Forfeiture of Property of Certain Persons

In one line

Section 15 voids a transfer made after seizure or notice, section 16 attaches an accused's property during trial and forfeits it on conviction, and section 17 makes a company register the Government as the transferee of forfeited shares.

In the wording a student can write in an exam: by section 16(2) of the Prevention of Terrorism Act, 2002, where a person has been convicted of an offence punishable under the Act, the Special Court may, in addition to awarding any punishment, by order in writing declare that any property belonging to the accused and specified in the order shall stand forfeited to the Central Government or the State Government, free from all encumbrances.

Two schemes, not one

Sections 6 to 13 forfeit proceeds of terrorism, from whoever holds them, whether or not anybody is prosecuted, with notice, a hearing and a bona fide transferee defence.

Sections 16 and 17 forfeit the accused's own property, on conviction, whether or not it has anything to do with terrorism.

The two are easy to confuse and they are examined on the difference. The first is a property-based scheme with a court and a defence; the second is a consequence of conviction with neither.

The provisions themselves

Section 15, transfers void. Where, after an order under section 7 or a notice under section 9, any property referred to in that order or notice is transferred by any mode whatsoever, the transfer shall for the purposes of proceedings under the Act be ignored; and if the property is subsequently forfeited, the transfer shall be deemed to be null and void.

Section 16(1), attachment during trial. Where a person is accused of an offence under the Act, it is open to the Special Court trying him to order that all or any of the properties, movable or immovable or both, belonging to him be attached during the period of the trial, if not already attached under the Act.

Section 16(2), forfeiture on conviction. As set out above: any property belonging to the accused and specified in the order stands forfeited to the Central or State Government, free from all encumbrances, in addition to any punishment.

Section 17, shares. Where any shares in a company stand forfeited to the Central or a State Government under the Act, the company shall, on receipt of the order of the Special Court and notwithstanding anything in the Companies Act, 1956 or the articles of association of the company, forthwith register the Government as the transferee of those shares.

Broken down: section 15's two stages

First, the transfer is ignored. From the moment a section 7 order or a section 9 notice issues, a transfer of the property is disregarded for the purposes of proceedings under the Act, so the proceedings continue against the property as though it had not moved.