Allowed

Fpa- 36/MUM/2016 of Ms. Shobha Grover v/s The Competent Authority, Mumbai

ATFP7 Feb 2017FPA- 36/MUM/2016

Case brief

AI extract

What is this about?

The Appellate Tribunal allowed the appellant's appeal against forfeiture of her Noida property under SAFEMA. The court held that the property owner, a bona fide transferee, was protected under Section 2(2)(e). The court set aside the order primarily due to the unexplained 16-year delay, which rendered the proceedings unsustainable and entitled the appellant to compensation.

What did the court decide?

Impugned order of forfeiture set aside; appellant directed to deposit Rs. 15,00,000/- within two months; interim order withdrawn.

Fpa- 36/MUM/2016 of Ms. Shobha Grover v/s The Competent… — Cheque Dishonour | ATFP (2017)

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APPELLATE TRIBUNAL

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(Under Section 12 of SAFEMA, 1976 as Amended by Finance Act, 2016)

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Date of Judgment: 07 February, 2017

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FPA- 36/MUM/2016

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Ms. Shobha Grover … Appellant Versus The Competent Authority, Mumbai … Respondent

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Advocates/Authorized Representatives who appeared

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For the appellant	:	Shri Aly Mirza, Advocate
For the respondent	:	Shri R.N. D‟ Souza, J.C. Shri Ratnesh Srivastava, I.O.
CORAM
JUSTICE MANMOHAN SINGH	:	CHAIRMAN
SHRI KAUSHAL SRIVASTAVA	:	MEMBER
SHRI ANAND KISHORE	:	MEMBER
JUGDGEMENT JUSTICE MANMOHAN SINGH	:	CHAIRMAN

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FPA- 36/MUM/2016

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The appellant Ms. Shobha Grover has filed the present appeal against the impugned order dated 19.02.2016 passed by the Competent Authority, SAFEMA/NDPSA, Mumbai whereby the Appellant‟s property No. B-7, Sector 26, NOIDA, Uttar Pradesh, had been forfeited to the Central Government as the appellant has been directed to surrender the possession to the Inspecting Officer in the Office of the Competent Authority & Administrator, SAFEMA/NDPS, Mumbai.

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FPA-36/MUM/2016

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Page 1 of 39

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The impugned order received by the Appellant on 26.02.2016 and the same is challenged by the appellant by filing of present appeal, interalia, on the following grounds. The details are mentioned below:-

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(i) The jurisdiction of the Competent Authority to initiate proceedings under SAFEMA is wrongly decided on the basis of residential address of the accused in the case as in the present case, Sh. Rajesh Bhasin, is the accused person against whom the order of detention dated 20.07.2009 is passed. He and his wife Smt. Deepshikha and his mother Smt. Jogindri Devi, were all residents of, NOIDA, Uttar Pradesh, as appears from the show cause notice dated 03.08.2000. Thus, the Competent Authority, Lucknow, had the authority to initiate proceedings under the Act. The Competent Authority, Mumbai did not have any jurisdiction in the matter. All the proceedings based on the said notice are null and void ab initio because by virtue of MOF, DOR, Notification No. 5 dated 16.03.2001, it was only the Competent Authority, Lucknow, which had the jurisdiction to initiate such proceedings. Subsequently, the Central Government, by GSR 85(E), dated 13.2.2008 and as corrected by GSR 35(E), dated 15.1.2010, allocated the Competent Authority at New Delhi, the jurisdiction of Uttar Pradesh, where NOIDA is located where the accused person reside. Thus, neither did the Competent Authority, Mumbai had any authority to issue the show cause notice under Section 6(1) of the Act dated 3.8.2000 and subsequently, which make all proceedings arising therefrom null and void ab initio as even according to the Competent Authority and notice issued under section 6(1) of the Act. The accused persons have been

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FPA-36/MUM/2016 Page 2 of 39

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residing at NOIDA, Uttar Pradesh. The appellant had specifically raised the issue of jurisdiction during the personal hearing granted in the matter and also in writing by way of the additional submissions. However, impugned order has been passed in a mechanical fashion, without any application of mind and this issue of jurisdiction has not even been dealt with in the impugned order.

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(ii) The respondent failed to appreciate that the property of the appellant cannot be forfeited in view of Section 2(2)(e) of SAFEMA, which reads as follows:

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“2. Application

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Application

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(1) The provisions of this Act shall apply only to the persons specified in sub-section (2).

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(2) The persons referred to in sub-section (1) are the following namely:-

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Xxxxxxxxx

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(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.” (Emphasis supplied)

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(iii) As the appellant has purchased the property in good faith it is completely excluded from the rigours of SAFEMA and the property in question, that is, Prop No. B-7, Sector-26, NOIDA is not liable for forfeiture. The above noted provision is in the nature of an

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FPA-36/MUM/2016

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Page 3 of 39

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exception clause to Section 11 of the Act and therefore the property in question cannot be forfeited.

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The respondent failed to appreciate that in the present case, Shri Rajesh Bhasin is stated to have been detained under the provisions of COFEPOSA. A notice under section 6(1) is stated to have been issued to his wife Smt. Deepshikha on 3.8.2000. However, the Smt. Deep Shikha referred to in the documents of sale and purchase, is the wife of Shri Rajesh Kumar and not Shri Rajesh Bhasin. These are two different persons and in view of the similarity of the name, the present proceedings are being conducted. Even otherwise if it is concluded that Shri Rajesh Kumar and Shri Rajesh Bhasin are on and the same person.

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On filing of an appeal and stay application, after small hearing the interim order was passed directing to the respondent not to take further steps for dispossession of the forfeited property during the pendency of the appeal subject to the appellant depositing an amount of Rs. 25000/per month with the respondent. Thereafter, after completion of pleadings, both parties have addressed their submission and order reserved on 22.11.2016.

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Counsel for the appellant has referred the following facts mentioned by the appellant in her pleadings:

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a) Plot No. B-7, Sector 26, NOIDA is a leasehold plot admeasuring 405 sq yards, the lease of which was granted by NOIDA [New Okhla Industrial Development Authority] on 29.01.1982 in favour of Sh. Ajit Jain, then aged 30 yrs, son of Sh. Chand Babu Jain, resident of 20 Copernicus Lane, New Delhi. A copy of the lease deed in favour of Sh. Ajit Jain is filed.

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FPA-36/MUM/2016 Page 4 of 39

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b) A registered Transfer Deed cum Sale deed dated 17.07.2000 was executed by Sh. Ajit Jain through General Attorney, Sh. Salil Chaudhary son of L N Chaudhary, resident of S-123, Greater Kailash-II, New Delhi; Sh. Salil Chaudhary through his Special Attorney Sh. Ajit Kumar son of Sh. Rajesh Kumar, resident of Wadhwa Complex, Shakarpur, New Delhi in favour of Ms. Deep Shikha wife of Rajesh Kumar resident of D-50, Sector 40, Noida. A copy of the registered Transfer Deed cum Sale Deed dated 17.07.2000 is filed as Annexure A/3 along with appeal.

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c) On 20.06.2001, a registered Transfer-cum-sale deed was executed in favour of Sh. Chander Parkash Sharma resident of D- 75, Gyandeep Apartments Mayur Vihar-I, Delhi. A copy of the registered Transfer Deed cum Sale Deed dated 20.06.2001 is filed as Annexure A/4 with the appeal.

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d) On 12.04.2005, an agreement to sell was executed by and between Surinder Singh and the Appellant in respect of the property. On 26.05.2005, the NOIDA authority issued transfer memorandum in respect of the property granting permission to the Appellant to purchase the said property. Consequent thereto, a registered sale deed dated 28.05.2005 was executed in favour of the Appellant. A copy of the agreement to sell dated 12.04.2005, transfer memorandum dated 26.05.2005 and registered sale deed dated 28.05.2005 are filed as Annexure A/5, A/6 and A/7 respectively alongwith the present appeal.

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(e) Admittedly the registered transfer sale deeds were executed after obtaining necessary approval/sanction from the NOIDA

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FPA-36/MUM/2016 Page 5 of 39

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authority in accordance with the law as the documents show that transfers have been allowed on applications and transfers made to the purchasers in respect of the property in question and the Appellant became a purchaser on the basis of sanction/permission being obtained from NOIDA.

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(f) Thereafter, the Appellant applied for sanction for further construction on the property on 11.11.2005, which was granted. The appellant also applied for an electricity connection on 10.02.2006, which was also granted. The completion certificate to the undersigned was issued by the NOIDA authority on 11.03.2008. The Appellant is in continuous possession of the said property and has been regularly paying the electricity and water dues. Copies of the application for building sanction, completion certificate, electricity bills, water bills are filed as Annexure A/8 with the appeal.

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It is the case of the appellant that for the first time on 03.12.2015, the Appellant has received a notice dated 17.11.2015 wherein a reference to show cause notice dated 03.08.2000 purportedly to be under Section 6(1) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 was made, but no copy was annexed therewith.

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The Appellant thereafter issued a letter dated 03.12.2015 seeking the said document. In response to the same, the respondent under its covering letter dated 08.12.2015 forwarded a copy of the purported show cause notice dated 03.08.2000. A copy of the notice dated 17.11.2015, Appellant‟s reply dated 03.12.2015 and the Respondent‟s letter dated 08.12.2015 are filed as Annexure A/9, A/10 and A/11 with the appeal. FPA-36/MUM/2016 Page 6 of 39

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It is stated by the Appellant that after enquiries with the NOIDA authority, she came to know about the Respondent‟s office at Khan Market, New Delhi had made an inquiry about the property vide its letter dated 12.05.2009 and the NOIDA authority had appropriately responded and intimated Khan Market Office about the transactions in respect of this plot. At no point of time, prior to the present notice dated 17.11.2015 the appellant had any intimation of any dispute involving this plot. The Appellant submitted her replies dated 07.01.2016, 08.01.2016 and also attended personal hearing at Mumbai, and also filed additional submission. Copies of replies 07.01.2016, 08.01.2016 and additional submissions are filed as Annexure A/12.

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It is submitted on behalf of the appellant by the counsel that in order to avoid harassment, without prejudice to her right to contest the matter on merit, she is willing to deposit/pay the value of amount mentioned in the sale deed executed by the original owner with the respondent though, the appellant has a good case on merits. The said proposal is not acceptable to the counsel for the respondent who submitted before us that such proposal can only be considered if the appellant is prepared to deposit the current value of the house and not from the date of first sale-deed executed by the accused person.

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The case of the Respondent

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The main case of the respondent is that the said property was purchased by Mrs. Deepshikha wife of detenue from Mr. Ajit Jain on 16.1.1999. Show Cause notice under section 6(1) of SAFMEMA was issued by the Competent Authority on 03./07.08.2000. Thereafter, on

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14.06.2001, Mrs. Deepshikha sold the property to one Mr. C.P. Sharma FPA-36/MUM/2016 Page 7 of 39

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s/o P.D. Sharma, r/o D-75, Gyandeep Apartment, Mayur Vihar, Delhi. Subsequently through the General Power of Attorney (GPA) holder, Mr. C.P. Sharma sold the said property to Mrs. Shobha Grover w/o Mr. Rajiv Grover (the present appellant) on 26.05.2006 who is the at present occupying the same. It is stated that after the date of show-cause notice i.e. 03/07.08.2000, Deepshikha has illegally sold the property to Mr. C.P. Sharma s/o P.D. Sharma. Thus, any sale transaction entered into by Mrs. Deepshika after the issuance of show-cause notice dated 03/07.08.2000 was null and void as held by the Hon’ble Supreme Court in the case of

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Aamenabai Taybaly Vs. Competent Authority under SAFEMA, AIR

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1998 SC 484 .

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In support of his submissions, Shri R.N. D‟Souza, Joint Commissioner appearing on behalf of the respondent has relied on Section 11 of SAFEMA and submits that after 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 purposes of the proceedings under this Act be ignored and if such property is subsequently forfeited to the Central Government under Section 7, then the transfer of such property shall be deemed to be null and void even if the appellant is genuine purchaser of the property who acquired it in good faith. The appellant, therefore, is not entitled for any compensation.

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It is also submitted by him that the appellant has no case in view of settled law particularly the law down by the Hon‟ble Supreme Court in the case of Winston Tan & Anr. Vs. Union of India & Anr. reported in 2012(SC2)-GJX-0495-SC and the said judgment is directly applicable to the facts of the present case as the appellant had purchased the property on FPA-36/MUM/2016 Page 8 of 39

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26.5.2006 which is much after issuance of show-cause notice under section 6(1) of SAFEMA by the Competent Authority on 03/07.08.2000.

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Pertaining to the objections about jurisdiction taken by the appellant, it is stated that the notification no. 3/98 dated 1^st May, 1998, issued by the Government of India, Ministry of Finance, Department of Revenue, states as under:

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“Provided that a case where the accused is detained in a state/union Territory falling in the jurisdiction of one Competent Authority and his illegally acquired property or his relatives/associates are located in a place falling in the jurisdiction of other Competent Authority, shall be dealt by the Competent Authority in whose Jurisdiction the accused is detained,”

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11.1 It is submitted on behalf of the respondent that in the present case,

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the detention order against Mr. Rajesh Bhasin, was issued by the Government of Maharashtra, hence the Respondent Competent Authority, Mumbai, rightly assumed the jurisdiction and proceeded to adjudicate the matter irrespective of the fact that the properties were located outside the territorial jurisdiction of the Competent Authority, Mumbai.

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11.2 The detention order was issued on 20.07.1999 by the Government of Maharashtra and the show cause notice under SAFEMA was issued on 3.08.2000 when the above said notification was in force. The Central Government vide a subsequent notification no. 5/2001 dated 16.3.2001 amended the jurisdiction according to the address/residence of the person affected. The show cause notice dated 3.08.2000 was adjudicated by the Competent Authority vide order dated 19.02.2016 when the second notification i.e., 5/2001 was in force.

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11.3 The Competent Authority assumed jurisdiction by initiating the proceedings under the Act vide the Show Cause notice, when the FPA-36/MUM/2016 Page 9 of 39

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Notification No. 3/98 was in force. There is no statutory provision for handing over the jurisdiction once it was assumed on the basis of a notification in force and SCN was issued, the Competent Authority was under legal obligation to complete the proceedings as the notification no. 5/2001 had not given any provision for transfer of cases pending before the Competent Authority as on 16.03.2001. Therefore, the Appellant has no force on the issue of the jurisdiction.

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On merit, it was argued on behalf of the respondent that in the present case the appellant had purchased the property in the year 2005, much after the issuance of show–cause notice dated 03/07.08.2000. Hence, Section 11 is applicable to the present appellant. Section 2(2)(e) is not a section for granting protection to any person from initiation of proceedings. The intention of the Parliament was to cover the properties which were disposed off by the detainee even prior to the issuance of show cause notice if such transfer was an attempt to evade the proceedings and in such cases the present owner of the property can be brought within the ambit of the Act as a “Holder” of the property under this section 2(2)(e). Therefore, said section is not a section extending protection, but, elaborately covering even the properties sold prior to the issuance of the notice, but with an exemption to persons who bought the property in good faith and adequate consideration. This exemption is not available to the persons who acquired the property under proceedings knowingly or unknowingly in violation to section 11 of SAFEMA.

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With regards other objection of delay raised by the appellant, it is submitted that the decision of the Hon‟ble Delhi High Court vide judgment dated 17.12.2004 passed in the case of Gulshan Ahuja and Ors. Vs. Union of India reported in 115 (2004) DLT 691 has no application in the present case as the said matter was decided on merit. The Hon‟ble Court FPA-36/MUM/2016 Page 10 of 39

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in appeal had merely made casual observations that if a party has a reasonable case on merit, the issue of delay can also be considered otherwise while interpreting provisions, it was noticed in the said decision that there is no doubt that the provisions of SAFEMA or for that matter COFEPOSA are stringent in nature; once a notice is issued under Section 6 of the Act, any transaction carried out thereafter would be null and void in terms of the provisions of section 11 of the ACT even if the order was passed subsequently under section 7 of the Act forfeiting the property. Thus, there is no force in the submission of the appellant‟s counsel about delay.

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It is submitted by him that the facts in the present case are different from the facts involved in the judgment of Gulshan Ahuja (Supra) case decided by the Delhi High Court as firstly, the High Court had not allowed the said petition only on the ground of delay in adjudicating the SCN. The Act does not specify any time limit for adjudication of a show Cause notice and like any proceedings before any quasi judicial body or judicial forums, each case may take it‟s own time depending on the nature, facts and circumstance of each case and also depend upon the infrastructure and logistics of the adjudicating authority.

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In order to explain the issue of delay, it is submitted on behalf of respondent that in the present case, the show cause notice contained different properties with different claimants in various forms, the impugned property in this case was also under various transfer claims and all these led to the reasonable delay in this case which cannot be a reason for invalidating the proceedings for want of such provisions in the Act. As in the present case before this Tribunal, the Show-cause notice dated 03/07.08.2000 was issued to the person affected when he was the FPA-36/MUM/2016 Page 11 of 39

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absolute owner of the property. The fact of issuance of show cause notice and the prohibitions and restriction by virtue of the same were duly communicated and served upon the authority, by registered post AD through the Sub-Registrar (Properties), A-27D, Sector 16, Nodia, UP, which was duly received as per acknowledgement on record.

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The proceedings under SAFEMA in respect of the subject property was duly intimated to the local authority who was under legal obligation to deny any transaction with respect to the impugned property. Therefore, the argument of the appellant is without any basis. The relied upon judgment stands distinguished from the facts of the present case. The delay is not fatal and immaterial in the absence of any provision of the act, the appellant cannot derive any benefit of the same.

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It is refuted by the Joint Commissioner appearing on behalf of the respondent that the appellant cannot claim that they cannot be punished for a mistake committed by others and they had acquired the property in good faith after getting the necessary clearances from the NOIDA Authorities, the appellant pleaded that the property may be released to her by recovering the cost of the plot as paid by her and that she is willing to pay for it. In reply, it is submitted on behalf of respondent that the property proceeded against by the department was the Plot only at the relevant time the subsequent construction made by the appellant is not a subject matter of the proceedings under SAFEMA i.e., building and structure was never held by any person covered by the Act. The issue here is whether the Appellate Tribunal is adequate to grant such a relief as the appeal is required to be decided in accordance with the provisions of Act. In this case the property in question is the open plot and the entire plot was ordered to be forfeited. The construction if any done by the appellant FPA-36/MUM/2016 Page 12 of 39

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is as per her own risk. Even there is no provision under section 9 of the SAFEMA for imposing redemption fine in respect of the entire property. As such this is not an acceptable proposal.

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Counsel for the appellant submits that Sub-Registrar was not the appropriate authority to inform about the proceedings pending against the original owner. The Noida Authority was the proper party. In case the notice was issued to the said property, the any of the sale transactions could not have happened. Even, the appellant would not have purchased the property. Even, it was admitted on behalf of the respondent that the Noida Authority was not communicated about the issuance of notice under section 6 of the Act upon the accused parties at the relevant period of time. There is a force in submission of the appellant on this aspect as the notice ought to have been served to the Noida Authority.

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The admitted facts in the present case are that one Mr. Rajesh Bhasin was ordered to be detained under section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 vide detention order No. PSA/18/SPL.3(A) dated 20.07.1999 issued by the Secretary to the Govt. of Maharasthra, Home Deptt. Mumbai. There is no dispute that Shri Rajesh Bhasin was covered under 2(2) (b) of the Act.

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The order of detention in respect of Shri Rajesh Bhasin is stated to have been passed on 20.07.1999. The basis of show cause notice under section 6(1) issued to his wife Deepshikha was this detention order. Nothing appears to have been done after issuance of this show cause dated 3.8.2000. The respondent did not pass the order under section 7 of the Act within a reasonable period of the issue the of Show Cause Notice which was the next step if reply to show cause notice was not given by the FPA-36/MUM/2016 Page 13 of 39

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noticees. On 20.06.2001 the property in question was sold by Smt. Deepshikha to Shri Chander Parkash by a registered sale deed after due permission from the NOIDA Authority, the perpetual leasor of the plot. Had the NOIDA authority been informed of the proceedings or of the issue of the show cause dated 3.8.2000, it would not have issued the sale permission/transfer memorandum on 14.6.2001 and the sale of the property to Shri Chander Parkash, could have been avoided. The in-action on the part of the respondent either by way of passing forfeiture order under section 7 of the Act or by way of informing the NOIDA Authority of the proceedings resulted in the sale of the property to the Appellant on 29.5.2005 by a registered sale deed and after permission was granted by the NOIDA authority by transfer memorandum dated 26.05.2005.

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It was for the first time on 12.05.2009, that the Competent Authority, New Delhi, wrote a letter to NOIDA authority seeking information. In response to the said letter NOIDA authority by its letter dated 13.6.2009, informed that the property had been sold to the appellant. The said correspondence was behind the back of the appellant and the appellant came to know of this when she made inquiries after receiving notice dated 17.11.2015 on 3.12.2015, much after the appellant had invested her money in the property and made constructions thereon.

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Even thereafter, there is a considerable delay and a notice for personal hearing was issued to the appellant after six years from 2009 on 17.11.2015, which was received by the appellant on 3.12.2015.

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18.1 As per Competent Authority, Mrs. Deepshikha is the wife of Shri Rajesh Bhasin and Mrs. Jogindri Devi is sister-in-law of Shri Rajesh Bhasin and they were titled as accused person 2 & 3 (AP-2 & AP-3) in the matter.

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FPA-36/MUM/2016

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Page 14 of 39

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18.2 Since Mrs. Deepshikha was the owner of the subject property which is also admitted by Shri Rajesh Bhasin, the show cause notice dated 03/07.08.2000 was also issued under section 6(1) of SAFEMA to the accused person(s) calling upon them to indicate within 35 days of receipt of the notice, the source of income, earnings or assets one of the property included in the show cause notice “Open Plot at B-7, Sector-26, Noida, U.P which is the subject matter of the present case. The said property was purchased earlier by Mrs. Deepshikha in March, 1999 for a consideration of Rs. 15 lakhs this fact was also admitted by her husband Shri Rajesh Bhasin in his statement made on 29^th September, 1999.

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18.3 As per the case of the Competent Authority, she was served with the show cause notice which was sent to the accused party on the address available on the record and it was returned undelivered by the postal authority, thus left with no choice, the service of the show cause notice of Shri Rajesh Bhasin and Mrs. Deepshikha was conducted by affixture under panchnama dated 26^th September, 2000 which is the proper mode of service as per the case of the Competent Authority. Therefore both were duly served under deemed service under section 22 of SAFEMA.

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It is admitted position that Smt. Deep Shikha sold the property to one Shri Chander Prakash Sharma (after the NOIDA authority gave permission for sale vide their Transfer Memorandum No. NOIDA/Res Plots/5704, Regn ID 30006627, dated 14.6.2001) by registered sale deed dated 20.06.2001. Shri Chander Prakash Sharma sold the property (after the NOIDA authority gave permission for sale vide their Transfer Memorandum No. NOIDA/Res Plots/5740, dated 26.05.2005) by registered sale deed dated 28.05.2005 to the appellant. Shri Chander Prakash Sharma was the person who held the property after Smt. Deep FPA-36/MUM/2016 Page 15 of 39

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Shikha (Affected Person) and before the Appellant (the present holder). The permission in favour of Shri Chander Prakash Sharma for purchasing the property from Smt. Deep Shikkha who was a transferee with adequate consideration. Chander Prakash Sharma is neither a relative nor an associate of Shri Rajesh Bhasin. The appellant purchased the property from the said Shri Chander Prakash Sharma (after obtaining permission from NOIDA) under a registered transfer cum sale deed.

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The case of the appellant is that she is to be treated as a bonafide purchaser (without notice) for adequate consideration is exempted from the provisions of SAFEMA by virtue of Section 2(2)(e) of the Act and therefore property No. B-7, Sector-26, NOIDA is liable to be released from the mischief of the provisions of SAFEMA.

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The impugned order in the above said matter was passed on 19^th February, 2016 after the gap of about more than 15 years and four months from the date of the Show Cause Notice viz 3.8.2000. Section 6 of the SAFMEA reads as under:

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Notice of Forfeiture:- (i) 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, 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.

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(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.

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FPA-36/MUM/2016 Page 16 of 39

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It is pertinent to mention here that once the notice is deemed to be served under section 22 of SAFEMA, the Competent Authority was supposed to pass the order in the absence of reply which was not filed by the accused party. However, the Competent Authority has taken about 16 years to pass the order under section 7 of the Act without any valid explanation of such delay. It appears from the said provisions that if the show cause to the accused persons are served, and thereafter if objections are filed or not, the next steps by the Authority are to be taken under section 7 of the Act, as per procedure which read as under:

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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.

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(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 identify 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).

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(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.

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The learned Joint Commissioner for the respondent has heavily relied upon the judgement of the Supreme Court in the case of Wintson Tan, supra wherein the provisions and impact of section 11 was discussed in detail in a somewhat similar set of facts. The said case was finally

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FPA-36/MUM/2016

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Page 17 of 39

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decided in favour of the Department and the impact of section 11 was upheld. Hon‟ble Supreme Court has held as under:

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“25………Admittedly, SAFEMA was applicable to both vendors here. One of the vendors, a detenu, who was covered by Section 2(2)(b), was issued notice way back on 08.12.2003 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 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 under Section 7 of SAFEMA relates back to the issuance of first notice under Section 6(1) to one of the vendors.

¶95

26. Section 11 is unequivocal and its object is clear. It intends ot avoid transfer of property by the persons who are covered by clauses (a) to (e) of sub-section (2) of Section 2 during the pendency of forfeiture proceedings. The provision says that for the purposes of proceedings under the Act, transfrer 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 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 the pendency of forfeiture proceedings.

¶96

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 from Vijaya Bank, Brigade Road Branch, Bangalore for purchase of the said flat. It s 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 the Vijaya Bank as a security towards loan. But unfortunately these 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 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 during the pendency of forfeiture proceedings under SAFEMA. The title in the subject flat is deemed to have vested in the Central Government on our 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

¶97

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¶99

the subject flat on the date 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.

¶100

Apparently in the present case, even with the failure to file the reply within 45 days by the appellant no. 1 and the appellant no. 2, the Competent Authority did not pass the order under section 7 for Forfeiture of Property for more than 15 years. It also appears that during this period the property has not been vested with the Central Government under section (7) of the Act in the absence of order.

¶101

As far as the proposition of the law is concerned, one cannot dispute that once the notice under section (6) of the SAFEMA has been issued the subsequent sales of the forfeited property are to be ignored and when the forfeiture orders are issued subsequently, the transfer of such property shall be deemed to be null and void. However, in the present case no order was passed under section (7) either before the first sale when Mrs. Deepshikha sold the property to Shri Chandraprakash Sharma on 14^th June, 2001 or before 12^th April, 2005 when the agreement was executed in favour of the appellant and ultimately the property was sold to the present appellant. There was complete silence by the authority for more than 15 years and particularly inordinate delay for more than six years when admittedly the respondent was aware in 2009 when reply were received from Noida Authority that the present appellant had purchased the property and the owner thereof and occupying the same. Copy of the Notice dated 3.8.2000 under section 6 of the Act was for the first time provided to the appellant only in November, 2015. There is no

¶102

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¶104

explanation at all for such a long delay on the part of the respondent as well as inordinate delay on the part of the Competent Authority.

¶105

Therefore it is to be considered whether the present case is covered within the provision of Section 11 of the Act in the absence of impugned order to be passed by the Competent Authority of section (7) of SAFEMA within a reasonable period. It is not denied by the respondent that in the present case the said order was not passed earlier and the same was only passed on 19^th February, 2016. In the intervening period, the property has changed several hands and the same has been purchased by the appellant in 2005. Section 11 of the SAFEMA reads as under:

¶106

11. Certain transfers to be null and void .- Where after the 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 Government under section 7, then, the transfer of such property shall be deemed to be null and void.

¶107

[Emphasis supplied]

¶108

It mandates under the said provision that the transfer of the property is to be declared as null and void once the order under Section (7) was passed and thereafter the said Forfeited Property would vest in the Central Government. Under these circumstances the transfer could have been declared null and void under Section 11 of the Act in the present case, if in the absence of the reply of the accused party, the forfeiture would have been passed within a reasonable period of the issue of the notice under section 6(1) of the Act and in any case in a reasonable period after coming to know from the Noida Authority in 2009 about the property being held by the present owner. The appeal filed by the present appellant would not be maintainable as there is a presumption once the notice under section (6) of the SAFEMA was issued and the reply to the same having not been

¶109

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¶111

filed even after service, order under section (7) is deemed to be passed, admittedly the forfeited property is vested with the Central Government. However, the facts and circumstances in the present case are totally different.

¶112

Respondent has relied on the judgment in the case of Winston Tan & Anr vs Union of India - (Supra). In the said case section 6 notice was issued on 8.2.2003, the property was sold to the Appellants on 10.2.2005. The order forfeiting the property was passed, rightly so, on 23.6.2005. It was held by the Hon‟ble Supreme Court that the transfer of the property in the said case was null and void in view of Section 11 of the Act, show Cause Notice under section 6 ibid having already been issued earlier. However, the present case is different from the above noted judgment for the following reasons:

¶113

(i). In the said judgment there was no delay which in the present case is 16 years. In the cases of Gulshan Ahuja(supra) the delay was of 18 years and Chandan Saha (supra) 10 years.

¶114

(ii). Although encumbrances certificates were obtained, it was not a case where prior permission for sale was required. In the case of Gulshan Ahuja(supra) the property was converted into freehold despite a section 6 notice thereby allowing the transfer of the property. In the present case, NOIDA authority first issued permission to transfer the property to Chander Prakash Sharma in 2001 and thereafter permission was again issued in 2005 in favour of the Appellant. The forfeiture order in the present case was passed in 2015 after a long delay of 16 years from Show Cause Notice.

¶115

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¶117

(iii). This was not a case dealing with the exempted category of persons under section 2(2)(e) of the Act, which fact was itself acknowledged by the Ld. ASG in para 14 of the judgment “ He argued that transaction of sale 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). ” For the applicability of section 2 (2)(e), there has to be at least one person between the present holder and the affected party and in-as-much as in the said case the property was purchased directly from the affected party, no question of section 2(2)(e) arose. In the present case, the appellant was a bonafide purchaser on value from Shri Chander Prakash Sharma/his GPA holder, who in turn was a bonafide purchaser on value from the A.P-2, Ms. Deepshikha. Further, neither the appellant or Shri Chander Prakash Sharma were “relative” or “associate” within the meaning of the Act.

¶118

The ratio of the said judgment is therefore not applicable to the present case.

¶119

Even the judgment in the case of Anwer Pyarlali Masani vs. State of Maharashtra, is not in consonance with the facts of the present case in which permission has been granted by NOIDA authority to transfer the property twice after issuance of notice under section 6 of the Act. The said judgment relies upon the case of Winston Tan, which has been distinguished above.

¶120

The judgment in the case of Sanjeev M. Deshmukh vs. Competent Authority, is also not applicable in the facts of the present case as in that case, no permission was granted by the government authority for transferring the said property and also the property was sold directly by the detenu to the petitioner without their being any person between the FPA-36/MUM/2016 Page 22 of 39

¶121

two. In the present case, there were sale permission(s) granted by the competent authority NOIDA at the two stages of transfer (after issue of Show Cause Notice in 2000) coupled with the fact that the proceedings have been pending for the past 16 years without any explanation for the delay. Also the present case squarely covered under the provision of section 2(2)(e) of the Act.

¶122

Section 2(2)(e) of SAFEMA reads as under:-

¶123

“(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.” ( Emphasis supplied)

¶124

From reading of the provision it appears that there is an exception to the rigors of the Act as it provides for forfeiture of property “ unless” there is a bonafide transferee between the present holder and the affected person.

¶125

Admittedly in the present case, Mr. Chander Parkash Sharma was the person who held the property after Smt. Deep Shikha (the main accused person). The permission in favour of Chander Parkash Sharma for purchasing the property from Smt. Deep Shikha was granted by the Noida Authority, he was a transferee against the consideration. Chander Parkash Sharma is neither a relative nor an associate of Sh. Rajesh Bhasin and there is no such allegation even. The Appellant have purchased the property from the said Chander Parkash Sharma (after obtaining permission from NOIDA) after praying the consideration. The appellant is therefore exempted from the provisions of SAFEMA by virtue of Section 2(2)(e) of the Act.

¶126

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¶128

The contention of the respondent that no purchaser under any circumstances is protected if the property was transferred after issuance of notice under section 6 by virtue of section 11 of the act or that all transfers after issuance of notice under section 6 are void ab initio, is without any force, as there is no requirement of reading Section 2(2)(e), if the proceedings under the provisions of the act have not been initiated by issuance of Section 6 notice. It is only after issuance of section 6 notice that one would refer to the provision of Section 2(2)(e). In the present case no such circumstances have happened. As Shri Chander Prakash Sharma has not been issued notice u/s 6 of the Act in 2000 nor to the appellant by the respondent atleast from the date of knowledge in 2009 when Noida Authority had informed the respondent about the transaction of the same in favour of the appellant.

¶129

The respondent during the course of arguments relied upon the judgment in the case of Winston Tan vs. Union of India and the said judgment itself, while discussing the scheme of the Act, in para 22 quotes as follows:

¶130

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 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 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 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.

(Emphasis added)

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In the present case, there is a force in the submission of the appellant that had the appellant known about the proceeding against Shri Rajesh Bhasin or any other accused person in respect of this property, there was no question of her purchasing the property. The prolonged delay of 16 years in this matter is unjustified especially when the appellant‟s immoveable asset is to be forfeited. This ground is enough for allowing the present appeal. The property, that is, Prop No. B-7, sector 26, NOIDA is a leasehold property, and the deed was executed and registered on 29.01.1982 in favour of Shri Ajit Jain aged 30 yrs s/o Shri Chand Babu Jain. Subsequently, the said property changed hands by registered sale deed, after seeking all required permission from the NOIDA authority and finally came to vest in the appellant by registered sale deed dated 28.05.2005. The perpetual lease-deed dated 29.1.1982 governs the relationship effectively between the NOIDA authority on the one hand and the appellant on the other i.e. the contractual relations between the parties. The said perpetual lease deed can only be terminated in accordance with the terms of the perpetual lease deed.

¶135

It has been pointed out by the Appellant that she had absolutely no notice of the proceedings till the notice of personal hearing 17.11.2015 received on 3.12.2015. This fact has not been disputed by the Competent Authority. The office of the Competent Authority itself was negligent in pursuing the matter diligently and even after initiation of proceedings under COFEPOSA/SAFEMA, they did not take any steps for proper intimation of the proceedings under SAFEMA in respect of the subject property to the concerned authorities or by display of suitable notice/warning at the concerned plot to any intending purchasers.

¶136

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¶138

It has been contended on behalf of the Competent Authority that a letter dated 6.10.2000 was sent to the Sub-Registrar (Properties), A-27D, Sector 16, NOIDA. Firstly, no such fact of sending any notice to the SubRegistrar (Properties) was brought to the notice of the Appellant at any point of time and secondly, the sending of notices to the Sub-Registrar (Properties) in the absence of any power vested in them for acting thereon is meaningless. Thirdly, the Sub-Registrar (Properties) and NOIDA are two different entities and sending a letter to the Sub-Registrar (Properties) does not amount sending a letter to NOIDA.

¶139

The Appellant appears to be a bonafide purchaser for valuable consideration of leasehold rights on fulfilling all the terms & conditions laid down by the authorities. In this respect, it is pertinent to note that the appellant entered into this transaction after obtaining sanction for transfer of leasehold rights from the NOIDA Authority. Had there been any objection to the said transfer, no such permission would have been granted. That the NOIDA authority gave the permission or in other words issued the transfer memorandum for the transfer of the property in question firstly in favour of Deepshikha and thereafter in favour of Chander Parkash Sharma and thereafter in favour of the Appellant is an ample indication that even the said authority was not aware about the proceedings under COFEPOSA/SAFEMA. When the concerned government instrumentality responsible for giving no objection/permission for transfer of property between parties was itself not aware about the proceedings under COFEPOSA/SAFEMA which was being conducted by another government instrumentality, it cannot be expected that a private citizen such as the Appellant would be aware of the said proceedings. The Appellant is/was a bonafide purchaser for

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consideration without notice. It was incumbent upon the Respondents that if some proceedings were pending in respect of the property in question under COFEPOSA/SAFEMA, they should have notified public at large from dealing with the said properties. No such warning/caveat was ever issued by the Respondents. While the Appellant is sought to be penalised by forfeiting her property, no action appellant have been taken against the officers of the Respondents who allowed the property in question to change hands by their acts of omission/commission. Even if penal action is taken against the errant officials of the respondents, it cannot be said that it would be recompense to the Appellant who invested her life savings in purchasing the said property and thereafter further made construction of building in the plot after obtaining the building sanction and electricity connection.

¶143

There has been a delay of around 16 years in the matter. The long delay in the matter is a ground in itself for discharging the appellant‟s property and withdrawal of the notice dated 3.8.2000, if the appellant has reasonable good case of merit.

¶144

The procedure adopted by the Competent Authority, Delhi in the matter evidences that on 12.5.2009, the Competent Authority, Delhi issued a letter to the NOIDA Authority seeking information, inter-alia , regarding the property in question. In its reply, the NOIDA Authority informed the Competent Authority, Delhi that the property in question presently stood in the name of Appellant. If the argument of the Competent Authority, Mumbai is to be believed that it had jurisdiction to decide all pending matters, then there was no occasion for the Competent Authority, Delhi to have issued a letter to the NOIDA Authority. However, FPA-36/MUM/2016 Page 27 of 39

¶145

like the Competent Authority, Mumbai, no action was taken by the Competent Authority, Delhi.

¶146

It is evident from the impugned order dated 19.2.2016 that no reply was ever given by the Affected Parties No. 1 and 2, namely Rajesh Bhasin or his wife Deepshikha, to the show cause notice dated 3.8.2000. In the absence of any reply from the said Parties, normally the Competent Authority should have passed the order within a short-span of time. We have failed to understand why the order was not passed against the effected parties once the reply was not filed of the show cause notice dated 3.8.2000. Ultimately the Authority has passed the impugned order only on 19.2.2016. There are no valid reasons or explanation whatsoever mentioned in the impugned order as to why there was a long delay of 16 years in passing the impugned order. Even during the hearing before this Tribunal no justification is given as to why, if no reply to the show cause notice was filed by the Affected Parties, the order of forfeiture was not passed within a reasonable period of time of the issue of the Show Cause Notice under section 6 of the Act.

¶147

It appears that there was complete inaction on the part of the Competent Authority, Mumbai after the issue of the Show Cause Notice under section 6 of the Act. In fact, the said delay on the part of the Office of the Competent Authority is one of the main reason which resulted in the transfer of property from Deepshikha to Chander Prakash Sharma on 20.6.2001 and, subsequently, in the transfer of property from Chander Prakash Sharma to the Appellant on 28.5.2005. The respondent cannot now be permitted to take advantage of its own wrong and continued

¶148

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inaction in the matter due to which the forfeiture order came to be passed after a long period of 16 years after issue of show cause notice.

¶151

There is no material on record to show that the appellant was aware of any proceedings in respect of the property in question pending under the provisions of SAFEMA or any other law at the time of purchasing the property. It is also a matter of record that at no point of time was the NOIDA Authority the perpetual lessor of the said property, informed about the pendency of the proceedings under the provisions of SAFEMA. As the property could not have been transferred without the permission/sanction of the NOIDA Authority, it was necessary on behalf of the Competent Authority, Mumbai to have at least intimated that authority in 2000 itself when no reply was filed against the main dispute and would have asked the NOIDA Authority that no permission for transferring the property in question should be granted.

¶152

It is not denied by the respondent that the property in question was purchased only after obtaining the requisite permission from the NOIDA Authority. In the impugned order it is mentioned that a copy of the show cause notice was sent by letter dated 6.10.2000 to the Sub-Registrar, NOIDA dated 6.10.2000 which is of no consequence. The Sub-Registrar, NOIDA is a separate and distinct authority from the NOIDA Authority, which is in charge of giving permission for transfer of plots in NOIDA, Uttar Pradesh. No explanation has been given by the Competent Authority as to why no such letter was written to the NOIDA Authority.

¶153

It is rightly submitted on behalf of the appellant that in the absence of any letter to the NOIDA Authority, permission was first granted to Deepshikha to transfer the property to Chander Prakash Sharma and FPA-36/MUM/2016 Page 29 of 39

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thereafter to the Appellant for purchasing the property in question from Chander Prakash Sharma. It is evident that it is the sheer negligence of the Competent Authority, which has led to the present predicament of the Appellant and it cannot take advantage of the same to the prejudice of the Appellant by forfeiting the property in question.

¶155

In the case of Gulshan Ahuja & Ors.vs. Union of India &Ors.115 (2004) DLT 691. In the said case the notice under section 6 of SAFEMA was issued on 29.4.1980 and the final order came to be passed on 5.8.1998 i.e. after 18 years. In the interregnum, in the year 1996 the properties in question were converted from leasehold to freehold by execution and registration of a conveyance deeds and the property was sold to a third party vide registered sale deeds on 9.3.998. The order of forfeiture was challenged before the Tribunal, which dismissed the appeal. However, a Ld. Single Judge of the Delhi High Court set aside the order is also the forfeiture order passed by the Competent Authority, by observing as follows:

¶156

“42. In the present case, however, an important aspect to be considered is the 18 years' delay in passing the order between the date of issuance of the notice under Section 6 and the passing of the order under Section 7 of SAFEMA. The Appellate Tribunal in certain cases referred to by learned counsel for the petitioner has found such delays fatal. In my considered view, if the properties had continued to vest with the original owners, even this inordinate delay of 18 years could not have influenced the decision to be arrived at in the matter. However, the material fact in the present case is that the properties have been purchased through Regd. documents by bona fide purchasers when the Department itself had delayed the proceedings for 18 years. This delay has occurred despite the fact that Shri H.K. Sarin had responded to the notice in 1981 and there was no interdict by any competent court in passing the order. Even if more than one property was involved, a delay of such magnitude cannot be expected

¶157

43. I am not in agreement with the findings arrived at by the Appellate Tribunal that the purchasers had to do anything more than what they had done. Any enquiry from the Registry would have served no purpose since no intimation is sent to the Registrar's office. Thus, a bona fide purchaser was required to look into the previous title and see whether any doubts were cast on the property. There

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was no manner by which petitioners could have known of the notice under Section 6 of SAFEMA.

¶161

44. The most material aspect while considering the aforesaid plea is the factum of the execution of the conveyance deeds in 1996 by the President of India through the Land and Building Department in favor of Shri H.K. Sarin and Shri S.K. Sarin. The sale deeds in favor of the petitioners had been duly registered and proceeded on the premises of the title in favor of the vendors in pursuance to such conveyance deeds. If the proceedings were continuing under SAFEMA, there was no occasion for the Government to have executed the conveyance deeds in favor of Shri H.K. Sarin and Shri S.K. Sarin. No doubt, this has also arisen on account of the absence of any procedure by the authorities to send intimation of such proceedings under Section 6 of SAFEMA to the perpetual Lessor.

¶162

45. If the plea of the learned counsel for the respondent was to be accepted, then all transactions after issuance of the notice under Section 6 of SAFEMA would be null and void. Learned counsel for the respondent contended that the perpetual Lessor ought not to have executed the conveyance deed in favor of Shri H.K. Sarin and Shri S.K. Sarin. If that be, then even those transactions would be held to be null and void. The result would be that the petitioners would suffer as a consequence of the Government of India having executed conveyance deeds in favor of Shri H.K. Sarin and Shri S.K. Sarin. As noticed above, these are conveyance deeds executed on behalf of the President of India by the Land and Building Department.

¶163

46. If the aforesaid plea were to be accepted, then petitioners must be compensated for the loss caused to them by the action of the Government of India and certainly this court in proceeding under Article 226 of the Constitution of India would be competent to do so where the consequence is writ large on its face. If the properties were to be forfeited, they would be put up for auction. The prices which the properties would fetch from the auction, would be the only adequate compensation to the petition rs who were deprived of their property in pursuance to the proceedings under the SAFEMA. The result would be that the property would be taken from one hand and the compensation given to the petitioners on the other hand. It would not amount to appropriation to the Government of any realisations from the forfeited property. The Government cannot be given a premium for one limb of the Government not knowing what is happening in the other limb.

¶164

47. In my considered view, this aspect cannot be ignored despite the stringent provisions of SAFEMA. If the delay of 18 years is considered along with this aspect of the Government itself having executed the conveyance deed 16 years after the notice was issued under Section 6 of SAFEMA and the petitioners having purchased the property vide Regd. Deeds on the basis of such conveyance deeds, the properties which lie in the hand of the petitioners cannot be forfeited under the provisions of Section 7 of SAFEMA.

¶165

48. In view of the aforesaid, a writ of mandamus is issued quashing the impugned orders of the appellate authority and the competent authority forfeiting the properties of the petitioners. The rule is made absolute leaving the parties to bear their own costs.”

¶166

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¶168

In the present case also permission was granted by the Competent NOIDA authority firstly for transferring the property to Chander Prakash Sharma and permission was again granted for transferring the property to the Appellant, which was around five years after the notice under Section 6 claims to have been issued. The case of Gulshan Ahuja (supra) had the similar facts and thus is applicable to the facts of the present case.

¶169

The case of Chandan Kumar Saha vs. Competent Authority (1989)179 ITR 183 is also relevant where the delay of 10 years in Section 6 proceedings was considered to be fatal. In this case, it was held as follows:

¶170

This Tribunal had the occasion to make some observations on the liability of relations, persons of associates, in Mira Rani Mazumdar v. Competent Authority [1987] 166 ITR 230 while taking note that the definition of the term "person" in section 2 of the SAFEMA is wide embracing and this was to cover clandestine holding of properties in other persons names by smugglers and foreign exchange manipulators, and tracing and pursuing them in their hands. It was observed (at p. 236) :

¶171

"However, at the same time, one has to act with caution and circumspection so that the relations, partners or associates who may have otherwise nothing to do with smuggling or foreign exchange manipulations or properties connected therewith, and may be, even ignorant of the activities of the detenu, are not unnecessarily harassed and penalised. Some semblance of nexus may be desirable..."

¶172

Another peculiarity in the present case is that when the earlier Competent Authority did not proceed further in the proceedings after April 22, 1978, his successor restarted them without any special reasons more than ten years later in May, 1988. In case the proceedings were earlier left in abeyance because of the pendency of the challenge to detention under the COFEPOSA Act before the Supreme Court, that circumstance had not changed in May, 1988. The writ petition in this regard is still pending.

¶173

The following observations in Mira Rani Mazumdars case [1987] 166 ITR 230 may be referred to here with advantage (at p. 236) :

¶174

"Similarly, when no time factor is prescribed with regard to the acquisition of assets, and the forfeiture process may commence even with regard to properties acquired before the enactment of this legislation, still a reasonable limit has to be kept in view and no

¶175

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long-buried graves may be dug out. This may appear appropriate also as human memory limitations to explain the source of acquisitions of properties acquired long back cannot be ignored. At the same time, where some positive nexus with clandestine activities exists or is patently a pointer, the time factor alone should not stand in the way of the forfeiture process. It may not be of place to mention here that even under the Income Tax Act, vide sections 147 and 148, where income has escaped assessment on the omission or failure of the assessee to make disclosure or on information received independently, the Income Tax Officer is entitled to start assessment or reopen past assessments if the income pertains to a period of four years or eight years. It is only in exceptional circumstances where the amount involved is fairly large that the period is extended up to 16 years."

¶178

Even under the Narcotic Drugs and Psychotropic Substances (Amendment) Act, 1988, which has analogous forfeiture provisions as in the SAFEMA, the proviso to section 68C prescribes a limitation of six years from the acquisition of the property within which forfeiture can be effected. It reads as under :

¶179

"... provided that no property shall be forfeited under this Chapter if such property was acquired by a person to when this Act applies before a period of six years from the date on which he was charged for an offence relating to illicit traffic..."

¶180

The Bombay High Court as well, in a recent decision in the case of CIT v. Harinagar Sugar Mills Ltd. MANU/MH/0152/1988 : [1989] 176 ITR 289, observed that even where no limitation is prescribed for taking recourse to a statutory provision, delay or rather inordinate delay may be an aspect which the court can consider for quashing the proceedings.

¶181

Even under the Limitation Act, the provisions of which are otherwise not technically applicable to the SAFEMA where no period of limitation is prescribed elsewhere in the schedule or the division, the suit or application can be brought within three years of the accrual of the right to sue or apply, vide articles 113 and 137. In the Criminal Procedure Code also, limitation has started to be introduced with regard to certain types of offences.

¶182

The inordinate delay of over ten years in the present case in reviving the proceedings has not been explained by the Competent Authority. Had the case been one where, for certain reasons or happening of events, the proceedings had been stayed, and those reasons have disappeared or events have happened, the revival would be permissible after their so happening. Limitation in such cases may have to be ignored. However, in the present cases, no such circumstances have been brought out. The inordinate delay of more than ten years, therefore, in the present cases, vitiates the proceedings under the impugned orders.

¶183

The result, therefore, is that the appeals are allowed and the impugned orders quashed.

¶184

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¶186

The appellant also relies upon the case of Md. Golam Rasul MIA vs. Competent Authority passed by the Tribunal where 7 years delay in initiating proceedings under the provisions of SAFEMA was quashed by observing as follows:

¶187

“ 7. Keeping the above propositions in view, we have examined the case before us. Properties in question were acquired way back in 1973 and 1974. The appellant had been carrying on petty business in grocery goods and did not have any taxable income. After getting a report from the Income-tax Officer, B-Ward, Dhubri, in 1980, the Competent Authority took more than seven years to record his reasons for forming the belief for issuing a notice under section 6(1). There was no explanation forthcoming for justifying the delay. The appellant not being obliged to keep any accounts was obviously placed in a difficult position in the matter of tendering evidence regarding the source of acquisition of the properties specified in the notice under section 6(1). We, therefore, hold that they delay in initiating the proceeding for forfeiture of property in this particular case was inordinately long and without any justification and we, accordingly, hold that the order of the Competent Authority made on August 25, 1988, in pursuance of the proceeding initiated on December 23, 1987, is not sustainable. The order is, accordingly set aside.

¶188

It is stated that by the respondent the delay cannot be an issue in the present case as no application was made to the competent authority/supervising authority for expediting the present case even though the same was pending since the year 2000. This contention is highly misconceived as the Appellant was not aware about any such proceedings for forfeiture of the property in question till December 2015. Under these circumstances no application for expediting the same could have been filed. The Competent Authority, Mumbai concedes that the Appellant at the most would be entitled to compensation in civil proceedings. This question has already been answered by the Delhi High Court in the case of Gulshan Ahuja (Supra) as referred above. The Competent Authority, Mumbai, has not been able to point out any default committed by the appellant. On the contrary, it has not even offered as to why there was a 16 year delay in deciding the show cause notice when,

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admittedly, no reply was received by it from the affected parties. The delay is one of the aspect to be decided in favour of the appellant specially when it has a reasonable case on merits. It cannot simply shirk its responsibility as a government instrumentality of acting with due diligence and care by stating that the appellant can invoke civil remedies for seeking compensation. Adequate compensation in the present case would be price equivalent to the cost of the property as per today‟s market rate.

¶192

In the present case, the delay and that too unexplained of 16 years has arisen solely on account of the Competent Authority, Mumbai which kept the matter hanging even though no reply to the show cause notice was ever submitted to it.

¶193

It is also a matter of fact that in 2009, the Competent Authority was informed by the Noida Authority the subject matter of the property were purchased by the appellant still the respondent maintain the complete silence for more than six years. No justification is given for inordinate delay by the respondent. In normal cases it has been noted that the department passes the order within reasonable period once the reply to the show cause notice was not given by the accused party. In the present case, notice was given in 2000, no order of forfeiture of property was passed till February 2016, even though there was no reply from the noticees. The forfeiture order was passed in February, 2016 after serving a copy of the notice dated 3.8.2000 to the appellant in November, 2015. The said delay of about 16 years is totally unexplained by the respondent and in the impugned order. Under these circumstances, at this stage, the respondent cannot be allowed to forfeit a property which otherwise

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could have been forfeited in the year 2000 and the present dispute would not have arisen.

¶197

In view of the discussion and finding above, the appeal is liable to allowed on merits as well as on the ground of undue delay / limitation.

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JURISDICTION

¶199

The respondent relied upon the notification dated 1.5.1998 which amended the notification dated 24.4.1997 to contend that as Rajesh Bhasin was detained under the provisions of COFEPOSA at Mumbai, therefore the Competent Authority, Mumbai had the jurisdiction.

¶200

The above noted contention is misconceived as the following discussion would show. The respondent themselves have referred and relied upon a subsequent notification dated 16.3.2001 pursuant to which the Competent Authority, Lucknow was given the Jurisdiction of dealing with cases / persons whose residence was at Uttar Pradesh.

¶201

Subsequent to the notification dated 16.3.2001 another notification dated 13.2.2008 was issued which vested the jurisdiction of NOIDA properties with Competent Authority, Delhi.

¶202

The respondent seeks to distinguish the notification of 2001 by stating that as the proceeding had started with the issuance of section 6 notice at a time when the 1998 notification was effective, therefore it was entitled to pursue the proceedings till its logical conclusion not withstanding the subsequent notification which ousted the jurisdiction of the Competent Authority, Mumbai.

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The Respondent has itself inserted a rider in respect of cases which were pending on the date, the subsequent notification came into effect in 2001. While interpreting provisions of an Act and especially the provision pertaining to jurisdiction, a party cannot be permitted to either add or subtract words from the provision. A jurisdiction clause has to be strictly construed and inasmuch as the 2001 notification ousted the jurisdiction of Competent Authority, Mumbai to deal with properties in NOIDA and vested the same in Competent Authority, Lucknow, the Competent Authority, Mumbai could not have continued with the present proceedings even though they were initiated at a time when the 1998 notification was in force. All pending proceedings automatically abated, which were not transferred to the Competent Authority having jurisdiction over the subject matter.

¶206

In the present case the property in question was purchased by the appellant in 2005 i.e. after the issuance of the fresh notification in 2001 which vested the jurisdiction of NOIDA properties in the Competent Authority, Lucknow. Thus, the Competent Authority, Mumbai could not have under any circumstances taken cognizance of the transfer of the property to the Appellant in 2005. During the course of hearing, it is not confirmed on behalf of respondent that Shri Rajesh Bhasin was residing in Bombay. The property in question is in Noida. It is also not the case of the respondent that the relatives namely AP-2 and AP-3 to whom the show cause notice dated 3.8.2000 was also issued reside in Bombay; in fact the show cause notices or addressed to them in their addresses at Noida. It is, therefore, doubtful that the Competent Authority, Mumbai that passed the order in the present case has got the jurisdiction.

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However, as this Tribunal has chosen to decide the matter on merit and because of the reason that the matter has already been delayed for more than 16 years., thus, it is not necessary to allow the appeal on this objection itself However, if our order is challenged by the Competent Authority, liberty is granted to the appellants to raise this issue also in her favour if necessary.

¶210

The appellant on the date of final argument on 22.11.2016 also made an offer to the Respondent, without prejudice to all her rights and remedies, to take a one-time compensation equivalent to the price of the property for which it was purchased by Deepshikha. This was done so that the Appellant in her old age is not dragged through the process of litigation. However in response to the said offer, the Competent Authority, Mumbai now claims that the market price of the property in question has risen over the years and the property in question is worth much more. No doubt that the price of the property has risen over the years, however, it is the default of the Competent Authority, Mumbai which resulted in the delay and not that of the appellant. If the Competent Authority, Mumbai is allowed to raise such pleas then it would mean that they are to be rewarded for the default/delay committed by them. Even otherwise since we have found the order to be not sustainable on merit as well as on account of undue delay/limitation, we are not expressing any final opinion on the subject issue. We however, feel it appropriate that in the overall facts and circumstances of the case the offer made by the appellant is reasonable and that the price paid by Ms. Deepshikha for the purchase of the property in the year 2000 is just compensation to the Competent Authority, Mumbai as a one-time payment to bring a quietus to the present matter.

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In the facts and circumstances, we set aside impugned order dated 19.02.2016 passed by the Competent Authority, SAFEMA/NDPSA, Mumbai whereby the Appellant‟s property Open plot No. B-7, Sector 26, NOIDA, Uttar Pradesh, has been forfeited to the Central Government.

¶214

The appellant is directed to deposit a sum of Rs. 15,00,000/- within two months in the office of the Competent Authority & Administrator, SAFEMA/NDPS, Mumbai.

¶215