Wednesday, October 10, 2018

Centre gets HC rap for wrongly enforcing SAFEMA

Gujarat high court rapped the central government for initiating the process of forfeiture of properties belonging to a family for a minor fault of exchanging foreign currencies without permission some 18 years after the accused admitted his guilt. The court pulled up SAFEMA authorities for unnecessarily throwing their weight around.

Though the family established that the properties acquired were not from the money earned through the illegal exchange of dollars and pounds, the authorities were hell bent upon forfeiture. The HC said, “When the fact of acquisition of properties was known to the competent authority they were keen to forfeit those properties, which also confirms the intention and attitude of the competent authority in disturbing the citizens for not a valid reason but, only because of statutory power with them.”

In this case, a resident of Anand district, Mahendra Patel, was caught with foreign currencies while returning from England in 1981.
Director of Enforcement conducted the investigation and found 41 dollars and 31 pounds in his possession at his home. He had opened an account in Barclays Bank in London without RBI permission and transferred certain amounts to India in form of rupees, while pounds were credited in his account.

Patel was charged under the Foreign Exchange Regulation Act (FERA). He pleaded guilty and told the court that he was ignorant about laws. Since the amount of transferred sum was not huge, a court in Borsad town punished him by asking him to sit in the courtroom for a day. This happened in 1983.

In 2001, authority at Mumbai under Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act (SAFEMA) issued show cause notice to Patel on why agriculture and residential properties purchased by him, though they are not in his name, should be confiscated. They were acquired through illegal earning. The proceedings lasted long and in 2009, the authority decided to forfeit his agriculture and residential properties on the ground that they were purchased from the money earned through an illegal exchange.
In 2010, a tribunal cut the list of properties to be forfeited and held that Patel family’s bungalow, a house, and a godown should be confiscated.
Patel challenged the forfeiture order. After hearing the case, Justice SG Shah quashed an order of forfeiture and observed that Patel had established that the properties were not purchased from the amount earned from exchange and authorities knew it. Moreover, the court granted a minor punishment thinking that it was a minor offence, the government should not have initiated process of forfeiture under SAFEMA and that too after nearly two decades.

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