(FORFEITURE OF PROPERTY) ACT, 1976 |
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SMUGGLERS AND FOREIGN EXCHANGE MANIPULATORS |
(FORFEITURE OF PROPERTY) ACT, 1976 |
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(ACT 13 OF 1976)
The Act
An Act to provide for the
forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators
and for matters connected therewith or incidental thereto;
Whereas for the effective
prevention of smuggling activities and foreign exchange manipulations which are having a
deleterious effect on the national economy it is necessary to deprive persons engaged in
such activities and manipulations of their ill-gotten gains;
And whereas such persons have been
augmenting such gains by violations of wealth-tax, income-tax or other laws or by other
means and have thereby been increasing their resources for operating in a clandestine
manner;
And whereas such persons have in
many cases been holding the properties acquired by them through such gains in the names of
their relatives, associates and confidants.
Be it enacted by Parliament in the
Twenty-sixth Year of the Republic of India as follows:
1.
Short title,
extent and commencement:
(1)
This act may be
called the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.
(2)
It extends to
the whole of India except the State of Jammu and Kashmir.
(3)
It shall be
deemed to have come into force on the 5th day of November, 1975.
2.
Application:
(1)
The provisions
of this Act shall apply only to the persons specified 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 an offence in relation to goods of a
value exceeding one lakh of rupees; or
(ii)
who having been convicted under the Sea Customs Act, 1878
(8 of 1878), or the Customs Act, 1962 (52 of 1962), has been convicted subsequently under
either of those Acts; or
(iii)
who having been convicted under the Foreign Exchange
Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of
1973), has been convicted subsequently under either or those Act;
(b)
every person in respect of whom an order of detention has been
made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities
Act, 1974 (52 of 1974):Provided that-
(i) such order of detention, being
an order which the provisions of section 9 or section 12A of the said Act do not apply,
has not been revoked on the report of the Advisory Board under section 8 of the said Act
or before the receipt of the report of the Advisory Board or before making a reference to
the Advisory Board; or
(ii)
such order of detention, being an order to which the
provisions of section 9 of the said Act apply, has not been revoked before the expiry of
the time for, or on the basis of, the review under sub-section (3) of section 9 or on the
report of the 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 the
provisions of section 12A of the said Act apply, has not been revoked before the expiry of
the time for, or on the basis of, the first review under sub-section (3) of that section,
or on the basis of the report of the Advisory Board under section 8, read with sub-section
(6) of section 12A, of that Act; or
(iv)
such order of detention has not been set aside by a Court
of competent jurisdiction;
(c)
every person who is a relative of 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 present
holder) of any property which was at any time previously held by a person referred to in
clause (a) or clause (b) unless the present holder or, as the case may be, any one who
held such property after such person and before the present holder, is or was a transferee
in good faith for adequate consideration.
Explanation 1:
For the purposes of sub-clause (i)
of clause (a), the value of any goods in relation to which a person has been convicted of
an offence shall be the wholesale price of the goods in the ordinary cause of trade in
India as on the date of the commission of the offence.
Explanation 2:
For the purposes of clause (c),
“relative”, in relation to a person, means –
(i)
spouse of the person;
(ii)
brother or sister of the person;
(iii)
brother or sister of the spouse of the person;
(iv)
any lineal ascendant or descendant of the person;
(v)
any lineal ascendant or descendant of the spouse of the person;
(vi)
spouse of a person referred to in clause (ii), clause (iii), clause (iv) or clause
(v);
(vii)
any lineal descendant of a person referred to in clause (ii) or clause (iii).
Explanation 3:
For the purposes of clause (d),
“associate”, in relation to a person, means-
(i)
any individual who, had been or is residing in the residential premises (including
out-houses) of such person;
(ii)
any individual who had been or is managing the affairs or keeping the accounts of
such person;
(iii)
any association of persons, body of individuals, partnership firm, or private
company within the meaning of the Companies Act, 1956 (1 of 1956), of which such person
had been or is a member, partner or director;
(iv)
any individual who had been or is a member, partner or director of an association
of persons, body of individuals, partnership firm or private company referred to in clause
(iii) at any time when such person had been or is a member, partner or director of such
association, body, partnership firm or private company;
(v)
any person who had been or is managing the affairs, or keeping the accounts, of any
association of persons, body of individuals, partnership firm or private company referred
to in clause (iii);
(vi)
the trustee of any trust, where,-
(a) the trust has been created by
such person; or
(b) the value of the assets
contributed by such person (including the value of the assets, if any, contributed by him
earlier) to the trust amounts, on the date on which the contribution is made, to not less
than twenty per cent of the value of the assets of the trust on that date;
(vii)
where the competent authority, for reasons to be recorded in writing, considers
that any properties of such person are held on his behalf by any other person, such other
person.
Explanation 4:
For the avoidance of doubt, it is
hereby provided that the question whether any person is a person to whom the provisions of
this Act apply may be determined with reference to any facts, circumstances or events
(including any conviction or detention) which occurred or took place before the
commencement of this Act
2A.
Act not to apply to certain persons:
On and from the commencement of
the provisions of Chapter VA of the Narcotic Drugs and Psychotropic Substances Act, 1985
(61 of 1985), the provisions of this Act shall not apply to persons in relation to whom
any order, or proceeding, may be made or taken under that Chapter.
3.
Definitions:
(1)
In this Act,
unless the context otherwise requires,-
“Appellate Tribunal”
means the Appellate Tribunal for Forfeited Property constituted under section 12;
“competent authority”
means an officer of the Central Government authorised by it under sub-section (1) of
section 5 to perform the functions of a competent authority under this Act;
“illegally acquired
property”, in relation to any person to whom this Act applies, means-
(i)
any property acquired by such person, whether before or after the commencement of
this act, wholly or partly out of or by means of any income, earnings or assets derived or
obtained from or attributable to any activity prohibited by or under any law for the time
being in force relating to any matter in respect of which Parliament has power to make
laws; or
(ii)
any property
acquired by such person, whether before or after the commencement of this Act, wholly or
partly out of or by means of any income, earnings or assets in respect of which any such
law has been contravened; or
(iii)
any property
acquired by such person, whether before or after the commencement of this Act, wholly or
partly out of or by means of any income, earnings or assets the source of which cannot be
proved and which cannot be shown to be attributable to any act or thing done in respect of
any matter in relation to which Parliament has no power to make laws; or
(iv)
any property
acquired by such person, whether before or after the commencement of this Act, for a
consideration, or by any means, wholly or partly traceable to any property referred to in
sub-clauses (i) to (iii) or the income or earnings from such property;
and includes-
any property held by such person
which would have been, in relation to any previous holder thereof, illegally acquired
property under this clause if such previous holder had not ceased to hold it, unless such
person or any other person who held the property at any time after such previous holder
or, where there are two or more such previous holders, the last of such previous holders
is or was a transferee in good faith for adequate consideration;
any property acquired by such
person, whether before or after the commencement of this Act, for a consideration, or by
any means, wholly or partly traceable to any property falling under item (A), or the
income or earnings therefrom;
“prescribed” means
prescribed by rules made under this Act;
“property” includes any
interest in property, movable or immovable;
“trust” includes any other legal obligation.
(2)
Any reference in
this Act to any law which is not in force in any area shall, in relation to that area, be
construed as a reference to the corresponding law, if any, in force in that area.
(3)
Any reference in
this Act to any officer or authority shall, in relation to any area in which there is no
officer or authority with the same designation, be construed as a reference to such
officer or authority as may be specified by the central Government by notification in the
Official Gazette.
4.
Prohibition of
holding illegally acquired property:
(1)
As from the
commencement of this Act, it shall not be lawful for any person to whom this Act applies
to hold any illegally acquired property either by himself or through any other person on
his behalf.
(2)
Where any person
holds any illegally acquired property in contravention of the provisions of sub-section
(1), such property shall be liable to be forfeited to the Central Government in accordance
with the provisions of this Act.
5.
Competent
authority:
(1)
The Central
Government may, by order published in the Official Gazette, authorise as many officers of
the Central Government (non below the rank of a Joint Secretary to the Government), as it
thinks fit, to perform the functions of the competent authority under this Act.
(2)
The competent
authorities shall perform their functions in respect of such persons or classes or persons
as the Central Government may, by order, direct.
6.
Notice of
forfeiture:
(1)
If, having
regard to the value of the properties held by any person to whom this Act applies, either
by himself or through any other person on his behalf, his known sources, of income,
earnings or assets, and any other information or material available to it as a result of
action taken under section 18 or otherwise, the competent authority has reason to believe
(the reasons for such belief to be recorded in writing) that all or any of such properties
are illegally acquired properties, it may serve a notice upon such person (hereinafter
referred to as the person affected) calling upon him within such time as may be specified
in the notice, which shall not be ordinarily less than thirty days, to indicate the
sources of his income, earnings or assets, out of which or by means of which he has
acquired such property, the evidence on which he relies and other relevant information and
particulars, and to show cause why all or any of such properties, as the case may be,
should not be declared to be illegally acquired properties and forfeited to the Central
Government under this Act.
(2)
Where a notice
under sub-section (1) to any person specifies any property as being held on behalf of such
person by any other person, a copy of the notice shall also be served upon such other
person.
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 section6, and the materials available before it and after giving to the person
affected (and in a case where the person affected holds any property specified in the
notice through any other person, to such other person also) a reasonable opportunity of
being heard, by order, record a finding whether all or any of the properties in question
are illegally acquired properties.
(2)
Where the
competent authority is satisfied that some of the properties referred to in the show-cause
notice are illegally acquired properties but is not able to identify specifically such
properties, then, it shall be lawful for the competent authority to specify the properties
which, to the best of its judgment, are illegally
acquired properties and record a finding accordingly under sub-section (1).
(3)
Where the
competent authority records a finding under this section to the effect that any property
is illegally acquired property, it shall declare that such property shall, subject to the
provisions of this Act, stand forfeited to the central Government free from all
encumbrances.
(4)
Where any shares
in a company stand forfeited to the Central Government under this Act, then, the company
shall, notwithstanding any thing contained in the Companies Act, 1956 (1 of 1956), or the
articles of association of the company, forthwith register the Central Government as the
transferee of such shares.
8.
Burden of proof:
In any proceedings under this Act,
the burden of proving that any property specified in the notice served under section 6 in
not illegally acquired property shall be on the person affected.
9.
Fine in lieu of
forfeiture:
(1)
Where the
competent authority makes declaration that any property stands forfeited to the Central
Government under section 7 and it is a case where the source of only a part, being less
than one-half, of the income, earnings or assets with which such property was acquired has
not been proved to the satisfaction of the competent authority, it shall make an order
giving an option to the person affected to pay, in lieu of forfeiture, a fine equal to one
and one-fifth times the value of such part.
Explanation:
For the purposes of this
sub-section, the value of any part of income, earnings or assets, with which any property
has been acquired, shall be,-
(a)
in the case of any part of income of earnings, the amount of such part of income of
earnings;
(b)
in the case of any part of assets, the proportionate part of the full value of the
consideration for the acquisition of such assets.
(2)
Before making an
order imposing a fine under sub-section (1), the person affected shall be given a
reasonable opportunity of being head.
(3)
Where the person
affected pays the fine due under sub-section (1), within such time as may allowed in that
behalf, the competent authority may, by order, revoke the declaration of forfeiture under
section 7 and thereupon such property shall stand released.
10.
Procedure in
relation to certain trust properties:
In the case of any person referred
to in clause (vi) of Explanation 3 to sub-section (2) of section 2, if the competent
authority, on the basis of the information and materials available to it, has reason to
believe (the reasons for such belief to be recorded in writing) that any property held in
trusts in illegally acquired property, it may serve a notice upon the author of the trust
or, as the case may be, the contributor of the assets out of or by means of which such
property was acquired by the trust and the trustees, calling upon them within such time as
may be specified in the notice which shall not ordinarily be less than thirty days, to
explain the source of the money or other assets out of or by means of which such property
was acquired or, as the case may be, the source of the money or other assets which were
contributed to the trust for acquiring such property and thereupon such notice shall be
deemed to be a notice served under section 6 and all other provisions of this Act shall
apply accordingly.
Explanation:
For the purposes of this section
“illegally acquired property”, in relation to any property held in trust,
includes-
(i)
any property which if it had continued to be held by the author of the trust of the
contributor of such property to the trust would have been illegally acquired property in
relation to such author or contributor;
(ii)
any property acquired by the trust out of any contributions made by any person
which would have been illegally acquired property in relation to such person had such
person acquired such property out of such contributions.
11.
Certain
transfers to be null and void:
Where after the issue of a notice
under section 6 or under section 10, any property referred to in the said notice is
transferred by any mode whatsoever such transfer shall, for the purposes of the
proceedings under this Act, be ignored and if such property is subsequently forfeited to
the Central Government under section 7, then, the transfer of such property shall be
deemed to be null and void.
12.
Constitution of
Appellate Tribunal:
(1)
The Central
Government may, be notification in the Official Gazette, constitute an Appellate Tribunal
to be called the Appellate Tribunal for Forfeited Property consisting of a Chairman and
such number of other members (being officers of the Central Government not below the rank
of a Joint secretary to the Government) as the Central Government thinks fit, to be
appointed by that Government for hearing appeals against the orders made under section 7,
sub-section (1) of section 9 or section 10.
(2)
The Chairman of
the Appellate Tribunal shall be a person who is or has been or is qualified to be a judge
of the Supreme Court or of a High Court.
(3)
The terms and
conditions of service of the Chairman and other members shall be such as may be
prescribed.
(4)
Any person
aggrieved by an order of the competent authority made under section 7, sub-section (1) of
section 9 or section 10, may, within forty-five days from the date on which the order is
served on him, prefer an appeal to the Appellate Tribunal.
Provided that the Appellate Tribunal may
entertain any appeal after the said period of forty-five days, but not after sixty days,
from the date aforesaid if it is satisfied that the appellant was prevented by sufficient
cause from filling the appeal in time.
(5)
On receipt of an
appeal under sub-section (4), the Appellate Tribunal may, after giving an opportunity to
the appellant to be heard, if he so desires, and after making such further enquiry as it
deems fit, confirm, modify or set aside the order appealed against.
(6)
The powers and
functions of the Appellate tribunal may be exercised and discharged by Benches consisting
of three members and constituted by the Chairman of the Appellate Tribunal.
(6A)
Notwithstanding
anything contained in sub-section (6), where the Chairman considers it necessary so to do
for the expeditious disposal of appeals under this section, he may constitute a Bench of
two members and a Bench so constituted may exercise and discharge the powers and functions
of the Appellate Tribunal:
Provided
that if the members
of a Bench so constituted differ on any point or points, they shall state the point or
points on which they differ and refer the same to a third members (to be specified by the
chairman) for hearing on such point or points and such point or points shall be decided
according to the opinion of that member.
(7)
The Appellate
Tribunal may regulate its own procedure.
(8)
On application
to the Appellate Tribunal and on payment of the prescribed fee, the Tribunal may allow a
party to any appeal or any person authorised in this behalf by such party to inspect at
any time during office hours, any relevant records and registers of the Tribunal and
obtain a certified copy of any part thereof.
13.
Notice or order
not to be invalid for error in description:
No notice issued or served, no
declaration made, and no order passed, under this Act shall be deemed to be invalid by
reason of any error in the description of the property or person mentioned therein if such
property or person is identifiable from the description so mentioned.
14.
Bar of
jurisdiction:
No order passed or declaration
made under this Act shall be appealable except as provided therein and no civil court
shall have jurisdiction in respect of any matter which the Appellate Tribunal or any
competent authority is empowered by or under the Act to determine, and no injunction shall
be granted by any Court or other authority in respect of any action taken or to be taken
in pursuance of any power conferred by or under this Act.
15.
Competent
authority and Appellate Tribunal to have powers of civil court:
The competent authority and the
Appellate tribunal shall have all the powers of a civil court while trying a suit under
the Code of Civil Procedure, 1908 (5 of 1908), in respect of the following maters, namely:
(a)
Summoning and
enforcing the attendance of any person and examining him on oath;
(b)
Requiring the
discovery and production of documents;
(c)
Receiving
evidence on affidavits;
(d)
Requisitioning
any public record or copy thereof from any court or office;
(e)
Issuing
commissions for examination of witnesses or documents;
(f)
Any other matter
which may be prescribed.
16.
Information to
competent authority:
(1)
Notwithstanding
anything contained in any other law, the competent authority shall have power to require
any officer or authority of the central Government or a State Government of a local
authority to furnish information in relation to such persons, points or matters as in the
opinion of the competent authority will be useful for, or relevant to, the purposes of
this Act.
(2)
Any officer of
the Income-tax Department, the Customs Department or the Central Excise Department or any
officer of Enforcement appointed under the Foreign Exchange Regulation Act, 1973 (46 of
1973), may furnish suo motu any information available with him to the competent authority
if in the opinion of the officer such information will be useful to the competent
authority for the purposes of this Act.
17.
Certain officers
to assist competent authority and Appellate Tribunal:
For the purposes of any
proceedings under this Act, the following officers are hereby empowered and required to
assist the competent authority and the Appellate Tribunal, namely:-
(a)
officers of the
Customs Department;
(b)
officers of the
Central Excise Department;
(c)
officers of the
Income-tax Department;
(d)
officers of
Enforcement appointed under the Foreign Exchange Regulation Act, 1973 (46 of 1973);
(e)
officers of
Police;
(f)
such other
officers of the Central of State Government as are specified by the Central Government in
this behalf by notification in the Official Gazette.
18.
Power of
competent authority to require certain officers to exercise certain powers:
(1)
For the purposes
of any proceedings under this Act or the initiation of any such proceedings, the competent
authority shall have power to cause to be conducted any inquiry, investigation or survey
in respect of any person, place, property, assets, documents, books of account or any
other relevant matters.
(2)
For the purposes
referred to in sub-section (1), the competent authority may, having regard to the nature
of the inquiry, investigation or survey, require an officer of the Income-tax Department
to conduct or cause to be conducted such inquiry, investigation or survey.
(3)
Any officer of
the Income-tax Department who is conducting or is causing to be conducted any inquiry,
investigation or survey required to be conducted under sub-section (2), may, for the
purpose of such inquiry, investigation or survey, exercise any power (including the power
to authorise the exercise of any power) which may be exercised by him for any purpose
under the Income-tax Act, 1961 (43 of 1961), and the provisions of the said Act shall, so
far as may be, apply accordingly.
19.
Power to take
possession:
(1)
Where any
property has been declared to be forfeited to the Central Government under this Act, or
where the person affected has failed to pay the fine due under sub-section (1) of section
9 within the time allowed therefore under sub-section (3) of the section, the competent
authority may order the person affected as well as any other person who may be in
possession of the property to surrender or deliver possession thereof to the competent
authority or to any person duly authorised by it in this behalf within thirty days of the
service of the order.
(2)
If any person
refuses or fails to comply with an order made under sub-section (1), the competent
authority may take possession of the property and may for that purpose use such force as
may be necessary.
(3)
Notwithstanding
anything contained in sub-section (2), the competent authority may, for the purpose of
taking possession of any property referred to in sub-section (1), requisition the service
of any police officer to assist the competent authority and it shall be the duty of such
officer to comply with such requisition.
20.
Rectification of
mistakes:
With a view to rectifying any
mistakes apparent from the record, the competent authority or the Appellate Tribunal, as
the case may be, may amend any order made by it within a period of one year from the date
of the order:
Provided
that if any such
amendment is likely to affect any person prejudicially, it shall not be made without
giving to such person a reasonable opportunity of being heard.
21.
Findings under
other laws not conclusive for proceedings under this Act:
No finding of any officer of
authority under any other law shall be conclusive for the purposes of any proceedings
under this act.
22.
Service of
notices and orders:
Any notice or order issued or make
under this Act shall be served-
(a)
by tendering the
notice or order or sending it by registered post to the person for whom it is intended or
to his agent;
(b)
if the notice or
order cannot be served in the manner provided in clause
(a), by affixing it on a conspicuous place in the property in relation to
which the notice or order is issued or made, or on some conspicuous part of the premises
in which the person for whom it is intended is known to have last resided or carried on
business or personally worked for gain.
23.
Protection of
action taken in good faith:
No suit, prosecution or other
proceeding shall lie against the Central Government or any Officer of the Central or State
Government for any thing which is done, or intended to be done, in good faith, in
pursuance of this Act or the rules made thereunder.
24.
Act to have
overriding effect:
The provisions of this Act shall
have effect notwithstanding any thing inconsistent therewith contained in any other law
for the time being in force.
25.
Provisions of
the Act not to apply to certain properties help in trust:
Nothing contained in this Act
shall apply in relation to any property held by a trust or an institution created or
established wholly for public, religious or charitable purposes if –
(i)
such property
has been so held by such trust or institution from a date prior to the commencement of
this Act.
(ii)
Such property is
wholly traceable to any property held by such trust or institution prior to the
commencement of this Act.
26.
Power to make
rules:
(1)
The Central
Government may, by notification in the Official Gazette, make rules to carry out the
provisions of this Act.
(2)
In particular
and without prejudice to the generality of the foregoing power, such rules may provide for
all or any of the following matters, namely;-
(a)
the terms and conditions of service of the chairman and other
members of the Appellate Tribunal under sub-section (3) of section 12;
(aa)
the fees which shall be paid for the inspection of the records
and registers of the Appellate Tribunal or for obtaining a certified copy of any part
thereof under sub-section (8) of section 12;
(b)
the powers of a civil court that may be exercised by the
competent authority and the Appellate Tribunal under clause (f) of section 15;
(c)
any other matter which has to be, or may be, prescribed.
(3)
Every rule made under this Act shall be
laid, as soon as may be after it is made, before each House of parliament, while it is in
session or the successive sessions, and if, before the expiry of the session immediately
fo
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