Holding

The rights of a bona‑fide tenant are not automatically terminated by forfeiture of property under SAFEMA; forfeiture extinguishes only the rights of the person to whom the Act applies, and the tenant’s claim must be determined by the competent authority.

Summary

The appellants, bona‑fide tenants of a property owned by Krishna Budha Gawde, challenged the forfeiture of that property under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA). Gawde had been detained under COFEPOSA and his property was declared “illegally acquired” and forfeited. The High Court held that the tenancy did not survive the forfeiture. The Supreme Court examined whether a tenancy is itself “illegally acquired property” and whether forfeiture automatically extinguishes a bona‑fide tenant’s rights. It held that forfeiture under SAFEMA extinguishes only the rights of the person to whom the Act applies (owner, relative or associate) and does not automatically terminate the rights of a bona‑fide tenant; the tenant’s claim must be decided by the competent authority. Consequently, the appeal was allowed, the High Court order set aside and the matter remitted to the competent authority for appropriate orders.

Issues considered

Whether a tenancy of a property whose owner is subject to forfeiture under SAFEMA is itself “illegally acquired property” within s.3(1)(c) of the Act.
Whether the rights of a bona‑fide tenant are automatically terminated by the forfeiture and vesting of the property in the Central Government.

Legislation cited

Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974s. 3(1)
Income Tax Act, 1961s. 269-UE
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976s. 19, s. 2(b), s. 3(1)(c), s. 3(b), s. 6, s. 7

Subjects

SAFEMAforfeiture of propertybona fide tenantillegal acquisitionCOFEPOSAtenancy rightscompetent authorityproperty lawcriminal law

Judgment

[2017] 7 S.C.R. 617

DOMNIC ALEX FERNANDES (D) THROUGH LRS. & ORS. A
v.
UNION OF INDIA AND ORS.
(Criminal Appeal No. 34 of2009)
AUGUST 17,2017 B

[ADARSH KUMAR GOEL AND UDAY UMESH LALIT, JJ.)
Smugglers and Foreign Exchange Manipulators (Forfeiture
of Property) Act, 1976 (SAFEMA)-ss. 3(J)(c), 7 and 19-Detention
order against a person - Confirmation of the detention order and C
detenu covered by SAFEMA - Notice of forfeiture of the property
of detenu - Order of forfeiture, if would operate against the tenants
of the said property - Held: The property would be treated as
"illegally acquired property" within the meaning of s. 3(J)(c) and
can be subjected to forfeiture under the provisions thereof -
However, rights of a bona fide tenant would not stand automatically D
terminated by forfeiture ofproperty and vesting thereof in the Central
Government - Such forfeiture would extinguish the rights of the
person to whom the Act applies, the owner of the property or his
relative or associate having nexus with him in relation to the said
property.
E
Allowing the appeal, the Court
HELD: In the instant 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 Smugglers
and Foreign Exchange Manipulators (Forfeiture of Property) Act, F
1976 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 law laid down by this Court, the rights of a bona fide G
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 instant case, the owner of the property in
question or his relative or associate having nexus with him in H
617
618 SUPREME COURT REPORTS [2017] 7 S,C.R.

A relation to the said property. However, the question 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, would be determined independently by the
competent authority as defined in section 3(B) of the Act. The
order of the High Court is set aside and the matter is remitted to
B
the competent authority for passing an appropriate order in
accordance with Jaw. £Paras 20, 21) [629-D-G; 630-A)
C.B. Gautam v. Union of India and Ors. (1993) 1 SCC
78 : (1992) 3 Suppl. SCR 12; Attorney General for
India and Ors. v. Amratlal Prajivandas and Ors. (1994)
c 5 SCC 54: (1994) 1 Suppl. SCR 1; State of West Bengal
and Ors. v. Vishnunarayan & Associates (P)Ltd. and
Anr.(2002) 4 SCC 134 : [2002) 2 SCR 557; Fatima
Mohd. Amin (Smt.) (Dead) through LRs. v. Union of
India and Am: (2003) 7 SCC 436 ; P.P. Abdulla and
D Am: v. Authority and ors. (2007) 2 SCC 510 : [20061
10 Suppl. SCR 983; Aslam Mohammad Merchant v.
Competent Authority and Ors. (2008) 14 SCC 186 :
(2008) 10 SCR 332; Vishal N. Kalsaria v. Bank of India
and Ors. (2016) 3 SCC 762 : [2016) 1 SCR 419; ·
Narayan Vittappa Kudva versus Union of India and
E Anr. 2002 (2) MhLJ 290 - referred to.
Case Law Reference
[1992) 3 Suppl. SCR 12 referred to Para 9
(19941 1 Suppl. SCR 1 referred to Para9
F [2002 I 2 SCR 557 referred to Para9
(2003) 1 sec 436 referred to Para9
(2006) 10 Suppl. SCR 983 referred to Para 9
[2008) 10 SCR 332 referred to Para9
(2016) 1 SCR 419 referred to Para9
G 2002 (2) MhLJ 290 referred to Para9

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal
No.34 of2009.
From the Judgment and Final Order dated 11.07 .2007 passed by
H
DOMNIC ALEX FERNANDES (D) THROUGH LRS. & ORS. 619
v. UNION OF INDIA AND ORS.

the High Court of Judicature at Bombay in Criminal Writ Petition No. A
1088of1995.
Chander Uday Singh, Sr. Adv., Pratap Venugopal, Ms.Surekha
Raman, Ms.Niharika, Anuj Sarma, Ms. Kanika Kalaiyarasan (for K. J.
John and Co.) Advs. for the Appellants.
Mahling Pandarge, AAG, Rana Mukherjee, Sr. Adv., Ms. Binu B
Tamta, Abbay Kumar, B.V. Balaram Das, Nishant Ramakantrao
Katneshwarkar, Mukesh Kumar Maroria, Advs'. for the Respondents.
The Judgment of the Court was delivered by
ADARSH KUMAR GOEL, J. 1. This appeal has been
preferred against Order dated 11 •h July, 2007 of the High Court of C
· Judicature at Bombay in Criminal Writ Petition No. 1088of1995.
2. The 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(l)(c) of SAFEMA and can be subjected to D
forfeiture under the provisions thereof.
3. Facts giving rise to the issue may be briefly st.tted. Vide order
dated 191h January, 1974 one Krishna Budha Gaw de was detained under
Section 3(1) of the Conservation of Foreign Exchange and Prevention
of Smuggling Activities Act, 1974 (COFEPOSA) by the Government of E
Maharashtra. As his detention was confirmed by the Advisory Board,
he was covered by Section 2(b) of SAFEMA1 as the person to whom
I .

' 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:- F
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 ofa person referred to in clause (a) or clause
(b);
G
(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. H
620 SUPREME COURT REPORTS [2017] 7 S.C.R.

A the said Act applied. Once it was so, the property illegally acquired by

xxx xxx xxx
Explanation 2.-For the purposes of clause (c), "relative'', in relation to a
person, means-
B (i) spouse of the person;
(ii) brother or sister of the person;
(iii) brother or.sister of the spouse of the person;
(iv) any lineal ascendant or descendant of the person;
(v) any lineal ascendant or descendant of the spouse of the person;
(vi) spouse of a person referred to in clause (ii), clause (iii) clause (iv) or clause
(v);
C (vii) any lineal descendant ofa person referred to in Clause (ii) or clause (iii).

Explanation 3.-For the purposes of clause (d), "associate", in relation to a
person, means-
(i) any individual who had been or is residing in the residential premises (including
outhouses) of such person;
(ii) any individual who had been or is managing the affairs or keeping the
D accounts of such person;
(iii) any association of persons, body ofindividuals, partnership firm, or private
company within the meaningoftheCompaniesAct, 1956 (I of 1956), of which
such person had been or is a member, partner or director;
(iv) any individual who had been or is a member, partner or director of an
association of persons, body ofindividuals, partnership firm or private company
referred to in clause (iii) at any time when such person had been or is a member,
E partner or director of such association, body, partnership firm or private
company;
(v) who had been or is managing the affairs, or keeping the accounts, of an
association of persons, body ofindividuals, partnership firm or private company
referred to in clause (iii); value of the assets of the trust on that date; referred
to in clause (iii);
F (vi) the trustee of any trust, where, -
(a) the trust has been created by such person; or
(b) the value of the assets contributed by such person (including the value of
the assets, if any, contributed by him earlier) to the trust amounts, on the date
on which the contribution is made, to not less than twenty per cent. of the
value of the assets of the trust on that date;
(vii) where the competent authority, for reasons to be recorded in writing,
G considers that any properties of such person are held on his behalf by any
other person, such other person.
Explanation 4.- For the avoidance of doubt, it is hereby provided that the
question whether any person is a person to whom the provisions of this Act
apply may be determined with reference to any facts, circumstances or events
(including any conviction or detention) which occurred or took place before the
commencement of this Act.
H
DOMNIC ALEX FERNANDES (D) THROUGH LRS. & ORS. 621
v. UNION OF INDIA AND ORS. [ADARSH KUMAR GOEL, J.]

him (as defined in Section 3(1)(c)2 of the Act was liable to be forfeited. A
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. Vi de order dated 29th August, 1977, the competent authority passed B
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 2"d 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 order of forfeiture passed
against Krishna Budha Gawde could riot operate against them as they
c
are bona fide tenants. Prior to 1965, the original owner of the property
sold the property to Krishna Budha Gawde. The new landlord- Gawde
. reconstructed the structure in the year 1972 and the appellants were put
in possession thereof and were paying rent to the new owner under the
Bombay Rent Act. They were not aware of proceedings under D

2
3. Definitions.-{ I) In this Act, unless the context otherwise requires,-
XXX XXX XX
(c) "illegally acquired property", in relation to any person to whom this Act applies,
means--- E
(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 F
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 G
matter in relation to which Parliament has no power to make laws; or
(iv) any property acquired by such person, whether before or after the
commencement of this Act, for a consideration, or by any means, wholly or
partly traceable to any property referred to in sub-clauses (i) to

(iii) or the income or earnings from such property; and includes---
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622 SUPREME COURT REPORTS [2017) 7 S.C.R.

A SAFEMA and COFEPOSA against the landlord. They informed the
competent authority about this. Since they apprehended coercive steps
against them, they are entitled to be granted_protection.
5. The writ petition was contested by submitting that since the
properties of Krishna Budha Gawde stood forfeited and vested in the
B Central Government free from all encumbrances, the alleged tenancy
rights did not survive and the competent authority was entitled to take
possession under Section 19 ofSAFEMA.
6. The High Court dismissed the writ petition holding that the
tenancy did not survive in view of Section 7(3) of SAFEMA.
c 7. We have heard learned counsel for the parties.
8. The contention raised on behalf of the appellants is that
forfeiture contemplated under Section 7 of the Act is only of illegally
acquired property as defined under Section 3(1)(c) of SAFEMA i.e.
property acquired by the person to whom the Act applies which is defined
D under Section 2(2) of SAFEMA. The Act applied to a person against
whom the order of detention has been passed or a person who is a
n~llltivP. nr :issnc.i:itP. nf snc.h nP.rsnn nr hnlclP.r nfthP. nrnnP.rty which was
previously held by such person as per the said provision, quoted earlier.
'Relative' is defined in Explanation 2 and 'associate' is defined in
E Explanation 3 of Section 2 of SAFEMA.

9. It is submitted that the appellants could not, in any manner, be
held to be relative or associate of the person against whom the order of
detention had been passed, and, therefore they could not be visited with
any adverse consequences for the wrongful action of Krishna Budha
F Gawde. Reliance has been placed on judgments of this Court in C.B.

(A) any property held by such person which would have been, in
relation to any previous holder thereof, illegally acquired property under this
clause if such previous holder had not ceased to hold it, unless such person or
any other person who held the property at any time after such previous
holder or, where there are two or more such previous holders, the last of such
G
previous holders is or was a transferee in good faith for adequate consideration;
(B) any property acquired by such person, whether before or after the
commencement of this Act, for a consideration, or by any means, wholly or
partly traceable to any property falling under item (A), or the income or
earnings therefrom; .. . . .....

H
DOMNIC ALEX FERNANDES (D) THROUGH LRS. & ORS. 623
v. UNION OF INDIA AND ORS. [ADARSH KUMAR GOEL, J.]

Gautam versus Union ofIndia and Ors. 3; Attorney General for India A
. and Ors. versus Amratlal Prajivandas and Ors. 4; State of West Bengal
and Ors. versus Vishnunarayan & Associates (P) Ltd. and Anr. 5;
Fatima Mohd. Amin (Sml) (Dead) through LRs. versus Union of
India andAnr. 6; P.P. Abdulla andAnr. versus CompetentAutlwrity
and ors. 7; Aslam Mohammad Merchant versus Competent B
Authority and Ors. 8; Vishal N. Kalsaria versus Bank of India and
Ors.• ; and judgment of Bombay High Court in Narayan Vittappa
Kudva versus Union of India and Anr.1°.
10. Learned counsel for the respondents supported the view taken
in the impugned judgment.
c
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 D
. 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 ifthere 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.
E
However, as regards the bona fide rights of encumbrance holders such
as a subsisting lease, it was observed that they could not be visited with
adverse consequences as they were not involved in tax evasion. This
Court observed:
"36. .. .... ... In the result the expression ''free from all
encumbrances" in sub-section (1) of Section 269-UE is struck F

"1993) 1 sec 78
'<!994) 5 sec 54
'(2002) 4 sec 134
'(2003) 1sec436 G
1
. (2001) 2 sec 51 o

'(2008) 14 sec 186
'(2016) 3 sec 162
10
2002 (2) MhLJ 290

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624 SUPREME COURT REPORTS [2017] 7 S.C.R.

A down and sub-section (1) of Section 269-UE must be read
without the expression "ji-ee ji-om all encumbrances" with the
result the property in question would vest in the Central
Government subject to such encumbrances and leasehold
interests as are subsisting thereon except for such of them as
are agreed to be discharged by the vendor before the sale is
B
completed. if under the relevant agreement to sell the property
is agreed to be sold free of all encumbrances or certain
encumbrances it would vest in the Central Government free
of such encumbrances. Similarly, sub-section (2) of Section
269-UE will be read down so that if the holder of an
c encumbrance or a lessee is in possession of the property and
under the agreement to sell the property it is not provided
that the sale would be.fi'ee of such encumbrances or leasehold
interests, the encumbrance holder or the lessee who is in
possession will not be obliged to deliver the possession of the
property to the appropriate authority or any person
D
authorised by it and the provisions of sub-section (3) also
would not apply to such persons. if the provisions of Section
269-UE are read down in the manner indicated above then,
in our opinion, the provisions of sub-section (6) of that section
do not present any difficulty because the vesting in the Central
E Government would be subject to such encumbrances and
leasehold rights as stated earlier. "

13. In Amratlal (supra) this Court considered the validity of the
SAFEMA and the COFEPOSA and in that context one of the questions
F framed for consideration was whether the definition of"illegally acquired
property" in clause (c) of Section 3( I) of SAFEMA was unconstitutional
and whether application of the Act to the relatives and associates of a
person illegally acquiring the property was valid. This Court observed:
"44 . ...... ... The relatives and associates are brought in only
G 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

H
DOMNIC ALEX FERNANDES (D) THROUGH LRS. & ORS. 625
v. UNION OF INDIA AND ORS. [ADARSH KUMAR GOEL, J.]

properties acquired from such illegal activity in the names of A
their relatives and associates. Sometimes they transfer such
properties to them, may be, with an intent to transfer the
ownership and title. Jn 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
B
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 de.fined 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. ft is c
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
D
thf! 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 forfeited:
wherever they are. The idea is to reach his properties in
whosoever s name they are kept or by whosoever they are
held. The independent properties of relatives and ji-iends, E
which are not traceable to the convict/detenu, are not sought
to be forfeited nor are they within the purview of SAFEMA ** 11 •
We may proceed to explain what we say. Clause (c) ~peaks of
a relative of a person referred to in clause (a) or clause (b)
(which speak of a convict or a detenu). Similarly, clause (d)
F
speaks of associates of such convict or detenu. If we look to
Explanation (3) which specifies who the associates referred
.
to in clause (d) are, the matter becomes clearer. 'Associates'
11
**That this was the object of the Act is evident from para 4 of the preamble which
states: "And whereas such persons have in many cases been holding the properties
acquired by them through such gains in the names of their relatives associates and G
confidants." We are not saying that the preamble can be utilized for restricting the
scope of the Act, we are only referring to it to ascertain the object of the enactment and
to reassure ourselves that the construction placed by us accords with the said object.

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626 SUPREME COURT REPORTS [2017] 7 S.C.R.

A means - (i) any individual who had been or is residing in the
residential premises (including outhouses) of such person
['such person' refers to the convict or detenu, as the case
may be, referred to in clause (a) or clause (b)]; (ii) any
individual who had been or is managing the affairs or keeping
the accounts of such convict/detenu; (iii) any association of
B
persons, body of individuals, partnership firm or private
company of which such convictldetenu had been or is a
member, partner or director; (iv) any individual who had been
or is a member, partner or director of an association of
persons, body of individuals, partnership firm or private
c company referred to in clause (iii) at any time when such
person had been or is a member, partner or director of such
association of persons, body of individuals, partnership firm
or private company; (v) any person who had been or is
managing the affairs or keeping the accounts of any
association of persons, body of individuals, partnership.firm
D or private company referred to in clause (iii); (vi) the trustee
of any trust where (a) the trust has been created by such
convictldetenu; or (b) the value of the assets contributed by
such convictldetenu to the trust amounts, on the date of
contribution not less than 20% of the value of the assets of
E the trust on that date; and (vii) where the competent authority,
for reasons to be recorded in writing, considers that any
properties of such convictldetenu are held on his behalf by
any other person, such other person. It would thus be clear
that the connecting link or the nexus, as it may be called, is
the holding of property or assets of the convictldetenu or
F
traceable to such detenu/convict. Section 4 is equally relevant
in this context. It declares that "as ji·om the commencement of
this Act, it shall not be lawfirlfor 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
G 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

H
DOMNIC ALEX FERNANDES (D) THROUGH LRS. & ORS. 627
v. UNION OF INDIA AND ORS. [ADARSH KUMAR GOEL, J.]

of the overall scheme and purpose of the enactment. The idea A
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
B
relatives or associates which they may have acquired illegally
but only to reach the properties of the convictldetenu 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 his relative or associate - it does not c
matter whether he intends such a person to be a mere name-
/ender or whether he really intends that such person shall be
the real owner and/or possessor thereof - or gifts away or .
otherwise transfers his properties in favour of any of his
relatives or associates, or purports to sell them to any of his D
relatives or associates - in all such cases, all the said
transactions will be ignored and the properties forfeited
unless the convict/detenu or his relative/associate, as the case
may be, establishes that such property or properties are not
"illegally acquired properties" within the meaning of Section
3(c). In this view of the matter, there is no basis for the E
apprehension that the independently acquired properties of
such relatives and associates will also be forfeited even if
they are in no way connected with the convictldetenu. So far
as the holders (not being relatives and associates) mentioned
in Section 2(2}(e) are concerned, they are dealt with on a
F
separate footing. If such person proves that he is a transferee
in good faith for consideration, his property - even though
purchased from a convict/detenu - is not liable to beforfeited.
It is equally necessary to reiterate that the burden of
establishing that the properties mentioned in the show-cause
notice issued under Section 6, and which are held on that G
date by a relative or an associate of the convictldetenu, are
not the illegally acquired properties of the convict/detenu,
lies upon such relative/associate. He must establish that the

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628 SUPREME COURT REPORTS [2017] 7 S.C.R.

A said property has not been acquired with the monies or assets
provided by the detenu/convict or that they in fact did not or
do not belong to such detenulconvict. We do not think that
Parliament ever intended to say that the properties of all the
relatives and associates, may be illegally acquired, will be
.forfeited just because they happen to be the relatives or
B
associates of the convictldetenu. 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 this view of the matter, the
apprehension and contention of the petitioners in this behalf
c must be held to be based upon a mistaken premise. The
bringing in of the relatives and associates or of the persons
mentioned in clause (e) of Section 2(2) is thus neither
discriminatory nor incompetent apart from the protection of
Article 31-B. "
D 14. In Fatima (supra), applying the ratio ofAmratfa/ (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.
E 15. In Vishmmaraya11 (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
F 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
G 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 will result in a central
statute nullifying a State statute which was within the exclusive jurisdiction
of the legislature and thereby affecting the concept Federalism.

H
DOMNIC ALEX FERNANDES (D) THROUGH LRS. & ORS. 629
v. UNION OF INDIA AND ORS. [ADARSH KUMAR GOEL, J.]

18. In Narayan Vittappa (supra) the Bombay High Court held A
that a person to whom the Act applied, his relative or associate did not
include a bona fide tenant having no connection whatsoever to the person
who was convicted or detained in the manner contemplated under Section
2 of the Act and if such a person claims to be having no nexus to the
person to whom the Act applied, his rights will not stand vested in the
B
Central Government, though he may be liable to be proceeded against
the Public Premises Eviction Act 12 •
19. In Aslam (supra), following the judgments of this Court in
Amratlal (supra) and Fatima (supra) it was held that for forfeiture of
· property under Chapter V-A of the Narcotic Drugs and Psychotropic
Substances Act, 1985, a direct nexus/link was necessary between the
c
properties sought to be forfeited and its illegal acquisition.
20. 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, D
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 law laid down by this Court, noticed above, we are of the
view that rights of a bona fide tenant will not stand automatically E
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 F
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.
21. Accordingly, we allow this appeal, set aside the order of the G
High Court and remit the matter to the competent authority for passing

12 Para 15 in Narayan Vittappa Kudva v. Union oflndia andAnr. (2002 (2) MhLJ290]

H
630 SUPREME COURT REPORTS [2017] 7 S.C.R.

A an appropriate order in accordance with law. The parties are directed
to appear before the competent authority for further proceedings on
9'h October, 2017.

Nidhi Jain Appeal allowed.
B