2011 (7) TMI 1366 - HC - Indian Laws

Sale Deed Voided for Circumvention of Statutory Proceedings under SAFEMA

The court held that a sale deed executed after the issuance of a notice under SAFEMA lacked bona fides and was intended to circumvent statutory ... - Issues Involved:1. Validity of the sale transaction post issuance of notice u/s 6 of SAFEMA.2. Applicability of Section 2(2)(e) of SAFEMA to the respondent's claim.3. Legitimacy of the possession notice dated 13 October, 2003.Summary:Validity of the Sale Transaction Post Issuance of Notice u/s 6 of SAFEMA:The property in question was initially purchased by Mrs. Sulaikha Beevi, whose husband was detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. The Competent Authority issued a notice u/s 6 of SAFEMA on 21 October, 1978, which was received on 31 October, 1978. The respondent purchased the property via a sale deed executed on 13 November, 1978, after the notice was issued. The learned Single Judge quashed the forfeiture order on the ground that the sale consideration was paid before the notice u/s 6 of SAFEMA. However, the court held that the date of execution of the sale deed is material, not the date of payment. The sale deed executed post-notice was deemed to lack bona fides and was intended to circumvent statutory proceedings.Applicability of Section 2(2)(e) of SAFEMA to the Respondent's Claim:The respondent claimed to be a bona fide purchaser for value and sought protection u/s 2(2)(e) of SAFEMA. The court clarified that Section 2(2)(e) aims to protect innocent purchasers before the initiation of proceedings, not those who purchase post-initiation. Section 11 of SAFEMA invalidates transfers made after the issuance of notice u/s 6. Therefore, the respondent's purchase post-notice could not be protected under Section 2(2)(e).Legitimacy of the Possession Notice Dated 13 October, 2003:The possession notice was a consequential action following the final forfeiture order dated 24 February, 1995, which had attained finality. The respondent's challenge to the possession notice was invalid as the substantive forfeiture order was not contested. The court emphasized that the burden of proving the property was not illegally acquired lies with the affected person, and the respondent failed to meet this burden. The learned Single Judge's decision to quash the possession notice was overturned, and the writ petition was dismissed.Conclusion:The appeal was allowed, and the writ petition was dismissed, upholding the possession notice dated 13 October, 2003. No costs were awarded.