ASLAM MOHD. MERCHANT versus COMPETENT AUTHORITY & ORS.

Citation: [2008] 10 S.C.R. 332 · Decided: 08-07-2008 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2008] 10 S.C.R. 332 
ASLAM MOHD. MERCHANT 
).. 
A 
v. 
COMPETENT AUTHORITY & ORS. 
(Criminal Appeal No. 1053 of 2003) 
B 
JULY 8, 2008 
[S.B. SINHA AND V.S. SIRPURKAR, JJ.] 
Narcotic Drugs and Psychotropic Substances Act, 1985 
- Chapter VA, ss 68A, 68C, 68E, 68F, 68H and 681- lnterpre-
c tation and application of - Order of preventive detention 
against a person - Forfeiture of property of relatives of the 
person, having being derived from or used in illicit traffic -
Challenge to - High Court holding that the proceedings initi-
ated validly against the relatives - On appeal,· held: Order of 
~ 
D High Court not sustainable - Conditions precedent for initiat-
';j. 
ing valid proceeding-formation of 'reason to believe' on part 
of the authority wherefor reasons are to be recorded in writing 
that properties are illegally acquired properties, not fulfilled -
There was non-application of mind on part of the Authority -
E Property sought to be forfeited did not have direct nexus with 
the income or assets or properties illegally acquired by per-
son concerned. 
It is alleged that M was involved in illicit trafficking 
under the Prevention of Illicit Traffic in Narcotic Drugs and 
y. 
F Psychotropic Substances Act, 1988. An order of preven-
...( 
tive detention was passed against M, however, the order 
could not be served on him as he had left the country. M 
was a 'person' r~ferred to in s. 68A(C) of the Act. The ap-
pellants being relatives of M were issued notices to show 
G cause as to why their properties, being 'illegally acquired 
properties' should not be forfeited. Causes were shown 
and the appellants were given opportunity of hearing. 
-~5 
Appellants contended that out of the 40 properties men-
tioned therein they were concerned only with 11 proper-
H 
332 
ASLAM MOHD. MERCHANT v. COMPETENT 
333 
AUTHORITY &"ORS. 
"' 
ties. Some of the prop~rties belonging to the appellants A 
were directed to be forfeited and some were released. 
Appellate Tribunal upheld the findings. However, some 
more properties were directed to be released as they were 
not 'illegally acquired properties'. Aggrieved appellants 
filed writ petitions on the ground that the proceedings B 
were not validly initiated against them. The writ petitions 
were dismissed. Hence the present appeals. 
Allowing the appeals, the Court 
HELD: 1.1 Chapter VA of the Narcotic Drugs and Psy- c 
chotropic Substances Act, 1985 contains stringent pro-
visions. It provides for forfeiture of property. Such prop-
erty must be derived from or used in illicit traffic. Illegally 
acquired property in relation to any person to whom the 
chapter applies would mean only such property which D 
was acquired wholly or partly out of or by means of any 
income attributable to the contravention of any provision 
of the Act or for a consideration wholly or partly traceable 
to any property referred to in sub-clause (i) or the income 
or earning from property. The property sought to be for-
E 
feited must be the one which has a direct nexus with the 
income etc. derived by way of contravention of any of the 
provisions of the Act or any property acquired therefrom. 
-
What is meant by identification of such property having 
~~-
regard to the definition of 'identifying' is that the property 
' 
was derived from or used in the illicit traffic. The property 
F 
having regard to the said definition would include any of 
the properties described therein and deeds of instru-
ments evidencing interest derived from or used in the ii-
licit traffic. [Paras 17, 18 and 19] [352-C,D,E,F & G] 
1.2 The word "person" leads to determining the na-
G 
f'.J, 
ture, source, disposition, movement, title or ownership 
of the property. Direction to forfeiture of a property is in 
two parts. Firstly, it has to be identified in terms of s.68-F 
for which a satisfaction must be arrived at by the author-
H 
334 
SUPREME COURT REPORTS 
[2008] 10 S.C.R. 
" 
A ity specified therein to the effect that the person concerned 
had been holding any illegally acquired property. Sec-
ondly, on the basis of such information, he is entitled to 
take steps for tracing and identifying the property. [Para 
19) [352-H; 353-A & BJ 
B 
1.3 Before the actual order of forfeiture of illegally 
'l 
acquired property is passed, issuance of notice to show 
cause is essential so as to fulfil the requirements of natu-
ral justice. Such a notice is to be_ issued by the Authority 
having regard to the value of the property held
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