1999 (7) TMI 627 - AT - FEMA

Appeals Denied: Properties Transferred Post-Notice Null & Void; Pre-Notice Transfers Subject to Forfeiture

Gulshan Ahuja Versus Competent Authority

Gulshan Ahuja Versus Competent Authority - [2000] 242 ITR (A. T.) 34 Issues Involved:1. Maintainability of the appeals.2. Validity of the sale deeds executed after the issuance of notice under section 6(1) of SAFEMA.3. Bona fide purchaser status of the appellants.4. Legality of the acquisition of the property by the detenu.5. Delay in the proceedings and its impact on the detenu.Issue-wise Detailed Analysis:1. Maintainability of the Appeals:The primary question was whether the appellants could be considered 'persons aggrieved' under section 12(4) of SAFEMA. The appellants argued that they were aggrieved because their purchased property was under forfeiture. The Tribunal referenced the Supreme Court's interpretation in Bar Council of Maharashtra v. M. V. Dabholkar, which defines a 'person aggrieved' as someone materially affected by a decision. The Tribunal concluded that the appellants, having registered sale deeds, were indeed 'persons aggrieved' and thus, their appeals were maintainable.2. Validity of the Sale Deeds:The sale deeds in question were executed after the issuance of a notice under section 6(1) of SAFEMA. According to section 11 of SAFEMA, any transfer of property after the issuance of such a notice is deemed null and void if the property is subsequently forfeited. The Tribunal held that the sale deeds executed on March 9, 1998, were void as they were executed long after the notice dated April 29, 1980. Consequently, these deeds were ineffective and had no legal force.3. Bona Fide Purchaser Status:The appellants claimed to be bona fide purchasers for value without notice. However, the Tribunal found no evidence to support this claim. The appellants did not provide proof of any due diligence, such as inquiries with the Registrar or public notices. The Tribunal emphasized that essential requisites for establishing bona fides were missing, and thus, the appellants could not be considered bona fide purchasers.4. Legality of the Acquisition of the Property by the Detenu:The appellants contended that the property was legally acquired by the detenu through a conveyance deed executed by the Evacuee Property Cell. However, the Tribunal found discrepancies in the documentation and unexplained financial adjustments. The detenu failed to prove the legal source of funds used for the property's purchase. The Tribunal upheld the competent authority's conclusion that the property was acquired through illegal means.5. Delay in the Proceedings:The appellants argued that the significant delay between the detention order and the conclusion of the proceedings caused prejudice. The Tribunal noted that the detenu was declared an absconder, and multiple opportunities were given for representation. The proceedings were delayed due to the detenu's non-cooperation. The Tribunal found no substance in the argument that the delay caused prejudice, as the detenu had ample opportunity to defend himself.Conclusion:The Tribunal upheld the competent authority's order, dismissing the appeals. It emphasized that properties transferred after the issuance of notice under sections 6 or 10 of SAFEMA are null and void if subsequently forfeited. Additionally, it clarified that properties transferred before such notices could still be forfeited unless the current holder proves they are bona fide purchasers for adequate consideration.