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TMI Blog2011 (7) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority considered the matter. Though Mr. Sheikh Dawood appeared before the Competent Authority, Mrs. Sulaikha Beevi, failed to appear before the authority. The Competent Authority considered the explanation given by Mr.Sheik Dawood and the deposition of Mrs. Sulaikha Beevi and rejected the same after indicating sufficient reasons. The order has become final. In short, the order of Forfeiture dated 24 February, 1995 had attained finality. 11. Before the writ Court, the learned counsel for the respondent relied on Section 2(2)(e) of SAFEMA in support of his contention that the respondent was a bona fide transferee in good faith for adequate consideration and as such, proceedings cannot be initiated in respect of the said property. Though the learned Single Judge has not considered the said issue, we consider it fit and proper to decide the said question even though there was no appearance on behalf of the respondent during the course of hearing the writ appeal. The statutory provisions: 12. Section 2(2)(e) reads thus: "2. Application:- (1) The provisions of his Act shall apply only to the persons specified in sub-section (2) (2) The persons referred to in sub-section (1) are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering the good faith or valuable consideration. 18. Section 7(3) of SAFEMA provides for statutory vesting. The finding regarding illegal acquisition of property and the consequential declaration of forfeiture by the competent authority would result in statutory transfer of ownership of property. The Central Government would thereafter become the absolute owner of the property free from all encumbrances. 19.The procedure for forfeiture would commence by the issue of notice under Section 6(1) of SAFEMA and it would close by passing an order under Section 7. The order of forfeiture passed by the competent authority would relate back to the date of issue of notice under Section 6. Therefore, Section 7 has to be read along with Sections 6 and 11 and a combined reading of these provisions would reveal the real spirit behind Section 11 of SAFEMA. The transfer pending proceeding would be an irregular transaction not binding on the competent authority. When the proceedings culminate in passing an order of forfeiture, the transfer of property pending forfeiture proceeding would become a null and void transaction. Therefore, till a declaration is made under section 7(3), after recording ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was only to avoid the statutory proceedings and to save the document from the statutory invalidation, such a statement was made in the sale deed. 25. Even though the entire sale consideration was paid as on 8 January, 1978, the document was registered only on 13 November, 1978. The factum of registration on 13 November, 1978 after receiving notice under Section 6 on 31 October, 1978 clearly proves the lack of bona fides in the transaction. In case payments were made earlier, nothing prevented the vendor to execute the document in favour of the respondent immediately after the receipt of final payment. No prudent purchaser would wait indefinitely to get the sale deed registered, after making full payments. The very fact that the document was executed after receiving the notice on 31 October, 1978 clearly shows that the sale deed was executed with full knowledge of the proceedings. This aspect was not considered by the learned Single Judge. 26. Even otherwise, the date of payment of sale consideration is immaterial. The date of execution of the sale deed alone is material. The sale in question was for a sum of ₹ 18,000/-. Therefore the document must compulsorily be registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 31. The order impugned in the writ petition was only a possession notice. It was nothing but a consequential proceedings issued by the statutory authority pursuant to the final order passed under Section 7(1) of SAFEMA on 24 February, 1995. The order passed by the Competent Authority contains sufficient reasons justifying the order of forfeiture. The said proceedings has become final. It is not open to the transferee, whose sale was statutorily invalidated to challenge the possession notice. The respondent has been banking upon Section 2(2)(e) to relieve the property from forfeiture proceedings. Since the sale was made only after initiation of proceedings under Section 6, it is void under Section 11 of SAFEMA. Therefore, Section 2(2)(e) of SAFEMA cannot be relied on to avoid the sale as the same being statutorily invalidated under Section 11 of SAFEMA. 32. The learned Judge has incidentally referred to the permission granted by the Reserve Bank of India on 15 April, 1978 to sell the property. The land owner appears to have taken permission on account of her Malaysian nationality. The permission obtained from the Reserve Bank of India cannot be taken as a factor to save the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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