UNION OF INDIA vs. R KODANDARAMA REDDY

- 1 - IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 23RD DAY OF NOVEMBER, 2012

PRESENT THE HON’BLE MR.JUSTICE K.SREEDHAR RAO AND THE HON’BLE MR. JUSTICE L. NARAYANA SWAMY WRIT APPEAL NO.2808 OF 2005 (GM-RES) C/W WRIT APPEAL NOS.2789/2005, 2802/2005, 2803/2005, 2804/2005, 2805/2005, 2806/2005, 2807/2005, 150/2006, 226/2006, 671/2007 & 1715/2008 W.A.No.2808/2005 BETWEEN: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

(BY SRI.SHIVAPRABHU S.HIREMATH & N.DEVHADASS, ADVOCATES)

AND: 1. SRI.R.KODANDARAMA REDDY AGED ABOUT 63 YEARS,

- 2 - S/O. SRI.S.RAMAIAH, RESIDING AT 467, S.R.LAYOUT, MURUGESHPALYA, BANGALORE – 17.

… RESPONDENTS

(SRI.M.C.NARASIMHAN & V.SHIVAREDDY, ADVOCATES FOR RESPONDENT NO.1, SRI.C.H.JADHAV, ADVOCATE FOR RESPONDENT NO.5, SRI.K.B.NARAYASWAMY, ADVOCATE FOR RESPONDENTS 1 TO 4) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.26052-55/2004 DATED 17/2/2005.

- 3 - W.A.No.2789/2005 BETWEEN: SMT.SUGANTHI W/O LATE PAKEERATHAN (ALIAS) RAVI AGED ABOUT 33 YEARS, PROPRIETRIX, PRIYA BUILDERS & DEVELOPERS, NO.67/1, III CROSS, LAVELLE ROAD, BANGALORE - 32.

… APPELLANT

(BY SRI.C.H.JADHAV, ADVOCATE)

AND: THE COMPETENT AUTHORITY & ADMINISTRATOR SMUGGLERS AND FOREIGN EXCHANGE MANIPULATIONS (FORFEITURE OF PROPERTY) ACT, 1976 & NARCOTIC DRUGS AND PSYCHOTROPHIC SUBSTANCE ACT, 1985, MITTAL COURT, C-WING, III FLOOR, NARIMAN POINT, MUMBAI – 400 021.

… RESPONDENT

(BY SRI.N.DEVHADASS, ASG & SRI.SHIVAPRABHU HIREMATH, CGC) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.46447/2002 DATED 3.2.2005.

W.A.No.2802/2005 BETWEEN: THE COMPETENT AUTHORITY AND ADMINISTRATOR SMUGGLERS AND FOREIGN EXCHANGE MANIPULATIONS (FORFEITURE OF PROPERTY) ACT, 1976 & NARCOTIC DRUGS AND PSYCHOTROPHIC SUBSTANCE ACT, 1985,

- 4 - MITTAL COURT, C-WING, III FLOOR, NARIMAN POINT, MUMBAI – 400 021.

… APPELLANT

(BY SRI.N.DEVHADASS, ASG & SRI.SHIVAPRABHU HIREMATH, CGC)

AND: SMT.SUGANTHI P W/O LATE PAKEERATHAN @ RAVI AGED ABOUT 33 YEARS, PROPRIETRIX, PRIYA BUILDERS & DEVELOPERS, NO.67/1, III CROSS, LAVELLE ROAD, BANGALORE – 560 032.

…RESPONDENT

(BY SRI:C.H.JADHAV & P. PRASANNA KUMAR, ADVOCATES) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.46447/2002 DATED 3.2.2005.

W.A.No.2803/2005 BETWEEN: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

- 5 - DEPARTMENT OF REVENUE, MITTAL COURT, C-WING, II FLOOR, NARIMAN POINT, MUMBAI – 21. … APPELLANTS

(BY SRI.SHIVAPRABHU S.HIREMATH & N.DEVHADASS, ADVOCATES)

AND: 1. PREMCHAND CHAWLA AGED 41 YEARS, S/O. NARAINDAS MOOLCHAND, NO.104, VITTAL MALLYA ROAD, BANGALORE – 560 001.

W/O LATE P.PAKEERATHAN,

AGED 35 YEARS,

NO.6, STEPEHEN ROAD,

FRAZER TOWN,

BANGALORE – 560 005.

…RESPONDENTS

(BY SRI:C.H.JADHAV & P. PRASANNA KUMAR, ADVOCATES) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.23516/2004 DATED 3.2.2005.

W.A.No.2804/2005 BETWEEN: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

- 6 - 3. THE COMPETENT AUTHORITY THE ADMINISTRATOR, GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, MITTAL COURT, C-WING, II FLOOR, NARIMAN POINT, MUMBAI – 21. … APPELLANTS

(BY SRI.SHIVAPRABHU S.HIREMATH & N.DEVHADASS, ADVOCATES)

AND: 1. T.ROSHAN SHETTY AGED ABOUT 38 YEARS, S/O. A.CHANDRASHEKAR SHETTY, NO.31, PRIYA MANOR, S.R.LAYOUT, MURUGESHAPALYA, BANGALORE – 560 001.

W/O LATE P.PAKEERATHAN,

AGED 35 YEARS,

NO.6, STEPEHEN ROAD,

FRAZER TOWN,

BANGALORE – 560 005.

…RESPONDENTS

(SRI.K.ANANDA, ADVOCATE FOR RESPONDENT NO.1 SRI:C.H.JADHAV, ADVOCATE FOR RESPONDENT NO.2) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.23517/2004 DATED 3.2.2005.

W.A.No.2805/2005 BETWEEN: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

- 7 - 2. ADDL. COMMISSIONER OF CENTRAL EXCISE (PREVENTIVE) BANGALORE – 1 COMMISSIONERATE, QUEENS ROAD, BANGALORE – 1.

(BY SRI.SHIVAPRABHU S.HIREMATH & N.DEVHADASS, ADVOCATES)

AND: 1. S.BALASUBRAMANYAM AGED ABOUT 37 YEARS, S/O. K.R.SITARAMAN, A-3, LAKSHMI APARTMENTS, NO.39, ST.JOHN’S CHURCH ROAD, BANGALORE – 560 005.

W/O LATE P.PAKEERATHAN,

AGED 35 YEARS,

NO.6, STEPEHEN ROAD,

FRAZER TOWN,

BANGALORE – 560 005.

…RESPONDENTS

(SRI:G.K.V.MURTHY, P.E.UMESH & ASHOK B.PATIL, ADVOCATES FOR RESPONDENT NO.1 SRI:C.H.JADHAV, ADVOCATE FOR RESPONDENT NO.2) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.23518/2004 DATED 3.2.2005.

- 8 - W.A.No.2806/2005 BETWEEN: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

(BY SRI.SHIVAPRABHU S.HIREMATH & N.DEVHADASS, ADVOCATES)

AND: 1. V.MUTHUSWAMY AGED ABOUT 70 YEARS, S/O. VENKITA REDDY, MATHI REDDI PALAYAM, ALLAPALAYAM ANNUR, COIMBAATORE DISTRICT, TAMIL NADU.

W/O LATE P.PAKEERATHAN,

AGED 35 YEARS,

NO.6, STEPEHEN ROAD,

FRAZER TOWN,

BANGALORE – 560 005.

…RESPONDENTS

(SRI:G.K.V.MURTHY & ASHOK B.PATIL, ADVOCATES FOR RESPONDENT NO.1

- 9 - SRI:C.H.JADHAV, ADVOCATE FOR RESPONDENT NO.2) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.23519/2004 DATED 3.2.2005.

W.A.No.2807/2005 BETWEEN: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

(BY SRI.SHIVAPRABHU S.HIREMATH & N.DEVHADASS, ADVOCATES)

AND: 1. SMT. KAVITA MITTAL AGED ABOUT 44 YEARS, W/O ASHOK MITTAL, 241/2, UPPER PALACE ORCHARD, 18TH CROSS, SADASHIVANAGAR, BANGALORE.

- 10 - 2. SMT.P.SUGANTHI

W/O LATE P.PAKEERATHAN,

AGED 35 YEARS,

NO.6, STEPEHEN ROAD,

FRAZER TOWN,

BANGALORE – 560 005.

…RESPONDENTS

(SRI:G.K.V.MURTHY & ASHOK B.PATIL, ADVOCATES FOR RESPONDENT NO.1 SRI:C.H.JADHAV, ADVOCATE FOR RESPONDENT NO.2) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.24683/2004 DATED 3.2.2005.

W.A.No.150/2006 BETWEEN: SRI.S.BALASUBRAMANIYAM AGED ABOUT 38 YEARS, S/O. SRI.K.R.SITARAMAN, A-3, LAKSHMI APARTMENTS, NO.39, ST.JOHN’S CHURCH ROAD, BANGALORE – 560 005.

…APPELLANT

(BY SRI.ASHOK B. PATIL, ADVOCATE)

AND: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

- 11 - 3. SMT.P.SUGANTHI

W/O LATE P.PAKEERATHAN,

AGED 36 YEARS,

NO.6, STEPEHEN ROAD,

FRAZER TOWN, BANGALORE – 560 005.

(SRI.SHIVAPRABHU S.HIREMATH, CGS FOR RESPONDENTS 1, 2 & 4 SRI.C.H.JADHAV, ADVOCATE FOR RESPONDENT NO.3) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.23518/2004 DATED 3.2.2005.

W.A.No.226/2006 BETWEEN: SMT.KAVITA MITTAL AGED ABOUT 44 YEARS, W/O. SRI.ASHOK MITTAL, 241/2, UPPER PALACE ORCHARDS, 18TH CROSS, SADASHIVANAGAR, BANGALORE – 560 080.

…APPELLANT

(BY SRI.ASHOK B. PATIL, ADVOCATE)

AND: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

- 12 - 2. THE ADDL. COMMISSIONER OF CENTRAL EXCISE (PREVENTIVE) BANGALORE – 1 COMMISSIONERATE, QUEENS ROAD, BANGALORE – 560 001.

W/O LATE P.PAKEERATHAN,

AGED 36 YEARS,

NO.6, STEPEHEN ROAD,

FRAZER TOWN, BANGALORE – 560 005.

(SRI.SHIVAPRABHU S.HIREMATH, CGS FOR RESPONDENTS 1, 2 & 4 SRI.C.H.JADHAV, ADVOCATE FOR RESPONDENT NO.3) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.24683/2004 DATED 3.2.2005.

W.A.No.671/2007 BETWEEN: 1. R.KODANDARAMA REDDY AGED ABOUT 65 YEARS, S/O. SRI.S.RAMAIAH, NO. 467, S.R.LAYOUT, MURUGESHPALYA, BANGALORE – 560 017.

- 13 - W/O N.RAGHAVA REDDY, NO. 467, NEW NO.7, III CROSS, S.R.LAYOUT, MURUGESHPALYA, BANGALORE – 560 017.

BANGALORE – 560 017.

… APPELLANTS

(BY SRI.M.C.NARASIMHAN ASSTS., ADVOCATES)

AND: 1. UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

PROPRIETRIX,

M/S.PRIYA BUILDERS & DEVELOPERS,

NO.67/3, III CROSS,

- 14 -

LAVELLE ROAD, BANGALORE . …RESPONDENTS

(SRI.SHIVAPRABHU S.HIREMATH, CGS FOR RESPONDENTS 1 & 2 SRI.C.H.JADHAV, ADVOCATE FOR RESPONDENT NO.3) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NOS.26052-55/2004 DATED 17.2.2005 IN SO FAR AS THE REMAND OF THE CASE OF THE RESPONDENT NO.2 IS CONCERNED.

W.A.No.1715/2008 BETWEEN: SHRI. V.MUTTHU SWAMY S/O. VENKITA REDDY, AGED ABOUT 70 YEARS, R/AT MATHI REDDI PALAYAM, ALLAPALAYAM, ANNUR, COIMBATORE DISTRICT, TAMUL NADU.

…APPELLANT

(BY SRI.ASHOK B. PATIL, ADVOCATE)

AND: 1. THE UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI.

W/O LATE P.PAKEERATHAN,

AGED ABOUT 40 YEARS,

- 15 -

NO.6, STEPEHEN ROAD,

FRAZER TOWN, BANGALORE – 560 005.

(SRI.Y.HARIPRASAD, SR.CGC FOR RESPONDENTS 1, 2 & 4 SRI.C.H.JADHAV, ADVOCATE FOR RESPONDENT NO.3) ---- THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETTION NO.23519/2004 DATED 3.2.2005.

THESE APPEALS COMING ON FOR FINAL HEARING THIS DAY, SREEDHAR RAO.J, DELIVERED THE FOLLOWING:-

JUDGMENT All the appeals involve common question of law and similar facts, hence all the appeals are considered together by passing common order.

- 16 - 21, 23 and 29 read with Section 8(c) of the NDPS Act before the Special Court (under NDPS) at Mumbai in NDPS Spl. Case No.387/1997. In the course of investigation, it was found that one Ravi was their associate and with ill-gotten money from the narcotic drug traffic had acquired several properties. One Smt. Suganthi said to be wife of Ravi, in her name, land was purchased and apartments were constructed under the name ‘Priya Manor’.

- 17 - respondent – Ruben was served on Smt.Suganthi, the appellant who participated in the proceedings through counsel. She produced her income-tax returns, documentary materials to show that the property ‘Priya Manor’ is her self-acquired property purchased by lawful funds and not of the funds of ill- gotten money of the narcotic drug traffic. The competent authority on consideration of the evidence produced has found that the material produced by the appellant does not establish her contention and does not establish that she had lawful sources and lawful funds for purchase of the property and putting up constructions. The competent authority ultimately forfeited the building property ‘Priya Manor’ in favour of the State. Smt.Suganthi, aggrieved by the said order filed the appeal before the appellate tribunal. The appeal was dismissed and the order of the competent authority was confirmed. The appellant aggrieved by the order of the appellate tribunal filed a writ petition before this Court. Consequent to the forfeiture, the building ‘Priya Manor’ was seized. The owners of the apartments in ‘Priya Manor’ have also filed appeals contending that they have paid lawful consideration for construction of the

- 18 - building and with the funds given by them, the apartments have been constructed and they have become lawful owners. They have been lawfully inducted into the possession by virtue of part performance of contract.

- 19 - holders before passing an order of forfeiture or otherwise under Section 68K and 68I of the Act. Smt.Suganthi, agreement holders and Kodandaramareddy have filed these appeals challenging the order of the learned Single Judge. The Union of India has also filed appeals challenging the order of remand.

(2) Where any person referred to in clause (a) or clause (b) or clause (cc) of sub-section (2) of Section 68A has been acquitted or discharged from the charges under this Act or any other corresponding law of any other country and the acquittal was not appealed against or when appealed against, the appeal was disposed of as a consequence of which such property could not be forfeited or warrant of arrest or authorisation of arrest issued against such person has been

- 20 - withdrawn, then, property seized or frozen under this Chapter shall stand released.”

In view of the provisions in Section 68Z, it is argued that once there is an order of acquittal of an accused, all the properties seized shall stand released automatically by operation of law. In the instant case, the accused in NDPS Spl.Case No.387/1997 are acquitted. Therefore, by virtue of provisions of Section 68Z, the confiscation proceedings have to be dropped and properties stand released.

Nextly, it was contented that it was mandatory on the part of the competent authority to have issued show-cause-notice under Section 68H to the appellant with specific allegations to provide an opportunity to meet the case, but no such notice is issued to the appellant. Therefore, there is serious material procedural lapse on the part of the competent authority in conducting the enquiry. The fact that Smt.Suganthi had participated in the proceedings does not cure the material irregularity because without a specific allegation it would not be possible for the appellant to have explained her stand cogently.

- 21 - With reference to provisions of Section 68Z, the Amendment Act 9 of 2001 to the NDPS Act is referred to. In Section 41 of the Amendment Act, it is declared that to the provisions of Section 68Z the amended provisions shall apply to pending cases before the courts or under investigation at the time of commencement of the Act and the same has to be disposed of in accordance with law with the provisions of the principal act as amended by the Amendment Act. In view of the said amendment, it is submitted that Section 68Z as per the Amendment Act would apply to the present appeals, which are pending proceedings.

- 22 - accused is acquitted, the property seized stands released and the proceedings have to be dropped.

- 23 - The property at Madras was purchased immediately after marriage with Ravi who was an associate of accused Ruben. Therefore, the origin of source being funds from property at Madras is itself tainted. Therefore the competent authority has rightly found that the investment of funds by Suganthi by lawful means is not established. Thus has held that the investment is from the ill-gotten money by her husband and accused Ruben. The husband of Smt.Suganthi had died 3 months prior to the arrest and registration of case against accused Ruben. It is established by evidence that husband of Suganthi was associate of accused Ruben. Therefore, the confiscation proceedings held are valid in law and the forfeiture order is sound and proper so as the order passed attaching and forfeiting the building ‘Priya Manor’ is also sound and proper.

- 24 - “68A. Application.- (1) The provisions of this Chapter shall apply only to persons specified in sub- section (2). (a) every person who has been convicted of an offence punishable under this Act with imprisonment for a term of ten years or more; (b) every person who has been convicted of a similar offence by a competent court of criminal jurisdiction outside India; (c) every person in respect of whom an order of detention has been made under the Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 (46 of 1988), or under the Jammu and Kashmir Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988 (J & K Act XXIII of 1988): Provided that such order of detention has not been revoked on the report of the Advisory Board constituted under the said Acts or such order of detention has not been set aside by a court of competent jurisdiction; (cc) every person who has been arrested or against whom a warrant or authorization of arrest has been issued for the commission of an offence punishable under this Act with imprisonment for a term of ten years or more, and every person

- 25 - who has been arrested or against whom a warrant or authorisation of arrest has been issued for the commission of a similar offence under any corresponding law of any other country. (d) every person who is a relative of a person referred to in clause (a) or clause (b) or clause (c) or clause (cc). (e) every associate of a person referred to in clause (a) or clause (b) or clause (c) or clause (cc). (f) any holder (hereinafter in this clause referred to s the “present holder”) of any property which was at any time previously held by a person referred to in clause (a) or clause (b) or clause (c) or clause (cc); 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 or adequate consideration.”

- 26 - not a relative of Manivannan, but wife of the associate of Manivannan.

(c) or (cc) of the said Section. The relative of associate is not one of the persons named, against whom the proceedings can be launched.

In view of the matter, the appeals file by the respondents in the proceedings before the competent authority are allowed and the State appeals are dismissed.

Sd/- JUDGE

Sd/- JUDGE

AHB