Case Note & Summary
The Supreme Court of India heard appeals against a Madras High Court judgment that had set aside forfeiture orders under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) against two relatives of a convict, V.P. Selvarajan. The convict had been convicted under the Customs Act, 1962 in 1969. The Competent Authority issued notices under Section 6(1) of SAFEMA directly to the relatives — V. Mohan (nephew) and V. Padmavathy (sister-in-law) — in 1994, calling upon them to explain the sources of income for properties held in their names. After they failed to provide credible evidence, forfeiture orders were passed in 1998, which were upheld by the Appellate Tribunal in 2000. The Madras High Court, however, quashed the proceedings on the ground that no notice had been served on the convict, holding such notice mandatory under Section 6. The Supreme Court examined the conflicting views of the Kerala and Calcutta High Courts, which had held that notice to the convict is not necessary when property stands in the name of relatives. The Court analyzed Section 6 read with Section 2 of SAFEMA and concluded that the primary notice under Section 6(1) must be served on the person who holds the property, i.e., the relative, and not necessarily on the convict. The convict is not expected to explain properties held by others. The Court held that proceedings against relatives are independent and not contingent on action against the convict. The burden of proof lies on the noticee to show that the property is legally acquired. The Supreme Court allowed the appeals, set aside the Madras High Court judgment, and restored the forfeiture orders, thereby upholding the view that non-service of notice on the convict does not vitiate proceedings against relatives.
Headnote
A) SAFEMA - Forfeiture of Property - Section 6 - Notice to Convict - When property is ostensibly held by relatives of a convict, the Competent Authority is not required to serve a primary notice under Section 6(1) upon the convict before initiating proceedings against the relatives under Section 6(2). The notice under Section 6(1) must be served on the person in whose name the property stands, and non-service on the convict does not vitiate the proceedings against the relatives. (Paras 1-4) B) SAFEMA - Forfeiture of Property - Burden of Proof - Section 2(2)(c) - The burden of proving that the property is not illegally acquired lies on the person to whom notice has been issued, i.e., the relative holding the property. The convict is not expected to offer explanation regarding properties held by relatives. (Paras 2-3) C) SAFEMA - Forfeiture of Property - Independent Proceedings - Section 6 - Proceedings against relatives of a convict under SAFEMA are independent of any action against the convict. There is no condition precedent that the convict must be proceeded against before initiating action against relatives. (Paras 3-5)
Issue of Consideration
Whether service of primary notice under Section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 upon the convict is mandatory before initiating forfeiture proceedings against relatives who ostensibly hold the property, and whether non-service of such notice vitiates the entire proceedings against the relatives.
Final Decision
Appeals allowed; impugned judgment of Madras High Court set aside; forfeiture orders restored
Law Points
- Interpretation of Section 6 of SAFEMA
- 1976
- Notice to convict not mandatory when property held by relatives
- Burden of proof on noticee
- Independent proceeding against relatives
