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TMI Blog2017 (8) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... e briefly stated. Vide order dated 19th January, 1974 one Krishna Budha Gawde was detained under Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) by the Government of Maharashtra. As his detention was confirmed by the Advisory Board, he was covered by Section 2(b) of SAFEMA 1 as the person to whom the said Act applied. Once it was so, the property illegally acquired by him (as defined in Section 3(1)(c)2 of the Act was liable to be forfeited. Accordingly, notice of forfeiture was issued under Section 6 of the Act in respect of several properties including the property which is subject matter of present proceeding viz. T-40, Juhu Koliwada, H.B. Gawde Road (also known as Azad Road), I Santacruz (West), Mumbai - 400 049. Vide order dated 29th August, 1977, the competent authority passed an order under Section 7 of the Act holding the property in question to be liable to be forfeited. This order was confirmed by the Appellate Tribunal for Forfeited Property on 2nd April, 1997 in respect of the said property. 4. The appellants herein filed a Writ Petition under Articles 226/227 of the Constitution seeking a direction that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. versus Union of India and Anr. (2003) 7 SCC 436; P.P. Abdulla and Anr. versus Competent Authority and ors. (2007) 2 SCC 510; Aslam Mohammad Merchant versus Competent Authority and Ors. (2008) 14 SCC 186; Vishal N. Kalsaria versus Bank of India and Ors. (2016) 3 SCC 762 ; and judgment of Bombay High Court in Narayan Vittappa Kudva versus Union of India and Anr. 2002 (2) MhLJ 290. 10. Learned counsel for the respondents supported the view taken in the impugned judgment. 11. On due consideration of the matter, we find merit in the contention of the appellants. The answer to the question framed in earlier part of the judgment has to be in favour of the appellants and in the negative. 12. In C.B. Gautam (supra) validity of Chapter XX-C inserted in the Income Tax, 1961 by the Finance Act of 1986 was considered. The scheme of the said provision was to confer power of compulsory purchase of immovable property by the Department if there was under-valuation for evasion of tax. This Court upheld the provision by reading therein the requirement of giving opportunity of hearing and recording reasons. However, as regards the bona fide rights of encumbrance holders such as a subsisting lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies acquired from such illegal activity in the names of their relatives and associates. Sometimes they transfer such properties to them, may be, with an intent to transfer the ownership and title. In fact, it is immaterial how such relative or associate holds the properties of convict/detenu - whether as a benami or as a mere name-lender or as a bona fide transferee for value or in any other manner. He cannot claim those properties and must surrender them to the State under the Act. Since he is a relative or associate, as defined by the Act, he cannot put forward any defence once it is proved that that property was acquired by the detenu - whether in his own name or in the name of his relatives and associates. It is to counteract the several devices that are or may be adopted by persons mentioned in clauses (a) and (b) of Section 2(2) that their relatives and associates mentioned in clauses (c) and (d) of the said sub-section are also brought within the purview of the Act. The fact of their holding or possessing the properties of convict/detenu furnishes the link between the convict/detenu and his relatives and associates. Only the properties of the convict/detenu are sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y relevant in this context. It declares that "as from the commencement of this Act, it shall not be lawful for any person to whom this Act applies to hold any illegally acquired property either by himself or through any other person on his behalf". All such property is liable to be forfeited. The language of this section is indicative of the ambit of the Act. Clauses (c) and (d) in Section 2(2) and the Explanations (2) and (3) occurring therein shall have to be construed and understood in the light of the overall scheme and purpose of the enactment. The idea is to forfeit the illegally acquired properties of the convict/detenu irrespective of the fact that such properties are held by or kept in the name of or screened in the name of any relative or associate as defined in the said two Explanations. The idea is not to forfeit the independent properties of such relatives or associates which they may have acquired illegally but only to reach the properties of the convict/detenu or properties traceable to him, wherever they are, ignoring all the transactions with respect to those properties. By way of illustration, take a case where a convict/detenu purchases a property in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minatory nor incompetent apart from the protection of Article 31-B." 14. In Fatima (supra), applying the ratio of Amratlal (supra), this Court held that in absence of an averment that the property with an individual was benami, such individual could not be proceeded against in absence of any link or nexus of the property with the illegally acquired money. 15. In Vishnunarayan (supra) it was held that Section 6-A of the W.B. Govt. Premises (Tenancy Regulation) Act, 1976 is not applicable to tenants in lawful occupation. 16. In Abdulla (supra) following the judgment of this Court in Fatima (supra) it was held that Section 6(1) of the Act could apply only when there was a link or nexus of the property sought to be forfeited with the illegally acquired money of the person to whom the Act applied. 17. In Vishal (supra), the question was whether protected tenant under the Maharashtra Rent Control Act, 1999 could be deprived of his rights under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act). Answering the question in the negative, it was held that such a situation was not contemplated as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter 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. 1 2. Application.-(1) The provisions of this Act shall apply only to the persons specified in sub-section (2). (2) The persons referred to in sub-section (1) are the following, namely:- XXX XXX XXX (b) every person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974): XXX XXX XXX (c) every person who is a relative of a person referred to in clause (a) or clause (b); (d) every associate of a person referred to in clause (a) or clause (b); (e) any holder (hereafter in this clause referred to as the present holder) of any property which was at any time previously held by a person referred to in clause (a) or clause (b) unless the present holder or, as the case may be, anyone who held such property after such person and before the present holder, is or was a transferee in good faith for adequate consideration. XXX XXX XXX Explanation 2.-For the purposes of clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the commencement of this Act. 2 3. Definitions.-(1) In this Act, unless the context otherwise requires,- XXX XXX XXX (c) "illegally acquired property", in relation to any person to whom this Act applies, means- (i) any property acquired by such person, whether before or after the commencement of this Act, wholly or partly out of or by means of any income, earnings or assets derived or obtained from or attributable to any activity prohibited by or under any law for the time being in force relating to any matter in respect of which Parliament has power to make laws; or (ii) any property acquired by such person, whether before or after the commencement of this Act, wholly or partly out of or by means of any income, earning or assets in respect of which any such law has been contravened; or (iii) any property acquired by such person, whether before or after the commencement of this Act, wholly or partly out of or by means of any income, earnings or assets the source of which cannot be proved and which cannot be shown to be attributable to any act or thing done in respect of any matter in relation to which Parliament has no power to make laws; or (iv) any property acqu ..... 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