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ACT 13 OF 1976 The Act AN Act to provide for the forfeiture of illegally acquired properties 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 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 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. Be it enacted by Parliament in the Twenty-sixth Year of the Republic of India as follows: 1. Short title, extent and commencement: (1) This act may be called the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. (2) It extends to the whole of India except the State of Jammu and Kashmir. (3) It shall be deemed to have come into force on the 5th day of November, 1975. 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), or the Customs Act, 1962 (52 of 1962), of an offence in relation to goods of a value exceeding one lakh of rupees; or (ii) who having 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 (iii) who having been convicted under the Foreign Exchange Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), has been convicted subsequently under either or those Act; (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 (52 of 1974):Provided that- (i) such order of detention, being an order which the provisions of section 9 or section 12A of the said Act do not apply, has not been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board or before making a reference to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 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 (iv) such order of detention has not been set aside by a Court of competent jurisdiction; (c) every person who is a relative of person referred to in clause (a) or clause (b); (d) every associate of a person referred to in clause (a) or clause (b); (e) any holder (hereafter in this clause referred to as the present 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 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 cause of trade in India as on the date of the commission of the offence. Explanation 2: For the purposes of clause (c), -relative”, in relation to a person, means c (i) spouse of the person; (ii) brother or sister of the person; (iii) brother or sister of the spouse of the person; (iv) any lineal ascendant or descendant of the person; (v) any lineal ascendant or descendant of the spouse of the person; (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 (including out-houses) of such person; (ii) any individual who had been or is managing the affairs or keeping the accounts of such person; (iii) any association of persons, body of individuals, partnership firm, or private company within the meaning of the Companies Act, 1956 (1 of 1956), of 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 individuals, partnership firm or private company referred to in clause (iii) at any time when such person had been or is a member, partner or director of such association, body, partnership firm or private company; (v) any person who had been or is managing the affairs, or keeping the accounts, of any association of persons, body of individuals, partnership firm or private company referred to in clause (iii); (vi) the trustee of any trust, where,- (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 the contribution 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, 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 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 events
(including any conviction or detention) which occurred or took place
before the commencement of this Act 2A. Act not to
apply to certain persons: On and from the commencement of the provisions of Chapter
VA of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of
1985), the provisions of this Act shall not apply to persons in
relation to whom any order, or proceeding, may be made or taken under
that Chapter. 3.
Definitions: (1)
In this Act, unless the context otherwise requires,- -Appellate Tribunal” means the Appellate Tribunal
for Forfeited Property constituted under section 12; -competent authority” means an officer of the
Central Government authorised by it under sub-section (1) of section
5 to perform the functions of a competent authority under this Act; -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 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 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 (iv)
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 referred to in sub-clauses
(i) to (iii) or the income or earnings from such property; and includes- 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 previous holders is or
was a transferee in good faith for adequate consideration; 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; -prescribed” means prescribed by rules made under
this Act; -property” includes any interest in property,
movable or immovable;
-trust” includes any other legal obligation. (2)
Any reference in this Act to any law which is not in force in
any area shall, in relation to that area, be construed as a reference
to the corresponding law, if any, in force in that area. (3)
Any reference in this Act to any officer or authority shall,
in relation to any area in which there is no officer or authority
with the same designation, be construed as a reference to such
officer or authority as may be specified by the central Government by
notification in the Official Gazette. 4.
Prohibition of holding illegally acquired property: (1)
As from the commencement of this Act, it shall not be lawful
for any person to whom this Act applies to hold any illegally
acquired property either by himself or through any other person on
his behalf. (2)
Where any person holds any illegally acquired property in
contravention of the provisions of sub-section (1), such property
shall be liable to be forfeited to the Central Government in
accordance with the provisions of this Act. 5.
Competent authority: (1)
The Central Government may, by order published in the Official
Gazette, authorise as many officers of the Central Government (non
below the rank of a Joint Secretary to the Government), as it thinks
fit, to perform the functions of the competent authority under this
Act. (2)
The competent authorities shall perform their functions in
respect of such persons or classes or persons as the Central
Government may, by order, direct. 6.
Notice of forfeiture: (1)
If, having regard to the value of the properties held by any
person to whom this Act applies, either by himself or through any
other person on his behalf, his known sources, of income, earnings or
assets, and any other information or material available to it as a
result of action taken under section 18 or otherwise, the competent
authority has reason to believe (the reasons for such belief to be
recorded in writing) that all or any of such properties are illegally
acquired properties, it may serve a notice upon such person
(hereinafter referred to as the person affected) calling upon him
within such time as may be specified in the notice, which shall not
be ordinarily less than thirty days, to indicate the sources of his
income, earnings or assets, out of which or by means of which he has
acquired such property, the evidence on which he relies and other
relevant information and particulars, and to show cause why all or
any of such properties, as the case may be, should not be declared to
be illegally acquired properties and forfeited to the Central
Government under this Act. (2)
Where a notice under sub-section (1) to any person specifies
any property as being held on behalf of such person by any other
person, a copy of the notice shall also be served upon such other
person. 7.
Forfeiture of property in certain cases: (1)
The competent authority may, after considering the
explanation, if any, to the show-cause notice issued under section6,
and the materials available before it and after giving to the person
affected (and in a case where the person affected holds any property
specified in the notice through any other person, to such other
person also) a reasonable opportunity of being heard, by order,
record a finding whether all or any of the properties in question are
illegally acquired properties. (2)
Where the competent authority is satisfied that some of the
properties referred to in the show-cause notice are illegally
acquired properties but is not able to identify specifically such
properties, then, it shall be lawful for the competent authority to
specify the properties which, to the best of its judgment, are
illegally acquired properties and record a finding accordingly
under sub-section (1). (3)
Where the competent authority records a finding under this
section to the effect that any property is illegally acquired
property, it shall declare that such property shall, subject to the
provisions of this Act, stand forfeited to the central Government
free from all encumbrances. (4)
Where any shares in a company stand forfeited to the Central
Government under this Act, then, the company shall, notwithstanding
any thing contained in the Companies Act, 1956 (1 of 1956), or the
articles of association of the company, forthwith register the
Central Government as the transferee of such shares. 8.
Burden of proof: In any proceedings under this Act, the burden of proving
that any property specified in the notice served under section 6 in
not illegally acquired property shall be on the person affected. 9.
Fine in lieu of forfeiture: (1)
Where the competent authority makes declaration that any
property stands forfeited to the Central Government under section 7
and it is a case where the source of only a part, being less than
one-half, of the income, earnings or assets with which such property
was acquired has not been proved to the satisfaction of the competent
authority, it shall make an order giving an option to the person
affected to pay, in lieu of forfeiture, a fine equal to one and
one-fifth times the value of such part. Explanation: For the
purposes of this sub-section, the value of any part of income,
earnings or assets, with which any property has been acquired, shall
be,- (a) in the
case of any part of income of earnings, the amount of such part of
income of earnings; (b) in the
case of any part of assets, the proportionate part of the full value
of the consideration for the acquisition of such assets. (2)
Before making an order imposing a fine under sub-section (1),
the person affected shall be given a reasonable opportunity of being
head. (3)
Where the person affected pays the fine due under sub-section
(1), within such time as may allowed in that behalf, the competent
authority may, by order, revoke the declaration of forfeiture under
section 7 and thereupon such property shall stand released. 10.
Procedure in relation to certain trust properties: In the case of any person referred to in clause (vi) of
Explanation 3 to sub-section (2) of section 2, if the competent
authority, on the basis of the information and materials available to
it, has reason to believe (the reasons for such belief to be recorded
in writing) that any property held in trusts in illegally acquired
property, it may serve a notice upon the author of the trust or, as
the case may be, the contributor of the assets out of or by means of
which such property was acquired by the trust and the trustees,
calling upon them within such time as may be specified in the notice
which shall not ordinarily be less than thirty days, to explain the
source of the money or other assets out of or by means of which such
property was acquired or, as the case may be, the source of the money
or other assets which were contributed to the trust for acquiring
such property and thereupon such notice shall be deemed to be a
notice served under section 6 and all other provisions of this Act
shall apply accordingly. Explanation: For the
purposes of this section -illegally acquired property”, in
relation to any property held in trust, includes- (i) any
property which if it had continued to be held by the author of the
trust of the contributor of such property to the trust would have
been illegally acquired property in relation to such author or
contributor; (ii) any
property acquired by the trust out of any contributions made by any
person which would have been illegally acquired property in relation
to such person had such person acquired such property out of such
contributions. 11.
Certain transfers to be null and void: Where after the issue of a notice under section 6 or
under section 10, any property referred to in the said notice is
transferred by any mode whatsoever such transfer shall, for the
purposes of the proceedings under this Act, be ignored and if such
property is subsequently forfeited to the Central Government under
section 7, then, the transfer of such property shall be deemed to be
null and void. 12.
Constitution of Appellate Tribunal: (1)
The Central Government may, be notification in the Official
Gazette, constitute an Appellate Tribunal to be called the Appellate
Tribunal for Forfeited Property consisting of a Chairman and such
number of other members (being officers of the Central Government not
below the rank of a Joint secretary to the Government) as the Central
Government thinks fit, to be appointed by that Government for hearing
appeals against the orders made under section 7, sub-section (1) of
section 9 or section 10. (2)
The Chairman of the Appellate Tribunal shall be a person who
is or has been or is qualified to be a judge of the Supreme Court or
of a High Court. (3)
The terms and conditions of service of the Chairman and other
members shall be such as may be prescribed. (4)
Any person aggrieved by an order of the competent authority
made under section 7, sub-section (1) of section 9 or section 10,
may, within forty-five days from the date on which the order is
served on him, prefer an appeal to the Appellate Tribunal. Provided that the Appellate Tribunal may entertain any
appeal after the said period of forty-five days, but not after sixty
days, from the date aforesaid if it is satisfied that the appellant
was prevented by sufficient cause from filling the appeal in time. (5)
On receipt of an appeal under sub-section (4), the Appellate
Tribunal may, after giving an opportunity to the appellant to be
heard, if he so desires, and after making such further enquiry as it
deems fit, confirm, modify or set aside the order appealed against. (6)
The powers and functions of the Appellate tribunal may be
exercised and discharged by Benches consisting of three members and
constituted by the Chairman of the Appellate Tribunal. (6A)
Notwithstanding anything contained in sub-section (6), where
the Chairman considers it necessary so to do for the expeditious
disposal of appeals under this section, he may constitute a Bench of
two members and a Bench so constituted may exercise and discharge the
powers and functions of the Appellate Tribunal: Provided that if the members of a Bench so constituted
differ on any point or points, they shall state the point or points
on which they differ and refer the same to a third members (to be
specified by the chairman) for hearing on such point or points and
such point or points shall be decided according to the opinion of
that member. (7)
The Appellate Tribunal may regulate its own procedure. (8)
On application to the Appellate Tribunal and on payment of the
prescribed fee, the Tribunal may allow a party to any appeal or any
person authorised in this behalf by such party to inspect at any time
during office hours, any relevant records and registers of the
Tribunal and obtain a certified copy of any part thereof. 13.
Notice or order not to be invalid for error in
description: No notice issued or served, no declaration made, and no
order passed, under this Act shall be deemed to be invalid by reason
of any error in the description of the property or person mentioned
therein if such property or person is identifiable from the
description so mentioned. 14.
Bar of jurisdiction: No order passed or declaration made under this Act shall
be appealable except as provided therein and no civil court shall
have jurisdiction in respect of any matter which the Appellate
Tribunal or any competent authority is empowered by or under the Act
to determine, and no injunction shall be granted by any Court or
other authority in respect of any action taken or to be taken in
pursuance of any power conferred by or under this Act. 15.
Competent authority and Appellate Tribunal to have powers of
civil court: The competent authority and the Appellate tribunal shall
have all the powers of a civil court while trying a suit under the
Code of Civil Procedure, 1908 (5 of 1908), in respect of the
following maters, namely: (a)
Summoning and enforcing the attendance of any person and
examining him on oath; (b)
Requiring the discovery and production of documents; (c)
Receiving evidence on affidavits; (d)
Requisitioning any public record or copy thereof from any
court or office; (e)
Issuing commissions for examination of witnesses or documents; (f)
Any other matter which may be prescribed. 16.
Information to competent authority: (1)
Notwithstanding anything contained in any other law, the
competent authority shall have power to require any officer or
authority of the central Government or a State Government of a local
authority to furnish information in relation to such persons, points
or matters as in the opinion of the competent authority will be
useful for, or relevant to, the purposes of this Act. (2)
Any officer of the Income-tax Department, the Customs
Department or the Central Excise Department or any officer of
Enforcement appointed under the Foreign Exchange Regulation Act, 1973
(46 of 1973), may furnish suo motu any information available with him
to the competent authority if in the opinion of the officer such
information will be useful to the competent authority for the
purposes of this Act. 17.
Certain officers to assist competent authority and Appellate
Tribunal: For the purposes of any proceedings under this Act, the
following officers are hereby empowered and required to assist the
competent authority and the Appellate Tribunal, namely:- (a)
officers of the Customs Department; (b)
officers of the Central Excise Department; (c)
officers of the Income-tax Department; (d)
officers of Enforcement appointed under the Foreign Exchange
Regulation Act, 1973 (46 of 1973); (e)
officers of Police; (f)
such other officers of the Central of State Government as are
specified by the Central Government in this behalf by notification in
the Official Gazette. 18.
Power of competent authority to require certain officers to
exercise certain powers: (1)
For the purposes of any proceedings under this Act or the
initiation of any such proceedings, the competent authority shall
have power to cause to be conducted any inquiry, investigation or
survey in respect of any person, place, property, assets, documents,
books of account or any other relevant matters. (2)
For the purposes referred to in sub-section (1), the competent
authority may, having regard to the nature of the inquiry,
investigation or survey, require an officer of the Income-tax
Department to conduct or cause to be conducted such inquiry,
investigation or survey. (3)
Any officer of the Income-tax Department who is conducting or
is causing to be conducted any inquiry, investigation or survey
required to be conducted under sub-section (2), may, for the purpose
of such inquiry, investigation or survey, exercise any power
(including the power to authorise the exercise of any power) which
may be exercised by him for any purpose under the Income-tax Act,
1961 (43 of 1961), and the provisions of the said Act shall, so far
as may be, apply accordingly. 19.
Power to take possession: (1)
Where any property has been declared to be forfeited to the
Central Government under this Act, or where the person affected has
failed to pay the fine due under sub-section (1) of section 9 within
the time allowed therefore under sub-section (3) of the section, the
competent authority may order the person affected as well as any
other person who may be in possession of the property to surrender or
deliver possession thereof to the competent authority or to any
person duly authorised by it in this behalf within thirty days of the
service of the order. (2)
If any person refuses or fails to comply with an order made
under sub-section (1), the competent authority may take possession of
the property and may for that purpose use such force as may be
necessary. (3)
Notwithstanding anything contained in sub-section (2), the
competent authority may, for the purpose of taking possession of any
property referred to in sub-section (1), requisition the service of
any police officer to assist the competent authority and it shall be
the duty of such officer to comply with such requisition. 20.
Rectification of mistakes: With a view to rectifying any mistakes apparent from the
record, the competent authority or the Appellate Tribunal, as the
case may be, may amend any order made by it within a period of one
year from the date of the order: Provided that if any such amendment is likely to affect
any person prejudicially, it shall not be made without giving to such
person a reasonable opportunity of being heard. 21.
Findings under other laws not conclusive for proceedings under
this Act: No finding of any officer of authority under any other
law shall be conclusive for the purposes of any proceedings under
this act. 22.
Service of notices and orders: Any notice or order issued or make under this Act shall
be served- (a)
by tendering the notice or order or sending it by registered
post to the person for whom it is intended or to his agent; (b)
if the notice or order cannot be served in the manner provided
in clause (a), by affixing it on
a conspicuous place in the property in relation to which the notice
or order is issued or made, or on some conspicuous part of the
premises in which the person for whom it is intended is known to have
last resided or carried on business or personally worked for gain. 23.
Protection of action taken in good faith: No suit, prosecution or other proceeding shall lie
against the Central Government or any Officer of the Central or State
Government for any thing which is done, or intended to be done, in
good faith, in pursuance of this Act or the rules made thereunder. 24.
Act to have overriding effect: The provisions of this Act shall have effect
notwithstanding any thing inconsistent therewith contained in any
other law for the time being in force. 25.
Provisions of the Act not to apply to certain properties help
in trust: Nothing contained in this Act shall apply in relation to
any property held by a trust or an institution created or established
wholly for public, religious or charitable purposes if c (i)
such property has been so held by such trust or institution
from a date prior to the commencement of this Act. (ii)
Such property is wholly traceable to any property held by such
trust or institution prior to the commencement of this Act. 26.
Power to make rules: (1)
The Central Government may, by notification in the Official
Gazette, make rules to carry out the provisions of this Act. (2)
In particular and without prejudice to the generality of the
foregoing power, such rules may provide for all or any of the
following matters, namely;- (a)
the terms and conditions of service of the chairman and other
members of the Appellate Tribunal under sub-section (3) of section
12; (aa)
the fees which shall be paid for the inspection of the records
and registers of the Appellate Tribunal or for obtaining a certified
copy of any part thereof under sub-section (8) of section 12; (b)
the powers of a civil court that may be exercised by the
competent authority and the Appellate Tribunal under clause (f) of
section 15; (c)
any other matter which has to be, or may be, prescribed. (3) Every
rule made under this Act shall be laid, as soon as may be after it is
made, before each House of parliament, while it is in session or the
successive sessions, and if, before the expiry of the session
immediately for a total period of thirty days which may be comprised
in one session or in two or more successive sessions, and if, before
the expiry of the session immediately following the sessions
aforesaid, both Houses agree in making modification in the rule, or
both House agree that the rule should not be made, the rule shall
thereafter have effect only in such modified form or be i no effect,
as the case may be; however, that any such modification or annulment
shall be without prejudice to the validity of anything previously
done under the rule. 27.
Repeal and saving: (1)
The Smugglers and Foreign Exchange Manipulators (Forfeitures of
Property) Ordinance, 1975 (20 of 1975) is hereby repealed. (2)
Notwithstanding such repeal, anything done or any action taken under
the Ordinance so repealed shall be deemed to have been done or taken
under the corresponding provisions of this Act. |