Back
2022 Supreme(Mad) 535
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. ANAND VENKATESH, J.
Kantha Bai & Another – Appellants
Versus
The Competent Authority Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, Chennai & Another – Respondents
W.P. Nos. 22098 & 22099 of 2003 & WMP Nos. 27367, 27368, 27369 & 27370 of 2003
Decided on : 06-07-2022
For the Appellant :B. Kumar, R. Loganathan, Advocates.
For the Respondents:A. Kumaraguru, Advocate.
Headnote:
Constitution of India, Article 226- Foreign Exchange and Prevention of Smuggling Activities Act, 1974- Section 6(1)- Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 -petitioners claim that they are bonafide purchasers for value and they were not aware about the proceedings initiated against Abdul Razaak under COFEPOSA and the forfeiture proceedings initiated against his immoveable properties under SAFEMA- Held, Court is inclined to remand the matter back to the file of the 2nd respondent for the limited purpose of exercising its jurisdiction under Rule 20 of the Forfeited Property (Procedure) Rules, 1986 in order to enable the 2nd respondent to determine the amount and direct the petitioners to pay the same to the Central Government within the stipulated period. On the petitioners making such payment of the amount determined by the 2nd respondent, the property can be released from forfeiture. If the amount is not paid, the order of forfeiture can be confirmed and further action can be taken under the provisions of SAFEMA. The 2nd respondent shall pass appropriate orders in this regard within a period of twelve weeks from the date of receipt of copy of this Order – Disposed of.
Key Points: - Transfers of property after notice under Section 6(1) are null and void for purposes of forfeiture proceedings (!) . - The court is inclined to remand the matter to determine the value of the property and direct payment to secure release from forfeiture (!) (!) . - Bona fide purchaser claims are not sufficient to override forfeiture where prior notice and forfeiture proceedings exist (!) (!) (!) . - Delay in passing forfeiture order (18 years) is a relevant factor but does not automatically preclude forfeiture (!) (!) . - The authority may exercise jurisdiction under Rule 20 of the Forfeited Property (Procedure) Rules to ascertain value and allow payment in such cases (!) (!) .
What is the consequence of transferring property after receiving a notice under Section 6(1) of the Act?
How should the competent authority exercise its jurisdiction when property has been transferred post-notice but before final forfeiture?
What is the right of bona fide purchasers for value when their vendor is subject to forfeiture proceedings under the Act?
JUDGMENT :
(Prayer in W.P.No.22098 of 2013: Writ Petition under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorari, calling for the records of the 2nd respondent made in FPA No.21/MDS/2000 dated 9.1.2001 and quash the same as far as this petitioner is concerned in espect of the property bearing door no.38, Munusamy Road, Taskar Town, Bangalore 51.
Writ Petition under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorari, calling for the records of the 2nd respondent made in FPA No.19/MDS/2000 dated 9.1.2001 and quash the same as far as this petitioner is concerned in respect of the property bearing door no.38, Munusamy Road, Taskar Town, Bangalore 51.)
1. The issues involved in these Writ Petitions are common and hence, they are taken up together, heard and disposed of through this Common Order.
2. The subject matter of challenge in both these Writ Petitions pertains to the proceedings of the 2nd respondent dated 9.1.2001, wherein, the Appellate Tribunal confirmed the Order of the Competent Authority and dismissed the appeals filed by the petitioners under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (hereinafter referred to as ‘SAFEMA’).
3. The case of the petitioners is that the subject property (hereinafter referred to as the ‘KGF property’) was originally owned by one Abdul Razaak. He was detained under the provisions of Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (hereinafter referred to as ‘COFEPOSA’). Notice dated 13.2.1980 was issued to him under Section 6(1) of SAFEMA to show cause as to why the immoveable properties belonging to him should not be forfeited as illegally acquired properties. He sold the property in favour of Smt. Shalamma and Smt. Gokulamma through a registered sale deed dated 3.3.1988. They in turn sold the property in favour of the petitioners under two sale deeds dated 14.12.1994. The further case of the petitioners is that they demolished the old building and they had put up a new building after getting necessary permission and were in possession and enjoyment of the same. The petitioners claim that they are bonafide purchasers for value and they were not aware about the proceedings initiated against Abdul Razaak under COFEPOSA and the forfeiture proceedings initiated against his immoveable properties under SAFEMA.
4. It is stated that the petitioners were informed by the counsel who was appearing for Abdul Razaak that forfeiture order has been passed on 20.3.1998 by the competent authority under SAFEMA and the subject property has been forfeited. The petitioners were also informed that the appeal filed by Abdul Razaak against the Order of the competent authority was also dismissed by the Appellate Tribunal through an Order dated 9.12.1999.
5. The petitioners filed an appeal before the 2nd respondent and it was taken up for hearing along with the connected appeals and it was dismissed by an Order dated 9.1.2001. Aggrieved by the same, these Writ Petitions have been filed before this Court.
6. The 1st respondent has filed counter affidavit in both the Writ Petitions and has taken a stand that the transactions made by Abdul Razaak after the issuance of the notice under Section 6(1) of SAFEMA are null and void and hence, there is no question of going into the issue of whether the purchase was made bona fide for valid consideration. It is further stated in the counter affidavit that the 2nd respondent had taken into consideration all the grounds put forth by the petitioners and there is no scope to interfere with the same. The 1st respondent has also denied the claim made by the petitioners with regard to recording of reasons under Section 6(1) of SAFEMA and providing an opportunity to the petitioners. The 1st respondent has taken a stand that all these grounds were raised by the detenue and it has been rejected and confirmed by the Appellate Tribunal and the
