate Tribunal adjudicated the issues and passed final orders
on 31.07.1997 confirming the order passed by the competent authority. This
led to the institution of the writ petition in W.P.No.16262 of 1997.
6. As far as the writ petition in W.P.No.11228 of 1997 is concerned,
Mr.A.M.Abdul Lateef was detained under COFEPOSA Act, 1974. Following
an inquiry, the competent authority issued a notice on 25.02.1978, under
Section 6(1) of SAFEMA, directing Mr.Lateef to show cause, as to why the
properties should not be forfeited under the provisions of SAFEMA.
7. The properties in question were:
(a) The Right, title and interest in the Betel Nut Shop Provision Stores
at No.46, Dr.Besant Road, Chennai;
(b) The State Housing Board Flat MIG 55-B, Anna Nagar, Chennai.
8. Later on another property namely Right, title and interest in
Balussery Chit Fund was also added in the list of the properties proposed to
be forfeited. The proposed action was confirmed by the competent authority
in proceedings dated 11.02.1980. Subsequently, on an appeal the matter was
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remanded back to the competent authority to reconsider the issue by
affording opportunity to the affected person. Consequently, the case was re-
decided by the competent authority by order dated 18.09.1997. An appeal
was filed before the Tribunal, which remanded the matter back to the
competent authority for the second time, observing that due hearing to the
affected person must be granted. A re-adjudication was conducted and
considering the merits in entirety, the competent authority passed an order in
proceedings dated 25.01.1989. The order became the subject matter of an
appeal filed in F.P.A.No.8/MAD/89. The Appellate Tribunal adjudicated the
issues on merits and rejected the appeal vide order dated 23.05.1997. Thus,
the writ petition in W.P.No.11228 of 1997 came to be instituted.
9. The aforementioned facts are not seriously disputed between the
parties. Mr.B.Kumar, learned Senior Counsel appearing on behalf of the writ
petitioners raised three primary contentions. Firstly, he contended that
Section 6(1) notice had not been given to the owner of the property in whose
name the property was purchased from inception in 1973. Thus, the entire
proceedings in respect of the writ petitioner Mrs.Zubaida Begum are vitiated.
In this context, he relied on the judgment of the Hon’ble Supreme Court of
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India in the case of Income Tax Officer, Circle I(2), Kumbakonam and
Another vs. V.Mohan and Another1.
10. Secondly, he contended that the amount in the bank, initially
frozen by the Reserve Bank of India (RBI), was released after detailed
consideration in the adjudicating proceedings under FERA. Therefore, the
amount is to be excluded from the preview of the provisions of the
SAFEMA.
11. Thirdly, Jamal Textiles cannot be said to be an illegal business.
Therefore, holding that the entire business as illegal has not been accepted by
the Tribunal and thus, the impugned proceedings become invalid.
12. In this context, the learned Senior Counsel relied on the judgment
of the Hon’ble Supreme Court of India in the case of Union of India and
Others vs. Kamlakshi Finance Corporation Limited2.
13. Finally, Mr.B.Kumar, learned Senior Counsel drew the attention of
this Court with reference to the guidelines issued by the Government of
1. 2021 SCC Online SC 1240
2.1992 Supp (1) SCC 443.
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India, Ministry of Finance, Department of Revenue dated 23rd June, 1994. As
per the said guidelines, proceedings under Section 6(1) of SAFEMA need not
be initiated and if already initiated, may be dropped if the value of the
property sought to be forfeited below one lakh. However, before deciding not
to initiate or drop the proceedings, the competent authority should conduct a
thorough investigation to determine, whether the property’s value is indeed
less than Rs.1,00,000/-.
14. Relying on the said guidelines, the learned Senior Counsel
reiterated that the case of the writ petitioners would squarely fall within the
ambit of the guidelines issued by the Government of India. Therefore, the
competent authority ought to have dropped the proceedings initiated under
SAFEMA. Though the guidelines were subsequently withdrawn by the
Government of India, during the relevant point of time when the competent
authority passed an order in the case of the petitioner, the guidelines dated
23rd June, 1994 was in force. Consequently, the petitioner is entitled to the
benefit of the said guidelines. The said principle has been considered by the
Appellate Tribunal for Forfeited Property in case No.FPA-17/BOM/2012
dated 19.05.2017.
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15. Mr.AR.L.Sundaresan, learned Additional Solicitor General of India
appearing on behalf of the respondents would oppose by stating that the
notice under Section 6(1) was served along with the reasons recorded for
satisfaction, as required under Section 6 of the Act. Thus, the notice does not
suffer from any infirmity. Full opportunity was afforded to the affected
person, his legal heirs and the writ petitioners. They availed of the
opportunities provided by the competent authorities and effectively
participated in the proceedings before the Appellate Tribunal, and defended
their case. Both the Competent Authority and the Appellate Tribunal
concurrently held, based on the documents and evidence, that the subject
properties were acquired from illegally earned funds. It was found that the
notice issued under Section 6(1) and the subsequent proceedings under
Section 7(1) by the competent authority were well within the scope and
ambit of the provisions of SAFEMA.
16. Incriminating records were available and foreign exchange
transactions in violation of FERA were identified, and penalty was imposed.
Mere reduction of penalty from Rs.1,00,000/- to Rs.70,000/- by the Appellate
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Authority would not be a ground to seek exoneration from the provisions of
SAFEMA.
17. As per the judgment in the case of the Attorney General For India
and Others vs. Amratlal Prajivandas and Others3, the Nine Judges Bench of
the Hon’ble Supreme Court of India asserted that the burden shifts to the
noticee to establish that the property was acquired through lawful sources.
18. Considering the arguments as advanced by the respective learned
Senior Counsels appearing on behalf of the parties to the lis, Section 6 of
SAFEMA pertains to Notice of forfeiture. To ascertain the validity of the
notice issued under Section 6(1) in the present case, in proceedings dated
30.06.1976, reasons are recorded for issuance of notice under Section 6(1).
The reasons recorded was communicated to the affected person. After
recording the reasons as contemplated under Section 6 for initiation of
further action under SAFEMA, 6(1) notice was issued to Mr.A.G.Shajudeen
on 13.07.1976. The said notice was forwarded to the writ petitioner,
Mrs.Zubaida Begum, wife of Mr.A.G.Shajudeen and the Agent Canara Bank
Malapudhur, Tiruchy.
3. (1994) 5 SCC 54
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19. One of the grounds raised by the petitioners are that notice issued
to the petitioner Mrs.Zubaida Begum under Section 6(2) is improper. Section
6(2) of SAFEMA enumerates that “Where a notice under sub-section (1) to
any person specifies any property as being held on behalf of such person by
any other person, a copy of the notice shall also be served upon such other
person”.
20. The learned Senior Counsel for the petitioners would submit that
Sub Section (2) would be applicable to a third person, and therefore, the
notice forwarded under Section 6(2) of SAFEMA to the writ petitioner
Mrs.Zubaida Begum, wife of the affected person, is invalid.
21. However, it is hard and impractical to accept such a proposition in
view of the fact that misquoting or wrong quoting per se does not vitiate the
entire proceedings unless such misquoting causes serious prejudice to the
affected person or noticee.
22. In the present case, Section 6(1) notice was admittedly issued to
the affected person Mr.A.G.Shajudeen, who is the husband of the writ
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petitioner Mrs.Zubaida Begum. The notice contained details, reasons
recorded for issuance of notice were also communicated to
Mr.A.G.Shajudeen along with the particulars. The said notice was forwarded
to the writ petitioner Mrs.Zubaida Begum and the Agent Canara Bank. In
response, the writ petitioner Mrs.Zubaida Begum submitted her detailed
return statements to the competent authorities under SAFEMA. Perusal of
the explanation/reply reveals that the petitioner had completely understood
the contents of the notice and the purpose for which such notice was issued
under the provisions of SAFEMA.
23. That being so, merely quoting Section 6(2) of SAFEMA while
forwarding Section 6(1) notice to the writ petitioner cannot be a ground to
invalidate the said proceedings, as it did not cause any prejudice to the
interest of the writ petitioner. Further, she participated in the proceedings by
submitting her detailed return submissions. Thus, the said ground is of no
avail to the writ petitioners.
24. Secondly, regarding the guidelines issued by the Government of
India dated 23rd June 1994, plain reading of the circular would amplify that it
is only guidelines issued to the competent authorities to take decisions,
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whether further actions to be initiated in respect of the cases, wherein the
value of property falls below one lakh. Paragraph 4 of the guidelines clarifies
that “These instructions are in the nature of guidelines only and are being
issued with a view to enable the competent authorities and all the officers
working with them to concentrate more on bringing to book economic
offenders with substantial proportion instead of spending their time and
energy in handling small cases”.
25. Such circulars are unenforceable in respect of all cases, as the
guidelines are issued to the officials to take decisions. In the absence of
statutory backing, mere guidelines issued by the department for the officials
cannot be a ground to seek exoneration from the provisions of the Act. The
Act will prevail over. When there is no specific or express exemption under
any of the provisions of the Act, the guidelines will not confer any right or to
be construed as enforceable for the purpose of dropping further actions
initiated under the SAFEMA.
26. Regarding the facts, the learned Additional Solicitor General of
India referred several paragraphs in the orders impugned passed by the
competent authority and the Appellate Tribunal. The competent authority
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elaborately considered the facts with reference to the documents and
evidences available on record.
27. In the order impugned dated 31st March, 1995 passed by the
competent authority made a finding that “she had stated that she has no
evidence to produce in regard to Rs.27,000/- left by her husband or any
account to show that it was given by her to Shri. K.Sabjan Saheb, her uncle.
She also could not indicate when and in how many instalments this money
was received back from Shri.Sabjan Saheb. According to her affidavit, Shri
Sabjan Saheb was doing a flourishing beedi business called, ‘Anil & Swan
Beedi’. She had given to him Rs.27,000/- left by her husband for keeping the
said amount. It is beyond comprehension that a flourishing businessman
would keep with him or inject such huge amount into his business without
accounting it in his books of accounts”. The competent authority elaborately
made a finding with reference to the allegations and counter allegations
between the parties.
28. In paragraph 14, the competent authorities observed that the
“person affected was dealing in Foreign Exchange unauthorisedly by making
compensatory payments. In fact, in the year 1973, his premises were
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searched by the officers of the Enforcement Directorate which revealed that
he had dealt with unauthorised payment to the extent of Rs.12,19,472.14/-.
This was also admitted by the person affected in his statement tendered
before the Enforcement Officers. It was only during this period that both the
immovable properties, discussed herein above, were acquired by the person
affected in his as well as in the name of his wife. The obvious conclusion is
that the illegally earned money from FERA violations was utilised for
acquiring the properties and that the firm, Jamal Textiles, was being utilised
to launder the illegally earned money”.
29. With reference to the above finding, the Appellate Tribunal
independently considered facts adjudicated by the competent authority. In
para 7 the factual details are elaborately considered by the competent
authority. The contradictory statements made by the affected person and the
writ petitioner were considered by the Appellate Tribunal in paragraph 11 of
the impugned order dated 31.07.1997, which reads as under:
“11. The appellants made statements contrary to
the statements of their Counsel in respect of the
manufacture of bidis. Their Counsel stated that income
was generated from the manufacture of 2,000 bidies
daily, whereas, the appellants claim to have made aPage 18 of 26
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W.P.Nos.11228 & 16262 of 1997saving of Rs. 1, 100/- out of the manufacture of
30,000/- to 35,000 bidies daily. These contradictions by
the appellants and by their Counsel only show that the
version of the appellants is not true. It is also
improbable that huge amounts to an extent of
Rs.40,000/-, Rs.19,520/-, Rs.11,000/- etc., would have
been accumulated and kept in cash by the persons
affected or his wife for several years before purchasing
the house property. It is also not possible to believe that
such huge amounts were kept in cash. The Competent
Authority was, therefore, justified in holding that the
source of investment made in the property under
consideration is totally unexplained and was correct in
holding that the investment is made of illegal sources.”
30. In respect of the writ petition in W.P.No.11228 of 1997 is
concerned, the competent authority passed an order of forfeiture in
proceedings dated 25.01.1989. The findings of the competent authority in the
said order reveals that the affected person, as well as the authorised
representative, attempted to prolong the proceedings as long as possible.
Despite repeated opportunities provided to the affected person as directed by
the Tribunal in its order dated 15.07.1988, the affected person or their
authorised representative have not made use of such opportunities. Instead
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they contemplated moving the Hon’ble Supreme Court to question the
constitutional validity of the SAFEMA and the detention of the affected
person, which could have been agitated before a Court of Law at any point of
time from the issue of the first notice under Section 6(1) in the year 1978.
31. The findings state that the affected person was not inclined to
finalise the proceedings as directed by the Tribunal in its order dated
15.07.1988. Due to complete non-cooperation on the part of the affected
person and his authorised representative, the competent authority was forced
to pass the final order under Section 7(1) of SAFEMA based on the records
available.
32. In the concluding paragraph, the competent authority has stated
that the affected person has no evidence to support their claims made before
the Appellate Tribunal regarding forfeited property. Despite the fact that the
proceedings of the Tribunal were made available to the affected person and
his representative to complete the adjudication they have not cooperated for
completion of proceedings.
33. The said order was taken by way of an appeal before the Appellate
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Tribunal. The Tribunal while confirming the orders of the competent
authority, adjudicated the facts independently with reference to the
documents available on record. The Tribunal found that the property
forfeited was a flat and it was necessary to determine the character of the
betel nut business, whether it was illegally acquired or not. The facts relating
to the case was elaborately adjudicated by the Tribunal along with the
assessment order passed by the competent authority. The findings of the
Tribunal are as follows:
“8. From the above, it would be observed that in
the Assessment Year 1974-75 (previous year beginning
on 01.04.1973) Rs.12,216/- used for investment in the
said house property has been held as through
unexplained sources. It would also be seen that
Rs.9.900/- were from the business income of the
appellant in the said A.Y. 1974-75 and Rs.4,000/- were
his savings in the beginning of the said previous year.
We have already held that the appellant’s betelnut
business was an illegally acquired property and
considering provisions of Section 3(1) (c) (1v) of the
SAFEMA which stipulates that any property acquired
for a consideration or by any means, wholly or partly
traceable to any illegally acquired property or the
income or earnings from such property will also be
deemed as illegally acquired property. We have noPage 21 of 26
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W.P.Nos.11228 & 16262 of 1997hesitation in holding that the forfeited flat is an illegally
acquired property. In the previous year 1973-74, the
appellant had paid Rs.24,250/- (Rs.12,250/- on
26.06.1973 and Rs.12,000/- on 14.02.1974) towards the
acquisition of the said flat of this. Rs.12,260/- has been
held by the ITO as through unexplained sources. The
remaining amount of Rs.11/0900/- paid in the said A.Y.
1974-75 towards acquisition of the flat can be traced out
of the betelnut business income of Rs.9,990/- in that
year and the opening balance of Rs.6,295/- at the
beginning of the said A.Y. of the business. We have
already held that the betelnut business as illegally
acquired property and hence any income generated out
of such business will also be a tainted incomer; in the
assessment order genuineness of the sale of the gold
jewellery has already been discounted. Thus, on the
basis of these payments alone and ignoring for the
moment the character of the two sums of Rs.750/- and
Rs.7,500/- paid in the preceding financial year 1972-73,
though such an assumption may not be wholly justified.
It can safely be concluded that more than 50% of the
investment made in the said property through the
unexplained/tainted sources and since the amount
through such sources is more than 50% of the total
investment made in the property forfeited by the
Competent Authority, provisions Section 9 of the
SAFEMA are not applicable. In view of this, we do not
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see any reasons to interfere with the impugned order.”
34. The Tribunal concluded by stating that the nexus between the
forfeited properties and the detenus are clearly established and consequently
confirmed the orders passed by the competent authority.
35. We are of the considered opinion that the procedures as
contemplated under Sections 6(1) and 7(1) were complied with by the
authorities. Under Section 8 of SAFEMA, the burden of proof lies on the
affected person. In the present cases, neither the affected person nor their
legal heirs, including the petitioners failed to discharge the burden which
resulted in forfeiting the properties under the provisions of SAFEMA.
36. A complete analysis of the facts recorded by the Competent
Authority and the Appellate Tribunal would be sufficient to form an
irresistible conclusion that there is no further reason to interfere with the
orders impugned.
37. The power of judicial review of the High Court under Article 226
of the Constitution of India is to ensure the processes through which a
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decision has been taken by the competent authority in consonance with the
Statutes and Rules in force, but not the decision itself. However, in the
present cases, we have considered the factual findings of the Competent
Authority and Appellate Authority, as well as the grounds raised between the
parties.
38. In conclusion, the execution order under Section 19(1) of the
SAFEMA issued by the Government of India, Ministry of Finance is valid,
and there is no impediment to proceed with the said order in the manner
known to law.
39. We do not find any infirmity in respect of the actions taken, and
consequently, the impugned orders are confirmed. The writ petitions are
dismissed. There shall be no order as to costs.
[S.M.S., J.] [M.J.R., J.]
05.12.2024
Index : Yes
Speaking order
Neutral Citation : Yes
Jeni
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To
1.The Appellate Tribunal for Forfeited Property,
No.123, ‘C’ Wing,
4th Floor, Lok Nayak Bhavan,
Khan Market,
New Delhi – 110 003.
2.The Competent Authority,
Smugglers and Foreign Exchange Manipulators
(Forfeiture of Property) Act, 1976,
‘UTSAV’,
No.64/1, G.N.Chetty Road,
T.Nagar, Chennai – 600 017.
3.The Secretary,
The Government of India,
Ministry of Finance,
Department of Revenue,
New Delhi.
4.The District Collector,
Trichy District.
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S.M.SUBRAMANIAM, J.
AND
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05.12.2024
Page 26 of 26
https://www.mhc.tn.gov.in/judis