The main legal point established in the judgment is that a transferee of property hit by Section 11 of SAFEMA cannot resist forfeiture proceedings and challenge the order under Sections 7(2) and 7(3) on the ground of being a bona fide purchaser. The judgment emphasizes the statutory provisions of SAFEMA, particularly Section 2(2)(e) and Section 11, and their interpretation in the context of property forfeiture proceedings.

K.K. SASIDHARAN, J

1. This appeal, at the instance of the competent authority under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 challenges the order dated 11 November, 2008 in W.P.No.31869 of 2003, setting aside the order of forfeiture.

The facts:

2. The property, which is the subject matter of this appealwas initially purchased by Mrs.Sulaikha Beevi, wife of Mr. K.K.Sheikh Dawood. The said Sheik Dawood was involved in proceedings under The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 and he was detained on several occasions by the Customs department. The department found that it was only with the money contributed by the detenu, Sulaikha Beevi purchased the property. Therefore, proceedings were initiated to confiscate the property.

3. The Competent Authority issued a notice to Mrs. Sulaika Beevi under Section 6 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter referred to as "SAFEMA") on 21 October, 1978. She received the notice on 31 October, 1978. The Competent Authority ultimately passed an order under Section 7 (1) of SAFEMA on 24 February, 1995. The said order has become final.

4. The Competent Authority as per notice dated 13 October, 2003 directed Smt.Sulaikha Beevi to surrender the property. The said notice was challenged before the writ Court in W.P.No.31869 of 2003 at the instance of the respondent. Before the learned Single Judge, the respondent contended that she was a bona fide purchaser for valuable consideration and though the sale deed was executed subsequent to the notice under Section 6 of SAFEMA, payments were made even before. The purchase was not with the knowledge of the proceedings. It was her further contention that she is entitled to the benefit of Section 2(2)(e) of SAFEMA as she is a bona fide purchaser for value. Therefore, the order passed by the Competent Authority under Section 7(1) of SAFEMA behind her back is unsustainable.

Views of learned Judge:

5. The learned Single Judge allowed the writ petition mainly on the ground that payments were made on various dates commencing from January, 1978 and ending with 8 January, 1978. Therefore, consideration was paid before the initiation of proceedings on 21 October, 1978. In view of the payment of sale consideration even before the notice under Section 6(1) of SAFEMA, the sale made on 13 November, 1978 cannot be construed to be a transaction subsequent to the initiation of proceedings. Accordingly, the order was quashed.

6. Dis-satisfied with the said order, passed by the writ Court, the Competent Authority has come up by way of this Intra Court appeal.

Submissions:

7. The learned Senior Central Government Standing Counsel contended that the sale in question was made only after the commencement of proceedings under Section 6(1) of SAFEMA and as such it was an invalid sale. It was his further contention that the original land owner was aware of the proceedings and knowing fully well, she sold the property and therefore, the order passed against her is binding on the transferee. In any case, according to the learned counsel, the sale is hit by Section 11 of SAFEMA and therefore, the learned Single Judge was not correct in quashing the proceedings.

Discussion:

8. The proceedings under SAFEMA was initiated against Mrs.Sulaikha Beevi, wife of detenu K.K.Sheikh Dawood and it was commenced by issuing notice under Section 6 of SAFEMA. Notice of forfeiture issued on 21 October, 1978 was accompanied by reasons, which actually weighed with the Competent Authority to initiate action. The addressee received the notice on 31 October, 1978. It was only thereafter, the respondent purchased the property by way of a sale deed executed on 13 November, 1978.

9. The notice dated 21 October, 1978 was challenged by the land owner Mrs.Sulaikha Beevi and her husband K.K.Sheikh Dawood before this Court in W.P.No.333 of 1979. The writ petition was dismi