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Issues: Whether the bank's mortgage interest in the three houses was liable to forfeiture as illegally acquired property under the Act, or whether the bank was a transferee in good faith for adequate consideration so that only the owner's equity of redemption could be forfeited.
Analysis: The properties had originally stood in the name of the owner and were treated as illegally acquired property in her hands. However, the bank's mortgage was created in 1974 to secure loans advanced by the bank, and there was nothing to indicate that the mortgage was mala fide. The mortgage was supported by consideration, since it secured credit extended by the bank, and therefore fell within the statutory protection available to a transferee in good faith for adequate consideration. On that footing, the mortgagee's interest could not be treated as illegally acquired property liable to forfeiture, though the owner's residual interest in the properties could still be proceeded against.
Conclusion: The bank's mortgage rights were not forfeitable, and only the owner's equity of redemption in the houses could be forfeited to the Central Government free from encumbrances.
Ratio Decidendi: A bona fide mortgage created for adequate consideration is protected as a transfer in good faith and is not liable to forfeiture as illegally acquired property; only the delinquent owner's remaining interest can be forfeited.
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