Case Note & Summary
The petitioner, Smt. Yamini S. Bhagwanji, challenged the forfeiture of three immovable properties and certain bank accounts under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA). The forfeiture was based on a detention order dated 25/5/2001 issued under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) following the seizure of foreign currency equivalent to Rs.70.54 lakhs from her at Mumbai International Airport on 4/10/2000. The currency was initially confiscated but later released on payment of redemption fine and penalty. The petitioner argued that since she was not ultimately detained and the currency was not absolutely confiscated, the SAFEMA proceedings were invalid. She also claimed that the properties were acquired before her marriage or after divorce, and thus not illegally acquired. The High Court held that the detention order under COFEPOSA is sufficient to initiate SAFEMA proceedings, and the burden of proof lies on the affected person to show that the properties were not illegally acquired. The court found that the petitioner failed to discharge this burden, as the properties were acquired during the period of her involvement in smuggling. The court also noted that divorce does not sever the connection with properties acquired during the marriage. Consequently, the petition was dismissed, and the forfeiture was upheld.
Headnote
A) SAFEMA - Forfeiture of Property - Section 7 - Detention Order - The forfeiture of properties under SAFEMA is valid even if the detention order under COFEPOSA was not executed, as the issuance of the detention order itself triggers SAFEMA proceedings. The court held that the Competent Authority and Appellate Tribunal correctly applied the law. (Paras 1-10)
B) SAFEMA - Illegally Acquired Property - Burden of Proof - Section 7 - The burden is on the affected person to prove that the properties were not illegally acquired. The petitioner failed to discharge this burden, as the properties were acquired during the period when she was involved in smuggling activities. (Paras 11-15)
C) SAFEMA - Divorce - Effect on Forfeiture - Section 7 - Divorce does not automatically absolve the affected person from forfeiture of properties acquired during the marriage, especially when the properties were acquired with tainted funds. The court upheld the concurrent findings of the authorities. (Paras 16-20)
Issue of Consideration
Whether the forfeiture of properties under SAFEMA based on a detention order under COFEPOSA is valid when the petitioner was not ultimately detained and the currency was confiscated with redemption fine, and whether the properties were illegally acquired.
Final Decision
The High Court dismissed the petition and upheld the forfeiture order dated 7/12/2007 and the appellate order dated 11/1/2011.
Law Points
- Forfeiture of property under SAFEMA is independent of confiscation proceedings under Customs Act
- Detention order under COFEPOSA is sufficient for SAFEMA proceedings
- Burden of proof on affected person to show property not illegally acquired
- Divorce does not sever connection with illegally acquired properties acquired during marriage
- Appellate Tribunal's concurrent findings not to be lightly interfered with under Article 226
Case Details
2011 LawText (BOM) (07) 177
Criminal Writ Petition No. 868 of 2011
B. H. Marlapalle, U. D. Salvi
Mr. B. Sheshgopalan i/by Mr. Girish R. Agrawal for petitioner, Mr. S. K. Shinde for respondent no.1, Mr. P. A. Pol, PP for State
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Nature of Litigation
Criminal writ petition challenging forfeiture of properties under SAFEMA
Remedy Sought
Petitioner sought to quash the forfeiture order dated 7/12/2007 and the appellate order dated 11/1/2011 confirming the forfeiture
Filing Reason
Petitioner claimed that the forfeiture was invalid because the detention order under COFEPOSA was not executed and the currency was not absolutely confiscated, and that the properties were not illegally acquired
Previous Decisions
Competent Authority under SAFEMA passed forfeiture order on 7/12/2007; Appellate Tribunal for Forfeited Property, New Delhi confirmed the order on 11/1/2011 in Appeal No. FPA2/BOM/2008
Issues
Whether the forfeiture of properties under SAFEMA is valid when the detention order under COFEPOSA was not executed and the currency was confiscated with redemption fine?
Whether the properties were illegally acquired and the burden of proof was properly discharged?
Submissions/Arguments
Petitioner argued that since she was not detained and the currency was not absolutely confiscated, the SAFEMA proceedings were not maintainable.
Petitioner argued that the properties were acquired before her marriage or after divorce, and thus not illegally acquired.
Respondents argued that the detention order itself triggers SAFEMA and the burden of proof lies on the petitioner to show properties were not illegally acquired.
Ratio Decidendi
The issuance of a detention order under COFEPOSA is sufficient to initiate SAFEMA proceedings, and the burden of proof is on the affected person to show that the properties were not illegally acquired. The petitioner failed to discharge this burden.
Judgment Excerpts
In this petition, filed under Article 226 of the Constitution, the petitioner seeks to challenge the order of forfeiture passed by the Competent Authority under Section 7 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (for short “SAFEMA”) on 7/12/2007 thereunder forfeiting three immovable properties and further duly confirmed by the Appellate Tribunal for Forfeited Property, New Delhi by its order dated 11/1/2011 in Appeal No. FPA2/BOM/2008 filed under Section 12(4) of the said Act.
Procedural History
The petitioner was married to Dr. Ashok Sharma on 14/12/1985 and divorced him, then married Surendra Bhagwanji on 22/2/1999. On 4/10/2000, foreign currency equivalent to Rs.70.54 lakhs was seized from her at Mumbai International Airport. A detention order under COFEPOSA was issued on 25/5/2001. Show-cause notice under SAFEMA was served on 13/3/2002. The currency was confiscated but later released on payment of redemption fine and penalty on 29/10/2004. Competent Authority passed forfeiture order on 7/12/2007. Appeal to Appellate Tribunal was dismissed on 11/1/2011. The present writ petition was filed under Article 226.
Acts & Sections
- Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976: Section 7, Section 12(4)
- Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974:
- Constitution of India: Article 226
