Section 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 on his behalf, his known sources of income, earnings or assets, and 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 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, 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 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 be served upon such other person.
How courts have applied section 6
- A Section 6(1) notice must record reasons to believe and establish a nexus between illegal activities and the specific property; otherwise the notice is illegal and forfeiture is vitiated.1,2,3
- Section 6(1) does not require notice to the convict where action is against relatives; notice goes to the person holding the tainted property, who bears the reverse burden under Section 8.1
- Transfers of property after service of a Section 6 notice are null and void under Section 11, even against bona fide purchasers.4,5,6
- Property acquired by a bona fide transferee for adequate consideration before the Section 6 notice is not liable to forfeiture.7
- The Section 9 option to pay a fine in lieu of forfeiture is mandatory once the condition precedent is met; the fine is valued as on the date of forfeiture.8
- Forfeiture does not automatically terminate the rights of bona fide tenants; only the rights of the owner and those with nexus are extinguished.9
- Inordinate and unexplained delay in initiating proceedings after properties are identified can vitiate the proceedings.10
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The judgements here primarily concern the validity and scope of notices issued under Section 6(1) of SAFEMA, the consequences of forfeiture, and the procedural safeguards courts have enforced. Several decisions focus on the jurisdictional precondition that the competent authority must record reasons to believe the property is illegally acquired, and that the notice must establish a nexus between the detenu or convict's illegal activities and the specific property. Where such a link is absent, the notice is illegal and subsequent forfeiture orders are vitiated. Similarly, if proceedings are initiated after an inordinate and unexplained delay, they may be set aside. The burden of proof under Section 8 applies only after a valid notice has been issued.1,2,3,10
Courts have also clarified who must receive the notice and the effect of transfer of property after notice. Section 6(1) does not mandate service of notice on the convict when action is initiated against relatives holding tainted property; notice must issue to the person to whom the Act applies who holds the property, and that person alone bears the reverse burden under Section 8. Where notices under Section 6(1) were duly served, subsequent sales by the owner do not defeat forfeiture; transfers made after notice are deemed null and void under Section 11, affecting even bona fide purchasers. However, property acquired by a bona fide transferee for adequate consideration before the issuance of a show-cause notice is not liable to forfeiture.1,11,4,5,6,7
The judgements also address the remedies and benefits available to persons affected. Under Section 9, the option to pay a fine in lieu of forfeiture is mandatory once the condition precedent is satisfied; the fine is computed on the value as on the date of forfeiture. The rights of bona fide tenants do not automatically terminate upon forfeiture; only the rights of the owner or those with nexus to him are extinguished. Claims of ignorance of forfeiture orders have been disbelieved where notices were served and parties actively participated in proceedings. The application of SAFEMA extends to every person against whom a COFEPOSA detention order was made, unless one of the four contingencies in the proviso to Section 2(2)(b) applies.8,9,11,12,13
By court
Outcomes
Judgements applying section 6
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);
AllowedOpenmesne profits against Directorate of Estates; SAFEMA Sections 6, 7, 7(3), 14, 23; bar of civil court jurisdiction; forfeiture order quashed; proprietary rights revived; COFEPOSA detention; Commercial Courts Act Section 2(1)(c)(vii) commercial dispute immovable property lease; Section 11 CC Act;
SAFEMA 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;
DismissedOpen
Show 6 more
Original owners challenged the Appellate Tribunal's dismissal of their delayed appeals against forfeiture of their property under SAFEMA, citing non-service and lack of knowledge.
DismissedOpenThe Delhi High Court quashed forfeiture orders under SAFEMA, holding that notices failed to establish a nexus between the detenue's alleged illegal activities and the properties sought to be forfeited, rendering the proceedings void.
Writ Petition (Civil)OpenCWP-28766-2018; Punjab and Haryana High Court; Kuldeep Tiwari J.; COFEPOSA Act 1974 Section 3(1); MISA Ordinance 1974; SAFEMA / Act of 1976 Sections 6(1), 7(1), 7(3); forfeiture of House No. 267 Mota Singh Nagar Jalandhar; Friends Watch Company; detention order 15.04.1975; CRWP-127-1974;
DismissedOpenCourt dismissed writ petitions challenging forfeiture of property purchased from erstwhile owners. Held that sales after Section 6 notice under SFEM Act 1976 are void per Section 11, regardless of bona fide status, as Act applies retrospectively.
DisposedOpenHigh Court dismissed petitions by property purchasers challenging forfeiture orders under SAFEM Act 1976, ruling that sales made after a Section 6 notice were null and void, regardless of purchasers' bona fide status.
DisposedOpenThe Court dismissed three writ petitions filed by purported bona fide purchasers. It held that purchases made after a Section 6 notice under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act 1976 are null and void, regardless of the purchaser's lack of notice.
DisposedOpen
Neutral Citation: 2026:MHC:1367. W.P.No.20795 of 2002, High Court of Judicature at Madras, Division Bench (Dr. Justice Anita Sumanth, author; Justice Sunder Mohan), pronounced 02.04.2026, reserved 10.03.2026. SAFEMA 1976 Section 9 fine in lieu of forfeiture; COFEPOSA detenu Abdul Razak @ Asmath Pasha;
DisposedOpenSAFEMA 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;
DismissedOpenAppellate Tribunal quashed a forfeiture order under SAFEMA for property purchased in 1990 from legal sources, ruling that the competent authority failed to establish any nexus with smuggling activity occurring in 1999.
This 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.
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.
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Appellants challenged forfeiture of six properties under SAFEMA. The Tribunal held that properties acquired decades before relevant license issuance lacked nexus with alleged violations. Relying on FERA appeal finality and lack of smuggling link, it allowed appeals and ordered release.
This judgment allows appeals against an order forfeiting six properties. The court held that properties acquired years before the alleged violation lacked the required nexus for forfeiture, noting the acquittal in parallel foreign exchange proceedings.
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;
DismissedOpenSAFEMA 1976 forfeiture; Section 6(1) show-cause notice dated 18.02.1986; Section 7(1) ex parte forfeiture order dated 16.12.1996; Section 8 burden of proof on affected person and legal heirs; COFEPOSA detention order 20.12.1974; MISA detention;
DismissedOpen
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