Case Law Details

Case Name : Simmant Kohli Vs Union Of India (Madhya Pradesh High Court)
Appeal Number : W.P. No. 3957 of 2019
Date of Judgement/Order : 17/12/2019
Related Assessment Year :

Simmant Kohli Vs Union Of India (Madhya Pradesh High Court)

The Court opined that pending final adjudication whether property is in the name of petitioner are ‘Benami’ property or not, the authorities concerned have passed an order of provisional attachment as a matter of precaution, until the dispute is finally resolved, no interference is warranted.

FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT

The petitioners have called in question the legality, validity and propriety of the impugned show cause notice dated 10.01.2019 (Annexure P/11) and Provisional Attachment Order (PAO) dated 10.01.2019 (Annexure P/12).

Shri Mishra, learned senior counsel by referring to the amendment application urged that during the pendency of this case, the respondents have passed a consequential order under Section 24(5) of the Prohibition of Benami Property Transactions, 1988 (Act of 1988). Shri Mishra urged that as per Section 24 of the Act of 1988, the Initiating Authority must have reasons to believe that on the basis of material in his possession any person is a Benamidar in respect of a property. In order to satisfy himself, he has to independently, impartially and objectively form his own opinion and cannot be influenced by any opinion collected by any other authority. Even any adjudication by any other authority cannot be a reason to form an opinion under Section 24 aforesaid. The impugned show cause notice does not fulfill the aforesaid requirement and, therefore, it must be treated to have been issued without authority of law. The opinion so formed by Issuing Authority is based on surmises and conjectures. The complete relevant documents have not been supplied. The PAO is an example of non application of mind. The petitioner’s defence taken in the reply has not been considered by the respondents.

Shri Mishra, learned senior counsel placed reliance on AIR 1954 SC 403 (Himmatlal Harilal Mehta vs. State of M.P. & Ors.), AIR 1964 SC 1095 (Shivram Poddar vs. Income Tax Officer, Anr.) and AIR 1999 SC 22 (Whirlpool Cooperation vs. Registrar of Trade Marks, Mumbai & Ors.) to contend that despite availability of statutory alternative remedy, the writ petition can be entertained. Since in the instant case the impugned show cause notice is passed without authority of law, the availability of alternative remedy is not an impediment for the petitioners. Lastly, he placed reliance on the judgment of High Court of Rajasthan in CWP No.2195/19 (Niharika Jain & Ors. vs. Union of India & Ors.). Reliance on this judgment was to bolster the contention that certain properties mentioned in the show cause notice are ‘Benami’ properties but the description of purchase of those properties shows that the same were purchased before amendment had taken place in the said act in the year 2016. Thus, the amended provision cannot be made applicable with retrospective effect.

Sounding a contra note, Shri Sanjay Lal, learned counsel for the respondents supported the impugned notice/orders. He submits that the petitioners have not filed reply on merits despite getting opportunity and relevant documents. Reliance is placed on letter dated 01.02.2019 (Annexure P/14) whereby the petitioner was informed that the relevant documents have been supplied. If the petitioner still intends to get certain documents, he may approach the authorities and he shall be permitted to inspect the relevant documents and even may be permitted to obtain copies. Shri Lal submits that impugned notice is tentative in nature and after passing the order as envisaged in Sub-section (5) of Section 24 of the Act, the petitioners have a valuable right and forum to get their points redressed. The adjudication will be made by Adjudicating Authority wherein all necessary points can be taken note of. At this stage, interference may be declined. He placed reliance on the order passed by this Court in WP. No.10280/17 (Kailash Assudani vs. Commissioner of Income Tax & Ors.), which was affirmed by the Divisional Bench in WA. No.704/2017 decided on 16.08.2017. He also placed reliance on judgment of Chhattisgarh High Court passed in WP(C) No.3819/2019 (Tulsiram & Anr. vs. Assistant Commissioner of Income Tax & Ors.) wherein the High Court has considered the judgment of Rajasthan High Court in the case of Niharika Jain (supra) and the judgment of Supreme Court in Mangathai Ammal (Died) through his L.Rs. vs. Rajeshwari & Ors. passed in Civil Appeal No.4805/2019.

No other point is pressed by the parties.

We have heard the parties on admission.

This is trite law that scope of interference at the stage of issuance of show cause notice by this Court is limited. [See Special Director & Another vs. Mohd. Ghulam Ghouse & Another (2004) 3 SCC 440] Relevant portion of said judgment reads as under:-

“Unless, the High Court is satisfied that the show cause notice was totally non est in the eye of law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine, and the writ petitioner should invariably be  directed to respond to the show cause notice and take  all stands highlighted in the writ petition. Whether  the show cause notice was founded on any legal  premises is a jurisdictional issue which can even be urged by the recipient of the notice and such issues  also can be adjudicated by the authority issuing the  very notice initially, before the aggrieved could approach the Court.”

(Emphasis supplied)

This Court in Kailash Assudani (supra) considered the scheme ingrained in Section 24 and 26 of the Act of 1988. The relevant portion reads as under:-

“The order dated 29.06.2017 is a provisional attachment order under Section 24(4) of the PBPT Act, 1988. The order itself shows that it is issued with the prior approval of approving authority, but will remain subject to passing of necessary order by the adjudicating authority. Section 24(3) of the PBPT Act makes it clear that the order of attachment would be a provisional order. As per Sub-section (5) of Section 24 of the Act, the Initiating Officer after passing the provisional attachment of property is obliged to draw up the statement of the case and refer it to the adjudicating authority. On receipt of reference under Sub-section (5) of Section 24, the adjudicating authority shall issue notice to the stake holders as provided under Sub-section (1) of Section 26 of the Act. Section 26 (3) makes it clear that the adjudicating authority will examine the entire issue and relevant material. Sub-section (3) of Section 26 reads as under:

“(3) The Adjudicating Authority shall, after—

(a) considering the reply, if any, to the notice issued under sub-section (1);

(b) making or causing to be made such inquiries and calling for such reports or evidence as it deems fit; and

(c) taking into account all relevant materials,

provide an opportunity of being heard to the person specified as a benamidar therein, the Initiating Officer, and any other person who claims to be the owner of the property, and, thereafter, pass an order—

(i) holding the property not to be a benami property and revoking the attachment order; or

(ii) holding the property to be a benami property and confirming the attachment order, in all other cases. ”

A plain reading of Sub-section (3) makes it clear that the adjudicating authority is obliged to examine the stand of alleged Benamindar in reply to the show cause notice. He is further obliged to make further inquiry or take into account further report or evidence which he deems fit for deciding the question. He can take into account all relevant documents. After providing due opportunity of hearing to alleged Benamindar, he may pass the order to declare the property as Benami Property and confirm the attachment order or he may hold that the property cannot be treated as Benami Property . In that case, he may revoke the attachment order. Pertinently, as per Sub-section (6) of Section 26, the adjudicating authority may at any stage of proceeding, either on the application of any party or suo-moto strike out the name of any property improperly joined or add the name of any person whose presence before the adjudicating authority may be necessary to enable him to adjudicate upon and settle all the questions involved in the reference.

In my view, the principles of natural justice are codified in terms of Sub-section (6) of Section 26 of the Act. The impugned order is subject to judicial review before the adjudicating authority. The order passed by the adjudicating authority can be assailed before the appellate tribunal constituted under Section 31 of the Act. The order of appellate tribunal can also be called in question by preferring appeal to the High Court within a period of 60 days. A microscopic reading of provisions make it clear that principles of natural justice are reduced in writing in the shape of amendment in the said act. The amended provisions contains a complete code in itself.

7. In this back drop, it is to be seen whether at this stage any interference is warranted by this Court. In C.B. Gautam (Supra) the order of compulsory purchase under Section 269-UD(1) of Income Tax Act was served on the petitioner without issuing any show cause notice and without giving any opportunity to him. The Apex Court in the aforesaid factual back drop interfered in the matter. In the said case ,neither show cause notice was given nor reasons were assigned in the impugned compulsory purchase order. In the present case show cause notice has been issued, opportunity has been given to the petitioner. The  order impugned is provisional/tentative in nature. It is subject to judicial review by adjudicating authority.  If order of adjudicating authority goes against the petitioner, the further forums of judicial review of said order is available to the petitioner before the appellate tribunal and then before this Court. Hence,against the tentative/provisional order, no interference is warranted by this court at this stage. As per the scheme of the Act, the petitioner can raise all possible grounds before the adjudicating authority. The adjudicating authority is best suited and statutorily obliged to consider all relevant aspects. Thus, at this stage no case is made out for interference. More so, when adjudicating authority has already fixed the hearing on 23.08.2017. Resultantly, the petition is dismissed.”

(Emphasis Supplied)

This order of Writ Court got a stamp of approval by the Division Bench in WA. No.704/2017. In the said judgment, Division Bench opined as under:-

“We do not find any merit in the present appeal. It is the Adjudicating Authority who is to decide the question of Benami nature of the property. The proceedings under Section 24 of the Act contemplates the issuance of show cause notice as to why the property specified in the notice should not be treated as Benami property. However, the substantive order of treating the property as Benami is required to be passed by Adjudicating Authority under Section 26 of the Act only. Therefore, the appellant is at liberty to take all such plea of law and facts as may be available to the appellant before the Adjudicating Authority. The Adjudicating Authority shall decide the Benami nature of the property in accordance with law.”

(Emphasis Supplied)

The Chhattisgarh High Court after considering the judgment of Niharika Jain (supra) opined that the final adjudication is yet to be done. In the case before Chhattisgarh High Court, order dated 31.07.2019 passed under Section 24(4)(b)(i) and order dated 27.08.2019 passed under Section 24(5) of the said act were called in question. The Court opined that pending final adjudication whether property is in the name of petitioner are ‘Benami’ property or not, the authorities concerned have passed an order of provisional attachment as a matter of precaution, until the dispute is finally resolved, no interference is warranted.

We have perused the show cause notice and are unable to hold that it is issued without authority of law, which warrants interference by this Court at this stage. Since we are not unable to hold that show cause notices were issued without authority of law, the judgments cited by Shri Mishra regarding alternative remedy are of no assistance to the petitioners. As held by this Court in Kailash Assudani (supra), these petitions cannot be entertains. Pertinently, parties are at loggerheads on a factual aspect whether petitioner has filed the reply to the show cause notice or not ? Shri Mishra, learned senior counsel repeatedly and vehemently contended that the reply on merits to the show cause notice was indeed filed whereas Shri Lal refuted the same. We are not inclined to enter into this aspect at this stage. Since the petitioner is at liberty to raise all relevant aspects before Adjudicating Authority under Section 26 of the Act of 1988, interference is declined.

The petitions are dismissed. The ad-interim order, if any, stands vacated.

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