Smuggling activities and Foreign Exchange Manipulators are having deleterious effect on the national economy. Persons engaged in such calendstine activities have been augmenting their ill-gotten gains by violation of various laws such as Income Tax, Wealth Tax or other laws. The ill-gotten gains augmented by such persons have been held either in their own names or in the names of their relatives, associates and confidants. For the effective prevention of smuggling activities and foreign exchange manipulations, it was felt that certain enactments in the law be made to deprive persons engaged in such activities and manipulation of their ill-gotten gains. By enactment by Parliament, the Smugglers and Foreign Exchange Manipulators Act, 1976 came into being w.e.f. 5th day of November 1975 which extends to the whole of India except the State of Jammu & Kashmir.
The Smugglers and Foreign Exchange Manipulators Act, 1976 in short the SAFEM(FOP) Act, 1976 shall apply to every person who has been convicted under the Sea Customs Act, 1878. the Customs Act 1962, Foreign Exchange Regulation Act 1947, the Foreign Exchange Regulation Act 1973 or to 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under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 if such detention has not been revoked by the Advisory Board or has not been set aside by a Court of Competent Jurisdiction. The applicability of the afore-mentioned Act is extended to every person who is a relative or associate of persons referred to above. Even holder of any property which was previously held by afore-mentioned persons is covered if it can be shown that the transfer was not in good faith or for adequate consideration. The persons convicted for the first time under Sea Customs Act 1878, Customs Act 1962, FERA 1947 or FERA 1973 of an offence in relation to goods of a value exceeding 1 lakh of rupees is covered within the ambit of this Act. No pecuniary limit is applicable to a person who is convicted under the afore-mentioned Acts more than once.
Prohibition clause under the Act
As per provisions of Section 4 of the 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 and if any person holds any illegally acquired property, the same shall be liable to be forfeited to the Central Govt. in accordance with the provisions of this Act by the Competent Authority duly appointed u/s 5 of the Act.
1.[Section 3 (1) (c) of the Act defines illegally acquired property, moveable or immoveable. If the Competent Authority has reasons to believe that all or any of such illegally acquired properties are held by any person to whom this Act applies either by himself or through any other person on his behalf, he/she may after recording the reasons in writing serve a notice u/s 6 upon such person/persons calling upon him/them within such time as may be specified in the notice to indicate the sources of his income, earnings or assets out of which or by means of which he has acquired such properties 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 Govt. under this Act.]
2.Section 11 provides that if any property is transferred by any mode whatsoever after issue of notice u/s 6 or u/s 10 which relates to trust properties, such transfer shall for the purposes of the proceedings under this Act be ignored and if such property is subsequently forfeited to the Central Govt. then the transfer of such property shall be deemed to be null and void.
3. The Competent Authority after giving reasonable opportunity of being heard as prescribed u/s 7 of the Act may pass such order, as it deems fit either forfeiting properties to the Central Govt free from all encumbrances or releasing some or all of them after recording a finding in respect of each property. Where the Competent Authority makes a declaration that any property stands forfeited to the Central Govt. u/s 7 and it is a case where more than 50 percent of the sources of funds invested in purchase of properties identified for forfeiture, have been explained to the satisfaction of Competent Authority for the Competent Authority 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 after affording him with an opportunity of being heard.
Burden of proof
Under the proceedings of this Act, the burden of proving that any property specified in the notice served u/s 6 is not illegally acquired property shall be on the person affected.
Powers of Competent Authority
In order to unearth illegally acquired properties of the persons specified as per the provisions of this Act, Section 15, 16, 17 & 18 of SAFEM(FOP) Act, 1976 provides and gives powers to Competent Authority to require any officer or authority of the Central Govt., State Govt. or 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. The officers of Income Tax Department, Customs & Central Excise Department and others as prescribed u/s 17 of the Act are empowered and required to assist the Competent Authority in its functioning. The powers of the Civil Court are also inferred on the Competent Authority and Appellate Tribunal for Forfeited Properties by virtue of Section 15 in matters of summoning, enforcing attendance of any person, examining on oath, requiring the discovery and production of documents, receiving evidence or affidavits, requisitioning any public record or copy thereof, issuing commission for examination of witness or documents and any other matter which may be prescribed. Thus, the Competent Authority and the Appellate Tribunal for Forfeited Properties in these matters have all the powers of a Civil Court.
Power to take possession
By virtue of Section 19 of SAFEM(FOP) Act, 1976, the Competent Authority has powers to take possession of the property forfeited to the Central Govt. under this Act or all the property in respect of which fine has not been paid within the time prescribed.
Act to have over riding effect
No finding of any officer or authority under any other law shall be conclusive for the purposes of any proceedings under this Act as provided by Section 21 of the Act. Section 24 envisages that the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force i.e. this Act is to have over-riding effect.
The orders passed by the Competent Authority can be appealed against before Appellate Tribunal for Forfeited Properties, Lok Nayak Bhawan, 4th Floor, Khan Market, New Delhi within 45 days of the receipt of such order. It has been clearly provided in Section 14 of the Act that 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.
Constitutional validity of SAFEMA
The constitutional validity of the Act had been challenged but a 9 Judges Bench of the Supreme Court of India passed decision on 12th May 1994 in the case of Attorney General V/s Amritlal Prajivandass and Others etc. upholding constitutional validity of SAFEM(FOP) Act, 1976 (AIR 1994 SC 2179