Case Note & Summary
The petitioner, Ishwar R. Gidwani, challenged the order dated 4.8.2004 passed by the Competent Authority under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEM (FOP) Act), and the order dated 14.6.2006 passed by the Appellate Tribunal, which confirmed the forfeiture of properties belonging to the petitioner's mother and a shop block. The background involved a detention order under COFEPOSA against the petitioner's relative (the detenu), who absconded. The Enforcement Directorate initiated action against relatives, including the petitioner, regarding properties in their possession. The Competent Authority issued a show cause notice under Section 6(1) of the SAFEM (FOP) Act on 9.10.2001, but the notice was served only on the detenu and not on the petitioner, who was in possession of the properties. The petitioner argued that the proceedings were vitiated due to non-compliance with Section 6(1), which requires notice to the person in possession. The court analyzed the provisions and held that the notice under Section 6(1) must be served on the person in possession of the property, as the purpose is to give an opportunity to show cause why the property should not be forfeited. Since the petitioner was not served, the entire proceedings were null and void. The court quashed both the impugned orders and the proceedings under Sections 7 and 19 of the Act.
Headnote
A) Forfeiture of Property - Show Cause Notice - Section 6(1) SAFEM (FOP) Act, 1976 - The competent authority must serve a show cause notice under Section 6(1) on the person in possession of the property sought to be forfeited, not merely on the detenu. Failure to serve such notice on the petitioner, who was in possession of the property, renders the entire forfeiture proceedings null and void. (Paras 5-7) B) Forfeiture of Property - Appellate Tribunal - Section 19 SAFEM (FOP) Act, 1976 - The appellate tribunal's order confirming the forfeiture without addressing the fundamental defect of non-service of notice under Section 6(1) is unsustainable and liable to be set aside. (Para 8)
Issue of Consideration
Whether the proceedings under Section 7 and 19 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 are vitiated due to non-compliance with Section 6(1) notice requirements.
Final Decision
The court allowed the writ petition, quashed the order dated 4.8.2004 of the Competent Authority and the order dated 14.6.2006 of the Appellate Tribunal, and set aside the proceedings under Sections 7 and 19 of the SAFEM (FOP) Act.
Law Points
- Section 6(1) SAFEM (FOP) Act
- 1976 requires show cause notice to be served on the person in possession of property
- not just the detenu
- failure to serve notice on the petitioner vitiates the proceedings
- appellate tribunal's order confirming forfeiture without considering this defect is unsustainable.
