M/S. PLATINUM THEATRE AND OTHERS versus COMPETENT AUTHORITY SMUGGLERS & FOREIGN EXCHANGE MANIPULATORS (FORFEITURE OF PROPERTY) ACT, 1976 AND ANOTHER on 22 March 2023

SUPREME COURT REPORTS

[2023] 3 S.C.R.

AM/S. PLATINUM THEATRE AND OTHERS

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COMPETENT AUTHORITY SMUGGLERS & FOREIGNEXCHANGE MANIPULATORS (FORFEITURE OF PROPERTY)ACT, 1976 AND ANOTHER

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(Civil Appeal No(S). 4369 of 2009)

MARCH 22, 2023

[AJAY RASTOGI AND BELA M. TRIVEDI, JJ.]

Smugglers and Foreign Exchange Manipulators (ForfeitureCof Property) Act, 1976 – ss. 2, 6, 7, 8, 9 – Conservation of ForeignExchange and Prevention of Smuggling Activities Act, 1974(COFEPOSA) – Appellant no.1-registered partnership firmcomprising of appellant nos. 2 to 5 were holding the subject theatre– According to the finding recorded by the competent authority,Dmore than 50% of the value assessed (i.e. Rs.13.12 lakhs) of thetheatre has remained unexplained and accordingly the theatre wasliable for forfeiture u/s. 7 of the Act, 1976 – Aggrieved by it, thepartners approached High Court – Single Judge of the High Courtdismissed their plea on the premise that the partners failed to disclosethe source of their income and had not tendered any explanationEwith respect to the same – High Court upheld the order passed bythe competent authority u/s. 7 r/w. 19(1) of the 1976 Act – On appeal,held: From the evidence on record, neither of the partners havejustified any source from where their capital contribution was madenor the explanation was tendered by them regarding their source ofFincome – What was tendered by the partners was disbelieved at allstages and a finding was returned that major part of their investmentwas income from undisclosed sources – Therefore, Authority hasnot committed any manifest error in forfeiting the property in exerciseof power u/s. 7 of Act 1976.

GSmugglers and Foreign Exchange Manipulators(Forfeitureof Property) Act, 1976 – Object & purpose of – The Act has beenenacted with an object to provide for the forfeiture of illegallyacquired properties of smugglers and foreign exchangemanipulators and for matters connected therewith or incidentalthereto – At the same time, to provide an effective prevention ofH

smuggling activities and foreign exchange manipulations which arehaving a deleterious effect on the national economy, it is necessaryto deprive persons engaged in such activities and manipulations oftheir ill-gotten gains.

Dismissing the appeal, the Court

HELD: 1. The Act, 1976 has been enacted by theParliament with an object to provide for the forfeiture of illegallyacquired properties of smugglers and foreign exchangemanipulators and for matters connected therewith or incidentalthereto. At the same time, to provide an effective prevention ofsmuggling activities and foreign exchange manipulations whichare having a deleterious effect on the national economy, it isnecessary to deprive persons engaged in such activities andmanipulations of their ill-gotten gains. It also provides that suchpersons have been augmenting such gains by violations ofwealth-tax, income-tax or other laws or by other means and havethereby been increasing their resources for operating in aclandestine manner and to nail such persons who are holding theproperties acquired by them through such gains in the name oftheir relatives, associates and confidants. [Para 9][1090-E-G]

2. Section 2(1) of the Act, 1976 applies to the personsspecified in sub-section (2). Section 2(2) gives a long list ofdifferent categories of persons to whom the Act applies andincludes as defined in Section 2(2)(b) that every person in respectof whom an order of detention has been made under theCOFEPOSA and also includes every associate of a personreferred to in clause (a) or clause (b) as defined in sub-clause(d)read with Explanation 3, which refers to an associate and coversall individuals who had been or is a member, partner or directorof an association of persons including association, body,partnership firm or private company, etc. [Para 10][1090-G-H;1091-A]

3. Section 8 clearly postulates that burden of proof, in anyproceedings under this Act, in reference to the notice servedunder Section 6 in regard to the illegally acquired properties shalllie on the person affected and while exercising power underSection 7, forfeiting the illegally acquired properties in a case A

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Awhere the source of only a part, being less than one-half of theincome of which such property is acquired, the acquisition hasbeen subject to proof to the satisfaction of the competent authority,can be offered an option to the person affected to pay in lieu offorfeiture, a fine of the value of such part, as indicated underSection 9 of the Act 1976. [Para 13][1095-H; 1096-A-B]

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4. The Single Judge of the High Court revisited the factualmatrix on record and returned a finding that no documentaryevidence was placed by either of the appellants, during theproceedings initiated by the competent authority, who are underan obligation to prove in terms of Section 8 of the Act 1976. FromCthe evidence which came on record, it could be gathered that outof the investment made by the partners (Appellant nos. 2 to 5) tothe tune of Rs.10.20 lakhs, one Y (not a party to the presentproceeding) contributed Rs.5 lakhs and Appellant no.2 and herchildren have contributed to the tune of Rs.5.2 lakhs each butDneither Y has justified any source from where his capitalcontribution was made nor the explanation was tendered byAppellant nos. 2 to 5 regarding their source of income and it wasdisbelieved at all stages and a finding was returned that majorpart of the investment has been treated as income fromundisclosed sources. That apart, no evidence was placed byEAppellant no. 2 on record to justify that the land in question waspurchased from the resources available at her command in theyear 1969, through the sale deed dated 16th April, 1969. In thegiven circumstances, the appellants are not entitled to seekprotection of Section 9 of the Act 1976. [Para 16][1097-C-F]F

5. Even before this Court, there is no material that hasbeen placed by Appellant no.2 in rebuttal which may even primafacie justify the sources of fund available at her command foracquisition of the land in question to the tune of Rs.33,000/- inthe year 1969. In the absence of proper explanation as to theGsource of acquisition and as majority of investment remainsunexplained, the authority disbelieved the version of Appellantno. 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 work out at Rs.25,20,000/-, and as such, the major part of the investment still remainsH

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unexplained. Even the accounts were not maintained in respectof the cost of construction of the building, in absence whereof,the authority has not committed any manifest error in forfeitingthe property in exercise of power under Section 7 of Act 1976.[Para 19][1098-G-H; 1099-A-B]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4369of 2009.

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From the Judgment and Order dated 19.04.2007 of the High Courtof Karnataka at Bangalore in WP No.7263 of 2000.

Shyam Divan, Sr. Adv., Abdul Azeem Kalebudde, AnkolekarGurudatta, Adith Deshmukh, Advs. for the Appellants.

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Vikramjit Bannerjee, A.S.G., Arijit Prasad, Sr. Adv., T. A. Khan,Shashank Bajpai, B K Satija, Nachiketa Joshi, Raj Bahadur Yadav, ArvindKumar Sharma, Advs. for the Respondents.

The Judgment of the Court was delivered by D

RASTOGI, J.

1. The instant appeal is directed against the judgment and orderdated 19[th] April, 2007 passed by learned Single Judge of the High Courtof Karnataka at Bangalore upholding the order passed by the competentauthority under Section 7 read with 19(1) of the Smugglers and ForeignExchange Manipulators (Forfeiture of Property) Act, 1976(hereinafterbeing referred to as the “Act, 1976”) dated 31[st] December, 1997.

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2. Appellant no.1 is said to be a registered partnership firmcomprising of appellant nos. 2 to 5 and one N.A. Yusuf(not a partyherein) as its partners with the profit sharing ratio of the partners asfollows:- F

3. The background facts culled out from the record which led topassing of the order forfeiting the subject property are that one of the H

Apartners of the first appellant, namely, N.A. Yusuf, was ordered to bedetained by Conservation of Foreign Exchange and Prevention ofSmuggling Activities Act, 1974(hereinafter being referred to as“COFEPOSA”) by order dated 21[st]January, 1985 by Government ofMaharashtra and later by the Central Government by order dated 27[th]August, 1991. The two detention orders against N.A. Yusuf came to beBchallenged in the writ petition before Delhi High Court. Both the petitionswere allowed by judgments dated 15[th] October, 1991 and 11[th] May, 1992respectively. In consequence thereof, the forfeiture order passed by thecompetent authority on 23[rd] November, 1977 came to an end.

4. On 16[th] October, 1994, a show cause notice was issued to theCfirst appellant firm and its partners calling upon them to provide anexplanation as to why the subject theatre (M/s. Platinum Theatre) shouldnot be forfeited. After affording opportunity of hearing, the competentauthority, in the first instance, passed an order of forfeiture against thefirst appellant firm forfeiting M/s. Platinum Theatre and its equipmentDby order dated 31[st] July, 1995. However, on appeal being preferred atthe instance of the appellants, the matter was remanded back to thecompetent authority for fresh consideration by order dated 17[th] July,1997.

5. The competent authority after revisiting the matter afresh andEaffording an opportunity of hearing to the parties, passed an order dated31[st] December, 1997 of forfeiture of M/s.Platinum Theatre under Section7 of the Act, 1976. Subsequently, the Appellate Tribunal for ForfeitedProperty, New Delhi(hereinafter being referred to as the “Tribunal”)dismissed the appeal and upheld the order of forfeiture passed by thecompetent authority on 7[th] September, 1999 and, thereafter, the writFpetition filed at the instance of the appellants also came to be dismissedby judgment and order dated 19[th] April, 2007 which became a subjectmatter of challenge in appeal before us.

6. Learned counsel for the appellant has challenged the order offorfeiture particularly on the following submissions:-G

(i) The land on which the subject theatre was constructed is notthe property of the first appellant firm. It is owned by appellant no.2(P.M. Saheeda w/o Ibrahim Soofi) through a registered sale deed dated16[th] April, 1969. Since the land was privately owned by appellant no. 2,the order regarding forfeiture of land, in the facts and circumstance ofHthe case, is not legally sustainable.

(ii) The competent authority ought to have applied Section 9 ofthe Act, 1976 in the present case and should have provided an option tothe appellants to pay fine in lieu of forfeiture, taking into considerationthe fact that the appellants had disclosed source of more than 50% costincurred in construction of the theatre. The loan of Rs.12 lakhs obtainedfrom Vijaya Bank by the appellants constituted more than 50% of costof the theatre’s construction. As such, the authority was under anobligation to give an option to the appellants to pay a fine in lieu offorfeiture in terms of Section 9 of the Act, 1976.

(iii) The forfeiture proceeding initiated in 1995 was grossly delayed.The partnership firm is of the year 1974, the construction of the theatrewas carried out during the period 1971-1974 and the forfeiture orderwas passed in 1997, after more than two decades. The competentauthority ought to have considered the inordinate delay in passing of anadverse order of forfeiture on the premise that it could not have beenpossible because of long delay to trace the relevant documents which,indeed, has caused prejudice to the appellants.

7. Per contra, learned counsel for the respondents, while supportingthe finding returned by the competent authority, in the first instance,forfeiting the subject property in question and later confirmed by theTribunal in the impugned judgment, in counter, has made the followingsubmissions:-

(i) Section 8 of the Act, 1976 provides that the burden to proof, inany proceedings under this Act, shall lie on the person affected. Theappellants have failed to discharge the said burden, in consequence ofwhich the finding recorded by the competent authority duly supportedwith the material on record justify and support the order of forfeiturepassed by the competent authority dated 31[st] December, 1997.

(ii) Both N.A. Yusuf and appellant no. 2(P.M. Saheeda) failed todisclose any source of their capital contribution in the first appellant firmand have failed to disclose any books of accounts for the expenditure inconstruction of the subject theatre and also failed to disclose any bankaccount from which money was disbursed for building the said theatre.In addition, appellant no. 2(P.M. Saheeda) failed to substantiate withproof the claim that the land was bought from her wedding gifts in 1969.In the facts and circumstances, the finding of forfeiture recorded by thecompetent authority has been rightly confirmed at all later stages in thecourse of proceedings.

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(iii) The contribution of N.A. Yusuf was more than half of thetotal contribution of Rs.10.20 lakhs of capital infused in the partnershipfirm. Since more than 50% of the value remained unexplained, theappellants were not entitled to seek an option to pay a fine in lieu offorfeiture as contemplated under Section 9 of the Act.

B(iv) There was no delay which could be attributed to the authorityfor the reason that proceedings were initiated in the first instance againstthe appellant firm by issuance of show cause notice dated 13[th] January,1977 and since then the proceedings were continued one after the other.In reference to the instant proceedings, the show cause notice was servedto the appellant firm and its partners(appellant nos. 2 to 5) on 16[th] October,C1994 which finally culminated into forfeiture of the property under Section7 by order dated 31[st] December, 1997. In the given circumstances, therewas no delay on the part of the respondent authorities in initiating theproceedings in reference to the forfeiture of the property under the Act,1976 which, in no manner, be said to be fatal in the given facts andDcircumstances to interfere in the instant proceedings.

8. We have heard learned counsel for the parties and with theirassistance perused the material available on record.

9. The Act, 1976 has been enacted by the Parliament with anobject to provide for the forfeiture of illegally acquired properties ofEsmugglers and foreign exchange manipulators and for matters connectedtherewith or incidental thereto. At the same time, to provide an effectiveprevention of smuggling activities and foreign exchange manipulationswhich are having a deleterious effect on the national economy, it isnecessary to deprive persons engaged in such activities and manipulationsFof their ill-gotten gains. It also provides that such persons have beenaugmenting such gains by violations of wealth-tax, income-tax or otherlaws or by other means and have thereby been increasing their resourcesfor operating in a clandestine manner and to nail such persons who areholding the properties acquired by them through such gains in the nameof their relatives, associates and confidants.G

10. Section 2(1) of the Act, 1976 applies to the persons specifiedin sub-section (2). Section 2(2) gives a long list of different categories ofpersons to whom the Act applies and includes as defined in Section2(2)(b) that every person in respect of whom an order of detention hasbeen made under the COFEPOSA and also includes every associate ofHa person referred to in clause (a) or clause (b) as defined in sub-clause(d)

read with Explanation 3, which refers to an associate and covers allindividuals who had been or is a member, partner or director of anassociation of persons including association, body, partnership firm orprivate company, etc.

11. Sections 2, 6, 7, 8 and 9 of the Act, 1976 which are relevantfor the purpose, are extracted hereinbelow:

“2. Application.

(1) The provisions of this Act shall apply only to the personsspecified in sub-section (2).

(2) The persons referred to in sub-section (1) are the following,namely: - (a) every person-

(i) who has been convicted under the Sea Customs Act, 1878(8 of 1878), or the Customs Act, 1962 (52 of 1962), of anoffence in relation to goods of a value exceeding one lakh ofrupees ; or

(ii) who has been convicted under the Foreign ExchangeRegulation Act, 1947 (7 of 1947), or the Foreign ExchangeRegulation Act, 1104 1973 (46 of 1973), of an offence, theamount or value involved in which exceeds one lakh of rupees;or

(iii) who having been convicted under the Sea Customs Act,1878 (8 of 1878), or the Customs Act, 1962 (52 of 1962), hasbeen convicted subsequently under either of those Acts ; or

(iv) who having been convicted under the Foreign ExchangeRegulation Act, 1947 (7 of 1947), or the Foreign ExchangeRegulation Act, 1973 (46 of 1973), has been convictedsubsequently under either of those Acts ; (b) every person in respect of whom an order of detention hasbeen made under the Conservation of Foreign Exchange andPrevention of Smuggling Activities Act, 1974 (52 of 1974); Provided that-

(i) such order of detention, being an order to which the provisionsof section 9 or section 12A of the said Act do not apply, has not

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been revoked on the report of the Advisory Board under section8 of the said Act or before the receipt of the report of theAdvisory Board or before making a reference to the AdvisoryBoard; or

(ii) such order of detention, being an order to which theprovisions of section 9 of the said Act apply, has not beenrevoked before the expiry of the time for, or on the basis of,the review under subsection (3)of section 9, or on the report ofthe Advisory Board under section 8, read with sub- section (2)of section 9, of the said Act ; or

(iii) such order of detention, being an order to which, theprovisions of section 12A of the said Act apply, has not beenrevoked before the expiry of the time for, or on the basis of,the first review under sub-section (3) of that section, or on thebasis of the report of the Advisory Board under section 8, readwith sub-section (6) of section 12A, of that Act ; or

(iv) such order of detention has not been set aside by a courtof competent jurisdiction ;

(c) every person who is a relative of a person referred to in clause(a) or clause (b) ; (d) every associate of a person referred to in clause (a) or clause(b); (e) any holder (hereafter in this clause referred to as the presentholder) of any property which was at any time previously held bya person referred to in clause (a) or clause (b) unless the presentholder or, as the case may be, anyone who heldsuch propertyafter such person and before the present holder, is or was atransferee in good faith for adequate consideration.

Explanation 1.-

Explanation 2.—

Explanation 3.-For the purposes of clause (d), “associate”, inrelation to a person, means-

(i) any individual who had been or is residing in the residentialpremises (including outhouses) of such person;

(ii) any individual who had been or is managing the affairs orkeeping the accounts of such person;

(iii) any association of persons, body of individuals, partnershipfirm, or private company within the meaning of the CompaniesAct, 1956 ( 1 of 1956), of which such person had been or is amember, partner or director;

(iv) any individual who had been or is a member, partner ordirector of an association of persons, body of individuals,partnership firm or private company referred to in clause (iii)atany time when such person had been or is a member, partneror director of such association, body, partnership firm or privatecompany;

(v) any person who had been or is managing the affairs, orkeeping the accounts, of any association of persons, body ofindividuals, partnership firm or private company referred to inclause (iii);

(vi) ….”

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6. Notice of forfeiture.

(1) If, having regard to the value of the properties held by anyperson to whom this Act applies, either by himself or through anyother person on his behalf, his known sources of income, earningsor assets, and any other information or material available to it as aresult of action taken under section 18 or otherwise, the competentauthority has reason to believe (the reasons for such belief to berecorded in writting) that all or any of such properties are illegallyacquired properties. it may serve a notice upon such person(hereinafter referred to as the person affected) calling upon himwithin such time as may be specified in the notice, which shall notbe ordinarily less than thirty days, to indicate the sources of hisincome, earnings or assets, out of which or by means of which hehas acquired such property, the evidence on which he relies andother relevant information and particulars, and to show cause whyall or any of such properties, as the case may be, should not be A

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declared to be illegally acquired properties and forfeited to theCentral Government under this Act.

(2) Where a notice under sub-section (1) to any specifies anyproperty as being held on behalf of such person by any otherperson. a copy of the notice shall also be served upon such otherperson.

7. Forfeiture of property in certain cases.

(1) The competent authority may, after considering the explanation,if any, to the show- cause notice issued under section 6, and thematerials available before it and after giving to the person affected(and in a case where the person affected holds any propertyspecified in the notice through any other person, to such otherperson also) a reasonable opportunity of being heard, by order,record a finding whether all or any of the properties in questionare illegally acquired properties.

(2) Where the competent authority is satisfied that some of theproperties referred to in the showcause notice are illegally acquiredproperties but is not able to identify specifically such propertiesthen, it shall be lawful for the competent authority to specify theproperties which, to the best of its judgment, are illegally acquiredproperties and record a finding accordingly under sub-section (1).

(3) Where the competent authority records a finding under thissection to the effect that any property is illegally acquired property,it shall declare that such property shall, subject to the provisionsof this Act, stand forfeited to the Central Government free fromall encumbrances.

(4) where any shares in a company stand forfeited to the CentralGovernment under this Act, then, the company shall,notwithstanding anything contained in the Companies Act, 1956(1 of 1956), or the articles of association of the company, forthwithregister the Central Government as the transferee of such shares.

8. Burden of proof.

In any proceedings under this Act, the burden of proving that anyproperty specified in the notice served under section 6 is not illegallyacquired property shall be on the person affected.

9. Fine in lieu of forfeiture.

(1) Where the competent authority makes a declaration that anyproperty stands forfeited to the Central Government under section7 and it is a case where the source of only a part, being less thanone-half of the income, earnings or assets with which such propertywas acquired has not been proved to the satisfaction of thecompetent authority, it shall make an order giving an option to theperson affected to pay, in lieu of forfeiture, a fine equal to one andone-fifth times the value of such part.

Explanation.-For the purposes of this sub-section, the value ofany part of income, earnings or assets, with which any propertyhas been acquired, shall be,- (a) in the case of any part of income or earnings, the amountof such part of income or earnings; (b) in the case of any part of assets, the proportionate part ofthe full value of the consideration for the acquisition of suchassets.

(2) Before making an order imposing a fine under sub-section (1),the person affected shall be given a reasonable opportunity ofbeing heard,

(3) Where the person affected pays the fine due under sub- section(1), within such time as may be allowed in that behalf, thecompetent authority may, by order, revoke the declaration offorfeiture under section 7 and thereupon such property shall standreleased.”

12. Taking into consideration the scope and ambit of Act, 1976 ofwhich a detailed reference has been made, forfeiture proceedings couldbe initiated under Section 6 in reference to such illegally acquiredproperties by such persons who are covered under Section 2 read withthe explanation, appended thereto, by a show cause notice and after duecompliance of principles of natural justice, the power vests in thecompetent authority to pass an order of forfeiture of the property inexercise of power under Section 7 of the Act 1976.

13. Section 8 clearly postulates that burden of proof, in anyproceedings under this Act, in reference to the notice served underSection 6 in regard to the illegally acquired properties shall lie on the A

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Aperson affected and while exercising power under Section 7, forfeitingthe illegally acquired properties in a case where the source of only apart, being less than one-half of the income of which such property isacquired, the acquisition has been subject to proof to the satisfaction ofthe competent authority, can be offered an option to the person affectedto pay in lieu of forfeiture, a fine of the value of such part, as indicatedBunder Section 9 of the Act 1976.

14. The respondents have initiated the proceedings serving showcause notice under Section 6 of forfeiture of the property which wastaken from ill-gotten gains to the first appellant firm and itspartners(Appellant nos. 2 to 5) dated 16[th] October, 1994. The competentCauthority, in the first instance, after taking into consideration the materialon record returned a finding that the total contribution of the partners inM/s. Platinum Theatre by way of capital was Rs.10,20,000/- as could beseen from the Partnership Deed as well as returns of M/s. PlatinumTheatre that clearly indicates that N.A. Yusuf contributed Rs.5 lakhs.DAppellant no.2 (P.M. Saheeda) and her minor son contributed Rs.5.20lakhs. The partners are the joint owners of the property of a firm byvirtue of their capital contribution in terms of Partnership Deed.

15. N.A. Yusuf has not disclosed any source from which he gotcapital contribution of Rs.5 lakhs. In respect of contribution made byEAppellant no. 2(P.M. Saheeda) and her minor son to the tune of Rs. 5.20lakhs in the partnership firm, no explanation was tendered about thesource of funds infused in the partnership firm. The authorities of theincome-tax department on assessment were able to substantiate thatneither the source of contribution made by N.A. Yusuf nor anyone elseand the entire sum of Rs.4.57 lakhs was assessed as income of AppellantFno. 2(P.M. Saheeda). From the other documentary evidence which hascome on record, it reveals that the construction and decoration of thetheatre was undertaken by N.A. Yusuf as a proprietor. A finding wasrecorded that the entire capital in M/s. Platinum Theatre in the names ofN.A. Yusuf, P.M. Saheeda(Appellant no. 2)and her minor children wasGcreated through the illegally earned money by N.A. Yusuf through hissmuggling activities. It was supported by income-tax returns for theassessment year 1975-76. Appellant no. 2(P.M. Saheeda) which claimedthat the land was purchased by her for Rs.33,000/-in the year 1969 fromher own funds generated through wedding gifts in support of which noproofs was produced, and with land, the value of the theatre would workH

out to be Rs.25.12 lakhs. The appellants failed to justify that the loan ofRs. 12 lakhs from Vijaya Bank was ever invested in the subject theatre.There was no document placed on record which could justify that Rs.12lakhs was invested in the construction of theatre. According to the findingrecorded by the competent authority, more than 50% of the valueassessed(i.e. Rs. 13.12 lakhs) of the theatre has remained unexplainedand accordingly the theatre was liable for forfeiture under Section 7 ofthe Act, 1976, free from all encumbrances, under Order dated 31[st]December, 1997.On appeal being preferred, the finding stood affirmedby order dated 7[th] September, 1999.

16. Against the said order, a writ petition was filed before theHigh Court under Article 226 of the Constitution. The learned SingleJudge of the High Court revisited the factual matrix on record andreturned a finding that no documentary evidence was placed by eitherof the appellants, during the proceedings initiated by the competentauthority, who are under an obligation to prove in terms of Section 8 ofthe Act 1976. From the evidence which came on record, it could begathered that out of the investment made by the partners(Appellant nos.2 to 5) to the tune of Rs.10.20 lakhs, N.A. Yusuf contributed Rs.5 lakhsand Appellant no.2(P.M. Saheeda) and her children have contributed tothe tune of Rs.5.2 lakhs each but neither N.A. Yusuf has justified anysource from where his capital contribution was made nor the explanationwas tendered by Appellant nos. 2 to 5 regarding their source of incomeand it was disbelieved at all stages and a finding was returned that majorpart of the investment has been treated as income from undisclosedsources. That apart, no evidence was placed by Appellant no. 2(P.M.Saheeda) on record to justify that the land in question was purchasedfrom the resources available at her command in the year 1969, throughthe sale deed dated 16[th] April, 1969. In the given circumstances, theappellants are not entitled to seek protection of Section 9 of the Act1976.

17. That apart, as regards the submissions made by the counselfor the appellants to impose fine in lieu of forfeiture, as contemplatedunder Section 9 of the Act 1976, after noticing the argument advancedby the appellants before the High Court, a categorical finding has beenrecorded as to why the appellants are not entitled to seek protection ofSection 9 of the Act 1976, which is as follows:

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“The argument of petitioners’ counsel is, major contributionis from the petitioners and that the land in question was acquiredin the year 1969 prior to the entering into a partnership agreementout of the borrowings of 2[nd] petitioner Saheeda and that land inquestion ought not have been taken into consideration to forfeitthe same, and as such, the Competent Authority and the AppellateTribunal ought to have taken note of the same into considerationonly to impose fine and not to forfeit the property and also theland in question should be available to the petitioners and it shouldnot be the subject matter of forfeiture.

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In this regard, it appears the Competent Authority as wellas the Appellate Tribunal having noted the transaction and alsohaving noted that there is no explanation offered by the 2[nd]petitioner properly regarding acquisition of the land in question forRs.33,000/- in the year 1969, and also having doubted the unsignedagreement between the 2[nd] petitioner and N.A. Yusuf, and in theabsence of any such proper explanation as to source of acquisition,held that major investment remain unexplained and also disbelievedthe version of the 2[nd] petitioner on the ground that the proof of giftfrom her marriage has not been produced. Thus, according to theCompetent Authority as well as the Appellate Tribunal, even ifthe value of the land is taken only at Rs.33,000/-, the total value of C

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the land and building will work out at Rs.25,20,000/- and as such,it was of the view that major part of the investment remainedunexplained. Even the accounts are not maintained in respect ofthe cost of construction of the building and all other variousinstallations made.”

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18. Taking into consideration the submissions made, we find noerror being committed in the finding returned by the High Court whichmay call for our interference.

19. Even before this Court, there is no material that has beenplaced by Appellant no.2 (P.M. Saheeda) in rebuttal which may evenGprima facie justify the sources of fund available at her command foracquisition of the land in question to the tune of Rs.33,000/- in the year1969. In the absence of proper explanation as to the source of acquisitionand as majority of investment remains unexplained, the authoritydisbelieved the version of Appellant no. 2(P.M. Saheeda) as no proofHwas 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 andbuilding work out at Rs.25,20,000/-, and as such, the major part of theinvestment still remains unexplained. Even the accounts were notmaintained in respect of the cost of construction of the building, in absencewhereof, the authority has not committed any manifest error in forfeitingthe property in exercise of power under Section 7 of Act 1976.

20. Suffice it to say that the proceedings were initiated in referenceto the appellants, in the first instance, pursuant to show cause noticedated 13[th] January, 1977 and the competent authority passed an Orderof forfeiture on 23[rd] November, 1977. Later that came to be set aside inthe year 1991 and fresh forfeiture proceedings were initiated pursuantto show cause notice under Section of the Act dated 16[th] October, 1994which finally culminated into passing of order of the competent authorityon 31[st] December, 1997 and on dismissal of appeal, the writ petition waspreferred at the instance of the appellants and the matter reached to thisstage. Thus, in the given facts and circumstances, the very plea of socalled alleged gross delay in initiating the proceedings for forfeiture ofthe property is misconceived and deserves an outright rejection.

21. Consequently, the appeal is without substance and accordinglydismissed. No costs.

22. Pending application(s), if any, shall stand disposed of.

Ankit Gyan

Appeal dismissed.

(Assisted by : Mahendra Yadav, LCRA)

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F

G

H