ABOUT FORFEITURE

Evolution

Forfeiture law in India is of very recent origin. In the first place a question might arise, viz., why should there be any forfeiture at all? Then follow other collateral questions like "What is the logic in using forfeiture as a legislative weapon against crimes? What are the crimes which should attract such an action?

In legal parlance, forfeiture, is the divestiture of specific property without compensation in consequence of some default or act forbidden by law. It also means deprivation or losing of the rights or extinction of rights. In simple terms, it would mean dispossession without any compensation for commission of crime identified.

Forfeiture as a piece of legislation might have been found in various economic laws in bits and pieces, but as a full blown law it first appeared, probably, as The Enemy Property Act, 1968 ( No. 34 of 1968 ). This legislation addressed the security concerns of the country by taking over the properties of the enemies of the country as defined in the Defence India Act, 1962.

Subsequent legislations using Forfeiture, as a legal weapon, is found in tackling economic crimes like smuggling, foreign exchange manipulations and narcotic offences. SAFEM(FOP)A is meant to deprive persons involved in smuggling and foreign exchange manipulations of their ill-gotten wealth. It aims at cutting their resources for operating in clandestine manner. Hence it was essentially brought to address the economic concerns of the country.

The drug abuse of narcotic substances had led to many evils in the socio-economic fabric of the society. The drug money was easy and huge. Hence to get at the huge wealth created by the drug mafia Chapter VA was introduced in the NDPS Act in 2001. This addresses these socio-economic concerns of the country.

Of late, Drug and terror feed on each other. Narco-terrorism has global ramification. The Money Laundering Act was as a result of this realisation.

The Competent Authority & Administrator is concerned with forfeiture of assets relating to smuggling, foreign exchange violations and narcotic offences. In effect, he administers SAFEM(FOP)Act and Chapter VA of the NDPS Act.

Forfeiture is in addition to the criminal consequence attracted under the Customs Act or NDPS Act. This procedure is civil in nature. It is like a twin brother. Thus as a result for a Custom or Narcotic violation, under certain conditions, there would be two proceedings one to prosecute the person for his criminal conduct and the second one would be to proceed against his property to compensate the State for the illegal gains made by the offender on account of such violation.

Philosophy

The basic philosophy in dispossessing somebody of his wealth is found in the reasoning that the offender is not entitled to the profit earned out of crime, but it should go to the State, which was in fact, deprived of its due share. The legislature having recognized the need to frame a legislation on this score laid the basis of forfeiture as the criminal ingredient of the offence, like preventive detention or arrest or conviction under the relevant statutes relating to these offences. Hence establishment of criminal conduct forms the bedrock of forfeiture proceedings. The statute also visualizes, as in the case of drug offences, seizing or freezing the properties, pending final conviction. By these measures, the State also ensures that the gains of the offence is not made available to the offender for either continuing his illegal activity or fight his legal battle in the court. Thus this measure is designed to hit at the heart of the offence and hit where it most hurts.

Person affected

For effective forfeiture proceedings, hence, one needs to identify the persons who are covered by the statute, the properties owned by them. It is common knowledge that such ill-gotten wealth is always kept in others' names in order to defeat detection. Hence the statute recognizes persons like relatives, associates or holders of these properties and they are also made liable for forfeiture proceedings. Such tainted wealth could be possessed by other legal entities like firms, association of persons or corporate bodies or trusts. These legal entities are also brought within the provisions so that the arms of law stretch up to them also to get at the illegally acquired properties. The implementation of these proceedings depend upon the information provided by the feeder agencies as regards the relevant details for forfeiture, be it be, the persons or the properties.

Burden of Proof

Considering the gravity of the offence and to mount attack against it, the law mandates that the onus of proof is always on the accused to prove that the source for acquiring these assets is from legal ones. The source of sources requires to be established and hence the finding given in any other proceedings like income tax, customs, enforcement would not be binding, though may be a factor to be considered.

Appeal

The forfeiture proceedings have corrective mechanism also in the form of appeal against the order. Appeal mechanism is also provided against forfeiture. One-tier appeal is provided in the statute. The appeal against forfeiture lies with the Appellate Tribunal for Forfeited Properties. It is the final authority on forfeiture. The appeal has to be preferred within 45 days. The Tribunal can condone the delay only to the extent of 15 days. The forfeiture proceedings are outside the purview of the court. Of course, writ jurisdiction still lies on the procedural aspects of the proceedings.

Prohibition of holding illegally acquired property

Section 68C of NDPS Act states that it shall not be lawful for any person to hold any “illegally acquired property” as defined in Section 68B(g), ibid. Any illegally acquired property is liable to be forfeited to the Central Government in accordance with the provisions of Chapter V-A of the NDPS Act. However, no property can be forfeited if the property was acquired before a period of six years from the date on which a person is arrested/detained for an offence relating to illicit trafficking in drugs.

Identification, seizure and freezing of illegally acquired property

Sections 68 E and F contain provisions for identification, tracing and freezing/ seizing of proceeds and property illegally acquired. It is one of the most important parts of investigation by drug enforcement agency. The legislative scheme envisages that officers authorized u/s. 53 should trace and identify illegally acquired property and either freeze or seize it before initiation of detailed investigation and formal forfeiture. The aim of these measures is to prevent transfer, concealment etc. of the property during the pendency of proceedings of forfeiture of property and prosecution launched under the Act.

The tracing and identification may include any inquiry, investigation or survey in respect of any person, place, property, assets, documents, books of accounts in any bank or financial institutions or any other relevant matter. The inquiry or investigation or survey for tracing and identification of any property illegally acquired shall be carried out in accordance with any directions or guidelines issued by the Competent Authority & Administrator in this behalf.

Freezing or seizing of illegally acquired property

Whenever any officer conducting enquiry or investigation under Sec. 68 E has a reasonable belief that the property which is the subject matter of investigation is likely to be concealed, transferred or otherwise dealt with in a manner which would frustrate forfeiture under Chapter V-A, he may make an order for seizing such property and where it is not possible, he may make an order to the effect that the property shall not be transferred or otherwise dealt with except with the prior permission of the officer making such order or the Competent Authority & Administrator. A copy of this order should be served on the person concerned and also sent to the Competent Authority & Administrator within 48 hours of its being made. Proceedings by the Competent Authority & Administrator 1. Confirmation of Seizing / freezing No order made under Section 68 F (1) shall have any effect unless it is confirmed by order of the Competent Authority & Administrator within a period of 30 days of its being made. This is a statutory requirement under the law. If the Competent Authority & Administrator does not confirm the freezing order within the stipulated period, such order is automatically rendered ineffective and the trafficker can do whatever he likes with the property. 2. Issue of show cause notice U/S 68 H of NDPS Act After the offender is convicted for an offence punishable for ten years or more or he/she is detained under PIT N.D.P.S.1988 & the Competent Authority & Administrator has reason to believe (the reason for such belief to be recorded in writing) on the basis of a report from investigating officer, that all or any of such properties are illegally acquired properties, he may issue a notice upon such person (affected person) calling upon him /her within a period of thirty days to indicate the sources of his/her income, earnings or assets to prove the legal acquisition of the properties 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. A copy of show cause notice are also issued to the relatives/associates of the affected person.. However, in case of persons arrested under NDPS Act 1985 who have neither been convicted nor detained under PIT NDPS ACT 1988, notice of forfeiture under section 68 H of NDPS Act can not be issued but their properties shall remain still seized/freezed. 3. Affording opportunity of personal hearing Before final order of forfeiture/release is passed by the Competent Authority & Administrator, the affected person is given opportunity for a personal hearing in the interest of natural justice and to enable him/her to submit the proof/ evidence of legal source of acquisition of the properties. 4. Order of forfeiture/release of property U/S 68 I of NDPS Act The Competent Authority & Administrator may, after considering the explanation, if any, to the show cause notice issued under section 68 H, and the materials available before it and after giving to the person affected (and in 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.

Service of any notice or order

Section 68X requires that any notice or order issued under Chapter V-A shall be served by sending it by Registered post with acknowledgement due to the person for whom it is intended or to his agent. If the notice cannot be served in the aforesaid manner, it should be affixed in a conspicuous place in the property in relation to which the notice or order is issued. This section does not require effective service on the person receiving it. The notice can also be served by pasting in a conspicuous place of the premises in which the person for whom it is intended is known to have last resided or carried out business or personally worked for gain.

Meaning of the term ‘property’

Property has been defined in Chapter V-A to include assets of description whether corporeal or incorporeal, movable or immovable, tangible or intangible and deeds and instruments evidencing title to, or interest in, such property or assets, derived from or used in, illicit traffic. Trusts have also been defined. Besides, the property of a person charged for an offence, the property of certain relatives, associates and trusts have also to be included. Movable properties may include vehicles, conveyances, live stock, cash, gold, diamond, jewellery of all description, fixtures, furniture, consumer durables like TV, fridge, VCR etc, bank deposits, investments of all types including fixed deposits, shares and debentures, deposits with the public and private companies, bank accounts, deeds and instruments including any advance or loans made etc. Immovable property, besides land and buildings, would include trees and crops attached to the ground.

Management of seized/forfeited property

Under Section 68G, Administrators are required to receive and manage the seized or forfeited property. Presently, the Competent Authorities have also been designated as Administrators. The illegally Acquired property (Receipt, Management and Disposal) Rules, 1989 have been framed for better management and disposal of property. These rules lay down the manner of storage of valuables, other property, management of land and building, procedure for disposal of livestock, perishables etc.