Judgment:
1. These three appeals are by the purchasers of 1/3rd of half-share of property bearing No. 3378, Christian Colony, Karol Bagh, New Delhi, against the order of the Competent Authority, New Delhi, dated August 5, 1998, made under section 7(1) and (3) of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (the SAFEMA), whereby the properties of H. K. Sarin, a detenu, under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (the COFEPOSA), were forfeited, including the property purchased by the appellants.
2. The appellants were not parties before the competent authority, as according to them, they were not aware of the proceedings. They stated that each of them purchased 1/3rd of a part of the property by virtue of registered sale deeds dated March 9, 1998, executed by H. K. Sarin for a consideration of Rs. 2,76,000 and they stated that they have filed these appeals soon after they came to know of the passing of the impugned order.
3. H. K. Sarin was detained by an order dated July 12, 1975, under the provisions of the COFEPOSA for his involvement in smuggling of jewellery and precious stones. He was declared an absconder.
Considering him as a person covered by section 2(2)(b) of the SAFEMA, the competent authority issued a notice under section 6(1), dated April 29, 1980, to the detenu to show cause why certain properties including the property in question, namely, house No. 3378, should not be forfeited as illegally acquired. The wife of the detenu responded to the notice and filed a reply dated March 23, 1981, stating that the properties are not illegally acquired properties. The detenu also sent his reply dated March 23, 1981, stating, inter alia, that the house bearing No. 3378 was awarded by the Rehabilitation Department of the Government of India to him and his mother, Suhag Wanti, against a claim of property left in Pakistan for a consideration of Rs. 19,000 and that the property was acquired from legal sources. Subsequently, the detenu was represented by a special power of attorney and the matter was adjourned from time to time till March 22, 1990. The proceedings could not be completed as notices to the detenu were returned with postal remarks "no such person" and the matter was ultimately posted to January 25, 1995, on which date, none appeared for the detenu.
4. In the place of the competent authority who issued notice under section 6(1), a new competent authority was appointed and he went through the material available on record and the reasons recorded and on being satisfied with the same, issued notice under section 7(1) dated June 25, 1998, to detenu, fixing the case for hearing on July 21, 1998. As notices sent by registered post were returned unserved, service of notice was effected by affixture. The house was found locked. Finding that the detenu was non co-operative, the competent authority considered the records and the replies of the detenu and his wife and found that all the properties, including house No. 3378 were illegally acquired properties and directed their forfeiture.
5. The detenu has not filed any appeal against the impugned order. As the claim of the appellants is that the acquisition of house No. 3378 by the detenu was by legal means and certain documents were filed as additional evidence, this Tribunal felt that an opportunity should be given to the appellants to have their documents considered by the competent authority, as they were not before the competent authority at any stage.
6. By an order of the Tribunal dated March 19, 1999, the competent authority was directed to admit the additional evidence, subject to proof and to summon the records from the Evacuee Property Cell, New Delhi, and to submit findings after hearing the appellants.
Accordingly, the competent authority submitted findings dated May 21, 1999, observing that H. K. Sarin acquired the impugned property by virtue of a registered conveyance deed executed by the Managing Officer, Land and Building Department, Evacuee Property Cell, New Delhi. It was also observed that the source of cash investment of Rs. 1,844.60 on November 22, 1957, by H. K. Sarin and the reason why the balance amount of Rs. 7,578.40 was adjusted by one Chaman Lal Jain, surrendering his compensation and rehabilitation grant in favour of H.K. Sarin, was not explained.
7. Learned counsel for the appellant, Shri Abhinav Vashisth, contended that the appellants are persons aggrieved within the meaning of section 12(4) of the SAFEMA as they are the owners of the property which is under forfeiture by virtue of the order of the competent authority. He further submitted that the appellants are the bona fide purchasers for value without notice and hence the property purchased by them cannot be forfeited. He further submitted that house No. 3378 is not an illegally acquired property as the same was allotted to the detenu and the sale deed dated March 9, 1998, was executed in his favour by the Managing Officer, Land and Building Department, Evacuee Property Cell. It was lastly contended that there was enormous delay between the date of issue of notice under section 6(1) and the date of the impugned order and that the same deserves to be set aside.
8. The Deputy Director, appearing for the competent authority, firstly, contended that the appellants have no locus standi to maintain the appeal, inasmuch as the sale deeds executed in their favour subsequent to the issuance of notice to the detenu under section 6(1) of the SAFEMA are hit by section 11 and are null and void. He further submitted that the question whether the appellants are bona fide purchasers for consideration without notice or not, does not arise and section 2(2)(e) is not applicable to the appellants.
9. The first question for consideration is whether the appeals are maintainable. Shri Vashisth relies on section 12(4) of the SAFEMA and contended that the appellants are persons aggrieved by the impugned order made under section 7 of the Act, inasmuch as the property purchased by them from the detenu will stand forfeited unless the impugned order is set aside to that extent and that they are "persons aggrieved" within the meaning of sub-section (4) of section 12. On the other hand, the Deputy Director contends that the title of the appellants is based on documents which are null and void and they cannot be treated as "persons aggrieved" and that the appeals are not maintainable.
10. Against the orders of the competent authority made under section 7, sub-section (1) of section 9 or section 10 a person aggrieved may appeal to the Appellate Tribunal within the prescribed period of limitation. The relevant provisions of the SAFEMA are as follows (see [1976] 46 Comp Cas (St.) 125) : (4) Any person aggrieved by an order of the competent authority made under section 7, sub-section (1) of section @ 9 or section 10, may, within forty-five days from the date on which the order is served on him, prefer an appeal to the Appellate Tribunal Provided ..." 11. It is to be examined whether the appellants are persons aggrieved.
In Bar Council of Maharashtra v. M. V. Dabholhar, AIR 1975 SC 2092, in paragraph 27 (page 2098), it is laid down as follows : "Where a right of appeal to courts against an administrative or judicial decision is created by statute the right is invariably confined to a person aggrieved or a person who claims to be aggrieved. The meaning of the words 'a person aggrieved' may vary according to the context of the statute. One of the meanings is that a person will be held to be aggrieved by a decision if that decision is materially adverse to him. Normally, one is required to establish that one has been denied or deprived of something to which one is legally entitled in order to make one 'a person aggrieved'." 12. As observed by the Supreme Court, the person who prefers an appeal against an order has to establish that he has been denied or deprived of something to which he is legally entitled. He has to establish that he has suffered a legal grievance against the decision which has been pronounced, which has wrongfully deprived him of something or wrongfully affected his title. The appellants have registered sale deeds in their favour executed by the detenu and it is for them to establish that they derived title to the property in question, by virtue of the sale deeds. That can be done only after the appeals are entertained and the claims of the appellants are considered by this Tribunal. In that view of the matter, we hold that the appellants are "persons aggrieved" within the meaning of sub-section (4) of section 12 and that their appeals are maintainable.
13. The next question which requires to be examined is whether the appellants derived any title by virtue of the sale deeds executed by the detenu in their favour. The notice under section 6(1) of the SAFEMA was issued by the competent authority to the detenu on April 29, 1980.
The sale deeds in favour of the appellants were executed by the detenu on March 9, 1998. The impugned order was passed by the competent authority forfeiting the properties of the detenu including the property 'purchased by the appellants on August 5, 1998. According to the Deputy Director, the sale deeds in favour of the appellants are null and void as they were executed subsequent to the issuance of notice under section 6(1) and the forfeiture order was passed by the competent authority on August 5, 1998, and hence no title can pass under null and void documents.
14. It is necessary to examine section 11 in order to appreciate the respective contentions (see [1976] 46 Comp Cas (St.) 124) : 11. Certain transfers to be null and void. - Where after 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 purposes 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'" 15. From a reading of section 11 it is seen that if a notice under section 6 or under section 10 is issued in respect of any property, any transfer of the property subsequent to the issuance of the notice has to be ignored by the competent authority. We have taken the view in Sanjeev M. Deshmukh v. Competent Authority [1998] 233 ITR (AT) 6 (ATFP), that where the transfer takes place after the issuance of notice under section 6(1), the competent authority is not bound to issue any notice to the transferee inasmuch as the transaction has to be ignored. If the property covered by the notice is subsequently forfeited, the transfer of the property shall be deemed to be null and void. In the present case, the transfer was subsequent to the issuance of notice under section 6 and had to be ignored. The property having been subjected to forfeiture by the impugned order, by virtue of the operation of law, the sale deeds in favour of the appellants have to be deemed to be null and void.
16. By enacting section 11, Parliament declared that transfer of property effected after the issuance of notice under section 6 or 10 has to be deemed as null and void if the property is forfeited under section 7. The plain reading of section 11 leaves no option to us but to construe the sale deeds in favour of the appellants as null and void. According to Blach's Law Dictionary, sixth edition, at page 1067, a null and void document is of no validity or effect. At page 1573 "void" is described as "ineffectual, nugatory, having no legal force or binding effect; unable, in law, to support the purpose for which it was intended. An instrument or transaction which is wholly ineffective, inoperative, and incapable of ratification and which thus has no force or effect so that nothing can cure it". The word "void" is used in statutes in the sense of utterly void so as to be incapable of ratification.
17. We have, therefore, to hold that the sale deeds dated March 9, 1998, which were executed by the detenu long after the issuance of notice dated April 2, 9, 1980, under section 6(1) to him became void, after the passing of the impugned order dated August 5, 1998, forfeiting the properties conveyed to the appellants under the said documents. The sale deeds are ineffective, inoperative and have no force or effect in law.
18. We are unable to accept the contention of learned counsel for the appellants that the appellants are bona fide purchasers for value and that clause (e) of sub-section (2) of section 2, SAFEMA, is applicable to them. The said provision is set out hereunder (see [1976] 46 Comp Cas (St.) 119) : "2. Application. - (1) The provisions of this Act shall apply only to the persons specified in sub-section (2).
(2) The persons referred to in sub-section (1) are the following, namely :- (e) any holder (hereafter 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, any one who held such property after such person and before the present holder, is or was a transferee in good faith for adequate consideration.
19. The provisions of the SAFEMA are made applicable among others, to the present holder under clause (e) of any property, if it was earlier held by a person convicted as per clause (a), or in respect of whom an order of detention has been made as per clause (b) of sub-section (2) of section 2, unless the present holder or his predecessor in title establishes that he is a transferee in good faith for adequate consideration. In other words, if a person holding a property of which, either a convict or a detenu as per clauses (a) and (b) was the previous holder is unable to establish that he is a transferee in good faith for adequate consideration, the provisions of the Act will be applicable to him.
20. It will be seen that both section 2(2)(e) and section 11 deal with transfer from a person to whom the Act is applicable. The contention of learned counsel for the appellant in this context is, that the transferee from a person to whom the Act is applicable at any point of time, can plead and establish that he is a transferee in good faith for adequate consideration. This contention cannot be accepted in the face of section 11, which declares the transfer of property made after the issue of notice under section 6 or section 10 null and void, if the properties ultimately are forfeited under section 7.
21. Section 2(2)(e) and section 11 of the SAFEMA have to be read together. Section 2(2)(e) should be held to be applicable only to transfers made prior to the issuance of notice under section 6 or under section 10, inasmuch as section 11 is made specifically applicable to transfers made after the issue of notice under section 6 or 10. We cannot read both the provisions of law as repugnant to each other, as the well established rule of interpretation of statutes is that, the court will ensure to construct the language of the Legislature in such a way as to avoid having to apply the rule of repugnance. One way in which repugnancy can be avoided is by regarding two apparently conflicting provisions as dealing with distinct matters for consideration. We have, therefore, no hesitation in holding that transfers in favour of the appellants are covered by section 11 and not by section 2(2)(e) as contended.
22. The contention that the appellants are the bona fide purchasers is not established by any document/evidence except the appellants stating so. They have not adduced any evidence to show that they have made any inquiries with the Registrar, or issued any notices in the newspapers and made any inquiries. These are the essential requisites for establishing bona fides on the part of a purchaser. May be the detenu suppressed the fact that there were proceedings under section 7 in respect of the properties and fraudulently transferred the properties to the appellants. The remedy for such acts of the detenu available to the appellants is elsewhere. We hold that the appellants are not bona fide purchasers.
23. We deal with the further contention of the appellants that the properties purchased by them are not illegally acquired properties of the detenu, to make the record complete. The contention is that the detenu was allotted the property by the custodian of evacuee properties on May 31, 1957, and that the consideration payable by him was Rs. 9,223 and 20 per cent. which is Rs. 1,844.60 of the said amount was payable and was in fact paid on November 22, 1957, and a sale deed was executed and registered in his favour on January 3, 1996, and the balance was adjusted from the compensation payable to one Chaman Lal Jain.
24. There is any amount of suspicion with regard to the registration of sale in favour of the detenu on January 3, 1996. Though a document dated May 31, 1957, evidencing sale was forwarded by the managing officer of evacuee property in a letter signed by one K. S. Chatrath on February 15, 1960, it is not explained as to what happened to the document dated May 31, 1957, signed by the same official and how the sale deed dated January 3, 1996, signed by one Azad, came into being.
It is also not explained as to how the balance of consideration of Rs. 7,378.40 was adjusted from the compensation payable to one Chaman Lal Jain. The burden of proof lay on the detenu under section 8 and he failed to show the source for the payment of the balance of consideration. It is not known as to what was the connection between Chaman Lal Jain and the detenu and why he agreed for adjustment of the compensation payable to him to be made in favour of the detenu. The competent authority was justified in holding that the detenu failed to establish that the consideration for the purchase of the property was from legal sources and rightly came to the conclusion that it was acquired through illegal sources. There is no substance in the contention that there was no nexus, as the property is that of the detenu himself and the entire circumstances clearly point to the nexus between the detenu and the illegal acquisition of the property.
25. It was lastly contended by learned counsel that there was a major delay between the date of detention of the detenu and the conclusion of the proceedings causing prejudice, and for that purpose, he relied on a decision of this Tribunal in support of his contention. It is to be noted that the detention order was made on July 12, 1975, and the detenu was declared as an absconder by the Deputy Collector, Revenue Intelligence, New Delhi, in his letter dated March 29, 1976. After necessary inquiries, notices under section 6(1) dated April 29, 1980 and May 2, 1980, were issued to him, to which the wife of the detenu responded, followed by a reply dated May 8, 1981, by the detenu himself. The proceedings went on from time to time and the detenu was represented by his representative till August 31, 1994, and ultimately, the order under section 7 was passed on August 5, 1998, as the detenu could be served only by affixture as his residence was found locked.
The detenu was given ample opportunity to defend himself and suffered no prejudice. We, therefore, find no substance in this contention.
26. Before we part with the case, we should make some observations with regard to the forfeiture of properties which are transferred by the persons covered by the Act, prior to the issuance of notice under section 6 or 10. We have come across some cases in which the competent authorities have released from forfeiture such properties, under the impression that the properties which have already been transferred prior to issue of notice under sections 6 and 10 are not liable to be forfeited. In the view we have taken that such properties are liable to be forfeited, unless the present holder as per section 2(2)(e), is able to establish that he is a bona fide purchaser for adequate consideration. It is necessary for the competent authorities to go into such question, if it is raised by the present holder. If it is not established by the present holder that he is a bona fide purchaser for adequate consideration, such properties will be liable to be forfeited, even though the transfer took place prior to the issue of notice under section 6 or 10.
27. For all the aforesaid reasons, we uphold the impugned order of the competent authority and dismiss the appeals.