DURLABHAI NARSIBHAI JOGIA vs. APPELLATE TRIBUNAL FOR FORFEITED PROPERTIES

C/LPA/287/2008 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD LETTERS PATENT APPEAL NO. 287 of 2008 In SPECIAL CIVIL APPLICATION NO. 5900 of 2006

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE A.G.URAIZEE ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ DURLABHAI NARSIBHAI JOGIA & 1....Appellant(s) Versus APPELLATE TRIBUNAL FOR FORFEITED PROPERTIES & 1....Respondent(s) ================================================================ Appearance: MS GARGI VYAS FOR M/S WADIAGHANDY & CO, ADVOCATE for the Appellant(s) No. 1 - 2 MR KT DAVE, ADVOCATE for the Respondent(s) No. 2 MR SHAKEEL A QURESHI, ADVOCATE for the Respondent(s) No. 2 RULE SERVED for the Respondent(s) No. 1 ================================================================ Page 1 of 9

C/LPA/287/2008 JUDGMENT CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE A.G.URAIZEE

Date : 19/09/2014

ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. We have heard Ms. Gargi Vyas, learned advocate appearing for M/s Wadia Ghandy & Co. for the appellants and Mr. KT Dave, learned advocate appearing for respondent authority. 2. This intra-court Letters Patent Appeal has been filed challenging the judgement and order dated 28.02.2008 passed by the learned Single Judge in Special Civil Application No. 5900 of 2006 whereby the learned Single Judge has dismissed the writ petition. 3. The facts in brief leading to the filing of the present appeal are set out as under: 3.1 The appellant no.1 Durlabji Narsibhai Jogia came to be detained under the provisions of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred to as ‘COFEPOSA’) by the State Government vide order dated 21-1-1992 which was confirmed by the Advisory Board on 6-4-1992 and as such on completion of the period of detention, the appellant no.1 was released. The case against the appellant no.1 as reflected in the grounds of detention was that when he was intercepted and checked by the Customs Officers on 31-7-1991, upon search Page 2 of 9

C/LPA/287/2008 JUDGMENT gold biscuits worth Rs.4,80,000/- were recovered from the pocket of appellant no.1, and therefore, the Customs Officers under the reasonable belief that these gold biscuits were smuggled goods placed the same under seizure as they were liable for confiscation under the provisions of the Customs Act. 2.2 Subsequently, on 18-9-2000 a show cause notice under Section 6(1) of the Smugglers and Foreign Exchange Manipulators(Forfeiture of Property Act, 1976 (hereinafter referred to as ‘SAFEMA’) was issued to the appellants and their relatives by the competent authority as appellant no.1’s case was covered under section 2(2)b) of SAFEMA while the appellant no.2 being his wife was covered under section 2(2)c thereof, calling upon them to indicate the source of their income, earnings or assets out of which or by means of which the following properties were acquired by them: i. ‘Chandanvilla’ at Diwanpara Sheri no.1, Rajkot stated to have been held by the petitioner no.1 along with Shri Tulsidas Raju N.Jogia, Shri Narsibhai Vasanji Jogia and Smt. Parvatiben N. Jogia purchased during 1995 valued at Rs.8,00,000/- ii.A shop in the cellar of Raj Shilp Complex, Ghadnirang, Rajkot, purchased in the year 1998 valued at Rs.3,00,00/-. 2.3 It was alleged in the said notice that the family of the appellants consisted of 13 members and that their income as per the returns of income-tax filed by them for the years 1972- 73 to 1977-78 and 1981-82 to 1990-91 were not sufficient to Page 3 of 9

C/LPA/287/2008 JUDGMENT meet the household expenses and they were called upon to show cause as to why the said properties should not be forfeited under Section 7 of the Act as they had illegally acquired properties. 2.4 On receipt of the said show cause notice, the appellants vide reply dated 12-10-2000 denied all the allegations made therein and produced documentary evidence like sale-deeds, income-tax returns. The appellants also submitted details regarding the acquisition of the properties and the transactions, assessment orders passed by the income-tax authorities, confirmation of the parties who had given loans vide letters dated 21st May, 2001 and 17th September, 2001. According to the appellants, in spite of their having produced all material to show that the properties were legally acquired the competent authority passed an order dated 31-5-2002 forfeiting the aforesaid two properties as mentioned in the show cause notice. 2.5 Aggrieved thereby, the appellants preferred two separate appeals before respondent no.1-Appellate Tribunal who by his order dated 1st February, 2006 dismissed both the appeals by a common order and confirmed the order passed by the competent authority, pursuant to which the writ petition was filed before this Court. The learned Single Judge after hearing both the sides dismissed the writ petition. Hence, the present appeal. 3. Ms. Gargi Vyas, learned advocate appearing on behalf of M/s Wadia Ghandy & Co., advocates for the appellants Page 4 of 9

C/LPA/287/2008 JUDGMENT contended that the learned Single Judge has reproduced the reasonings adopted by the competent authority. She submitted that the learned Single Judge erred in law as well as in facts in affirming issuance of the show cause notice and the action/orders passed in pursuance thereto. 3.1 Ms. Vyas has drawn the attention of this Court to the further affidavit at page 405 of the appeal and contended that the balance sheet/statement of assets and liabilities of appellants for a period of ten years from 1991-92 to 1999- 2000 can be perused. She submitted that the returns filed by the appellants have also been duly accepted by the Income Tax Department under Section 143(1) of the Income Tax Act, 1961 and therefore the veracity of the incomes of the appellants ought not to have been questioned unless there was a direct nexus between the alleged illegal income of appellant no. 1 and the purchased property. She submitted that the said fact has not only been ignored by the learned Single Judge but also a contrary finding has been made to the effect that the returns of appellant no. 1 have not been accepted by the Income Tax Department and consequent order of forfeiture of properties under Section 7 of SAFEMA has been upheld by the learned Single Judge. 3.2 Ms. Vyas further contended that in any view of the matter, the reading of the order of respondent no. 1 as well as the Competent Authority would show that no nexus as is required to be established between the activities of the detenue and the acquisition of the property is established. 4. Mr. KT Dave, learned advocate appearing for respondent Page 5 of 9

C/LPA/287/2008 JUDGMENT no. 2 supported the impugned order passed by the learned Single Judge and submitted that the same having been passed in accordance with law does not call for any interference by this Court. 4. We have perused the papers on record more particularly the impugned orders passed by the Competent Authority, the Appellate Authority and the learned Single Judge. The Competent Authority while considering the case of the appellants observed that on a perusal of the capital accounts, balance sheets and cash flow accounts produced by the appellants, it appears that the closing balance of the previous years do not tally with the opening balance of subsequent years and that there are many wrong entries in the accounts which have been prepared according to the convenience of the appellants and that the same was also not signed by a qualified Chartered Accountant. The Competent Authority has come to the satisfactory conclusion that the legal source of income was not explained by the appellants and therefore the said properties were ordered to be forfeited as the appellants failed to prove the legitimate source of income from which they were purchased. The Competent Authority in para 22 has in detail explained the lacuna in the accounts tendered by the appellants. 5. The Appellate Authority observed that though the Chartered Accountant had given tendered explanation about the discrepancies pointed out by the Competent Authority in para 22 of the impugned order, there was no explanation coming forth with regards to the deposits of large amounts of cash in bank in the year 1997-98. Going by the entire record Page 6 of 9

C/LPA/287/2008 JUDGMENT of the case the Appellate Authority observed that the findings of the Competent Authority with regard to discrepancy in the opening and closing balances of the accounts are germane. The Appellate Authority has observed that though the Chartered Accountant accepted that an amount of Rs. 87500/- out of the sales proceeds of Rs. 3,50,000/- of an ancestral house called ‘Raj Darshan’ was used in the purchase of forfeited properties, he has not proved the legitimacy of the remaining amount of the property above Rs. 87500/-. Thus the Appellate Authority has upheld the order passed by the Competent Authority. 6. The learned Single Judge while examining the matter before it, has placed emphasis on the discrepancies in the accounts and the statements produced by the appellants and the failure to explain the same before the Appellate Authority as well. The learned Single Judge observed that the manipulated accounts contributed only to the extent of Rs. 1,19,000/- but the balance amount on account of appellant no. 2 had not been explained by the appellants. The learned Single Judge also considered the submission of the appellants that income tax returns were filed but the learned Single Judge was of the view that the income tax returns appear to have been filed only after the receipt of the show cause notice of the earlier years. 7. We are in complete agreement with the reasonings adopted and concurrent findings arrived at by the authorities below and the learned Single Judge. The contention raised by the learned advocate for the appellant that returns filed by the appellants and not rejected by the Income Tax department Page 7 of 9

C/LPA/287/2008 JUDGMENT do not merit consideration. The learned Single Judge has observed that the competent authority has made a specific statement that though the appellants had filed income tax returns there is nothing to show that these accounts had been finalized and accepted by the income tax authorities. In fact the learned Single Judge has observed that even if it is believed that the appellants had filed income tax returns and the same are accepted by the authorities, since the accounts are fabricated and there being involvement of appellant no. 1 in smuggling of gold, the investments in the properties in question is proved to be disproportionate to the known source of income, earnings and assets and therefore they are illegally acquired properties. We do not find any infirmity in the impugned orders and therefore as the appellants could not prove that the properties in question were acquired from their legitimate source of income, the same were liable to be forfeited under section 7 of the SAFEMA. 8. We are in complete agreement with the impugned order passed by the learned Single Judge and the authorities below and therefore do not see any reason for causing interference in the appeal. Appeal accordingly stands dismissed. 9. At this stage, Ms. Vyas, learned advocate for the appellant has requested this Court to stay the present order. Mr. K.T. Dave, learned advocate for the respondent has vehemently objected to the same, however, considering the facts and circumstances of the case, request is accepted and the order is stayed for a period of twelve weeks from today. Page 8 of 9

C/LPA/287/2008 JUDGMENT (K.S.JHAVERI, J.) (A.G.URAIZEE,J) divya Page 9 of 9