Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ATFP) 67

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
V. Anandaranjan, Member
Siddharth A.S. – Appellant
Versus
The Competent Authority, Chennai – Respondent
MP-351/CHN/2023 (Exem.) | MP-352/CHN/2023 (Stay) | FPA-151/CHN/2023 | MP-354/CHN/2023 (Exem.) | MP-355/CHN/2023 (Stay) | FPA-152/CHN/2023 | MP-357/CHN/2023 (Exem.) | MP-358/CHN/2023 (Stay) | FPA-153/CHN/2023

Advocates:
For the Appellant: Ms. Aakashi Lodha, Mr. Namanjeet Bhatia, Ms. Nishtha Jindal
For the Respondent: Mr. Ajay Kumar, Manoj Dargar, Maheshwari, Ratna Aggarwal

Transferee's good faith acquisition protects property from forfeiture under SAFEMA if purchased before the show cause notice was issued.

Headnote:(A) Smugglers and Foreign Exchange Manipulators (Forfeiture of Properties) Act, 1976 - Section 12(4), Section 6(1), Section 2(2) - Appeal against order of forfeiture of property challenged on grounds of good faith acquisition and lack of jurisdiction of competent authority to attach property purchased prior to issuance of show cause notice - Appellants claimed to be bona fide purchasers who acquired property before the show cause notice; established ownership and absence of allegations against them. (Paras 1, 36-49)

(B) Burden of proof under Section 8 - It lies on the authority to demonstrate that property was acquired from illegal sources, especially when appellants provided evidence of lawful purchase. (Para 31)

(C) Principle of good faith conveyances affirmed - Property held by transferees in good faith cannot be subjected to forfeiture under SAFEMA if acquired prior to notice issuance. (Paras 46, 50)

(D) Jurisdictional error - The competent authority failed to recognize that the appellants were not 'persons affected' under the act and acted beyond its authority in issuing attachment notices without substantiation. (Paras 10, 37-39) (E) Final determination - The tribunal finds that the impugned order has no legal basis and upholds the appellants' claims for rightful ownership and possession.

Result: Appeals allowed.

Table of Content
1. introduction of case and factual background (Para 1 , 2)
2. appellant's claim of property ownership and development (Para 3 , 4 , 5)
3. court's directive for the competent authority to consider cases (Para 6)
4. appellants assert good faith and legitimate ownership (Para 7 , 9 , 10)
5. legal position on bona fide purchasers (Para 11 , 12 , 13 , 14)
6. case law cited by appellants supporting their argument (Para 15 , 16 , 17)
7. detailing issues with the competent authority's conduct (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25)
8. respondent's arguments contesting appellants' claims (Para 26 , 27 , 28 , 29)
9. legal rebuttal against appellants' arguments (Para 30 , 31 , 32 , 33)
10. conclusion on authority's justification for actions (Para 34)
11. court's analysis of legal principles governing property forfeiture (Para 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50)
12. judgment conclusion and order (Para 51 , 52 , 53)

FINAL ORDER

28.01.2026

These appeals have been filed under section 12(4) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Properties) Act, 1976 (“SAFEMA”) challenging the order dated 18.08.2023 passed by the Competent Authority, Chennai in F.No. OCA/MDS/3051/2016. The appellants in these appeals are Sh. A.S. Siddharth, his father, Sh. C.K. Sathian, and his mother, Smt. Anitha Sathian. Sh. C.K. Sathian, the appellant in FPA-152/CHN/2023, passed away during the pendency of the appeal and his name was substituted by that of his wife, Smt. Anitha Sathian, son Sh. A.S. Siddharth, and daughter Ms. A.S. Shilpa.

Facts in Brief

2. The brief facts of the case are that one Sh. Yasir Ibnu Muhammed, son of Sh. P.A. Kunjumuhammed, was detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 ("COFEPOSAA") by the Government of India vide an order dated 14.10.2015. Consequent to the same, the Ld. Competent Authority, Chennai issued a Show Cause Notice under Section 6 (1) of SAFEMA to Sh. Yasir Ibnu Muhammed, being a “Person Affected” (hereafter referred to as “PA No. 1”) within the meaning of the Act. The said Show Cause Notice was copied to parents of PA No. I, namely, Sh. P.A. Kunjumuhammed (“PA No. 2”) and Smt. Raseela (“PA No 3”). The proceedings initiated under SAFEMA, 1976 resulted in the forfeiture of various immovable properties including a parcel of land admeasuring 90 cents in Velloorkunnam Village under Survey No. 519/11A and 519/11B, hereafter referred to as "the subject property".

Arguments on behalf of the appellant

3. The Appellants’ case, in brief is that they are the joint owners of the subject property. The same is stated to have been purchased by them vide a registered sale deed dated 19.07.2007 bearing Document No. 4374 of 2007, in the office of Sub-Registrar at Muvattupuzha, executed with Sh. P.A. Kunjumuhammed and Smt. Raseela Kunjumuhammed. In and around 2017, after this retirement of his father, the Appellants developed a convention centre named "Nakshathra Convention Centre” by securing a loan of Rs. 5.5 crore from Bank of India and, thereafter, the loan account was taken over by Kerala Financial Corporation on 18.09.2018 by making an addition of Rs. 1.5 Crore to the term loan account.

4.It is submitted that the said business of the Appellants of running the Convention Centre was running successfully till 2020. However, due to the COVID-19 pandemic, business operations were severely suffered, as a result of which, the Appellants were unable to pay the loan instalments to Kerala Financial Corporation and vide notice dated 13.12.2022, the loan was sought to be recovered from the Appellant. In this situation, the Appellant was approached by a prospective buyer who was ready to buy and take over the convention centre. In this connection, in and around March 2023, the Appellant applied for encumbrance certificate for the period 01.09.2019 to 21.03.2023. To his utter shock, the appellants found that the subject property of

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2026 Supreme(Online)(ATFP) 67

Transferee's good faith acquisition protects property from forfeiture under SAFEMA if purchased before the show cause notice was issued.

Cases Referred (2)