Supreme Court

Domnic Alex Fernandes (D) through L.Rs. and Ors. Vs. Union of India (UOI) and Ors.

MANU/SC/1016/2017

17.08.2017

Criminal

Rights of a bona fide tenant would not be automatically terminated by forfeiture of property

In present case, vide impugned order, 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 Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, as the person to whom 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. Vide order, 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.

The Appellants filed a Writ Petition under Articles 226/227 of the Constitution seeking a direction that, order of forfeiture passed against Krishna Budha Gawde could not operate against them as they are bona fide tenants. The High Court dismissed the writ petition holding that, the tenancy did not survive in view of Section 7(3) of SAFEMA. Question for consideration is 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.

In Attorney General for India and Ors. v. Amratlal Prajivandas and Ors. Supreme Court observed that, the relatives and associates are brought in only for the purpose of ensuring that, the illegally acquired properties of the convict or detenu, acquired or kept in their names, do not escape the net of the Act. It is a well-known fact that, persons indulging in illegal activities screen the properties 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 the property was acquired by the detenu -whether in his own name or in the name of his relatives and associates. There ought to be the connecting link between those properties and the convict/detenu, the burden of disproving which, as mentioned above, is upon the relative/associate.

In Fatima Mohd. Amin (Smt.) (dead) through L.Rs. v. Union of India and Anr., applying the ratio of Amratlal, this Court held that, in absence of an averment that, 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.

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.

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. However, Supreme Court has not expressed any opinion as to 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, order of the High Court is set aside and matter remitted to the competent authority for passing an appropriate order in accordance with law.

Relevant

Attorney General for India and Ors. v. Amratlal Prajivandas and Ors. MANU/SC/0774/1994
: (1994) 5 SCC 54; Fatima Mohd. Amin (Smt.) (dead) through L.Rs. v. Union of India and Anr. MANU/SC/0291/2003
: (2003) 7 SCC 436

Tags : Forfeiture Property Tenant Bonafide right

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