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CASE NO.: Appeal (crl.)  1058 of 2003

PETITIONER: Smt. Heena Kausar

RESPONDENT: Competent Authority

DATE OF JUDGMENT: 24/04/2008

BENCH: S.B. Sinha & V.S. Sirpurkar

JUDGMENT: J U D G M E N T REPORTABLE

CRIMINAL APPEAL NO.1058 OF 2003

S.B. Sinha, J.

1.      Validity of the proviso appended to Section 68C of the Narcotic  Drugs and Psychotropic Substances Act, 1985 (NDPS Act) is in question in  this appeal which arises out of a judgment and order dated 27.11.2002  passed by a Division Bench of the High Court of Judicature at Bombay.   2.      The basic fact of the matter is not in dispute. 3.      Appellant herein is wife of one Iqbal Mohammed Memon.  An order  of detention was passed against him under the provisions of the Prevention  of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988  (PINDPS Act) by the State of Marharashtra.  Allegedly, both the appellant  and her husband left India in or about the year 1991.  Appellant has not yet  come back to India.  Her husband admittedly had not been taken incustody  pursuant to the order of detention.  Admittedly again, Appellant has several  properties in her name.  A proceeding was initiated against her in terms of  Chapter V-A of the Act, wherefor, she was served with a show cause notice  dated 9.5.1995 asking her to furnish the proof and/or source of income  and/or the channels from which the assets being Flat Nos.501 and 502A  along with stilt parking No.19 in Milton Apartments at Juhu Tara Road,  Santacruz (W) had been acquired as also to show cause why the said  properties should not be held to be "illegally acquired properties" and  forfeited by the Central Government under the Act. 4.      An appeal thereagainst was preferred before the Appellate Tribunal.   By an order dated 10.2.1999, the properties were directed to be confiscated.   A writ petition was filed by her before the Bombay High Court which  was marked as Writ Petition No.1867 of 1999.  The said writ petition was  dismissed by a judgment and order dated 15.12.1999 insofar as the order of  confiscation of flat No.501 and 502 and stilt parking in Milton Apartments  were concerned. However, in regard to the confiscation of three bank  accounts, the matter was remitted to the Appellate Tribunal for its decision. 5.      Proviso appended to Section 68-C prior to its amendment stood as  follows : "Provided that no property shall be forfeited under  this Chapter, if such property was acquired by a  person to whom this Act applies before a period of  six years from the date on which he was charged  for an offence relating to illicit traffic."

       Section 68-C, after the amendment, reads as under : "Section 68C - Prohibition of holding illegally  acquired property\027(1) As from the  commencement of this Chapter, it shall not be

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lawful for any person to whom this Chapter applies  to hold any illegally acquired property either by  himself or through any other person on his behalf. (2) Where any person holds any illegally acquired  property in contravention of the provisions of sub- section (1), such property shall be liable to be  forfeited to the Central Government in accordance  with the provisions of this Chapter: Provided that no property shall be forfeited under  this Chapter if such property was acquired, by a  person to whom this Act applies, before a period of  six years from the date he was arrested or against  whom a warrant or authorisation of arrest has been  issued for the commission of an offence  punishable under this Act or from the date the  order or detention was issued, as the case may be."

       Indisputably, the Act was amended by Act No.9 of 2001 with effect  from 2.10.2001. 6.      An application purported to be for rectification having regard to the  said amendment, was filed by the appellant before the Appellate Tribunal,  inter alia, praying therein for setting aside its order dated 15.2.1999 as also  the order of the competent authority dated 20.10.1997. 7.      In the said purported application for rectification, the appellant raised  the following contentions : 1.      That prior to coming into force of the said Act, the Competent  Authority had no jurisdiction to initiate any proceeding under the said  Act against a citizen of India who had been residing out of the  country. 2.      That the proviso, as it stood prior to amendment, was ultra vires  Article 14 of the Constitution of India.         The said application was dismissed by the Appellate Tribunal by an  order dated 20.6.2002.  A writ petition was filed theragainst before the  Bombay High Court which was marked as writ petition No.1283 of 2002.         By reason of the impugned judgment, the said writ petition has been  dismissed. 8.      Mr. Raju Ramachandran, learned senior counsel appearing on behalf  of the appellant, at the outset, did not press the first contention raised before  the Appellate Authority as also before the High Court.   The learned counsel, however, would submit that a classification  made in a statute by way of under inclusion would not validate the proviso  to Section 68E of the Act as it stood prior to 2001 insofar as there did not  exist any valid or cogent reason for not providing the period of limitation of  six years in respect of a person who was charged for commission of an  offence relating to illicit traffic vis-‘-vis a person who is sought to be  detained under a preventive detention. 9.      The learned counsel would submit that the show cause notice did not  contain any reason which was required to be recorded in terms of Section  68E read with Section 68H of the NDPS Act, and, thus, the impugned  judgment cannot be sustained.         Admittedly, the order of the Appellate Authority was the subject  matter of the writ petition.  The contentions raised herein were not raised  before the said Authority or before the High Court..  The order of the High  Court dated 15.12.1999 attained finality.   The flats in question stood forfeited to the State Government.  The  said proceedings cannot be permitted to be reopened. 10.     Only because in relation to the bank accounts, the matter was  remanded, during pendency whereof, the proviso appended to Section 68C  was inserted, the same by itself, in our opinion, would not give rise to  another cause of action so as to enable the appellant to raise the contentions  which he could and ought to have raised in the earlier proceedings.   The principle of ’Constructive Res Judicata’, it is trite, applies also to  a writ proceeding.  Furthermore, admittedly such a contention has not been  raised even in the second writ application.  The documents which were

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necessary to be taken into consideration for determining the said question  are also not before us.  We, therefore, are of the opinion that it is not  possible for us to go into the said question. 11.     The ’Proviso’ appended to Section 68C was in the statute book since  1989.  Appellant’s husband was served with an order of detention as far  back as in the year 1994.  The notice under Section 68D of the Act was  issued in the year 1995. 12.     Only because at a later stage, a period of limitation was prescribed for  initiation of proceedings for forfeiture of the properties, the same, in our  opinion, by itself would not be sufficient to arrive at a conclusion that the  same attracts the wrath of Article 14 of the Constitution of India. 13.     It is now well settled that validity of a statute can be upheld if there  exists a valid and reasonable classification therefor, being based upon the  substantial distinction bearing a reasonable and just relation with the object  sought to be attained. 14.     In this regard, we may notice some well settled legal principles.  A  law may be constitutional even though it affects an individual.  There exists  a presumption in favour of the constitutionality of an enactment.  The burden  of proof that the legislation is unconstitutional is upon the person who  attacks it, save and except the cases where, inter alia, arbitrariness appears  on the face of the statute and the burden of proof in regard to  constitutionality of the statute is on the State.  The principle of equality  would not mean that every law must have universal application for all  persons who, by nature, attainment or circumstances, are in the same  position.   15.     A law is amended by the Parliament having regard to its experience. It  is a matter of legislative policy and for that purpose mere inequality cannot  be the sole factor for determining the constitutionality of the impugned  provision. 16.     Whereas Article 14 forbids classification, it is trite, it does not forbid  reasonable classification.  {See M.P. Rural Agriculture Extension Officers  Association v. State of M.P. & Anr. [(2004) 4 SCC 646]; and State of Bihar  & Ors. v. Bihar State +2 Lecturers Associations & Ors. [(2007) 7 SCALE  697]}. 17.     This court in State of West Bengal v. Anwar Ali Sarkar [AIR 1952 SC  75] as also Ram Krishna Dalmia v. Shri Justice S.R. Tendolkar & Ors. [1959  SCR 279], categorically laid down the twin test of classification.  The  classification, however, should be based on reasonable and rational  differentia and should not be arbitrary. 18.     It is not a case where validity of the statute itself is in question.   Ordinarily, a statute providing for ’under inclusion’ would not be held to be  attracting the wrath of Article 14.  A Constitution Bench of this Court held  so in State of Gujarat & Anr. v. Shri Ambika Mills Ltd. & Anr. [(1974) 4  SCC 656], in the following words: "54. A reasonable classification is one which  includes all who are similarly situated and none  who are not. The question then is: what does the  phrase "similarly situated" mean? The answer to  the question is that we must look beyond the  classification to the purpose of the law. A  reasonable classification is one which includes all  persons who are similarly situated with respect to  the purpose of the law. The purpose of a law may  be either the elimination of a public mischief or the  achievement of some positive public good.

55. A classification is under-inclusive when all  who are included in the class are tainted with the  mischief but there are others also tainted whom the  classification does not include. In other words, a  classification is bad as under-inclusive when a  State benefits or burdens persons in a manner that  furthers a legitimate purpose but does not confer  the same benefit or place the same burden on  others who are similarly situated. A classification

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is over-inclusive when it includes not only those  who are similarly situated with respect to the  purpose but others who are not so situated as well.  In other words, this type of classification imposes  a burden upon a wider range of individuals than  are included in the class of those attended with  mischief at which the law aims. Herod ordering the  death of all male children born on a particular day  because one of them would some day bring about  his downfall employed such a classification.

56. The first question, therefore, is, whether the  exclusion of establishments carrying on business  or trade and employing less than 50 persons makes  the classification under-inclusive, when it is seen  that all factories employing 10 or 20 persons, as  the case may be, have been included and that the  purpose of the law is to get in unpaid  accumulations for the welfare of the labour. Since  the classification does not include all who are  similarly situated with respect to the purpose of the  law, the classification might appear, at first blush,  to be unreasonable. But the Court has recognised  the very real difficulties under which legislatures  operate \027 difficulties arising out of both the  nature of the legislative process and of the society  which legislation attempts perennially to re-shape  \027 and it has refused to strike down  indiscriminately all legislation embodying  classificatory inequality here under consideration.  Mr. Justice Holmes, in urging tolerance of under- inclusive classifications, stated that such  legislation should not be disturbed by the Court  unless it can clearly see that there is no fair reason  for the law which would not require with equal  force its extension to those whom it leaves  untouched. What, then, are the fair reasons for  non-extension? What should a court do when it is  faced with a law making an under-inclusive  classification in areas relating to economic and tax  matters? Should it, by its judgment, force the  legislature to choose between inaction or  perfection?"

       The said ratio was followed by this Court in The Superintendent and  Remembrancer of Legal Affairs, West Bengal v.  Girish Kumar Navalakha  and Ors. [(1975) 4 SCC 754, holding: "8. Oftentimes the courts hold that under-inclusion  does not deny the equal protection of laws under  Article 14. In strict theory, this involves an  abandonment of the principle that classification  must include all who are similarly situated with  respect to the purpose. This under-inclusion is  often explained by saying that the legislature is  free to remedy parts of a mischief or to recognize  degrees of evil and strike at the harm where it  thinks it most acute."

       It was furthermore held : "10. There are two main considerations to justify  an under-inclusive classification. First,  administrative necessity. Second, the legislature  might not be fully convinced that the particular  policy which it adopts will be fully successful or  wise. Thus to demand application of the policy to

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all whom it might logically encompass would  restrict the opportunity of a State to make  experiment. These techniques would show that  some sacrifice of absolute equality may be  required in order that the legal system may  preserve the flexibility to evolve new solutions to  social and economic problems. The gradual and  piecemeal change is often regarded as desirable  and legitimate though in principle it is achieved at  the cost of some equality. It would seem that in  fiscal and regulatory matters the court not only  entertains a greater presumption of  constitutionality but also places the burden on the  party challenging its validity to show that it has no  reasonable basis for making the classification."

19.     The statute deals with an economic aspect of the matter.  The  purported object for which such a statute has been enacted must be noticed  in interpreting the provisions thereof.  The nexus of huge amount of money  generated by drug trafficking and the purpose for which they are spent is  well known.  Harsh laws, not only for punishing the drug traffickers but also  for preventive detention, if the conditions therefor are satisfied, were made.   Necessity was felt for introduction of strict measures so that money earned  from the drug trafficking by the persons concerned may not continue to be  invested, inter alia, by purchasing moveable or immoveable properties not  only in his own name but also in the names of his near relatives.   This case, itself throws sufficient light as to why the Parliament  thought it fit to exclude the applicability of the provisions of the period of  limitation in the matter of initiation of proceedings for forfeiture of  properties. 20.     The Union of India and the State of Maharashtra have not been able to  serve even the order of detention upon the husband of the appellant.  There  may be a large number of other cases of that nature.   A person might have committed only one time offence, another not  only may be an offender but also might have been indulging in drug  trafficking for a long time. Whereas in the former an order of preventive  detention may not be necessary, in case of the latter, it may be found to be  necessary.  The distinction although appears to be fine, but real.   21.     This Court in Re : The Special Courts Bill, 1978 [(1979) 1 SCC 380,  held that the offences which were emergency related form a class of  offences, stating : "72. As long back as in 1960, it was said by this  Court in Kangsari Haldar that the propositions  applicable to cases arising under Article 14 "have  been repeated so many times during the past few  years that they now sound almost platitudinous".  What was considered to be platitudinous some 18  years ago has, in the natural course of events,  become even more platitudinous today, especially  in view of the avalanche of cases which have  flooded this Court. Many a learned Judge of this  Court has said that it is not in the formulation of  principles under Article 14 but in their application  to concrete cases that difficulties generally arise.  But, considering that we are sitting in a larger  Bench than some which decided similar cases  under Article 14, and in view of the peculiar  importance of the questions arising in this  reference, though the questions themselves are not  without a precedent, we propose, though  undoubtedly at the cost of some repetition, to state  the propositions which emerge from the judgments  of this Court insofar as they are relevant to the  decision of the points which arise for our  consideration. Those propositions may be stated

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thus:  

The Court noticed as many as thirteen propositions, some of which  are: "(2)    The State, in the exercise of its  governmental power, has of necessity to  make laws operating differently on different  groups or classes of persons within its  territory to attain particular ends in giving  effect to its policies, and it must possess for  that purpose large powers of distinguishing  and classifying persons or things to be  subjected to such laws. (3)     The constitutional command to the State to  afford equal protection of its laws sets a goal  not attainable by the invention and  application of a precise formula. Therefore,  classification need not be constituted by an  exact or scientific exclusion or inclusion of  persons or things. The courts should not  insist on delusive exactness or apply  doctrinaire tests for determining the validity  of classification in any given case.  Classification is justified if it is not palpably  arbitrary. (4)     The principle underlying the guarantee of  Article 14 is not that the same rules of law  should be applicable to all persons within  the Indian territory or that the same  remedies should be made available to them  irrespective of differences of circumstances.  It only means that all persons similarly  circumstanced shall be treated alike both in  privileges conferred and liabilities imposed.  Equal laws would have to be applied to all  in the same situation, and there should be no  discrimination between one person and  another if as regards the subject-matter of  the legislation their position is substantially  the same. (5)     By the process of classification, the State  has the power of determining who should be  regarded as a class for purposes of  legislation and in relation to a law enacted  on a particular subject. This power, no  doubt, in some degree is likely to produce  some inequality; but if a law deals with the  liberties of a number of well defined classes,  it is not open to the charge of denial of equal  protection on the ground that it has no  application to other persons. Classification  thus means segregation in classes which  have a systematic relation, usually found in  common properties and characteristics. It  postulates a rational basis and does not mean  herding together of certain persons and  classes arbitrarily. XXX                     XXX                     XXX  (11)   Classification necessarily implies the  making of a distinction or discrimination  between persons classified and those who  are not members of that class. It is the  essence of a classification that upon the  class are cast duties and burdens different

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from those resting upon the general public.  Indeed, the very idea of classification is that  of inequality, so that it goes without saying  that the mere fact of inequality in no manner  determines the matter of constitutionality."

22.     In view of the settled legal position as noticed above, we are of the  opinion that no case has been made out for us to invoke Article 14 of the  Constitution of India so as to hold that the proviso amended in the year 2001  shall also apply to the present category of cases.  Accordingly, the appeal is  dismissed with costs.  Counsel’s fee assessed to Rs.50,000/- (Rupees fifty  thousand only)