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CASE NO.: Appeal (civil)  2455 of 1997

PETITIONER: Smt. Kesar Devi                                                  

RESPONDENT: Vs. Union of India & Ors     

DATE OF JUDGMENT: 31/07/2003

BENCH: S. Rajendra Babu & G. P. Mathur.         

JUDGMENT:                                  JUDGMENT

G.P. Mathur, J.

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   Jagannath Sharma  was then detained under MISA on 8.10.1974, but the detention order was  revoked and he was released in November, 1974.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

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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

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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 â\200\223 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

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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 â\200\223 a case  of excessive regulation.   The relevant part of para 44 (page 92 of the  Reprots) is being reproduced below :         "â\200¦â\200¦. 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 â\200\223 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 â\200\223 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 â\200\223 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). â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦ â\200¦â\200¦â\200¦â\200¦â\200¦â\200¦  â\200¦.â\200¦â\200¦â\200¦â\200¦â\200¦ 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

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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. â\200¦â\200¦â\200¦â\200¦.."

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

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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.