WINSTON TAN & ANR.versusUNION OF INDIA & ANR.

                    [2012] 8 S.C.R. 1107


                   WINSTON TAN & ANR.                             A
                              v.
                  UNION OF INDIA & ANR.
              (Civil Appeal No. 7207 of 2012)

                    OCTOBER 04, 2012
                                                                  B
         [R.M. LODHA AND ANIL R. DAVE, JJ.]

    SMUGGLERS   AND   FOREIGN   EXCHANGE
MANIPULATORS (FORFEITURE OF PROPERTY) ACT,
1976:                                                             c
      ss.2(2)(b), 2(2)(c), 2(2)(e), 6,7, 10 and 11 - Certain
transfers to be null and void - Forfeiture of property illegally
acquired by detenu and his wife - Challenged by purchasers
claiming as transferees in good faith and for adequate 0
consideration - Held: Any transfer of the property referred to
in s. 6(1) is prohibited - In respect of the transfer of the property
after issuance of notice u/s. 6, the holder cannot set up a plea
that he is a transferee in good faith or a bona fide purchaser
for adequate consideration - Such plea is not available to a E
transferee who has purchased the property during pendency
of forfeiture proceedings - In the instant case, the transaction
of sale in favour of the purchasers has to be ignored by virtue
of s. 11 and on passing of the order of forfeiture u/s. 7, the sale
in their favour has become null and void - The title in the
subject flat is deemed to have vested in the Central F
Government when the first notice u/s.6(1) was issued and
served on one of the vendors and they ceased to have any
title in the subject flat on the date of transfer - In the
circumstances, question of according any opportunity to the
 holders to prove that they are transferee in good faith with G
adequate consideration does not arise - Conservation of
 Foreign Exchange and Prevention of Smuggling Activities
 Act, 1974.

                             1107                                  H
     1108   SUPREME COURT REPORTS              [2012] 8 S.C.R.


A       One 'Ml' was detained on 02.05.2003 under the
   Conservation of Foreign Exchange and Prevention of
   Smuggling Activities Act, 1974. Notices u/s.6(1) of the
   Smuggling and Foreign Exchange Manipulators
   (Forfeiture of Property) Act, 1976 in respect of the subject
B property were issued to the detenu and his wife in 2003
   and 2004, respectively, as both owned the subject
   property. On 10.02.2005, both the noticees sold the
   subject property to the appellants. The appellants by their
   communication dated 20.05.2005, informed the
c Competent Authority that they purchased the subject
   property under a registered sale deed after availing loan
   from the Bank. The Competent Authority on 23.06.2005
   passed an order u/ss.7(1) and (3) of SAFEMA forfeiting the
  subject property and declaring that the said property
  stood vested in the Central Government, and holding-that
0
  the transfer in favour of the appellants was null and void
  in view of s.11 of SAFEMA. The appellants filed a writ
  petition before the High Court contending that they were
  bonafide purchasers for adequate consideration. The
  Single Judge of the High Court quashed the order dated
E 23.06.2005 as violative of principles of natural justice and
  remitted the matter to the Competent Authority for
  consideration afresh. However, on appeal, the Division
  Bench of the High Court held that the appellants were not
  entitled to any notice and as the sale in their favour was
F subsequent to the issuance of the notice u/s.6 of
  SAFEMA, the transaction was null and void u/s. 11
  thereof.

        Dismissing the appeal, the Court

        HELD: 1.1. The provisions of SAFEMA are stringent
    and drastic in nature. They are designed to discourage
    law breaking and directed towards forfeiture of illegally
    acquired properties. One of the concepts that centres
    around the provisions of SAFEMA is to reach the
H
 WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1109


properties acquired illegally by the persons who are . A
covered by Clauses (a) to (e) of s.2(2). The provisions of
SAFEMA are intended to apply to any property acquired
by persons covered by Clauses (a) to (e) of s.2(2),
whether before or after the commencement, wholly or
partly out of or by means of any income, earnings or B
assets derived or obtained from or attributable to any
activity prohibited by or under any law for the time being
in force. [Para 22) [1122-D-G]

     1.2. However, SAFEMA is not applicable to holder of C
any property uls. 2(2)(e) who proves that he is a
transferee in good faith for adequate consideration.
Section 2(2)(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) unless such holder proves that
he is a transferee in good faith for adequate D
consideration. The holder talked of in s.2(2)(e) does not
cover a holder who is a transferee of the property after
issuance of notice uls.6. On issuance of notice uls.6, a
moratorium is placed on transfer of property referred to
in the notice. Any transfer of the property referred to in E
s.6 notice is prohibited. [Para 22-23) [1222-G-H; 1124-C-
E]

    Aamenabai Tayebaly and Others v. Competent Authority
1997 ( 5 ) Suppl. SCR 246   =(1998) 1 sec 703 - relied     F
on

    Competent Authority v. Parvathi Bai (2011) 6 MLJ 537
- approved

     Attorney General for India and others v. Amratlal     G
Prajivandas and Others 1994 (1) Suppl. SCR 1 = (1994) 5
sec 54 - held inapplicable
   1.3. Admittedly, SAFEMA was applicable to both
vendors. They were served with notices u/s.6(1) before     H
    1110    SUPREME COURT REPORTS              [2012] 8 S.C.R.


A transaction of sale in favour of the appellants. After the
  issuance of notices u/s.6(1) of SAFEMA to the vendors,
  the transaction of sale in favour of the appellants has to
  be ignored by virtue of s.11 and on passing of the order
  of forfeiture u/s.7, the sale in their favour has become null
B and void. The order of forfeiture dated 23.06.2005 u/s.7
  of SAFEMA relates back to the issuance of first notice u/
  s.6(1) to one of the vendors. [Para 25] [1126-E-G]
       1.4. Section 11 is unequivocal and its object is clear.
  It intends to avoid transfer of property by the persons
C who are covered by clauses (a) to (e) of sub-s.(2) of s.2
  during the pendency of forfeiture proceedings. The
  provision says that for the purposes of proceedings
  under the Act, transfer of any property referred to in the
  notice u/s.6 or u/s.10 shall be ignored. In respect of the
D transfer of the property after issuance of notice u/s.6, the
  holder cannot set up a plea that he is a transferee in good
  faith or a bona fide purchaser for adequate consideration.
  Such plea is not available to a transferee who has
  purchased the property during pendency of forfeiture
E proceedings. [Para 26] [1126-H; 1127-A-B]

       1.5. It is true that the appellants had obtained
  encumbrances certificates from the Sub-Registrar prior
  to purchase which show that there were no
F encumbrances to the subject flat. It is also true that the
  appellants had obtained loan from the Bank, for purchase
  of the said flat. It is a fact that sale consideration to the
  tune of Rs. 26 lakhs was paid directly by the Bank to the
  vendors after the Bank was satisfied about the title of the
  vendors. The appellants had also mortgaged the flat with
G the Bank as a security towards loan. But these facts are
  of no help to the appellants as the sale in their favour was
  effected after notices u/s.6(1) were issued to the vendors.
  Such sale has no legal sanction. The sale is null and void
  on the face of s.11; it is not protected so as to enable the
H purchaser to prove that he is transferee in good faith for
  WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1111


  adequate consideration. As a matter of law, no title came      A
  to be vested in the appellants by virtue of sale-deed dated
  10.02.2005 as the vendors could not have transferred the
  property after service of the notice u/s.6(1) and during
  pendency of forfeiture proceedings under SAFEMA. The
  title in the subject flat is deemed to have vested in the      B
  Central Government on or about 08.12.2003 when the first
  notice u/s.6(1) was issued and served on one of the
  vendors. The vendors ceased to have any title in the
  subject flat on the date of transfer i.e. 10.12.2005. They
  had no transferable right. The appellants cannot claim any     c
  right in the flat. In the circumstances, question of
. according any opportunity to the appellants to prove that
  they are transferees in good faith with adequate
  consideration does not arise. [Para 28] [1127-E-H; 1128-
  A-C]
                                                                 D
                      Case Law Reference:
   1994 (1) Suppl. SCR 1         held inapplicable Para 6
   (2011) 6 MLJ 537             approved             Para 14
                                                                 E
   1997 (5) Suppl. SCR 246 relied on                 Para t4
     CIVIL APPELLATE JURISDICTION : Civil Appeal No.
 7207 of 2012.
     From the Judgment & Order dated 16.3.2009 of the High       F
 Court of Karnataka at Bangalore in Writ Appeal No. 2181 of
 2007.
     S.B. Sanyal, K. Maruthi Rao, Anjani Aiyagari for the
 Appellants.
                                                                 G
     A.S. Chandhiok, ASG, S.K. Sahijpal, Ritesh Kumar,
 Piyush Sanghi, Shweta Gupta, Sidharth Tyagi, Arjun Pal, Vidit
 Gupta, Sonam Anand, Meenakshi Chauhan, B.K. Prasad,
 Shreekant N. Terdal for the Respondents.

     The Judgment of the Court was delivered by                  H
    1112    SUPREME COURT REPORTS                [2012) 8 S.C.R.


A       R.M. LODHA, J. 1. Leave granted.

       2. The forfeiture of Flat No. 4, Kamala Mansion, Ground
  Floor, Promenade Place, No. 45/2, Promenade Road,
  Bangalore - 560 042 under Section 7 of the Smugglers and
B Foreign Exchange Manipulators (Forfeiture of Property) Act,
  1976, to be referred as 'SAFEMA', is the subject matter in this
  Appeal. Col. K. M. Somana (Reid.) was the original owner of
  that flat. On 20.3.1997, he sold the flat to Mohd. Ismail
  Shabandari and his wife Fathima Kauser Ismail by a sale deed
  which was registered in the office of the Sub-Registrar,
c Bangalore.

       3. Mohd. Ismail Shabandari was detained under
  Conservation of Foreign Exchange aQd Prevention of
  Smuggling Activities Act, 1974 (for short, .'COFEPOSA') on
D 2.5.2003. The detention order came to be passed at the
  instance of the Enforcement Directorate, Bangalore; his
  premises were searched on 31.7.2002. In that search Indian
  Currency of Rs. 13,50,000/- along with incriminating materials
  showing illegal transfer of money from abroad was seized. The
E documents seized from the residence of Mohd. Ismail
  Shabandari on 3.1.7.2002 by the Enforcement Directorate also
  indicated that he had received Rs. 92,09,480/- from different
  persons as instructed by one Hussain Sherrif of Dubai and he
  had made payments in India to various persons to the tune of
F Rs. 78,59,480/- leaving a balance of Rs. 13,50,000/-which was
  seized at the time of search. It was in this backdrop that the
  order dated 2.5.2003 for detention of Mohd. Ismail Shabandari
  came to be passed by the Competent Authority.

G      4. On 8.12.2003, a notice under Section 6(1) of SAFEMA
  in respect of subject flat was issued to Mohd. Ismail
  Shabandari. SAFEMA was applicable to him as he was a
  'person' within the meaning of Section 2(2)(b) of SAFEMA The
  Competent Authority having come to know that his wife,
H Fathima Kauser Ismail, was having 50 per cent share in the
 WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1113
              [R.M. LODHA, J.]

subject property, a notice under Section 6(1) was also issued        A
to her as she happened to be 'relative' within the meaning of
Section 2(2)(c) of SAFEMA. The above notices were served
on them.

     5. In response to the notice issued to him under Section        B
6(1), Mohd. Ismail Shabandari sent a letter to the Competent
Authority on 26.5.2004 stating therein that the subject flat was
purchased through legal earnings. By a subsequent letter, he
stated that he had explained the sources of acquisition before
the income tax authorities. He filed copies· of the income tax       C
returns and also stated that his wife Fathima Kauser Ismail
received remittances from her brother in 1994. Mohd. Ismail
Shabandari was asked by the Competent Authority to
substantiate his claim in respect of sources from which he and
his wife purchased the property. He and his wife were asked
to appear personally but they did not appear and it transpired       D
that the subject property has been sold by them for Rs.
26,00,0001- on 10.2.2005 to the present appellants.

     6. On 17.5.2005, a notice was again issued to Mohd.
Ismail Shabandari by the Competent Authority to explain the          E
sources of his income and earnings relating to Savings Bank
Ale No. 15802, Vijaya Bank, Brigade Road Branch, Bangalore.
A copy of the said notice was also sent to the Branch Manager,
Vijaya Bank, Brigade Road Branch, Bangalore. The appellants
claim that they came to know of Section 6(1) notice issued to        F
their vendors from Vijaya Bank, Brigade Road Branch,
Bangalore and consequently sent their reply to the Competent
Authority through their Advocate on 20.5.2005. In their reply, the
appellants intimated to the Competent Authority that they had
purchased the subject flat by a registered sale deed. As they        G
were having insufficient funds to purchase the subject flat, they
availed of loan from Vijaya Bank, Brigade Road Branch,
Bangalore. The Bank sanctioned loan after proper examination
and scrutiny of the documents and after obtaining legal opinion.
The appellants claimed that they were in actual possession and
                                                                     H
    1114     SUPREME COURT REPORTS                   [2012] 8 S.C.R.


A   enjoyment of the subject flat and they have also applied to the
    authorities of Bangalore Mahanagar Palika for mutation of their
    names in the records and for obtaining Khatha Certificate and
    assessment of taxes.

       7. The Competent Authority, on 23.6.2005 passed an
8
  order under Sections 7(1) and (3) of SAFE MA forfeiting the
  subject flat and declaring that forfeited property stands vested
  in the Central Government free from all encumbrances. It was
  held in the order that the subject flat was not acquired by Mohd.
C Ismail Shabandari and Fathima Kauser Ismail out of any legal
  earnings. The said flat had been sold stealthily after the
  commencement of the proceedings under SAFEMA and the
  said transfer in favour of the appellants on 10.2.2005 was null
  and void by virtue of the provisions of Section 11 of SAFEMA.

D      8. Subsequent to the passing of the above order, a further
  order under Section 19(1) of SAFE MA was passed by the
  Competent Auhority on 23.12.2005 directing Mohd. Ismail
  Shabandari and Fathima Kauser Ismail to surrender/deliver
  possession of the forfeited flat within 30 days of the receipt of
E order. In that order, it was reiterated that transfer/sale effected
  by them subsequent to the notice under Section 6(1) was null
  and void in view of Section 11 of SAFEMA. A copy of this order
  was sent by the Competent Auhority to the present appellants.

F      9. It was then that the appellants filed ~ writ petition before
  the Karnataka High Court for qua!lhing the order dated
  23.6.2005 forfeiting the subject flat and for writ of mandamus
  to the Competent Authority not to intellfere with their peaceful
  possession and enjoyment in respect of the subject flat. The
  above reliefs were sought on diverse grounds, including that
G they had purchased the subject flat af1er thorough verification
  and after obtaining encumbrance certifi~ates for the period from
  1.4.1990 to 4.1.2005 and after satisf~ing with the title of the
  vendors and also that there was no ciharge or encumbrance
  created over the subject flat. They claimed that they were bona
H fide purchasers for adequate considetation.
    WINSTON TAN & ANR., v. UNION OF INDIA & ANR. 1115
                 [R.M. LODHA, J.]

     10. A counter affidavit was filed by the Competent Authority    A
in opposition to the writ petition. The appellants filed rejoinder
to the counter affidavit.

     11. The learned Single Judge of the High Court heard the
parties and considered the question that was raised before him
                                                                     B
as to whether the appellants (petitioners therein) were entitled
to a notice from the Competent Authority before order of
confiscation/forfeiture was passed under SAFEMA. The Single
Judge in his order dated 12.9.2007 held that the sale in favour
of the appellants had taken place on 10.2.2005, i.e., before the     C
order of forfeiture was passed by the Competent Authority.
Although it was a fact that the first notice was issued under
SAFEMA to the transferors much before the sale had taken
place, but in the opinion of the Single Judge, the order dated
23.6.2005 was violative of the principles of natural justice and,
consequently, he quashed the same and remitted the matter            D
to the Competent Authority for fresh consideration.

      12. A writ appeal was preferred by the Union of India and
the Competent Authority against the order of the Single Judge.
The Division Bench of the High Court held that the sale              E
transaction in favour of the appellants was subsequent to the
issuance of notice under Section 6 and, accordingly, the
transaction was null and void under Section 11 of SAFEMA. In
the opinion of the Division Bench, the appellants were not
entitled to any notice and non-issuance of notice to them had        F
not vitiated the action taken by the Competent Authority.

     13. Mr. S.B. Sanyal, learned senior counsel for the
appellants, heavily relied upon the excepted clause of Section
2(2)(e) that protects a transferee in good faith for adequate
consideration and the observations made by a 9-Judge Bench           G
of this Court in Attorney General for India and others v.
Amratlal Prajivandas and Others' in para 44 (Pg. 92) of the
Report observing, 'So far as the holders (not being relatives

t    (1994) s sec 54.                                                H
     1116      SUPREME COURT REPORTS1             [2012] 8 S.C.R.


A and associates) mentioned in Section 2i(2)(e) are concerned,
  they are dealt with on a separate footing. 1lf such person proves
  that he is a transferee in good faith fbr consideration, his
  property - even though purchased from a convict/detenu - is
  not liable to be forfeited'. He referred to diverse documents to
B show that the appellants had purchased 1the property after due
  diligence and after obtaining certificate$ from Sub-Registrar,
  Bangalore, that the subject flat was not encumbranced in any
  manner whatsoever. Learned senior couosel would submit that
  the appellants had obtained loan from thEI Vijaya Bank, Brigade
c Road Branch, Bangalore and the title of the property was fully
  scrutinized by the Bank and its Panel Adltocate. The adequate
  consideration of Rs. 26,00,000/- was pejid by the Bank to the
  transferors which prima facie establishes that the appellants are
  transferees in good faith for adequate consideration. Learned
  senior counsel contended that the appellants were seeking an
0
  opportunity to be given to them to prove before the Competent
  Authority that they were transferees in good faith for adequate
  consideration and that is what was don~ by the Single Judge.
  and there was no justification for the Diltision Bench to upset
  such a just order.
E                                           I

        14. On the other hand, Mr. A.S. <Chandhiok, Additional
  Solicitor General, would submit that the purchase of the subject
  flat by the appellants was after the isslflance of notice under
  Section 6( 1) to the vendors by the <J;ompetent Authority.
F SAFEMA is applicable to one of the vendors by virtue of
  Section 2(2)(b) and to the other venddr by virtue of Section
  2(2)(c). He argued that transaction of $ale was null and void
  under Section 11 and the appellants are not covered by the
  excepted category of the 'holder' under Section 2(2)(e). He
G placed reliance upon a decision of !hi$ Court in Aamenabai
  Tayebaly and Others v. Competent Authority under SAFEMA
  and others2 and a decision of Madras Hi~h Court in Competent
  Authority v. PaNathi Bai~.
    2.   (1998) 1 sec 103.
H   3.   (2011) 6 MLJ 537.
 WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1117
              [R.M. LODHA, J.)

      15. SAFEMA came into effect from 05.11.1975. It, inter         A
alia, provides for forfeiture of illegally acquired properties of
smugglers and foreign exchange maqipulators. Its applicability
is provided in Section 2. Sub-section (1) of Section 2 provides
that the provisions of SAFEMA shall only apply to persons
specified in sub-section (2). Clause (b), amongst others, covers     B
the persons in respect of whom an order of detention has been
made under COFEPOSA and such order has not been revoked
or set aside in any of the situations set out in the four sub-
clauses of the proviso. Clause (c) of sub-section (2) of Section
2 applies to the relatives of persons referred to in clauses (a)     c
or (b) while clause (d) applies to the associates of persons
 referred to in clauses (a) or (b). Clause (e) of sub-section (2)
of Section 2 refers to a holder of property. It reads as under:

     "S. 2. Application.-(1) xxx xxx                xxx
                                                                     D
     (2). The persons referred to in sub-section (1) are the
     following, namely: -

     (e) any holder (hereinafter in this clause referred to as the
     present holder) of any property which was at any time           E
     previously held by a person referred to in clause (a) or
     clause (b) unless the present holder or, as the case may
     be, any one who held such property after such person and
     before the present holder, is or was a transferee in good
     faith for adequate consideration."
                                                                     F
    16. Section 3 defines various expressions. Section 3 (1)
© defines 'illegally acquired property' which reads as follows:

     "S. 3(1 ). In this Act, unless the context otherwise
     requires,-                                                      G
     (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,           H
    1118           SUPREME COURT REPORT$                 [2012) 8 S.C.R.


A                   wholly or partly out of or by means of any income,
                    earnings or assets derive<ll or obtained from or
                    attributable to any activity prQhibited by or under any
                    law for the time being in force'
                                                     relating to any matter
                    in respect of which Parliament has power to make
B                   laws; or

           (ii)     any property acquired by $uch person, whether
                    before or after the commencement of this Act,
                    wholly or partly out of or byl means of any income,
                    earnings or assets in respeqt of which any such law
c                   has been contravened; or :

           (iii)    any property acquired by such person, whether
                                                    1




                    before or after the commrencement of this Act,
                    wholly or partly out of orb~ means of any income,
D                   earnings or assets the source of which cannot be
                    proved and which can(lot 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
E                                               '
           (iv)     any property acquired by such person, whether
                    before or after commenc~ment of this Act, for a
                    consideration, or by any means, wholly or partly
                    traceable to any property r$ferred to in sub-clauses
                    (i) to (iii) or the income or earnings from such
F                   property ; and includes- I

           (A)      any property held by such werson which would have
                    been, in relation to any previous holder thereof,
                    illegally acquired property under this clause if such
G                   previous holder had not Cleased 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 mote such previous holders,
                    the last of such previol)s holders is or was a
H                   transferee in good faith for adequate consideration;
 WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1119
              [R.M. LODHA, J.]

      (B)   any property acquired by such person, whether             A
            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;"
                                                                      B
    17. Section 4 prohibits holding of illegally acquired property
which reads as follows :

    "S. 4. Prohibition of holding illegally acquired property.-
    (1) As from the commencement of this Act, it shall not be
    lawful for any person to whom this Act applies to hold any        C
    illegally acquired property either by himself or through any
    other person on his behalf.

    (2) Where any person holds any illegally acquired property
    in contravention of the provision of sub-section (1 ), such       0
    property shall be liable to be forfeited to the Central
    Government in accordance with the provisions of this Act."

     18. Section 6 provides for issuance of show cause notice
before forfeiture of illegally acquired property while Section 7
provides for passing of final orders in that behalf. These            E
provisions read as under:-

    "S.6. - Notice of forfeiture.-(1) If, having regard to the
    value of the properties held by any person to whom this
    Act applies, either by himself or through any other person        F
    on his behalf, his known sources of income, earnings or
    assets, any other information or material available to it as
    a result of action taken under section 18 or otherwise, the
    competent authority has reason to believe (the reasons for
    such belief to be recorded in writing ) that all or any of such   G
    properties are illegally acquired properties, it may serve
    a notice upon such person (hereinafter referred to as the
    person affected) calling upon him within such time as may
    be specified in the notice, which shall not be ordinarily less
    than thirty days, to indicate the sources of his income,
                                                                      H
    1120   SUPREME COURT REPORTS                   [2012] 8 S.C.R.


A      earnings or assets, out of which or by means of which he
       has acquired such property, the evidence on which he
       relies and other relevant information and particulars, and
       to show cause why all or any of such properties, as the
       case may be should not be declared to be illegally
B      acquired properties and forfeited to the Central
       Government under this Act.

       (2) Where a notice under sub-section (1) to any person
       specifies any property as being held on behalf of such
       person by any other person, a copy of the notice shall also
c      be served upon such other person."

       "S.7.- Forfeiture of property in certain cases.-(1) The
       competent authority may, after considering the explanation,
       if any, to the show-cause notice issued under section 6,
D      and the materials available before it and after giving to the
       person affected (and in a case where the person affected
       holds any property specified in the notice through any other
       person, to such other person also) a reasonable
       opportunity of being heard, by order, record a finding
E      whether all or any of the properties in question are illegally
       acquired properties.

       (2) Where the competent authority is satisfied that some
       of the properties referred to in the show-cause notice are
       illegally acquired properties but is not able to identity
F      specifically such properties, then, it shall be lawful for the
       competent authority to specify the properties which, to the
       best of its judgment, are illegally acquired properties and
       record a finding accordingly under sub-section(1).

G     (3) Where the competent authority records a finding under
      this section to the effect that any property is illegally
      acquired property, it shall declare that such property shall,
      subject to the provisions of this Act, stand forfeited to the
      Central Government free from all encumbrances.
H
 WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1121
              [R.M. LODHA, J.]

    (4) Where any shares in a company stand forfeited to the        A
    Central Government under this Act, then the company shall,
    notwithstanding anything contained in the Companies Act,
    1956 (1 of 1956), or the articles of association of the
    company, forthwith register the Central Government as the
    transferee of such shares."                                     B

    19. Section 8 provides that burden of proving that property
specified in the notice served. under Section 6 is not illegally
acquired property shall be on the person affected.

     20. Section 11 declares transfers of properties specified      C
in the notice issued under Section 6 null and void when such
transfers are effected after the issuance of notice. Section 11
reads as follows :

    "11. Certain transfers to be null and void.-Whereafter the      o
    issue of a notice under section 6 or under section 10, any
    property referred to in the said notice is transferred by any
    mode whatsoever such transfer shall, for the purpose of
    the proceedings under this Act, be ignored and if such
    property is subsequently forfeited to the Central
                                                                    E
    Government under Section 7, then, the transfer of such
    property shall be deemed to be null and void."

     21 . Section 19 makes a provision for taking possession
of the property which has been declared to be forfeited to the
Central Government and where the person affected as well as         F
any other person who may be in possession of the property fails
to surrender or deliver possession. Section 19 reads as under


     "S. 19. Power to take possession.-(1) Where any                G
     property has been declared to be forfeited to the Central
     Government under this Act, or where the person affected
     has failed to pay the fine due under sub-section (1) of
     section 9 within the time allowed therefor under sub-section
     (3) of that section, the competent authority may order the     H
    1122     SUPREME COURT REPORTS                   [2012] 8 S.C.R.


A        person affected as well as any other person who may be
         in possession of the property to surrender or deliver
         possession thereof to the competent authority or to any
         person duly authorised by it in this behalf within thirty days
         of the service of the order.
B
        (2) If any person refuses or fails to comply with an order
        made under sub-section (1 ), the competent authority may
        take possession of the property and may for that purpose
        use such force as may be necessary.
c       (3) Notwithstanding anything contained in sub-section (2),
        the competent authority may, for the purpose of taking
        possession of any property referred to in sub-section (1),
        requisition the service of any police officer to assist the
        competent authority and it shall be the duty of such officer
D       to comply with such requisition."

        22. The provisions of SAFEMA are stringent and drastic
  in nature. They are designed to discourage law breaking and
  directed towards forfeiture of illegally acquired properties. One
E of the concepts that centres around the provisions of SAFEMA
  is to reach properties acquired illegally by the persons who are
  covered by Clauses (a) to (e) of Section 2(2). The provisions
  of SAFEMA are intended to apply to any property acquired by
  persons covered by Clauses (a) to (e) of Section 2(2), whether
  before or after the commencement, wholly or partly out of or by
F 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. However, SAFEMA is not
  applicable to holder of any property under Section 2(2)(e) who
  proves that he is a transferee in good faith for adequate
G consideration. The question that arises for consideration in this
  appeal is, whether appellants who purchased the subject flat
  during pendency of forfeiture proceedings are entitled to an
  opportunity to prove that they are transferees in good faith for
  adequate consideration.
H
  WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1123
               [R.M. LODHA, J.]

       23. In Amratlal Prajivandas', a 9-Judge Bench of this A
 Court extensively considered the scheme and the provisions
 of SAFEMA and the Act has been held to be constitutional. The
 observations in para 44 of the Report in Amratlal Prajivandas',
 upon which heavy reliance has been placed by the learned
 senior counsel for the appellants, were made by this Court while B
 dealing with the question, whether the application of SAFEMA
 to the relatives and associates of detenus was violative of
 Articles 14,19 and 21? It was submitted on behalf of the
 petitioners therein that the relatives or associates of a person
 falling under Clause (a) or Clause (b} of Section 2(2) of c
 SAFEMA might have acquired properties of their own, could
  be by illegal means, but there was no reason why those
  properties be forfeited under SAFE MA just because they were
  related to or were associates of the detenu or convict. This
  Court held that the relatives or associates were brought in only
                                                                     0
 for the purpose of ensuring that the illegally acquired properties
  of the convict or detenu, acquired or kept in their names, do
  noi escape the net of SAFEMA. It was further observed that it
  was not unknown that persons indulging in illegal activities
  screen the properties acquired from such illegal activities in the E
  names of their relatives and associates, sometimes they
  transfer such properties to them with an intent to transfer the
  ownership and title and it was immaterial how such relative or
  associate held the properties of convict/detenu, whether as a
  benami or a mere name-lender or as a bona fide transferee
  for value or in any other manner. Where a person is relative or F
  associate as defined under SAFEMA, he or she cannot put
  forward any defence on proof of the fact that the property was
· acquired by the detenu, whether in his own name or in the name
  of his relatives or associates. The Court allayed the
  apprehension that the independently acquired properties of G
  such relatives or associates could be forfeited even if they were
  in no way connected with the convict/detenu. This Court then
  made the observations, 'So far as the holders (not being
   relatives and associates) mentioned in Section 2(2)(e) are
   concerned, they are dealt with on a separate footing. If such H
    1124    SUPREME COURT REPORTS                 [2012] 8 S.C.R.


A  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 be forfeited". We are afraid
  these observations have no application to a transferee who has
  purchased illegally acquired property defined under Section 3
B from a detenu/convict and/or his relative or associate after
  issuance of notice under Section 6 of SAFEMA. Section 2(2)(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) unless such holder proves that he is a transferee in good
c faith for adequate consideration. The holder talked of in Section
  2(2)(e) does not cover a holder who is a transferee of the
  property after issuance of notice under Section 6. It is so
  because Section 11 makes it manifest that if any property
  referred to in the notice under Section 6 or under Section 10
                                                  '
  is triinsferred by any mode whatsoever, such transfer    shall be
0
  ignored for the purposes of proceedings under SAFEMA and
  if such property is subsequently forfeited under Section 7 then
  the transfer of such property shall be deemed to be null and
  void. On issuance of notice under Section 6, a moratorium is
  placed on transfer of property referred to in the notice. Any
E transfer of such property (the property referred to in Section 6
  notice) is prohibited.

        24. In Aamenabai Tayebaly2, this Court had expressly held
  that the transaction of transfer effected after the issuance of
F notice under Section 6 is of no legal consequence and such
  transfer does not confer any title on the transferee. Aamenabai
   Tayebaly 2 was a case where one Talab Haji Hussein
  Sumbhania was detained under Section 3(1) of COFEPOSA
  by an order dated 2.4.1976. Before the detention order, in
G February, 1975, Tahira Sultana, second wife of Talab Haji
  Hussein Sumbhania purchased a flat in Mumbai. On
  15.2.1977, a notice was issued by the Competent Authority
  under Section 6(1) of SAFEMA to Tahira Sultana calling upon
  her to show cause why the said flat should not be forfeited as
H the illegally acquired property of the COFEPOSA detenu, her
 WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1125
              [R.M. LODHA, J.]

husband. On 12.10.1977, a forfeiture order relating to that flat       A
was passed under Section 7. The said order was challenged
by her in the Bombay High Court. She undertook before the
High Court not to alienate the said flat. However, on 30.7 .1981,
Tahira Sultana sold the said flat to Tayab Ali in breach of the
undertaking given to the High Court. Tayab Ali received an             B
information on 5.11.1982 that the flat purchased by him was
already forfeited by the Central Government and based on that
information he filed a writ petition before Bombay High Court
on 13.12.1982. Tayab Ali raised the plea that he was a bona
fide purchaser for value without notice. The High Court                c
dismissed the writ petition filed by Tayab Ali and consequently
the order of the Competent Authority forfeiting the flat was
confirmed. The matter reached this Court at the instance of
successor in interest of Tayab Ali. In the backdrop of these
facts, this Court referred to Section 11 of SAFEMA (Pgs. 713-
                                                                       0
714) and then proceeded to hold as under:
     "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 the said Act and prior to the order
     of forfeiture shall be treated to be null and void. The           E
     purchaser's transaction is after the order of forfeiture of the
     said property. Still 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    F
     was stayed at the time of the purchase. It got confirmed
     by the Bombay High Court ultimately when the
     Miscellaneous Petition No. 1680 of 1977 moved by Tahira
     Sultana was disposed of and the subsequent Writ Petition
     No. 1527 of 1995 was dismissed by the High Court and              G
     the SLP filed by her in this Court was also dismissed. We
      may also note that as the Miscellaneous Petition No. 1680
     of 1977 was withdrawn on 19-6-1995 and ultimately the
     forfeiture order came to be confirmed in the subsequent
     Writ Petition No. 1527 of 1995 on 21-8-1995, the                  H
     1126    SUPREME COURT REPORTS                   [2012] 8 S. C.R.


A         transaction of transfer in favour of Tayab Ali would be said
          to have been effected after the notice under Section 6,
          issued to 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. It must, therefore, be held that the transaction
         of purchase by the appellants' predecessor Tayab Ali
         was also hit by Section 11 of SAFEMA. Consequently
         in 1981 when the purchaser purchased this property from
          Tahira Sultana she had no interest in the said flat which
         she could convey to the appellants' predecessor. In
c        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 ..... "

D                                              (Emphasis Supplied)

         25. The above position wholly and squarely applies to the
   present case. Admittedly, SAFEMA was applicable to both
   vendors here. One of the vendors, a detenu, who was covered
E by Section 2(2)(b), was issued notice way back on 8.12.2003
   under Section 6(1) of SAFEMA. The other vendor, wife of the
   detenu, was also issued notice under Section 6(1) in 2004
   once it transpired that she held 50% share in the said flat. Both
  vendors were served with notices under Section 6( 1) before
F transaction of sale in favour of the appellants. After the issuance
  of notices under Section 6(1) of SAFEMA to the vendors, the
  transaction of sale in favour of the appellants has to be ignored
  by virtue of Section 11 and on passing of the order of forfeiture
  under Section 7, the sale in favour of the appellants had
  become null and void. The order of forfeiture dated 23.06.2005
G under Section 7 of SAFEMA relates back to the issuance of
  first notice under Section 6(1) to one of the vendors.

       26. Section 11 is unequivocal and its object is clear. It
  intends to avoid transfer of property by the persons who are
H covered by clauses (a) to (e) of sub-section (2) of Section 2
 WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1127
              [R.M. LODHA, J.]

during the pendency of forfeiture proceedings. The provision          A
says that for the purposes of proceedings under the Act,
transfer of any property referred to in the notice under Section
6 or under Section 10 shall be ignored. In respect of a transfer
after issuance of notice under Section 6, the property referred
to therein, the holder cannot set up plea that he is a transferee     B
in good faith or a bona fide purchaser for· adequate
consideration. Such plea is not available to a transferee who
has purchased the property during pendency of forfeiture
proceedings.

     27. Learned Additional Solicitor General referred to a           C
decision of Madras High Court in the case of Parvathi BaP.
The Division Bench of Madras High Court referred to the two
decisions of this Court in Amratlal Prajivandas' and
Aamenabai Tayebaly2 and after noticing the relevant provisions
of SAFEMA held that the protection given to a bona fide sale          D
under Section 2(2)(e) would not extend to a sale made
subseqµent to the issuance of notice under Section 6 and in
violation of Section 11 of SAFEMA. We are in complete
agreement with the view of the Madras High Court in Parvathi
Bai3.                                                                 E

     28. It is true that the appellants had obtained
encumbrances certificates from the Sub-Registrar prior to
purchase which show that there were no encumbrances to the
subject flat. It is also true that the appellants had obtained loan   F
from Vijaya Bank, Brigade Road Branch, Bangalore for
purchase of the said flat. It is a fact that sale consideration to
the tune of Rs. 26 lakhs was paid directly by the Bank to the
vem:tors after the Bank was satisfied about the title of the
vendors. The appellants had also mortgaged the flat with the
Vijaya Bank as a security towards loan. But unfortunately these       G
facts are of no help to the appellants as the sale in their favour
was effected after notices under Section 6(1) were issued to
the vendors. Such sale has no legal sanction. The sale is null
and void on the face of Section 11; it is not protected so as to
                                                                      H
    1128       SUPREME COURT REPORTS                [2012] 8 S.C.R.


A enable the purchaser to prove that he is transferee in good faith
  for adequate consideration. As a matter of law, no title came
  to be vested in the appellants by virtue of sale-deed dated
  10.02.2005 as the vendors could not have transferred the
  property after service of the notice under Section 6(1) and
8 during   pendency of forfeiture proceedings under SAFEMA. The
  title in the subject flat is deemed to have vested in the Central
  Government on or about 08.12.2003 when the first notice under
  Section 6(1) was issued and served on one of the vendors. The
  vendors ceased to have any title in the subject flat on the date
C of transfer i.e. 10.02.2005. They had no transferable right. The
  appellants cannot claim any right in the flat. In the circumstances,
  question of according any opportunity to the appellants to prove
  that they are transferees in good faith with adequate
  consideration does not arise.

D          29. In view of the above, we find no merit in the appeal.
    The impugned order does not call for any interference. Civil
    Appeal is dismissed with no order as to costs.

    R.P.                                        Appeal dismissed.