WINSTON TAN Vs. UNION OF INDIA

JUDGEMENT

(1.) THE short question which is required to be decided in these proceedings is whether the petitioners who are purchasers are entitled for a notice before any order of confiscation/forfeiture is passed under Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (for short 'the Act' ). The matter arises in the following manner : the petitioners claim that they have purchased Flat No. 004 of Kamala Mansion, ground Floor, Promenade Place. No. 45/2, promenade Road pursuant to a registered sale deed dated 20th March, 1997 for valuable consideration from respondents 3 and 4. According to the petitioners, the said deed is registered with the sub-registrar at Shivajinagar, bangalore. It is not in dispute that certain proceedings were initiated against respondent No. 3-Vendor under the Conservation of foreign exchange and Prevention of Smuggling Activities Act, 1974 (for short 'cofeposa Act' ). In the said proceedings, he was directed to be detained and has suffered an order of detention. During the course of these proceedings it was revealed that the immovable property, which is the subject-matter of these proceedings was acquired by him through illegal source. The present proceedings are initiated on the ground that the property, which is purchased by the petitioners, is liable for forfeiture inasmuch as the sale consideration used for the purpose of purchase of this property by respondent No. 3 was from the illegal source.

(2.) AS stated earlier proceedings were initiated under the Act. Initially, a show cause notice was issued to respondents 3 and 4 under Section 6 (1) of the act on 8-12-2003. But however, respondents 3 and 4 did not choose to enter appearance or file objections. A second notice was issued on 21-4-2004 asking the 3rd respondent to file her reply on or before 4-5-2004. But however, the 4th respondent came forward and made a request for extension of time pursuant to a communication dated 26-5-2004. But however, it appears on the said application no order was passed. The 3rd notice was issued on 2-6-2004 asking the 3rd respondent to appear before them on 14-6-2004. The 4th respondent sought for further extension of time pursuant to his representation dated 19-6-2004. Eventually, the competent Authorities issued the first of the summons on 30-3-2005 to the 3rd and 4th respondents to appear before the Competent authority. But however, the said summons was returned with an endorsement 'left'. Second summons was issued on 3-5-2005. But however, they did not choose to enter appearance. During this interregnum, i. e. , between 19-6-2004 before the second representation was given by the 4th respondent for extension of time to file his objections and 13-3-2005 i. e. , before first of the summons was issued in respect of tender proceedings, the said property was sold on 10-2-2005 in favour of the petitioners both by respondents 3 and 4, who are wife and husband. The sale consideration is Rs. 26,00,000/ -. The Competent authority pursuant to the impugned order, a copy of which is produced at Annexure 'p' has found that the purchase of the property by respondents 3 and 4 for the relevant period was through the ill-gotten money for which the proceedings were initiated against him under COFEPOSA Act and wherein he was detained. Consequently, on the totality of the circumstances and evidence gathered, the Enforcement Directorate held that the property acquired by respondents 3 and 4 is liable to be forfeited and accordingly has passed an order of forfeiture under Section 7 (1) of the Act. The petitioners in these proceedings claim that they are the bona fide purchasers of the property forfeited, for valuable consideration. They would further submit that they were not aware of the proceedings before the Competent Authority. Aggrieved by the said forfeiture, they have questioned Annexure 'p' in this writ petition.

(3.) MR. Gururaj Joshi, learned counsel appearing for the petitioner vehemently submitted that the petitioners being bona fide purchasers for value were required to be heard before any order of forfeiture is passed under section 7 of the Act. He would stress that under sub-section (2) of Section 6 of the Act, the petitioners being classified as any person holding the property on behalf of such person are entitled for notice. According to him, the petitioners having purchased the property would certainly step into the shoes of respondents 3 and 4 and are entitled to defend the purchase of the property. Indeed he submitted that the petitioners are not questioning the order of detention of respondent No. 4. But however, he submits that the petitioners may be given an opportunity to justify that they are the bona fide purchasers of the property in question. He would submit that under subsection (2)of Section 6 of the Act, the petitioners are entitled for notice.