Dismissed

FPA-61/DLI/2002 of Dharam Pal Goel v/s The Competent Authority, Delhi

ATFP22 Mar 2018FPA-61/DLI/2002

Case brief

AI extract

What is this about?

The Appellate Tribunal dismissed appeals by 18 petitioners challenging the forfeiture of Plot No. 8, Faridabad. The Court held that under SAFEMA Section 11, transfers occurring after the notice under Section 6 are void. As petitioners are subsequent transferees not covered by the Act, they lack locus standi, and the matter resembles a property dispute for other forums.

What did the court decide?

Appeals dismissed with a direction that the petitioners may pursue ownership/title disputes in other appropriate forums.

FPA-61/DLI/2002 of Dharam Pal Goel v/s The Competent Authority… — Cheque Dishonour | ATFP (2018)

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APPELLATE TRIBUNAL FOR FORFEITED PROPERTY NEW DELHI

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Date of Judgement: 22.03.2018

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FPA-54/DLI/2002 Motian Devi	…	Appellant
FPA-55/DLI/2002
Ashok Kumar	…	Appellant
FPA-56/DLI/2002
Morni Bai	…	Appellant
FPA-57/DLI/2002
Gulshan Kumar	…	Appellant
FPA-58/DLI/2002
Shakuntla Devi	…	Appellant
FPA-59/DLI/2002
Ghanshyam Dass	…	Appellant
FPA-60/DLI/2002
Reena	…	Appellant
FPA-61/DLI/2002
Dharam Pal Goel	…	Appellant
FPA-62/DLI/2002
N.K. Makharia	…	Appellant
FPA-63/DLI/2002
Paramjit Singh	…	Appellant
FPA-64/DLI/2002
Nagash Bajaj	…	Appellant
FPA-65/DLI/2002
Som Pirani	…	Appellant
FPA-66/DLI/2002
Praveen Makharia	…	Appellant
FPA-68/DLI/2002
Asha	…	Appellant

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FPA-54-66, 68-70, 79-80/DLI/2002

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Page 1 of 10

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FPA-69/DLI/2002
Capital Plastic	…	Appellant
FPA-70/DLI/2002 Mahabir Plastic	…	Appellant
FPA-79/DLI/2002
Ashok Kumar Gulati	…	Appellant
FPA-80/DLI/2002
Pushpal Nagpal	…	Appellant
Versus
The Competent Authority, Delhi	…	Respondent

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Advocates/Authorized Representatives who appeared

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For the appellants	: Shri Kawaljit Singh, Advocate
For the respondent	: Shri Munish Kumar, Advocate
CORAM
SMT. ANANYA RAY	: MEMBER
JUDGEMENT

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FPA-54-66, 68-70, 79-80/DLI/2002

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Eighteen petitions have been filed by the above persons with regard to one property i.e. Plot No. 8 Industrial Area, Faridabad, Haryana. Briefly the case is that one Mr. Henry H Le Febvre resident of C-1/13, Vasant Vihar, New Delhi was detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) as he was involved in smuggling of narcotics from India to Canada and USA. The Competent Authority under the Smugglers and Foreign Exchange Manipulators Act, 1976 (SAFEMA) inter alia forfeited five properties amongst which one of them was the said property i.e. Plot No. 8, Industrial Area, Faridabad, Haryana. The forfeiture order was passed vide CA/DL/93/76/2304-2305 dated 30.06.1998. The show

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FPA-54-66, 68-70, 79-80/DLI/2002

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Page 2 of 10

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cause notice dated 04.07.1980 in the present case was issued under Section 6(1) of SAFEMA.

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The above petitioners have submitted that they have all purchased this property at various point of time from 1991 onwards.

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The learned counsel for the appellant stated that the property belonged to one firm by the name of M/s. Bharat Rasayan Pvt. Ltd. (BRPL) and the present petitioners had bought the land from BRPL, in pieces at different points of time from 1991 onward. On the question of maintainability of the present petitions, the learned counsel drew attention to the Delhi High Court order in WP (C) No. 13728/2009 and C.M.No. 15445/2009 wherein the High Court had remitted the case back to this Tribunal for reconsideration of all the submissions of the respective parties afresh. The High Court also made it clear that the court has not determined any of the issues raised by the parties on merits and accordingly they are left open. The appeals were dismissed by the Tribunal earlier vide its order dated 30.10.2009 as being not maintainable. He further mentioned that BRPL was a registered company since 1963. As per Section 6(1) of SAFEMA, the notice should have been issued to all the holders of the said land and the same was not done in the present case. The fact that it was owned by BRPL has not been disputed by the Competent Authority. He further stated that before purchasing the said land they had done a due diligence with the Registrar of Properties/land, wherein no mention of any order/proceeding under SAFEMA of the said land was available. Hence the petitioners who have subsequently purchased this land are not at fault. He relied on the judgment of the Delhi High Court in the case of Gulshan Ahuja vs. Union of India (WP (C) Nos. 5577 of 1999 and 1274 of 2000 dated 17.12.2004, para 43 which reads as under:

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“Any enquiry from the registry would have served no purpose since no intimation is sent to the Registrar office. Thus, the bona fide

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FPA-54-66, 68-70, 79-80/DLI/2002

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Page 3 of 10

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purchaser was required to look into the previous title and see whether any doubts were cast on the property. There was no manner by which the petitioners could have known of the notice under Section 6 of SAFEMA”.

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At Para 48, the High Court issued a writ of mandamus accordingly.

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In response, the learned counsel for the respondent took us to Section 2 of

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SAFEMA which reads as follows:

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“2 (1) The provisions of this Act shall apply only to the person in subSection (2)

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

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(a) every person—

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(i) who has been convicted under the Sea Customs Act, 1878 (8 of 1978), or the Customs Act, 1962 (52 of 1962), of an offence in relation to goods of a value exceeding one lakh of rupees; or

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(ii) who has been convicted under the Foreign Exchange Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), of an offence, the amount or value involved in which exceeds one lakh of rupees; or

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(iii) who having been convicted under the Sea Customs Act, 1878 (8 of 1878), or the Customs Act, 1962 (52 of 1962), has been convicted subsequently under either of those Acts; or

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(iv) who having been convicted under the Foreign Exchange Regulation Act, 1947 (7 of 1947), or the Foreign Exchange Regulation Act, 1973 (46 of 1973), has been convicted subsequently under either of those Acts:

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(b) every person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974)”

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It is an undisputed fact that the present eighteen petitioners are not covered by the said definition. When the show cause notice was issued in 1980 it was only to Mr. Henry H Le Febvre since he was a COFEPOSA detenue and his wife Mrs. Laluhimi Henry Febvre in 1981. All the purchasers of this land was much later in 1991 onwards. He also referred to Section 11 of SAFEMA which reads as:

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FPA-54-66, 68-70, 79-80/DLI/2002

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Page 4 of 10

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“Whereafter 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.”

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Hence, in the present case a reading of Section 2 and 11 of SAFEMA would amply clarify that the present petitioners have no locus standi to file any appeal before this Tribunal as the SAFEMA is not applicable to them. He further stated that at the relevant time the property belonged to M/s. Bharat Rasayan Pvt. Ltd., who transferred 363 shares to one M/s. Lone Star Engineering Works Pvt. Ltd in the following manner:

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a. One share each was allotted to the four directors of M/s. Lone Star Engineering Works Pvt. Ltd. including one share for Mrs. Laluhimi Henry Febvre who was the wife against whom the proceedings under SAFEMA was initiated.

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b. The remaining 359 shares were allotted to M/s. Lone Star Engineering Works Pvt. Ltd.

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The required amount of acquisition was arranged in the following manner:

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a. Shri Henry H Le Febvre provided Rs. 3,50,000/- claiming to be advance money he received against his future export orders.

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b. The brother-in-law of Shri Henry provided Rs. 1,00,000/-.

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He therefore stated that at the relevant time this property was very much in the control of the accused Mr. Henry H Le Febvre and his family. If subsequently they have sold off or alienated the property it is an illegality as per Section 11 of SAFEMA. But even then the present petitioners do not have any legal authority to appeal to this Tribunal. As presently, the case is more of a property dispute for which there are other forums/court where proceedings should be initiated. He also stated that the show cause notice dated FPA-54-66, 68-70, 79-80/DLI/2002 Page 5 of 10

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Page 5 of 10

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04.07.1980 issued on 07.07.1980 was also intimated to both M/s. BRPL and M/s. Lone Star Engineering Works Pvt. Ltd. by the Competent Authority vide their letters both dated 15.07.1980 wherein their attention was clearly drawn to the provisions of Section 11 of SAFEMA which was reproduced in the said letter. If M/s. BRPL and M/s. Lone Star Engineering Works Pvt. Ltd. had any issue they should have replied to the said letter but they did not send any response whatsoever. Hence the seller/accused had knowledge of the proceedings but he kept quiet and the accused also appears to have quietly left the country. The accused Mr. Henry or his family have not filed any appeal against the said impugned order dated 20.06.1998. He relied on the judgement of the Bombay High Court in Criminal Writ petition no. 711 of 1998 in the case of Sanjiv M. Deshmukh vs. Competent Authority. At para 18, the High Court observed as follows:

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“He (petitioners} submitted that a holder of any property which was at any time previously held by a detenue will not be governed by the SAFMEA if such holder is a transferee in good faith for adequate consideration. It was tried to be submitted that if the petitioner no. 1 who is the transferee from the detenue establishes that the transfer was made in good faith for adequate consideration notwithstanding the provisions of Section 11 of SAFEMA, provisions of SAFEMA will not be applicable to such holder and therefore the order of forfeiture cannot be passed affecting the said flat (property) held by such holder. A further submission was made that since the petitioner is a transferee in good faith for valuable consideration, the said accusation by the petitioner will not be a nullity. We are of the view that if the aforesaid contentions…… are accepted it will completely nullify the provisions of Section 11. ……… Thus, if there is a transfer made after commencement of proceedings under Section 6 or 10 and even if the transfer is in good faith for adequate consideration, the transfer will be null and void and the transferee will not be protected by the exception carved out to clause (e) of sub section 2 of Section 2.”

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As a rejoinder, the learned counsel for the appellant stated that:

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a) All the petitioners had locus standi in as much as they hold a part of the property i.e. Plot No. 8, Industrial Area, Faridabad, Haryana.

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FPA-54-66, 68-70, 79-80/DLI/2002

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Page 6 of 10

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b) In as much as the property was in the name of M/s. Bharat Rasayan Pvt. Ltd. since 1963 that is much before the proceedings started.

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c) That M/s. BRPL was never owned by Mr. Henry H Le Febvre the accused.

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d) That the present petitioners are all bona fide purchasers.

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e) That Section 11 is applicable only when a notice is issued and in the present case no notice has been issued either to M/s. BRPL or the present petitioners.

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I have given my careful consideration to the submissions and have also examined the documents filed as on record. The case of the petitioners are that they purchased small areas of land carved out of plot No.8, Industrial area, Faridabad, Haryana between the period 1991 to 1998 from various owners who in turn had at some point of time earlier bought either from M/s. BRPL or someone else who had bought from M/s. BRPL. This plot of land originally belonged to M/s. Bharat Rasayan Pvt. Ltd. which was registered in the year 1963. BRPL was wholly owned subsidiary of M/s. South India Carbonic Industries Ltd. (SICL). The paid-up equity was Rs. 3,63,000/- consisting of 363 shares held by SICL. SICL sold 359 shares out of the 363 shares to M/s. Lone Star Engineering Works Pvt. Ltd. in December 1975. M/s. Lone Star Engineering Works Pvt. Ltd. was a company incorporated in 1973 Mr. Henry H Le Febvre and his wife Mrs. Laluhimi Henry Febvre were Directors and shareholders of M/s. Lone Star Engineering Works Pvt. Ltd. Mr. Henry H Le Febvre was detained under COFEPOSA in 1976. A notice dated 04.07.1980 under Section 6(1) of the SAFEMA was issued to Mr. Henry H Le Febvre, asking him to show cause as to why certain properties which were in his name should not be forfeited to the Central Government until he is able to show their licit acquisition. The impugned Plot No. 8, Industrial Area, Faridabad, Haryana was one of the properties in the said notice. A similar notice was also issued to his wife Mrs. Laluhimi Henry Febvre on 03.02.1981 where, apart from the assets FPA-54-66, 68-70, 79-80/DLI/2002 Page 7 of 10

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indicated in the schedule of the said notice also covered the right title and interest in the following:

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The business carried under the name and style of M/s. Lone Star Engineering Works Pvt. Ltd. in the form of machinery, patents, knowhow or any other form.

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The business carried on under the name of BRPL in the form of machinery, patents, knowhow or any other form

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Shares, debentures or deposits held in M/s. Lone Star Engineering Works Pvt. Ltd.

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Shares, debentures or deposits in BRPL.

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The case was adjudicated by the Competent Authority and vide its order dated 30.06.1998 the above properties were forfeited.

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It would be pertinent to reflect on the intention of SAFEMA, 1976 as incorporated in its Preamble. It reads as

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“An Act to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matters connected therewith or incidental thereto. ”

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Hence, the Act clearly deals with only those properties which belong to smugglers and foreign exchange manipulators. Section 2 of SAFEMA specifically mentions as to who are the person who are covered by the provisions of the said Act. The petitioners in the present case admittedly do not fall within the ambit of the same. Mr. Henry H Le Febvre was the one who was detained under COFEPOSA for illegal export of narcotics and it was his property, which he had acquired through illicit means, which were forfeited. Section 6(1) notice was issued only to him and his wife covered under the definition of relative as per Section 2 (2) (c). The adjudication order was passed in 1998. As per section 11 of SAFEMA as quoted above wherever any property has been transferred after issue of the notice under Section 6 shall for the FPA-54-66, 68-70, 79-80/DLI/2002 Page 8 of 10

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purpose of the proceedings under the said Act be ignored and if such property is subsequently forfeited to the Central Government then the transfer of such property shall be deemed to be null and void. The relationship between BRPL and the accused has been brought out in the preceding para.

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Incidentally no appeal to this Tribunal has been filed either by the accused, his wife or the two companies in question i.e BRPL and M/s. Lone Star Engineering Works Pvt. Ltd. M/s. Bharat Rasayan Pvt. Ltd. and M/s. Lone Star Engineering Works Pvt. Ltd. were issued letters both dated 15.07.1980 informing them about the proceedings as well as the provisions of Section 11 of SAFEMA. Hence, BRPL was legally mandated not to transfer or alienate the property since the proceedings under SAFEMA were there. Since BRPL is not in appeal before me I will let the matter of their alienation of the property rest there.

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That the present petitioners subsequently bought it from BRPL is a situation which is squarely covered by section 11 of SAFEMA. When the notices under Section 6(1) were pending, the property could not have been transferred and if it has been transferred, that is null and void. The Hon‟ble Supreme Court in the case of Amina Bai Taybaly Anr. Vs. Competent Authority (1998 1 SCC Page 703) which was followed later in by the Bombay High Court in the case of Sanjiv Deshmukh have clearly laid down that the

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“Petitioners cannot be held to be a holder as contemplated by clause (e) of sub-Section 2 of Section 2 as the transfer in his favour is made after the commencement of proceedings under Section 6. The transfer in his favour is void at its inception and therefore such transfer will have to be ignored……………………. Therefore such a person cannot be held to a person affected within the meaning of section 6(1) of SAFEMA.”

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From the above it is clear that:

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FPA-54-66, 68-70, 79-80/DLI/2002

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Page 9 of 10

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a. The present eighteen petitioners are not the persons covered under the provisions of SAFEMA and hence their appeal does not lie to this Appellate Tribunal. It appears more in the nature of ownership/title to the property which they need to pursue if they so deem fit in other forums.

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b. The provisions of Section 11 of SAFEMA clearly covers the present case

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c. The Apex Court and the Bombay High Court has already clarified the law amply in their above said judgments

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d. The persons who are covered by the impugned order and the persons to whom the copy of the notice was sent i.e. BRPL and M/s. Lone Star Engineering Works Pvt. Ltd. are not in appeal before me.

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In the light of above, I hold that no appeal by the above said petitioners lie in this Tribunal and hence they are dismissed.

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(Ananya Ray) Member

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New Delhi, 22^th , March, 2018

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„A‟

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FPA-54-66, 68-70, 79-80/DLI/2002

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