WINSTON TAN & ANR. versus UNION OF INDIA & ANR.

Citation: [2012] 8 S.C.R. 1107 · Decided: 04-10-2012 · Supreme Court of India · Bench: RAJENDRA MAL LODHA · Disposal: Dismissed

Judgment (excerpt)

[2012] 8 S.C.R. 1107 
WINSTON TAN & ANR. 
v. 
UNION OF INDIA & ANR. 
(Civil Appeal No. 7207 of 2012) 
OCTOBER 04, 2012 
[R.M. LODHA AND ANIL R. DAVE, JJ.] 
SMUGGLERS 
AND 
FOREIGN 
EXCHANGE 
MANIPULATORS (FORFEITURE OF PROPERTY) ACT, 
1976: 
A 
B 
c 
ss.2(2)(b), 2(2)(c), 2(2)(e), 6,7, 10 and 11 - Certain 
transfers to be null and void - Forfeiture of property illegally 
acquired by detenu and his wife - Challenged by purchasers 
claiming as transferees in good faith and for adequate 0 
consideration - Held: Any transfer of the property referred to 
in s. 6(1) is prohibited - In respect of the transfer of the property 
after issuance of notice u/s. 6, the holder cannot set up a plea 
that he is a transferee in good faith or a bona fide purchaser 
for adequate consideration - Such plea is not available to a 
E 
transferee who has purchased the property during pendency 
of forfeiture proceedings - In the instant case, the transaction 
of sale in favour of the purchasers has to be ignored by virtue 
of s. 11 and on passing of the order of forfeiture u/s. 7, the sale 
in their favour has become null and void - The title in the 
subject flat is deemed to have vested in the Central F 
Government when the first notice u/s.6(1) was issued and 
served on one of the vendors and they ceased to have any 
title in the subject flat on the date of transfer -
In the 
circumstances, question of according any opportunity to the 
holders to prove that they are transferee in good faith with 
G 
adequate consideration does not arise - Conservation of 
Foreign Exchange and Prevention of Smuggling Activities 
Act, 1974. 
1107 
H 
1108 
SUPREME COURT REPORTS 
[2012] 8 S.C.R. 
A 
One 'Ml' was detained on 02.05.2003 under the 
Conservation of Foreign Exchange and Prevention of 
Smuggling Activities Act, 1974. Notices u/s.6(1) of the 
Smuggling and Foreign Exchange Manipulators 
(Forfeiture of Property) Act, 1976 in respect of the subject 
B property were issued to the detenu and his wife in 2003 
and 2004, respectively, as both owned the subject 
property. On 10.02.2005, both the noticees sold the 
subject property to the appellants. The appellants by their 
communication dated 20.05.2005, informed the 
c Competent Authority that they purchased the subject 
property under a registered sale deed after availing loan 
from the Bank. The Competent Authority on 23.06.2005 
passed an order u/ss.7(1) and (3) of SAFEMA forfeiting the 
subject property and declaring that the said property 
0 stood vested in the Central Government, and holding-that 
the transfer in favour of the appellants was null and void 
in view of s.11 of SAFEMA. The appellants filed a writ 
petition before the High Court contending that they were 
bonafide purchasers for adequate consideration. The 
Single Judge of the High Court quashed the order dated 
E 23.06.2005 as violative of principles of natural justice and 
remitted the matter to the Competent Authority for 
consideration afresh. However, on appeal, the Division 
Bench of the High Court held that the appellants were not 
entitled to any notice and as the sale in their favour was 
F subsequent to the issuance of the notice u/s.6 of 
SAFEMA, the transaction was null and void u/s. 11 
thereof. 
H 
Dismissing the appeal, the Court 
HELD: 1.1. 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 the 
WINSTON TAN & ANR. v. UNION OF INDIA & ANR. 1109 
properties acquired illegally by the persons who are . A 
covered by Clauses (a) to (e) of s.2(2). The provisions of 
SAFEMA are intended to apply to any property acquired 
by persons covered by Clauses (a) to (e) of s.2(2), 
whether before or after the commencement, wholly or 
partly out of or by means of any income, earnings or 
B 
assets derived or obtained from or attributable to any 
activity prohibited by or under any law for the time being 
in force. [Para 22) [1122-D-G] 
1.2. However, SAFEMA is not applicable to holder of C 
any property uls. 2(2)(e) who proves that he is a 
transferee in good faith for adequate consideration. 
Section 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) unless such holder proves that 
he is a transferee in good faith for adequate 
D 
consideration. The holde

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