Bashir Ahmad Bhat Vs Competent Authority (Appellate Tribunal under SAFEMA)
Unregistered Buyer Cannot Seek Release of Vehicle Frozen in NDPS Case; Sale of Land After Purchase Cannot Explain Earlier Payment
Summary: The Appellate Tribunal under SAFEMA has held that a person claiming to have purchased a vehicle through an unregistered agreement cannot seek its release from freezing under the Narcotic Drugs and Psychotropic Substances Act, 1985 when the registration certificate continues in the name of another person, the vehicle remains under bank hypothecation and the claimant fails to establish the legitimate source of its acquisition. The Tribunal further held that sale proceeds received after the alleged purchase of the vehicle cannot explain the source of an earlier acquisition.
Recovery of Commercial Quantity and Freezing of Vehicle
On 1 January 2025, the Jammu and Kashmir Police allegedly recovered 320 capsules of Spasmo Proxyvon Plus from Zafar Bashir Bhat. An FIR was registered under Sections 8, 21 and 29 of the NDPS Act, and he was arrested on the same day.
Since the recovered substance was stated to constitute commercial quantity punishable with rigorous imprisonment of ten years or more, the accused was treated as an “affected person” under Section 68-A(2)(cc). His father, Bashir Ahmad Bhat, was also treated as an affected person under Section 68-A(2)(d), which extends the statutory proceedings to relatives of the accused.
During the financial investigation, the police identified a load carrier bearing Registration No. JK03H2841, stated to be worth approximately Rs.7 lakh. The vehicle was frozen under Section 68-F(1), and the freezing order was confirmed by the Competent Authority on 28 February 2025.
Bashir Ahmad Bhat challenged the confirmation order before the Appellate Tribunal under Section 68-O of the NDPS Act.
Claim That Vehicle Was Purchased from Sale of Family Land
The appellant contended that although the vehicle remained registered in the name of Adil Amin Bhat, it had first been sold to Mohammad Shafi Waloo and thereafter sold to the appellant. An agreement to sell dated 10 June 2021 was produced in support of the transaction.
According to the appellant, his mother had sold four marlas of land, and the sale proceeds were utilised to purchase the vehicle and discharge the related bank liability. It was also contended that standing trees on the property had been sold to clear the outstanding loan.
The appellant further claimed that his son had used the vehicle without his knowledge or permission. Therefore, the vehicle could not be treated as illegally acquired property merely because it was allegedly used in connection with the NDPS offence.
Registration Continued in Original Owner’s Name
The Tribunal found that the appellant was admittedly not the registered owner of the vehicle. The registration certificate continued to stand in the name of Adil Amin Bhat, who had originally purchased the vehicle on 21 January 2019 for Rs.6.05 lakh.
The vehicle was also hypothecated to Jammu and Kashmir Bank. A finance certificate issued by the bank showed that the loan facility remained active and had not been terminated. The loan statement reflected an outstanding debit balance of Rs.16,037. There was no material to show that the appellant had been paying the loan instalments.
The alleged agreement between Mohammad Shafi Waloo and the appellant did not mention the sale consideration. Although it stated that the appellant had to discharge an outstanding vehicle loan of Rs.2.70 lakh, there was no proof that this liability had actually been discharged by him.
The agreement also failed to disclose when Mohammad Shafi Waloo had purchased the vehicle from the registered owner or the consideration paid by him. No duly executed transfer forms from the registered owner were produced. Therefore, the alleged chain of transfer from the registered owner to the intermediate buyer and thereafter to the appellant remained unsubstantiated.
Chronology Defeated Explanation of Source
The appellant’s principal explanation was that the vehicle had been purchased from the proceeds of land sold by his mother. However, the documents showed that the four-marla plot was sold for Rs.3.56 lakh on 2 August 2021, and the consideration was received through a cheque dated 30 July 2021.
On the appellant’s own showing, possession of the vehicle had been delivered on 5 March 2021, and the agreement was executed on 10 June 2021. Thus, both events occurred before the land-sale consideration was received in July 2021.
The Tribunal therefore found a clear chronological contradiction. Money received in July 2021 could not explain a vehicle allegedly purchased in March or June 2021.
The appellant also failed to produce his mother’s bank statement to establish receipt and subsequent utilisation of the land-sale proceeds. Neither his own bank statement nor those of the other family members were produced. Consequently, there was no banking trail connecting the land sale with the purchase or loan repayment relating to the vehicle.
Vehicle Allegedly Used for Transporting Contraband
The police contended that the appellant’s family held a Below Poverty Line card and lacked disclosed financial means to acquire the vehicle from legitimate income. It was further alleged that the vehicle had actively been used by the accused to transport narcotic substances and that contraband was recovered from its cabin.
The Tribunal observed that vehicles are sometimes acquired in the names of third parties and used for transporting contraband to insulate the actual persons involved from legal consequences. Such arrangements required careful scrutiny.
While this general observation could not by itself establish guilt, the appellant’s failure to prove ownership, consideration and the legitimate financial source prevented him from obtaining relief.
No Locus Standi Without Transfer of Registration
The Tribunal held that even if the successive sale transactions were assumed to be genuine, the appeal could not be entertained because the vehicle had never been transferred into the appellant’s name. He therefore lacked the necessary locus standi to seek release of the vehicle.
Releasing a vehicle to an unregistered purchaser could also create complications concerning third-party accident claims, insurance coverage, contractual rights of the insurer and civil or criminal liability of the registered owner.
The appeal was accordingly dismissed, and the freezing of the vehicle was sustained.
The decision rests on two independent deficiencies. First, the appellant could not establish legal ownership because the registration certificate remained in another person’s name and no complete chain of transfer was produced. Secondly, even the financial explanation failed because the alleged source of funds arose only after the vehicle had purportedly been purchased.
An informal agreement and physical possession may create contractual rights between the parties, but they do not necessarily confer sufficient standing against statutory freezing proceedings. Where a vehicle is purchased second-hand, particularly while bank hypothecation continues, the purchaser must preserve the complete trail comprising the original sale documents, transfer forms, bank consent, loan-closure evidence, payment proof, insurance endorsement and registration transfer.
The central lesson is straightforward: a later receipt cannot finance an earlier purchase, and possession without registered ownership may not be enough to challenge statutory freezing.
FULL TEXT OF THE JUDGMENT/ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA
The present appeal u/s 68-O of the Narcotic Drugs & Psychotropic Substances Act, 1985, is filed by the appellant against the Confirmation Order dated 28.02.2025 passed by the Competent Authority, New Delhi, whereby the Freezing Order No. PSG/2025/FIR No-01 dated 30.01.2025 passed by the Freezing Authority/SHO, PS: Ganderbal, District: Ganderbal, UT of J & K, was confirmed qua the following property of the appellant:-
| Description of property | Year of purchase/ construction | Value (in Rs.) |
|---|---|---|
| Load Carrier bearing Registration No. JK03H2841, Chasis No. MAT374445JSN1831 and Engine No. 4SPCR10KRY658831
* Note: Registered in the name of Shri Adil Amin Bhat, S/o Shri Mohd. Amin Bhat |
10.06.2021 | 7,00,000 (as per affidavit) |
2. As per the facts of the case, on 01.01.2025, J & K Police recovered and seized 40 Strips of Spasmo Proxyvon Plus each strips containing 08 Capsules total 320 Capsules from the possession of Shri Zafar Bashir Bhat and accordingly FIR No. 1/2025 dated 01.01.2025 was registered against him for commission of offence u/s 8, 21 & 29 of the NDPS Act, 1985 at PS: Ganderabal, District: Ganderbal, UT of JK. He was arrested on 01.01.2025. As the said recovery is commercial quantity punishable with rigorous imprisonment for 10 years or more, accused Zafar Bashir Bhat is covered u/s 68A(2)(cc), as affected person, and his father Bashir Ahmad Bhat (herein appellant) is covered u/s 68A(2)(d) of the NDPS Act, 1985.
The SHO conducted the Financial Investigation into the illegally acquired property of the APs as defined u/s 68B(g) of the Act and thereafter passed the Freezing Order No. PSG/2025/FIR No-01 dated 30.01.2025 u/s 68F(1) of the NDPS Act, 1985, and thereby, seized/frozen the property, as mentioned in para No.1 above.
Thereafter, in order to give an opportunity of being heard, notices dated 31.01.2025 were sent to the APs to defend their case before the Competent Authority, at New Delhi on 07.02.2025. On 07.02.2025, filed reply to the notice before the Competent Authority, which was received on 07.02.2025 through e-mail. Accordingly, on the basis of material on record, the Competent Authority confirmed the Freezing Order.
Aggrieved by the said order, the appellant filed the present appeal.
3. During the arguments, Ld. Counsel for appellant argued that as per SHO/Freezing Authority the appellant and his family belongs to Below Poverty Line and thus, appellant was unable to afford the vehicle valued approximately 7 lakhs. Ld. Counsel for the Appellant argued that the Competent Authority failed to appreciate the fact that vehicle was purchased on 10.06.2021, when her mother sold her land measuring 4 Marlas, though the sale deed was executed later on 30.07.2021. He contended that they also sold the standing trees on the immovable property for liquidation of the debt including the bank finance. The copy of the sale deed of 4 Marlas land comprised in Survey No. 504 Khevat No. 114 is annexure-B which is at page 17. The copy of jamabandi of the said land is at page 18 and the translated copy is at page 19. He pointed out that the present vehicle Registration No. JK03H2841 was originally purchased by Shri Aadil Amin, who sold the said vehicle to Shri Mohd. Shafi Waloo. The subsequent purchaser sold the said vehicle to the present appellant Bashir Ahmad Bhat. He argued that present appellant was ignorant of the fact that the said vehicle was being unauthorisedly used by his son, without his knowledge and permission. Prayer is accordingly made to allow the present appeal as appellant is the owner of the vehicle and he never permitted any person for any unauthorised use, coupled with the fact that appellant has explained the sources of funds for acquiring the said vehicle.
4. After hearing the appellant submissions, we have given our thoughtful consideration to the same. Admittedly, appellant is not the registered owner of the vehicle till date, though he is claiming the ownership of the vehicle. Shri Aadil Amin Bhat is the actual registered owner of the vehicle, as apparent from the registration certificate. This vehicle was purchased by the said owner on 21.01.2019 for sum of Rs. 6,05,000. The vehicle is hypothecated in favour of J & K Bank Limited Zablipora, Anantnag. The finance certificate dated 08.05.2026 issued by Bank reflects that the finance facility qua the said vehicle is still continuing and has not been closed/terminated. The hypothecation is still valid until full repayment and closure of loan account. The loan statement issued by the J&K Bank reflects that outstanding debit balance of Rs.16,037. There is nothing on record that present appellant is repaying the loan amount. Appellant also filed one agreement to sale dated 10.06.2021 executed by Shri Mohd Shafi Waloo in favour of present appellant Bashir Ahmad Bhat for sale of vehicle registration no. JK03H2841, however, the sale consideration amount is not mentioned therein. The agreement reflects the outstanding vehicle loan liability of Rs. 2,70,000 payable to J&K Bank. The said agreement reflects the date of execution of this agreement on 10.06.2021, though the vendor handed over all the relevant papers of the said vehicle to the present appellant on 05.03.2021. There is no explanation for not transferring the vehicle by second purchaser Mohd Shafi Waloo and the present appellant Bashir Ahmad Bhat. The agreement is silent as to when Mohd Shafi Waloo purchased the vehicle and the sale consideration paid by him to Adil Amin Bhat. Appellant also failed to produce that he obtained the transfer form executed by the registered owner for transferring the vehicle in his favour in the near future. The perusal of impugned order reflects that SHO has pointed out that APs are registered as BPL card holders and have no financial means to purchase the vehicle from any licit income. The SHO also submitted that the vehicle was actively used by the accused for transporting the narcotics and the contraband was recovered from the vehicle’s cabin. SHO also pointed out that accused’s father sold a 4 Marla plot of land under Survey No. 504 in Moza Gund Rahman, Tehsil Tulmulla, District Ganderbal, shortly after the purchase of the vehicle. SHO also pointed out that sale proceeds of land were utilised by APs to finance the construction of a two-story residential house, which further highlights the questionable nature of their financial transactions. Accordingly, request was made by the SHO for confirmation of the Freezing Order. Now on perusal of the record the sale deed of 4 Marla land reflects that the same was sold for sum of Rs. 3,56,000 on 02.08.2021 and received sale consideration vide cheque dated 30.07.2021. Appellant has not filed the bank account statement of Mst. Fata to show the receipt of sale consideration and to check & verify the other day to day savings in her bank account. Appellant has also not filed his own bank account statement and the other family members, if any. The fact that as per agreement appellant purchased the vehicle on 05.03.2021, but the agreement was executed in his favour on 10.06.2021 and this contradicts his defence that he utilised the sale proceeds of the plot which was received vide cheque dated 30.07.2021, as there is gap in both the transactions. It is a common practice that the drug traffickers purchase the vehicles for transporting the contraband in the name of another person and take the services of their employee for transporting the contraband, in order to shelter themselves from the eyes of law. Such dubious practice needs to be curbed. Even otherwise, even if it is presumed that the sale transaction of the frozen vehicle from the original registered owner Shri Aadil Amin Bhat to Mohd Shafi Waloo and then to the present appellant is genuine, even then in absence of transfer of the vehicle in favour of the present appellant, the present appeal cannot be entertained for want of locus standi. The release of vehicle in favour of any unregistered owner may lead to many legal complications regarding the interest of third-party accident victims; the renewal of insurance policy; taking the defence of want of privity of contract by the insurance company with the new unregistered vendor; commission of crime without the knowledge of registered owner making him vicariously liable for civil and criminal actions etc.
5. In sequel to our discussion in the preceding para, the present appeal is hereby dismissed being devoid of any merits.
Appeal Dismissed with liberty.
Pronounced on this 17th Day of September, 2026.
