Obedulla A Vs Union of India (Karnataka High Court)
Company Search Must Be Challenged by the Affected Company: Karnataka High Court Declines Director’s Challenge, Grants Time to Answer Summons
Case Details
In Obedulla A v. Union of India and Others, Writ Petition No. 31229 of 2026 (T-IT), the Karnataka High Court considered a director’s challenge to search authorisations concerning Attica Gold Private Limited, together with his request for time to respond to departmental summons. The order was delivered by Justice B. M. Shyam Prasad on 6 October 2026, bearing neutral citation 2026:KHC:55626.
The Court held that a grievance against the company’s search had to be raised by the affected person, and that the petitioner could not maintain that challenge merely in his capacity as a director. However, following an agreement recorded from the Department, the Court permitted him to appear in response to the latest summons on 14 October 2026 at 11:00 a.m.
Background and Reliefs Sought
The petitioner was described in the cause title as a non-executive director of Attica Gold Private Limited. In the oral order, his asserted position was recorded as that of an Additional Director. He challenged search warrants dated 24 and 25 September 2026, searches conducted at several premises, and associated prohibitory orders and panchanamas.
His petition sought extensive relief. Besides quashing the search authorisations, he requested a declaration that the searches and seizures lacked legal authority and violated constitutional protections. He also challenged summons issued to him and sought restrictions on the manner in which any further examination could be conducted.
The proposed safeguards included advance written notice, specified examination hours, proper breaks, video recording, copies of statements and the presence of counsel within sight but beyond hearing. He further sought protection against penalty or prosecution for non-attendance, restrictions on accessing seized digital material, and disclosure and cross-examination safeguards concerning statements recorded from other persons.
These were prayers in the petition, rather than directions granted by the Court. At the preliminary hearing, the immediate request pressed by counsel was permission to respond to the summons within a reasonable time.
Petitioner’s Argument on Search Authorisation
The petitioner’s counsel contended that a search could have been authorised only after summons had been issued and the petitioner had failed to respond, together with the requisite belief concerning possession of assets.
Counsel relied on section 247(1), reproducing the provisions dealing with failure to produce books, documents or electronic information, anticipated non-production of such material, and possession of assets or information relating to assets representing undisclosed income or property.
The argument sought to question whether the statutory conditions for authorising the search had been satisfied. However, the Court’s disposal did not turn on a detailed determination of those conditions. The petitioner’s interpretation of section 247 was recorded as his submission; it was not accepted as the legal principle governing the case.
Revenue’s Objection and Court’s Reasoning
The Additional Solicitor General submitted that the search and seizure concerned Attica Gold Private Limited. Since the petitioner himself described his role as that of an Additional Director, any grievance against the company’s search had to be canvassed by the company. The Revenue maintained that the petitioner had no personal cause to challenge that action. It also proposed to contest his interpretation of the statutory provisions.
The Court found considerable force in the Revenue’s objection. It observed that a challenge to the search, seizure or manner of authorisation had to be brought by the affected person, and that the petitioner could not be regarded as such a person in the circumstances presented.
The reasoning therefore concerned the petitioner’s standing to challenge the company’s search. The order contains no detailed examination of the recorded satisfaction, underlying information or evidentiary basis of the warrants. It consequently should not be presented as a comprehensive ruling that every aspect of the search authorisation or its execution was valid.
Time Granted to Respond to Summons
On the separate request for additional time, the Revenue stated, on instructions, that the recent summons could be treated as requiring appearance on a reasonable date identified before the Court.
The petitioner’s counsel requested a date after seven days. The Revenue agreed that he could appear on 14 October 2026 in response to the last summons dated 30 September 2026.
The Court accordingly disposed of the petition, permitting appearance before the concerned authority on that date at 11:00 a.m. It expressly stated that, if the petitioner failed to appear, the authorities would remain free to take measures permissible in law. No general immunity from departmental action was granted.
Author’s Comments
The decision draws a useful distinction between a director’s obligation to answer a summons and the company’s grievance against a search. An individual summons does not, by itself, establish that the recipient can challenge every action concerning the company.
The ruling must nevertheless remain confined to its facts. The Court did not examine a separately established infringement of the petitioner’s personal rights. It should therefore not be expanded into an absolute proposition that a director can never challenge a search affecting him personally.
There is also a drafting inconsistency: the prayers refer to section 247 of the Income-tax Act, 2025, whereas the opening paragraph of the oral order refers to section 247 of the 1961 Act. That reference should not obscure the actual basis of disposal: lack of standing to challenge the company’s search, coupled with a specific extension of time to answer the summons.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner, who asserts is an Additional Director of a Company which is subject to search and seizure under Section 247 of the Income Tax Act, 1961 [for short, ‘the IT Act’], has called in question the authorization to conducting such search. Mr. Mohammed Tahir, the learned counsel for the petitioner seeking to elaborate on the petitioner’s grievance with the authorization to conduct search and seizure under Section 247 of the IT Act, seeks interim protection for the petitioner stating that this Court may permit the petitioner, who has been issued with summons on 26.09.2026, 29.09.2026 and 30.09.2026, to appear in response thereto within a reasonable time.
2. On the petitioner’s grievance with the authorization issued, the learned counsel submits that the authorization could have been only if the summons was issued to the petitioner and if he failed to respond and if there was reasons to believe that the petitioner is in possession of any asset that is the subject matter of pending proceedings under the IT Act or the other Acts mentioned in Section 247(1)(b) of the IT Act. The learned Counsel’s reliance on his reading of the Section in its material part is as under.
“247(1)(a) any person to whom a summons under section 131(1) or a notice under section 142(1) of the Income-tax Act, 1961 (43 of 1961) or summons under section 246(1) or a notice under section 268(1) of this Act,
I. was issued to produce, or cause to be produced, any books of account or other documents, or any information in electronic form or on a computer system, has omitted or failed to produce, or cause to be produced, such books of account or other documents or such information as required by such summons or notice; or
II. has been issued or might be issued, will not, or would not, produce or cause to be produced, any books of account or other documents, or any information in electronic form or on a computer system which will be useful for, or relevant to, any proceedings under the Income-tax Act, 1961 (43 of 1961) or this Act; or
(b) any person is in possession of any asset or information in relation to any asset and such asset represents either wholly or partly, income or property which has not been, or would not be, disclosed, for the purposes of the Income-tax Act, 1961 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 or this Act.”
3. Mr. Arvind Kamath, the learned Additional Solicitor General, submits that the search and seizure is on M/s. Attica Gold Private Limited and even according to the petitioner, he is only an Additional Director, that if the search is against a Company and if there could be any grievance, that grievance must be canvassed by the Company and not by an Additional Director as he cannot have a personal cause. The learned Additional Solicitor General also proposes to refute the reading of the provisions by Mr. Mohammed Tahir.
4. This Court, apart from the reading of Section 247(1) of the IT Act, opines that there is considerable force in the submissions by Mr. Arvind Kamath. If any person could have a grievance with the search and seizure or the manner of authorization which could be canvassed to invoke this Court’s jurisdiction, it has to be by the affected person, and the petitioner cannot be such a person. When queried on the petitioner being given some time, Mr. Arvind Kamath, on instructions, submits that if the petitioner wants reasonable time and if the petitioner could state before this Court, the Authorities will treat the recent summons as a summons to appear on such date. Mr. Mohammed Tahir submits that he will appear any day after seven [7] days from today, and Mr. Arvind Kamath, again on instructions, submits that the petitioner could appear on 14.10.2026 in response to the last of the summons dated 30.09.2026. In the light of the afore, the following.
ORDER
The petition stands disposed of permitting the petitioner to appear in response to the summons dated 30.09.2026 [as per Annexure – L] with the concerned on 14.10.2026 at 11:00 a.m. observing that if there is any failure, it shall be open to the Authorities to take every such measure as may be permissible in law.
