Case Note & Summary
The dispute arose from preventive detention orders made during the 1975-1977 emergency under Section 3 of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) read with Section 12A. Detenues were not supplied grounds of detention nor referred to Advisory Boards due to Article 359(1) suspension of Article 22 safeguards. After emergency was revoked, detenues were released. Subsequently, notices under Section 6 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) were issued to the detenues, their relatives and associates, calling upon them to show cause why their properties should not be declared illegally acquired and forfeited. The detention orders formed the foundation for SAFEMA action. The detenues and others filed writ petitions in various High Courts challenging the notices and the constitutional validity of COFEPOSA, SAFEMA, and the 39th, 40th, and 42nd Constitution Amendments. These petitions were transferred to the Supreme Court due to important constitutional questions. The petitioners argued that COFEPOSA was not relatable to Entry 9 List I or Entry 3 List III; SAFEMA was not relatable to any entry; detention orders were invalid for violation of Articles 14, 21, 22; Section 12A was arbitrary; the definition of illegally acquired property was unreasonable and should be read down; extension to relatives and associates was excessive; and Section 5A COFEPOSA violated Article 22(5). The Additional Solicitor General contended that clause (1A) of Article 359 saved detention orders, suspension of remedy amounted to suspension of right, and detention orders were good and valid when made. The Supreme Court held that Parliament was competent to enact both Acts; COFEPOSA was relatable to Entry 3 List III. Both enactments being placed in the IX Schedule enjoyed immunity under Article 31B. Detention orders made under Section 3 read with Section 12A COFEPOSA during emergency could serve as foundation for SAFEMA action and their validity could not be challenged in later SAFEMA proceedings if not challenged during operation. The definition of 'illegally acquired property' in Section 3(1)(c) SAFEMA was not invalid; reading down was not permissible. Application of SAFEMA to relatives and associates was not violative of Articles 14, 19, 21. Section 5A COFEPOSA was not violative of Article 22(5). The Court overruled Union of India v. Haji Mastan Mirza and relied on Union of India v. H.E.S. Dhillon. The writ petitions were dismissed, upholding the constitutional validity of the impugned provisions and the notices issued under SAFEMA.
Headnote
A) Constitutional Law - Legislative Competence - Parliament competent to enact COFEPOSA and SAFEMA - Constitution of India, Schedule VII, Entry 3 List III; Article 31B - COFEPOSA relatable to Entry 3 List III as preventive detention for reasons connected with security of State and maintenance of supplies and services essential to community; SAFEMA also valid; both enactments placed in Ninth Schedule by 39th and 40th Amendment Acts enjoy immunity under Article 31B - Held that challenges to legislative competence failed (Paras 22-H, 23-A, 53-C, 11-D, 21-C). B) Preventive Detention - Emergency Orders - Detention order made under Section 3 read with Section 12A COFEPOSA during emergency can serve as foundation for SAFEMA action - Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, Sections 3 and 12A; Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, Section 2(2)(b) - President's order under Article 359(1) suspending Articles 14, 21, 22 enabled Parliament to enact Section 12A by virtue of Article 359(1A); such orders are orders of detention for purposes of Section 2(2)(b) SAFEMA - Held that foundation is valid (Paras 53-E-G). C) Preventive Detention - Challenge to Detention Order in SAFEMA Proceedings - Validity of detention order cannot be challenged by detenue or his relatives/associates in SAFEMA proceedings if not challenged during operation - Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, Section 12A; Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, Sections 2(2)(b), 6 - If detenue did not question detention during its operation or was unsuccessful, later challenge barred; even if allowed, challenge to be examined with reference to law obtaining at time order made - Held that later challenge not permissible; Union of India v. Haji Mastan Mirza overruled (Paras 53-H, 54-A-B, 40-D). D) Forfeiture of Property - Illegally Acquired Property Definition - Definition under Section 3(1)(c) SAFEMA not invalid or ineffective - Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, Section 3(1)(c); Constitution of India, Articles 14, 19, 21, 31B - Definition wide, includes property acquired before or after Act, but due to Ninth Schedule placement, validity cannot be challenged on reasonableness/arbitrariness grounds; reading down not permissible due to clear language - Held that definition valid (Paras 40-F-G). E) Forfeiture of Property - Application to Relatives and Associates - Extension of SAFEMA to relatives and associates not violative of Articles 14, 19, 21 - Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, Sections 2(2)(a), 2(2)(b) - Definitions of relative and associate are wide but Act applies to persons falling under clauses (a) or (b) of Section 2(2); inclusion in Ninth Schedule cures any violation - Held that application valid. F) Preventive Detention - Constitutional Safeguards - Section 5A COFEPOSA not violative of Article 22(5) - Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, Section 5A; Constitution of India, Article 22(5) - Challenge rejected; Section 5A is valid and does not violate clause (5) of Article 22 - Held that Section 5A is constitutional.
Issue of Consideration
Whether Parliament was competent to enact COFEPOSA and SAFEMA; whether an order of detention under Section 3 read with Section 12A COFEPOSA made during emergency can form foundation for action under Section 6 of SAFEMA; whether validity of such detention order can be challenged in SAFEMA proceedings; whether definition of 'illegally acquired property' under Section 3(1)(c) SAFEMA is violative of fundamental rights; whether application of SAFEMA to relatives and associates is violative of Articles 14, 19, 21; whether Section 5A COFEPOSA is violative of Article 22(5)
Final Decision
The Supreme Court upheld the constitutional validity of COFEPOSA and SAFEMA and dismissed the challenges. It held that Parliament was competent to enact both Acts; detention orders made during the emergency under Section 3 read with Section 12A COFEPOSA could form the foundation for SAFEMA proceedings; the validity of such detention orders could not be challenged in SAFEMA proceedings if not challenged during their operation; the definition of 'illegally acquired property' was valid; application of SAFEMA to relatives and associates was valid; and Section 5A COFEPOSA was not violative of Article 22(5).
Law Points
- Parliament has legislative competence to enact COFEPOSA under Entry 3 List III as preventive detention for security of State and maintenance of supplies and services essential to community
- SAFEMA is also constitutionally valid
- both enactments enjoy immunity under Article 31B by inclusion in Ninth Schedule
- detention orders made under Section 3 read with Section 12A COFEPOSA during emergency can form foundation for SAFEMA proceedings
- validity of such detention orders cannot be challenged in later SAFEMA proceedings if not challenged during operation
- definition of 'illegally acquired property' under Section 3(1)(c) SAFEMA is not violative of fundamental rights
- application of SAFEMA to relatives and associates is not violative of Articles 14
- 19
- 21
- Section 5A COFEPOSA is not violative of Article 22(5)
