AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2001 (9) TMI 1153
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad) Juhu Koliwada. Bombay -- 400049, hereinafter referred to as "the property in question". 3. The petitioner claims to be a tenant of the property in question since April, 1959. His case is that he was inducted into the premises by one Gulabbai Govind Chavan and her husband Govind Raghunath Chavan. According to the petitioner, he was put in exclusive possession of the property in question as a monthly tenant. He claims to be in possession of monthly rent receipts issued by the said Chavan in his favour from about April, 1959. While the petitioner continued as a tenant, it appears that the said Chavan sold the property in question to one Laxman Narayan Gawde. The petitioner attorned his tenancy to Gawde. Petitioner claims to be in possession of the rent receipt dated 28th December, 1970 issued in his favour by Mr. Gawde in the sum of Rs. 50/- being the monthly rent for the premises for the month of December, 1970. According to the petitioner he continued paying rent to Gawde till the year 1977. It is the petitioners case that Gawde did not pass the receipts for all the rent paid by the petitioner. 4. In the year 1977 the respondent No. 1 acting under the provisions of SAFEMA ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de and then to Central Government. It appears that the petitioner was not given any opportunity of presenting his case in person or of being heard. All that was communicated to him thereafter was the impugned order dated 16th January, 1995 directing the petitioner to handover the property in question of the late Shri Laxman Narayan Gawde to respondent No. 2, Competent Authority, within ten days of the receipt of the said order on the footing that the properties had already been forfeited by the Competent Authority on 9th June, 1977 and that forfeiture order had been upheld by the Appellate Tribunal. The petitioner was informed by the said order that he may purchase the property in auction. 9. Having heard learned Counsel for both sides, we find the proceedings resulted in miscarriage of justice as a result of the impugned order. The SAFEMA applies, vide Section 2 to the categories of persons enumerated therein; that is, to (i) Every person convicted under the Sea Customs Act, Foreign Exchange Regulation Act, Sea Customs Act, 1878 or the Customs Act, 1962 or the Foreign Exchange Regulation Act, 1947 for offence in relation to goods or amount exceeding one lakh of rupees ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r. (a) the person whose property or ancestral property is sought to be affected under the Act by way of forfeiture, is a person to whom the Act applies and (b) whether the property is illegally acquired property within the meaning of the Act. 11. As far as forfeiture of the property in question in the present case is concerned, it appears that the property which stood in Gawde's name has been found to be property liable for forfeiture under the provisions of SAFEMA and therefore forfeited by the Central Government in accordance with the provisions of the SAFEMA, the petitioner is not really concerned with the forfeiture of the property of his landlord that is Gawde to the Central Government and its vesting in the Central Government. In fact, he claims that he has, after its vesting in the Central Government paid monthly rent to the Central Government and is a tenant. It is, therefore, clear that before the petitioner's rights in the property are affected, there must be a proper enquiry as to the nature of his right, i.e. whether it is a tenancy right or otherwise and must be preceded by an appropriate show cause notice which offers the petitioner an opp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n purpose of the present Act, as held by the Supreme Court in Attorney General for India v. Amratlal Prajivandas and Ors., is as under :-- "43. Question No. 5 : It is contended by the counsel for the petitioners that extending the provisions of SAFEMA to the relatives, associates and other holders is again a case of overreaching or of over-breadth, as it may be called - a case of excessive regulation. It is submitted that the relatives or associates of a person falling under Clause (a) or Clause (b) of Section 2(2) of SAFEMA may have acquired properties of their own, may be by illegal means but there is no reason why those properties be forfeited under SAFEMA just because they are related to or are associates of the detenu or convict, as the case may be. It is pointed out that the definition of relative in Explanation (2) and of associates in Explanation (3) are so wide as to bring in a person even distantly related or associated with the convict/detenu, within the net of SAFEMA, and once he comes wilhin the net, all his illegally acquired properties can be forfeited under the Act. In our opinion, the said contention is based upon a misconception. SAFEMA is directed toward....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erson [such person refers to the convict or detenu, as the case may be referred to in Clause (a) or Clause (b)]; (ii) any individual who had been or is managing the affairs or keeping the accounts of such convict/detenu; (iii) any association of persons, body of individuals, partnership firm or private company of which such convict/detenu had been or is a member, partner or director : (iv) any individual who had been or is a member, partner or director of an association of persons, body of individuals, partnership firm or private company referred to in Clause (iii) at any time when such person had been or is a member, partner or director of such association of persons, body of individuals, partnership firm or private company; (v) any person who had been or is managing the affairs or keeping the accounts of any association of persons, body of individuals, partnership firm or private company referred to in Clause (iii); (vi) the trustee of any trust where (a) the trust has been created by such convict/detenu; or (b) the value of the assets contributed by such convict/detenu to the trust amounts, on the date' of contribution not less than 20% of the value of the assets of the trus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....will also be forfeited even if they are in no way connected with the convict/detenu. So far as the holders (not being relative^ and associates) mentioned in Section 2(2)(e) are concerned, they are dealt with on a separate footing. If such person proves that he is a transferee in good faith for consideration, his property - even though purchased from a convict/detenu - is not liable to be forfeited. It is equally necessary to reiterate that the burden of establishing that the properties mentioned in the show-cause notice issued under Section 6, and which are held on that date by a relative or an associate of the convict/detenu, are not the illegally acquired properties of the convict/detenu, lies upon such relative/associate. He must establish that the said property has not been acquired with the monies or assets provided by the detenu/convict or that they in fact did not or do not belong to such detenu/convict. We do not think that Parliament ever intended to say that the properties of all the relatives and associates, may be illegally acquired, will be forfeited just because they happen to be the relatives or associates of the convict/detenu. There ought to be the connecting link ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onthly tenant whose tenancy is created by a person who held the property prior to the purchase of the property by the person whose interest in it is forfeited under the SAFEMA and the Central Government has further accepted monthly rent the legal implication might be quite different. 14. In fact having regard to the provisions of the SAFEMA we are of the view that the provisions of the SAFEMA will be applicable only to the persons specified in sub-section (2) reproduced (supra). Therefore, unless the person has been convicted under the Act enumerated in sub-section 2 (a) or, if the person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1947 under subsection 2(b) or a person who is a relative of a person referred to in clauses (a) or (b) or an associate of person referred to in clauses (a) or (b) or a holder of any property which was at any time previously held by a person referred to in clauses (a) or (b) except a present holder who is or was a transferee in good faith for adequate consideration, the Act has no application. We consider this to be the plain intendment of Section 2 of SAF....