Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act 1976.
SMUGGLERS AND FOREIGN EXCHANGE MANIPULATORS
(FORFEITURE OF PROPERTY) ACT, 1976
(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:
- Short title, extent and commencement:
- This act may be called the Smugglers and Foreign Exchange
Manipulators (Forfeiture of Property) Act, 1976.
- It extends to the whole of India except the State of Jammu and
Kashmir.
- It shall be deemed to have come into force on the 5th day of
November, 1975.
- Application:
- The provisions of this Act shall apply only to the persons specified
in sub-section (2).
- The persons referred to in sub-section (1) are the following, namely
:-
- every person-
- 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
- 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
- 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;
- 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-
- 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do not apply, has not been revoked on the report of the Advisory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
- 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
- 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
- such order of detention has not been set
aside by a Court of competent jurisdiction;
- every person who is a relative of person
referred to in clause (a) or clause (b);
- every associate of a person referred to in
clause (a) or clause (b);
- 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 –
- spouse of the person;
- brother or sister of the person;
- brother or sister of the spouse of the person;
- any lineal ascendant or descendant of the person;
- any lineal ascendant or descendant of the spouse
of the person;
- spouse of a person referred to in clause (ii), clause
(iii), clause (iv) or clause (v);
- 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-
- any individual who, had been or is residing in the
residential premises (including out-houses) of such person;
- any individual who had been or is managing the affairs
or keeping the accounts of such person;
- 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;
- 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;
- 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);
- the trustee of any trust, where,-
- the trust has been created by such person; or
- 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;
- 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.
- Definitions:
- 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-
- 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
- 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
- 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
- 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.
- 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.
- 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.
- Prohibition of holding illegally acquired property:
- 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.
- 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.
- Competent authority:
- 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.
- The competent authorities shall perform their functions in respect
of such persons or classes or persons as the Central Government may, by
order, direct.
- Notice of forfeiture:
- 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.
- 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.
- Forfeiture of property in certain cases:
- 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.
- 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).
- 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.
- 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.
- 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.
- Fine in lieu of forfeiture:
- 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,-
- in the case of any part of income of earnings,
the amount of such part of income of earnings;
- in the case of any part of assets, the
proportionate part of the full value of the consideration for the
acquisition of such assets.
- Before making an order imposing a fine under sub-section (1), the
person affected shall be given a reasonable opportunity of being head.
- 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.
- 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-
- 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;
- 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.
- 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.
- Constitution of Appellate Tribunal:
- 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.
- 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.
- The terms and conditions of service of the Chairman and other
members shall be such as may be prescribed.
- 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.
- 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.
- 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.
- The Appellate Tribunal may regulate its own procedure.
- 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.
- 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.
- 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.
- 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:
- Summoning and enforcing the attendance of any
person and examining him on oath;
- Requiring the discovery and production of
documents;
- Receiving evidence on affidavits;
- Requisitioning any public record or copy
thereof from any court or office;
- Issuing commissions for examination of witnesses or
documents;
- Any other matter which may be prescribed.
- Information to competent authority:
- 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.
- 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.
- 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:-
- officers of the Customs Department;
- officers of the Central Excise Department;
- officers of the Income-tax Department;
- officers of Enforcement appointed under the Foreign
Exchange Regulation Act, 1973 (46 of 1973);
- officers of Police;
- 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.
- Power of competent authority to require certain officers to
exercise certain powers:
- 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.
- 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.
- 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.
- Power to take possession:
- 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.
- 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.
- 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.
- 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.
- 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.
- Service of notices and orders:
Any notice or order issued or make under this Act shall be served-
- by tendering the notice or order or sending it by
registered post to the person for whom it is intended or to his agent;
- 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.
- 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.
- 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.
- 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 –
- such property has been so held by such trust or
institution from a date prior to the commencement of this Act.
- Such property is wholly traceable to any property
held by such trust or institution prior to the commencement of this Act.
- Power to make rules:
- The Central Government may, by notification in the Official Gazette,
make rules to carry out the provisions of this Act.
- 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;-
- 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;
- the powers of a civil court that may be
exercised by the competent authority and the Appellate Tribunal
under clause (f) of section 15;
- any other matter which has to be, or may be,
prescribed.
- 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 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.
- Repeal and saving:
- The Smugglers and Foreign Exchange Manipulators (Forfeiture of
Property) ordinance, 1975 (20 of 1975), is hereby repealed.
- 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.