Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976-Commentary.
 
The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, or in short SAFEM(FOP) A, came into force on 5.11.1975 extending to the whole of India except the states of Jammu & Kashmir. This is an Act providing for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators.
The SAFEM(FOP) Act, 1976, applies to every person who has been convicted under Sea Customs Act, 1878, the Customs Act, 1962, or the Foreign Exchange Regulation Act 1947/1973 or detained under Conservation of Foreign Exchange and Prevention of Smuggling Activities (COFEPOSA) Act, 1974, if such detention has neither been revoked by the Advisory Board under section 9F of the COFEPOSA Act, nor has been set- aside by a court of competent jurisdiction and also to the relatives and associates of such persons. The Act also applies to any holder of any property , which has been transferred by such persons unless the transfer was in good faith and for adequate consideration. The person convicted for the first time under Sea Customs Act of an offence in relation to goods of a value exceeding one lac of rupees alone comes under ambit of this Act. The value of the goods shall be the wholesale price of the goods in ordinary course of trade in India as on the date of the commission of the offence and not the price of the goods in the land of origin. This monetary condition is not applicable to a person, who has already been convicted under Sea Customs Act, 1978 or the Customs Act, 1962. Similarly, if a person has been convicted under FERA for the first time for an offence involving amount exceeding Rs. 1,00,000/- only, then SAFEMA Act will apply. But if a person has already been convicted under the FERA, this monetary limit will not apply for subsequent offence. The Act applies not only to the convicts or the detenues but also to their relatives and associates and other persons to whom the property might have been transferred in bad faith. The word ‘ ‘relative’ has a very wide meaning under the Act and it means spouse, brother, sister, brother or sister of the spouse, any lineal ascendant or descendant of the person or his spouse. Similarly ‘ associates’ in relation to a person means any person, who has been residing together in the residential premises of such person, who is acting as manager or accountant, any association of persons/body of individuals, partnership firm, or private company of which such person had been or is a member, partner or director or trustee/substantial contributor of a trust created by such person.
 
Section 4 of the Act provides that 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 and if any person holds any such property, the same shall be liable to be forfeited to the Central Government in accordance with the provisions of this Act by the Competent Authority duly appointed under section 5 of the Act. Section 3 (1) ( c) defines illegally acquired property as any property acquired wholly or partly by any income, earnings or assets obtained from any activity prohibited by law or in respect of which any such law has been contravened or any property acquired by any income, earnings or assets, the source of which can not be proved legally. Property includes any interest in property, movable and immovable. If the Competent Authority has reason to believe that any person to whom this Act applies is in the name of any other person, it may, after recording the reasons in writing, serve a notice under Section 6 upon such person and other persons calling upon them to explain within a period of not less than 30 days, the source of income, earnings or assets out of which or by means of which such properties were acquired and calling upon the evidence on which the person may rely and other relevant information and to show cause why such properties should not be declared to be illegally acquired properties and forfeited to the central Government free from all encumbrances. The Competent Authority after giving a reasonable opportunity of being heard in person under Section 7 of the Act may pass such order, as it deems fit either forfeiting properties to the Central Government free from all encumbrances or releasing some or all of them after recording a finding in respect of each property. Where any share in a company stands forfeited, such share shall be registered in the name of the Central Government. In case less than 50 percent of a property is unexplained, the Competent Authority 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 unexplained portion of the property. This option of fine in lieu of forfeiture is given under Section 9 of the Act after giving a reasonable opportunity of being heard. Section 10 relates to issue of notice for forfeiture of trust properties. Section 11 states that if any property is transferred after the issue of notice under section 6 or 10, such transfer shall be ignored and, if such property is subsequently forfeited to the Central Government under section 7, the transfer of such property shall be deemed to be null and void.
 

Under the Indian Evidence Act, the burden of proof in criminal proceedings lies on the prosecution, whereas section 8 of the SAFEM (FOP) Act casts the burden of proof on the affected person. The burden of proving that any property specified in the notice u/s 6 is not illegally acquired property shall be on the person affected. It means that if a person fails to satisfactorily account for certain properties or income, the same shall stand forfeited to the Central Government by the Competent Authority. Section 24 states that the provisions of the SAFEM (FOP) Act shall have over-riding effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force. Section 23 gives protection of action taken in good faith.