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CASE NO.: Appeal (crl.)  1318 of 2006

PETITIONER: P.P. Abdulla & Anr.                             ..              Appellant

RESPONDENT: The Competent Authority & Ors.          ..          Respondents

DATE OF JUDGMENT: 14/12/2006

BENCH: S. B. Sinha & Markandey Katju

JUDGMENT: J U D G M E N T (Arising out of SLP (Criminal) No. 2225/2006)

MARKANDEY KATJU, J.

       Leave granted.

       This appeal has been filed against the impugned judgment of the  Kerala High Court dated 31.1.2006 in W.A. No.1541 of 2005.

       Heard learned counsel for the parties and perused the record.

       The facts of the case are that the appellant was convicted under the  Customs Act, 1962 in a case relating the seizure of 700 bars of foreign gold  from him.  Alleging that certain properties purchased by the appellant and  the building constructed thereon attracted the provisions of the Smugglers  and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976  (hereinafter referred to as "the Act").  Ext. P1 notice was issued to the  appellant under Section 6(1) of the said Act in a proceeding for forfeiture of  the property.  The proceedings culminated in Ext.P5 order of the concerned  authority whereby he found that the appellant could not sufficiently prove  that the property specified in the notice was not his illegally acquired  property.  It was held that the appellant could explain only to the extent of  Rs.26,500/- as the source for acquiring the said property and the building  thereon which was valued at Rs.1,36,134/-.  Accordingly, the authority by  virtue of the powers under Section 7(1) of the Act ordered forfeiture of the  property to the Government of India free of all encumbrances vide Ext.P5.   The appeal preferred by the appellant before the appellate authority was  dismissed, upholding the order of the authority vide Ext.P6. The appellant  challenged Exts.P5 and P6 orders in O.P. No.27488/2000 which was  allowed by the learned Single Judge of the High Court relying on the  decision of the Supreme Court in Fatima Mohd. Amina (dead) through  LRs. vs. Union of India & Anr. reported in (2003) 7 SCC 436, holding that  since there is no allegation regarding the existence of any link or nexus  between the property sought to be forfeited and the illegally acquired money  of the detenu under the Act, the orders of forfeiture could not be maintained.

       Against the aforesaid judgment of the learned Single Judge the  competent authority and Union of India filed an appeal before a Division  Bench of the High Court which was allowed by the impugned judgment,  hence this appeal.

       Learned counsel for the appellant has invited our attention to Section  6(1) of the Act which states :

"If, having regard to the value of the properties  held by any person to whom this Act applies, either by

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himself or through any other person on his behalf, his  known sources 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 (hereinafter referred to as the  person affected) calling upon him within such time as  may be specified in the notice which shall not be  ordinarily less than thirty days, to indicate the sources of  his income, earnings or assets, out of which or by means  of which he has acquired such property, the evidence on  which he relies and other relevant information and  particulars, 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 under this Act."          

       Learned counsel submitted that it has been expressly stated in Section  6(1) that the reason to believe of the competent authority must be recorded  in writing.  In the counter-affidavit it has also been stated in paragraph 8 that  the reasons in the notice under Section 6(1) were recorded in writing.  In our  opinion this is not sufficient.  Whenever the statute required reasons to be  recorded in writing, then in our opinion it is incumbent on the respondents to  produce the said reasons before the Court so that the same can be scrutinized  in order to verify whether they are relevant and germane or not.  This can be  done either by annexing the copy of the reasons along with the counter- affidavit or by quoting the reasons somewhere in the counter-affidavit.   Alternatively, if the notice itself contains the reason of belief, that notice can  be annexed to the counter-affidavit or quoted in it.  However, all that has not  been done in this case.   

It must be stated that an order of confiscation is a very stringent order  and hence a provision for confiscation has to be construed strictly, and the  statute must be strictly complied with, otherwise the order becomes illegal.

In our opinion, the facts of the case are covered by the decision of this  Court in Fatima Mohd. Amina (dead) through LRs. Vs. Union of India &  Anr  (supra).  In the present case the contents of the notice, even if taken on  face value,  do not disclose any sufficient reason warranting the impugned  action against the appellant as, in our opinion, the condition precedent for  exercising the power under the Act did not exist.  Hence, the impugned  orders cannot be sustained.

In the present case, in the notice dated 15.3.1988 issued to the  appellant under Section 6(1) of the Act (copy of which is annexed as  Annexure P1 to this appeal), it has not been alleged therein that there is any  such link or nexus between the property sought to be forfeited and the  alleged illegally acquired money of the appellant.   

Hence, in view of the decision of this Court in Fatima Mohd.  Amina’s case (supra), the said notice dated 15.3.1988 has to be held to be  illegal.  Consequently the order passed in pursuance of the said notice is  declared as null and void.  The appeal is, therefore, allowed and the  impugned orders of the High Court and the concerned Authorities are set  aside.  No costs.