J. Eswara Prasad J. (Chairman) - (1.) THE appellants in these appeals are Harshad P. Mehta and his relatives, namely, his wife and children and the purchaser of property at serial No. (b) of the schedule, namely, Row House No. 18, at Ahmedabad. THEy question the order of the Competent Authority, Mumbai, dated April 13, 1998, made under sections 7 and 19 of the Smugglers and Foreign Exchange and Manipulators (Forfeiture of Property) Act, 1976 (the SAFEMA for short), directing the forfeiture of the properties mentioned in the Schedule to the order.
(2.) Harshad P. Mehta along with seven others was detained by order dated February 3, 1997, under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 ("the COFEPOSA" for short), for indulging in violation of the provisions of the Foreign Exchange Regulation Act, 1947 ("the FERA" for short), by opening fictitious bank accounts and remitting large amounts in foreign exchange abroad through banks, by using forged import documents between the years 1991-1996. It was alleged that Harshad P. Mehta was an active participant in the conspiracy of carrying out illegal hawala transactions running into crores of rupees by way of effectively managing the affairs pursuant to the conspiracy and was an associate of the other detenus. Though the detention order against him was revoked, the competent authority, finding that Harshad P. Mehta is a "person" within the meaning of section 2(2)(d) of the SAFEMA, issued notices to Harshad P. Mehta and the other appellants under section 6(1) of the SAFEMA dated August 29, 1997, to show cause as to why the properties mentioned in the schedule should not be forfeited as illegally acquired properties. In response to the said show-cause notices, the appellants sought for time which was granted by the competent authority from time to time and a final opportunity was granted by fixing the date of hearing on April 20, 1998. The appellants failed to attend and did not reply to the show-cause notices, nor did they submit their explanations. The competent authority, therefore, proceeded on the basis of the materials available on record and passed the impugned order, directing forfeiture of the properties of Harshad P. Mehta and his relatives and a sum of Rs. 9.5 lakhs in the hands of the appellant, Ashish Patel, against which, the appellants have preferred these appeals.
(3.) SHRI J. S. Arora, learned counsel for the appellants, vehemently contended that the provisions of the SAFEMA are not applicable to the appellants, inasmuch as the detention order against Harshad P. Mehta was revoked and the properties never belonged to any one of the other seven detenus. In support of his contention, he relied on the decision of the Supreme Court in Attorney General for India v. Amratlal Prajivandas [1995] 83 Comp Cas 804, and contended that the properties, in order to fall within the definition of illegally acquired properties, must have originally belonged to the detenu and later been transferred to the appellants who are the affected parties and that the forfeited properties should be traceable to the detenus. He further submitted that Harshad P. Mehta was himself conducting hawala transactions according to the competent authority and hence the money belonged to him and not to the detenus, and inasmuch as he was not the detenu, the properties acquired through his funds cannot be forfeited. It was next submitted by learned counsel that the sources from which the properties were acquired by the relatives were only traceable to Harshad P. Mehta and not the detenus.;