-(1)- IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPELLATE JURISDICTION CRIMINAL APPELLATE JURISDICTION CRIMINAL WRIT PETITION NO.1088 OF 1995 1. Mr.Domnic Alex Fernandes ] since deceased: ] 1A. John Domnic Fernandes, ] age 39 years, ] 1B. David Domnic Fernandes, ] age 51 years, ] 1C. Alex Domnic Fernandes, ] age 45 years, ] 1D. Ms.Carmeline Fernandes, ] age 58 years, ] resident of Room No.8 ] T.40 Juhu Koliwada, ] H.B. Gawde Road, ] Santacruz (West), ] Mumbai - 400 049. ] -(2)- 2. Mr.Prakash Shankar Talib, ] age 47 years, residing at ] Room No.1. ] 3. Mrs.Filsu Salu D’souza, ] since deceased: ] 3A. Miss.Santana Sebestian ] Mascarenhas, age 53 years, ] Resident of Room No.7 ] T.40 Juhu Koliwada, ] H.B.Gawde Road, Santacruz ] (West), Mumbai-400 049. ] 4. Mrs.Jerome John Fernandes, ] age 26 years, residing at ] Room no.3. ] 5. Mrs.Manika Keshu D’souza, ] age 60 years, residing ] at Room No.4. ] 6. Mr.Joe S. Coutinho, ] age 55 years, residing ] -(3)- at Room No.5. ] 7. Mr.Manuel Santan Carvelho, ] age 49 years, residing ] at Room No.6. ] 8. Mrs.Natoline Sebastian ] Mascarenhas, ] Since deceased : ] 8A. Marie Santan Elias Fernandes, ] age 62 years, Resident of ] Room No.2, T.40 Juhu Koliwada,] H.B. Gawde Road, Santacruz ] (West), Mumbai - 400 049. ] 9. Mr.Mary Johnna Dias, ] since deceased : ] 9-a. Mrs.Sabina D’souza, ] Residing at Virar, Agashi. ] 9-b. Mrs.Eliza D’souza, ] Residing at Opp.Gawade ] -(4)- Building, Hirabuwa Marg, ] Juhu, Koliwada, ] Mumbai-49. ] 9-c. Mrs.Margaret Dias, ] Residing at Nalasopara. ] 9-d. Ms.Philomena Dias, ] R/a. Room No.9, Gawade ] Building, Hirabuwa Marg, ] Juhu Koliwada, ] Mumbai-400 049. ] 9-e. Mr.Balthazar Dias, ] R/a. Room No.9, Gawade ] Building, Hirabuwa Marg, ] Juhu Koliwada, ] Mumbai - 400 049. ] 9-f. Mrs.Deodita Raman, ] R/a. Hirabuwa Marg, Juhu ] Koliwada, Mumbai-400 049. ] 9-g. Mrs.Regina M. Anthony, ] -(5)- R/a. Room No.9, Gawade ] Building, Hirabuwa Marg, ] Juhu Koliwada, ] Mumbai - 400 049. ] 10. Mr.Rajnikant Narayan ] Ajgaonkar, age 57 years, ] residing at Room No.11.. ] ..PETITIONERS. -VERSUS- -VERSUS- -VERSUS- 1. The Union of India, ] 2. The Director, ] SAFEMA/NDPS, Bombay, ] Government of India, ] Ministry of Finance, ] Department of Revenue, ] Office of the Competent ] authority & Administrator, ] Smugglers & Foreign Exchange ] Manipulators (Forfeiture of ] Property) Act 1976 & ] Narcotics Drugs & Psychotropic] Substances Act, 1985, ] Mittal Court, ‘C’ Wing, ] -(6)- 3rd Floor, Nariman Point, ] Bombay - 400 021. ] 3. State of Maharashtra. ] ..RESPONDENTS. .. Mr.R.V.Govilkar, Adv. with Mr.Sarang Aradhye, Adv. for the Petitioners. Mr.J.C.Satpute, Adv. for Respondent Nos.1 & 2. Mr.A.S.Gadkari, APP, for the State. .. CORAM : R.M.S.KHANDEPARKAR, & CORAM : R.M.S.KHANDEPARKAR, & CORAM : R.M.S.KHANDEPARKAR, & SMT.V.K.TAHILRAMANI, JJ. SMT.V.K.TAHILRAMANI, JJ. SMT.V.K.TAHILRAMANI, JJ. DATED : 11TH JULY, 2007. DATED : 11TH JULY, 2007. DATED : 11TH JULY, 2007. ORAL JUDGMENT (PER R.M.S.KHANDEPARKAR,J.) : ORAL JUDGMENT (PER R.M.S.KHANDEPARKAR,J.) : ORAL JUDGMENT (PER R.M.S.KHANDEPARKAR,J.) : 1. Heard Mr.Govilkar learned Advocate for the Petitioners, Mr.Satpute learned Advocate for the respondent Nos.1 & 2 and Mr.Gadkari learned APP for the State. -(7)- 2. The petitioners are seeking to challenge the action sought to be taken by the respondents under Section 19 of the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, hereinafter called as SAFEMA for brevity, mainly on the ground that the petitioners are lawful tenants in respect of flats in the building and that they cannot be evicted therefrom without following due process of law which is otherwise required to be followed in case of eviction of tenants of a building. 3. Few undisputed facts relevant for the decision are that : there existed a building called "Gawde Building" at Juhu Koliwada, Mumbai which belonged to one Mr.Francis Coelho and consisted of a chawl wherein the petitioners and their ancestors were residing as the tenants. One Shri.Krishna Budha Gawde purchased the said building sometime in 1965 and thereafter reconstructed the building in 1972. It was pursuant to the purchase of the premises by Shri.Krishna Budha Gawde that the building came to -(8)- be known as the "Gawde Building". Under the agreements with the said Shri.Krishna Budha Gawde, the petitioners occupied the reconstructed building and continued to pay the rent to said Krishna Budha Gawde. The petitioners were served with a notice dated 5th July, 1995 by the office of the respondent No.2 calling upon the petitioners to vacate the respective rooms and hand over the possession thereof to the respondents. The notice was replied to by the petitioners through their advocate on 19th July, 1995 raising the issue of tenancy in relation to the premises and being protected under the law of land applicable to them and further that they were not parties to the SAFEMA proceedings against the landlord of the said building, nor they had any opportunity of being heard in the said proceedings at any time. Under notice dated 22nd August, 1995 the respondents informed the petitioners that the proceedings which were initiated under the SAFEMA against the said Shri.Krishna Budha Gawde were concluded whereby the property in question stood forfeited to the Government and even the Appellate Tribunal had confirmed the said forfeiture. -(9)- 4. It is the contention of the petitioners that they being the tenants in respect of the premises in question, they are protected by the law of land and they cannot be evicted from the said premises, without they are heard in the matter and their occupation in the premises is terminated by due process of law applicable to them. It is their further case that they being not parties to the SAFEMA proceedings, they having not been heard in the SAFEMA proceedings and they having not been offered an opportunity of being heard at any stage of the said proceedings, the forfeiture of landlord’s property would not amount to or result in a deprivation of their tenancy rights in relation to the said premises and to hold otherwise would result in denying their fundamental and statutory right assured to them. In any way, it is their contention that even assuming that upon the forfeiture of the property it vests in the Government free from, in order to enable the petitioners to defend their right it is necessary for the respondents to offer appropriate opportunity by issuing necessary show cause notice -(10)- before proceeding to take action in accordance of Section 19 of SAFEMA, and denial thereof would virtually amount to failure on the part of respondents to comply with the basic principles of natural justice inasmuch as that the petitioners would be dispossessed from the premises without even being offered an opportunity of being heard in the matter. 5. On the other hand, it is the case of the respondents that consequent to the conclusion of the proceedings under the SAFEMA the properties of late Krishna Budha Gawde stand forfeited to the Central Government and the same include the properties in question and, therefore, it vests free from all encumbrances in favour of the Central Government. It is their further case that consequent to the forfeiture of the property, the alleged tenancy rights of the petitioners came to an end and they cannot independently claim any right to the said premises and further that Section 19 of SAFEMA clearly authorises the competent authority to take possession of such premises by evicting whoever found in possession -(11)- of the forfeited property. 6. The learned Advocate appearing for the petitioners placed reliance in the decisions of the Apex Court in the matters of C.B.Gautam Vs. C.B.Gautam Vs. C.B.Gautam Vs. Union of India and others : (1993) 1 SCC 78 Union of India and others : (1993) 1 SCC 78 Union of India and others : (1993) 1 SCC 78; Attorney General for India & Ors. Vs. Amratlal Attorney General for India & Ors. Vs. Amratlal Attorney General for India & Ors. Vs. Amratlal Prajivandas & Ors : (1994) 5 SCC 54 Prajivandas & Ors : (1994) 5 SCC 54 Prajivandas & Ors : (1994) 5 SCC 54; Fatima Fatima Fatima Mohd. Amin (Smt) (Dead) through L.Rs. Vs. Union Mohd. Amin (Smt) (Dead) through L.Rs. Vs. Union Mohd. Amin (Smt) (Dead) through L.Rs. Vs. Union of India & another : (2003) 7 SCC 436 of India & another : (2003) 7 SCC 436 of India & another : (2003) 7 SCC 436; and in the decision of Division Bench of this Court in the matter of Narayan Vittappa Kudva Vs. Union of Narayan Vittappa Kudva Vs. Union of Narayan Vittappa Kudva Vs. Union of India and another : 2002(2) MLJ 290 India and another : 2002(2) MLJ 290 India and another : 2002(2) MLJ 290. The learned Advocate appearing for the petitioners submitted that though there is no specific provision under SAFEMA for issuance of show cause notice to the person in possession of the property alleged to have been forfeited under SAFEMA, the Section 19 has to be read down in that regard in order to ensure that the fundamental or statutory rights guaranteed to such occupants are not disturbed or violated, and eviction is not effected without following the due process of law and no injustice is caused in that regard to such occupant of such -(12)- property. Reliance is sought to be placed in that regard in the decision of the Apex Court in the matter of Fatima Amin Fatima Amin Fatima Amin (supra). He has further submitted that the tenants of such building would not be either "associates" or "relatives" within the meaning of the said expression under SAFEMA and being so the provisions of SAFEMA cannot be held to be applicable to the tenants in occupation of such building or property and in that regard reliance is placed in the decision in the matter of C.B. Gautam C.B. Gautam C.B. Gautam (supra). He has further submitted that in view of the decision of the Division Bench of this Court in the matter of Narayan Kudva Narayan Kudva Narayan Kudva (supra), tenants of such building cannot be considered as having been covered under SAFEMA and, therefore, merely because the property is forfeited under SAFEMA, it would not empower the respondents to evict the petitioners without following due process of law and the rules and regulations which are required to be followed for the purpose of eviction of a tenant. In that regard attention is also drawn to a decision in the matter of Amratlal’s case Amratlal’s case Amratlal’s case (supra). He has further submitted that SAFEMA itself requires an -(13)- opportunity of being heard even to the associates, therefore by no stretch of imagination it can be presumed that the tenants in occupation of the property can be evicted without offering an opportunity of being heard. He has further submitted that there is no presumption under the law that the holders of the said property are necessarily to be the relatives or associates of the smugglers and therefore they cannot be directed to be evicted without an opportunity of being heard by issuing necessary show cause notice before taking action in terms of Section 19 of SAFEMA. In any case the provisions of SAFEMA nowhere disclose that forfeiture of the property under SAFEMA would automatically result in termination of tenancy rights of the occupants of such property. He has also submitted that the principle which is adopted in relation to the property acquired under the Income Tax Act will have to be applied to the case arising under SAFEMA, while considering the point as to whether the property vests in the Government free from encumbrances and if so at what extent. -(14)- 7. The learned Advocate appearing for the respondents on the other hand has submitted that the petitioners are not the holders of the property nor there is any claim in that regard; and that their claim is that of tenants of the building in the said property. He has submitted that once the property is forfeited under SAFEMA, all the rights and interest in such property come to an end and the property vests in the Central Government free from all encumbrances. He has further submitted that under the Income Tax Act there is no forfeiture of the property but the property stands acquired on account of violation of certain statutory provisions, whereas in case of SAFEMA the property stands forfeited. The rent legislation in force in the State is not applicable to the properties belonging to the Central Government. Even the provisions of the Transfer of Property Act would not be attracted once the property stands forfeited in favour of the Central Government. He has further submitted that a person can be said to be a holder of the property only in case he is able to disclose title thereto having acquired either on the basis of -(15)- some document or by adverse possession, and the tenant cannot be said to be a holder in that sense. 8. In C.B. Gautam’s C.B. Gautam’s C.B. Gautam’s case (supra) attention was drawn specifically to paragraph-34 of the said decision, while canvasing the argument in relation to the concept of "free from all encumbrances". The Apex Court therein was dealing with a matter arising under the Income Tax Act, 1961 and the matter related to challenge to the validity of the provisions of Chapter XX-C inserted in the Income Tax Act, 1961 by the Finance Act of 1986. In paragraph-34 of the decision, while dealing with the argument that the provisions of the relevant chapter were arbitrary and violative of the provisions of fundamental rights insofar as that the order of compulsory purchase under Section 269-UD of the said chapter has an effect of vesting the property in the Central Government free from all encumbrances or leasehold rights the value of which might not be reflected in the apparent consideration mentioned in the agreement for sale, and after considering the scope of the -(16)- relevant Section held : "an order for compulsory purchase results in the rights of holders or encumbrances and leasehold rights being destroyed or significantly diminished. In a given case it might happen that the property is intended to be sold under an agreement to sell subject to encumbrances and leasehold rights, and very often agreements to sell the immovable property do not provide that the property sold would be free from encumbrances or leasehold rights. In such a case, the apparent consideration, even if it is equivalent to the fair market value, would be indicative of the market value of the property subject to such encumbrances. If, in such a case an order for compulsory purchase is made, the result would be that the property would be compulsorily purchased and the amount to be paid -(17)- for the purchase would be only equal to the apparent consideration and this apparent consideration would not take into account the value of the encumbrances on the property like mortgages and so on or the leasehold rights. It is well known that a property may be heavily encumbered and its value can be considerably depressed if it were sold subject to encumbrances. It is equally well known that a property in respect of which there is a subsisting lease for a substantial period of time would fetch a comparatively low price because the purchase thereof would not carry with it the right to possession or occupation during the subsistence of the leasehold interests. In such cases, the amount of apparent consideration could be even less than the value of the encumbrances or the leasehold interests. An order for compulsory -(18)- purchase in such cases would necessarily result in gross injustice to the encumbrance holders and lessees and to their being deprived of their rights without their being in any way involved in the attempt at a tax evasion. It, therefore, appears to us difficult to uphold the last part of sub-section (1) of Section 269-UE insofar as it provides that the property in respect of which an order under sub-section (1) of Section 269-UD is made shall vest in the Central Government free of all encumbrances." . Having held as above, the Apex Court further ruled that : " In our opinion the expression "free of all encumbrances" is liable to be struck down as arbitrary, without any rational nexus with the object of the -(19)- legislation in question and violative of Article 14 of the Constitution." 9. While reading the decision of the Apex Court in C.B.Gautam’s C.B.Gautam’s C.B.Gautam’s case, one has to bear in mind the provisions of Article 300-A of the Constitution of India which clearly provides that, "no person shall be deprived of his property save by authority of law". It is to be noted that the action contemplated under Section 269-UE of the Income Tax Act is in the nature of compulsory purchase of the property. Compulsory purchase of the property of the owners on account of certain defaults in tax matters by the owners of the property or the holders of the property could result in grave injustice to the encumbrance holders and lessees if they are deprived of their rights without being in any manner compensated in relation to their rights in or to the property inspite of the fact that they were not involved in tax evasion by owner of the property and that therefore the Apex Court ruled that the expression "free from all encumbrances" from Section 269-UE shall be liable to be struck down as being -(20)- arbitrary and without having any rational nexus and violative of the Article 14 of the Constitution. It is sought to be argued on behalf of the petitioners that same principle will have to be applied while considering the provisions of Section 7(3) of SAFEMA. 10. Sub-section 3 of Section 7 of SAFEMA undoubtedly provides that once the proceedings under SAFEMA in relation to a property against the concerned person are concluded adverse to the interest of that person, such property stands forfeited to the Central Government "free from all encumbrances". The SAFEMA has been enacted to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators and for matters connected therewith or incidental thereto, and that for effective prevention of smuggling activities and foreign exchange manipulations which are having a deleterious effect on the national economy, it is necessary to deprive persons engaged in such activities and manipulations of their ill-gotten gains. Besides such persons have been augmenting -(21)- such gains by violations of wealth-tax, income-tax, or other laws or by other means and have thereby been increasing their resources for operating in clandestine manner, as also that such persons have in many cases been holding the properties acquired by them through such ill gotten gains in the names of their relatives, associates and confidants, that the SAFEMA came to be enacted. 11. Section 4 of SAFEMA provides prohibition of holding illegally acquired property. Sub-section (1) of Section 4 thereafter provides that as from the commencement of the Act SAFEMA, it shall not be lawful for any person to whom SAFEMA applies to hold any illegally acquired property either by himself or through any other person on his behalf. Sub-section (2) of Section 4 provides that where any person holds any illegally acquired property in contravention of the provision of sub-section (1), such property shall be liable to be forfeited to the Central Government in accordance with the provisions of SAFEMA. Section 5 of SAFEMA deals with the functions of the competent authority under SAFEMA. Section 6 thereafter deals with -(22)- subject of notice of forfeiture under SAFEMA. Sub-section (1) of Section 6 provides that if, having regard to the value of the properties held by any person to whom SAFEMA applies, either by himself or through any other person on his behalf, his known sources of income, earnings or assets, any other information or material available to it as a result of action taken under section 18 or otherwise, the competent authority has reason to believe which is recorded in writing that all or any of the properties are illegally acquired properties, it may serve a notice upon such person calling upon him within such time as may be specified in the notice, which shall not be ordinarily less than 30 days, to indicate the sources of his income, earnings or assets, out of which or by means of which he has acquired such property, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties, as the case may be, should not be declared to be illegally acquired properties and forfeited to the Central Government under SAFEMA. Pursuant to the issuance of such notice, the matter then proceeds -(23)- in terms of Section 7 and in case the findings of the competent authority happens to be that the property is illegally acquired it is declared as such and thereupon it stands forfeited to the Central Government free from all encumbrances in terms of Section 7(3) of SAFEMA. 12. Section 7 of the SAFEMA reads thus :- "7. Forfeiture of Property in certain cases.- (1) The competent authority may, after considering the explanation, if any, to the show-cause notice issued under section 6, and the materials available before it and after giving to the person affected (and in a case where the person affected holds any property specified in the notice through any other person, to such other person also) a reasonable opportunity of being heard, by order, record a finding whether all or any of the properties in question are -(24)- illegally acquired properties. (2) Where the competent authority is satisfied that some of the properties referred to in the show-cause notice are illegally acquired properties but is not able to identify specifically such properties, then, it shall be lawful for the competent authority to specify the properties which, to the best of its judgment, are illegally acquired properties and record a finding accordingly under sub-section (1). (3) Where the competent authority records a finding under this section to the effect that any property is illegally acquired property, it shall declare that such property shall, subject to the provisions of this Act, stand forfeited to the Central Government free from all encumbrances. -(25)- (4) Where any shares in a company stand forfeited to the Central Government under this Act, then the company shall, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or the articles of association of the company, forthwith register the Central Government as the transferee of such shares." 13. Section 8 clarifies that in such proceedings, the burden of proving that any property specified in the notice served under Section 6 is not illegally acquired property shall be on the person affected and to whom the notice is issued. Section 9 speaks of fine in lieu of forfeiture which can be offered by an affected person. Section 10 relates to procedure in relation to certain trust properties. Section 11 declares certain transfers to be null and void. It provides that pursuant to issuance of a notice -(26)- under Section 6 or under Section 10, any property, referred to in such notice, is transferred by any mode whatsoever such transfer shall, for the purpose of the proceedings under SAFEMA, to be ignored and if such property is subsequently forfeited to the Central Government under Section 7, then, the transfer of such property shall be deemed to be null and void. Section 12 deals with the constitution of appellate tribunal. Section 13 deals with the notice or order not to be invalid for error in description. Section 14 relates to bar of jurisdiction and provides that no order passed or