2010 (9) TMI 814 - HC - Indian Laws

Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 - Writ petition - Section 11 of the Act, after notice issued under Section 6 or Section 10, if any property referred to in the notice is transferred by any mode whatsoever such transfer for the purposes of the proceedings under the Act shall be deemed to be null and void. In such circumstances, no right accrues either to the third respondent, the appellant s vendor or to the fourth respondent on account of their purchaser and those transactions are null and void and non-est in law. Thus, the learned Single Judge, rightly dismissed the writ petition, the appellant was not issued the notice under Section 6(1) of the Act and admittedly, there is no challenge either to the notice issued under Section 6(1) or the order of forfeiture passed under Section 7, and those proceedings have attained finality, we find there are no merits in the appeal and it is dismissed. Consequently, connected miscellaneous petitions are closed. No costs.

Summary

Issues:
1. Interpretation of provisions of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.
2. Validity of notice of forfeiture and subsequent orders.
3. Application of Section 11 of the Act to property transactions.

Issue 1: Interpretation of Act Provisions
The case involved the interpretation of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. The Act aimed to forfeit illegally acquired properties of smugglers and foreign exchange manipulators. The definition of "illegally acquired property" under Section 3(c) includes property obtained from activities prohibited by law. Section 4 prohibits holding such property, making it liable for forfeiture to the Central Government. Section 6 requires a notice of forfeiture to be served if the competent authority believes the property is illegally acquired.

Issue 2: Validity of Notice and Orders
The appellant purchased a property subject to forfeiture under the Act. A notice of forfeiture was issued to the third respondent in 1993, which led to an order of forfeiture in 1999. Subsequently, the appellant was directed to surrender the property. The appellant challenged this order, arguing lack of reasons in the notice and improper service to the third respondent. The court found that the transactions post-notice were null and void under Section 11 of the Act, as transfers after notice are disregarded, rendering them legally ineffective.

Issue 3: Application of Section 11
Section 11 of the Act deems transfers of property after a notice of forfeiture null and void. The court held that the appellant, as a subsequent purchaser, had no legal right over the property due to the prior notice and subsequent forfeiture order. The judgment cited the Division Bench case of V. Mohan, stating it did not assist the appellant's case as there was no challenge to the notice or forfeiture order. Consequently, the court upheld the dismissal of the writ petition, finding no merit in the appeal and closing the connected miscellaneous petitions without costs.

This detailed analysis of the judgment highlights the key legal issues addressed, the application of relevant provisions of the Act, and the court's interpretation leading to the dismissal of the appeal.