It Is Neccessary To Deprive Persons Engaged In Smuggling and Foreign Exchange Manipulation Of Their Gotten Gains: SC

The Supreme Court bench comprising Justices Ajay Rastogi and Bela M. Trivedi have recently held that the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 is present to facilitate the confiscation of properties of smugglers and foreign exchange manipulators which have been acquired illegally and to prevent such smuggling activities and exchange manipulations.

The Supreme Court bench has upheld the Karnataka High Court order which had further asserted the order of forfeiture issued under Section 7 r/w Section 19 of Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.

In the matter at hand a partner of the appellant firm was ordered to be detained by Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 on two occasions. The two detention orders were challenged before the Delhi HIgh Court and both the petitions were allowed due to which the forfeiture order passed by the authority came to an end. Later on an order of forfeiture was passed against the first appellant firm and later on appeal an order of forfeiture was passed. Later a writ petition was filed before the Karnataka High Court and the high court found that there was no satisfactory explanation to the questions arising in the matter.

The Supreme Court bench in the matter observed that it is neccessary to deprive Persons Engaged In Smuggling and Foreign Exchange Manipulation Of Their Gotten Gains. The bench observed that such persons have been augmenting this wealth by tax violations which gives tehm icncreased resources for openating in clandestine manner.

Taking into consideration the submissions made,the court observed that there is no error being committed in the finding returned by the High Court. It was further observed that  there is no material that has been placed by Appellant no.2 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. 

It was noted that 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  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 were at Rs.25.20,000/-, and as such, the major part of the investment still remains unexplained. Even the accounts were not maintained in respect of the cost of construction of the building, in absence whereof, the authority has not committed any manifest error in forfeiting the property in exercise of power under Section 7 of Act 1976. 

The court held that - “It is suffice to say that the proceedings were initiated in reference to the appellants, in the first instance, pursuant to show cause notice dated 13th January, 1977 and the competent authority passed an Order of forfeiture on 23rd November, 1977. Later that came to be set aside in the year 1991 and fresh forfeiture proceedings were initiated pursuant to show cause notice under Section 6 of the Act which finally culminated into passing of order of the competent authority on 31st December, 1997 and on dismissal of appeal, the writ petition was preferred at the instance of the appellants and the matter reached to this stage.”

The appeal was accordingly dismissed.

CASE: M/S PLATINUM THEATRE AND ORS. V. COMPETENT AUTHORITY