Section 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:--
(a) every person--
(i) who has been convicted under the Sea Customs Act, 1878 (8 of 1878), or the Customs Act, 1962 (52 of 1962), of an offence in relation to goods of a value exceeding one lakh of rupees; or
(ii) who has been convicted under the Foreign Exchange Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), of an offence, the amount or value involved in which exceeds one lakh of rupees; or
(iii) who having been convicted under the Sea Customs Act, 1878 (8 of 1878), or the Customs Act, 1962 (52 of 1962), has been convicted subsequently under either of those Acts; or
(iv) who having been convicted under the Foreign Exchange Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), has been convicted subsequently under either of those Acts;
(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):
Provided that--
(i) such order of detention, being an order to which the provisions of section 9 or section 12A of the said Act do not apply, has not been revoked on the report of the Advisory Board under section 8 of the said Act or before the receipt of the report of the Advisory Board or before making a reference to the Advisory Board; or
(ii) such order of detention, being an order to which the provisions of section 9 of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the review under sub-section (3) of section 9, or on the report of the Advisory Board under section 8, read with sub-section (2) of section 9, of the said Act; or
(iii) such order of detention, being an order to which the provision of section 12A of the said Act apply, has not been revoked before the expiry of the time for, or on the basis of, the first review under sub-section (3) of that section, or on the basis of the report of the Advisory Board under section 8, read with sub-section (6) of section 12A, of that Act; or
(iv) such order of detention has not been set aside by a court of competent jurisdiction;
(c) every person who is a relative of a person referred to in clause (a) or clause (b);
(d) every associate of a person referred to in clause (a) or clause (b);
(e) any holder (hereafter in this clause referred to as the present holder) of any property which was at any time previously held by a person referred to in clause (a) or clause (b) unless the present holder or, as the case may be, 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.
Explanation 1.--For the purposes of sub-clause (i) of clause (a), the value of any goods in relation to which a person has been convicted of an offence shall be the wholesale price of the goods in the ordinary course of trade in India as on the date of the commission of the offence.
Explanation 2.--For the purposes of clause (c), "relative", in relation to a person, means--
(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);
(vii) any lineal descendant of a person referred to in clause (ii) or clause (iii).
Explanation 3@/[email protected] 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 accounts of such person;
(iii) any association of persons, body of individuals, partnership firm, or private company within the meaning of the Companies Act, 1956 (1 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 of individuals, partnership firm or private company referred to in clause (iii) at any time when such person had been or is a member, partner or director of such association, body, partnership firm or private company;
(v) any person who had been or is managing the affairs, or keeping the accounts, of an association of persons, body of individuals, partnership firm or private company referred to in clause (iii);
(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, 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.
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How courts have applied section 2
- The Act applies to a person against whom a COFEPOSA detention order has been made unless one of the four proviso contingencies to section 2(2)(b) applies.1
- A detention order set aside by a competent court takes the person outside the Act; no further SAFEMA proceedings can continue.2
- Forfeiture extinguishes only the rights of the person to whom the Act applies; bona fide tenants' rights are not automatically terminated.3,4
- A bona fide purchaser for adequate consideration before the show cause notice holds property in their own right and is not liable to forfeiture.5,6
- The burden of proving that property is not illegally acquired lies on the person affected, including relatives.7,8
- A substantial unexplained delay in initiating proceedings, such as twelve years, can vitiate the forfeiture proceedings.9
- Before confirming forfeiture, the Competent Authority must give the option to pay a fine under section 9 and hear tenants under section 19(1).10
- A joint notice to the main detainee and relatives is sufficient; service of a notice under section 6(1) on the holder of the property is required.11,12
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The judgements here mostly concern the scope of the SAFEMA's application under section 2(2), and the consequences of forfeiture orders made against persons covered by that provision. Courts have consistently held that the Act applies to a person against whom a COFEPOSA detention order has been made, provided none of the four contingencies in the proviso to section 2(2)(b) is attracted; a detention order revoked pursuant to a government statement before the Supreme Court, without any Advisory Board report or court order setting it aside, did not take the person outside the Act. Conversely, where the Supreme Court has set aside the detention orders, the Act ceases to apply and no further SAFEMA proceedings can continue.1,2
A recurring question is whether forfeiture can reach property held by third parties, such as relatives, associates, bona fide purchasers, or tenants. Forfeiture under the Act extinguishes only the rights of the person to whom the Act applies, or of a relative or associate having a nexus with that person in relation to the property, and does not automatically terminate the rights of a bona fide tenant. Property acquired by a bona fide transferee for adequate consideration before the show cause notice is not liable to forfeiture, as such a third-party purchaser holds the property in their own right, not on behalf of the detenu. However, the burden of proving that property is not illegally acquired lies on the person affected, and relatives must show that their properties were not traceable to illegal earnings.3,4,5,6,7,8
Several judgements address the validity of proceedings and the obligations of the Competent Authority. A delay in issuing a show cause notice after the death of a property holder does not vitiate proceedings if no prejudice is caused, but an inordinate and unexplained lapse of time in initiating proceedings, such as twelve years, can vitiate them, as proceedings must be initiated within a reasonable period absent a stay or other valid reason. In addition, before confirming forfeiture under section 7, the Competent Authority must give the affected person the option under section 9 to pay a fine in lieu of forfeiture, and tenants in occupation are entitled to be heard and to a thirty-day notice under section 19(1).8,9,10
The judgements also confirm procedural points. A joint notice to the main detainee and relatives is sufficient under the Act. Section 6(1) does not make it mandatory to serve the primary notice on the convict where forfeiture is initiated against his relatives; the notice must go to the person to whom the Act applies who holds the tainted property. Where a detention order was made solely to deal with an emergency and was revoked on the lifting of that emergency, SAFEMA proceedings founded on it do not survive. The judgements further show that the courts will not allow a reopening of concluded proceedings through a fresh jurisdictional objection or a collateral attack on the underlying detention in forfeiture proceedings.11,12,10,4,13
By court
Outcomes
Judgements applying section 2
SAFEMA forfeiture; COFEPOSA detention order; revocation/withdrawal of detention order; s.2(2)(b) SAFEMA proviso clauses (i)-(iv); Advisory Board; undertaking/statement by Union of India before Supreme Court; Customs Act 1962 s.135(1)(b) complaint and discharge; Gold (Control) Act 1968 s.85 penalties;
DismissedOpenM/S. Platinum Theatre and Others versus Competent Authority Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 and Another
Outcome: DismissedSAFEM(FOP) Act 1976 forfeiture of M/s. Platinum Theatre; burden of proof under s.8 on person affected; s.9 fine in lieu of forfeiture only if unexplained portion less than one-half; COFEPOSA detenu's partnership firm and associates under s.2(2)(b) and (d) with Explanation 3; unexplained investment Rs.13.12 lakhs;
DismissedOpenSAFEMA 1976: Supreme Court (Khanwilkar & Khanna JJ., 14-12-2021, CA Nos. 8592-8593 of 2010) held that a primary notice under s.6(1) need not be served on the convict when forfeiture targets properties held by his relatives; notice lies to the person to whom the Act applies holding the property;
AllowedOpenSAFEMA forfeiture; bona fide tenant rights not automatically terminated on vesting in Central Government; COFEPOSA detention of Krishna Budha Gawde; Section 3(1)(c) illegally acquired property; Section 6 notice and Section 7 forfeiture order; Section 19 possession; competent authority under Section 3(b);
AllowedOpenSAFEMA 1976 forfeiture; Appellate Tribunal for Forfeited Property FPA appeals; condonation of delay ~9 years; sufficient cause; Section 12(4) limitation from date of service; substituted service Section 22(b) affixture; sale after Section 6(1) notice void under Section 11;
DismissedOpenA bona fide purchaser of property challenged an eviction notice under the SAFEM(FOP) Act. The court quashed the notice, holding that the property had changed hands multiple times during the prolonged proceedings, and the purchaser was never given notice or a hearing.
Writ Petition (Civil)Open
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Legal heirs sought to reopen concluded SAFEMA property forfeiture proceedings by disputing the underlying detention and challenging Section 2(2)(b). The court rejected both challenges and dismissed the appeal, finding no jurisdictional error or legal infirmity warranting interference.
DismissedOpenThis judgment quashes an order forfeiting immovable property under SAFEMA. The Tribunal empowered that the appellants, being bona fide purchasers for valid consideration prior to the detention of the alleged smuggler, fall outside the Act's scope and are not liable for forfeiture.
SAFEMA forfeiture; Section 6(1) notice; 'person affected' versus 'any other person' under Section 6(2); COFEPOSA detenu relatives; Sridhana settlement; property omitted from notice stands outside forfeiture ambit; ministerial error plea rejected; Section 11 transfers-ignored provision inapplicable;
AllowedOpenSAFEMA 1976 forfeiture upheld; Section 6(1) notices dated 09.02.1997; lands in names of detenu Shakul Hameed's sons (Sheik Kamal; Hussain Jalal @ Hussain) bought during their minority; no independent income; link to tainted funds conceded via petitioners' own explanation;
DismissedOpenThree petitions arising from SAFEMA forfeiture proceedings against a detenu's relatives and the tenants of the forfeited building. The High Court quashed the order of detention and the consequential forfeiture orders, holding that SAFEMA proceedings could not survive once the detention order was revoked on the lifting…
AllowedOpenNazir Ahmedd Usmangani Digmar Heir and Legal Vs Competent Authority Under the Safem Act
Outcome: AllowedCommon judgment in three petitions arising from SAFEMA forfeiture of properties linked to a COFEPOSA detenu. The court quashed the detention order and the consequential forfeiture orders, holding the detention was solely to deal with the emergency, and that long-standing tenants could not be dispossessed without…
AllowedOpen
The Appellate Tribunal reviewed forfeiture orders under SAFEMA against lands and bank accounts in the names of the Appellant's deceased mother and brother. The Tribunal set aside forfeiture of minor bank balances but upheld forfeiture of immovable properties as the Appellant failed to discharge the burden of proving…
Appellants challenged the forfeiture of two flats as illegally acquired properties under SAFEMA, contending the 12-year delay in initiating proceedings after property identification was unexplained and prejudicial. The Tribunal found the delay unreasonable and not justified, setting aside the Impugned Order.
SAFEMA 1976 forfeiture; COFEPOSA detention 1975 (Emergency); Section 2(2)(b) person affected; Section 6(1) notice dated 31.03.1976; Section 7(1) forfeiture order dated 08.08.1995; Section 8 burden of proof on affected person not discharged by legal heirs; Section 9 option to pay cost where 50% consideration explained;
DismissedOpenSingle Bench of the Appellate Tribunal under SAFEMA dismissed an appeal by a widow against forfeiture orders passed under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976.
Umrao Bai v. Competent Authority, SAFEM(FOP) Act 1976 — S.6(1) notice (21.12.1977) and S.7(1) forfeiture (12.07.1995) of Sithik Alima's 50% share (wife of COFEPOSA detenu S.A. Yaseen);
DismissedOpenPetitioners challenged Section 6(1) SAFEMA forfeiture notices after their COFEPOSA detention orders were set aside by the Supreme Court. The court held that SAFEMA does not apply once detention is set aside under Section 2(2)(b)(iv), and quashed the notices.
AllowedOpen
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Petitioners challenged a SAFEMA authority's letter to the Sub-Registrar creating an encumbrance on property originally belonging to a COFEPOSA detenu. No forfeiture order under Section 7 had been passed despite notices in 2004 and 2006 and a 13-year lapse.
AllowedOpenFive appeals challenging property forfeiture orders under SAFEMA. The Tribunal held that the lapse of detention orders due to failure of confirmation under COFEPOSA does not invalidate prior forfeiture orders under SAFEMA, as the Act applies to persons against whom detention orders were validly made.
The Tribunal dismissed appeals challenging a property forfeiture order issued under SAFEMA/NDPS. The appellants argued that a Supreme Court order lapsing their detention invalidated the forfeiture.
The Tribunal held that the forfeiture order passed under Section 7 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 remains valid even if the underlying detention order under COFEPOSA lapsed by efflux of time due to lack of Government confirmation.