Forfeiture proceedings require notice to bona fide purchasers claiming good-faith title before property is finally forfeited.

Purchasers who acquired property before a forfeiture order under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 were entitled to notice and a hearing before their claim was ignored. The statutory scheme under Section 6 requires notice to persons holding the property, including those asserting an independent title, while Section 2(2)(e) recognises a transferee in good faith for adequate consideration and Section 11 does not dispense with hearing where the transferee claims prior acquisition. Because the purchasers claimed bona fide transferee status and were excluded from the process, the forfeiture order could not stand and was quashed, with the matter remitted for fresh consideration on that limited issue.

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Issues: Whether purchasers of property allegedly liable to forfeiture under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 were entitled to notice and an opportunity of hearing before the forfeiture order was passed, and whether the forfeiture order could stand when the transfer in their favour had been made during the pendency of proceedings.

Analysis: The statutory scheme contemplates notice under Section 6, including service on a person who is said to hold the property on behalf of another, and Section 2(2)(e) brings within the fold a person holding property previously held by a notified person, subject to the exception of a transferee in good faith for adequate consideration. Section 11 protects the forfeiture process from transfers made after commencement of proceedings, but that does not dispense with hearing a person who has already acquired possession and asserts an independent claim to the property. Since the petitioners had purchased the property before the forfeiture order and claimed bona fide transferee status, exclusion from the process offended the requirements of fair hearing. The availability of forfeiture, or even transfer-nullification arguments, did not remove the need to hear them on the limited question whether they were transferees in good faith for adequate consideration.

Conclusion: The forfeiture order could not be sustained without notice and hearing to the purchasers, and it was quashed and remitted for fresh consideration limited to their status as transferees in good faith for adequate consideration.

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