Forfeiture upheld under SAFEMA for breach of stay order. Bona fide purchaser claim rejected. No double forfeiture.

The court upheld the forfeiture of property under the SAFEMA due to the breach of a stay order by the wife of a COFEPOSA detenu. The purchaser's claim of being a bona fide purchaser for value without notice was rejected, as the property had already vested in the Central Government. The court clarified that the forfeiture of two properties did not constitute double forfeiture. The suggestion of a fine in lieu of forfeiture was also dismissed. The appeal was dismissed, and the appellants were given time to vacate the premises upon compliance with certain conditions.

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Issues Involved:
1. Applicability of the SAFEMA to the sale transaction.
2. Bona fide purchaser for value without notice.
3. Double forfeiture of property.
4. Fine in lieu of forfeiture under principles analogous to section 9 of the SAFEMA.

Detailed Analysis:

Point 1: Applicability of the SAFEMA to the Sale Transaction
The SAFEMA (Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976) was enacted to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators. Section 2(2) lists the persons to whom the Act applies, including relatives of COFEPOSA detenus. Tahira Sultana, being the wife of COFEPOSA detenu Talab Haji Hussein, was covered under section 2(2)(c). The competent authority issued a notice under section 6(1) of the SAFEMA and passed an order under section 7, forfeiting the property. Despite a stay order from the High Court conditional on non-alienation, Tahira Sultana sold the property, breaching her undertaking. The High Court's stay was conditional and did not permit alienation. Therefore, the purchaser, Tayab Ali, could not derive any benefit from the transaction. The property had vested in the Central Government by the order dated October 12, 1977, and the sale in 1981 was void. The transaction was also hit by section 11 of the SAFEMA, which nullifies transfers after a notice under section 6 or 10 and before the final order of forfeiture.

Point 2: Bona Fide Purchaser for Value Without Notice
The purchaser, Tayab Ali, claimed to be a bona fide purchaser for value without notice. However, the High Court found this claim improbable. The purchaser should have been aware of the property's history, given its connection to a COFEPOSA detenu. No due diligence was conducted to verify the property's title. The High Court's finding that the purchaser was not bona fide was upheld. The property had already vested in the Central Government by the forfeiture order of October 12, 1977. Consequently, when Tayab Ali purchased the property, it no longer belonged to Tahira Sultana, and no valid title could be transferred.

Point 3: Double Forfeiture of Property
The appellants argued that forfeiture of both the Dharam Jyoti Building flat and the Shivasthan Society flat constituted double forfeiture of the same tainted money. However, the court clarified that tainted money could be used to purchase multiple properties, each subject to forfeiture. The Dharam Jyoti flat was purchased for Rs. 88,562 and sold for Rs. 3,60,000, part of which was used to buy the Shivasthan flat. The original forfeiture of the Dharam Jyoti flat was independent of the subsequent forfeiture of the Shivasthan flat. The latter forfeiture did not invalidate the former. Thus, the argument of double forfeiture was rejected.

Point 4: Fine in Lieu of Forfeiture
Section 9 of the SAFEMA allows for a fine in lieu of forfeiture if only a part of the property's acquisition is from tainted money. This was not applicable here, as the entire purchase of the Dharam Jyoti flat was from tainted money. The appellants' counsel suggested an analogy to section 9, proposing a fine instead of forfeiture due to the passage of time and the Central Government's potential gain from the Shivasthan flat. However, the court rejected this, noting that the purchaser had acted in breach of an undertaking and the forfeiture order was already confirmed. The transaction was void, and no fine could substitute the forfeiture.

Conclusion:
The appeal was dismissed, and the interim stay was vacated. The appellants were granted time until May 31, 1998, to vacate the premises, contingent on filing an appropriate undertaking within four weeks. Failure to comply would nullify the granted time extension.

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