Right to Property Remains a Constitutional Right – Even Drug Law Must Respect Due Process: Telangana High Court Upholds Freezing Order Under NDPS Act

“Stringent laws must follow stringent safeguards. Freezing of assets must be backed by reason, not assumptions” – Telangana High Court upheld a freezing order issued under Section 68F(2) of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act), confirming the temporary restraint on the petitioner’s movable and immovable properties. The order was passed based on allegations that the properties were acquired through illicit drug trade involving Alprazolam, a controlled psychotropic substance.

The Court, however, emphasized that right to property, though no longer fundamental, remains a protected constitutional and human right, and any encroachment on it must be strictly compliant with statutory procedure and principles of fairness.

The case arose out of the alleged involvement of Gundumalla Venkataiah, an accused in two NDPS crimes — Cr.No.894 of 2023 and Cr.No.1386 of 2023, both involving commercial quantities of Alprazolam. On 25.12.2023, a search operation led to the seizure of two kilograms of Alprazolam from near a residence in Shadnagar, following which Venkataiah and others were booked under Sections 8(c), 22(c), and 29 of the NDPS Act.

The Inspector of Police, Shadnagar, acting as an "empowered officer", passed a freezing order on 20.02.2024 under Section 68F(1). This was confirmed by the Competent Authority, Ministry of Finance, on 20.03.2024, invoking powers under Section 68F(2), on the basis that the assets in question were illegally acquired properties as defined under Section 68B(g).

Challenging this, the petitioner contended that the properties were acquired lawfully and that there was no direct recovery from him, arguing that the freezing was arbitrary and violative of his rights.

Justice N.V. Shravan Kumar framed the issue around the legality and procedural propriety of the freezing order, particularly examining whether the authority had “reason to believe” as mandated by the statute.

The Court observed: “Dealing in narcotics is a social evil that must be curtailed or prohibited at any cost. Chapter V-A seeks to achieve a salutary purpose. But it must also be borne in mind that right to hold property, although no longer a fundamental right, is still a constitutional right. It is a human right.”

The petitioner was found to have declared only ₹35 lakhs in income over six years, while acquiring properties worth ₹95 lakhs, all in cash and many in the names of non-earning family members. The Court noted:
“The sale consideration was in cash, while in some cases the mode of transaction is missing from the face of such records… There is no credible explanation as to the source of these funds.”

Relying on the Supreme Court's ruling in Aslam Mohammad Merchant v. Competent Authority, (2008) 14 SCC 186, the Court reiterated:
“Whenever a statute provides for ‘reason to believe’, either the reasons should appear on the face of the notice or they must be available on the materials which had been placed before him… Properties sought to be forfeited must have a direct nexus with the properties illegally acquired.”

While the petitioner argued that the properties were acquired before the alleged offences, the Court noted that involvement in multiple narcotic crimes, close in time, strengthened the state's case for provisional attachment.

The Court confirmed the legality of the Competent Authority’s action, stating: “Respondent No.2, on a careful perusal of the material placed on record, believed that the properties acquired by the petitioner and his family members are attributable to their income, earnings, or assets derived from the sale proceeds of narcotic drugs.”

The Court clarified that the confirmatory order under Section 68F(2) was not a final confiscation, but a temporary restraint to ensure the property is not alienated during the pendency of trial or forfeiture proceedings. It said:
“The impugned order only confirms the freezing order and is not a final order… It places a temporary restraint on the accused person from concealing or transferring the illegally acquired property.”

Acknowledging the hardship caused by freezing of accounts, the Court extended limited relief, directing:
“This Court grants limited/conditional access to the frozen accounts of the petitioner… subject to petitioner providing proof of legal income credits and with prior permission from the Trial Court.”

It also held that while a statutory appellate remedy under Section 68O exists, the petitioner had failed to explain why he bypassed it. Therefore, the writ petition was not maintainable.

The High Court has reaffirmed the scope and authority of the NDPS Act’s forfeiture regime, while cautioning that its powers must not be exercised arbitrarily. Importantly, it reminded that property rights, even in narcotic cases, must be respected unless robust legal grounds justify interference.

As the Court concluded: “When stringent laws become applicable, as a result of which some persons are to be deprived of their right in a property, scrupulous compliance of the statutory requirements is imperative.”

Date of Decision: 21 April, 2025