SAFEMA Tribunal Allows House and Car After Legitimate Sources Were Explained

Sonu & Another Vs Competent Authority (Appellate Tribunal under SAFEMA, New Delhi)

Mere NDPS Accusation Cannot Justify Freezing Explained Assets—Ancestral House and Loan-Financed Car Released: SAFEMA Tribunal

The Narcotic Drugs and Psychotropic Substances Act, 1985 provides the statutory framework for identification, freezing and forfeiture of illegally acquired properties of persons covered by Chapter VA. In the present appeal, the Appellate Tribunal under SAFEMA, New Delhi considered the freezing of an ancestral residential house and a Tata Nexon car belonging to Sonu and connected assets. The proceedings arose after Himachal Pradesh Police allegedly recovered 157 grams of Chitta/Heroin from Pradeep Kumar, Mohit and Sonu on 02.04.2025, following which FIR No. 0076/2025 was registered under Sections 21 and 29 of the NDPS Act. The Freezing Authority passed an order under Section 68F(1), which was subsequently confirmed by the Competent Authority. Before the Tribunal, the appellants pressed their challenge only in respect of the residential house and Tata Nexon car.

The house was claimed to be ancestral and the valuer recorded that the existing construction was approximately 10 to 12 years old. The Tribunal found that the only material recent expenditure was renovation costing ₹2.68 lakh, which was explained through LIC receipts of ₹3 lakh and ₹1,03,800 received by Pushpa, followed by withdrawal of ₹4 lakh. In respect of the car, the Tribunal considered the actual vehicle cost of ₹8,73,032, including insurance, against the higher value adopted by the SHO, and noted the documented vehicle loan of ₹8.20 lakh and ₹50,000 cash down payment.

The appellants also relied upon ration-depot income, general-store income and agricultural receipts supported by J-Forms and Jamabandi. While accepting the agricultural receipts, the Tribunal deducted two-thirds towards cultivation expenses and treated only one-third as agricultural income. On the material placed before it, the Tribunal held that the renovation expenditure and acquisition of the vehicle stood explained and accordingly allowed the appeal in respect of properties at serial Nos. 1 and 2. The challenge to properties at serial Nos. 5 to 7 was not pressed and was dismissed accordingly.

FULL TEXT OF THE JUDGMENT/ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA

The present appeal u/s 68-O of the Narcotic Drugs & Psychotropic Substances Act, 1985, is filed by the appellants against the Confirmation Order dated 25.07.2025 passed by the Competent Authority, New Delhi, whereby the Freezing Order No.PS SADAR SOLAN/2025-5688/5A dated 26.06.2025 passed by the Freezing Authority/SHO, PS: Sadar Solan, District: Solan, Himachal Pradesh, was confirmed with respect to properties at serial No. 1, 2, 5, 6 & 7, detailed as under:-

2. As per the facts of the case on 02.04.2025, Himachal Pradesh Police recovered and seized 157 Grams of Chitta/Heroin from the possession of Shri Pradeep Kumar, Shri Mohit and Shri Sonu, and accordingly FIR No. 0076/2025 dated 02.04.2025 was registered against them for commission of offence u/s 21 & 29 of the NDPS Act, 1985 at PS: Sadar Solan, District: Solan, Himachal Pradesh. Shri Pradeep Kumar and Shri Mohit were arrested on 02.04.2025 & 03.04.2025 and Shri Sonu was arrested on 30.04.2025. As the said recovery is quantity punishable with rigorous imprisonment up-to 10 years, they are covered u/s 68A(2)(cc) and their relatives/associates are covered u/s 68A(2)(d) and 68A(2)(e) of the NDPS Act, 1985.

The SHO conducted the Financial Investigation into the illegally acquired properties of the APs as defined u/s 68B(g) of the Act and thereafter passed the Freezing Order No. P.S. SADAR SOLAN/2025-5688/5A dated 26.06.2025 u/s 68F(1) of the NDPS Act, 1985, and thereby, seized/frozen the properties, as mentioned in para No.1 above.

Thereafter, in order to give an opportunity of being heard, notices dated 30.06.2025 were sent to the APs to defend their case before the Competent Authority, at New Delhi on 09.07.2025. On 09.07.2025, SHO appeared through VC and Advocate of APs also appeared through VC. The next date of hearing was fixed for 16.07.2025. On 16.07.2025, SHO appeared through VC and Advocate of APs also appeared through VC. Accordingly, on the basis of material on record, the Competent Authority confirmed the Freezing Order.

Aggrieved by the said order, the appellants filed the present appeal.

3. During the arguments, Ld. Counsel for appellants pointed out that the property at serial No. 3 & 4 were not confirmed by the Competent Authority and he is not pressing the present appeal, qua the confirmation of properties at serial No. 5 to 7. He is pressing this appeal only qua the properties at serial No. 1 & 2. He pointed out that as per Valuation Report obtained by the SHO from M/s. Rakesh Kumar Dhimal and Associates which is at page 71 & 72, the cost of property at serial No. 1 is evaluated as Rs. 28,38,000/-. He submitted that this particular plot is ancestral in nature, being inherited from forefathers and the construction is more than 12 years old. In support of his contention, he pointed out, the note given by the Valuer at the bottom of Valuation Report which reflects that- “age of existing construction of house is near about 10 to 12 years old, as per my site observation and local information”. Accordingly, he stressed that appellant is entitled to benefit qua the plot and construction u/s 68C of the NDPS Act. He further pointed out the only issue with respect to this property is with respect to cost of renovation of the house which is calculated by the Valuer as Rs. 2,68,000/-, which was stated to be done 2½ years ago. In order to explain the expenses for doing the renovation work, Ld. Counsel for appellant pointed out that on account of death of his father, his mother, Smt. Pushpa received sum of Rs. 3 lacs and Rs. 1,03,800/- from LIC, Karnal on 21.12.2021. The said amount of Rs. 4,00,000/- was withdrawn on 06.04.2022 and was duly utilized for renovation of the residential house and the balance amount utilized for other purposes.

Accordingly, in support of his contention he pointed out the statement of account of appellant No. 2, Smt. Pushpa Rani Annexure ‘B-12’, which is at page 13 & 14 of the Appeal Paper Book, Part-II, reflecting the above entries.

Now, coming to the Tata Nexon Car Registration No. HR83A5896, the property at serial No. 2, Ld. Counsel for appellant stressed that the value of Rs. 10,06,000/- taken by the SHO is without any basis. In support of his contention, he pointed out the tax invoice, Annexure ‘A-15’ which reflects the total value of this vehicle as Rs. 8,43,592/-. He pointed out that appellant incurred the insurance amount of Rs. 29,440/- vide Annexure ‘A-16’. Accordingly, he submitted the total cost of vehicle is Rs. 8,73,032/-, whereas, SHO has wrongly taken the value of the vehicle as Rs. 10,06,000/-. He further submitted that appellant took loan of Rs. 8,20,000/- from M/s. Cholamandalam Investment and Finance Company, payable in 60 Monthly Instalment of Rs. 17,829/-. The loan documents are from page 193 to 198. He pointed out appellant made only cash down payment of Rs. 50,000/-, as per Receipt, Annexure ‘A-6’ at page 192, out of the balance available with his mother, Smt. Pushpa, as mentioned in above sub-para.

He further pointed out that appellant is running a Ration Depot and is also engaged in the business of General Store, which constitutes the primary source of livelihood. He pointed out that in the Ration Depot, appellant earns margin income as fixed by Government on distribution of essential commodities to ration card holders. The said income has been duly recorded and certified by Food & Supply Department, vide summary, which reflects his income from January 2021 to August 2023 as Rs. 2,83,365.30; September 2023 to December 2024 as Rs. 2,52,619 and from January 2025 to April 2025 as Rs. 73,298. The Bank statement of appellant, Sonu is Annexure ‘A-14’, reflecting his day-to-day earnings. He also pointed out the agriculture income earned by the appellant and his father, Shri Ved Pal during his lifetime, amounting to Rs. 16,52,000/-, as tabulated in Para 1 of the Grounds of Appeal supported by ‘J’ forms Annexure ‘A-2’ and Jamabandi Annexure ‘A-3’. Accordingly, he stressed that appellant was having sufficient funds for renovation of the house as well as for acquisition of the vehicle at serial No. 2.

He submitted that on the demise of his father, Shri Ved Pal, appellants initially received sum of Rs. 5,14,400/- and additional sum of Rs. 3 lacs and Rs. 1,03,800/- from LIC, Karnal.

4. On the other hand, Ld. Counsel for respondent Competent Authority controverted the submissions made by the Ld. Counsel for appellants on each & every aspect, which will be discussed in our analysis and findings in the following Paras.

5. After hearing the rival submissions, we have given our thoughtful consideration to the same. Ld. Counsel for Respondent CA failed to controvert the receipts pointed out by appellant vide ‘J’ Forms, Annexure ‘A-2’, but he has not disclosed the expenses incurred till the harvesting of the crop. Therefore, after deducting, two-third towards the expenses, only one-third can be considered towards agriculture income of the appellants. The bank statement of Smt. Pushpa reflects credit entries of Rs. 3 lacs & Rs.1,03,800/- from LIC, Karnal on 31.12.2021 and thereafter cash withdrawal of Rs.4,00,000/- on 06.04.2022 (statement issued by Food & Supply Department, which is at page 18 to 22 of Part-II of the Appeal Paper Book). The bank statement of appellant, Sonu reflects receipt of Rs. 5,14,400/- on 31.12.2021 from LIC, Karnal. Therefore, the renovation of the house at serial No. 1 by incurring expenses of Rs. 2,68,000/- is duly explained and similarly, acquisition of vehicle at serial No. 2, also stands explained by the appellant. Accordingly, the present appeal needs to be allowed, qua, the properties at serial No. 1 & 2 and dismissed qua, the properties at serial no. 5 to 7, being not pressed.

6. In sequel to our discussion in the preceding para, the present appeal is allowed qua the property at serial No. 1 & 2 and dismissed qua, the properties at serial No. 5 to 7, being not pressed.

Appeal Partly Allowed.

Pronounced on this 10^th Day of September, 2026.