AAMENABAI TAYEBALY AND ORS.versusCOMPETENT AUTHORITY UNDER SAFEMA AND ORS.

A                AAMENABAI TA YEBALY AND ORS.
                               v.                                                      ...
           COMPETENT AUTHORITY UNDER SAFEMA AND ORS.

                               NOVE.MBER 19, 1997

B           [S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.]


           Smugglers and Foreign Exchange Manipulators (Foifeiture of Property)
    Act, /976-S2 (2)(c)-The vendor of the immovable property, being the wife
     of COFEPOSA detenu, is liable to be proceeded under the Act-S2(2)(e)-
C    Though the purchaser is not covered by this section, the property he purchased
    from the vendor is liable to lfe forfeited since he was aware of the proceedings
     under SAFEMA in respect to the said property before the purchase and
     cannot claim that the purchase was bonafide purchase for value without
     notice-There was also an undertaking by the vendor to the Court not to
D    dispose off theproperty and there was .'10 absolute stay granted by the High
•    Court.

         S. I I-The forfeiture becomes confirmed from the actual date of the
  order of the Competent authority-When the Court dismisses the case the
  property ceases to be that of the vendor and he/she loses all title/interest in
E it and the same becomes vested in the Central Govt.-The sale is therefore
  void and the purchaser has no legal defence against the authorities.-A void
  purchase cannot be resurrected by the imposition of a fine-There is no
  double forfeiture when the money from the sale of a flat under SAFEMA
  proceedings is invested in another flat and both flats are foifeited-A later
  order offorfeiture of the immovable property under the Act will not invalidate
F an earlier order offorfeiture if another immoveable property under the same
  Act, since both were independent of each other-When the earlier sale itself
  is still-born, the forfeiture of a subsequent property under the Act cannot'
  bring to life earlier sa/e-S.s. 6(1), S. 7(2)&(3), S9-Conservation of Foreign
  Exchange and Prevention a/Smuggling Activities Act, 1974-S 3(/)-Transfer
G of Property Act-S52.
          The Present appeal relates to the sale of an immovable property by a
    vendor, who was the wife of a COFEPOSA detenu, which was forfeited by an
    order under S. 7 of SAFEMA passed by the Competent Authority and later
    confirmed by the Appellate Authority On a writ petition challenging the said
H   order, the Bombay High Court gave a stay on the undertaking that the vendor
                                          246



                                                                                       r
          AAMENABAl v. COMPETENT AUTHORITY UNDER SAFEMA 247


-    will not dispose/alienate or encumber/part with the right, title and interest
     in the said property during the pendency of the petition.
           However she sold the said property to a purchaser who was the
                                                                                      A


     respondents predecessor in-interest, for a consideration and from out of the
     sale proceeds bought another flat even during the court proceedings. The
     purchaser also filed a Writ petition in the High Court, challenging the          B
     forfeiture, which was dismissed when the Court became aware of the sale,
     the vendor was punished for contempt. The vendor, then filed another Writ
     petition in High Court. The purchaser also challenged the detention order
     against the vender's husband and the forfeiture arising therefrom, before
     the Gujarat High Court. That High Court remanded the matter to the
     Competent Authority holding that the order of forfeiture was made by the         C
     Competent Authority without giving a hearing to the purchaser. The
     Competent Authority in deference to the order of the High Court, heard the
     parties and re-confirmed the forfeiture The Competent Authority in an
     independent proceeding passed an order forfeiting the second flat purchased
     by the vendor out of the sale proceeds of the first flat. When the vendor        D
    ·appealed against the order of forfeiture, the Appellate Tribunal dismissed the
     appeal. A writ petition and a Special Leave Petition arising from this order
     were also dismissed. An appeal was filed before this Court from the order
     of the Bombay High Court dismissing the challenge to the forfeiture.
          On behalf of the appellants, it was contended inter alia, that SAFEMA       E
    did not apply to the purchaser as he was not covered by S. 2(2) (e) of the Act
    and therefore the entire exercise was null and void. It was also submitted the
    purchaser was not aware of the Court proceedings and the undertaking by
    the seller, that the purchaser purchased the property in good faith and
    therefore he should not be punished. It was also pointed out that S. 11 of
    SAFEMA did not apply to the facts, as the purchaser purchased the flat in         F
    1981 and not between two terminal dates, viz. 15th February 1977, when
    notice under S6 (I) of SAFEMA was issued to the seller and 12th October
    1977 when the competent authority passed the order under S. 7. Another
    contention was that there was double forfeiture since, evert granting that the
    said property was purchased with tainted money, the vendor had sold it for
    a consideration and had used that money for purchasing another flat which         G
    was also forfeited. It was submitted that it was the vendor who was at fault
    and the purchaser having bought the property in good faith should not be
    punished. The appellants urged that using the analogy of S. 3 of SAFE MA
    the Court could impose a fine on the purchaser instead of forfeiture.
          Dismissing the appeal, this Court                                           H
    248                     SUPREME COURT REPORTS fl997] SUPP. 5 S.C.R.

A         HELD : I. It is obvious that purchaser's vendor TS was covered by
  Section 2 sub-section (2) (c) as she was the wife of the COFEPOSA detenu.
  The Property standing in her name, therefore could be processed under the
  provisions of the SAFEMA. It is true that a purchase from a relative of the        •./



  COFEPOSA detenu would not be covered by Section 2 sub-section (e).
B Accordingly the purchaser TA cannot be covered by Section 2 (20) (e) of
  SAFEMA. However difficulty in this case arises independently of the
  provisions of Section 2 sub-section (2) (e). The property in question at the
  relevant time stood in the name of the purchaser's vendor TS. As she was
  the relative of the COFEPOSA detenu, her husband, the competent authority
  issued a notice under Section 6(1) of SAFEMA in connection with DJ building
C flat, the disputed property herein. After hearing her, the Competent Authority
  passed an order under Section 7 of SAFE MA forfeiting the said property on
  12th October 1997. It is this order which was challenged by her in the
  Bombay High Court. She had undertaken not to alienate the said property
  and still in flagrant breach thereof she sold the property in 1981 to purchaser
  TA. Apart from the fact that the said transaction had exposed purchased
D vendor TS to contempt proceedings and she was punished, the question
  survives whether the purchaser TA could derive any benefit out of the said
  tainted transaction. It is, of course, true that pending the writ petition there
  was already a stay order of the High Court of Bombay by which the order
  of forfeiture of the said property had remained stayed. But is was not an
E absolute order. It was conditional on the purchaser's vendor TS, the writ
   petitioner, not transferring or alienating the said property pending the
   proceedings. The said injunction of the High Court reflected by the
   undertaking of TS made the said property inalienable pending the writ
   proceedings before the High Court. Under these circumstances, even though
   Section 52 of the Transfer of Property Act, strictly speaking, may not apply
F as the Iis was not registered in Bombay, the prohibition against alienation
   of this property, by way of undertaking of purchaser's own predecessor-in-
   title before the High Court had its full sway and operation. Therefore, if
   ultimately the writ petition was dismissed the transfer effected by the writ
   petitioner in breach of the prohibition and the undertaking would not give
G any benefit to the purchaser. It would be too much to contend that he was a
   bonafide purchaser for value without notice. The High Court in the impugned
   judgment has noted that said plea does not appear to be probable. The
   ultimate finding of the High Court in this connection cannot be faulted on
   the touchstone ofprobabilities.1256-G-H; 257-A-l-ll

H

                                                                                     !
           2. The COFEPOSA detenu was a smuggler. When the purchaser
     AAMENABAI v. COMPETENT AUTHORITY UNDER SAFEMA 249

purchased the said flat standing in the name of the wife of the said smuggler,    A
in usual course of conduct the said purchaser must have been put on enquiry
as to how COFEPOSA detenu's wife TS became the owner of the property
and what had happened to this property in the proceedings under SAFEMA
and whether the title of the said flat was clear or not. No such enquiry seems
to have been made by him at the relevant time when he entered into the said       B
transaction pending the writ petition in the Bombay High Court. Thus on
broad possibilities of the case it must be held that the purchaser willingly
and with open eyes played with fire and purchased litigation and it is too tall
a claim on his part to submit that he was a bona fide purchaser for value
without notice. Such stand does not bear scrutiny on the touchstone of
probabilities. 1258-A-Ci                                                          C
      3. Once the writ petition filed by TS challenging forfeiture order of
12th October 1977 got dismissed by the Bombay High Court and once that
order became final the original order of forfeiture of this property dated 12th
October 1977 operated in full swing and the result was that as per Section
7 sub-section (3) of SAFE MA the said property stood forfeited to the Central     D
Government free from all encumbrances. Therefore, it mµst be held that by
12th October 1977 the property in dispute had ceased to belong to purchaser's
vendor TS and had vesttd in Central Government. Consequently when she
purported to sell this property on 30th .July 1981 to the purchaser TA she
can be said to have sold property which had already ceased to belong to her       E
and she could not pass any valid title in favour of TA in connection with the
said property which no longer belonged to her since 1977. It is no doubt true
that on the express language o( the Section 11 transfer of any property
pending the proceedings under Section 6 or 10 of the said Act and prior to
the order of forfeiture shall be treated as null and void. The purchaser's
transaction is after the order of forfeiture of the said property. Still the      F
consequence of the said transaction being null and void could not be avoided
by the purchaser on the plea that his transaction was subsequent to the
original order of forfeiture. The transaction of transfer in favour of TA
would be said to have been effected after the notice under Section 6, issued
to TS and before the order of forfeiture ultimately got confirmed by the High     G
Court and this Court and which had back effect of confirming the same from
1977. It must, therefore, be held that the transaction of purchase by the
appellants predecessor TA was also hit by Section II of SAFEMA.
Consequently in t 981 when the purchaser purchased this property from TS
she had no interest in the said flat which she could convey to the appellants
predecessor. In substance it amounted to selling of Central Government's          H
                                                                                       ,_




    250                      SUPREME COURT REPORTS [1997] SUPP_ 5 S.C.R.

A  property by a total stranger in favour of the purchaser. No title, therefore,
 - in the said property passed to the appellants predecessor. Appellants
   predecessor, therefore had no legal defence against the claim of the authorities
   in calling upon the appellants as heirs of the original purchaser to vacate
   and hand over possession of the property to the Central Government as full
B owner thereof. 1258-C-E; 259-B; D-FI
           4. It is easy to visualise that tainted money earned by smuggler who
    is convicted under COFEPOSA may result in purchasing number of
    properties. It cannot, therefore, be said that these properties when confiscated
    after following the procedure of SAFEMA would amount to multiple forfeiture.
C   It is not as if DJ building flat is being forfeited twice. Consequently the
    forfeiture of DJ flat on 12th October 1977 by the Competent Authority must
    be treated to be quite an independent transaction as compared to the latter
    order of forfeiture of S flat on 18th June 1987. The latter order of forfeiture
    of entirely different immovable property cannot retrospectively invalidate the
    earlier order of forfeiture of 12th October 1977 pertaining to DJ flat. At the
D   time when the earlier order of 12th October 1977 was passed the said
    <lisputed property clearly reflected the utilisation of tainted money of Rs.
    88,562. If subsequent dealing with the said property is found to be
     unauthorised and inoperative in law and if such subsequent transaction qua
    the said property remains a still-born one no life can be infused in it on
E    account of the subsequent forfeiture of some other property of the original
     vendor when a subsequent forfeiture has stood on its own and has become
     final. 1259-G; 260-A; D-FI

          5. The appellant's predecessor purchaser TA played with fire. He
    purchased the property despite there being an injunction and an undertaking
F   by his vendor TS in the pending proceedings in the writ petition. His
    transaction therefore, was liable to be voided in the light of the final result
    of the writ petition which confirmed the order of forfeiture of this very
    property purchased by him. Even that apart, as a result of the dismissal of
    the writ petition ofTA's vendor by the Bombay High Court the purchased
G   property stood forfeited to the Government prior to the date of the purchase
    by the purchaser as the order of forfeiture operated from 1977 once the stay
    granted by the Bombay High Court stood lifted on the final dismissal of the
    writ petition of the writ petitioner TS. Therefore, the transaction of purchase
    by TA was an exercise in futility. Such a still-born transaction cannot be
    resurrected by passing an order of fine in lieu of forfeiture. The forfeiter
H   of this very property had already taken place on the 12th October 1977 and
 i\AMENAllAI 1· COMl'ET!lNT AlJTllORITY UNDllR SAl'llMA l.S.ll MA.IMUl)AR. J.] 251

which 01·dcr ultlmotcly got connrmcd by the Bombay lilgh Court. Therefore, A
It 15 too lute In the day for the oppclhrnts to contend that the clock should
be put back nnd the 12th October 1977 order mny be converted Into fine in
lieu of forfeiture especially when TS ngninst whom the order hos operated
hns finally lost In her chollcngc to the snid order. 1261-F-H; 262-AI
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11836of1995.                    B
      From the Judg111e\1t and Order dated 29.6.95 of the Bombay High Court
in W.P. No. 2841 of 1982.

      R.F. Nari111an and Mrs. M. Karanjawala for the Appellants.

    K.N. Shukla. T.C. Shanna, S. Rajappa, S.N. Tcrdol. A.P. Mayec and A.M.           c
Khanwi lkar for Respondents.

     The following Judgment of the Court was delivered :

      S.B. MAJMUDAR, J. This appeal by special leave seeks to challenge
judgment and order rendered by a Division Bench of the Bombay High Court D
in Writ petition No. 2841 of 1982. By the impugned judgment the order of
respondent competent authority forfeiting the property in question under the
smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act,
 1976 (hereinafter referred to as 'SAFEMA ') came to be confirmed.

      In order to appreciate the grievance of the appellants it is necessary to      E
note a few introductory facts.

lntroducto1y Facts

       One Talab Haji Hussein Sumbhanis was detained under section 3 sub-
section (I) of the conservation of Foreign Exchange and prevention of F
Smuggling Activities Act, 1974 (hereinafter referred to as 'CO FE POSA') by
the Government of Gujarat by order dated 2nd April 1976. Before the said
order of detention, the second wife of said Ta lab Haji Hussein, Tahira Sultana,
purchased a flat being flat No. 25 in Dharam Jyoti Premises Co-operative
Housing Society, Bandra Bombay in February 1975 for a consideration of Rs. G
88,562/-. On 15th February 1977 the competent authority issued a notice
under Section 6(!) of SAFEMA to the said Tahira Sultana calling upon her
to show cause why the said flat purchased in her name should not be
forfeited as illegally acquired property of the COFEPOSA detenu, her husband,
the aforesaid Talab Haji Hussein. After hearing said Tahira Sultana the
Competent Authority passed an order under Section 7 of the SAFEMA on H
    252                     SUPREME COURT REPORTS (1997] SUPP. 5 S.C.R.

A 12th October 1977 holding that the said prope1ty was illegally acquired property
  and therefore it stood forfeited to the Central Government free from all
  encumbrances as laid down under Section 7(3) of SAFEMA. Said Tahira
  Sultana challenged the aforesaid order of forfeiture by filing a Misc. Petition
  No. 1680 of 1977 on the Original side of the Bombay High Court. In the writ
B petition she challenged both the order of detention of her husband as well
  as the order of forfeiture of the said property standing in her name. The said
  writ petition was moved in December 1977. The High Court of Bombay
  admitted the said writ petition ofTahira Sultana on 3rd March 1978 and stayed
  the order of forfeiture of the said property on an undertaking by her that she
  would not dispose of or alienate or encumber or part with the right, title and
C interest in the said flat pending the final disposal of the writ petition.
           Simultaneously she moved the Appellate Tribunal under the SAFEMA
    challenging the order of forfeiture of her property, The appellate Authority
    dismissed her appeal anq confirmed the order of forfeiture by its order dated
    25th July 1978. By amendment to her writ petition she also challenged the
D   latter order. In the meantime the writ petition filed by her before the Bombay
    High Court remained pending. On 20th November 1980 COFEPOSA detenu
    Talab Haji Hussein expired.

           Now comes the crucial date when the present appellants' predecessor
E   came in picture. By a Sale Deed dated 30th July 1981 Tahira sultana sold the
    said flat to Tayab Ali, predecessor-in-interest of the present appellants for a
    consideration of Rs. 3,60,000. We will refer to Tayab Ali as the purchaser of
    this Flat. It is obvious that the said sale was in breach of the undertaking
    given by the vendor Tahira Sultana to the Bombay High Court and it was
    pending the disposal of the writ petition challenging the order forfeiting the
F   very same property as passed by the competent authority years back on 12th
    October, 1977 and as confirmed by the Appellate Tribunal on 25th July 1978.
    It is the case of the purchaser that he had purchased the said flat in good
    faith for valuable consideration since he was not aware of the order of the
    Competent Authority or his vendor Tahira Sultana's undertaking to the High
G   Court said Tahira Sultana out of the consideration money received by her
    from the purchaser in the aforesaid transaction amounting to Rs. 3, 60,000 is
    said to have purchased a flat at Shivasthan Co-operative Society, Bandra,
    Bombay, for Rs. 1,86,000. The case of the appellants is that towards the said
    purchase consideration Rs. I, 60,000 were utilised by the said Tahira Sultana
    from the sale proceeds which she received from the purchaser of Dharam Jyoti
H    flat, namely, the appellants' predecessor-in-interest. That on 5th November
 AAMENABAI v COMPETENT AUTHORITY UNDER SAFEMA [S.B. MAJMUDAR, J]             253

 1982, according to the appellants, the purchaser for the first time got infonnation A
from the Society in whose building the flat was situated, about the order of
forfeiture of the said flat and the undertaking given by the purchaser's vendor
Tahira Sultana before the Bombay High Court. That resulted in a writ petition
No. 2841 of 1982 filed by the purchaser Tayab Ali on 13th December 1982 in
the Bombay High Court. The said writ petition was admitted on 16th December B
1982 by the High Court and interim relief was granted to the purchaser. When
it was brought to the notice of the Bombay High Court that purchaser's
vendor Tahira Sultana had committed breach of the undertaking given by her
in her pending writ petition against the forfeiture order of the flat in Dharam
Jyoti Building the High Court initiated contempt of court proceedings against
the said Tahira Sultana and by an order dated 21st February 1983 held her C
guilty of contempt and imposed punishment of simple imprisonment for four
weeks and a fine of Rs. 2,000 on said Tahira Sultana. She underwent the said
sentence. Tahira Sultana on her part filed writ petition No. I00 of 1984 on the
Criminal side of Bombay High Court in 1984 again challenging the detention
order and order of forfeiture of prope1ty, while the appellants' predecessor-
in-interest Tayab Ali che purchaser of the flat in question, moved the High D
Court of Gujarat on 12th August 1985 challenging the detention order of the
COFEPOSA detenu Talab Haji Hussein which gave rise to the proceedings
under SAFEMA as well as consequential order under SAFEMA since the
order of detention was issued by the State of Gujarat. The Division Bench
of the High Court of Gujarat by its judgment dated 17th July 1986 held that E
the order of forfeiture of property was passed by the Competent Authority
without hearing the purchaser of the prope1ty and hence the proceedings
were required to the decided afresh after giving an opportunity of hearing to
the said purchaser. Pending the remanded proceedings the purchaser Tayab
Ali expired on 24th December 1.986 leaving present appellants as his heirs and
legal representatives. Pursuant to the order of the High Court of Gujarat, the F
Competent Authority functioning under SAEFAM by order dated 17th March
1987 after hearing the purchaser's heirs, namely, the present appellants re-
confirmed the order of forfeiture of the flat purchased by their predecessor,
under SAFEMA. Independent of these proceedings the Competent Authority
also passed an order on 18th June 1987 under Section 7(2) of SA FEM A, after G
hearing Tahira Sultan, forfeiting the second flat purchased by her being Flat
No. I Ground Floor. Shivasthan Co-operative Housing Society Ltd., Bandra,
Bombay. It was held by the competent authority in the said proceedings the
Flat No. I. Ground Floor, Shivasthan Co-operative Housing Society Ltd., had
been acquired by said Tahira Sultana partly out of the sale proceeds of Flat
No. 25, Dharam Jyoti Building, Pali Hill, Bandra, Bombay, which was he:d to H
    254                      SlJl'REME COURT RIWORTS [1997] SUP!', S S.C.R.

A be illcgnlly acquired ond wos forfeited to the Central Government by nn order
   passed on 12th October 1977. As a consequence of this order of 18th June
   1987 it was directed by the competent authority under Section 19( I) of SAFEMA
   that said Flat No. 1, Shivasthnn Society, wns illegally acquired by Tahira
   Sultnna nnd dirllcted her to deliver possession thereof to the Central
B .Government authol'ities. Tahira Sultana filed appeal against the said order in
   connection with forfeiture of Flat No. I, Shivasthan Society, which was
   dismissed by the Appellant Tribunal on 2nd November 1987. Tahira Sultana
   unsuccessfully challenged the said order in proceedings for setting aside the
   ex pa11e order before the Appellant Tribunal. The said application was dismissed
   by the Tribunal. She filed writ petition No. 1527 of 1995 before the Bombay
C High Court challenging the order of Appellate Tribunal passed on 18th April
   1995 dismissing her application for sctting!aside the ex parte order of the
   Appellate Tribunal. Her writ l!etition was dismissed by the Bombay High
   Court on 21st August 1995, The authorities took possession of Flat No. l,
   Shivasthan society, from Tahira Sultana on 13th September 1995. She filed
   Special Leave petition before this Court challenging the order of the Bombay
D High Court pertaining to Flat No. I, Shivasthan Society, Bombay. It was
   dismissed by this Court on 24th November 1995. Therefore, the forfeiture of
   flat No. I, Shivasthan Society, became final upto this court. The appellants,
   who were brought on record as heirs of purchaser in the latter's Writ Petition
   No. 2841 of 1982, which challenged the forfeiture of the said Flat No. 25,
E Dharam Jyoti Building, and the direction to them to hand over possession
   ultimately came to be dismissed by a Division Bench of the High Court of
   Bombay by an order dated 29th June 1995 and that is how the appellants are
   before us in this appeal. We may also note at this stage that Tahira Sultana's
   Misc. Petition No. 1680 of 1977 was withdrawn by her before the Bombay
    High Court with a view to challenge the appellate order confirming the order
F of forfeiture: She accordingly filed subsequent writ Petition No. 1527 of 1995
   which was rejected by the Bombay High Court on 21st August 1995. The said
    decision was challenged before this Court in S.L.P. (c) NO. 25358 of 1995
    which was dismissed by this Court on 24th November 1995.

G        lt is in the background of the aforesaid facts that the main contentions
    canvassed in support of this appeal have to be examined.

        Learned Senior counsel, Shri R.F. Nariman, for the appellants firstly
  contended that SAFEMA itself did not apply to the purchase made by the
  purchaser as he was not one of the persons mentioned in Section 2(2) of             (
H SAFEMA especially Section 2(2)(e) thereof and, therefore. entire proceedings


                                                                                      r
 AAMl\NMAI "· COMP~TllNT AUTHORITY UNO~R SAPP.MA f~.il MA.IMUOAR. J.] 255

against him were null nnd void. It wos alternatively contended that in any A
 view of the nrnttcr the original purchaser Toyab AIi wns a bona fide purchaser
for value without notice and he was, therefore. not responsible for the acts
of commission on the part of his vendor Tahira Sultana. That even if she
might have committed breach of undertaking given to the High Court of
 Bombay for which she was adequately punished the purchaser cannot be
visited with any adverse consequences thereof. It was next contended that B
Section l 1 of SA FEM A would not apply to the facts of the present case as
the appellants predecessor-in-interest had not purchased the Aat in Dharam
Jyoti Building between two terminal dates. namely, 15th February, 1977 when
 notice under Section 6( I) of SAFE MA was issued to Tahira Sultana and 12th
October 1977 when the order of the Competent Authority under Section 7 of C
 SAFEMA was passed. On the other hand he had purchased the property on
30th July, 1981. Therefore on the express language of Section 11 of the
 SAFEMA the said transaction could not be said to be null and void. It was
next contended that even proceeding on the basis that Dharam Jyoti Building
 flat was originally purchased ·by Tahira Sultana for a consideration of Rs.
88,562 by utilising the tainted money of her husband, Ta lab Haji Hussein, who D
was a COFEPOSA detenu, once she sold the said property of th~ purchaser
by taking Rs. 360,000 from him and once out of the said consideration she
 spent Rs. 1,60,000 for purchasing Shivasthan Society flat, the tainted money
which were converted into Aat in Dharam Jyoti were again re-conve1ted into
case and were utilised for purchasing another immovable property. Therefore. E
the tainted money could be traced out to the said property in Shivasthan
 Society and could be said to have ultimately resulted in purchase ofShivasthan
 Society property and which now is likely to fetch Rs. 65 lacs as seen from
the auction notice dated 24th .July, 1996. Hence the purchaser's transaction
may not be treated to be a void transaction as it would amount to double
forfeiture of the original smuggler's prope1ty. It was lastly contended that in F
any case looking to the equities of the case and as the purchaser was a bona
fide purchaser for value without notice he may not be visited with the evil
consequences of the transaction wherein only the vendor Tahira Sultana was
at fault and consequently on a analogy of Section 9 of the SAFEMA this
Court may impose appro~riate fine in lieu of forfeiture.                        G
      Learned Senior Counsel for the respondents, Shri K.N. Shukla, on the
hand, supported the decision of the High Court.
     In view of the aforesaid contentions of Learned Senior Counsel Shri
Nariman, the following points arise for determination :
      I.   Whether the provisions of SAFEMA apply to the sale transaction     H
    256                      SUPREME COURT REPORTS [1997] SUPP. 5 S.C.R.

A              entered into between the widow of Ta lab Haji Hussein, COFEPOSA
               detenu and the purchaser, predecessor-in-interest of the appellants.

          2    Whether the purchaser was bona fide purchaser for value without
               notice.

B         3.   Whether the forfeiture of purchaser's Flat in Dharam Jyoti Building
               by the authorities can be treated as double forfeiture on the basis
               of the same tainted money of the COFEPOSA convict only because
               the subsequent property purchased by the purchaser's vendor in
               Shivasthan Co-operative Society has also been forfeited of the
               Government under SAFEMA.
c
          4.   Whether the transaction in favour of the purchaser could be cleared
               on principles analogous to Section 9 of the SAFEMA by imposing
               fine in lieu of forfeiture on the peculiar facts of this case.

    We shall deal with these points for consideration seriatim.
D
    Points Nos. I and 2

          It is true that the SAFEMA has been enacted to provide for the forfeiture
    of illegally acquired prope1ties of smugglers and foreign exchange manipulators
E and for matters connected therewith or incidental thereto. It is also true that
  Section 2 sub-section (I) of the SAFEMA lays down that the provisions of
  this Act shall apply only to pei'sons specified in sub-section (2). When we
  turn to sub-section (2) of section 2 we find list of persons mentioned therein
  at clause (a) to (e). In Section 2 sub-section 2(a) and (b) are mentioned
  persons who are themselves detenues under the Act. Clause (c) refers to
F every person who is a relative of a person referred to in clause (a) or Clause
  (b); Clause (d) refers to every associate of a person referred to in Clause (a)
  or clause (b); while clause (e) refers to any holder of any property which was
  at any time previously held by a person referred to in clause (a) or clause (b)'    11
  unless the present holder or, as the case may be, any one who held such
G property after such person and before the present holder, is or was a transferee
   in good faith for adequate consideration. It is obvious that purchaser's
  vendor Tahira Sultana was covered by Section 2 sub-section (2)(c) as she was
  the wife of the COFEPOSA d~tenu Talab Haji Hussein. Property standing in
                                                                                      (
   her name, therefore, could be processed under the provisions of the SAFEMA.
   It is true that a purchase from a relative of the COFEPOSA detenu would not        I
H be covered by Section 2 sub-section (e). Accordingly the purchaser Tayab


                                                                                      J
 AAMENABAI v. COMPETENT AUTHORITY UNDER SAFEMA [S.B. MA.IMUDAR, J.] 257

 Ali cannot be covered by Section 2(2)(e) of SAFEMA. However difficulty in            A
 his case arises independently of the provisions of Section 2 sub-section (2)(e)
as we will presently show. The property in question at the relevant time stood
 in the name of purchaser's vendor Tahira Sultana. As she was the relative of
the COFEPOSA detenu, her husband, the competent authority issued a notice
to her under Section 6( 1) of SAFEMA in connection with Dharam Jyoti
Building flat, the disputed property herein. After hearing her, the competent         B
authority passed an order under Section 7 of SAFEMA forfeiting the said
 property on 12th October, 1977. It is this order which was challenged by her
 in the Bo~bay High Court. She had undertaken not to alienate the said
 property and still in flagrant breach thereof she sold the property in 1981 to
 purchaser Tayab Ali. Apart from the fact that the said transaction had exposed       C
purchaser's vendor Tahira Sultana to contempt proceedings and she was
 punished, the question survives whether the purchaser Tayab Ali could
derive any benefit out of the said tainted transaction. It is, of course, true that
 pending the writ petition there was already a stay order of the High Court of
 Bombay by which the order of forfeiture of the said property had remained
 stayed. But it was not an absolute order. It was conditional on the purchaser's      D
vendor Tahira Sultana the writ petitioner, not transferring or alienating the
said property pending the proceedings. The said injunction of the High Court
reflected by undertaking of Tahira Sultana made the said property inalienable
 pending the writ petition proceedings moved by purchaser's vendor before
the High Court. Under these circumstances even though Section 52 of the               E
Transfer of Property Act, strictly speaking, may not apply as the lis was not
registered in Bombay as informed to us, the prohibition against alienation of
this property, by way of undertaking of purchaser's own predecessor-in-title
before the High Court had its full sway and operation. Therefore, if ultimately
the writ petition was dismissed the transfer affected by the writ petitioner in
breach of the prohibition and the undertaking would not give any benefit to           F
the purchaser. It would be too much for him to contend that he was a bona
fide purchaser for value without notice, The High Court in the impugned
judgment has noted that the said plea does not appear to be probable. It is
true, as pointed out by Learned Senior Counsel Shri Nariman for the appellants,
that for coming to this finding the High Court had wrongly assumed that the           G
purchaser Tayab Ali had immediately filed a writ petition after purchasing the
property as he had filed his writ petition only on [3th December, 1982 when
he had received information on 5th November, 1982 that the flat in question
was already forfeited by the Government. That may be so. However, the
ultimate finding of the High Court in this connection cannot be faulted on the
touchstone of probabilities. Reason is obvious. The COFEPOSA detenu Talab             H
    258
                                                                                       -
                             SUPREME COURT REPORTS [1997] SLJPP. 5 S.C.R.
A Hllji Hussein was n smuggler. When the purchnser purchosed the said llnt
  standing in the nnn1e of the wife of the said smuggler, in usual course of
  conduct the said purchaser must hnve been put 011 enquiry ns to how
  COFEPOSA dctenu's wife Tahirn Sultana became the owner of this property
  and what had happened to this property in the proceedings under SAFEMA
B and whether title of the said flat was clear m· not. No such enquiry seems to
  have been made and it is not the case of the purchaser that any such enquiry
  was made by hi111 at the relevant ti111e when he entered into the said transaction
  pending the writ petition in the Bo111bay High Court. Thus on broad
  probabilities of the case it must be held that purchaser willingly and with open
  eyes played with fire and purchased litigation and it is too tall a claim on his
C part to submit that he was a bona fide purchaser for value without notice.
  Such stand does not bear scrutiny on the touchstone of probabilities. But
  even that apart once the writ petition filed by Tahira Sultana challenging
  forfeiture order of 12th October, 1977 got dismissed by the Bombay High
  Court and once that order became final the original order of forfeiture of this
D property dated 12th October 1977 operated in full swing and the result was
  that as per Section 7 sub-section (3) of SAFEMA the said property stood
  forfeited to the Central Government free from all encumbrances. Therefore. it
  must be held that by 12th October. 1977 the property in dispute had ceased
  to belong to purchaser's vendor Tahira Sultana and had vested in the Central
  Government. Consequently when she purported to sell this property on 30th
E July 1981 to the purchaser Tayab Ali she can be said to have sold the
  property which had already ceased to belong to her and she could not pass
  any valid title in favour of Tayab Ali in connection with the said property
  which no longer belonged to her since 1977. lt is. of course, true that when
  she sold the said property the order of forfeiture had been stayed by the High
  Court but, as seen earlier. it was a limited stay subject to the condition of
F inalienability of the property by Tahira Sultana and breach of such undertaking.
  which was a substitute for an injunction, would make that transaction voidable
  and its efficacy had to be seen in the light of the final result of the writ
   petition and once the final result was against Tahira Sultana, whatever she
  did in the meantime became an exercise in futility. In this connection we may
G usefully refer to Section 11 of SAFEMA which reads as under :
             "11. Certain transfers to be null and void - Where after the issue of
             a notice under section 6 or under section I0, any property referred to
             in the said notice is transferred by any mode whatsoever such transfer
             shall, for the purposes of the proceedings under this Act. be ignored     (
H            and if such property is subsequently forfeited to the Central

                                                                                       I
 AAMTlNA!lAI '" COMPlffllNT AUTHORITY IJND!lR SAP!lMA (S,ll MAJMUDAlt J J 259

        Government under section 7, then, the transfer of such property shall       A
        be deemed to be null nnd void."

 It is no doubt true that on the express language of the said Section transfer
 of any property pending the proceedings under section 6 or 10 of said Act
 and prior to the order of forfeiture shall be treated to be null and void. The
 purchaser's transaction is after the order of forfeiture of the said property. Still B
the consequence of the said transaction being null and void could not be
avoided by the purchaser on the plea that this transaction was subsequent
to the original order of forfeiture. The original order of forfeiture was stayed
at the time of the purchases. It got confirmed by the Bombay High Court
 ultimately when the Misc, Petition No. 1680of1977 inoved by Tahira Sultana C
was disposed of and the subsequent writ Petition No. 1527 of 1995 was
dismissed by the High Court and the S.L.P. filed by her in this Court was also
dismissed. We may also note that as the Misc, Petition No. 1680 of 1977 was
withdrawn on 19th June 1995 and ultimately the forfeiture order came to be
confirmed in the subsequent writ petition No. 1527 of 1995 on 21st August,
 1995, the transaction of transfer in favour ofTayab Ali would be said of have D
been effected after the notice under Section 6, issued of Tahira Sultana, and
before the order of forfeiture ultimately got confirmed by the High Court and
by this Court and which had back effect of confirming the same from 1977.
lt must, therefore, be held that the transaction of purchase by the appellants
 predecessor Tayab Ali was hit by Section 11 of SAFEMA, Consequently in
 1981 when the purchaser purchased this property from Tahira Sultana she had E
no interest in the said flat which she could convey to the appellants
predecessor. In substance it amounted to selling of Central Government's
property by a total stranger in favour of the purchaser, No title, therefore, in
the said property passed to the appellants predecessor. Appellants predecessor,
therefore, had no legal defence against the claim of the authorities in calling F
upon the appellants as heirs of the original purchaser to vacate and hand over
the possession of the property to the Central Government as full owner
thereof. Both the points for determination, therefore, are answered against the
appellants and in favour of the respondents.
Point No. 3                                                                         G
      So far as this point is concerned we fail to appreciate how it is a case
of double forfeiture of the property purchased from the very same tainted
money. It is easy to visualise that tainted money earned by smuggler who is
convicted under COFEPOSA may result in purchasing number of properties.
It cannot, therefore, be said that these properties when confiscated after H
    260                      SUPREME COURT REPORTS [1997] SUPP. 5 S.C.R.

A following due procedure of SAFEMA would amount to multiple for feiture.
   So far as the facts of the present case are concerned it has to be kept in view
  ·that for Rs. 88,562 the original vendor Tahira Sultana purchased the disputed
    Flat in February 1975. She sold this very flat to the purchaser for Rs. 3,60,000.
   Therefore, money earned out of the said consideration Rs. 88,562 remained
B tainted money. Utilising a part of this money she purchased Shivasthan
   Society flat for Rs. 1,86,000 out of which it is said that Rs. 1,60,000 were
   utilised from the sale proceeds of Dharam Jyoti Building flat. To this original
   trained money of Rs. 88,562 therefore, she must have added some more for
   purchasing Shivasthan Society flat. Even assuming that for the purchase of
   the said flat she utilised R~. 1,60,000 out of Rs. 3,60,000 obtained by her from
C the purchaser as consideration for the sale of the Dharam Jyoti Building flat
   to him it cannot be said that the original forfeiture of Dharam Jyoti Building
   flat on 12th October, 1977 was in any way affected by the subsequent
    forfeiture of another immovable property purchased by the widow of original
   COFEPOSA smuggler when she purchased the second, flat. The said
    transaction was quite independent of the earlier transaction which had already
D resulted in forfeiture of the disputed property. It is not as if that Dharam Jyoti
    Building flat is being forfeited twice. Consequently the forfeiture of the
    Dharam Jyoti flat on 12th October, 1977 by the Competent Authority must be
    treated to be quite an independent transaction as compared to the latter order
    of forfeiture ofShivasthan Flat on 18th June 1987. The latter orderofforfeiture
E of entirely different immovable property cannot retrospectively invalidate the
    early order of forfeiture of 12th October, 1977 pertaining to Dharam Jyoti
    Building flat. At the time when the earlier order of 12th October, 1977 was
    passed the said disputed property clearly reflected the utilisation of tainted
    money of Rs. 88,562. If subsequent dealing with the said property is found
    to be unauthorised and inoperative in law and if such subsequent transaction
F qua the said property remains a still-born one no life can be infused in it on
     account of the subsequent forfeiture of some other property of the original
     vendor when a subsequent forfeiture has stood on its own and has become
     final. The third point for detennination, therefore, also is held against the
     appellants and in favour of the respondents.

G Point No.4
          So far as this contention is concerned Section 9 of SAFEMA on its
     express language cannot apply. It lays down as under :
             "9. Fine in lieu of forfeiture.-(!) Where the competent authority makes
H            a declaration that any property stands forfeited to the Central
 AAMENABAI v COMPETENT AUTHORITY UNDER SAFEMA lS.B. MA.IMUDAR, J.] 26)

       Government under section 7 and it is a case where the source of only A
       a part, being less than one-half, of the income, earnings or assets with
       which such property was acquired has not been proved to the
       satisfaction of the competent authority, it shall make an order giving
       an option to the person affected to pay, in lieu of forfeiture, a fine
       equal to one and one-fifth times the value of such part.
                                                                                     B
       Explanation : For the purposes of this sub-section, the value of any
       part of income, earnings or assets, with which any property has been
       acquired, shall be-
        (a)   in the case of any part of income or earnings, the amounts of
              such part of income or earnings;                                       c
        (b)   in the case of any part of assets, the proportionate part of the
              full value of the consideration for the acquisition of such assets."

This is not a case in which the purchase of Flat No. 25, Dharam Jyoti Building,
Sandra, Bombay, by Tahira Sultana in February 1975 could be said to be a
result of only a part utilisation of the tainted money and any part of the said D
sale consideration of Rs. 88,562 could be said to have come out of a source
which was not tainted. Such is not a case of anyone. Shri Nariman, learned
senior counsel for the appellants, also therefore, rightly contended that he
only draws an analogy from Section 9 and submits in the peculiar facts of this
case that the appellants may not be disturbed after so many years especially E
when from the other forfeited property the Central Government is likely to get
Rs .65 lacs as seen from the auction notice and that appropriate fine may be
imposed on the appellants in lieu of forfeiture. It is difficult to agree. The
appellants predecessor, purchaser Tayab Ali played with fire. He purchased
the property despite there being an injunction and an undertaking by his
vendor Tahira Sultana in the pending proceedings in the writ petition. His F
transaction, therefore, was liable to be voided in the light of the final resu It
of the writ petition which confirmed the order of forfeiture of this very
property purchased by him. Even that apart, as a result of the dismissal of
the writ petition of Tayab Ali's vendor by the Bombay High Court the purchased
property stood forfeited to the Government prior to the date of purchase by G
the purchaser as the order of forfeiture, as seen above, operated from 1977
once the stay granted by the Bombay High Court stood lifted on the final
dismissal of the writ petition of writ petitioner Tahira sultana. Therefore, the
transaction of purchase· by Tayab Ali was an exercise in futility. Such a still-
born transaction cannot be resurrected by passing an order of fine in lieu of
forfeiture. The forfeiture of this very property had already taken place on 12th H
    262                      SUPREME COURT REPORTS [1997] SUPP, 5 S.C.R.
A October, 1977 nnd which order got ultimntely continned by the Bombay High
  Court. Therefore, it is too late in the day for the nppcllants to contend that·
  the clock should be put back and the 12th October, 1977 order may be
  converted into tine in lieu of forfeiture especially when Tahira Sultaria against ·
  whom that order has operated, has finally lost in her challenge to the said
B order, The fourth point for determination, therefore, has also to be rejected
  and stands decided against the appellants.

          As a result of the aforesaid findings of ours on all these points the
    inevitable result is that the appeal fails and is dismissed. Interim order of stay
    granted pending the appeal will stand vacated. On the facts and circumstances
C   of the case there will be no order as to costs.

        After pronouncement of the judgment some reasonable time to vacate
  the premises was asked for by the learned counsel for the appellants. In the
  facts and circumstances of the case, we deem it fit to grant time upto 31st
  May, 1998 to vacate the premises and to hand over the possession to the
D authorities. The said time shall be granted on appellants' filing a proper
  undertaking within four weeks from today. A copy of the undertaking shall
  be furnished to the respondents. If any of the conditions of the undertaking
  is committed breach of or if the undertaking is not so filed, the grant of time
  shall not be. available to the appellants.

E !.M.A.                                                          Appeal dismissed.