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

Citation: [2023] 3 S.C.R. 1084 · Decided: 22-03-2023 · Supreme Court of India · Bench: AJAY RASTOGI · Disposal: Dismissed

Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 3 S.C.R.
   [2023] 3 S.C.R. 1084
1084
M/S. PLATINUM THEATRE AND OTHERS
v.
COMPETENT AUTHORITY SMUGGLERS & FOREIGN
EXCHANGE MANIPULATORS (FORFEITURE OF PROPERTY)
ACT, 1976 AND ANOTHER
(Civil Appeal No(S). 4369 of 2009)
MARCH 22, 2023
[AJAY RASTOGI AND BELA M. TRIVEDI, JJ.]
Smugglers and Foreign Exchange Manipulators (Forfeiture
of Property) Act, 1976 – ss. 2, 6, 7, 8, 9 – Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 1974
(COFEPOSA) – Appellant no.1-registered partnership firm
comprising of appellant nos. 2 to 5 were holding the subject theatre
– According to the finding recorded by the competent authority,
more than 50% of the value assessed (i.e. Rs.13.12 lakhs) of the
theatre has remained unexplained and accordingly the theatre was
liable for forfeiture u/s. 7 of the Act, 1976 – Aggrieved by it, the
partners approached High Court – Single Judge of the High Court
dismissed their plea on the premise that the partners failed to disclose
the source of their income and had not tendered any explanation
with respect to the same – High Court upheld the order passed by
the 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 have
justified any source from where their capital contribution was made
nor the explanation was tendered by them regarding their source of
income – What was tendered by the partners was disbelieved at all
stages and a finding was returned that major part of their investment
was income from undisclosed sources – Therefore, Authority has
not committed any manifest error in forfeiting the property in exercise
of power u/s. 7 of Act 1976.
Smugglers and Foreign Exchange Manipulators(Forfeiture
of Property) Act, 1976 – Object & purpose of – The Act has been
enacted with an object to provide for the forfeiture of illegally
acquired properties of smugglers and foreign exchange
manipulators and for matters connected therewith or incidental
thereto – At the same time, to provide an effective prevention of
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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.
Dismissing the appeal, the Court
HELD: 1. The Act, 1976 has been enacted by the
Parliament with an object to provide for the forfeiture of illegally
acquired properties of smugglers and foreign exchange
manipulators and for matters connected therewith or incidental
thereto. At the same time, to provide an 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. It also provides that 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 to nail such persons who are holding the
properties acquired by them through such gains in the name of
their relatives, associates and confidants. [Para 9][1090-E-G]
2. Section 2(1) of the Act, 1976 applies to the persons
specified in sub-section (2). Section 2(2) gives a long list of
different categories of persons to whom the Act applies and
includes as defined in Section 2(2)(b) that every person in respect
of whom an order of detention has been made under the
COFEPOSA and also includes every associate of a 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
all individuals who had been or is a member, partner or director
of 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 any
proceedings under this Act, in reference to the notice served
under Section 6 in regard to the illegally acquired properties shall
lie on the person affected and while exercising power under
Section 7, forfeiting the illegally acquired properties in a case
PLATINUM THEATRE v. COMPETENT AUTHORITY SMUGGLERS &
FOREIGN EXCHANGE MANIPULATORS  ACT, 1976
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where the source of only a part, being less than 

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