Section 7 of SAFEMA, Smugglers Act : Section 7: Forfeiture Of Property In Certain Cases

Explanation using Example

Imagine a situation where Mr. A is suspected of being involved in smuggling activities. The competent authority issues a show-cause notice to Mr. A under Section 6 of The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, suspecting that certain properties owned by him are illegally acquired through smuggling.

Mr. A provides an explanation claiming that the properties were acquired legally. However, after reviewing the evidence and giving Mr. A a chance to be heard, the competent authority determines that a luxury villa and a sports car in Mr. A's possession are indeed illegally acquired properties.

As per Section 7(3), the competent authority then declares that the identified properties, the luxury villa and the sports car, will be forfeited to the Central Government, free from any mortgages or liens.

In another instance, Mr. A owns shares in a company, which are also deemed to be illegally acquired. Following Section 7(4), the company is required to immediately recognize the Central Government as the new owner of these shares, despite the company's regulations or the Companies Act, 1956.