Holding

The notice under Section 6(1) is not defective, and the forfeiture under SAFEMA does not violate Article 20; consequently the appeals are dismissed.

Summary

Biswanath Bhatiacharya, who had been detained under COFEPOSA in the 1970s, was served a notice under Section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) to explain the source of his wealth, and later a forfeiture order was passed under Section 7. He challenged the notice as defective for not stating the reasons, contended that the forfeiture amounted to a penalty in violation of Article 20 of the Constitution, and sought a remand for re‑appreciation of evidence. The Supreme Court held that the statute does not require the reasons to be communicated with the notice, that the reasons were later supplied, and that the forfeiture is a civil deprivation, not a penal sanction, thus not barred by Article 20. The Court also rejected the request to remit the matter for fresh evidence appraisal and dismissed the appeals.

Issues considered

The notice issued under Section 6(1) of SAFEMA is defective for not containing the reasons for belief that the property is illegally acquired.
Whether the forfeiture of property under SAFEMA constitutes a penalty prohibited by Article 20 of the Constitution.
Whether the order of forfeiture should be remitted to the High Court for re‑appreciation of evidence.
Whether SAFEMA is ultra vires the Constitution, particularly in view of Article 31‑B immunity.

Legislation cited

Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA)
Constitution of Indias. Article 14, s. Article 20, s. Article 300A, s. Article 31-B
Income Tax Act, 1961s. 127
Indian Penal Code, 1860s. 536
Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976s. 2(2), s. 6(1), s. 7

Subjects

civil forfeitureproperty forfeiturepreventive detentionCOFEPOSAArticle 20ex post factoconstitutional validitynotice requirementSmugglingforeign exchange manipulation

Judgment

[2014] 1 S.C.R. 885

BISWANATH BHATIACHARYA A
v.
UNION OF INDIA & OTHERS
(Civil Appeal Nos. 772-773 of 2014)

JANUARY 21, 2014
B
[H.L. GOKHALE AND J. CHELAMESWAR, JJ.]

SMUGGLERS AND FOREIGN EXCHANGE
MANIPULATORS (FORFEITURE OF PROPERTY) ACT,
1976: c
s. 6(1) - Notice under - Requirement of recording reasons
in the notice -Plea of appellant that notice issued u/s. 6 was
defective as it did not contain reasons which made competent
authority believe that notice scheduled properties were illegal D
acquired property - Held: Plea not sustainable - There is no
express statutory requirement to communicate the reasons
issuance of notice u/s. 6 of the Act - Secondly, the re_asons,
though not initially supplied alongwith the notice were
subsequently supplied thereby enabling the appellant to E
effectively meet the case of the respondents - The appellant
not only filed a rejoinder to the said notice but he was a/so
given a hearing before an order of forfeiture uls. 7 was passed
- Further, an order of forfeiture is an appealable order where
the correctness of the decision u/s. 7 to forfeit the properties F
could be examined.

ss. 7, 2(2) - Forfeiture of properties - If violative of Article
20 of Constitution - Held: The application of the Act is limited
to persons who have either suffered a conviction under one
of the acts specified in s.2(2)(a) of the Act or detained under G
the COFEPOSA subsequent to the commencement of the Act
in question - Apart from that there are other categories of
persons to whom the Act applies - Of all the five categories
of persons to whom the Act is made applicable, only one
885 H
886 SUPREME COURT REPORTS [2014] 1 S.C.R.

A category specified u/s.2(2)(a) happens to be of persons who
are found guilty of an offence under one of the enactments
mentioned therein and convicted - The other four categories
of persons to whom the Act is applicable are persons
unconnected with any crime or conviction under any law while
B the category of persons falling u/s. 2(2)(b) are persons who are
believed by the State to be violators of law - The other three
categories are simply persons who are associated with either
of the two categories mentioned in s.2(2)(a) and (b) - At least
with reference to the four categories other than the one
c covered by s.2(2)(a}, the forfeiture/deprivation of the property
is not a consequence of any conviction for an offence -
Therefore, with reference to these four categories, the question
of violation of Article 20 does not arise - In case of first
category, Article 20 would have no application for the reason,
0 conviction is only a factor by which the Parliament chose to
identify the persons to whom the Act be made applicable -
The Act does not provide for the confiscation of the properties
of all the convicts falling uls.2(2)(a} or detenues falling u/
s.2(2)(b).
E s.2(2) - Forfeiture of illegally acquired property - Legality
of - Held: There is a public interest in ensuring that persons
who cannot establish that they have legitimate sources to
acquire the assets held by them do not enjoy such wealth -
Such a deprivation would certainly be consistent with the
F requirement of Article 300A and 14 of the Constitution which
prevent the State from arbitrarily depriving a subject of his
property - Even otherwise, in view of its inclusion in the IXth
Schedule, the Act is immune from attack on the ground that
it violates any of the rights guaranteed under Part Ill of the
G Constitution by virtue of the declaration under Article 31-B -
Constitution of India, 1950 - Articles 14, 31-B, 300A.

LEGISLATION: Retrospective operation - Held: It is a
well settled principle of constitutional law that sovereign
H legislative bodies can make laws with retrospective operation;
BISWANATH BHATTACHARYA v. UNION OF ·INDIA 887

and can make laws whose operation is dependent upon facts A
or events anterior to the making of the law - However, criminal
law is excepted from such general Rule, under another equally
well settled principle of constitutional law, i.e. no ex post facto
legislation is permissible with respect to criminal law - Article
20 contains such exception to the general authority of the B
sovereign legislature functioning under the Constitution to
make retrospective or retroactive laws - Criminal law -
Constitution of India, 1950 - Article 20.

WRIT PETITION: Re-appreciation of evidence - Scope
of - Plea that in view of the failure of High Court to examine C
the tenability of the order of the forfeiture as confirmed by the
appellate tribunal the matter is required to be remitted to High
Court for appropriate consideration - Held: Plea is rejected -
In the writ petition, except challenging order of forfeiture on
the two legal grounds, there was no other ground on which D
correctness of the order of forfeiture was assailed - For the first
time in the instant appeal, an attempt was made to argue that
conclusions drawn by competent authority that the properties
forfeited were illegally acquired - Appellant sought re-
appreciation of the evidence without even an appropriate E
pleading in the writ petition - Therefore, no reason to remit the
matter to the High Court.

The appellant was once detained in 1974 under MISA,
1971 and then under COFEPOSA, 1974 for the reason that F
he with his brother in London was indulging in prejudicial
activities. He was eventually released in 1977. He was
given notice under Section 6(1) of SAFEMA on 4.3.1977
asking him to explain sources of income for acquiring
certain properties. Then on 27 .11.1989, respondent 2 G
ordered forfeiture of some of the properties of the
appellant. His appeal was partly allowed. He then filed
writ petition in High Court challenging the validity of the
SAFEMA and legality of his detention under COFEPOSA.
The Single judge of the High Court partly allowed it on
the ground of defective notice. Jhe appeal filed against H
888 SUPREME COURT REPORTS [2014] 1 S.C.R.

A it was, however, allowed by the Division Bench of the
High Court.

In the instant appeals, the appellant contended that
the notice issued under Section 6 of the SAFEMA Act was
8 defective as it did not contain the reasons which made
the competent authority believe that the notice scheduled
properties were illegally acquired properties; that the
forfeiture, such as the one provided under the Act, is
violative of Article 20 of the Constitution of India; and in
C the alternative, he contended that matter should be
remitted to the High Court for an appropriate
consideration of the legality of order of forfeiture as it has
failed to consider the question whether the decision of
the competent authority as confirmed by the appellate
authority was sustainable.
D
Dismissing the appeals, the Court

HELD: 1.1. Initially notice under Section 6(1) of
SAFEMA was issued at a point of time when the appellant
E was under preventive detention. Subsequently, by a
communication dated 1st June, 1988, the recorded
reasons for the belief which led to the issuance of notice
under Section 6(1) of the Act was served on the appellant.
The appellant not only filed a rejoinder to the said notice
F but he was also given a hearing before an order of
forfeiture under Section 7 was passed. In support of the
submission that the Division Bench of the High Court has
erred in coming to the conclusion that notice under
Section 6(1) did not vitiate the subsequent proceedings,
the appellant relied upon a judgment of this Court in
G *Ajantha Industries. It was a case where this court had
to consider the legality of the order under Section 127 of
the Income Tax Act, 1961 transferring the 'case' of the
Ajantha Industries. Dealing with the legality of such an
order, it was held that there is a requirement of not only
H
BISWANATH BHATIACHARYA v. UNION OF !NOIA 889

recording the reasons ·tor the decision to transfer the case A
but also such reasons are required to be communicated
to the assessee. Though section 127 expressly provided
for recording of reasons, it did not expressly provide
communicating the same to the assessee. Still, it was
held that such a communication is mandatory. Such a B
conclusion must be understood in the light of the
observation of the Court that there was no provision of
appeal or revision under the Income Tax Act against an
order of transfer. For the same reason, this Court
distinguished and declined to follow an earlier judgment c
in **S. Narayanappa where this Court on an interpretation
of Section 34 of the Income Tax Act, 1922, opined to the
contra. Section 34 provided for re-opening of the
assessment with the prior sanction of the Commissioner,
if the income tax officer has 'reasons to believe' that
0
taxable income had been under-assessed. Dealing with
the question whether the reasons which led the
Commissioner to accord sanction for the initiation of
proceedings under section 34 are required to be
communicated to the assessee, it was held that there is
no requirement in any of the provisions of the Act or any E
section laying down as a condition for the initiation of the
proceedings that the reasons which induced the
Commissioner to accord sanction to proceed under S.34
must be communicated to the assessee. [Para 13-17]
[900-E-G; 901-A-B, E-F; 902-G-H] F

1.2. The submission of the appellant is rejected on
the ground that firstly, there is no express statutory
requirement to communicate the reasons which led to the
issuance of notice under Section 6 of the Act. Secondly, G
the reasons, though not initially supplied alongwith the
notice dated 4.3.1977, were subsequently supplied
thereby enabling the appellant to effectively meet the
case of the respondents. Thirdly, the case on hand is
squarely covered by the ratio of **Narayanappa case. The H
890 SUPREME COURT REPORTS [2014] 1 S.C.R.

A appellant could have effectively convinced the
respondents by producing the appropriate material that
further steps in furtherance to the notice under Section
6 need not be taken. Apart from that, an order of forfeiture
is an appealable order where the correctness of the
B decision under Section 7 to forfeit the properties could
be examined. The ratio of *Ajantha Industries case does
not lay down a universal principle that whenever a statute
requires some reasons to be recorded before initiating
action, the reasons must necessarily be communicated.
c [Para 19] [903-D-G]
*Ajantha Industries and others v. Central Board of Direct
Taxes and others, (1976) 1 SCC 1001 : 1976 (2) SCR 884 -
held inapplicable.

D **S. Narayanappa v. The Commissioner of Income-tax
AIR 1967 SC 523 : 1967 SCR 590 - relied on.

2.1. The SAFEMA Act enables the Government of
India to forfeit "illegally acquired property" of any person
E to whom the Act is made applicable. The Act is made
applicable to the persons specified in section 2(2). Five
categories of persons covered are: Clause (a) - persons
who have been convicted under various enactments
referred to therein; clause (b) - persons in respect of
whom an order of detention has been made under the
F COFEPOSA; clause (c) - persons who are relatives of
persons referred to in clause (a) or clause (b). Clause (d)
- every associate of persons referred to in clause (a) or
clause (b). Clause (e) - subsequent holders of property
which at some point of time belonged to persons referred
G to either in clause (a) or clause (b). Expression "illegally
acquired property" is defined in elaborate terms under the
Act. The definition covers two types of properties:
acquired by the income or earnings; and assets derived
or obtained from or attributable to any activity which is
H prohibited by or under a law in force. Such law must be
BISWANATH BHATIACHARYA v. UNION OF INDIA 891

a law with respect to which parliament has the power to A
make law. The language and the scheme of the Act show
that the application of the Act is limited to persons who
have either suffered a conviction under one of the acts
specified in section 2(2)(a) of the Act or detained under
the COFEPOSA subsequent to the commencement of the B
Act in question. Apart from that there are other categories
of persons to whom the Act applies. The appellant
happens to be a person to whom the Act applies. He was
detained under the provisions of the COFEPOSA.
However, such a detention was anterior to the c
commencement of the Act, which came into force on 25th
January 1976, while the detention order was passed on
19th December 1974. The appellant was eve11tually set at
liberty in 1977. [Paras 20, 22-24] [903-H; 904-A; 905-A;
906-A-B; 907-E; 908-A-B, C; 909-B-C]
D
2.2. Section 7(3) of the Act provides for forfeiture of
the illegally acquired property of the persons to whom the
Act is made applicable after an appropriate enquiry
contemplated under Sections 6 and 7 of the Act. In other
words, the Act provides for the deprivation of the (illegally E
acquired) property of the persons to whom the Act
applies. The question whether such a deprivation is
consistent with Article 20 of the Constitution of India in
the specific factual setting of the case coupled with the
explanation 4 to section 2 depends upon whether such F
deprivation is a penalty within the meaning of the said
expression occurring in Article 20. Article 20 contains one
of the most basic guarantees to the subjects of the
Republic of India. The relevant portion of Article stipulates
two things:- that no person shall be convicted of any G
offence except for violation of the law in force at the time
of the commission of the act charged as an offence; and
that no person shall be subjected to a penalty greater than
that which might have been inflicted under the law in
force at the time of the commission of the offence. [Paras H
892 SUPREME COURT REPORTS [2014J 1 S.C.R.

. ·- A 25, 26] [909-D-E; 910-B-EJ

2.3. It is a well settled principle of constitutional law
that sovereign legislative bodies can make laws with
retrospective operation; and can make laws whose
8 operation is dependent upon facts or events anterior to
the making of the law. However, criminal law is excepted
from such general Rule, under another equally well
settled principle of constitutional law, i.e. no ex post facto
legislation is permissible with respect to criminal law.
Article 20 contains such exception tq the general
C authority of the sovereign legislature functioning under
the Constitution to make retrospective or retroactive laws.
[Para 27] [910-E-G]

2.4. The regime of forfeiture of property contemplated
D under the Act is not new. At least from 1944 such a regime
(though not identical but similar to the impugned one) is
prevalent in this country. Two ordinances were made in
1943 and 1944, subsequently amended by another
ordinance in 1945, all called Criminal Law Amendment
E Ordinances, which continued to be in force in this
country by virtue of operation of Article 372 and some
anterior laws. Under the 1943 Ordinance, two special
Tribunals were constituted to try cases allotted to them
"in the first Schedule in respect of such charges of
F offence prescribed under the second Schedule etc.".
Essentially, such cases were cases either of charge of
receipt of illegal gratification by a public servant or
embezzlement of public money etc. The 1944 Ordinance
provided for the attachment of the money or other
G property which is believed to have been procured by
means of one of the above stated scheduled offences by
the offender. Such attached property is required to be
disposed of as provided under section 13 of the said
Ordinance. Under Section 12 of the Ordinance, the
H Criminal Court trying a scheduled offence is obliged to
BISWANATH BHATIACHARYA v. UNION OF INDIA 893

ascertain the amount or value of the property procured A
by the accused by means of the offence. Under section
13(3), it is provided that so much of the attached property
referred to earlier equivalent to the value ascertained by
the Criminal Court under section 12 is required to be
forfeited to the State. [Para 34] [915-A-E; 916-A] B

Attorney General for India & Others v. Amrat/al
Prajivandas and others (1994) 5 SCC 54 : 1994 (1) Suppl.
SCR 1; His Holiness Kesavananda Bharati Sripadagalvaru
v. State of Kera/a and another (1973) 4 sec 225 : 1973 (0) C
Suppl. SCR 1 - referred to.

Bidie v. General Accident, Fire and Life Assurance
Corporation (1948) 2 All ER 995 - referred to.

2.5. To understand the exact nature of the forfeiture o
contemplated under the (SAFEMA) Act it is necessary to
examine the nature of the property which is sought to be
forfeited and also the persons from whom such forfeiture
is sought to b~ made. The Act is made applicable to five
classes of persons specified under section 2. In other E
words, the properties of persons belonging to any one
of the said five categories only could be forfeited under
the Act. Even with reference to the properties held by any
one falling under any of the five categories, their entire
property cannot be forfeited except the property which ·
is determined to be illegally acqufred property as defined F
under section 3(c) of the Act. Of all the five categories of
persons to whom the Act is made applicable, only one
category specified under section 2(2)(a) happens to be
of persons who are found guilty of an offence under one
of the enactments mentioned therein and convicted. The G
other four categories of persons to whom the Act is
applicable are persons unconnected with any crime or
conviction under any law while the category of persons
falling under section 2(2)(b) are persons who are believed
by the State to be violators of law. The other three H
894 SUPREME COURT REPORTS [2014] 1 S.C.R.

A categories are simply persons who are associated with
either of the two categories mentioned in section 2(2)(a)
and (b). At least with reference to the four categories
other than the one covered by section 2(2)(a), the
forfeitureldeprivation of the property is not a
B consequence of any conviction for an offence. Therefore,
with reference to these four categories, the question of
violation of Article 20 does not arise. Insofar as first
category, Article 20 would have no application for the
reason, conviction is only a factor by which the
c Parliament chose to identify the persons to whom the Act
be made applicable. The Act does not provide for the
confiscation of the properties of all the convicts falling
under Section 2(2)(a) or detenues falling under Section
2(2)(b). Section 6 of the Act authorises the competent
authority to initiate proceedings of forfeiture only if it has
0
reasons to believe (such reasons for belief are required
to be recorded in writing) that all or some of the
properties of the persons to whom the Act is applicable
are illegally acquired properties. The conviction or the
preventive detention contemplated under Section 2 is not
E the basis or cause of the confiscation but the factual
basis for a rebuttable presumption to enable the State to
initiate proceedings to examine whether the properties
held by such persons are illegally acquired properties. It
is notorious that people carrying on activities such as
F smuggling to make money are very clandestine in their
activity. Direct proof is difficult if not impossible. The
nature of the activity and the harm it does to the
community provide a sufficiently rational basis for the
legislature to make such an assumption. More
G particularly, Section 6 specifically stipulates the
parameters which should guide the competent authority
in forming an opinion, they are; the value of the property
and the known sources of the income, earnings etc. of
the person who is sought to be proceeded against. Even
H in the case of such persons, the Act does not mandate
BISWANATH BHATIACHARYA v. UNION OF !NOIA 895

such an enquiry against all the assets of such persons. A
An enquiry is limited to such of the assets which the
competent authority believes (to start with) are beyond
the financial ability of the holder having regard to his
known and legitimate sources of income, earnings etc.
Connection with the conviction is too remote and, B
therefore, would not be hit by the prohibition contained
under Article 20 of the Constitution of India. [Paras 39-40]
[918-B-E; 919-A-H; 920-A-B]

R. S. Joshi, Sales Tax Officer, Gujarat and Others v. Ajit C
Mills Ltd. and Another, (1977) 4 SCC 98 : 1978 (1) SCR 338
- Distinguished.

R. Abdul Quader & Co: v. STO, AIR 1964 SC 922 : 1964
SCR 867 - referred to.
D
2.6. If a subject acquires property by means which
are not legally approved, sovereign would be perfectly
justified to deprive such persons of the enjoyment of
such ill-gotten wealth. There is a public interest in
ensuring that persons who cannot establish that they E
have legitimate sources to acquire the assets held by
them do not enjoy such wealth. Such a deprivation
would certainly be consistent with the requirement of
Article 300A and 14 of the Constitution which prevent the
State from arbitrarily depriving a subject of his property. F
Whether there is a right to hold property which is the
product of crime is a question examined in many
jurisdictions. Non-conviction based asset forfeiture
model also known as Civil Forfeiture Legislation gaine~
currency in various countries: United States of America,
Italy, Ireland, South Africa, UK, Australia and certain G
provinces of Canada. The Act is not violative of Article 20
of the Constitution. Even otherwise, in view of its
inclusion in the IXth Schedule, the Act is immune from
attack on the ground that it violates any of the rights
H
896 SUPREME COURT REPORTS ~2014] 1 S.C.R.

A guaranteed under Part Ill of the Constitution by virtue of
the declaration under Article 31-B. [Paras 41-42, 43, 45]
[920-C-D; 921-G-H; 922-D-EJ

Article published in the Journal of Financial Crime, 2004
8 by Anthony Kennedy • referred to.

3. The last submission i.e., in view of the failure of the
High Court to examine the tenability of the order of the
forfeiture as confirmed by the appellate tribunal the matter
is required to be remitted to the High Court for appropriate
C consideration is rejected. In the writ petition, except
challenging the order of forfeiture on the two legal
grounds, there is no other ground on which correctness
of the order of forfeiture is assailed in the writ petition. For
the first time in this appeal, an attempt was made to argue
D that the conclusions drawn by the competent authority
that the properties forfeited were illegally acquired - is not
justified on an appropriate appreciation of defence of the
appellant. In other words, the appellant seeks
reappreciation of the evidence without even an
E appropriate pleading in the writ petition. It is a different
matter that the High Court in exercise of its writ jurisdiction
does not normally re-appreciate evidence. Looked at any
angle, there is no reason to remit the matter to the High
Court. [Paras 46-47] [922-F-H; 923-A-B]
F
State of West Bengal v. S.K. Ghosh, [AIR 1963 SC 255]
: 1963 SCR 111 - Referred to.
Case Law Reference:
1976 (2) SCR 884 held inapplicable Para 14
G
1967 SCR 590 Relied on Para 17
1978 (1) SCR 338 Distinguished Para 30
1963 SCR 111 Referred to Para 31
H
BISWANATH BHATTACHARYA v. UNION OF INDIA 897

1994 (1) Suppl. SCR 1 Referred to Para 31 A

(1948) 2 All ER 995 at 998 Referred to Para 32
1973 (0) Suppl. SCR 1 Referred to Para 33
1964 SCR 867 Referred to Para 37 B
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 772-
773 of 2014.

From the Judgment and Order dated 09.08.2007 and
order dated 30.08.2007 of the High Court at Calcutta in FMA c
No. 206 of 2003 and RVW No. 2372 of 2007.

C.A. Sundaram, Puneet Jain, Christie Jain (for Pratibha
Jain) for the Appellant.

AS. Chandhiok, ASG, Rashmi Malhotra, Ritesh Kumar, D
Vidit Gupta, Harleen Singh, Vishnu Kant, Gurpreet S.
Parwanda, Hayank Baamniyal, Tanushree Sinha, Anil Katiyar
· (for B.V. Balaram Das) for the Respondents.

The Judgment of the Court was delivered by E
CHELAMESWAR, J. 1. Leave granted.

2. These two appeals are preferred against the final
judgment dated 9th August 2007 passed by the Calcutta High
Court in FMA No.206 of 2003 and order dated 30th August F
2007 in Review Application bearing RVW No.2372 of 2007
dismissing the said review application filed by the appellant
herein.

3. The facts leading to the instant litigation are as follows: G

4. The appellant was initially detained by order dated
19.12.1974 under the provisions of the Maintenance of Internal
Security Act, 1971 (since repealed) and later under the
provisions of the Conservation of Foreign Exchange and
Prevention of Smuggling Activities Act, 1974 (hereinafter H
898 SUPREME COURT REPORTS [2014) 1 S.C.R.

A referred to as the "COFEPOSA") on the ground that he in
collaboration with his brother, who was living in London at that
point of time, was indulging in activities which are prejudicial
to the conservation of foreign exchange. The appellant
unsuccessfully challenged the detention order. He was
B eventually released in 1977.

5. While he was in custody, the second respondent issued
a notice dated 4th March 1977 under section 6(1) of the
Smugglers and Foreign Exchange Manipulators (Forefeiture of
C Property) Act, 1976 (hereinafter referred to as "the Act") calling
upon the appellant to explain the sources of his income out of
which he had acquired the assets described in the schedule
to the notice. Some correspondence ensued between the
second respondent on one hand and the wife of the appellant
and the appellant on the other hand, the details of which may
D not be necessary for the time being.

6. Eventually on 27th November 1989, the second
respondent passed an order under section 7(1) of the Act
forfeiting the properties mentioned in the schedule to the said
E order.
7. Aggrieved by the said order, an appeal was carried to
the Appellate Tribunal constituted under section 12 of the Act.
The appeal was partly allowed setting aside the forfeiture of two
F items of the properties.
8. Not satisfied with the Appellate Authority's conclusion,
the appellant challenged the same in writ petition No. C.O.
No.10543 (W) of 1991 before the High Court of Calcutta. In the
said writ petition, the appellant also prayed for two declarations
G - (1) that the Act is illegal and ultra vires the Constitution and
(2) that the detention of the appellant under the COFEPOSA
by the order dated 19th December 1974 was illegal and void
- a collateral and second round of attack.

9. Learned Single Judge of the Calcutta High Court by an
H
BISWANATH BHATTACHARYA v. UNION OF INDIA 899
[J. CHELAMESWAR, J.]

order dated 1oth May 2002 partly allowed the writ petition A
holding that the forfeiture of the property by the second
respondent as confirmed by the Appellate Tribunal was illegal
on the ground that the notice under section 6(1) of the Act dated
4th March 1977 was not in accordance with the law as the
notice did not contain the reasons which constituted the basis B
for the belief of the competent authority that the appellant
illegally acquired the scheduled properties.

10. Aggrieved by the order of the learned Single Judge,
the respondents herein carried the matter in appeal to the
Division Bench. By the judgment under appeal, the appeal was C
allowed.

11. It appears from the judgment under appeal that though
the appellant sought a declaration that the Act (SAFEMA) is
unconstitutional, such a plea was not pressed before the D
learned Single Judge. 1

12. Before us, the appellant made three submissions - (1)
that the notice issued under Section 6 of the Act is defective
and therefore illegal as the notice did not contain the reasons E
which made the competent authority believe that the notice
scheduled properties are illegally acquired properties. In other
words, the reasons were not communicated to the appellant;
(2) that the forfeiture, such as the one provided under the Act,
is violative of Article 20 of the Constitution of India; and (3) in
the alternative, it is argued - that the High Court failed to F
consider the question whether the decision of the competent
authority as confirmed by the appellate authority is sustainable
and therefore, the matter is required to be remitted to the High

1. On perusal of the judgment and order of the Learned Single Judge it G
appears that although the vires of the said Act was under challenge the
respondent No. 1 only asked for cancellation of the order of detention issued
under Section 3 of the COFEPOSA and the orders passed by the competent
authority so merged in the appellate authority under section 6(1) of the
SAFEMA as well as prayed for release of the properties confiscated by the
appellate authority in terms of the order impugned therein. H
900 SUPREME COURT REPORTS [2014] 1 S.C.R.

A Court for an appropriate consideration of the legality of order
of forfeiture.

13. Regarding the non communication of the reasons, the
judgment under appeal recorded as follows:

B "The matter may be looked into from another angle.
In 1976 he was under detention. His wife replied to the
said notice without complaining of non-supply of reasoning.
After his release the respondent No.1 gave a further
rejoinder by adopting what had been said by his wife The
C authority did not proceed against him until he was served
with the reasoning in 1988. The respondent No.1 was also
afforded opportunity to deal with the reasonings in his
rejoinder. The competent authority after affording him
opportunity of hearing passed a detailed reasoned order.
o He preferred an appeal. The appeal was allowed in part
that too by a detailed reasoned order. Hence, we do not
find any reason to hold that the fundamental right of the
respondent No.1 was infringed."

E It appears from the record that initially notice dated 4.3.1977
under Section 6(1) was issued at a point of time when the
appellant was under preventive detention. Subsequently, by a
communication dated 1st June, 1988, the recorded reasons for
the belief which led to the issuance of notice under Section 6(1)
of the Act was served on the appellant. The appellant not only
F filed a rejoinder to the said notice but he was also given a
hearing before an order of forfeiture under Section 7 was
passed. It is in the background of the abovementioned facts
we are required to consider the submission that the High Court
erred in coming to the conclusion that notice under Section 6(1)
G did not vitiate 2 the subsequent proceedings.
2. The respondent No. 1 for the first time in the wirt petition contended that
the notice under Section 6(1) was bad due to non-supply of reasons
whereas it would appear that the reasons were supplied as and when
asked for. Delayed supply of reasons, in our view, did not vitiate the
subsequent orders of the competent authority as well as appellate authority.
H
BISWANATH BHATTACHARYA v. UNION OF INDIA 901
[J. CHELAMESWAR, J.]
14. In support of the submission, learned counsel for the A
appellant very heavily relied upon a judgment of this Court in
Ajantha Industries and others v. Central Board of Direct Taxes
and others, (1976) 1 sec 1001. It was a case where this court
had to consider the legality of the order under Section 127
transferring the 'case' of the Ajantha Industries. B

15. Section 127 of the Income Tax Act, 1961 empowers
the authorities (mentioned therein) to transfer "any case"
(explained in the said section) from one Income Tax Officer to
another. Further, the section stipulates that before such an C
order of transfer is made, two conditions are required to be
complied with - (1) that the assessee must be given a
reasonable opportunity to explain why his case should not be
transferred; and (2) the authority transferring the case is
required to record the reasons which led him to initiate the
proceedings. It appears from the judgment that though first of D
the abovementioned two requirements was complied with, it
was found that no reasons were recorded much less
communicated, Dealing with the legality of such an order, this
Court held that there is a requirement of not only recording the
reasons for the decision to transfer the case but also such E
reasons are ,required to be communicated to the assessee.

16. Though section 127 expressly provided for recording
of reasons it did not expressly provide communicating the
same to the assessee. Still, this Court held that such a F
communication is mandatory.

"10. The reason for recording of reasons in the order and

Show cause notice was served in 1976. It was not proceeded with till 1988
wnen reasons were supplied. Order was passed by the competent authority G
upon affording adequate opportunity of hearing. The respondent No.1 availed
the remedy of appeal where his appeal was partly allowed. With deepest
regard we have for the learned single Judge, His Lordship was perhaps not
right in interfering with the show cause notice at the stage when the
respondent No.1 availed of the remedies in law and became partly succesful
before the appellate authority. H
902 SUPREME COURT REPORTS [2014] 1 S.C.R.

A making these reasons known to the assessee is to enable
an opportunity to the assessee to approach the High Court
under its writ jurisdiction under Article 226 of the
Constitution or even this Court under Article 136 of the
Constitution in an appropriate case for challenging the
B order, inter alia, either on the ground that it is mala fide or
arbitrary or that it is based on irrelevant and extraneous
considerations. Whether such a writ or special leave
application ultimately fails is not relevant for a decision of
the question.
c 11. We are clearly of opinion that the requirement of
recording reasons under Section 127(1) is a mandatory
direction under the law."

17. In our view, such a conclusion must be understood in
D the light of the observation of the Court that there was no
provision of appeal or revision under the Income Tax Act
against an order of transfer. For the same reason, this Court
distinguished and declined to follow an earlier judgment in S.
Narayanappa v. The Commissioner of Income-tax AIR 1967
E SC 523 where this Court on an interpretation of Section 34 of
the Income Tax Act, 1922, opined to the contra. Section 34
provided for re-opening of the assessment with the prior
sanction of the Commissioner, if the income tax officer has
'reasons to believe' that taxable income had been under-
F assessed. Dealing with the question whether the reasons which
led the Commissioner to accord sanction for th~ initiation of
proceedings under section 34 are required to be
communicated to the assessee, this Court held -

"There is no requirement in any of the provisions of the Act
G or any section laying down as a condition for the initiation
of the proceedings that the reasons which induced the
Commissioner to accord sanction to proceed under S.34
must be communicated to the assessee."

H
BISWANATH BHATIACHARYA v. UNION OF INDIA 903
[J. CHELAMESWAR, J.]
18. In Ajantha Industries case, Narayanappa's case was A
distinguished on the ground -

"When an order under Section 34 is made the aggrieved
assessee can agitate the matter in appeal against the
assessment order, but an assessee against whom an
B
order of transfer is made has no such remedy under the
Act to question the order of transfer. Besides, the
aggrieved assessee on receipt of the notice under Section
34 may even satisfy the Income-tax Offier that there were
no reasons for reopening the assessment. Such an
opportunity is not available to an assessee under Section
c .
127(1) of the Act. The above decision is, therefore, clearly
distinguishable."

19. We reject the submission of the appellant for the
following reasons. Firstly, there is no express statutory D
requirement to communicate the reasons which led to the
issuance of notice under Section 6 of the Act. Secondly, the
reasons, though not initially supplied alongwith the notice dated
4.3.1977, were subsequently supplied thereby enabling the
appellant to effectively meet the case of the respondents. E
Thirdly, we are of the opinion that the case on hand is squarely
covered by the ratio of Narayanappa case. The appellant could
have effectively convinced the respondents by producing the
appropriate material that further steps in furtherance to the
notice under Section 6 need not be taken. Apart from that, an F
order of forfeiture is an appealable order where the correctness
of the decision under Section 7 to forfeit the properties could
be examined. We do not see anything in the ratio of Ajantha
Industries case which lays down a universal principle that
whenever a statute requires some reasons to be recorded G
before initiating action, the reasons must necessarily be
communicated.

20. Now, we deal with the second submission. The Act
enables the Government of India to forfeit "illegally acquired
property" of any person to whom the Act is made applicable. H
904 SUPREME COURT REPORTS [2014] 1 S.C.R.

A The Act is made applicable to the persons specified in section
2(2) 3 . Five categories of persons are covered thereunder.
Clause (a) - persons who have been convicted under various
enactments referred to therein; clause (b) - persons in respect

B 3. Section 2. Application-(1) The provisions of this Act shall apply only to the
persons specified in sub-section (2).
(2) The persons referred to in sub-section (1) are the following, namely:-
(a) every person-
(i) who has been convicted under the Sea Customs Act, 1878 (8 of 1878),
-c or the Customs Act, 1962 (52 of 1962), of an offence in relation to goods
of a value exceeding one lakh of ruppes; or
M who has been convicted under the Foreign Exchange Regulation Act,
1947(7of1947), or the Foreign Exchange Regulation Act, 1973 (46of1973),
of an offence, the amount of value involved in which exceeds one lakh of
rupees; or
D (iii) who have been convicted under the Sea Customs Act, 1878 (8 of 1878),
or the Customs Act, 1962 (52 of 1962), has been convicted subsequently
under either of those, Acts; or
(iv) who having been convicted under the Foreign Exchange Regulation
Act, 1947 (7of1947), or the Foreign Exchange Regulation Act, 1973 (46 of
1973), has been convicted subeqeuntly under either of those Acts;
E (b) 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 (52of1974):
Provided that-
(i) such order of detention being an order to which the provisions of section
9 or section 12A of the said Act do not apply, has not been revoked on the
F report of the Advisory Board under section 8 of the said Act or before the
receipt of the Advisory Board or before making a reference to the Advisory
Board: or
(ii) such order of detention being an order to which the provisions of section
9 of the said Act apply, has not been revoked before the expiry of the time
for, or on the basis of, the review under sub-section (3) of section 9 or on
G the report of the Advisory Board under section 8, read with sub-section (2)
of section 9 of the said Act; or
(iii) such order of detention, being an order to which the provisions of
section 12A of the said Act apply, has not been revoked before the expiry of
the time for, or on the basis of, the first review under sub-section (3) of that
section, or on the basis of the report of the Advisory Board under section 8,
read with sub-section (6) of section 12A, of that Act; or
H
BISWANATH BHATTACHARYA v. UNION OF INDIA 905
[J. CHELAMESWAR, J.]
of whom an order of detention has been made under the A

(iv) such order of detention has not been set aside by a court of competent
jurisdiction;
(c) every person who is a relative of a person referred to in clause (a) or clause
(a) or clase (b);
8
(d) every associate of person referred to in clause (a) or clause (b);
(c) any holder of any property which was at any time previously held by a person
referred to in clause (a) or clause (b) 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 for adequate
consideration.
Explanation 1.-For the purposes of sub-clause (i) of clause (a), the value of
c
any goods in relation to which a person has been convicted of an offence
shall be the wholesale price of the goods in the ordinary course of trade in
India as on the date of the comission of the offence.
Explanation 2.-For the purpose of clause, "relative" in relation to a person,
menas-
D
(i) spouse of the person;
(ii) brother or sister of the person;
(iii) brother or sister of the spouse of person;
(iv) any lineal ascendant or descendant of the person;
(v) any lineal ascendant or desendant of the spouse of the person;
E
(vi) spouse of a person referred to in clause (ii), clause (iii), clause (iv) or clause
(v);
(vii) any lineal descendant of a person referred to in clause (ii) or clause (iii).
Explanation 3.-For the purposes of clause (d), "associate", in relation to a
person, means-
(i) any individual who had been or is residing in the residential premises· F
(including out houses) of such person;
(ii) any individual who had been or in managing the affaris or keeping the
accounts of such person;
(iii) any association or person, body of individuals, partnership firms, or private
company within the meaning of the Companies Act, 1956 (1 of 1956), of G
which such person had been or is a member, partner or director.
(iv) any individual who had been or is a member, partner or director of an
association of persons, body of indivduals, partnership firm, or private
company within the meaning of the Companies when such person had
been or is a member, partner or director of such association, body,
partnership firm of a private company;
H
906 SUPREME COURT REPORTS [2014] 1 S.C.R.

A COFEPOSA (subject to certain conditions/exceptions the
details of which are not necessary for our purpose); clause (c)
- persons who are relatives of persons referred to in clause (a)
or clause (b). Expression "relative" is itself explained in
explanation 2. Clause (d) - every associate of persons referred
B to in clause (a) or clause (b). Once again the expression
"associate" is explained under explanation 3 to sub-section (2).
Clause (e) - subsequent holders of property which at some
point of time belonged to persons referred to either in clause
(a) or clause (b).
c 21. Section 4 makes it unlawful (for any person to whom
the Act applies) to hold any illegally acquired property and it
further declares that such property shall be liable to be forfeited
to the Central Government (following the procedure prescribed
under the Act). The procedure is contained under sections 6
D and 7 of the Act. Section 8 prescribes the special rule of
evidence which shifts the burden of proving that any property
specified in the notice under section 6 is not illegally acquired
property of the noticee. Section 6 inter alia postulates that

E
(v) any person who had been or is managing the affiars, or keeping the accounts,
of any association of persons, body of indivduals, partnership firm or private
company referred to in clause (iii).
(vi) the trustee of any trust, where,-
F (a) the trust has been created by such person; or
(b) the value of the assets contributed by such person (including the value
of the assets, if any, contributed by him earlier) to the trust amounts, on
the date on which thecontribution is made, to not less than twenty per cent,
of the value of the assets of the trust on that date;
(vii) where the competent authority, for reasons to be recorded in writing
G considers that any properties of such person are held on his behalf by any
other person, such other person.
Explanation 4.- For the avoidance of doubt, it is herebyprovided that
the question whether any person is a person to whom theprovisions
of this Act apply may be determined with reference to any
facts.circumstances or events including any conviction or detention
H which occurred or took place before the commencement of this Act.
BISWANATH BHATIACHARYA v. UNION OF INDIA 907
[J. CHELAMESWAR, J.]
having regard to the value of the property held by any person A
(to whom the Act applies) and his known sources of income, if
the "competent authority" (notified under section 5) has reason
to believe that such properties are "illegally acquired
properties", the competent authority is authorized to call upon
the holder of the property to 'indicate' the source of his income s
etc. which enabled the acquisition of such property along with
necessary evidence. It also authorizes the competent authority
to call upon the noticee to show cause as to why all or any of
such properties mentioned in the notice should not be declared
illegally acquired properties and be forfeited to the Central c
Government. Section 7 provides for a reasonable opportunity
of being heard after the receipt of response to the notice under
section 6 to the noticee and requires the competent authority
to record a finding whether all or any of the properties in
question are illegally acquired properties. Section 7 also
0
provides for certain incidental matters the details of which are
not necessary for the present purpose.

22. Expression "illegally acquired property" is defined in
elaborate terms under the Act4. Broadly speaking the definition
covers two types of properties: E

4. Section 3(c) "illegally acquired property", in relation to any person to whom
this Act applies, means,-
(i) any property acquired by such person, whether before or after the F
commencement of this Act, wholly or partly out of or by means of any
income, earnings or assets derived or obtained from or attributable to any
activity prohibited by or under any law for the time being in force relating to
any matter in respect of which Parliament has power to make laws; or
(ii) any property acquired by such person, whether before or after the
commencement of this Act, wholly or partly out of or by means of any
income, earnings or assets in respect of which any such law has been G
contravened; or
(iii) any property acquired by such person, whether before or after the
commencement of this Act, wholly or partly out of or by means of any
income, earnings or assets the source of which cannot be proved and which
cannot be shown to be attributable to any act or thing done in respect of
any matter in relation to which Parliament has no power to make laws; or H
908 SUPREME COURT REPORTS [2014) 1 S.C.R.

A 1) acquired by the income or earnings; and

2) assets derived or obtained

from or attributable to any activity which is prohibited by or
under a law in force. Such law must be a law with respect to
B which parliament has the power to make law. A complete
analysis of the definition in all its facets may not be necessary
for our purpose.

23. From the language and the scheme of the Act it does
C not appear that the application of the Act is limited to persons
who either suffered a conviction under one of the acts specified
in section 2(2)(a) the Act or detained under the COFEPOSA
subsequent to the commencement of the Act in question. On
the other hand, explanation 4 to section 2 expressly declares
D as follows:

"Explanation 4.-For the avoidance of doubt, it is hereby
provided that the question whether any person is a person
to whom the provisions of this Act apply may be
determined with reference to any facts, circumstances or
E events (including any conviction or detention which

(iv) any property acquired by such person, whether before or after
commencement of this Act, for a consideration, or by any means, wholly or
partly traceable to any property referred to in sub- clauses (i) to (ii) or the
F income or earnings from such property; and includes-I
(A) any property held by such person which would have been, in relation to
any previous holder thereof. illegally acquired property under this clause if
such previous holder had not ceased to hold it, unless such person or any
other person who held the property at any time after such previous holder
or, where there are two or more such previous holders, the last of such
G previous holders is or was a transferee in good faith for adequate
consideration;
(B) any property acquired by such person, whether before or after the
commencement of this Act, for a consideration, or by any means, wholly or
partly traceable to any property falling under item (A), or the income or
earnings therefrom.
H
BISWANATH BHATTACHARYA v. UNION OF INDIA 909
[J. CHELAMESWAR, J.]
occurred or took place before the commencement of this A
Act)."

Apart from that we have already taken note of the fact that
there are other categories of persons to whom the Act applies.

24. The appellant happens to be a person to whom the Act 8
applies. He was detained under the provisions of the
COFEPOSA. However, such a detention was anterior to the
commencement of the Act, which came into force on 25th
January 1976, while the detention order was passed on 19th
December 1974. It appears from the judgment under appeal C
that the appellant was eventually set at liberty in 1977.

25. Section 7(3) of the Act provides for forfeiture of the
illegally acquired property of the persons to whom the Act is
made applicable after an appropriate enquiry contemplated D
under Sections 6 and 7 of the Act. In other words, the Act
provides for the deprivation of the (illegally acquired) property
of the persons to whom the Act applies. The question which
we were called upon to deal with is whether such a deprivation
is consistent with Article 20 5 of the Constitution of India in the E
specific factual setting of the case coupled with the explanation
4 to section 2 which reads as follows:

"Explanation 4.-For the avoidance-of doubt, it is hereby
provided that the question whether any person is a person
to whom the provisions of this Act apply may be F

5. 20. Protection in respect of conviction for offences.-(1) No person shall
be convicted of any offence except for violation of a law in force atthe time
of the commission of the Act charged as an offence, nor besubjected to a G
· penalty greater than that which might have been inflictedunder the law in
force at the time of the commission of the offence.
(2) No person shall be prosecuted and punished for the same offence more
than once.
(3) No person accused of any offence shall be compelled to be a witness
against himself. H
910 SUPREME COURT REPORTS [2014] 1 S.C.R.

A determined with reference to any facts, circumstances or
events (including any conviction or detention which
occurred or took place before the commencement of this
Act)."

The answer to the question depends upon whether such
8
deprivation is a penalty within the meaning of the said
expression occurring in Article 20.

26. Article 20 contains one of the most basic guarantees
to the subjects of the Republic of India. The Article in so far as
C is relevant for our purpose stipulates two things:-

• That no person shall be convicted of any offence
except for violation of the law in force at the time of
the commission of the act charged as an offence;
D and

• That no person shall be subjected to a penalty
greater than that which might have been inflicted
under the law in force at the time of the commission
of the offence.
E
27. It is a well settled principle of constitutional law that
sovereign legislative bodies can make laws with retrospective
operation; and can make laws whose operation is dependent
upon facts or events anterior to the rnaking of the law. However,
F criminal law is excepted from such general Rule, under another
equally well settled principle of constitutional law, i.e. no ex post
facto legislation is permissible with respect to criminal law.
Article 20 contains such exception to the general authority of
the sovereign legislature functioning under the Constitution to
G make retrospective or retroactive laws.
28. The submission of the appellant is that since the Act
provides for a forfeiture of the property of the appellant on the
ground that the appellant was detained under the COFEPOSA,
the proposed forfeiture is nothing but a penalty within the
H
BISWANATH BHATIACHARYA v. UNION OF INDIA 911
[J. CHELAMESWAR, J.]
meaning of the expression under Article 20 of the Constitution. A
Such an inference is inevitable in the light of the definition of
"illegally acquired property" which by definition (under the Act)
is property acquired either "out of' or by means "of any income,
earnings ... " "obtained from or attributable to any activity
prohibited by or under any law ... ". On the other hand, if the B
forfeiture contemplated by the Act is not treated as a penalty
for the alleged violation of law on the part of the appellant, it
would be plain confiscation of the property of the appellant by
the State without any factual justification or the constitutional
authority. · c
29. The learned counsel for the appellant further argued
that the forfeiture contemplated under the Act whether based
on proven guilt or suspicion of involvement in a certain specified
activity prohibited by the Customs Act can only be a 'penalty'
attracting the prohibition of Article 20 of the Constitution of India. D
It is submitted that under Section 536 of the Indian Penal Code,
forfeiture of property is one of the prescribed punishments for
some of the offences covered under the Indian Penal Code.

30. Learned counsel for the appellant placing reliance on E
R.S. Joshi, Sales Tax Officer, Gujarat and Others v. Ajit Mills
Ltd. and Another, (1977) 4 sec 98 submitted that a
Constitution Bench of this Court also opined the expression

F
6. Section 53. Punishments.-The punishments to which offenders are ·
liable under the provisions of this Code are-
First-Death;
Secondly.-lmprisonment for life;
Thirdly.- Omitted
G
Fourthly.-lmprisonment, which is of two descriptions, namely.-
(1) Rigorous, that is, with hard labour;
(2) Simple;
Fifthly. -Forfeiture of property;
Sixthly.-Fine.
H
912 SUPREME COURT REPORTS [2014) 1 S.C.R.

A "forfeiture" to mean "a penalty for breach of a prohibitory
direction". 7
7. 18. Coming to "forfeiture', what is the true character of a "forfeiture'? Is it
punitive in infliction, or merely another form of exaction of money by one
from another? If it is penal, it falls within implied powers. If it is an act of
mere transference of money from thedealer to the State, then it falls outside
B the legislative entry. Such isthe essence of the decisions which we will
presently consider. There was acontention that the expression "forfeiture"
did not denote a penalty. This.perhaps, may have to be decided in the
specific setting of a statute. But.speaking generally, and having in mind
the object of Section 37 read withSection 46, we are inclined to the view
that forfeiture has a punitiveimpact. Black's Legal Dictionary states that "to
c forfeit" is '1o lose, orlose the right to, by, some error, fault, offence or crime',
"to incur apenalty'. "Forfeiture', as judicially annotated, is "a punishment
annexedby law to some illegal act or negligence .. .'. "something imposed
as apunishment for an offence or delinquency'. The word, in this sense,
isfrequently associated with the word "penalty'. According to Black's
LegalDictionary,
The terms "fine", "forreiture", and "penalty", are often used loosely, and even
D confusedly : but when a discrimination is made, the word "penalty" is found
to be generic in its character, including both fine and forfeiture. A "fine" is
a pecuniary penalty, and is commonly {perhaps always) to be collected by
suit in some form. A "forfeiture" is a penalty by which one loses his rights
and interest in his property.
More explicitly, the U.S. Supreme Court has explained the concept of
E "forfeiture" in the context of statutory construction. Chief Justice Taney, in
the State of Maryland v. Baltimore & Ohio RR Co., 11 L.Ed. 714, 722
observed :
'And a provision, as in this case, that the party shall forfeit a particular sum,
in case he does not perform an act required by law, has always, in the
construction of statutes, been regarded not as a contract with the delinquent
F party, but as the punishment for an offence. Undoubtedly, in the case of
individuals, the word forfeit is construed to be the language of contract,
because contract is the only mode in which one person can become liable
to pay a penalty to another for breach of duty, or the failure to perform an
obligation. In legislative proceedings, however, the construction is
otherwise, and a forfeiture is always to be regarded as a punishment
inflicted for a violation of some duty enjoined upon the party by law ; and
G such, very clearly, is the meaning of the word in the act in question."
19. The same connotation has been imparted by our Court too. A Bench
has held [Bankura Municipality v.Lalji Raja & Sons, 1953 Cri LJ 1101]:
"According to the dictionary meaning of the word 'forfeiture' the loss or the
deprivation of goods has got to be in consequence of a crime, offence or
breach of engagement or has to be by way of penalty of the transgression
H or a punishment for an offence. Unless the loss or deprivation of the goods
BISWANATH BHATIACHARYA v. UNION OF INDIA 913
[J. CHELAMESWAR, J.]
31. On the other hand, the learned Addi. Solicitor General A
appearing for the respondent submitted that the forfeiture
contemplated under the Act is not a 'penalty' within the meaning
of that expression occurring in Article 20 but only a deprivation
of property of a legislatively identified class of persons - in the
event of their inability to explain (to the satisfaction of the State) s
that they had legitimate sources of funds for the acquisition of
, such property. The learned Addi. Solicitor General further
submitted that while in the case of that class of persons covered
under Section 2(2)(a) of the Act, the forfeiture though has a
remote connection with the commission of a crime and c
conviction; with reference to the other four classes of persons
to whom the Act is made applicable under Section 2(2) (b) to
(e), the forfeiture has nothing to do with any crime or conviction.
Therefore, to say that the forfeiture under the Act is hit by the
prohibition under Article 20 is without any basis in law. The
0
learned Addi. Solicitor General also relied upon The State of

is by way of a penalty or punishment for a crime, offence or breach of
engagement it would not come within the definition of forfeiture."
This word "forfeiture" must bear the same meaning of a penalty for breach of E
a prohibitory direction. The fact that there is arithmeticai identity, assuming
it to be so, between the figures of the illegalcollections made by the dealers
and the amounts forfeited to the Statecannot create a conceptual confusion
that what is provided is notpunishment but a transference of funds. If this
view be correct, and wehold so, the legislature, by inflicting the forfeiture,
does not go outsidethe crease when it hits out against the dealer and
deprives him, by thepenalty of the law, of the amount illegally gathered F
from the customers. The Criminal Procedure Code, Customs & Excise
Laws and several other penal statutes in India have used diction which
accepts forfeiture as a kind of penalty. When discussing the rulings of
this Court we will explore whetherthis true nature of "forfeiture" is
contradicted by anything we can find inSections 37(1), 46 or 63. Even here
we may reject the notion that a penaltyor a punishment cannot be cast in
the form of an absolute or no-faultliability but must be preceded by mens . G
rea. The classical view that "nomens rea, no crime" has long ago been
eroded and several laws in India andabroad, especially regarding
economic crimes and departmental penalties.have created severe
punishments even where the offences have been definedto exclude mens
rea. Therefore, the contention that Section 37(1) fastens aheavy liability
regardless of fault has no force in depriving the forfeiture of the character H
914 SUPREME COURT REPORTS [2014] 1 S.C.R.

A West Bengal v S.K. Ghosh, [AIR 1963 SC 255] and R.S. Joshi
(supra) in support of his submission. Alternatively, the learned
Addi. Solicitor General submitted that in view of the fact that
the Act is included in the Ninth Schedule, the Act is immune
from any attack on the ground that it violates any one of the
B fundamental rights contained in Part Ill of the Constitution of
India, as was held by a Constitution Bench of this Court in
Attorney General for India & Others v. Amratlal Prajivandas
and others (1994) 5 sec 54.

32. Lord Green in Bidie v. General Accident, Fire and Life
C Assurance Corporation [(1948) 2 All ER 995 at 998] said in
the context of ascertaining the meaning of an expression in any
statute that "Few words in the English language have a natural
or ordinary meaning in the sense that they must be so read that
their meaning is entirely independent of their context".
D
33. Chief Justice Sikri in His Holiness Kesavananda
Bharati Sripadagalvaru v. State of Kera/a and another (1973)
4 SCC 225 dwelt on this subject referring to two English
decisions and one American decision stating in substance that
E the meaning of a word occurring in a statute cannot be
ascertained without examining the context and also the scheme
of the Act in which the expression occurs. 8

8. 56. In construing the expression ·amendment of this Constitution· I must
look at the whole scheme of the Constitution. It is not right to construe
F words in vacuum and then insert the meaning into an article. Lord Green
observed in Bidie v. General Accident, Fire and Life Assurance Corporation
(1948) 2 All ER 995, 998.
·rhe first thing one has to do, I venture to think, in construing words in a
Section of an Act of Parliament is not to tal<e those words in vacuo, so to
speak, and attribute to them what is sometimes called their natural or
G ordinary meaning. Few words in the English language have a natural or
ordinary meaning in the sense that they must be so read that their meaning
is entirely independent of their context. The method of construing statutes
that I prefer is not to take particular words and attribute to them a sort of
prima facie meaning which you may have to displace or modify. It is to
read the statute as a whole and ask oneself the question : 'In this state, in
this context, relating to this subject-matter, what is the true meaning of that
H words'."
BISWANATH BHATTACHARYA v. UNION OF INDIA 915
[J. CHE~AMESWAR, J.]
34. The regime of forfeiture of property contemplated under A
the Act is not new. At least from 1944 such a regime (though
not identical but similar to the impugned one) is prevalent in
this country. Two ordinances were made in 1943 and 1944,
subsequently amended by another ordinance in 1945, all called
Criminal Law Amendment Ordinances, which continued to be B
in force in this country by virtue of operation of Article 372 and
some anterior laws - the details of which may not be necessary
for the present purpose. Under the 1943 Ordinance, two special
Tribunals were constituted to try cases allotted to them "in the
first Schedule in respect of such charges of offence prescribed c
under the second Schedule etc.". Essentially, such cases were
cases either of charge of receipt of illegal gratification by a
public servant or embezzlement of public money etc. The 1944
Ordinance provided for the attachment of the money or other
property which is believed to have been procured by means of
0
one of the above mentioned scheduled offences by the offender.
Such attached property is required to be disposed of as
provided under section 13 of the said Ordinance. Under
Section 12 of the Ordinance, the Criminal Court trying a
scheduled offence is obliged to ascertain the amount or value E
of the property procured by the accused by means of the

57. I respectfully adopt the reasoning of Lord Green in construing the expression
"the amendment of the Constitution."
58. Lord Green is not alone in this approach. In Bourne v. Norwich Crematorium,
(1967) 2 ALL ER 576, 578 it is observed: F
"English words derive colour from those which surround them. Sentences
are not mere collections of words to be taken out of the sentence defined
separately by reference to the dictionary or decided cases, and then put
back again into the sentence with the meaning which you have assigned
. to them as separate words, so as to give the sentence or phrase a meaning
which as a sentence or phrase it cannot bear without distortion of the G
English language."
59. Holmes, J., in Towne v. Eisner, 245 US 418, 425 had the same thought. He
observed :
"A word is not a crystal, transparent and unchanged; it is the skin of living
thought and may vary greatly in colour and content according to the
circumstances and the time in which it is used." H
916 SUPREME COURT REPORTS [2014] 1 S.C.R.

A offence. Under section 13(3), it is provided that so much of the
attached property referred to earlier equivalent to the value
ascertained by the Criminal Court under section 12 is required
to be forfeited to the State.

35. Dealing with the question - whether such forfeiture (in
8
the factual setting of the case) violated Article 20 of the
Constitution of India?, a Constitution Bench of this Court held
that the forfeiture contemplated in the Ordinance was not a
penalty within the meaning of Article 20 but it is only a speedier
mode of recovery of the money embezzled by the accused. 9
c
36. In R.S. Joshi case, the question was whether it was
permissible for the State Legislature to enact that sums
collected by dealers by way of sales tax but are not exigible
under the State Law - indeed prohibited by it - shall be forfeited
D to the exchequer.

37. The question -whether such a forfeitt:re was a penalty
violating Article 20 did not arise in the facts of that case. The
discussion revolved around the question - whether such a
E forfeiture is a penalty for the violation of a prohibition contained
under section 46 of the relevant Sales Tax Act? The
contravention of section 46 is made punishable with
imprisonment and fine under section 63 of the said Act. Apart
from that, section 37 of the said Act provided for a departmental
proceeding against the dealers who violated the prohibition
F under section 46. The said departmental proceeding could
result in the forfeiture of". any sums collected by any person

9. The State of West Bengal v. S.K. Ghosh, AIR 1963 SC 255
G Para 15... We are therefore of opinion that forfeiture provided in S. 13(3) in
case of offences which involve the embezzlement etc. of Government money
or property is really a speedier method of realizing government money or
property as compared to a suit which it is not disputed the Government
could bring for realizing the money or property and is not punishment or
penalty within the meaning of Article 20(1 ). Such a suit could ordinarily be
brought without in any way affecting the right to realize the fine that may
H have been imposed by a criminal Court in connection with the offence.
BISWANATH BHATTACHARYA v. UNION OF INDIA 917
[J. CHELAMESWAR, J.]
by way of tax in contravention of section 46 .. ".The legal issue A
before this Court was - whether the State Legislature had
necessary competence to provide for such forfeiture? The
answer to the query depended upon whether such a forfeiture
is a penalty for the violation of law made by the State for the
levy and collection of sales tax. If it is not a penalty but a plain B
transfer of money (illegally collected by the dealer) to the State
it would be incompetent for the legislature to make such a
provision in the light of an earlier Constitution Bench decision
of this Court in R. Abdul Quader & Co. v. STO, AIR 1964 SC
922. 10 c
10. The first question therefore that falls for consideration is whether it was
open to the State legislature under its powers under Entry 54 of List II
to make a provision to the effect that money collected by way of tax, even
though it was not due as a tax under the Act, shall be made over to
Government. Now it is clear that the sums so collected by way of tax are
not in fact tax exigible under the Act. So it cannot be said that the State D
legislature was directly legislating for the imposition of sales or
purchase tax under Entry 54 of List II when it made such a provision, for
on the face of the provision, the amount, though collected by way of tax,
was not exigible as tax under the law. The provision however is attempted
to be justified on the ground that though it may not be open to a State
legislature to make provision for the recovery of an amount which is not a
tax under Entry 54 of List II in a law made for that purpose, it would still
E
be open to the legislature to provide for paying over all the amounts
collected by way of tax by persons, even though they really are not
exigible as tax, as part of the incidental and ancillary power to make
provision for the levy and collection of such tax. Now there is no dispute
that the heads of legislation in the various Lists in the Seventh Schedule
should be interpreted widely so as to take in all matters which are of a F
character incidental to the topics mentioned therein. Even so, there is a
limit to such incidental or ancillary power flowing from the legislative
entries in the various Lists in the Seventh Schedule. These incidental and
ancillary powers have to be exercised in aid of the main topic of
legislation, which, in the present case, is a tax on sale or purchase of
goods. All powers necessary for the levy and collection of the tax
concerned and for seeing that the tax is not evaded are comprised within G
the ambit of the legislative entry as ancillary or incidental. But where the
legislation under the relevant entry proceeds on the basis that the amount
concerned is not a tax exigible under the law made under that entry, but
even so lays down that though it is not exigibie under the law, it shall
be paid over to Government, merely becau$e some dealers by mistake or
otherwise have collected it as tax, it is difficult to see how such
H
918 SUPREME COURT REPORTS [2014] 1 S.C.R.

A 38. As explained above, the issue and the ratio decidendi
of R.S. Joshi case is entirely different and has nothing to do
with the application of Article 20 of the Constitution of India.

39. To understand the exact nature of the forfeiture
8 contemplated under the (SAFEMA) Act it is necessary to
examine the nature of the property which is sought to be
forfeited and also the persons from whom such forfeiture is
sought to be made. As already noticed, the Act is made
applicable to five classes of persons specified under section
2. In other words, the properties of persons belonging to any
C one of the said five categories only could be forfeited under the
Act. Even with reference to the properties held by any one
falling under any of the abovementioned five categories, their
entire property cannot be forfeited except the property which
is determined to be illegally acquired property as defined under
D section 3(c) of the Act. Of all the five categories of persons to
whom the Act is made applicable, only one category specified
under section 2(2)(a) happens to be of persons who are found
guilty of an offence under one of the enactments mentioned
therein and convicted. The other four categories of persons to
E whom the Act is applicable are persons unconnected with any
crime or conviction under any law while the category of persons

provision can be ancillary or incidental to the collection of tax legitimately
F due under a law made under the relevant taxing entry. We do not think that
the ambit of ancillary or incidental power goes to the extent of permitting
the legislature to provide that though the amount collected - may be wrongly
- by way of tax is not exigible under the law as made under the relevant taxing
entry, it shall still be paid over to Government, as if it were tax. The legislature
cannot under Entry 54 of List II make a provision to the effect that even though
a certain amount collected is not a tax on the sale or purchase of goods as
G laid down by the law, it will still be collected as if it was such a tax. This is
what Section 11 (2) has provided. Such a provision cannot in our opinion
be treated as coming within incidental or ancillary powers which the
legislature has got under the relevant taxing entry to ensure that the tax is
levied and collected and that its evasion becomes impossible. We are
therefore of opinion that the provision contained in Section 11 (2) cannot be
made under Entry 54 of List II and cannot be justified even as an incidental
H or ancillary provision permitted under that entry.
BISWANATH BHATTACHARYA v. UNION OF INDIA 919
' [J. CHELAMESWAR, J.]
falling under section 2(2)(b) are persons who are believed by A
the State to be violators of law. The other three categories are
simply persons who are associated with either of the two
categories mentioned in section 2(2)(a) and (b). At least with
reference to the four categories other than the one covered by
- section 2(2)(a), the forfeiture/deprivation of the property is not B
a consequence of any conviction for an offence.

40. Therefore, with reference to these four categories, the
question of violation of Article 20 does not arise. Insofar as first
category mentioned above, in our opinion, Article 20 would have C
no application for the reason, conviction is only a factor by which
the Parliament chose to identify the persons to whom the Act
be made applicable. The Act does not provide for the
confiscation of the properties of all the convicts falling under
Section 2(2)(a) or detenues falling under Section 2(2)(b).
Section 6 of the Act authorises the competent authority to D
initiate proceedings of forfeiture only if it has reasons to believe
(such reasons for belief are required to be recorded in writing)
that all or some of the properties of the persons to whom the
Act is applicable are illegally acquired properties. The
conviction or the preventive detention contemplated under E
Section 2 is not the basis or cause of the confiscation but the
factual basis for a rebuttable presumption to enable the State
to initiate proceedings to examine whether the properties held
by such persons are illegally acquired properties. It is notorious
that people carrying on activities such as smuggling to make F
money are very qlandestine in their activity. Direct proof is
difficult if not impossible. The nature of the activity and the harm
it does to the community provide a sufficiently rational basis for
the legislature to make such an assumption. More particularly,
Section 6 specifically stipulates the parameters which should G
guide the competent authority in forming an opinion, they are;
the value of the property and the known sources of the income,
earnings etc. of the person who is sought to be proceeded
against. Even in the case of such persons, the Act does not
mandate such an enquiry against all the assets of such persons. H
920 SUPREME COURT REPORTS [2014] 1 S.C.R.

A An enquiry is limited to such of the assets which the competent
authority believes (to start with) are beyond the financial ability
of the holder having regard to his known and legitimate sources
of income, earnings etc. Connection with the conviction is too
remote and, therefore, in our opinion, would not be hit by the
B prohibition contained under Article 20 of the Constitution of
India.

41. If a subject acquires property by means which are not
legally approved, sovereign would be perfectly justified to
deprive such persons of the enjoyment of such ill-gotten wealth.
C There is a public interest in ensuring that persons who cannot
establish that they have legitimate sources to acquire the assets
held by them do not enjoy such wealth. Such a deprivation, in
our opinion, would certainly be consistent with the requirement
of Article 300A and 14 of the Constitution which prevent the
D State from arbitrarily depriving a subject of his property.

42. Whether there is a right to hold property which is the
product of crime is a question examined in many jurisdictions.
To understand the substance of such examination, we can
E profitably extract from an article published in the Journal of
Financial Crime, 2004 by Anthony Kennedy. 11

"..It has been suggested that a logical interpretation of Art.
1 of the First Protocol of the European Convention on
Human Rights is:
F
'Everyone is entitled to own whatever property they
have (lawfully) acquired .... .'

hence implying that they do not have a right under
Art. 1 to own property which has been unlawfully
G
acquired. This point was argued in the Irish High

11. Head of Legal Casework, Northern Ireland for the Assets Recovery
Agency in his Article 'Justifying the civil recovery of criminal proceeds'
published in the Journal of Financial Crime, 2004 Vol.12, lss.1.
H
BISWANATH BHATTACHARYA v. UNION OF INDIA 921
[J. CHELAMESWAR, J.]
Court in Gilligan v The Criminal Assets Bureau, A
namely that where a defendant is in possession or
control over assets which directly or indirectly
constitute the proceeds of crime, he has no property
rights in those assets and no valid title to them,
whether protected by the Irish Constitution or by any B
other law. A similar view seems to have been
a
expressed earlier in dissenting opinion in Welch
v United Kingdom : 'in my opinion, the confiscation
of property acquired by crime, even without express
prior legislation is not contrary to Article 7 of the c
Convention, nor to Article 1 of the First Protocol.'
This principle has also been explored in US
jurisprudence. In United States v. Vanhorn a
defendant convicted of fraud and money laundering
was not entitled to the return of the seized proceeds
0
since they amounted to contraband which he had
no right to possess. In United States v Dusenbery
the court held that, because the respondent
conceded that he used drug proceeds to purchase
a car and other personal property, he had no E
ownership interest in the property and thus could not
seek a remedy against the government's decision
to destroy the property without recourse to formal
forfeiture proceedings. The UK government has
impliedly adopted this perspective, stating that:
F
' .... It is important to bear in mind the purpose of
civil recovery, namely to establish as a matter of
civil law that there is no right to enjoy property that
.
derives from unlawful conduct."
G
43. Non-conviction based asset forfeiture model also
known as Civil Forfeiture Legislation gained currency in various
countries: United States of America, Italy, Ireland, South Africa,
UK, Australia and certain provinces of Canada.
H
922 SUPREME COURT REPORTS (2014] 1 S.C.R.

A 44. Anthony Kennedy conceptualised the civil forfeiture
regime in the following words:-

Civil forfeiture represents a move from a crime and
punishment model of justice to a preventive model of
justice. It seeks to take illegally obtained property out of
B
the possession of organised crime figures so as to prevent
them, first, from using it as working capital for future crimes
and, secondly, from flaunting it in such a way as they
become role models for others to follow into a lifestyle of
acquisitive crime. Civil recovery is therefore not aimed at
c punishing behaviour but at removing the 'trophies' of past
criminal behaviour and the means to commit future criminal
behaviour. While it would clearly be more desirable if
successful criminal proceedings could be instituted, the
operative theory is that 'half a loaf is better than no bread'."
D
45. For all the above-mentioned reasons, we are of the
opinion that the Act is not violative of Article 20 of the
Constitution. Even otherwise as was rightly pointed out by the
learned Addi. Solicitor General, in view of its inclusion in the
E IXth Schedule, the Act is immune from attack on the ground that
it violates any of the rights guaranteed under Part Ill of the
Constitution by virtue of the declaration under Article 31-B.

46. Now we are required to consider the alternative and
last submission i.e., in view of the failure of the High Court to
F examine the tenability of the order of the forfeiture as confirmed
by the appellate tribunal the matter is required to be remitted
to the High Court for appropriate consideration. This
submission is required to be rejected. We have carefully gone
through the copy of the writ petition (a copy of which is available
G on record) from which the instant appeal arises.

4 7. Except challenging the order of forfeiture on the two
legal grounds discussed earlier in this judgement, there is no
other ground on which correctness of the order of forfeiture is
H assailed in the writ petition. For the first time in this appeal, an
BISWANATH BHATTACHARYA v. UNION OF !NOIA 923
(J. CHELAMESWAR, J.]
attempt is made to argue that the conclusions drawn by the A
competent authority that the properties forfeited are illegally
acquired - is not justified on an appropriate appreciation of
defence of the appellant. In other words, the appellant seeks
reappreciation of the evidence without even an appropriate
pleading in the writ petition. It is a different matter that the High B
Court in exercise of its writ jurisdiction does not normally
reappreciate evidence. Looked at any angle, we see no reason
to remit the matter to the High Court.

48. In the result, the appeals, being devoid of merit, are C
dismissed.

D.G. Appeals dismissed.