Section 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, 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 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 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).
(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.
(4) Where any shares in a company stand forfeited to the 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.
How courts have applied section 7
- Forfeiture under Section 7 requires a nexus between the illegal activity and the specific property; without it, the notice under Section 6(1) is jurisdictionally invalid.1
- The burden of proving that property is not illegally acquired lies on the person affected, under Section 8.2,3,4
- A bona fide transferee for adequate consideration before the show-cause notice holds the property in their own right and is not liable to forfeiture.5,6
- Forfeiture does not automatically terminate the rights of a bona fide tenant; it only affects the person to whom the Act applies.7
- Where the preventive detention order is quashed with finality, SAFEMA proceedings are not maintainable.8
- The Section 9 option to pay a fine in lieu of forfeiture is mandatory once its condition precedent is satisfied; it becomes available from the time that satisfaction is reached.9
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The judgements here deal mostly with the scope of forfeiture under Section 7, the conditions for its exercise, and the fate of property in the hands of third parties. Courts have upheld forfeiture where the property of the person affected was found to be illegally acquired, and the burden under Section 8 lay on that person. They have also held that a valid notice under Section 6(1) must establish a nexus between the illegal activity and the specific property; without such a link, the jurisdictional foundation for the notice is absent and subsequent forfeiture is vitiated. Forfeiture requires that the property be traceable to illegal earnings, and the burden of proving an independent source lies on the person affected.2,4,1,3,10
A recurring question is whether property held by third parties, such as relatives, tenants, or bona fide purchasers, is liable to forfeiture. Courts have held that the Act applies to persons specified therein holding property on their behalf; a bona fide transferee for adequate consideration before the show-cause notice holds the property in their own right and is not liable. Similarly, rights of a bona fide tenant do not automatically terminate upon forfeiture; only the rights of the person to whom the Act applies are extinguished. For relatives, forfeiture is possible if the property is traceable to the illegal activity, but the notice must be served on the holder of the tainted property, not necessarily the detenu.5,6,7,11,3,10
Threshold issues also recur. Courts have held that SAFEMA applies to every person against whom a COFEPOSA detention order has been made, unless one of the specified contingencies applies. Where the detention order is quashed with finality, the SAFEMA proceedings are not maintainable. However, a challenge to the detention order may be barred by finality of earlier decisions. Delay in initiating proceedings after the property is identified, without valid reason, can vitiate them. The limitation period for appeals is strictly construed: Section 12(4) allows only 60 days, and there is no power to condone delay beyond that.12,8,13,14,15
By court
Outcomes
Judgements applying section 7
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
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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.
DismissedOpenHanifa Mithu Padiyar(Amended as Per Order DT.10/07/26) Vs Competent Authority Safema/Ndps
Outcome: DismissedGujarat High Court upholds SAFEMA Appellate Tribunal order dated 02.05.2024 dismissing FPA No. 71/BOM/2000 as barred by limitation under Section 12(4) SAFEMA (45 days + 15 days = 60 days overall); no statutory power to condone further delay;
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;
DismissedOpenPetitioners challenged SAFEMA Competent Authority and Appellate Tribunal orders after their detention order was quashed by the Delhi High Court and the Supreme Court dismissed the Union's appeal. The court held the attachment could not survive and quashed both orders.
DisposedOpenA 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
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;
DisposedOpenThis 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.
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 forfeiture of a double-storied house under SAFEMA, claiming it was Stridhan. The Tribunal held that the wife failed to explain the source of construction funds, as her explanation regarding remittance from a deceased father was false.
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.
The Tribunal dissected a forfeiture appeal involving properties and foreign currency seized under SAFEMA. It held that the appellant failed to prove the source of funds for the undervalued Royal Palace flat, ordering its forfeiture, but set aside the forfeiture of the Smit Kinnari flat due to insufficient evidence of…
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SAFEMA 1976 forfeiture; COFEPOSA detention; Section 6(1) notice validity and recorded reasons; Section 18 investigation; Section 7(1) forfeiture order; Section 8 burden of proof on person affected; Section 9 fifty-per-cent lawful-source relief; relative as person affected under Section 2(2)(c);
DismissedOpenSAFEMA 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;
DismissedOpenMadras High Court; W.P.No.44211 of 2002; P.Rahamatoulla vs Competent Authority SAFEM(FOP) Act & NDPS Act, Collectors of Chengai-M.G.R. District (Kancheepuram) and Pondicherry, Registrar Appellate Tribunal for Forfeited Property New Delhi; writ of Certiorari under Article 226 of the Constitution of India;
DismissedOpen