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THE SMUGGLERS AND FOREIGN EXCHANGE MANIPULATORS
(FORFEITURE OFPROPERTY ACT 1976),
ACT NO.
13 OF 1976
[25th
January, 1976.]
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 pro- perties 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.
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. 1955.
2. Application.
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 has been convicted under the Foreign
Exchange Regulation Act, 1947 ( 7 of 1947), or the Foreign Exchange Regulation
Act,
1104
1973 (46 of 1973), of an offence, the amount or
value involved in which exceeds one lakh of rupees; or
(iii) 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
(iv) 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 of those
Acts ;
(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 to 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 a 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
1105
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 course 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 outhouses) 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
1106
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. Act not to
apply to certain persons. 1[2A.On and from thecommencement of the provisions of
Chapter VA of the Narcotic Drugs andPsychotropic Substance
3. Definitions.
Definitions.
(1) In
this Act, unless the context otherwise requires-
(a) "Appellate Tribunal" means the Appellate Tribunal for
Forfeited Property constituted under section
12 ;
(b) "competent authority" means an officer of the Central
Government authorised by it under sub-
(c)
"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
1. Ins. by Act 2 of 1989, s.22 (w.e.f. 29-05-1989).
1106A
(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,
1107
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-
(A) any property held by such person which would
have been, in relation to any previous holder thereof, illegally ac- quired
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;
(B) 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;
(d) "prescribed" means prescribed by rules made under this Act;
(e) "property" includes any interest in property, movable or
immovable;
(f) "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.
Competent
authority.
(1) The Central Government may, by order published
in the Official Gazette, authorise as many officers of the Central Government
(not 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.
1108
(2) The competent authorities shall perform their
functions in respect of such persons or classes of persons as the Central
Government may, by order, direct.
6. Notice of forfeiture.
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 writting) 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
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.
Forfeiture
of property in certain cases.
(1) The competent authority may, after considering
the explanation, if any, to the show- cause notice issued under section 6, 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
anything contained in the Companies Act, 1956 (1 of 1956), or the art- icles of
asso-
1109
ciation
of the company, forthwith register the Central Government as the transferee of
such shares.
8. Burden of proof.
Burden of proof. In any proceedings under this
Act, the burden of proving that any property specified in the notice served
under section 6 is not illegally acquired property shall be on the person
affected.
9. Fine in lieu of forfeiture.
Fine in
lieu of forfeiture.
(1) Where the competent authority makes a
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 or earnings, the amount of such part
of income or earnings;
(b) in the case of any part of assets, the
proportionate part of the full value of the consideration for the acquistion of
such assets.
(2) Before making an order imposing a fine under sub-section
(1), the per-son affected shall be given a reasonable opportunity of being
heard,
(3) Where the person affected pays the fine due
under sub- section (1), within such time as may be 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.
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 the
basis of the
information and materials available to it, has
reason to believe (the reason for such belief to be recorded in writing) that
any property held in trust 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 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 the 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 or 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.
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.
Constitution
of Appellate Tribunal.
(1) The Central Government may, by 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 filing 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.
1[(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 member (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.
1[(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 art thereof.]
13. Notice or order not to be invalid for error in description.
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 invaild 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.
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 this 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
civilcourt.
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 matters,
namely:-
(a) summoning and enforcing the attendance of any person an 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.
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 or a local authority
to furnishing 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 Depart- ment or the Central Excise Department or any officer of
enforcement appointed under the Foreign Exchange Regulation Act, 1973 (46 of
1973), may furnish
1. Ins.
by Act 55 of 1980, s.2 (w.e.f.1-7-1981).
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.
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 or 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
exercisecertain powers.
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.
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 therefor under sub- section (3) of that 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.
Rectification of mistakes. With a view to
rectifying any mistakes apparent from 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
thisAct.
Findings under other laws not conclusive for
proceedings under this Act. No finding of any officer or authority under any
other law shall be conclusive for the purpose of any proceedings under this
Act.
22. Service of notices and orders.
Service
of notices and orders. Any notice or order issued or made 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.
Protection of
action taken in good faith. No suit, prosecution or other proceeding shall lie
against the Central Government or any officers of the Central or State
Government for anything 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 overiding effect.
Act to have overiding 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 held
intrust.
Provisions of the Act not to apply to certain
properties held 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; or
(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.
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;
1[(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 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, for a total period of thirty days which may be comprised in one
session or in two or more successive sessions, and if, before the expiry of the
session immediately following the session or the successive sessions aforesaid,
both Houses agree in making any modification in the rule, or both Houses agree
that the rule should not be made, the rule shall thereafter have effect only in
such modified form or be of no effect, as the case may be; so, however, that
any such modification or annulment shall be without prejudice to the validity
of anything previously done under that rule.
27. Repeal and saving.
Repeal
and saving.
(1) The Smuggler and Foreign Exchange Manipulators
(Forfeiture of Property) Ordinance, 1975 (20 of 1975), is hereby repealed.
(2) Notwithstanding such repeal, anything done or
any action taken under the Ordinance so repealed shall be deemed to have been
done or taken under the corresponding provisions of this Act.
