Dismissed

FPA-97/DLI/2018 of Smt. Shanti Gupta v/s The Competent Authority, New Delhi & Anr.

ATFP6 Jun 2019FPA-97/DLI/2018

Case brief

AI extract

What is this about?

In consolidated appeals, the Tribunal dismissed challenges to a notice demanding vacation of properties previously forfeited to the Central Government. The court held that the notice was not appealable and the appellants were not covered under the Act due to the void transfer after a Section 6 notice.

What did the court decide?

All appeals dismissed on jurisdiction and merits.

FPA-97/DLI/2018 of Smt. Shanti Gupta v/s The Competent… — Property and Title | ATFP (2019)

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APPELLATE TRIBUNAL FOR SAFEMA, FEMA, NDPS, PMLA & PBPT ACT AT NEW DELHI

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DATE OF DECISION: 06.06.2019

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1. FPA-87/DLI/2018
Harish Khanna	…	Appellant
2. FPA-88/DLI/2018
S. P. Arora	…	Appellant
3. FPA-89/DLI/2018
Suresh Somani	…	Appellant
4. FPA-90/DLI/2018
Akhil Bhatnagar	…	Appellant
5. FPA-91/DLI/2018
Radha	…	Appellant
6. FPA-92/DLI/2018
Amar Nath Gupta	…	Appellant
Versus
The Competent Authority, New Delhi & Anr.	…	Respondents

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Advocates/Authorized Representatives who appeared

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For the Appellants : Shri Kaushikesh Kumar, Advocate Shri Kumar Prabhakar, Advocate on behalf of Shri Mrinal Madhav, Advocate For the Respondents : Shri D.S. Bisht, Joint Commissioner 7. FPA-93/DLI/2018 Smt. Nirmala Devi … Appellant 8. FPA-94/DLI/2018 Prakash Chandra Sharma … Appellant 9. FPA-95/DLI/2018 Ashok B. Sharma … Appellant Versus The Competent Authority, New Delhi & Anr. … Respondents

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FPA-87-95/DLI/2018 FPA-96-100/DLI/2018 FPA-85 & 86/DLI/2018

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Page 1 of 18

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Advocates/Authorized Representatives who appeared

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For the Appellants :	Shri Shiv K. Tya	gi, Advocate
For the Respondents :	Shri D.S. Bisht, Commissioner	Joint
10. FPA-96/DLI/2018
Shri Raghubir	…	Appellant
11. FPA-97/DLI/2018
Smt. Shanti Gupta	…	Appellant
12. FPA-98/DLI/2018
Smt. Laxmi Bai	…	Appellant
13. FPA-99/DLI/2018
Shri Ram Kalap Dubey & Anr.	…	Appellant
14. FPA-100/DLI/2018
Shri Mayur Saini	…	Appellant
Versus
The Competent Authority, New Delhi &	Anr. …	Respondents

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Advocates/Authorized Representatives who appeared

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For the Appellants : Shri ND Pancholi, Advocate Shri Deepak Mayur, Advocate
For the Respondents : Shri D.S. Bisht, Joint Commissioner
15. FPA-85/DLI/2018 Anand Prakash … Appellant
16. FPA-86/DLI/2018
Brij Kishore Rahatgi … Appellant
Versus
The Competent Authority, New Delhi & Anr. … Respondents

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Advocates/Authorized Representatives who appeared

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For the Appellants : Shri Surinder Goel, Advocate Shri Shivam Goel, Advocate Shri Ahul Ranjan, Advocate FPA-87-95/DLI/2018 FPA-96-100/DLI/2018 FPA-85 & 86/DLI/2018 Page 2 of 18

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For the Respondents : Shri D.S. Bisht, Joint Commissioner

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CORAM SMT. ANANYA RAY : MEMBER

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JUDGMENT

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FPA-87-95/DLI/2018, FPA-96-100/DLI/2018 & FPA-85-86/DLI/2018

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The above sixteen appeals have been filed by sixteen appellants against the notice dated 04.05.2018 issued by the SDM, Preet Vihar, Delhi whereby they have been asked to vacate the properties forfeited vide order dated 27.03.1978 passed by the Competent Authority under the Smugglers & Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA). An interim order against any coercive action was passed by this Bench vide its order dated 01.08.2018. 2. To appreciate these appeals, a brief background is necessary to be discussed. A show cause notice under Section 6(1) of SAFEMA was issued on 16.11.1977 to one Smt. Mahadevi Sharma as she was the wife of a COFEPOSA detenue Shri Rattan Lal Sharma and was therefore a person covered under Section 2(2)(c) of SAFEMA. Thereafter, after following the adjudication procedures an order was passed by the Competent Authority dated 27.03.1978 by virtue of which two properties;

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i. House property No. 1233-34, Kacha Bagh, Chandni Chowk, Delhi,

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ii. Plots in Lakshmi Nagar, Shakarpura, Shahdara, Delhi.

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a) Plot of Land 444 & 445 (area of both 125 sq. yds.) One temporary room built thereon, part of Khasra No. 52/4, situated at Guru Angad Nagar, Har Mandir Colony in Village Khureji Khas, Illaqa Shahdra, Delhi State.

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b) Plot of land measuring 125 sq. yds. in Khasra No. 52/4, bearing plot 446, 447 at Village Khureji Khas in the abadi of Guru Angad Nagar, Illaqa Shahdra, Delhi State.

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was forfeited to the Central Government. The appellant Smt. Mahadevi Sharma thereafter moved the erstwhile Appellate Tribunal for Forfeited Property against the said order dated 27.03.1978. The Appellate Tribunal vide its order dated 06.02.1979 after going through the merits in detail upheld the order of the Competent Authority and the appeal was dismissed. Thereafter, the said owner of the property Smt. Mahadevi Sharma approached the Delhi High Court in C.W.P No. 376/1979. The Delhi High Court vide its order dated 23.09.1996 dismissed the writ petition in default and for non-prosecution, with the liberty to the counsel for the petitioner to move the court in case they want to proceed with the case on such grounds as are admissible. The Hon‟ble High Court also noted that the petitioner and the spouse had since expired. From the records, it appears that no one pursued the case further in the Delhi High Court. Therefore, the Appellate Tribunal‟s order dated 06.02.1979 became final as there is neither any challenge to the same nor is any appeal/writ etc. pending in any higher courts.

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The present appellants are all subsequent purchasers/transferees of areas of property within the aforesaid properties of Smt. Mahadevi Sharma which finally stood forfeited to the Central Government after the order of the Appellate Tribunal order dated 06.02.1979. All the present appellants are either the sixth or seventh purchasers/transferees meaning thereby that the property has been sold and resold a number of times notwithstanding that the property belongs to the Central Government. 3. The appellants have all urged for early hearing. Accordingly, the hearing was held on 22.05.2019 when all of them appeared and argued. FPA-87-95/DLI/2018 FPA-96-100/DLI/2018 FPA-85 & 86/DLI/2018 Page 4 of 18

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With regard to appeal No. 87-92 the counsel desired to submit a written submission which was received in this office subsequently on 24.05.2019. The arguments of all the appellants during the hearing before me as well as the pleadings made in their appeal are summarized as follows:

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a. That the notice dated 04.05.2018 gives only seven days for vacating the property and it should have been at least 30 days, (although now it‟s more than one year) That this notice does not mention about any provisions of law under which it has been issued.

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b. That the notice of vacation was of 2018 while the Competent Authority‟s forfeiture order was of 1978. They were not aware of any litigation and encumbrances at the time they purchased the property. That the sale deed for such purchases were also registered with the competent land/revenue/district authorities who did not raise any issue for registering the sale deeds. Therefore, their purchasing parts of the property cannot be said to be illegal.

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c. That no notice under Section 6 was issued to any of the present appellants as mandated under Section 6(1) of SAFEMA and hence the proceedings against them are wrong and not as per law.

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d. That they are covered under the definition of persons as given in Section 2(2)(e). That the words „present holder‟ appearing in the Section should be given a literal interpretation.

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e. That they have nothing to do with Smt. Mahadevi Sharma and that the said Smt. Mahadevi Sharma had entered into some illegal documentation with respect to some property belonging to one

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coloniser Shri Balwant Singh and had tried to take forcible possession of Plot No. 446 and 447 which are the properties in question here, and that the said Smt. Mahadevi Sharma was not the owner of the said property.

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f. That the notice dated 04.05.2018 has been issued after forty years of the order of Competent Authority‟s order dated 27.03.1978 and hence is liable to be set aside. Reliance was placed in the decision of CIP vs. Harinagar Sugar Mills Ltd. (1989) 176 ITR 289.

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g. That as per the judgment of the Hon‟ble Supreme Court in the case of P.P. Abdullah & Anr. Vs. Competent Authority & Ors., AIR 2007 Supreme Court 1057 , there has to be a link or nexus between the properties sought to be forfeited and the illegally acquired money of the detenue under the Act (SAFEMA).

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Apart from the above, they relied on the following judgments:

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i. State Bank of India vs. Union of India W.P. (C) No. 4567/2001 decided on 15.04.2013 of Delhi High Court.

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ii. Kamal Kumar vs. Union of India W.P. (C) No. 2276/1976 decided on 25.11.2011 of Delhi High Court.

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iii. Appellate Tribunal judgment dated 07.02.2017 in FPA-36/MUM/2016 in the case of Ms. Shobha Grover vs. Competent Authority, Mumbai.

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iv. Gulshan Ahuja & Ors. vs. Union of India & Ors. decided on 17.12.2004 by Delhi High Court in C.W.P. 5577/1999, 1274/2000 and 1606/2000.

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In reply, the respondent stated the following:

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i. That the order of the Competent Authority forfeiting the said properties to the Central Government was passed on 27.03.1978 when none of the present appellants were in the picture. SAFEMA can be invoked only against those persons as defined and stipulated under Section 2(2). That Smt. Mahadevi Sharma‟s husband Shri Rattan Lal Sharma was a COFEPOSA detenue and hence she was covered under the definition of relative as per Section 2(2)(c). After following the adjudication procedure, the properties were forfeited to the Central Government.

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ii. That the said Smt. Sharma appealed before the Appellate Tribunal (the earlier Appellate Tribunal for Forfeited Property) and the Appellate Tribunal vide its order dated 06.02.1979 dismissed the said appeal on merits. Thereafter, she filed an writ petition C.W.P. No. 376 of 1979 before the Delhi High Court which vide its order dated 23.09.1996 dismissed their W.P. for default and for non-prosecution.

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iii. Liberty was given by the Delhi High Court that in case they want to proceed with the case it was open to the counsel to move the court on such grounds as are admissible. However, they did not pursue the case further. Hence, the Appellate Tribunal order dated 06.02.1979 has attained finality and cannot be reopened here.

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iv. They further stated that the sale of the property was done after proceedings under Section 6 was initiated and order under Section 7 of SAFEMA was passed. As per Section 11

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of SAFEMA, this transfer of property is therefore null and void in the eyes of law.

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v. They relied on the judgment of the Hon‟ble Supreme Court in the following cases:

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a. Amenabai Tayebaly & Ors. vs. Competent Authority under SAFEMA dated 19.11.1997,

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b. Winston Tan & Anr. vs. Union of India dated

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04.10.2012.

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I have carefully examined all the documents on record, the judgments quoted by both the sides, the pleadings in the appeal and also heard them at length. The challenge to the order dated 27.03.1978 is no more open. The Appellate Tribunal had dismissed the appeal on merits against this order vide the Appellate Tribunal‟s order dated 06.02.1979 against which a writ petition was also dismissed by the Delhi High Court vide its order dated 23.09.1996. Although the Delhi High Court had granted liberty to move the court again in case the original appellants so desired, it is accepted by both the sides that no such appeal was filed before any court. Hence, the Tribunal’s order upholding the impugned order of forfeiture dated 27.03.1978 is final and cannot be reopened at this stage here.

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Coming to the notice dated 04.05.2018 against which the present appellants are aggrieved and for which basically these appeals have been filed, and the arguments as supra has been putforth, it is seen that under Section 12(1)(a) of SAFEMA, appeals against orders made under Section 7, sub-Section (1) of Section 9 or Section 10 (of SAFEMA) can be filed in the Appellate Tribunal. The said notice dated 04.05.2018 has not been passed under any of the aforesaid provisions. The Competent Authority‟s order

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forfeiting the properties was passed by order dated 27.03.1978 and notice under Section 19(1) of SAFEMA, which is the power to take possession of the forfeited property, was issued on 02.06.2008. The present impugned notice is merely a notice for vacation issued by the SDM, Preet Vihar and appeals against the same as per discussions above do not lie to this Appellate Tribunal. Moreover, the present notice is only a vacation notice and is not an order issued under SAFEMA.

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Therefore, these appeals have been filed without any jurisdiction and are liable to be dismissed outright. I accordingly order so.

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However, since the present appellants have taken a lot of pain to argue the case on some legal issues which is more in the nature of academic discussion at this stage, I briefly deal with them as hereunder:

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a. The argument that none of them have been issued any notice under Section 6 and hence the entire proceedings are vitiated does not appear to be a legal argument. Section 6(1) states as follows:

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“If, having regard to the value of the properties held by

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any person to whom this Act applies ………” The Act applies to all the persons as mentioned in Section 2(2)(a), (b), (c), (d), (e). The appellants have submitted that they are covered under Section 2(2)(e) which reads as; “any holder (hereinafter 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, anyone who held such property after such person and before the present holder, is or was a transferee in good faith for adequate consideration.”

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Section 2(2)(e) therefore covers the present holder as a person to whom this Act would apply. However, there is an exception connoted by the use of the word „unless‟. The appellants have claimed that they are a transferee in good faith for adequate consideration and therefore are covered by the exception clause of „unless‟. They are therefore outside the purview of Section 2(2)(e) by their own above submissions. Therefore, Section 6 does not apply to them. In any case, the discussions and proceedings under Section 6 and Section 7 are closed with the Delhi High Court‟s order dated 23.09.1996.

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b. SAFEMA is an Act which as per its Preamble provides for the forfeiture of illegally acquired properties of smugglers & foreign exchange manipulators and for matters connected therewith. The appellants and the respondent in the present petition are admittedly not in the said category. SAFEMA, therefore, does not apply to the appellants in the present case.

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c. Coming to the judgments relied upon by the appellants, it is seen that all these judgments are in the context of the legality of the order of forfeiture itself. As discussed above that since the legality of the order dated 27.03.1978 is no more open before us having been finally disposed of by the Delhi High Court‟s order dated 23.09.1996. These judgments do not therefore help the appellants in any way. With regard to the Appellate Tribunal‟s decision dated 07.02.2017 in the case of Ms. Shobha Grover vs. the Competent Authority in appeal No. 93/DLI/2018 it is seen that the facts of

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that case and the present case are entirely different as in that case there was a huge delay between the issue of show cause notice under Section 6 and the forfeiture order passed under Section 7 of the SAFEMA which is not the present case. Moreover, in the said decision a onetime compensation was allowed which I respectfully disagree in as much as there is no provision in the law (SAFEMA) to grant any compensation whatsoever in lieu of forfeiture of the property. Appellate Tribunal‟s being creature of law as held by the Hon‟ble Supreme Court in many judgments has to limit its decisions within the said law.

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d. I agree with the respondent that the further sale or resale of a property already forfeited to the Central Government is a blatant illegality and contravenes the provisions of Section 11. The judgment of the Hon‟ble Supreme Court in the case of Amenabai Tayebaly & Winston Tan & Anr. referred supra clearly lays down that any transfer of property after issue of a notice under Section 6 of SAFEMA is illegal. At para 24 of the judgment in the case of Winston Tan & Anr. vs. Union of India , the Hon‟ble Supreme Court has stated as follows:

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“24. In Aamenabai Tayebaly, this Court had expressly held that the transaction of transfer effected after the issuance of notice under Section 6 is of no legal consequence and such transfer does not confer any title on the transferee. Aamenabai Tayebaly was a case where one Talab Haji Hussein Sumbhania was detained under Section 3(1) of COFEPOSA by an order dated 2.4.1976. Before the detention order, in February, 1975, Tahira Sultana, second wife of Talab Haji Hussein Sumbhania purchased a flat in

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Mumbai. On 15.2.1977, a notice was issued by the Competent Authority under Section 6(1) of SAFEMA to Tahira Sultana calling upon her to show cause why the said flat should not be forfeited as the illegally acquired property of the COFEPOSA detenu, her husband. On 12.10.1977, a forfeiture order relating to that flat was passed under Section 7. The said order was challenged by her in the Bombay High Court. She undertook before the High Court not to alienate the said flat. However, on 30.7.1981, Tahira Sultana sold the said flat to Tayab Ali in breach of the undertaking given to the High Court. Tayab Ali received an information on 5.11.1982 that the flat purchased by him was already forfeited by the Central Government and based on that information he filed a writ petition before Bombay High Court on 13.12.1982. Tayab Ali raised the plea that he was a bona fide purchaser for value without notice. The High Court dismissed the writ petition filed by Tayab Ali and consequently the order of the Competent Authority forfeiting the flat was confirmed. The matter reached this Court at the instance of successor in interest of Tayab Ali. In the backdrop of these facts, this Court referred to Section 11 of SAFEMA (Pgs. 713-714) and then proceeded to hold as under:

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“It is no doubt true that on the express language of the said section transfer of any property pending the proceedings under Section 6 or 10 of the said Act and prior to the order of forfeiture shall be treated to be null and void. The purchaser's transaction is after the order of forfeiture of the said property. Still the consequence of the said transaction being null and void could not be

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avoided by the purchaser on the plea that this transaction was subsequent to the original order of forfeiture. The original order of forfeiture was stayed at the time of the purchase. It got confirmed by the Bombay High Court ultimately when the Miscellaneous Petition No. 1680 of 1977 moved by Tahira Sultana was disposed of and the subsequent Writ Petition No. 1527 of 1995 was dismissed by the High Court and the SLP filed by her in this Court was also dismissed. We may also note that as the Miscellaneous Petition No. 1680 of 1977 was withdrawn on 19-6-1995 and ultimately the forfeiture order came to be confirmed in the subsequent Writ Petition No. 1527 of 1995 on 21-81995, the transaction of transfer in favour of Tayab Ali would be said to have been effected after the notice under Section 6, issued to Tahira Sultana, and before the order of forfeiture ultimately got confirmed by the High Court and by this Court and which had back effect of confirming the same from 1977. It must, therefore, be held that the transaction of purchase by the appellants' predecessor Tayab Ali was also hit by Section 11 of SAFEMA. Consequently in 1981 when the purchaser purchased this property from Tahira Sultana she had no interest in the said flat which she could convey to the appellants' predecessor. In substance it amounted to selling of Central Government's property by a total stranger in favour of the purchaser. No title,

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therefore, in the said property passed to the appellants' predecessor…..” (Emphasis Supplied)

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25. The above position wholly and squarely applies to the present case. 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 8.12.2003 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.

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26. Section 11 is unequivocal and its object is clear. It intends to 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, transfer 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

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purchaser for adequate consideration. Such plea is not available to a transferee who has purchased the property during pendency of forfeiture proceedings.

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27. Learned Additional Solicitor General referred to a decision of Madras High Court in the case of Parvathi Bai. The Division Bench of Madras High Court referred to the two decisions of this Court in Amratlal Prajivandas1 and Aamenabai Tayebaly and after noticing the relevant provisions of SAFEMA held that the protection given to a bona fide sale under Section 2(2)(e) would not extend to a sale made subsequent to the issuance of notice under Section 6 and in violation of Section 11 of SAFEMA. We are in complete agreement with the view of the Madras High Court in Parvathi Bai.

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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 is 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.

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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 pendency of forfeiture proceedings under SAFEMA. The title in the subject flat is deemed to have vested in the Central Government on or 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 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.

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29. In view of the above, we find no merit in the appeal. The impugned order does not call for any interference. Civil Appeal is dismissed with no order as to costs.”

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e. The Hon‟ble Supreme Court in the said judgment of Winston Tan further stated at para 23 as “……..so far as the holders (not being relatives and associates) mentioned in Section 2(2)(e) are concerned, they are dealt with on a separate footing. If such person proves that he is a transferee in good faith for consideration, his property even though purchase from a convict detenue is not liable to be forfeited.

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We are afraid these observations have no application to a

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transferee who has purchased illegally acquired property defined under Section 3 from a detenue/convict and/or his relative or associate after issuance of notice under Section 6 of SAFEMA. Sections 2(2)(e) refers to any holder of any property which was at any time previously held by a person referred to in clause (a) or clause (b) [of Section 2(2)] unless such holder proves that he is a transferee in good faith for adequate consideration. The holder talked of in Section 2(2)(e) does not cover a holder who is a transferee of the property after issuance of notice under Section 6. It is so because Section 11 makes it manifest that if any property referred to in the notice under Section 6 or under Section 10 is transferred by any mode whatsoever, such transfer shall be ignored for the purposes of proceedings under SAFEMA and if such property is subsequently forfeited under Section 7 then the transfer of such property shall be deemed to be null and void. On issuance of notice under Section 6, a moratorium is placed on transfer of property referred to in the notice. Any transfer of such property (the property referred to in Section 6 notice) is prohibited.”

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f. The Hon‟ble Supreme Court in the earlier case of Amenabai Tayebaly vs. Competent Authority which was followed later by the Bombay High Court in the case of Sanjiv Deshmukh vs. Competent Authority & Anr. decided on 17^th April, 1998 have clearly laid down that „the 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

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proceeding 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 be 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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i. The present notice dated 04.05.2018 is not an order under SAFEMA and it is passed by the SDM, Preet Vihar, New Delhi. Appeals against this do not lie to this Appellate Tribunal and is therefore liable to be dismissed forthwith.

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ii. Without prejudice to para (i), the present sixteen appellants are not the persons covered under the provisions of SAFEMA and hence their appeal does not lie to this Appellate Tribunal.

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