MOHD SHABANDRI vs UNION OF INDIA
- Court
- Karnataka High Court
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WP No. 35469 of 2015
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R
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 6 DAY OF JULY, 2026
PRESENT
THE HON'BLE MR. JUSTICE D K SINGH
AND
THE HON'BLE MR. JUSTICE T.M.NADAF
WRIT PETITION NO. 35469 OF 2015 (GM-RES)
C/W
WRIT PETITION NO. 28864 OF 2015 (GM-RES)
IN WP No. 35469/2015
BETWEEN:
1. MOHD. SHABANDRI
S/O FAQUI AHMED SHABANDRI
AGED 59 YEARS
R/O 9, GROUND FLOOR
KEMP ROAD, OPP: COLES PARK
BANGALORE-5
2. SMT FATIMA KOUSAR ISMAIL
W/O MOHD SHABANDRI
AGED 41 YEARS
R/O 9, GROUND FLOOR
KEMP ROAD, OPP: COLES PARK
BANGALORE-5
…PETITIONERS
(BY SRI. ADHITYA SONDHI, SENIOR COUNSEL FOR
SRI. PARASHURAM.A.L., ADVOCATE)
AND:
1. UNION OF INDIA
REP BY ITS PRL. SECRETARY
Digitally
signed by
REKHA R
Location:
High Court
of Karnataka
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MINISTRY OF LAW AND
PARLIAMENTARY AFFAIRS
4TH FLOOR, SHASTRI BHAVAN
NEW DELHI-1
2. THE COMPETENT AUTHORITY
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
SMUGGLERS AND FOREIGN EXCHANGE
MANIPULATORS
(FORFEITURE OF PROPERTY) ACT, 1976,
64/1, G N CHETTY ROAD,
T NAGAR, CHENNAI-500017
3. MR WINSTON TAN
S/O KAITOON TAN
AGED ABOUT 71 YEARS
OCC: BUSINESS
FLAT NO.004-GROUND FLOOR
"PROMENADE PLACE" NO. 45/2
PROMENADE ROAD
BANGALORE-42
4. MR GIBRAN TAN
S/O WINSTON TAN
AGED ABOUT 36 YEARS
OCC: BUSINESS
FLAT NO.004-GROUND FLOOR
"PROMENADE PLACE" NO. 45/2
PROMENADE ROAD
BANGALORE-42
…RESPONDENTS
(BY SRI. K.ARVIND KAMATH, ASGI, FOR
SRI.KUMAR M.N, CGSPC FOR R1 & R2;
SRI. V.R.DATAR, ADVOCATE FOR R3 & R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
QUASH THE IMPUGNED ORDER DTD.21.4.2015, PASSED BY
THE LEARNED APPELLATE TRIBUNAL IN FPA.NO.1/2013,
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FPA.NO.1/2014 AND FPA.NO.2/2014 VIDE ANNEX-AU AND TO
SET ASIDE THE REJECTION OF THE APPLICATION FOR DELAY.
IN WP NO. 28864/2015
BETWEEN:
1. MR WINSTON TAN
S/O KAITOON TAN
AGED ABOUT 71 YEARS
OCC: BUSINESS,
FLAT NO.004, GROUND FLOOR,
PROMENADE PLACE, NO.45/2,
PROMENADE ROAD,
BANGALORE-42
2. MR. GIBRAN TAN
S/O WINSTON TAN
AGED ABOUT 36 YEARS
OCC: BUSINESS,
FLAT NO.4, GROUND FLOOR,
PROMENADE PLACE, NO.45/2,
PROMENADE ROAD,
BANGALORE-42
...PETITIONERS
(BY SRI. V.R.DATAR, ADVOCATE)
AND:
1. UNION OF INDIA
REP BY ITS PRL. SECRETARY
MINISTRY OF LAW AND
PARLIAMENTARY AFFAIRS,
4TH FLOOR, SHASTRI BHAVAN,
NEW DELHI-1
2. THE COMPETENT AUTHORITY
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE,
SMUGGLERS AND FOREIGN EXCHANGE,
MANIPURLATORS, (FORFIETURE OF PROPERTY)ACT,1976,
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64/1, G.N. CHETTY ROAD,
T.NAGAR, CHENNAI-500017
3. VIJAYA BANK
REP BY ITS MANAGER
BRIGADE ROAD,
BANGALORE-560001
4. SMT. FATIMA KOUSAR ISMAIL
W/O MOHD. SHABANDRI
AGE 41 YEARS
R/O 9, GROUND FLOOR,
KEMP ROAD, OPP: COLES PARK,
BANGALORE-5
5. MOHD. SHABANDRI
S/O FAQUI AHMED SHABANDRI
AGE: 59 YEARS
R/O 9, GROUND FLOOR,
KEMP ROAD, OPP: COLES PARK,
BANGALORE-5
...RESPONDENTS
(BY SRI. K.ARVIND KAMATH, ASGI FOR
SRI. M.N.KUMAR, CGSPC FOR R1 & R2;
SRI. VIGNESH SHETTY, ADVOCATE FOR R3;
SRI. ADITYA SONDHI, SENIOR COUNSEL FOR
SRI. PARASHURAM.A.L ADVOCATE FOR R4 & R5)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 226 OF THE CONSTITUTION OF INDIA, PRAYING TO
QUASH THE IMPUGNED ORDER VIDE ANNEXURE-A
DATED:21.04.2015, PASSED BY THE LEARNED APPELLATE
TRIBUNAL IN FPA.No.1/2013 BE SET ASIDE BY QUASHING
THE SAME BY THE ISSUE OF WRIT OF CERTIORARI BY THIS
HON'BLE COURT AS PERVERSE, ERRONEOUS, BAD IN LAW,
ETC.
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THESE PETITIONS, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE D K SINGH
and
HON'BLE MR. JUSTICE T.M.NADAF
ORAL ORDER
(PER: HON'BLE MR. JUSTICE D K SINGH)
I. PREFACE:
1. These Writ Petitions are filed under Articles 226 and 227
of the Constitution of India, praying to quash the common
order dated 21.04.2015 passed by the learned Appellate
Tribunal for Forfeited Property, New Delhi (hereinafter referred
to as 'the Appellate Tribunal') in FPA.No.1/2013,
FPA.No.1/2014 and FPA.No.2/2014 and to set aside the
rejection of the application for condonation of delay and further
to direct the Appellate Tribunal to consider the appeals on
merits, or in the alternative, to adjudicate the appeals on
merits and set aside the Order dated 23.06.2005 passed by the
respondent No.2 – Competent Authority.
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II. FACTUAL BACKGROUND:
2. The genesis of the present dispute lies in the detention of
Petitioner No.1, Shri Mohd. Ismail Shabandri, under the
Conservation of Foreign Exchange and Prevention of Smuggling
Activities Act, 1974 (COFEPOSA) on 02.05.2003, pursuant to an
order dated 02.05.2003 issued by the Government of India.
This detention stemmed from his alleged involvement in illegal
transfer of money from abroad, specifically making
compensatory payments under instructions from Dubai, UAE, in
violation of the Foreign Exchange Management Act, 1999
(FEMA) read with the Income Tax Act, 1961.
3. A search of the residential premises of the Petitioners,
Flat No. 4, Kamala Mansion, Promenade Place, 45/2,
Promenade Road, Bangalore – 42 (hereinafter referred to as
'the Schedule Property'), was conducted on 31.07.2002,
leading to the seizure of Indian currency of Rs. 13,50,000/- and
incriminating materials. The Competent Authority found that
Petitioner No.1 was extensively engaged in illegal transfer of
funds, having received Rs. 92,09,480/- and paid Rs.
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78,59,480/- in India, with the seized amount being the
balance.
4. Consequently, proceedings were initiated under the
Smugglers and Foreign Exchange Manipulators (Forfeiture of
Property) Act, 1976 (hereinafter referred to as 'SAFEMA'). A
notice under Section 6(1) of SAFEMA was issued to Petitioner
No.1 on 08.12.2003, treating him as a 'person' within the
meaning of Section 2(2)(b) of SAFEMA. Subsequently, a notice
under Section 6(1) was also issued to Petitioner No.2, Smt.
Fathima Kausar Ismail, on 23.11.2004, for her 50% share in
the Schedule Property, treating her as a 'relative' within the
meaning of Section 2(2)(c) of SAFEMA. Both notices were duly
served.
5. The Petitioners responded to the notices, seeking time
and submitting some documents, including Income Tax returns
and claims regarding the sale of ancestral property and
remittances from Petitioner No.2's brother. However, the
Competent Authority found these explanations insufficient and
unsubstantiated, noting a lack of evidence regarding the source
of funds, the sale of ancestral property, or the legality of the
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brother-in-law's earnings abroad. The Competent Authority also
noted that acceptance of Income Tax returns by the Income
Tax Department does not bind forfeiture proceedings under
SAFEMA, as per Section 21 of the Act.
6. During the pendency of these proceedings, the Petitioners
sold the Schedule Property to Respondent Nos. 3 and 4 (the
Purchasers) for a consideration of Rs. 26,00,000/- by a
registered Sale Deed dated 10.02.2005. The sale consideration
was paid through drafts deposited into a bank account opened
by the Petitioners specifically for this purpose, and the entire
amount was withdrawn in cash within a week. The Competent
Authority noted that after selling the property, the Petitioners
became untraceable.
7. On 23.06.2005, the Competent Authority passed an order
under Section 7(1) and (3) of SAFEMA, declaring the Schedule
Property as illegally acquired and forfeited to the Central
Government, free from all encumbrances. The Competent
Authority further held that the transfer of the property to the
Purchasers on 10.02.2005 was null and void by virtue of
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Section 11 of SAFEMA, as it occurred after the issuance of
notices under Section 6(1) of the Act.
8. Aggrieved by the forfeiture order, the Purchasers filed
W.P. No. 764 of 2006 before this Court, which was allowed by a
learned Single Judge on 12.09.2007, quashing the forfeiture
order and remitting the matter for fresh consideration after
hearing the Purchasers.
9. The Union of India and the Competent Authority
challenged the Single Judge's order in W.A. No. 2181 of 2007,
which was allowed by a Division Bench of this Court on
16.05.2009. The Division Bench held that the sale transaction
to the Purchasers was subsequent to the Section 6 notice and
was null and void under Section 11 of SAFEMA, and that the
Purchasers were not entitled to any notice.
10. The Purchasers then preferred Special Leave Petition
(Civil) No. 20420 of 2009 (converted to Civil Appeal No. 7207
of 2012) before the Supreme Court of India. The Supreme
Court, vide judgment dated 04.10.2012, dismissed the appeal,
affirming the view of the Division Bench. The Supreme Court
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unequivocally held that after the issuance of Section 6(1)
notices, the sale to the Purchasers must be ignored under
Section 11 and the sale became null and void upon the
forfeiture order under Section 7, relating back to the first
Section 6(1) notice. The Supreme Court rejected the
Purchasers' plea of being bona fide purchasers for adequate
consideration, stating that no title vested in them by virtue of
the sale deed dated 10.02.2005, as the Vendors could not
transfer property after the Section 6(1) notice.
11. Subsequently, the Petitioners (original owners/vendors)
filed appeals, FPA.No.1/2014 and FPA.No.2/2014, before the
Appellate Tribunal, challenging the forfeiture order dated
23.06.2005, along with applications for condonation of delay of
approximately nine years. The Purchasers also had an appeal,
FPA.No.1/2013, before the Appellate Tribunal.
12. The Appellate Tribunal, by a common Judgment dated
21.04.2015, dismissed all three appeals, primarily on the
ground of inordinate and unexplained delay in filing the appeals
by the Petitioners. The Appellate Tribunal found no sufficient
cause for condoning the nine-year delay, rejecting the
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Petitioners' claims of non-service of the forfeiture order and
lack of knowledge of the previous legal proceedings. It is this
common order dated 21.04.2015 of the Appellate Tribunal, that
is impugned in the present Writ Petitions.
III. SUBMISSIONS OF LEARNED COUNSEL FOR THE
PETITIONERS:
13. Dr. Aditya Sondhi, Learned Senior Counsel for the
Petitioners has submitted that the impugned order dated
21.04.2015 is erroneous as the appellate tribunal failed to
appreciate the crucial fact of non-service of the forfeiture order
dated 23.06.2005. It was submitted that the Petitioners had
vacated the Schedule Property on 10.02.2005, and the
Competent Authority was aware of this fact, yet the order was
dispatched to the old address.
14. It is also submitted that that the mandate of Section
22(b) of SAFEMA, regarding substituted service by affixture,
was not complied with for the forfeiture order, rendering the
service invalid. Therefore, the order was never "served" in the
eyes of law, and the question of delay in filing an appeal under
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Section 12(4) of SAFEMA, which stipulates limitation from the
date of service, does not arise.
15. The Petitioners have asserted that they gained knowledge
of the forfeiture order only on 13.02.2014 through a relative
who informed them about a newspaper publication. They
immediately took steps to procure certified copies and filed
appeals within the prescribed period from the date of
knowledge, thus there was no delay.
16. It is further contended that the Petitioners had no
personal knowledge of the proceedings before this Court (W.P.
No. 764 of 2006 and W.A. No. 2181 of 2007) or the Supreme
Court (SLP/Civil Appeal No. 7207 of 2012), as the service of
summons was not in strict compliance with the Karnataka High
Court Rules, and in the Supreme Court, they were deleted as
parties. Therefore, the findings of the Appellate Tribunal
regarding their awareness of previous proceedings is incorrect .
17. Learned Counsel submitted that the issue of forfeiture
against the Petitioners has never been decided on substantive
merits by any higher court. The Supreme Court's decision was
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primarily concerned with the locus standi of the Purchasers and
the applicability of Section 11, not the veracity of the findings
of the forfeiture order against the Vendors. Thus, the matter
remains res integra for the Petitioners.
18. The Petitioners also highlighted their legitimate sources of
income for acquiring the Schedule Property, including sale
proceeds from ancestral properties and remittances from
Petitioner No.2's brother, which they claim were not adequately
considered by the Competent Authority.
19. A significant argument has been raised regarding the
Competent Authority's failure to consider the mandatory
provisions of Section 9 of SAFEMA, which provides for an option
to pay a fine in lieu of forfeiture. It was submitted that this
aspect was not agitated or considered in previous proceedings
and should be allowed to be addressed now. The Petitioners
allege that they were threatened by the Competent Authority
and its inspectors, and that Petitioner No.1 paid Rs. 1,00,000/-
in cash as a "fine" on 31.01.2005, based on an oral assurance
that the case would be closed and they could sell the property.
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This payment, they argued, further supports their claim of lack
of knowledge of subsequent forfeiture proceedings.
20. Finally, the Petitioners challenged the constitutional
validity of Sections 11 and 22 of SAFEMA, arguing that they
deprive the general public of knowledge of forfeiture
proceedings due to the absence of a public notice mechanism.
They also contended that the Section 6(1) notices were bald
and lacked the requisite "reasons to believe". However, this
argument has not been pressed.
IV. SUBMISSIONS OF LEARNED COUNSEL FOR THE
RESPONDENTS:
21. Mr. K. Aravind Kamath, learned ASGI for the Union of
India and the Competent Authority has opposed the petitions,
contending that the Appellate Tribunal's order is well-reasoned
and warrants no interference. It was submitted that the
Petitioners were actively involved in the proceedings before the
Competent Authority, filed replies, and sought multiple
opportunities to explain the source of funds. Their claim of
ignorance of the forfeiture order for nine years is a blatant
falsehood and an attempt to reopen a concluded matter.
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22. It has been emphasized that the Petitioners deliberately
absconded after selling the Schedule Property and withdrawing
the entire sale consideration in cash. The Competent Authority
made diligent efforts to serve notices, including through
affixture as permitted by Section 22(b) of SAFEMA. The
Petitioners cannot take advantage of their own evasive
conduct.
23. Learned Counsel for the Respondents would submit that
the issue of forfeiture has attained finality. The Supreme Court,
in Civil Appeal No. 7207 of 2012, has already upheld the
applicability of Section 11 of SAFEMA, declaring the sale to the
Purchasers null and void. This implicitly affirms the validity of
the forfeiture proceedings against the Vendors. The argument
that the merits of forfeiture against the Vendors were not
decided is a misinterpretation of the Supreme Court's
judgment.
24. It is submitted that the plea regarding Section 9 of
SAFEMA (fine in lieu of forfeiture) was raised by the Purchasers
in their previous writ petition and was not granted. Therefore,
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the Petitioners are barred by the principles of res judicata or
constructive res judicata from re-agitating this issue. The
Appellate Tribunal correctly held that the matter had attained
finality with the Supreme Court's decision.
25. The allegation of paying Rs. 1,00,000/- in cash to the
Competent Authority was categorically denied and dismissed as
a baseless and false claim, designed to create a false narrative
and circumvent the legal process. It was pointed out that such
a significant transaction would invariably be documented,
especially in the context of a property sale.
26. Learned Counsel for the Purchasers (Respondents Nos. 3
and 4) has supported the order passed by the Competent
Authority, reiterating that they were bona fide purchasers but
their title was rendered null and void by Section 11, as affirmed
by the Supreme Court. They highlighted that the Petitioners
had a legal and moral obligation to convey a valid title, which
they failed to do.
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V. POINTS FOR DETERMINATION:
27. Based on the pleadings and arguments advanced, the
following points arise for our consideration:
1. Whether the Appellate Tribunal was justified in dismissing
the Petitioners' applications for condonation of delay in
filing appeals against the forfeiture order dated
23.06.2005?
2. Whether the forfeiture order dated 23.06.2005 was
invalid due to alleged non-service on the Petitioners or
non-compliance with Section 22(b) of SAFEMA?
3. Whether the Petitioners are entitled to re-agitate the
merits of the forfeiture order or seek relief under Section
9 of SAFEMA, considering the previous proceedings up to
the Supreme Court?
VI. ANALYSIS AND FINDINGS:
Re. Point No.1:
28. The Petitioners' primary contention is that they were
unaware of the forfeiture order dated 23.06.2005 for nearly
nine years, learning about it only on 13.02.2014. This claim,
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upon careful scrutiny of the records, appears to be a deliberate
attempt to circumvent the consequences of their own actions
and inactions. The factual matrix clearly demonstrates that
Petitioner No.1 was detained under COFEPOSA in 2003. Notices
under Section 6(1) of SAFEMA were issued to both Petitioners
in 2003 and 2004, respectively, and were duly served.
The Petitioners actively participated in the proceedings before
the Competent Authority, filing replies, seeking time, and
offering explanations, albeit found to be unsubstantiated.
29. Crucially, the Petitioners sold the Schedule Property to
the Purchasers on 10.02.2005, after the initiation of SAFEMA
proceedings and service of Section 6(1) notices. The Competent
Authority's order dated 23.06.2005 explicitly notes that the
Petitioners became untraceable after selling the property and
withdrawing the sale proceeds in cash. This conduct strongly
suggests a deliberate attempt to evade the legal consequences
of the forfeiture proceedings.
30. Furthermore, the Petitioners were impleaded as
Respondent Nos. 3 and 4 in the Writ Petition (W.P. No. 764 of
2006) and the Writ Appeal (W.A. No. 2181 of 2007) before this
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Court. While they claim non-service as per High Court Rules,
the records indicate efforts were made, including newspaper
publications. Even if procedural service was not perfect, their
continued absence from their known address and subsequent
absconding cannot be overlooked. In STATE OF RAJASTHAN
V. NAV BHARAT CONSTRUCTION CO., ([2005] 11 SCC
197) , it has been held that vague pleas for condonation of long
delays are not acceptable. Paragraph 21 of the said judgment
is extracted hereunder:-
" 21. We have perused the impugned order
whereby application seeking condonation of
delay was rejected and the revision petition was
dismissed as barred. The cause for the delay
stated was long strike of government
employees. In the application seeking
condonation of delay there was no mention as to
when the strike commenced and terminated.
The application was completely vague and the
High Court committed no error in rejecting it.
We find no ground to interfere with the said
order. Civil Appeal No. 8053 of 2001 is,
therefore, dismissed."
31. Similarly, in G. RAMEGOWDA V. SPL. LAND
ACQUISITION OFFICER, ([1988] 2 SCC 142) , the Supreme
Court outlined that discretion in condonation should not be
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exercised where there is gross negligence or lack of bona fides.
Paragraph 14 of the said judgment is extracted hereunder:-
"14. The contours of the area of discretion
of the courts in the matter of condonation of
delays in filing appeals are set out in a
number of pronouncements of this Court.
See: Ramlal, Motilal and Chhotelal v. Rewa
Coalfield Ltd.; Shakuntala Devi Jain v.
Kuntal Kumari; Concord of India Insurance
Co. Ltd. v. Nirmala Devi; Lala Mata Din v. A.
Narayanan; Collector, Land Acquisition v.
Katiji etc. There is, it is true, no general
principle saving the party from all mistakes
of its counsel. If there is negligence,
deliberate or gross inaction or lack of bona
fides on the part of the party or its counsel
there is no reason why the opposite side
should be exposed to a time-barred appeal.
Each case will have to be considered on the
particularities of its own special facts.
However, the expression “sufficient cause”
in Section 5 must receive a liberal
construction so as to advance substantial
justice and generally delays in preferring
appeals are required to be condoned in the
interest of justice where no gross
negligence or deliberate inaction or lack of
bona fides is imputable to the party seeking
condonation of the delay. In Katiji case this
Court said: (SCC p. 108, para 3)
“ When substantial justice and
technical considerations are pitted
against each other, cause of
substantial justice deserves to be
preferred for the other side cannot
claim to have vested right in
injustice being done because of a
non-deliberate delay. . . .
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It must be grasped that judiciary is
respected not on account of its
power to legalise injustice on
technical grounds but because it is
capable of removing injustice and
is expected to do so. ”
32. The Appellate Tribunal's finding that the Petitioners'
allegations of non-awareness are false and an attempt to
reopen proceedings is well-founded. It is inconceivable that
individuals who were actively engaged in proceedings, sold the
property under dispute, and then absconded, would remain
genuinely ignorant of the final order for nine years. The
argument that they learned of the order from a newspaper
publication in 2014, after such a long period of silence and
evasion, lacks credibility.
33. In D. GOPINATHAN PILLAI V. STATE OF KERALA
([2007] 2 SCC 322) , it is emphasized that if a mandatory
provision is not complied with and delay is not properly
explained, condonation is not permissible on sympathetic
grounds. The Petitioners' explanation for the nine-year delay
falls far short of establishing "sufficient cause" as required by
law. Paragraph 5 of the said judgment is extracted hereunder:-
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"5. We are unable to countenance the
finding rendered by the Sub-Judge and
also the view taken by the High Court.
There is no dispute in regard to the delay
of 3320 days in filing the petition for
setting aside the award. When a
mandatory provision is not complied with
and when the delay is not properly,
satisfactorily and convincingly explained,
the court cannot condone the delay, only
on the sympathetic ground. The orders
passed by the learned Sub-Judge and
also by the High Court are far from
satisfactory. No reason whatsoever has
been given to condone the inordinate
delay of 3320 days. It is well-considered
principle of law that the delay cannot be
condoned without assigning any
reasonable, satisfactory, sufficient and
proper reason. Both the courts have
miserably failed to comply and follow the
principle laid down by this Court in a
catena of cases. We, therefore, have no
other option except to set aside the order
passed by the Sub-Judge and as affirmed
by the High Court. We accordingly set
aside both the orders and allow this
appeal."
Accordingly, we answer Point No.1 in affirmative and against
the petitioner.
Re. Point No.2:
34. The Petitioners contend that the forfeiture order dated
23.06.2005 was not validly served due to non-compliance with
Section 22(b) of SAFEMA, which deals with substituted service.
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Section 22(b) permits service by affixing the notice/order on a
conspicuous place on the property or premises where the
person is known to have last resided or carried on business, if
personal service is not possible.
35. The records indicate that the Competent Authority made
efforts to serve the Petitioners. When they vacated the
Schedule Property and became untraceable, the Competent
Authority directed the Assistant Director, Enforcement
Directorate, Bangalore, to effect valid service, including through
affixture. The Mahazar dated 24.07.2009 confirms that service
was effected under Section 22(b) of SAFEMA for subsequent
orders. While the Petitioners dispute the specific compliance for
the 23.06.2005 order, their own conduct of absconding after
the sale significantly complicates the matter of service.
36. The law does not permit a party to take benefit from their
own evasive actions. If a person deliberately makes themselves
untraceable, they cannot later claim non-service to invalidate
proceedings. The Competent Authority, having knowledge that
the Petitioners had sold the property and moved, took steps to
effect service at the last known address and through other
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means. The Appellate Tribunal, having considered these facts,
rightly concluded that the Petitioners' claim of non-service was
a pretext.
Accordingly, the Point No.2 is answered against the petitioner.
Re. Point No.3:
37. The Petitioners' argument that the merits of the forfeiture
order were never decided against them, and that the issue
remains res integra , is untenable. The Supreme Court, in Civil
Appeal No. 7207 of 2012, unequivocally held that the sale of
the Schedule Property to the Purchasers was null and void
under Section 11 of SAFEMA, as it occurred after the issuance
of Section 6(1) notices. This finding is a direct affirmation of
the validity of the forfeiture proceedings against the Vendors
(Petitioners herein). The Supreme Court's decision that the
Vendors ceased to have any title on the date of transfer
effectively means that the forfeiture proceedings were valid and
binding on them.
38. The principle of res judicata and the binding nature of
precedents, as enshrined in Article 141 of the Constitution of
India, are paramount. The Supreme Court, in S OUTH
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CENTRAL RAILWAY EMPLOYEES COOP. CREDIT SOCIETY
EMPLOYEES UNION V. B. YASHODABAI, ([2015] 2 SCC
727) , cautioned against re-examining matters concluded by
higher courts, stating that it would lead to "total chaos" and
necessitate rewriting the entire law of precedents. The
Petitioners cannot be permitted to re-agitate issues that have
been directly or indirectly decided by the Supreme Court.
Paragraph 15 of the said judgment is extracted hereunder:-
"15. If the view taken by the High Court
is accepted, in our opinion, there would
be total chaos in this country because in
that case there would be no finality to
any order passed by this Court. When a
higher court has rendered a particular
decision, the said decision must be
followed by a subordinate or lower court
unless it is distinguished or overruled or
set aside. The High Court had considered
several provisions which, in its opinion,
had not been considered or argued before
this Court when CA No. 4343 of 1988 was
decided (1998) 2 SCC 580. If the litigants
or lawyers are permitted to argue that
something was correct, but was not
argued earlier before the higher court and
on that ground if the courts below are
permitted to take a different view in a
matter, possibly the entire law in relation
to the precedents and ratio decidendi will
have to be rewritten and, in our opinion,
that cannot be done. Moreover, by not
following the law laid down by this Court,
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the High Court or the subordinate courts
would also be violating the provisions of
Article 141 of the Constitution of India."
39. In the present case, the Tribunal has merely applied the
law already declared by the Supreme Court in the earlier
proceedings concerning the very same forfeiture. Once the
issue had attained finality before the Supreme Court, it was not
open to the Petitioners to reopen the same, either directly or
indirectly, by raising contentions which either stood concluded
or ought to have been urged in the earlier proceedings. Any
such exercise would be contrary to the doctrine of finality of
litigation and the binding mandate of Article 141 of the
Constitution of India.
40. Judicial discipline requires every Court and Tribunal to
follow the law declared by the Supreme Court. In UNION OF
INDIA V. KAMLAKSHI FINANCE CORPORATION LTD.
( 1992 SUPP (1) SCC 443) , it has been held that orders of
superior Courts are binding on subordinate authorities and that
judicial discipline demands strict adherence to such decisions.
Paragraphs 6 and 8 of the said judgment are extracted
hereunder:-
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" 6. Sri Reddy is perhaps right in saying
that the officers were not actuated by
any mala fides in passing the
impugned orders. They perhaps
genuinely felt that the claim of the
assessee was not tenable and that, if it
was accepted, the Revenue would
suffer. But what Sri Reddy overlooks is
that we are not concerned here with
the correctness or otherwise of their
conclusion or of any factual mala fides
but with the fact that the officers, in
reaching their conclusion, by-passed
two appellate orders in regard to the
same issue which were placed before
them, one of the Collector (Appeals)
and the other of the Tribunal. The High
Court has, in our view, rightly criticised
this conduct of the Assistant Collectors
and the harassment to the assessee
caused by the failure of these officers
to give effect to the orders of
authorities higher to them in the
appellate hierarchy. It cannot be too
vehemently emphasised that it is of
utmost importance that, in disposing of
the quasi-judicial issues before them,
revenue officers are bound by the
decisions of the appellate authorities.
The order of the Appellate Collector is
binding on the Assistant Collectors
working within his jurisdiction and the
order of the Tribunal is binding upon
the Assistant Collectors and the
Appellate Collectors who function
under the jurisdiction of the Tribunal.
The principles of judicial discipline
require that the orders of the higher
appellate authorities should be
followed unreservedly by the
subordinate authorities. The mere fact
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that the order of the appellate
authority is not “acceptable” to the
department — in itself an objectionable
phrase — and is the subject matter of
an appeal can furnish no ground for
not following it unless its operation has
been suspended by a competent court.
If this healthy rule is not followed, the
result will only be undue harassment to
assessees and chaos in administration
of tax laws.
8. We have dealt with this aspect at
some length, because it has been
suggested by the learned Additional
Solicitor General that the observations
made by the High Court, have been
harsh on the officers. It is clear that
the observations of the High Court,
seemingly vehement, and apparently
unpalatable to the Revenue, are only
intended to curb a tendency in revenue
matters which, if allowed to become
widespread, could result in
considerable harassment to the
assessee-public without any benefit to
the Revenue. We would like to say that
the department should take these
observations in the proper spirit. The
observations of the High Court should
be kept in mind in future and the
utmost regard should be paid by the
adjudicating authorities and the
appellate authorities to the
requirements of judicial discipline and
the need for giving effect to the orders
of the higher appellate authorities
which are binding on them."
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41. The same principle was reiterated in EAST INDIA
COMMERCIAL CO. LTD. V. COLLECTOR OF CUSTOMS
(1962 SCC OnLine SC 142) . Paragraph 31 of the said
judgment is extracted hereunder:-
‘31. As we have already noticed in the
earlier stage of the judgment, the notice
issued by the respondent charges the
appellants thus:
“One of the conditions of the special
licence was that the goods would be
utilised for consumption as raw material
or accessories in the factory of the
licence-holder and no part thereof would
be sold to other parties, but in
contravention of that condition the
appellants sold a part of the goods
imported to a third party; and as the
goods had been caused to be issued by
fraudulent misrepresentation, they were
liable to be confiscated under Section
167(8) of the Sea Customs Act.”
Section 167(8) of the Sea Customs Act
can be invoked only if an order issued
under Section 3 of the Act was infringed
during the course of the import or export.
The Division Bench of the High Court held
that a contravention of a condition
imposed by a licence issued under the Act
is not an offence under Section 5 of the
Act. This raises the question whether an
Administrative Tribunal can ignore the
law declared by the highest court in the
State and initiate proceedings in direct
violation of the law so declared. Under
Article 215, every High Court shall be a
court of record and shall have all the
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powers of such a court including the
power to punish for contempt of itself.
Under Article 226, it has a plenary power
to issue orders or writs for the
enforcement of the fundamental rights
and for any other purpose to any person
or authority, including in appropriate
cases any Government, within its
territorial jurisdiction. Under Article 227 it
has jurisdiction over all courts and
tribunals throughout the territories in
relation to which it exercises jurisdiction.
It would be anomalous to suggest that a
tribunal over which the High Court has
superintendence can ignore the law
declared by that court and start
proceedings in direct violation of it. If a
tribunal can do so, all the subordinate
courts can equally do so, for there is no
specific provision, just like in the case of
Supreme Court, making the law declared
by the High Court binding on subordinate
courts. It is implicit in the power of
supervision conferred on a superior
tribunal that all the tribunals subject to
its supervision should conform to the law
laid down by it. Such obedience would
also be conducive to their smooth
working : otherwise, there would be
confusion in the administration of law and
respect for law would irretrievably suffer.
We, therefore, hold that the law declared
by the highest court in the State is
binding on authorities or tribunals under
its superintendence, and that they cannot
ignore it either in initiating a proceeding
or deciding on the rights involved in such
a proceeding. If that be so, the notice
issued by the authority signifying the
launching of proceedings contrary to the
law laid down by the High Court would be
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invalid and the proceedings themselves
would be without jurisdiction."
42. The doctrine of res judicata is intended to give finality to
judicial decisions. In DARYAO V. STATE OF UTTAR PRADESH
(1961 SCC OnLine SC 21) , the Constitution Bench held that
the principle of res judicata applies equally to proceedings
under Article 226 of the Constitution. Paragraph 18 of the said
judgment is extracted hereunder:-
"18. The same question can be
considered from another point of view. If
a judgment has been pronounced by a
court of competent jurisdiction it is
binding between the parties unless it is
reversed or modified by appeal, revision
or other procedure prescribed by law.
Therefore, if a judgment has been
pronounced by the High Court in a writ
petition filed by a party rejecting his
prayer for the issue of an appropriate writ
on the ground either that he had no
fundamental right as pleaded by him or
there has been no contravention of the
right proved or that the contravention is
justified by the Constitution itself, it must
remain binding between the parties
unless it is attacked by adopting the
procedure prescribed by the Constitution
itself. The binding character of judgments
pronounced by courts of competent
jurisdiction is itself an essential part of
the rule of law, and the rule of law
obviously is the basis of the
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administration of justice on which the
Constitution lays so much emphasis. As
Halsbury has observed: “subject to
appeal and to being amended or set aside
a judgment is conclusive as between the
parties and their privies, and is conclusive
evidence against all the world of its
existence, date and legal consequences”.
Similar is the statement of the law in
Corpus Juris: “the doctrine of estoppel by
judgment does not rest on any superior
authority of the court rendering the
judgment, and a judgment of one court is
a bar to an action between the same
parties for the same cause in the same
court or in another court, whether the
latter has concurrent or other
jurisdiction”. This rule is subject to the
limitation that the judgment in the former
action must have been rendered by a
court or tribunal of competent
jurisdiction. “It is, however, essential that
there should have been a judicial
determination of rights in controversy
with a final decision thereon”. In other
words, an original petition for a writ
under Article 32 cannot take the place of
an appeal against the order passed by
the High Court in the petition filed before
it under Article 226. There can be little
doubt that the jurisdiction of this Court to
entertain applications under Article 32
which are original cannot be confused or
mistaken or used for the appellate
jurisdiction of this Court which alone can
be invoked for correcting errors in the
decisions of High Courts pronounced in
writ petitions under Article 226. Thus, on
general considerations of public policy
there seems to be no reason why the rule
of res judicata should be treated as
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inadmissible or irrelevant in dealing with
petitions filed under Article 32 of the
Constitution. It is true that the general
rule can be invoked only in cases where a
dispute between the parties has been
referred to a court of competent
jurisdiction, there has been a contest
between the parties before the court, a
fair opportunity has been given to both of
them to prove their case, and at the end
the court has pronounced its judgment or
decision. Such a decision pronounced be
a court of competent jurisdiction is
binding between the parties unless it is
modified or reversed by adopting a
procedure prescribed by the Constitution.
In our opinion, therefore, the plea that
the general rule of res judicata should not
be allowed to be invoked cannot be
sustained."
43. IN FORWARD CONSTRUCTION CO. V. PRABHAT
MANDAL ([1986] 1 SCC 100) , it has been held that not only
matters actually decided but also matters which ought to have
been raised in the earlier proceedings are barred by the
principle of constructive res judicata . Paragraph 20 of the said
judgment is extracted hereunder:-
"20. So far as the first reason is concerned, the
High Court in our opinion was not right in
holding that the earlier judgment would not
operate as res judicata as one of the grounds
taken in the present petition was conspicuous by
its absence in the earlier petition. Explanation IV
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to Section 11 CPC provides that any matter
which might and ought to have been made
ground of defence or attack in such former suit
shall be deemed to have been a matter directly
and substantially in issue in such suit. An
adjudication is conclusive and final not only as
to the actual matter determined but as to every
other matter which the parties might and ought
to have litigated and have had it decided as
incidental to or essentially connected with the
subject-matter of the litigation and every matter
coming within the legitimate purview of the
original action both in respect of the matters of
claim or defence. The principle underlying
Explanation IV is that where the parties have
had an opportunity of controverting a matter
that should be taken to be the same thing as if
the matter had been actually controverted and
decided. It is true that where a matter has been
constructively in issue it cannot be said to have
been actually heard and decided. It could only
be deemed to have been heard and decided. The
first reason, therefore, has absolutely no force."
44. In M. NAGABHUSHANA V. STATE OF KARNATAKA
([2011] 3 SCC 408) , it has been reiterated that finality of
litigation is a matter of public policy and that repeated
challenges to the same issue cannot be permitted. Paragraphs
12 and 13 of the said judgment are extracted hereunder:-
"12. The principles of res judicata are of
universal application as they are based on
two age-old principles, namely, interest
reipublicae ut sit finis litium which means
that it is in the interest of the State that
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there should be an end to litigation and
the other principle is nemo debet bis
vexari, si constat curiae quod sit pro una
et eademn causa meaning thereby that
no one ought to be vexed twice in a
litigation if it appears to the court that it
is for one and the same cause. This
doctrine of res judicata is common to all
civilised system of jurisprudence to the
extent that a judgment after a proper
trial by a court of competent jurisdiction
should be regarded as final and
conclusive determination of the questions
litigated and should for ever set the
controversy at rest.
13. That principle of finality of litigation is
based on high principle of public policy.
In the absence of such a principle great
oppression might result under the colour
and pretence of law inasmuch as there
will be no end of litigation and a rich and
malicious litigant will succeed in infinitely
vexing his opponent by repetitive suits
and actions. This may compel the weaker
party to relinquish his right. The doctrine
of res judicata has been evolved to
prevent such an anarchy. That is why it is
perceived that the plea of res judicata is
not a technical doctrine but a
fundamental principle which sustains the
rule of law in ensuring finality in
litigation. This principle seeks to promote
honesty and a fair administration of
justice and to prevent abuse in the
matter of accessing court for agitating on
issues which have become final between
the parties."
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45. Regarding the plea under Section 9 of SAFEMA (fine in
lieu of forfeiture), it is noted that this plea was raised by the
Purchasers in their earlier writ petition before this Court. No
relief was granted on this count. The Appellate Tribunal
correctly observed that the matter had attained finality with the
Supreme Court's dismissal of the Purchasers' appeal. The
Petitioners cannot now seek to invoke Section 9 as a fresh
ground, especially after the forfeiture order has been upheld
and their appeals dismissed on grounds of delay. Section 9 is a
power exercisable by the Competent Authority, not a right that
can be claimed by a party to reopen concluded proceedings,
particularly when the entire property has been found to be
illegally acquired and forfeited.
ADDITIONAL ARGUMENTS OF THE RESPONDENTS FOR
DISMISSAL OF THE WRIT PETITION :
46. (i) Undischarged Onus of Proof: Section 8 of SAFEMA
places the onus on the affected person to prove that the
property was not illegally acquired. Despite multiple
opportunities, the Petitioners failed to discharge this burden.
Their claims regarding ancestral property sales, remittances
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from abroad, and income from tailoring/commission were found
to be unsubstantiated by the Competent Authority, a finding
that was not successfully challenged on merits in any forum.
The acceptance of Income Tax returns, as per Section 21 of
SAFEMA, does not bind the forfeiture proceedings.
(ii) Deliberate Evasion: The Petitioners' conduct of selling the
property after receiving Section 6(1) notices, withdrawing the
entire sale consideration in cash, and then becoming
untraceable, strongly indicates a deliberate attempt to evade
the forfeiture proceedings and frustrate the objectives of
SAFEMA. This conduct disentitles them from seeking equitable
relief in a writ jurisdiction.
(iii) No Denial of Natural Justice: The Petitioners were afforded
ample opportunities to present their case before the Competent
Authority. Their failure to provide satisfactory explanations or
to pursue their remedies diligently cannot be termed a denial of
natural justice. Natural justice does not imply endless
opportunities, especially when a party is evasive.
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(iv) Finality of Proceedings: The entire chain of events, from
the initial detention, forfeiture order, High Court proceedings,
to the Supreme Court's definitive pronouncement on Section
11, points towards the finality of the forfeiture proceedings.
Allowing these petitions would amount to unsettling settled
legal positions and undermining the efficacy of SAFEMA.
VII CONCLUSION:
47. Having meticulously considered the entire material on
record, the arguments advanced by the learned counsel for the
respective parties, and the relevant legal provisions and
precedents, we find no merit in the contentions raised by the
Petitioners. The Appellate Tribunal's decision to dismiss the
applications for condonation of delay and consequently the
appeals, is sound and based on a correct appreciation of facts
and law. The Petitioners' claims of non-service, lack of
knowledge, and the alleged payment of fine are
unsubstantiated and appear to be an afterthought to reopen
concluded matters. The forfeiture proceedings have attained
finality, and the Petitioners have failed to demonstrate any
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jurisdictional error or perversity in the impugned order of the
Appellate Tribunal.
48. In view of the aforesaid discussion, the Writ Petitions are
hereby dismissed, however, there will be no order as to costs.
Sd/-
(D K SINGH)
JUDGE
Sd/-
(T.M.NADAF)
JUDGE
BKV/TKN
CT:SN
List No.: 1 Sl No.: 2