Illegally acquired property can be forefeited under the the Smugglers and Foreign Exchange Manipulators(Forfeiture of Property) Act, 1976(hereinafter being referred to as the “Act, 1976”) dated 31st December, 1997.

According to the Act, competent authorities have the right to specify properties acquired illegally and to record their findings on them. If a property is deemed to be illegally acquired, it will be forfeited to the Central Government, free from any encumbrances. The burden of proof that the property is not illegally acquired lies with the affected person. If the source of only part of the income, earnings, or assets used to acquire the property has not been proven, the person affected may be given the option to pay a fine instead of forfeiting the property.

The judgement cites a specific case in which a show cause notice was served to initiate forfeiture proceedings against a firm and its partners, who acquired a property with ill-gotten gains. The competent authority returned a finding that the total capital contribution of the partners was Rs.10,20,000, and one partner did not disclose the source of his contribution. Therefore, the authorities declared the property forfeited to the Central Government.

“Taking into consideration the scope and ambit of Act, 1976 of which a detailed reference has been made, forfeiture proceedings could be initiated under Section 6 in reference to such illegally
acquired properties by such persons who are covered under Section 2 read with the explanation, appended thereto, by a show cause notice and after due compliance of principles of natural justice”.

M/S. PLATINUM THEATRE AND OTHERS ….APPELLANT(S)
VERSUS
COMPETENT AUTHORITY SMUGGLERS &
FOREIGN EXCHANGE MANIPULATORS
(FORFEITURE OF PROPERTY) ACT, 1976
AND ANOTHER ….RESPONDENT(S)
decided by the Supreme Court of India on 22.03.23

By aor.sanjivnarang@gmail.com

Sanjiv Narang Adv. is an Advocate on Record in the Supreme Court of India. His qualifications include an LLB from University of Delhi and a Masters degree in Personnel Management from Panjab University,Chandigarh.In his more than 3 decades of experience, he has practiced law at the District, High Court and Supreme Court levels.He also has more than a decade of experience in the field of Management. He is the author of two books namely Laws for Women in India and Innovation, Why What and How.