A bona fide purchaser cannot claim rights to property transferred during ongoing forfeiture proceedings under SAFEMA, as the vendor lacked title to transfer.

JUDGMENT :

S.V. PINTO, J.

1. By way of the present petition, filed under Article 226 of the Constitution of India, the petitioners have challenged the orders passed by the respondent nos. 1 and 2 on 03.10.2011 and 30.01.2012 respectively by which the residential property situated at 3rd Floor, F/301, Malabar Hill Society, Surat came to be forfeited under the provisions of Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter referred to as “SAFEMA”).

2. The brief facts giving rise to filing of the present petition are as under:

2.1 In May 2010, the petitioner was introduced to one Keshnath S. Yadav who expressed his willingness to sell the property and the petitioner had taken due care and diligence by way of search of the record of Sub Registrar and Revenue authorities. The petitioner did not find anything objectionable in respect of title of the property and the petitioner entered into an agreement to sell with the said Keshnath S. Yadav on 01.10.2010 and paid an amount of Rs. 20,51,000/- vide five cheques. The remaining amount was to be paid within 75 days or 2½ months from the date of execution of the agreement. The sale deed was executed on 22.10.2010 and was registered with the Sub Registrar and the petitioner made full payment of the amount of Rs. 40,11,000/- to the vendor Keshnath S. Yadav. The name of the petitioner was entered in the record and the petitioner is in possession of the said property. On 05.10.2011, the petitioner received the notice regarding forfeiture of the property pursuant to proceedings under SAFEMA and upon inquiry, it came to the knowledge of the petitioner that SAFEMA proceedings were initiated against Narendra Champaklal Shah and it was found that the property was purchased by Kantilal Chaganlal Shah - the brother-in-law of Narendra Champaklal Shah, from the income of the said Narendra Champaklal Shah and both of them were prosecuted under SAFEMA. A detention order was passed by the Government of Gujarat on 18.08.1997 against Narendra Champaklal Shah under the provisions of Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred to as “COFEPOSA” for short) and the order of detention was not quashed or revoked by any Court of competent jurisdiction or any Advisory Board. During the pendency of these proceedings, Kantilal Chaganlal Shah sold the property to Keshnath Yadav who further transferred the property to the petitioner.

2.2 After receipt of the order dated 03.10.2011 passed by the respondent no. 1, the petitioner preferred an appeal under Section 12 of SAFEMA and after hearing the parties, the respondent no. 2 vide the order dated 30.01.2012 was pleased to reject the appeal of the petitioner and the order was communicated to the petitioner on or after 13.02.2012.

2.3 Even though the petitioner was not served with any notice or order as required under Section 19 of the SAFEMA, on 27.02.2012 the officers entered the premises of the petitioner in the absence of the petitioner and forcibly took possession of the property and after the seal was applied to the property, the order under Section 19(1) of the SAFEMA was served upon the petitioner.

3. Being aggrieved and dissatisfied with the same, the petitioner has filed the present petition under article 226 of the Constitution of India mainly contending that the petitioner was not joined as a party to the proceedings and the relevant documents were not supplied to the petitioner at the time of the appeal. Both the authorities have lost sight of the fact that the petitioner is the transferee of the property in good faith for adequate consideration and the petitioner has taken due care and diligence before purchasing the property. The petitioner had no occasion to learn about the pendency of the proceedings, even while carrying out the search at the office of the revenue authorities and as the petitioner is a bona fide purchaser of the said property