Section 68-I: Forfeiture of property in certain cases

1[68-I. Forfeiture of property in certain cases. — (1) The competent authority may, after considering the explanation, if any, to the show cause notice issued under section 68H, and the materials available before it and after giving to the person affected (and in a 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:

Provided that if the person affected (and in a case where the person affected holds any property specified in the notice through any other person such other person also) does not appear before the competent authority or represent his case before it within a period of thirty days specified in the show cause notice, the competent authority may proceed to record a finding under this sub-section ex parte on the basis of evidence available before it.

(2) Where the competent authority is satisfied that some of the properties referred to in the show cause notice are illegally acquired properties but is not able to identify specifically such properties, then, it shall be lawful for the competent authority to specify the properties which, to the best of its judgment, are illegally acquired properties and record a finding accordingly under sub-section (1).

(3) Where the competent authority records a finding under this section to the effect that any property is illegally acquired property, it shall declare that such property shall, subject to the provisions of this Chapter, stand forfeited to the Central Government free from all encumbrances.

2[Provided that no illegally acquired property of any person who is referred to in clause (cc) of sub-section (2) of section 68A or relative of a person referred to in that clause or associate of a person referred to in that clause or holder of any property which was at any time previously held by a person referred to in that clause shall stand forefeited.]

(4) Where any shares in a company stand forfeited to the Central Government under this Chapter, then, the company shall, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or the articles of association of the company, forthwith register the Central Government as the transferee of such shares.]

1. Ins. by Act 2 of 1989, s. 19 (w.e.f. 29-5-1989)

2. Ins. by Act 9 of 2001, s. 36 (w.e.f. 2-10-2001).

Simplified Explanation

Section 68-I of the Narcotic Drugs and Psychotropic Substances Act, 1985 outlines the procedure for the forfeiture of property that is deemed to be illegally acquired. It establishes the responsibilities of the competent authority to consider explanations provided, offer opportunities for the affected person to be heard, and record findings that lead to the forfeiture of property.

Key Provisions of Section 68-I

1. Consideration of Explanation and Hearing (Subsection 1):
   • The competent authority must consider:
     • The explanation (if any) provided by the affected person in response to the show cause notice issued under Section 68H.
     • All available materials and evidence before it.
   • The affected person, or any person holding property on their behalf, must be given a reasonable opportunity to be heard.
   • If the person does not appear or present their case within 30 days (as specified in the show cause notice), the competent authority may proceed ex parte (without their presence), relying on the evidence available.

2. Finding of Illegally Acquired Property (Subsection 2):
   • If the competent authority believes some of the properties specified in the notice are illegally acquired but cannot specifically identify them, it may estimate or specify the properties, based on its best judgment, and record this finding.

3. Declaration of Forfeiture (Subsection 3):
   • Once the competent authority determines that property is illegally acquired, it must declare that such property:
     • Shall stand forfeited to the Central Government, free from all encumbrances.
   • This declaration is subject to the provisions laid out in this Chapter, ensuring that forfeiture follows the outlined legal processes.
   • Exemption: The forfeiture does not apply to:
     • Individuals referred to in clause (cc) of Section 68A(2) (e.g., certain classes of persons, relatives, and associates of such individuals, or holders of property once held by these persons).

4. Forfeiture of Shares in Companies (Subsection 4):
   • If shares in a company are forfeited to the Central Government, the company must immediately:
     • Register the Central Government as the transferee of the shares, regardless of the Companies Act, 1956 or the company’s articles of association.
   • This provision ensures that the forfeiture process is implemented even in the case of corporate assets, such as shares.

Purpose and Significance of Section 68-I

• Ensuring Due Process: It ensures that individuals affected by forfeiture have the opportunity to present their case, protecting their rights through a fair hearing.
• Clear Process for Forfeiture: Establishes a clear procedure for the competent authority to record findings and officially declare the forfeiture of illegally acquired properties.
• Property Rights Protection: The exemption provided in the proviso (Subsection 3) ensures that properties held by certain individuals (such as relatives or associates of certain offenders) are not automatically forfeited without due consideration of their status.
• Corporate Implications: The forfeiture of shares provides an effective means for the government to take control of shares in companies tied to illicit activity, bypassing company-specific legalities if necessary.

Practical Implications

1. For Affected Persons:
   • They must respond promptly to the notice and attend hearings to present their case.
   • Failure to appear may lead to ex parte decisions.
2. For Competent Authorities:
   • They must ensure that all findings are based on available evidence and that the affected person is granted a fair opportunity to be heard.
   • They must also manage the forfeiture process efficiently, including the forfeiture of shares.
3. For Companies:
   • Companies holding forfeited shares must comply by transferring ownership to the Central Government, ensuring that there is no delay in executing the forfeiture.