Platinum Theatre And Others Vs Competent Authority Smugglers & Oreign Exchange Manipulators (Supreme Court of India)
Supreme Court held that forfeiture of property in exercise of power under section 7 of Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 justifiable in absence of proper explanation as to the source of acquisition and as majority of investment remains unexplained.
Facts- The instant appeal is directed against the judgment and order passed by Single Judge of the High Court of Karnataka at Bangalore upholding the order passed by the competent authority under Section 7 read with 19(1) of the Smugglers and Foreign Exchange Manipulators(Forfeiture of Property) Act, 1976 dated 31st December 1997.
The partners of the first appellant, namely, N.A. Yusuf, was ordered to be detained by the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) by order dated 21st January 1985 by the Government of Maharashtra and later by the Central Government by order dated 27th August 1991.
On 16th October 1994, a show cause notice was issued to the first appellant firm and its partners calling upon them to explain why the subject theatre (M/s. Platinum Theatre) should not be forfeited. The competent authority, in the first instance, passed an order of forfeiture against the first appellant firm forfeiting M/s. Platinum Theatre. However, on appeal, the matter was remanded back to the competent authority for fresh consideration by order dated 17th July 1997.
The competent authority after revisiting the matter afresh and affording an opportunity of hearing to the parties, passed an order dated 31st December, 1997 of forfeiture of M/s. Platinum Theatre u/s. 7 of the Act, 1976. Subsequently, the Appellate Tribunal for Forfeited Property, New Delhi dismissed the appeal and upheld the order of forfeiture passed by the competent authority on 7th September, 1999 and, thereafter, the writ petition filed at the instance of the appellants also came to be dismissed by judgment and order dated 19th April, 2007 which became a subject matter of challenge in appeal before us.
Conclusion- Held 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(P.M. Saheeda) 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 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.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. The instant appeal is directed against the judgment and order dated 19th April, 2007 passed by learned Single Judge of the High Court of Karnataka at Bangalore upholding the order passed by the competent authority under Section 7 read with 19(1) of the Smugglers and Foreign Exchange Manipulators(Forfeiture of Property) Act, 1976(hereinafter being referred to as the “Act, 1976”) dated 31st December, 1997.
2. Appellant no.1 is said to be a registered partnership firm comprising of appellant nos. 2 to 5 and one N.A. Yusuf(not a party herein) as its partners with the profit sharing ratio of the partners as follows:
