# ATIORNEY GENERAL FOR INDIA ETC. ETC v. AMRRATLAL PRAJIVANDAS AND ORS. ETC. ETC. MAY 12, 19?4

- **Citation:** [1994] Supp. 1 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 1994
- **Case number:** Transfer Petition No. 17 of 1978
- **Bench:** Am. Ahmadi, P.B. Sawant, K. Ramaswamy, K. Jayachandra Reddy, S.C. Agrawal, S. Mohan, B.P. Jeevan Reddy, G.N. Ray, N. Venkatachala
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/atiorney-general-for-india-etc-etc-v-amrratlal-prajivandas-and-ors-etc-etc-may-12388
- **Pages:** 54

## Headnote

A
B
Constitution of lndi(t-Articles 22 (4) to (7), Schedules VII and IX,
C
Entry 3 List 111-ConseTVation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974-Smugglers and Foreign Exchange Manipulators
(Foifeiture of Property) Act, 1976-Constitutional validity of-whether Parliament competent to enact COFEPOSA and SAFEMA-Held, yes-Both
enactments being placed in IX Schedule, they enjoy immunity confe"ed by
Article Jl(B).
D
Co!tseTVation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974-Section 3 read with section 12 A-Order of detention under
section 3 read with section 12 A made during period of emergency-Whether
can form foundation for taking action under section 6 of Smugglers and E
Foreign Exchange Manipulators (Foifeiture of Property) Act, 1976-Held,
Yes-Whether the validity of such order of detention be challenged when
proceedings are taken against detenue .under SAFEMA, even though said
order has ceased to be operative and was not challenged during its opera-
...,
tion-Held, No.-Validity of order to be tested with reference to position of
law obtaining at the time said order was made and during period of operation.
F
Smugders and Foreign Exchange Manipulators (Foifeiture of Property)
A ct, 1976-Section 3(1) ( c }-lllegally acquired properties-Definition
of-Validity-Whether definition of "illegally acquired property" is violative of
fundamental rights of detenue-Held, No.
Smugglers and Foreign Exchange Manipulators (Foifeiture of Property)
Act, 1976-Section 2(2)(a)&(b}-Foifeiture of 'illegally acquired properties'
of a person falling under clause (a) or clause (b) of Section 2(2}-JYhether
application of Act to relatives and associates of detenues is violative of
Articles 14, 19 and 21 of Constitution of India-Held, No.
1
G
H
2
SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.
A
Conservafi·on of Foreign Exchange and Prevention of Smuggling Activities Act, 197~Section 5-A-Validity of-Whether Section 5-A is violative
of clause (5) of Article 22 of Constitution of Jndiir--lleld, No.
Constitution of India-Article 22(5/-Validity of Section 5-A of
B COFEPOSA-Whether section 5-A is violative of Article 22(5)--Held, No.
During the period of emergency in the year 1976, several orders of
detention. were made under section 3 of the Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 1974. Jn view of the
provisions of section 12-A, the detenues were neither supplied with the
C grounds of detenuetion nor were their cases referred to the Advisory
Board. Because ,of the order under Article 359(1) and the operation of
Article 358 of the Constitution of India, they bad no remedy and could not
approach the High Court or the Supreme Court for relief. The detenues
were released wh.en the emergency was revoked. Notices were issued under
D section 6 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, to those detenues, their relatives and associates calling upon them to show cause why the properties mentioned in
the notices be not declared as illegally acquired properties and forfeited.
The orders of detention made against the detenues under COFEPOSA
during the emergency were the foundation for the action being taken
E against them under SAFEMA. The detenues filed writ petitions in the High
Courts for quashing the said notices while challenging the constitutional
validify of the COFEPOSA, SAFEMA and the 39th, 40th and 42nd Amendments to the Constitution of India placing COFEPOSA and SAFEMA in
the IX Schedule. The writ petitions filed in various High Courts were
F
transferred to the Supreme Court in view of the important constitutional
questions raised therein.
Though a challenge to the constitutional validity of 39th, 40th and
42nd Amendments to the Constitution was levelled in the writ petitions on
the ground that the said Amendments infringe the basic structure of the
G
Constitution, no effort was made to establish in what manner the said
Amendment Acts

## Text

_Characters 0–39,622 of 136,540. This is a partial read: ask again with offset=39622 for what follows._

ATIORNEY GENERAL FOR INDIA ETC. ETC.
v.
AMRRATLAL PRAJIVANDAS AND ORS. ETC. ETC.
MAY 12, 19?4
[AM. AHMADI, P.B. SAWANT, K. RAMASWAMY,
K. JAYACHANDRA REDDY, S.C. AGRAWAL, S. MOHAN,
B.P. JEEVAN REDDY, G.N. RAY AND N. VENKATACHALA, JJ.]
A
B
Constitution of lndi(t-Articles 22 (4) to (7), Schedules VII and IX,
C
Entry 3 List 111-ConseTVation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974-Smugglers and Foreign Exchange Manipulators
(Foifeiture of Property) Act, 1976-Constitutional validity of-whether Parliament competent to enact COFEPOSA and SAFEMA-Held, yes-Both
enactments being placed in IX Schedule, they enjoy immunity confe"ed by
Article Jl(B).
D
Co!tseTVation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974-Section 3 read with section 12 A-Order of detention under
section 3 read with section 12 A made during period of emergency-Whether
can form foundation for taking action under section 6 of Smugglers and E
Foreign Exchange Manipulators (Foifeiture of Property) Act, 1976-Held,
Yes-Whether the validity of such order of detention be challenged when
proceedings are taken against detenue .under SAFEMA, even though said
order has ceased to be operative and was not challenged during its opera-
...,
tion-Held, No.-Validity of order to be tested with reference to position of
law obtaining at the time said order was made and during period of operation.
F
Smugders and Foreign Exchange Manipulators (Foifeiture of Property)
A ct, 1976-Section 3(1) ( c }-lllegally acquired properties-Definition
of-Validity-Whether definition of "illegally acquired property" is violative of
fundamental rights of detenue-Held, No.
Smugglers and Foreign Exchange Manipulators (Foifeiture of Property)
Act, 1976-Section 2(2)(a)&(b}-Foifeiture of 'illegally acquired properties'
of a person falling under clause (a) or clause (b) of Section 2(2}-JYhether
application of Act to relatives and associates of detenues is violative of
Articles 14, 19 and 21 of Constitution of India-Held, No.
1
G
H
2
SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.
A
Conservafi·on of Foreign Exchange and Prevention of Smuggling Activities Act, 197~Section 5-A-Validity of-Whether Section 5-A is violative
of clause (5) of Article 22 of Constitution of Jndiir--lleld, No.
Constitution of India-Article 22(5/-Validity of Section 5-A of
B COFEPOSA-Whether section 5-A is violative of Article 22(5)--Held, No.
During the period of emergency in the year 1976, several orders of
detention. were made under section 3 of the Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 1974. Jn view of the
provisions of section 12-A, the detenues were neither supplied with the
C grounds of detenuetion nor were their cases referred to the Advisory
Board. Because ,of the order under Article 359(1) and the operation of
Article 358 of the Constitution of India, they bad no remedy and could not
approach the High Court or the Supreme Court for relief. The detenues
were released wh.en the emergency was revoked. Notices were issued under
D section 6 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, to those detenues, their relatives and associates calling upon them to show cause why the properties mentioned in
the notices be not declared as illegally acquired properties and forfeited.
The orders of detention made against the detenues under COFEPOSA
during the emergency were the foundation for the action being taken
E against them under SAFEMA. The detenues filed writ petitions in the High
Courts for quashing the said notices while challenging the constitutional
validify of the COFEPOSA, SAFEMA and the 39th, 40th and 42nd Amendments to the Constitution of India placing COFEPOSA and SAFEMA in
the IX Schedule. The writ petitions filed in various High Courts were
F
transferred to the Supreme Court in view of the important constitutional
questions raised therein.
Though a challenge to the constitutional validity of 39th, 40th and
42nd Amendments to the Constitution was levelled in the writ petitions on
the ground that the said Amendments infringe the basic structure of the
G
Constitution, no effort was made to establish in what manner the said
Amendment Acts violated Authority. The petitioners argued that
COFEPOSA was not relatable to Entry 9 ofList·l of the Seventh Schedule
to ~he Constitution in as much as the preventive detention provided
therefor was not for reasons connected with defence, foreign affairs or
H
security of India. Even Entry 3 of list III, it was submitted, did not warrant
AITORNEY GENL. FOR INDIA v. A. PRAIIV ANDAS
3
the said enactment. So far as SAFEMA was concerned, it was argued, it A
was not relatable to any of the Entries in List I or in List III.
The petitioners submitted that since the order of detention under
COFEPOSA was made the basis for action under SAFEMA against the
;!etenues, their relatives and their associates, they were entitled to chal4'
Ienge the validity of the order of detention. They argued that by virtue of B
the order made under Article 359(1), the fundamental rights guaranteed
.. ,
....
to them by Articles, 14, 21 and 22 were not suspended, but only the right
to move for their enforcement was suspended. The detention nrder made
against them were invalid and illegal for violation of clauses (4) and (5)
of Article 22 and, therefore, could not serve as the basis of action under C
SAFEMA. The petitioners submitted that the detention orders governed
by Section 12-A of COFEPOSA were inherently arbitrary and unjust.
The petitioners then attacked the definition of illegally acquired
properties "in clause (c) of Section 3(1) of SAFEMA on grounds of unreasonableness, arbitrariness or as violative of Articles 14, 19 and 21. D
Mternatively, it was submitted that if the said definition was unassailable
on account of its inclusion in the IX Schedule, the definition should be
read down so as to confine it only to the properties acquired by violating
the prohibitions contained in the Acts mentioned in section 2(9) of
SAFEMA. It was contended that extending the provisions of SAFEMA to E
the relatives, associates and other'holders' was a case of excessive regula~
!ion. It was pointed out that the definitions of 'relative' in Explanation (2)
and of 'Associates' in Explanation (3) were so wide as to bring in a person
even distantly related or associated with the convict/detenne, within the net
ofSAFEMA.
The petitioners also challenged the validity of Section 5-A of
COFEPOSA on the ground of it being violative of the safeguards provided
by clause (5) of Article 22.
F
Relaying upon the provisions of clause (lA) of Article 359, it was
submitted by the Additional Solicitor General that the validity of the G
detention orders had to be judged with reference to the law then obtaining
on the date of issuance of notice under section 6 of SAFEMA. He submitted
that clause (lA) of Article 359 saved all such orders. It was stated that
susp~nsion of remedy amounted to suspension of the right itself and there
was no distinction, according to him, between Article 358 and an order H
4
SUPREME COURT REPORTS [1994] SUPP.1 S.C.R.
A
under Article 359 (1). It was argued that the detention orders passed
during the emergency to which section 12-A of COFEPOSA applied could
not be said to be void ab initio or non-est. The orders were good and valid
when they were made, though they ceased to be operative "ith the cessation
of the Presidential order. The questions raised for determination were :
B
(1) Whether the parliament was not competent to enact COFEPOSA
andSAFEMA?
(2) Whether an order of detention under Section 3 read with section
12-A of COFEPOSA made during the period of emergency proclaimed
C under Article 352(1) of the Constitution of India, - with the consequent
'suspension' of Article 19 and during which ·period the right to move the
Court to enforce the rights conferred by Articles 14, 21 and 22 was
suspended - can from the foundation for taking action under Section 6 of
SAFE MA against the detenue, his relatives and associates? And if it does,
can the validity of such order of detention be challenged by the detenue
D and/or his relatives and associates, when proceedings are taken against
him/them under SAFEMA, even though the said order of detention has
ceased to be operative and was not either challenged - or not successfully
challenged - during its operation?
E
(3) Uthe answer to the Question No. 1 is in affirmative, should the
validity of the order of detention be tested with reference to the position
of law obtaining at the time of making the said order and during its period
of operation or with reference to the position of law obtaining on the date
of issuance of the show cause notice under Section 6 of SAFEMA?
F
(4) Whether the definition of "illegally acquired property" in clause
G
(c) of Section 3(1) of SAFEMA is violative of the fundamental rights of the
petitioners guara .. teed by Articles 14, 19 and 21 and whether the inclusion
of SAFEMA in the IX Schedule to the Constitution cures such violation,
if any? '
(5) Whether the application of SAFEMA to the relatives and associates of detenues is violative of Articles 14, 19 and 21? Whether the
inclusion of the said Act in the IX Schedule cures such violation, if any.
(6) Whether Section 5-A of COFEPOSA is violative of clause (5) of
H Article 22?
...
•
}
A TIORNEY GENL. FOR INDIA v. A PRAJIV AND AS
5
Disposing of the matter, this Court
A
HELD : 1.1. Parliament was perfectly competent to enact both the
Conservation of Foreign Exchange and Prevention of Smuggling Activities "'
Act, 1974 and the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. The COFEPOSA is relatable to Entry 3 of List
lll inasmuch as it provides for preventive detention for reasons connected B
with the security of the State as well as the maintenance of supplies and
services essential to the community. [22-H, 23-A, 53-C]
Union of India v. H.E.S. Dhillon, [1972] 2 SCR 33, relied on.
1.2. COFEPOSA was placed in the IX Schedule by the Constitution
39th (Amendment) Act, 1975 while the SAFEMA and the COFEPOSA
(Amendment) Acts, 1976 were placed in the IX Schedule by the Constitution 40th (Amendment) Act, 1976. Both the enactments being placed in the
c
IX Schedule, they enjoy theimmunity conferred by Article 31 (B). The
petitioners have not been able to sustain their submission that the 39th D
(Amendment) Act and 40th (Amendment) Act, placing the said enactments
in the IX Schedule were unconstitutional, They are assumed to he good
and valid. [11-D, 21-C]
1.3. An order of detention made under Section 3 of COFEPOSA, E
which was governed by Section 12-A thereof, is yet an order of detention
for the purpose of and within the meaning of Section 2(2) (b) of SAFEMA.
Since the President had issued an order under Article 359 (1) suspending
Articles 14, 21 and 22, it became competent for Parliament, by virtue of
clause (lA) of Article 359 to enact Section 12-A of COFEPOSA for the
duration of and limited to the period for which the Presidential Order was F
in force. It was meant to achieve the purposes of emergency. Once Section
12-A is held to be a competent piece of legislation, orders of detention made
thereunder (i.e. orders of detention to which the said provision applied)
cannot be held to be not amounting to orders of detention for the purpose
of and within the meaning of section 2(2)(b) of SAFEMA, particularly in G
view of the express language of Section 2(2)(b) (incl\J.ding proviso (iii)
thereto) - and the protection enjoyed by both the enactments by virtue of
their inclusion in the IX Schedule to the Constitution. [53-E-G]
1.4. An order of detention to which Section 12-A is applicable as well
as an order of detention to which Section 12-A was not applicable can serve H
6
SUPREME COURT REPORTS [1994] SUPP.1 S.C.R.
A as the foundation, as the basis, for applying SAFEMA to such detenue and
to his relatives and associates provided such order of detention does not
attract any of the sub-clauses in the proviso to Section 2(2) (b). If such
detenue did not choose to question the said detention (either by himself or
through his next friend) before the court during the period when such order
B
c
D
of detention was in force, · or is unsuccessful in his attack thereon - he, or
his relatives and associates cannot attack or question its validity when it is
made the basis of applying SAFE MA to him or to his relatives or associates.
(53-H, 54-A-B]
This is for the reason that even if he is allowed to challenge the said
order when he is served with the notice under section 6 of SAFEMA, the
challenge has to be examined with reference to the position of law as was
obtaining at the time the said order was made and the law in force during
the period the said order of detention was in operation. (40-D]
Union of India, v. Haji Mastan Mirza, (1984] 3 SCR 1, overruled.
Union of India v. Manohar Lal Narang, [1987] 2 sec· 241, distinguished.
1.5. The definition of 'illegally acquired properties in clause (c) of·
Section 3 of SAFEMA is not invalid or ineffective. The definition is quite
E
wide. It takes in not only the property acquired after the Act but also the
property acquired before the Act, whatever be the length of time. It takes
in property which may have been acquired partly from· but of. illegal
activity. (40-F-G]
F
Both enactments being placed in the IX Schedule they enjoy the
immunity conferred by the Article 31 (B) and therefore, the validity of the
said definition on grounds of unreasonaJiless, arbitrariness or any of the
grounds relatable to part-HI, cannot be challenged. Further, in view of
clear and unambiguous language employed in clause (c) of Section 3, it is
not permissible to resort to the device of reading down. Therefore, neither
G the constitutional validity of the said definition can be questioned nor is
there any warrant for reading down the clear and unambiguous words in
the clause when the justification for such a provision is enough and more.
(41-D-H & 42-A-O]
Attorney General for Ho11g Kong v. Reid, (1993] 3 WLR 1143, relied
H on.
..
..,
ATI'ORNEY GENL. FOR INDIA''· A PRAJ!V AND AS
7
1.6. SAFEMA is directed towards forfeiture of "illegally acquired A
properties" of a person falling under clause (a) or clause (b) of Section
2(2). The relatives and associates are brought in only for the purpose of
ensuring that the illegally acquired properties of the convict or detenue,
acquired or kept in their names, do not escape the net of the Act. It is a
well known fact that persons indulging in illegal activities screen the
properties acquired from such illegal activity in the names of their relatives and associates. Sometimes they transfer such properties to them, may
be, with an intent to transfer the ownership and title. In fact, it is immaterial how such relative or associate holds the properties of con-
,'vict/detenue whether as a benami or as a mere name-lender or as a bona
fide transferee for value or in any other manner. He cannot claim those
properties and must surrender them to the State under the Act. Since he
is relative or associate, as defined by the Act, he cannot put forward any
defence once it is proved that, that property was acquired by the detenue
- whether in his own name or in the name of his relatives and associates.
B
c
It is to counter-act the several devices that are or may he adopted by D
persons mentioned in clauses (a) and (b) of Seciion 2(2) that their relatives and associates mentioned in clauses (c) and (d) of the said sub-section are also brought within the purview of the Act. The fact of their
holding or possessing the properties of convicl/detenue furnishes the link
between the convicl/detenue and his relatives and associates. Only the
properties of the convicl/detenue are sought to be forfeited, wherever they E
are. The idea is to reach his properties in whomsoever's name they are
kept or by whomsoever they are held. The independent properties of
relatives and friends, which are not traceable to the convicl/detenne, are
not sought to be forfeited nor are they within the purview of SAFEMA.
(44-B-GJ
F
There ought to be the connecting link between those properties and
the convicl/detenue, the burden of disproving which, is upon the relative/associate. The bringing in of the relatives and associates or of the
persons mentioned in clause (e) of Section 2(2) is thus neither discriminatory nor incompetent apart from the protection of Article 31-B.
G
(46-G-H & 47-A)
1.7. Section 5-A of COFEPOSA is not invalid or void. It is not
violative of clause (5) of Article 22. (54-E)
1.8. An order of detention can be based upon one single ground. It H
8
SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.
A is not necessary that there should be multiplicity of grounds for making
or sustaining an order of detention. Where the order of detention is made
on more than one ground, the section creates a legal fiction, viz., it must
be deemed that there are as many orders of detention as there are grounds
which means that each of such orders is an independent order. It is
.B difficult to conceive any inconsistency or conflict between Article 22(5) and
Section 5-A. The Parliament is competent to create a legal fiction and it
did so in this case. Article 22 (5) does not in terms or otherwise prohibit
making of more than one order simultaneously against the same person,
on different grounds. [48-G, 49-D-E)
C
Debu Mahato v. State of West Bengal, [1974) 4 SCC 135; Anil Day v.
State of West Bengal, [1974) 4 SCC 514; Israil Sk v. District Magistrate of
West Dinagpur & Ors., [1975) 3 SCC 292; Dharua Kanu v. State of West
Bengal, [1975) 3 SCC 527; Saraswathi Seshagiri v. State of Kera/a & Ors.,
[1982) 2 sec, relied on.
D
K. Yadigiri Reddy v. Commissioner of Police, ILR (1972) AP 1025,
E
F
G
distinguished.
CIVIL APPELLATE JURISDICTION : Transfer Petition No. 17 of
1978 Etc. Etc.
(Under Article 139A of the Constitution of India.)
Altaf Ahmad, Addi. Solicitor General, Venugopal Reddy, Dr. N.M.
Ghatate, A.K. Srivastava, Ms. A. Subhashini, Ms. Sushma Suri, P.H.
Parekh, Ms. Prerna Kohli, A.S. Bhasme, D.P. Mukherjee, R.S. Suri, K.C.
Dua, S.K. Agnihotri, Harjinder Singh, R.A. Shroff, Sarva Mitter for Mis
Mitter & Co., S. Ganesh, K.J. John, G.S. Phale, Pramod Swarup, Ms. J.
Sarla, M.N, Shroff, Nand Kumar, E.C. Agarwala, Pradeep Kumar; G.S.
Chatterjee, Shrinath Singh, Vineet Kumar, Anip Sachthey, S.V.
Tambwekar, P. Parmeswaran, PK. Pillai, ATM Sarnpath, M. Veerappa,
K.R. Nambiar, Ambrish Kumar, T.S. Arora, CVS Rao, S. Fazal, U. Sagar,
Ms. Sarda Devi, Yashank, Mukul Mudgal, D. Goburdhan, S.M. Jadhav,
Sakesh Kumar , R.N. Joshi, Ms. Janki Ramachandran, U.A. Rana, Anand
Prasad, Rajiv Tyagi for Mis Gagret & Co., P.R. Seethararnan, M.T.
George, S.K. Gambhir and R.S. Sodhi for the appearing parties.
H
The Judgment of the Court was delivered by
•
•
'
•
•
J
"l'\TfORNEY GENL. FOR INDIA v. A PRAJIV ANDAS [JEEVf>NREDDY,J.]
9
B.P. JEEVAN REDDY, J. Till the wind of liberalisation started A
blowing across the Indian economic landscape over the last year or two,
the Indian economy was a sheltered one. At the time of independer..ce,
India did not have an industrial base wor.th the name. A firm industrial
base had to be laid. Heavy industry was the crying need. All this required
foreign exchange. The sterling balanees built up during worldwar-11 were
fast dissipating. Foreign exchange had to be conserved, which meant
prohibition import of several unessential items and close regulation of
other imports. It was also found necessary to · raise .protective walls to
nurture and encourage the nascendndustries. These controls had, however, an unfortunate fall-out. They gave rise to a class of smugglers and
foreign exchange manipulators who were out to frustrate the regulations
B
c
and restrictions - profit being their sole motive, and success in life the sole
earthly judge of right and wrong. As early as 1947, the Central Legislature
found it necessary to enact the Foreign Exchange R.egulation Act, 1947 and
Imports and Exports (Control) Act, 1947. Then came the import (Control)
Order, 1955 to place the policy regarding import on a surer footing. In the D
year 1962, a new Customs Act replaced the antiquated Sea Customs Act,
1878. The menace of smuggling and foreign exchange violations, however,
continued to rise unabated. The Parliament then came forward with the
conservation of Foreign Exchange and Prevention of Smuggling Act, 1974
(COFEPOSA). It provided for preventive detention of these anti-social
elements.
E
On June 25, 1975, the President of India proclaimed an emergency
under Article 352(1) of the Constitution of India on the ground that "the
security of India is threatened by internal disturbance." A proclamation of
emergency dated December 3, 1971 issued under Article 352(1) on the F
ground that "the security of India is threatened by external aggression" was
already in force. These declarations had the 'effect of 'suspending' - to use
a popular though not strictly accurate expression - Article 19 as provided
by Article 358 of the Constitution. On 27th June, 1975 the President of
India made an order under Article 359( 1) of the Constitution declaring G
"that the right of any person (including a foreigner) to move any court for
the enforcement of the rights conferred by Article 14, Article 21 and
Article 22 of the Constitution and ·all proceedings pending in any C9urt for
the enforcement of the above-mentioned rights shall remain suspending for
the period during which the proclamation of emergency ma<le under clause
( 1) of Article 352 of the Constitution on 3rd December, 1971 and on the H
10
SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.
A 25th June, 1975 are 'both in force".
B
With effect from 1st July, 1975, COFEPOSA was amended in certain
respects. Inter alia, it introduced Section 12-A containing special provisions
for dealing with emergency. By virtue of Section 12-A, the requirements of
supply of gronnds (section 3(3)] and consultation with Advisory Board
(Section 8) were practically done away with.
,
In the year 1976, no doubt, during the continuance of emergency, the
•
Parliament enacted the Smugglers and Foreign Exchange Manipulators
(Forfeiture of property) Act, 1976 (SAFEMA). If replaced an Ordinance
C to the same effect and was brought into force from the date of the
Ordinance, viz., 5th November, 1975. This Act applies to persons convicted
under the Sea Customs Act, 1878/Customs Act, 1962/FERA, 1947/FERA,
1973 and to those detained under the COFEPOSA, whose detention order
was neither set aside nor revoked in the circumstances mentioned therein.
D Besides the persons so convicted/detained, the Act applies to their relatives
and associates as well. The main purpose of the Act is to forfeit the illegally
acquired properties of such smugglers and foreign exchange manipulators
in whomsoever's name they may have been l..ept.
During the period the Emergency proclaimed on 25th Jnne, 1975 was
E m force, several orders of detention were made under Section 3 of .•
COFEPOSA. In view of the provisions of Section 12-A, the said detenues
were neither supplied with the gronnds of detention nor were their cases
referred to the Advisory Board. The detenues, however, had no remedy.
Because of the order under Article 359( 1) and the operation of Article 358
F - as interpretated by this Court in A.D.M. Jabalpur v. Shivkant Shukla,
[1976] 2 S.C.C. 521 - they could not approach the High Court or this Court
for relief. The emergency was revoked on March 21, 1977 and the detenues
released. Subsequently notices were issued nnder Section 6 of the
SAFEMA to the said detenues, their relatives and associates calling upon
them to show cause why the properties mentioned in the notices be not
G
declared as illegally acquired properties and forfeited. SAFEMA was being
invoked against them because of the orders of detention made against the
detenues under COFEPOSA during the period of emergency. The said
orders of detentions were the connecting link, the foundation for the action
being taken against the dctenues, their friends and relatives under
H SAFEMA. (The orders of detention, it is not in dispute, were not revoked
..
'
'
•
.AITORNEYGENL. FOR INDIA v. A.PRAJNANDAS (JEEVANREDDY,J.]
11
or set aside as contemplated by clause (b) of sub-section (2) of Section 2 A
of SAFEMA). It is then that the said persons approached the High Courts
under Article 226 and this Court under Article 32 for quashing the said
notices. In these writ petitions, the Constitutional validity of the
COFEPOSA, SAFEMA and of the 39th, 40th and 42nd Amendments to
the Constitution of India were questioned. (In a few cases, it appears, final
B
orders were also passed- but that circumstance does not make any difference to the principle involved herein). In most of the cases further
proceedings were stayed .
The Attorney General of India applied for transfer of the writ
petitions pending in various High Courts to this Court to be heard C
alongwith the petitions preferred directly in this Court in view of the .
important constitutional questions raised therein. The prayer for transfer
is granted in all the transfer petitions. Leave granted in the S.L.P.
It may be mentioned that COFEPOSA was placed in the IXth
Schedule at Sl. No. 104 by the Constitution 39th (Amendment) Act, 1975 D
while the SAFEMA and the COFEPOSA
(Amendment) Acts, 1976
(Central Acts 13 and 20 of 1976 respectively) were placed in the IXth
Schedule at Serial Nor.. 127 and 129 by the Constitution 40th (Amendment)
Act, 1976.
The coun<el appearing for tbe petitioners urged several contentions
all of which have been contested by 3rd Altaf Ahmed, Learned Additional
Solicitor General. The issues arising from the rival contentions urged at the
bar may be formulated in the shape of questions. They are to the following
effect :
(1) Whether the Parliament was not competent to enact COFEPOSA
and SAFEMA?
E
F
(2) Whether an order of detention under Section 3 read with Section
12-A of COFEPOSA made during the period of emergency proclaimed
under Article 352(1) of the Constitution of India - with the consequent G
'suspension' of Article 19 and during which period the right to move the
Court to enforce the rights conferred by Articles 14, 21 and 22 was
suspended - can form the foundation for taking action under Section 6 of
SAFEMA against the detenue, his relatives and associates? And if it does,
can the validity of such order of detention be challenged by the detenue H
12
SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.
A and/or hrs relatives and associates, when proceedings are taken against
him/them under SAFEMA even though the said order of detention has
ceased to be operative and was not either challenged - or not successfully
challenged - during its operation?
B
c
D
E
F
G
H
(3) If the answer to the Question No. 1 is in affirmative, should the
validity of the order of detention be tested "With reference to the position
of law obtaining at the time of making the said order and during its period
of operation or 'jlith reference to the position of law obtaining on the date
of issuance of the show cause notice under Section 6 of SAFEMA?
( 4) Whether the definition of "illegally acquired property" in clause
(c) of Section 3(1) of SAFEMA is violative of the fundamental rights of
the petitioners guaranteed by Articles 14, 19 and 21 and whether the
inclusion of SAFEMA in the !Xth Schedule to the Constitution cures such
violation, if any?
(5) Whether the application of SAFEMA to the relatives and associates of detenues is violative of Articles 14, 19 and 21? Whether the
inclusion of the said Act in the !Xth Schedule cures such violation, if any?
(6) Whether Section 5-A of COFEPOSA is violative of clause (5) of
Article 22?
For a proper appreciation of the aforesaid questions, it is necessary
to briefly refer to the relevant provisions of both the enactments.
COFEPOSA :- The Preamble to the Act explains the reasons for
which and the objectives to achieve which the Act was made. It reads :
"An Act to provide for preventive detention in certain cases for
the purposes of conservation and argumentation of foreign exchange and prevention of smuggling activities and for matters
connected therewith.
· Whereas violations of foreign exchange regulations and smuggling activities are having an increasingly deleterious effect on the
national economy and thereby a serious adverse effect on the
security of the State ;
And whereas having regard to the persons by whom and the
I
..
'
' j
=
...
'•
ATIORNEY GENL. FOR INDIA v. A. PRAJIVANDAS (JEEVAN REDDY, J.J
13
manner in which such activities or violations are organised and
A
carried on, and having regard to the fact that in certain areas which
are highly vulnerable to smuggling, smuggling activities of a considerable magnitude are clandestinely organised and carried on, it
is necessary for the effective prevention of such activities and
violations to provide for detention of persons concerned in any B
manner therewith;
Be it enacted by Parliament in the Twenty-fifth year of the
Republic of India as follows :- "
The expression "smuggling" is defined in Clause (e) of Section 2. It C
says that the said expression shall have the same meaning as in clause (39)
of Section 2 of the Customs Act, 1%2 and that all its grammatical variations
and cognate expressions shall be construed accordingly.
Clause (39) of Section 2 of the Customs Act defines "smuggling" in
the following words: "smuggling in relation to any goods, means any act or D
omission which will render such goods liable to confiscation under Section
111 or Section 113."
Section 3 provides that where the Central Government, the State
Government or any officer empowered in that behalf is satisfied with
E
respect to any person including a foreigner, that (1) with a view to preventing him from acting in any ;,,anner prejudicial to the conservation or
augmentation of foreign exchange or (2) with a view to preventing him from
(i) smuggling goods, or (ii) abetting the smuggling of goods, or (iii)
engaging in transporting or concealing or keeping smuggled gooc;ls, or (iv)
dealing in smuggled goods otherwise than by engaging in transporting or F
concealing or keeping smuggled goods, or (v) harbouring persons engaged
in smuggling goods or iD. abetting the smnggling of goods, it is necessary
to detain him, he can do so. Sub-section (3) provides for service of grounds
of detention within five days of the detention. (In "exceptional circumstances and for reasons to be recorded in writing", the grounds of detention G
are allowed to be served within fifteen days).
Section 5-A which was inserted by the Amendment A~t 35 of 1975
reads thus:
"5-A. Grounds of. detention severable - Where a person has been H
14
A
B
c
D
SUPREME COURT REPORTS [1994] SUPP. I S.C.R.
detained in pursuance of an order of detention under sub-section
(1) of Section 3 which has been made on two or more grounds,
such order of detention shall be deemed to have been made
separately on each of such grounds and accordingly -
(a) such order shall not be deemed to be invalid or inoperative merely because one or some of the grounds is or are -
(i) vague,
(ii) non-existent,
(iii) not relevant,
(iv) not connected or not proximately connected with such
person, or
(v) invalid for any other reason whatsoever,
and it is not therefore possible to hold that the Government or
officer making such order would have been satisfied as provided
in sub-section ( 1) of Section 3 with reference to the remaining
ground or grounds and made the order of detention;
E
(b) the Government or officer making the order of detention shall
be deemed to have made the order of detention under the said
sub-section (1) after being satisfied as provided in that sub-section
with reference to the remaining ground or grounds."
F
More about this section later.
Section 8 provides for constitution of an Advisory Board as required
by clause ( 4) of Article 22 and for reference of each detenue's case to it.
The opinion of the Advisory Board is binding upon the Government.
Section 9 provides certain classes of cases, where the reference to Advisory
G Board can be made within an extended period. This section is relatable to
clause (7) of Article 22. Section 12-A containing special provisions for
dealing with emergency was introduced by COFEPOSA (Amendment)
Act, 1976 (Act 19 of 1976). In view of its crucial relevance, the section !"'ai ·
be set out in full. It reads :
H
"12-A. Specfal _provisions for dealing with emergency.- (1) Notr
·~·
AITORNEY GENL. FOR INDIA ''·A. PRAJIVANDAS [JEEVAN REDDY. J.[
15
withstanding anything contained in this Act or any rules of natural A
justice, the provisions of this section shall have effect during the
period of operation of the proclamation of Emergency issued
under clause (i) of Article 352 of the Constitution on the 3rd day
of December, 1971, or the Proclamation of Emergency issued
,.
under that clause on the 25th day of J unc, 1975, or a period of
twenty-four months from the 25th day of June, 1975, whichever B
period is the shortest.
(2) When making an order of detention under this Act against any
person after the commencement of the Conservation of Foreign
Exchange and Prevention of Smuggling Activities (Amendment) c
Act, 1975, the Central Government or the State Government or,
as the case may be, the officer making the order of detention shall
consider whether the detention. of such person under this Act is
necessary for dealing effectively with the emergency in respect of
..
which the proclamations referred to in sub-section (1) have been D
issued (hereafter in this section referred to as the emergency) and
if, on such consideration, the Central Government or the State
Government or, as the case may be, the officer is satisfied that it
is necessary to detain such person for effectively dealing with the
emergency, that Government or officer may m&ke a declaration to
that effect and communicate a copy of the declaration to the E
person concerned :
Provided that where such declaration is made by an officer, it
.,
shall be reviewed by the appropriate Government within fifteen days
from the .date of making of the declaration and such declaration
F
shall cease to have effect unless it is confirmed by that Government, after such review, within the said period of fifteen days.
(3) The question whether the detention of any person in respect
of whom a declaration has been made under sub-section (2) G
continues to be necessary for effectively dealing with the emergen-
;
cy shall be reconsidered by the appropriate Government v;jthin four
months from the date of such declaration and thereafter atintervals not exceeding four months, and if, on such reconsideration, it
appears to the appropriate Government that the detention of the
person is no longer necessary for effectively dealing with the H
16
A
B
SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.
emergency, that Government may revoke the declaration.
( 4) In making any consideration, review or reconsideration under
sub-section (2) or (3), the appropriate Government or officer may,
if such Government or officer considers it to be against the public
interest to do otherwise, act on the basis of the information and
materials in its or his possession without disclosing the facts or
giving an opportunity of making a representation to the person
concerned.
(5) It shall not be necessary to disclose to any person detained under
C
a detention order to which the provisions of sub-section (2) apply,
the groundS on which the order has been made during the period the
declaration made in respect of such person under that sub- section
is in force and, accordingly, such period shall not be taken into
account for the purposes of sub-section (3) of Section 3.
D
E
F
( 6) In the case of every person detained under a detention order
to which the provisions of sub-section (2) apply, being a person in
respect of whom a declaration has been made thereunder, the
period during which such declaration is in force shall not be taken
into account for the purpose of computing -
(i) the period specified in clauses (b} and (c) of Section 8;
(ii) the period of "one year" and "five weeks" specified in
sub-section (1), the period of "one year" specified in sub-section (2)(i) and the period of "six months" specified in sub-section (3) of Section 9."
'
This provision was made during the period of emergency 'and is
confined to the duration of emergency or such shorter period as may be
specified. It contemplates making a declaration that the detention of
person is necessary for dealing effectively with the emergency and if such
G a declaration is made, his case shall be governed by this Section. The only
safeguards . if they can be called that - are the provisions for review and
reconsideration by the appropriate Government mentioned in the Section
itself. The constitutional safeguards in clauses (4) and (5) of Article 22 and
the provisions in the Act incorporating the said safeguards are dispensed
H with in the sense that they need not be complied with; the several time-
,.
I
'
...... '
...
-'!'.
i
ATTORNEY GENL. FOR INDIA v. A. PRAJ!VANDAS (JEEVANREDDY,l.]
17
limits prescribed in Sections 8 and 9. stand extended by the period of A
emergency.
SAFEMA :- The preamble to the Act sets out the reasons and
objects behind the enactment. It reads :
"An Act to provide for the forfeiture of illegally acquired properB
ties 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 C
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 D
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;
E
Be it enacted by Parliament in the Twenty-sixth Year of the
Republic of India as follows :"
. Section 2 specifies the persons to whom the Act applies. Sub- section
(1) declares that the provisiOJIS of the Act shall apply "only to the persons
specified in sub-section (2)". Sub-section {2) mentions five categories of
persons to whom the provisions of the Act apply. The first category mentioned under clause (a) comprises persons convicted under Sea Customs
Act, 1878 or the Customs Act, 1962 of an offence in relation to goods of
F
a value exceeding one lakh of rupees. The requirement of value exceeding G
Rupees one lakh does not apply in case of second or subsequent conviction. Persons convicted under FERA, 1947/1973 of an offence, the amount
and value involved in which exceeds one lakh rupees are also included
under clause (a). The requirement of value (above one lakh), however,
does not apply in the case of second or subsequent conviction. The second
category [clause (b)] comprises of persons in respect of whom an order of H
18
SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.
A detention has been made under COFEPOSA, but which order was not
revoked or set aside in any of the situations set out in the four sub-clauses
of the proviso. It would be appropriate to set out clause (b) in full.