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2017 (8) TMI 671 - SC - FEMAIllegally acquired property within the meaning of Section 3(1)(c) of SAFEMA - whether tenancy of a property, ownership of which is acquired by a person to whom the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA) applies, will be treated as “illegally acquired property” within the meaning of Section 3(1)(c) of SAFEMA and can be subjected to forfeiture under the provisions thereof? - Held that:- In the present case, it is undisputed that only adjudication which has taken place by the competent authority is that the property was owned by the person to whom the Act applied i.e. against whom the order of detention had been confirmed. The rights of the appellants, who claim to be bona fide tenants even prior to purchase of the property by the person to whom the Act applied, have not been adjudicated upon on the assumption that their rights will stand automatically terminated. In view of above, we are of the view that rights of a bona fide tenant will not stand automatically terminated by forfeiture of property and vesting thereof in the Central Government. Such forfeiture will extinguish the rights of the person to whom the Act applies in the present case Krishna Budha Gawde, who was the owner of the property in question or his relative or associate having nexus with him in relation to the said property. However, we do not express any opinion whether the appellants are the bona fide tenants and had no nexus with the acquisition of the property by the person to whom the Act applied as claimed by them. This question needs to be determined independently by the competent authority as defined in Section 3(b) of the Act. Accordingly, we allow this appeal, set aside the order of the High Court and remit the matter to the competent authority for passing an appropriate order in accordance with law. The parties are directed to appear before the competent authority for further proceedings on 9th October, 2017.
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