Smugglers & Foreign Exchange Manipulators Act| Major Part Of Investment Remains Unexplained- SC Dismisses Plea Against Authority

The Supreme Court has recently dismissed an appeal preferred against the Competent Authority under the Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 holding that the major part of the investment still remains unexplained by the appellant.

The Court was dealing with an appeal that was directed against the judgment passed by a Single Judge of the Karnataka High Court upholding the order passed by the competent authority under Section 7 read with 19(1) of the aforesaid Act.

The two-Judge Bench of Justice Ajay Rastogi and Justice Bela M. Trivedi asserted, “In the absence of proper explanation as to the source of acquisition and as majority of investment remains unexplained, the authority disbelieved the version of Appellant no. 2(P.M. Saheeda) as no proof was placed on record of gifts from her marriage. That apart, if the value of the land is taken only of Rs.33,000/-, the total value of the land and building work out at Rs.25,20,000/¬, and as such, the major part of the investment still remains unexplained.”

The Bench noted that even the accounts were not maintained in respect of the cost of construction of the building, in the absence whereof, the authority has not committed any manifest error in forfeiting the property in the exercise of power under Section 7 of the said Act, 1976.

Senior Advocate Shyam Divan and Advocate Abdul Azeem Kalebudde appeared on behalf of the appellants while ASG Vikramjit Bannerjee and Senior Advocate Arijit Prasad appeared on behalf of the respondents.

Facts –

One of the partners of a firm was ordered to be detained by the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) by order of the Maharashtra Government and later by the Central Government. The two detention orders against the said partner came to be challenged before the Delhi High Court and the same was allowed as a result of which the forfeiture order came to an end.

Thereafter, the competent authority, in the first instance, passed an order of forfeiture against the partnership firm and on an appeal being preferred, the matter was remanded back to the competent authority for fresh consideration. The competent authority after revisiting the matter afresh and affording an opportunity of hearing to the parties passed an order of forfeiture and subsequently, the Tribunal for Forfeited Property, New Delhi dismissed the appeal and upheld the order of forfeiture passed by the competent authority.

The Supreme Court after hearing the contentions of the counsel observed, “The Act, 1976 has been enacted by the Parliament with an object to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matters connected therewith or incidental thereto. At the same time, to provide an 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.”

The Court said that there is no error being committed in the finding returned by the High Court which may call for its interference.

“Even before this Court, there is no material that has been placed by Appellant no.2 (P.M. Saheeda) in rebuttal which may even prima facie justify the sources of fund available at her command for acquisition of the land in question to the tune of Rs.33,000/¬ in the year 1969”, the Court further asserted.

The Court noted that the very plea of so-called alleged gross delay in initiating the proceedings for forfeiture of the property is misconceived and deserves an outright rejection.

Accordingly, the Court dismissed the appeal.

Cause Title- M/s. Platinum Theatre and Others v. Competent Authority Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 and Another

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