AAMENABAI TAYEBALY AND ORS. versus COMPETENT AUTHORITY UNDER SAFEMA AND ORS.

Citation: [1997] SUPP. 5 S.C.R. 246 · Decided: 19-11-1997 · Supreme Court of India · Bench: S.B. MAJMUDAR · Disposal: Dismissed

Judgment (excerpt)

A 
AAMENABAI TA YEBALY AND ORS. 
v. 
COMPETENT AUTHORITY UNDER SAFEMA AND ORS. 
NOVE.MBER 19, 1997 
B 
[S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.] 
Smugglers and Foreign Exchange Manipulators (Foifeiture of Property) 
Act, /976-S2 (2)(c)-The vendor of the immovable property, being the wife 
of COFEPOSA detenu, is liable to be proceeded under the Act-S2(2)(e)-
C Though the purchaser is not covered by this section, the property he purchased 
from the vendor is liable to lfe forfeited since he was aware of the proceedings 
under SAFEMA in respect to the said property before the purchase and 
cannot claim that the purchase was bonafide purchase for value without 
notice-There was also an undertaking by the vendor to the Court not to 
D dispose off theproperty and there was .'10 absolute stay granted by the High 
• 
Court. 
S. I I-The forfeiture becomes confirmed from the actual date of the 
order of the Competent authority-When the Court dismisses the case the 
property ceases to be that of the vendor and he/she loses all title/interest in 
E it and the same becomes vested in the Central Govt.-The sale is therefore 
void and the purchaser has no legal defence against the authorities.-A void 
purchase cannot be resurrected by the imposition of a fine-There is no 
double forfeiture when the money from the sale of a flat under SAFEMA 
proceedings is invested in another flat and both flats are foifeited-A later 
order of forfeiture of the immovable property under the Act will not invalidate 
F an earlier order of forfeiture if another immoveable property under the same 
Act, since both were independent of each other-When the earlier sale itself 
is still-born, the forfeiture of a subsequent property under the Act cannot' 
bring to life earlier sa/e-S.s. 6(1), S. 7(2)&(3), S9-Conservation of Foreign 
Exchange and Prevention a/Smuggling Activities Act, 1974-S 3(/)-Transfer 
G of Property Act-S52. 
The Present appeal relates to the sale of an immovable property by a 
vendor, who was the wife of a COFEPOSA detenu, which was forfeited by an 
order under S. 7 of SAFEMA passed by the Competent Authority and later 
confirmed by the Appellate Authority On a writ petition challenging the said 
H order, the Bombay High Court gave a stay on the undertaking that the vendor 
246 
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AAMENABAl v. COMPETENT AUTHORITY UNDER SAFEMA 247 
will not dispose/alienate or encumber/part with the right, title and interest A 
in the said property during the pendency of the petition. 
However she sold the said property to a purchaser who was the 
respondents predecessor in-interest, for a consideration and from out of the 
sale proceeds bought another flat even during the court proceedings. The 
purchaser also filed a Writ petition in the High Court, challenging the B 
forfeiture, which was dismissed when the Court became aware of the sale, 
the vendor was punished for contempt. The vendor, then filed another Writ 
petition in High Court. The purchaser also challenged the detention order 
against the vender's husband and the forfeiture arising therefrom, before 
the Gujarat High Court. That High Court remanded the matter to the 
Competent Authority holding that the order of forfeiture was made by the C 
Competent Authority without giving a hearing to the purchaser. The 
Competent Authority in deference to the order of the High Court, heard the 
parties and re-confirmed the forfeiture The Competent Authority in an 
independent proceeding passed an order forfeiting the second flat purchased 
by the vendor out of the sale proceeds of the first flat. When the vendor D 
·appealed against the order of forfeiture, the Appellate Tribunal dismissed the 
appeal. A writ petition and a Special Leave Petition arising from this order 
were also dismissed. An appeal was filed before this Court from the order 
of the Bombay High Court dismissing the challenge to the forfeiture. 
On behalf of the appellants, it was contended inter alia, that SAFEMA E 
did not apply to the purchaser as he was not covered by S. 2(2) (e) of the Act 
and therefore the entire exercise was null and void. It was also submitted the 
purchaser was not aware of the Court proceedings and the undertaking by 
the seller, that the purchaser purchased the property in good faith and 
therefore he should not be punished. It was also pointed out that S. 11 of 
SAFEMA did not apply to the facts, as the purchaser purchased the flat in F 
1981 and not between two terminal dates, viz. 15th February 1977

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