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8/13/2019 SC Forftr of Land.
1/36Page 1
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 772-773 OF 2014[Arising out of SLP (Civil) Nos.16872-16873 of 2007]
is!"n"t# #"tt"$#"r%" &A''ll"nt
Versus
nion of *n+i" , t#rs &s'on+nts
J U D G M E N T
Chel!e"#$% J.
1. L"v gr"nt+.
2. /#s t!o "''"ls "r 'rfrr+ "g"inst t# fin"l
u+gnt +"t+ t#August 2007 '"ss+ % t# C"l$utt"
4ig# Court in 5A No.206 of 2003 "n+ or+r +"t+ 30t#
August 2007 in vi! A''li$"tion "ring No.2372
of 2007 +isissing t# s"i+ rvi! "''li$"tion fil+ % t#
"''ll"nt #rin.
3. /# f"$ts l"+ing to t# inst"nt litig"tion "r "s
follo!s9
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on on #"n+ "n+ t# !if of t# "''ll"nt "n+ t#
"''ll"nt on t# ot#r #"n+; t# +t"ils of !#i$# "% not
n$ss"r% for t# ti ing.
6.
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. L"rn+ Singl Fu+g of t# C"l$utt" 4ig# Court %
"n or+r +"t+ 10t# "% 2002 '"rtl% "llo!+ t# !rit
'tition #ol+ing t#"t t# forfitur of t# 'ro'rt% % t#
s$on+ rs'on+nt "s $onfir+ % t# A''ll"t /riun"l
!"s illg"l on t# groun+ t#"t t# noti$ un+r s$tion
6(1) of t# A$t +"t+ :t# "r$# 177 !"s not in
"$$or+"n$ !it# t# l"! "s t# noti$ +i+ not $ont"in t#
r"sons !#i$# $onstitut+ t# "sis for t# lif of t#
$o'tnt "ut#orit% t#"t t# "''ll"nt illg"ll% "$uir+
t# s$#+ul+ 'ro'rtis.
10. Aggriv+ % t# or+r of t# l"rn+ Singl Fu+g;
t# rs'on+nts #rin $"rri+ t# "ttr in "''"l to t#
Division n$#. % t# u+gnt un+r "''"l; t# "''"l
!"s "llo!+.
11. *t "''"rs fro t# u+gnt un+r "''"l t#"t
t#oug# t# "''ll"nt soug#t " +$l"r"tion t#"t t# A$t
(SA5
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12. for us; t# "''ll"nt "+ t#r suissions
(1) t#"t t# noti$ issu+ un+r S$tion 6 of t# A$t is
+f$tiv "n+ t#rfor illg"l "s t# noti$ +i+ not
$ont"in t# r"sons !#i$# "+ t# $o'tnt "ut#orit%
liv t#"t t# noti$ s$#+ul+ 'ro'rtis "r illg"ll%
"$uir+ 'ro'rtis. *n ot#r !or+s; t# r"sons !r not
$ouni$"t+ to t# "''ll"ntG (2) t#"t t# forfitur;
su$# "s t# on 'rovi++ un+r t# A$t; is viol"tiv of
Arti$l 20 of t# Constitution of *n+i"G "n+ (3) in t#
"ltrn"tiv; it is "rgu+ t#"t t# 4ig# Court f"il+ to
$onsi+r t# ustion !#t#r t# +$ision of t#
$o'tnt "ut#orit% "s $onfir+ % t# "''ll"t
"ut#orit% is sust"in"l "n+ t#rfor; t# "ttr is
ruir+ to ritt+ to t# 4ig# Court for "n
"''ro'ri"t $onsi+r"tion of t# lg"lit% of or+r of
forfitur.
13. g"r+ing t# non $ouni$"tion of t# r"sons;
t# u+gnt un+r "''"l r$or++ "s follo!s9
>/# "ttr "% looE+ into fro"not#r "ngl. *n 176 # !"s un+r +tntion.4is !if r'li+ to t# s"i+ noti$ !it#out
$o'l"ining of non-su''l% of r"soning. Aftr #is
i'ugn+ t#rin.
5
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un+r S$tion 6(1) +i+ not viti"t2 t# susunt
'ro$+ings.
1:. *n su''ort of t# suission; l"rn+ $ounsl for t#
"''ll"nt vr% #"vil% rli+ u'on " u+gnt of t#is Court
inAjantha Industries and others v. Central Board of
Direct Taxes and others; (176) 1 SCC 1001. *t !"s "
$"s !#r t#is $ourt #"+ to $onsi+r t# lg"lit% of t#
or+r un+r S$tion 127 tr"nsfrring t# H$"sB of t#
Ajantha Industries.
1@. S$tion 127 of t# *n$o /"= A$t; 161 'o!rs
t# "ut#oritis (ntion+ t#rin) to tr"nsfr >"n% $"s?
(='l"in+ in t# s"i+ s$tion) fro on *n$o /"=
ffi$r to "not#r. 5urt#r; t# s$tion sti'ul"ts t#"t
for su$# "n or+r of tr"nsfr is "+; t!o $on+itions
"r ruir+ to $o'li+ !it# (1) t#"t t# "ssss
ust givn " r"son"l o''ortunit% to ='l"in !#% #is
$"s s#oul+ not tr"nsfrr+G "n+ (2) t# "ut#orit%
2 The respondent No.1 for the first time in the writ petition contended that the notice under Section6(1) was bad due to non-supply of reasons whereas it would appear that the reasons were supplied as
and when asked for. elayed supply of reasons! in our "iew! did not "itiate the subse#uent orders of the
competent authority as well as appellate authority. Show cause notice was ser"ed in 1$%6. &t was not
proceeded with till 1$'' when reasons were supplied. rder was passed by the competent authorityupon affordin ade#uate opportunity of hearin. The respondent No.1 a"ailed the remedy of appeal
where his appeal was partly allowed. *ith deepest reard we ha"e for the learned sinle +ude! ,is
ordship was perhaps not riht in interferin with the show cause notice at the stae when therespondent No.1 a"ailed of the remedies in law and became partly successful before the appellateauthority.
7
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tr"nsfrring t# $"s is ruir+ to r$or+ t# r"sons
!#i$# l+ #i to initi"t t# 'ro$+ings. *t "''"rs fro
t# u+gnt t#"t t#oug# first of t# "ovntion+ t!o
ruirnts !"s $o'li+ !it#; it !"s foun+ t#"t no
r"sons !r r$or++ u$# lss $ouni$"t+. D"ling
!it# t# lg"lit% of su$# "n or+r; t#is Court #l+ t#"t
t#r is " ruirnt of not onl% r$or+ing t# r"sons
for t# +$ision to tr"nsfr t# $"s ut "lso su$# r"sons
"r ruir+ to $ouni$"t+ to t# "ssss.
16. /#oug# s$tion 127 ='rssl% 'rovi++ for r$or+ing
of r"sons it +i+ not ='rssl% 'rovi+ $ouni$"ting t#
s" to t# "ssss. Still; t#is Court #l+ t#"t su$# "
$ouni$"tion is "n+"tor%.
&10./# r"son for r$or+ing of r"sons in t# or+r "n+"Eing t#s r"sons Eno!n to t# "ssss is to n"l "no''ortunit% to t# "ssss to "''ro"$# t# 4ig# Courtun+r its !rit uris+i$tion un+r Arti$l 226 of t#Constitution or vn t#is Court un+r Arti$l 136 of t#
Constitution in "n "''ro'ri"t $"s for $#"llnging t# or+r;intr "li"; it#r on t# groun+ t#"t it is "l" fi+ or"ritr"r% or t#"t it is "s+ on irrlv"nt "n+ =tr"nous$onsi+r"tions. #t#r su$# " !rit or s'$i"l l"v"''li$"tion ulti"tl% f"ils is not rlv"nt for " +$ision oft# ustion.
11. "r $l"rl% of o'inion t#"t t# ruirnt ofr$or+ing r"sons un+r S$tion 127(1) is " "n+"tor%+ir$tion un+r t# l"!.?
8
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17. *n our vi!; su$# " $on$lusion ust un+rstoo+ in
t# lig#t of t# osrv"tion of t# Court t#"t t#r !"s no
'rovision of "''"l or rvision un+r t# *n$o /"= A$t
"g"inst "n or+r of tr"nsfr. 5or t# s" r"son; t#is
Court +istinguis#+ "n+ +$lin+ to follo! "n "rlir
u+gnt inS. Narayanappa v. The Coissioner of
Incoe!tax A* 167 SC @23 !#r t#is Court on "n
intr'rt"tion of S$tion 3: of t# *n$o /"= A$t; 122;
o'in+ to t# $ontr". S$tion 3: 'rovi++ for r-o'ning
of t# "ssssnt !it# t# 'rior s"n$tion of t#
Coissionr; if t# in$o t"= offi$r #"s Hr"sons to
livB t#"t t"="l in$o #"+ n un+r-"ssss+.
D"ling !it# t# ustion !#t#r t# r"sons !#i$# l+
t# Coissionr to "$$or+ s"n$tion for t# initi"tion of
'ro$+ings un+r s$tion 3: "r ruir+ to
$ouni$"t+ to t# "ssss; t#is Court #l+
>/#r is no ruirnt in "n% of t# 'rovisionsof t# A$t or "n% s$tion l"%ing +o!n "s " $on+itionfor t# initi"tion of t# 'ro$+ings t#"t t#r"sons !#i$# in+u$+ t# Coissionr to "$$or+s"n$tion to 'ro$+ un+r S.3: ust
$ouni$"t+ to t# "ssss.?
18. *nAjantha Industries case" Narayanappa#s case
!"s +istinguis#+ on t# groun+
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?#n "n or+r un+r S$tion 3: is "+ t#"ggriv+ "ssss $"n "git"t t# "ttr in"''"l "g"inst t# "ssssnt or+r; ut "n"ssss "g"inst !#o "n or+r of tr"nsfr is"+ #"s no su$# r+% un+r t# A$t to
ustion t# or+r of tr"nsfr. si+s; t#"ggriv+ "ssss on r$i't of t# noti$ un+rS$tion 3: "% vn s"tisf% t# *n$o-t"= ffirt#"t t#r !r no r"sons for ro'ning t#"ssssnt. Su$# "n o''ortunit% is not "v"il"lto "n "ssss un+r S$tion 127(1) of t# A$t./# "ov +$ision is; t#rfor; $l"rl%
+istinguis#"l.?
1. r$t t# suission of t# "''ll"nt for t#
follo!ing r"sons. 5irstl%; t#r is no ='rss st"tutor%
ruirnt to $ouni$"t t# r"sons !#i$# l+ to t#
issu"n$ of noti$ un+r S$tion 6 of t# A$t. S$on+l%;
t# r"sons; t#oug# not initi"ll% su''li+ "long!it# t#
noti$ +"t+ :.3.177; !r susuntl% su''li+
t#r% n"ling t# "''ll"nt to ff$tivl% t t#
$"s of t# rs'on+nts. /#ir+l%; ! "r of t# o'inion
t#"t t# $"s on #"n+ is su"rl% $ovr+ % t# r"tio of
Narayanappa case. /# "''ll"nt $oul+ #"v
ff$tivl% $onvin$+ t# rs'on+nts % 'ro+u$ing t#
"''ro'ri"t "tri"l t#"t furt#r st's in furt#r"n$ to
t# noti$ un+r S$tion 6 n+ not t"En. A'"rt fro
t#"t; "n or+r of forfitur is "n "''"l"l or+r !#r
t# $orr$tnss of t# +$ision un+r S$tion 7 to forfit
10
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t# 'ro'rtis $oul+ ="in+. +o not s
"n%t#ing in t# r"tio of Ajantha Industries case !#i$#
l"%s +o!n " univrs"l 'rin$i'l t#"t !#nvr " st"tut
ruirs so r"sons to r$or++ for initi"ting
"$tion; t# r"sons ust n$ss"ril% $ouni$"t+.
20. No!; ! +"l !it# t# s$on+ suission. /# A$t
n"ls t# Iovrnnt of *n+i" to forfit >illg"ll%
"$uir+ 'ro'rt%? of "n% 'rson to !#o t# A$t is "+
"''li$"l. /# A$t is "+ "''li$"l to t# 'rsons
s'$ifi+ in s$tion 2(2)3. 5iv $"tgoris of 'rsons "rSection 2. /pplication0(1) The pro"isions of this /ct shall apply only to the persons specified insub-section (2).
(2) The persons referred to in sub-section(1) are the followin! namely0
(a) e"ery person0
(i) who has been con"icted under the Sea ustoms /ct! 1'%' (' of
1'%')! or the ustoms /ct! 1$62 (32 of 1$62)! of an offence in relation tooods of a "alue e4ceedin one lakh of rupees5 or
(ii) who has been con"icted under the orein 74chane 8eulation/ct! 1$9% (% of 1$9%)! or the orein 74chane 8eulation /ct! 1$% (96 of
1$%)! of an offence! the amount of "alue in"ol"ed in which e4ceeds onelakh of rupees5 or
(iii) who ha"e been con"icted under the Sea ustoms /ct! 1'%' (' of1'%')! or the ustoms /ct! 1$62 (32 of 1$62)! has been con"icted
subse#uently under either of those /cts5 or(i") who ha"in been con"icted under the orein 74chane
8eulation /ct! 1$9% (% of 1$9%)! or the orein 74chane 8eulation /ct!1$% (96 of 1$%)! has been con"icted subse#uently under either of those
/cts5(b) e"ery person in respect of whom an order of detention has been made under
the onser"ation of orein 74chane and pre"ention of Smulin /cti"ities /ct!1$%9 (32 of 1$%9)
:ro"ided that0
(i) such order of detention bein an order to which the pro"isions of
section $ or section 12/ of the said /ct do not apply! has not been re"oked
on the report of the /d"isory ;oard under section ' of the said /ct or beforethe receipt of the report of the /d"isory ;oard or before makin a reference
to the /d"isory ;oard5 or
(ii) such order of detention bein an order to which the pro"isions ofsection $ of the said /ct apply! has not been re"oked before the e4piry ofthe time for! or on the basis of! the re"iew under sub-section () of section $
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$ovr+ t#run+r. Cl"us (") 'rsons !#o #"v n
$onvi$t+ un+r v"rious n"$tnts rfrr+ to t#rinG
$l"us () - 'rsons in rs'$t of !#o "n or+r of
+tntion #"s n "+ un+r t# C5associate?! in relation to a person!
means0
(i) any indi"idual who had been or is residin in the residential premises(includin out houses) of such person5
(ii) any indi"idual who had been or is manain the affairs or keepin the
accounts of such person5
(iii) any association of persons! body of indi"iduals! partnership firms! or pri"atecompany within the meanin of the ompanies /ct! 1$36 (1 of 1$36)! of which such
person had been or is a member! partner or director5
(i") any indi"idual who had been or is a member! partner or director of anassociation of persons! body of indi"iduals! partnership firm! or pri"ate companywithin the meanin of the ompanies when such person had been or is a member!
12
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$ont"in+ un+r s$tions 6 "n+ 7 of t# A$t. S$tion 8
'rs$ris t# s'$i"l rul of vi+n$ !#i$# s#ifts t#
ur+n of 'roving t#"t "n% 'ro'rt% s'$ifi+ in t# noti$
un+r s$tion 6 is not illg"ll% "$uir+ 'ro'rt% of t#
noti$. S$tion 6 inter alia 'ostul"ts t#"t #"ving rg"r+
to t# v"lu of t# 'ro'rt% #l+ % "n% 'rson (to !#o
t# A$t "''lis) "n+ #is Eno!n sour$s of in$o; if t#
>$o'tnt "ut#orit%? (notifi+ un+r s$tion @) #"s
r"son to liv t#"t su$# 'ro'rtis "r >illg"ll%
"$uir+ 'ro'rtis?; t# $o'tnt "ut#orit% is
"ut#oriK+ to $"ll u'on t# #ol+r of t# 'ro'rt% to
Hin+i$"tB t# sour$ of #is in$o t$. !#i$# n"l+ t#
"$uisition of su$# 'ro'rt% "long !it# n$ss"r%
vi+n$. *t "lso "ut#oriKs t# $o'tnt "ut#orit% to
$"ll u'on t# noti$ to s#o! $"us "s to !#% "ll or "n% of
su$# 'ro'rtis ntion+ in t# noti$ s#oul+ not
+$l"r+ illg"ll% "$uir+ 'ro'rtis "n+ forfit+ to
t# Cntr"l Iovrnnt. S$tion 7 'rovi+s for "
r"son"l o''ortunit% of ing #"r+ "ftr t# r$i't of
rs'ons to t# noti$ un+r s$tion 6 to t# noti$ "n+
ruirs t# $o'tnt "ut#orit% to r$or+ " fin+ing
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!#t#r "ll or "n% of t# 'ro'rtis in ustion "r
illg"ll% "$uir+ 'ro'rtis. S$tion 7 "lso 'rovi+s for
$rt"in in$i+nt"l "ttrs t# +t"ils of !#i$# "r not
n$ss"r% for t# 'rsnt 'ur'os.
22. illeally ac#uired property?! in relation to any person to whom this /ct applies! means!
0 (i) any property ac#uired by such person! whether before or after the commencement of
this /ct! wholly or partly out of or by means of any income! earnins or assets deri"ed or
obtained from or attributable to any acti"ity prohibited by or under any law for the timebein in force relatin to any matter in respect of which :arliament has power to make
laws5 or(ii) any property ac#uired by such person! whether before or after the commencement of
this /ct! wholly or partly out of or by means of any income! earnins or assets in respectof which any such law has been contra"ened5 or
(iii) any property ac#uired by such person! whether before or after the commencement ofthis /ct! wholly or partly out of or by means of any income! earnins or assets the source
of which cannot be pro"ed and which cannot be shown to be attributable to any act orthin done in respect of any matter in relation to which :arliament has no power to make
laws5 or(i") any property ac#uired by such person! whether before or after commencement of this
/ct! for a consideration! or by any means! wholly or partly traceable to any propertyreferred to in sub-clauses (i) to (ii) or the income or earnins from such property5
and includes0t(/) any property held by such person which would ha"e been! in
relation to any pre"ious holder thereof! illeally ac#uired property under thisclause if such pre"ious holder had not ceased to hold it! unless such person
or any other person who held the property at any time after such pre"ious
holder or! where there are two or more such pre"ious holders! the last of
such pre"ious holders is or was a transferee in ood faith for ade#uateconsideration5
(;) any property ac#uired by such person! whether before or after the
commencement of this /ct! for a consideration! or by any means! wholly orpartly traceable to any property fallin under item (/)! or the income orearnins therefrom.
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fro or "ttriut"l to "n% "$tivit% !#i$# is 'ro#iit+ %
or un+r " l"! in for$. Su$# l"! ust " l"! !it#
rs'$t to !#i$# '"rli"nt #"s t# 'o!r to "E l"!. A
$o'lt "n"l%sis of t# +finition in "ll its f"$ts "% not
n$ss"r% for our 'ur'os.
23. 5ro t# l"ngu"g "n+ t# s$# of t# A$t it +os
not "''"r t#"t t# "''li$"tion of t# A$t is liit+ to
'rsons !#o it#r suffr+ " $onvi$tion un+r on of t#
"$ts s'$ifi+ in s$tion 2(2)(") t# A$t or +t"in+ un+r
t# C5
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'rson to !#o t# 'rovisions of t#is A$t "''l% "% +trin+ !it# rfrn$ to "n% f"$ts; $ir$ust"n$sor vnts (in$lu+ing "n% $onvi$tion or +tntion !#i$#o$$urr+ or tooE 'l"$ for t# $on$nt oft#is A$t).?
/# "ns!r to t# ustion +'n+s u'on !#t#r su$#
+'riv"tion is " 'n"lt% !it#in t# "ning of t# s"i+
='rssion o$$urring in Arti$l 20.
26. Arti$l 20 $ont"ins on of t# ost "si$ gu"r"nts
to t# su$ts of t# 'uli$ of *n+i". /# Arti$l in so
f"r "s is rlv"nt for our 'ur'os sti'ul"ts t!o t#ings9-
/#"t no 'rson s#"ll $onvi$t+ of "n%offn$ =$'t for viol"tion of t# l"! in for$"t t# ti of t# $oission of t# "$t$#"rg+ "s "n offn$G "n+
/#"t no 'rson s#"ll su$t+ to "'n"lt% gr"tr t#"n t#"t !#i$# ig#t #"vn infli$t+ un+r t# l"! in for$ "t t#ti of t# $oission of t# offn$.
27. *t is " !ll sttl+ 'rin$i'l of $onstitution"l l"! t#"t
sovrign lgisl"tiv o+is $"n "E l"!s !it#
rtros'$tiv o'r"tionG "n+ $"n "E l"!s !#os
o'r"tion is +'n+nt u'on f"$ts or vnts "ntrior to
t# "Eing of t# l"!. 4o!vr; $riin"l l"! is =$'t+
fro su$# gnr"l ul; un+r "not#r u"ll% !ll sttl+
'rin$i'l of $onstitution"l l"!; i.. no ex post facto
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lgisl"tion is 'rissil !it# rs'$t to $riin"l l"!.
Arti$l 20 $ont"ins su$# =$'tion to t# gnr"l "ut#orit%
of t# sovrign lgisl"tur fun$tioning un+r t#
Constitution to "E rtros'$tiv or rtro"$tiv l"!s.
28. /# suission of t# "''ll"nt is t#"t sin$ t# A$t
'rovi+s for " forfitur of t# 'ro'rt% of t# "''ll"nt on
t# groun+ t#"t t# "''ll"nt !"s +t"in+ un+r t#
C5out of? or % "ns >of "n% in$o; "rnings &?
>ot"in+ fro or "ttriut"l to "n% "$tivit% 'ro#iit+ %
or un+r "n% l"! &?. n t# ot#r #"n+; if t# forfitur
$ont'l"t+ % t# A$t is not tr"t+ "s " 'n"lt% for t#
"llg+ viol"tion of l"! on t# '"rt of t# "''ll"nt; it
!oul+ 'l"in $onfis$"tion of t# 'ro'rt% of t#
"''ll"nt % t# St"t !it#out "n% f"$tu"l ustifi$"tion or
t# $onstitution"l "ut#orit%.
19
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2. /# l"rn+ $ounsl for t# "''ll"nt furt#r "rgu+
t#"t t# forfitur $ont'l"t+ un+r t# A$t !#t#r
"s+ on 'rovn guilt or sus'i$ion of involvnt in "
$rt"in s'$ifi+ "$tivit% 'ro#iit+ % t# Custos A$t
$"n onl% " H'n"lt%B "ttr"$ting t# 'ro#iition of Arti$l
20 of t# Constitution of *n+i". *t is suitt+ t#"t un+r
S$tion @36of t# *n+i"n Pn"l Co+; forfitur of 'ro'rt%
is on of t# 'rs$ri+ 'unis#nts for so of t#
offn$s $ovr+ un+r t# *n+i"n Pn"l Co+.
30. L"rn+ $ounsl for t# "''ll"nt 'l"$ing rli"n$ on
R.S. $oshi" Sales Tax %fficer" &ujarat and %thers v.
Ajit 'ills (td. and Another"(177) : SCC 8suitt+
t#"t " Constitution n$# of t#is Court "lso o'in+ t#
='rssion >forfitur? to "n >" 'n"lt% for r"$# of "
'ro#iitor% +ir$tion?.7
6Section 3. :unishments.0The punishments to which offenders are liable under the pro"isions of thisode are0
Firsteath5
Secondly.&mprisonment for life5
Thirdly.mitted
Fourthly.&mprisonment! which is of two descriptions! namely.0
(1) 8iorous! that is! with hard labour5(2) Simple5
Fifthly.0orfeiture of property5Sixthly.ine.
%18.omin to >forfeiture@! what is the true character of a >forfeiture@A &s it puniti"e in infliction! ormerely another form of e4action of money by one from anotherA &f it is penal! it falls within implied
powers. &f it is an act of mere transference of money from the dealer to the State! then it falls outside
the leislati"e entry. Such is the essence of the decisions which we will presently consider. There was acontention that the e4pression >forfeiture? did not denote a penalty. This! perhaps! may ha"e to bedecided in the specific settin of a statute. ;ut! speakin enerally! and ha"in in mind the ob
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31. n t# ot#r #"n+; t# l"rn+ A++l. Soli$itor Inr"l
"''"ring for t# rs'on+nt suitt+ t#"t t# forfitur
$ont'l"t+ un+r t# A$t is not " H'n"lt%B !it#in t#
"ning of t#"t ='rssion o$$urring in Arti$l 20 ut onl%
" +'riv"tion of 'ro'rt% of " lgisl"tivl% i+ntifi+ $l"ss
Section % read with Section 96! we are inclined to the "iew that forfeiture has a puniti"e impact.;lack@s eal ictionary states that >to forfeit? is >to lose! or lose the riht to! by! some error, fault,
offenceor crime,>to incur a penalty@. >orfeiture@! as a punishment anne4ed
by law to some illeal act or nelience . . .@. >somethin imposed as a punishment for an offence ordelin#uency@. The word! in this sense! is fre#uently associated with the word >penalty@. /ccordin to
Blacks Legal Dictionary!The terms >fine?! >forfeiture?! and >penalty?! are often used loosely! and e"en
confusedly but when a discrimination is made! the word >penalty? is found to be eneric in its
character! includin both fine and forfeiture. / >fine? is a pecuniary penalty! and is commonly(perhaps always) to be collected by suit in some form. / >forfeiture? is a penalty by which one
loses his rihts and interest in his property.
Bore e4plicitly! the C.S. Supreme ourt has e4plained the concept of >forfeiture? in the
conte4t of statutory construction. hief +ustice Taney! in the State of Maryland". Baltimore !hio"" #o., 11 .7d. %19! %22 obser"ed
>/nd a pro"ision! as in this case! that the party shall forfeit a particular sum! in casehe does not perform an act re#uired by law! has always! in the construction of statutes! been
rearded not as a contract with the delin#uent party! but as the punishment for an offence.
Cndoubtedly! in the case of indi"iduals! the word forfeit is construed to be the lanuae ofcontract! because contract is the only mode in which one person can become liable to pay a penaltyto another for breach of duty! or the failure to perform an obliation. &n leislati"e proceedins!
howe"er! the construction is otherwise! and a forfeiture is always to be rearded as a punishmentinflicted for a "iolation of some duty en/ccordin to the dictionary meanin of the word Gforfeiture@ the loss or the depri"ation of
oods has ot to be in conse#uence of a crime! offence or breach of enaement or has to be by
way of penalty of the transression or a punishment for an offence. Cnless the loss or depri"ationof the oods is by way of a penalty or punishment for a crime! offence or breach of enaement itwould not come within the definition of forfeiture.?
This word >forfeiture? must bear the same meanin of a penalty for breach of a prohibitorydirection. The fact that there is arithmetical identity! assumin it to be so! between the fiures of the
illeal collections made by the dealers and the amounts forfeited to the State cannot create a conceptualconfusion that what is pro"ided is not punishment but a transference of funds. &f this "iew be correct!
and we hold so! the leislature! by inflictin the forfeiture! does not o outside the crease when it hits
out aainst the dealer and depri"es him! by the penalty of the law! of the amount illeally athered
from the customers. The riminal :rocedure ode! ustoms H 74cise aws and se"eral other penalstatutes in &ndia ha"e used diction which accepts forfeiture as a kind of penalty. *hen discussin the
rulins of this ourt we will e4plore whether this true nature of >forfeiture? is contradicted by anythin
we can find in Sections %(1)! 96 or 6. 7"en here we may re
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of 'rsons in t# vnt of t#ir in"ilit% to ='l"in (to t#
s"tisf"$tion of t# St"t) t#"t t#% #"+ lgiti"t sour$s
of fun+s for t# "$uisition of su$# 'ro'rt%. /# l"rn+
A++l. Soli$itor Inr"l furt#r suitt+ t#"t !#il in t#
$"s of t#"t $l"ss of 'rsons $ovr+ un+r S$tion 2(2)
(") of t# A$t; t# forfitur t#oug# #"s " rot
$onn$tion !it# t# $oission of " $ri "n+ $onvi$tionG
!it# rfrn$ to t# ot#r four $l"sss of 'rsons to
!#o t# A$t is "+ "''li$"l un+r S$tion 2(2) () to
(); t# forfitur #"s not#ing to +o !it# "n% $ri or
$onvi$tion. /#rfor; to s"% t#"t t# forfitur un+r t#
A$t is #it % t# 'ro#iition un+r Arti$l 20 is !it#out "n%
"sis in l"!. /# l"rn+ A++l. Soli$itor Inr"l "lso
rli+ u'on The State of )est Ben*al v. S.+. &hosh%
[A* 163 SC 2@@] "n+ R.S. $oshi (su'r") in su''ort of #is
suission. Altrn"tivl%; t# l"rn+ A++l. Soli$itor
Inr"l suitt+ t#"t in vi! of t# f"$t t#"t t# A$t is
in$lu++ in t# Nint# S$#+ul; t# A$t is iun fro
"n% "tt"$E on t# groun+ t#"t it viol"ts "n% on of t#
and abroad! especially reardin economic crimes and departmental penalties! ha"e created se"ere
punishments e"en where the offences ha"e been defined to e4clude mens rea. Therefore! the contention
that Section %(1) fastens a hea"y liability reardless of fault has no force in depri"in the forfeiture ofthe character of penalty.
22
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fun+"nt"l rig#ts $ont"in+ in P"rt *** of t# Constitution
of *n+i"; "s !"s #l+ % " Constitution n$# of t#is Court
in Attorney &eneral for India , %thers v. Aratlal
-rajivandas and others(1:) @ SCC @:.
32. Lor+ Irn in Bidie v. &eneral Accident" ire and
(ife Assurance Corporation [(1:8) 2 All
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3:. /# rgi of forfitur of 'ro'rt% $ont'l"t+
un+r t# A$t is not n!. At l"st fro 1:: su$# "
rgi (t#oug# not i+nti$"l ut siil"r to t# i'ugn+
on) is 'rv"lnt in t#is $ountr%. /!o or+in"n$s !r
"+ in 1:3 "n+ 1::; susuntl% "n++ %
"not#r or+in"n$ in 1:@; "ll $"ll+ Criin"l L"!
An+nt r+in"n$s; !#i$# $ontinu+ to in for$ in
t#is $ountr% % virtu of o'r"tion of Arti$l 372 "n+ so
"ntrior l"!s - t# +t"ils of !#i$# "% not n$ss"r%
for t# 'rsnt 'ur'os. n+r t# 1:3 r+in"n$; t!o
>The first thin one has to do! & "enture to think! in construin words in aSection of an /ct of :arliament is not to take those words in %acuo, so to speak! and
attribute to them what is sometimes called their natural or ordinary meanin. ew words
in the 7nlish lanuae ha"e a natural or ordinary meanin in the sense that they must beso read that their meanin is entirely independent of their conte4t. The method of
construin statutes that & prefer is not to take particular words and attribute to them a sortof prima facie meanin which you may ha"e to displace or modify. &t is to read the
statute as a whole and ask oneself the #uestion G&n this state! in this conte4t! relatin tothis subthe
amendment of the onstitution.?
3'. ord Ireen is not alone in this approach. &n Bourne %. )or*ich #rematorium,(1$6%) 2 / 78 3%6! 3%' it is obser"ed
>7nlish words deri"e colour from those which surround them. Sentences are
not mere collections of words to be taken out of the sentence defined separately byreference to the dictionary or decided cases! and then put back aain into the sentence
with the meanin which you ha"e assined to them as separate words! so as to i"e thesentence or phrase a meanin which as a sentence or phrase it cannot bear without
distortion of the 7nlish lanuae.?
3$. ,olmes! +.! in To*ne %. +isner,293 CS 91'! 923 had the same thouht. ,e obser"ed
>/ word is not a crystal! transparent and unchaned5 it is the skin of li"in
thouht and may "ary reatly in colour and content accordin to the circumstances andthe time in which it is used.?
24
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s'$i"l /riun"ls !r $onstitut+ to tr% $"ss "llott+ to
t# >in t# first S$#+ul in rs'$t of su$# $#"rgs of
offn$ 'rs$ri+ un+r t# s$on+ S$#+ul t$.?.
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t# Constitution of *n+i"M; " Constitution n$# of t#is
Court #l+ t#"t t# forfitur $ont'l"t+ in t#
r+in"n$ !"s not " 'n"lt% !it#in t# "ning of Arti$l
20 ut it is onl% " s'+ir o+ of r$ovr% of t# on%
KKl+ % t# "$$us+.
36. &n R.S. $oshi case; t# ustion !"s !#t#r it !"s
'rissil for t# St"t Lgisl"tur to n"$t t#"t sus
$oll$t+ % +"lrs % !"% of s"ls t"= ut "r not
=igil un+r t# St"t L"! in++ 'ro#iit+ % it
s#"ll forfit+ to t# =$#ur.
37. /# ustion - !#t#r su$# " forfitur !"s "
'n"lt% viol"ting Arti$l 20 +i+ not "ris in t# f"$ts of t#"t
$"s. /# +is$ussion rvolv+ "roun+ t# ustion -
!#t#r su$# " forfitur is " 'n"lt% for t# viol"tion of "
'ro#iition $ont"in+ un+r s$tion :6 of t# rlv"nt
S"ls /"= A$tM /# $ontr"vntion of s$tion :6 is "+
'unis#"l !it# i'risonnt "n+ fin un+r s$tion 63 of
t# s"i+ A$t. A'"rt fro t#"t; s$tion 37 of t# s"i+ A$t
$The State of *est ;enal ". S.J. Ihosh! /&8 1$6 S 233
:ara 13. .. *e are therefore of opinion that forfeiture pro"ided in S. 1() in case of offenceswhich in"ol"e the embeKKlement etc. of Io"ernment money or property is really a speedier method of
realiKin o"ernment money or property as compared to a suit which it is not disputed the Io"ernment
could brin for realiKin the money or property and is not punishment or penalty within the meanin of/rticle 2E(1). Such a suit could ordinarily be brouht without in any way affectin the riht to realiKethe fine that may ha"e been imposed by a criminal ourt in connection with the offence.
26
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'rovi++ for " +'"rtnt"l 'ro$+ing "g"inst t#
+"lrs !#o viol"t+ t# 'ro#iition un+r s$tion :6. /#
s"i+ +'"rtnt"l 'ro$+ing $oul+ rsult in t# forfitur
of >.. "n% sus $oll$t+ % "n% 'rson % !"% of t"= in
$ontr"vntion of s$tion :6 ..?. /# lg"l issu for t#is
Court !"s !#t#r t# St"t Lgisl"tur #"+ n$ss"r%
$o'tn$ to 'rovi+ for su$# forfiturM /# "ns!r to
t# ur% +'n++ u'on !#t#r su$# " forfitur is "
'n"lt% for t# viol"tion of l"! "+ % t# St"t for t#
lv% "n+ $oll$tion of s"ls t"=. *f it is not " 'n"lt% ut "
'l"in tr"nsfr of on% (illg"ll% $oll$t+ % t# +"lr)
to t# St"t it !oul+ in$o'tnt for t# lgisl"tur to
"E su$# " 'rovision in t# lig#t of "n "rlir
Constitution n$# +$ision of t#is Court in R. Abdul
0uader , Co. v. ST%; A* 16: SC 22.10
1EThe first #uestion therefore that falls for consideration is whether it was open to the State leislatureunder its powers under 7ntry 39 of ist && to make a pro"ision to the effect that money collected by
way of ta4! e"en thouh it was not due as a ta4 under the /ct! shall be made o"er to Io"ernment. Nowit is clear that the sums so collected by way of ta4 are not in fact ta4 e4iible under the /ct. So it
cannot be said that the State leislature was directly leislatin for the imposition of sales or purchaseta4 under 7ntry 39 of ist && when it made such a pro"ision! for on the face of the pro"ision! the
amount! thouh collected by way of ta4! was not e4iible as ta4 under the law. The pro"ision howe"eris attempted to be
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38. As ='l"in+ "ov; t# issu "n+ t#ratio decidendi
of R.S. $oshi caseis ntirl% +iffrnt "n+ #"s not#ing to
+o !it# t# "''li$"tion of Arti$l 20 of t# Constitution of
*n+i".
3. /o un+rst"n+ t# ="$t n"tur of t# forfitur
$ont'l"t+ un+r t# (SA5
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'ro'rtis #l+ % "n% on f"lling un+r "n% of t#
"ovntion+ fiv $"tgoris; t#ir ntir 'ro'rt%
$"nnot forfit+ =$'t t# 'ro'rt% !#i$# is
+trin+ to illg"ll% "$uir+ 'ro'rt% "s +fin+
un+r s$tion 3($) of t# A$t. f "ll t# fiv $"tgoris of
'rsons to !#o t# A$t is "+ "''li$"l; onl% on
$"tgor% s'$ifi+ un+r s$tion 2(2)(") #"''ns to of
'rsons !#o "r foun+ guilt% of "n offn$ un+r on of
t# n"$tnts ntion+ t#rin "n+ $onvi$t+. /#
ot#r four $"tgoris of 'rsons to !#o t# A$t is
"''li$"l "r 'rsons un$onn$t+ !it# "n% $ri or
$onvi$tion un+r "n% l"! !#il t# $"tgor% of 'rsons
f"lling un+r s$tion 2(2)() "r 'rsons !#o "r liv+
% t# St"t to viol"tors of l"!. /# ot#r t#r
$"tgoris "r si'l% 'rsons !#o "r "sso$i"t+ !it#
it#r of t# t!o $"tgoris ntion+ in s$tion 2(2)(")
"n+ (). At l"st !it# rfrn$ to t# four $"tgoris
ot#r t#"n t# on $ovr+ % s$tion 2(2)("); t#
forfiturJ+'riv"tion of t# 'ro'rt% is not " $onsun$
of "n% $onvi$tion for "n offn$.
29
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:0. /#rfor; !it# rfrn$ to t#s four $"tgoris;
t# ustion of viol"tion of Arti$l 20 +os not "ris.
*nsof"r "s first $"tgor% ntion+ "ov; in our o'inion;
Arti$l 20 !oul+ #"v no "''li$"tion for t# r"son;
$onvi$tion is onl% " f"$tor % !#i$# t# P"rli"nt $#os
to i+ntif% t# 'rsons to !#o t# A$t "+
"''li$"l. /# A$t +os not 'rovi+ for t# $onfis$"tion
of t# 'ro'rtis of "ll t# $onvi$ts f"lling un+r S$tion
2(2)(") or +tnus f"lling un+r S$tion 2(2)(). S$tion
6 of t# A$t "ut#oriss t# $o'tnt "ut#orit% to initi"t
'ro$+ings of forfitur onl% if it #"s r"sons to liv
(su$# r"sons for lif "r ruir+ to r$or++ in
!riting) t#"t "ll or so of t# 'ro'rtis of t# 'rsons to
!#o t# A$t is "''li$"l "r illg"ll% "$uir+
'ro'rtis. /# $onvi$tion or t# 'rvntiv +tntion
$ont'l"t+ un+r S$tion 2 is not t# "sis or $"us of
t# $onfis$"tion ut t# f"$tu"l "sis for " rutt"l
'rsu'tion to n"l t# St"t to initi"t 'ro$+ings to
="in !#t#r t# 'ro'rtis #l+ % su$# 'rsons "r
illg"ll% "$uir+ 'ro'rtis. *t is notorious t#"t 'o'l
$"rr%ing on "$tivitis su$# "s suggling to "E on%
30
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"r vr% $l"n+stin in t#ir "$tivit%. Dir$t 'roof is
+iffi$ult if not i'ossil. /# n"tur of t# "$tivit% "n+
t# #"r it +os to t# $ounit% 'rovi+ " suffi$intl%
r"tion"l "sis for t# lgisl"tur to "E su$# "n
"ssu'tion. or '"rti$ul"rl%; S$tion 6 s'$ifi$"ll%
sti'ul"ts t# '"r"trs !#i$# s#oul+ gui+ t#
$o'tnt "ut#orit% in foring "n o'inion; t#% "rG t#
v"lu of t# 'ro'rt% "n+ t# Eno!n sour$s of t#
in$o; "rnings t$. of t# 'rson !#o is soug#t to
'ro$++ "g"inst.
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+'riv su$# 'rsons of t# no%nt of su$# ill-gottn
!"lt#. /#r is " 'uli$ intrst in nsuring t#"t 'rsons
!#o $"nnot st"lis# t#"t t#% #"v lgiti"t sour$s to
"$uir t# "ssts #l+ % t# +o not no% su$# !"lt#.
Su$# " +'riv"tion; in our o'inion; !oul+ $rt"inl%
$onsistnt !it# t# ruirnt of Arti$l 300A "n+ 1: of
t# Constitution !#i$# 'rvnt t# St"t fro "ritr"ril%
+'riving " su$t of #is 'ro'rt%.
:2. #t#r t#r is " rig#t to #ol+ 'ro'rt% !#i$# is t#
'ro+u$t of $ri is " ustion ="in+ in "n%
uris+i$tions. /o un+rst"n+ t# sust"n$ of su$#
="in"tion; ! $"n 'rofit"l% =tr"$t fro "n "rti$l
'ulis#+ in t# Fourn"l of 5in"n$i"l Cri; 200: %
Ant#on% nn+%.11
>..*t #"s n suggst+ t#"t " logi$"l intr'rt"tion ofArt. 1 of t# 5irst Proto$ol of t#
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&t seeks to take illeally obtained property out of the possession
of oranised crime fiures so as to pre"ent them! first! from
usin it as workin capital for future crimes and! secondly!
from flauntin it in such a way as they become role models for
others to follow into a lifestyle of ac#uisiti"e crime. i"il
reco"ery is therefore not aimed at punishin beha"iour but atremo"in the Gtrophies@ of past criminal beha"iour and the
means to commit future criminal beha"iour. *hile it would
clearly be more desirable if successful criminal proceedins
could be instituted! the operati"e theory is that Ghalf a loaf is
better than no bread@.?
:@. 5or "ll t# "ov-ntion+ r"sons; ! "r of t#
o'inion t#"t t# A$t is not viol"tiv of Arti$l 20 of t#
Constitution.
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'tition (" $o'% of !#i$# is "v"il"l on r$or+) fro
!#i$# t# inst"nt "''"l "riss.
:7.
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&&&&&&&&&&&&&.+. ,H.L. GOHALE
&&&&&&&&&&&&&.+. ,J. CHELAMES/AR
N! Dl#iGF"nu"r% 21; 201:.