GRIFFIN DEVELOPERS PRIVATE LIMITED V. THE UNION OF INDIA

WP(C)/31660/2018

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Griffin Developers Private Limited, engaged in real estate, faced proceedings under the Prohibition of Benami Property Transactions Act, 1988, concerning certain properties. The authorities issued a show-cause notice and subsequently rejected the petitioner's defense, leading to a provisional attachment of the properties. The petitioner challenged these actions in the High Court of Kerala, seeking to quash the notices and orders issued by the authorities. The court dismissed the petition, emphasizing that the provisional attachment was a preliminary measure and the final determination of the property status would occur at a later stage.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 722304 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 03-10-2018
• Assessment Year: misc
• Laws Referred To: Prohibition of Benami Property Transactions Act, 1988
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JAYASANKAR NAIR
• Assessee Lawyers: M NAMBIAR
• Keywords: Benami property; Confiscation; Legal Proceedings; Provisional attachment; Show cause notice
• Section: 27; 5; 24; 24(4)(b)(i); 24(4)(b)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU WEDNESDAY,THE 03RD DAY OF OCTOBER 2018 / 11TH ASWINA, 1940 WP(C).No. 31660 of 2018 PETITIONER/S: 1 GRIFFIN DEVELOPERS PRIVATE LIMITED F-125 PIONEER TOWERS,MARINE DRIVE KOCHI-682035,REPRESENTED BY ITS DIRECTOR-MR.O.G.SUNIL 2 O.G.SUNIL, FLAT NO.13B,LINK HORIZON, MARINE DRIVE,KOCHI-682016. BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM SRI.P.GOPINATH RESPONDENT/S: 1 THE UNION OF INDIA REPRESENETED BY THE SECRETARY MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) NORTH BLOCK NEW DELHI-110001 2 THE ASSISTANT COMMISSIONER OF INCOME TAX BENAMI PROHIBITION UNIT,PANAMPILLY NAGAR,ERNAKULAM-682036. -2- W.P.(C). No. 31660 of 2018 3 THE ADJUDICATING AUTHORITY UNDER THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988,ROOM NO.26,4TH FLOOR,JEEVAN DEEP BUILDING,PARLIAMENT STREET,NEW DELHI-110001. 4 THE ADDITIONAL COMMISSIONER OF INCOME TAX BENAMI PROHIBITION UNIT,PANAMPILLY NAGAR,ERNAKULAM-682036. BY ADV. SRI.JAISHANKAR V.NAIR, CGC OTHER PRESENT: SC SRI. JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.10.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT The petitioner, a Private Limited Company, claims to have engaged itself in real-estate. About a few items of property allegedly owned and possessed by it, the respondent authorities began proceedings under the Prohibition of Benami Property Transactions Act, 1988 (“the Act”). 2. First, the authorities issued the Ext.P1 show-cause notice under Section 24 of the Act. The petitioner replied, putting forward its defence. Later, the 2nd respondnet, the authority concerned, passed the Ext.P2 -3- W.P.(C). No. 31660 of 2018 order; it rejected the petitioner's defence. Then to have the matter further processed, the same authority passed the Ext.P3 order, provisionally attaching the properties. The order seems to have been passed under Section 24 (4)(b) of the Act. Later, through the Ext.P4, the 2nd respondent placed the matter before the 3rd respondent, who is the adjudicating authority. Under those circumstances, the petitioner has filed this writ petition, seeking these reliefs: “i) call for the records leading to Exhibits P1 (series of notices), P2 and P3 (series of orders), P4 (reference order) issued by the 2nd respondent and quash the same by the issuance of a writ of certiorari or such other writ, order or direction. ii) Issue an order restraining the respondents from initiating or continuing with any proceedings for confiscation of properties which are the subject matter of Exhibits P1 (series of notices), P2 and P3 (series of orders), P4 (reference order), issued under the provisions of “The Prohibit of Benami Property Transactions Act, 1988. iii) declare that the provisions of “The Prohibition of Benami Property Transaction Act, 1988' providing for confiscation of properties found to be held 'benami' cannot be applied in respect of transactions entered into prior to 1.11.2016.” 3. From the above extract, I reckon that the petitioner has challenged all proceedings the respondent authorities have initiated: the Ext.P1 show cause notice, the Ext.P2 order of rejection, the Ext.P3 order -4- W.P.(C). No. 31660 of 2018 of provisional attachment, and also the Ext.P4 order of reference. Indeed, Ext.P3 is the order capable of execution or enforcement. The other orders only aid the process. So it is the Ext.P3 that needs the judicial interference, if ever. But as the writ petition seems to be comprehensive in its challenging the very initiation of Benami proceedings, I adjudicate the merits of the writ petition. 4. Sri M. Gopikrishnan Nambiar, the learned counsel for the petitioner Company has strenuously contended that the provisional attachment is with no statutory backing. According to him, Section 5, which speaks of confiscation, suffered an amendment on 01.11.2016. So any property acquired before 01.11.2016 must not be subjected to any scrutiny under the Act. In other words, be it provisional attachment or the possible eventual-confiscation, both fall foul of Section 5. 5. On the other hand, Sri Jayasankar V. Nair, the learned Central Government Counsel, has submitted that the writ petition is premature. According to him, the provisional attachment is an interim arrangement, only to preserve the property until the authorities completed the proceedings under the Act. He has also submitted that the petitioner can -5- W.P.(C). No. 31660 of 2018 appear before the 3rd respondent, put forward its defence, and establish that the Company, indeed, owns the property and that proeprty cannot be tainted with the label Benami. Eventually, the learned Central Government Counsel has submitted that Section 5 has no application to the proceedings. 6. Heard Sri M. Gopikrishnan Nambiar, the learned counsel for the petitioner, and Sri Jayasnakr V. Nair, the learned Central Government Counsel for the respondents. 7. Indeed, the facts are not in dispute, and the issue lies in a narrow compass. The petitioner’s counsel has frontally attacked the procedure the authorities have adopted in passing the impugned order: the Ext.P3 order of provisional attachment. According to him, it falls foul of Section 5. So it pays to examine that provision; it reads: 5. Property held benami liable to confiscation.-Any property, which is subject matter of benami transaction, shall be liable to be confiscated by the Central Government. 8. To begin with, the authorities issued the Ext.P1 show cause notice and passed the Ext.P3 order, rejecting the petitioner's defence. Then the 2nd respondent passed the Ext.P3 order of provisional attachment. And that is ostensibly under Section 24(4)(b)(i), which reads: -6- W.P.(C). No. 31660 of 2018 24. Notice and attachment of property involved in benami transaction.- xxxx (4) The Initiating Officer, after making such inquires and calling for such reports or evidence as he deems fit and taking into account all relevant materials, shall, within a period of ninety days from the date of issue of notice under sub-section (1), xxxx (b) where provisional attachment has not been made under sub- section (3),- (i) pass an order provisionally attaching the property with the prior approval of the Approving Authority, till the passing of the order by the Adjudicating Authority under sub-section (3) of section 26; or (ii) decide not to attach the property as specified in the notice, with the prior approval of the Approving Authority 9. As the learned counsel has also drawn my attention to Section 27, I may as well examine that provision, and it reads: 27. Confiscation and vesting of benami property.(1) Where an order is passed in respect of any property under sub-section (3) of section 26 holding such property to be a benami property, the Adjudicating Authority shall, after giving an opportunity of being heard to the person concerned, make an order confiscating the property held to be a benami property: Provided that where an appeal has been filed against the order of the Adjudicating Authority, the confiscation of property shall be made subject to the order passed by the Appellate Tribunal under section 46: Provided further that the confiscation of the property shall be made in accordance with such procedure as may be prescribed. (2) Nothing in sub-section (1) shall apply to a property held or acquired by a person from the benamidar for adequate consideration, prior to the issue of notice under sub-section (1) of section 24 without his having knowledge of the benami transaction. -7- W.P.(C). No. 31660 of 2018 (3) Where an order of confiscation has been made under sub- section (1), all the rights and title in such property shall vest absolutely in the Central Government free of all encumbrances and no compensation shall be payable in respect of such confiscation. (4) Any right of any third person created in such property with a view to defeat the purposes of this Act shall be null and void. (5) Where no order of confiscation is made upon the proceedings under his Act attaining finality, no claim shall lie against the Government. 10. Section 5 and Section 27, as I can see, deal with confiscation. I am afraid, it is premature for this Court to examine the issue on the principles of confiscation. What has so far been effected is only a provisional attachment. And it was under Section 24(4)(b)(i) of the Act. Even otherwise, a judicial or qusi-judicial authority has inherent power to preserve all that affects the lis or adjudication: to maintain status quo until the dispute is dissolved or resolved. Here, in fact, the Ext.P3 order of provisional attachment has statutory backing under Section 24(4)(b) of the Act. 11. But the petitioner's grievance concerns the authority's alleged violation of Section 5 or its inapplicability. As extracted above, Section 5 speaks of confiscation of any property, suspected to be Benami property. First, the authorities have not yet determined whether the property is -8- W.P.(C). No. 31660 of 2018 Benami; second, Section 5 concerns confiscation, but the proceedings are at a preliminary stage—provisional attachment. We have, in other words, not yet reached the stage of confiscation. Indeed, it takes an elaborate procedure of hearing and adjudication for the authorities to confiscate any property. I must, then, hold that even Section 27 concerns only with confiscation and vesting of benami property. And we have not reached that stage, yet. Under these circumstances, I find no merit in the writ petition. I dismiss it. I, however, clarify that as the writ petition was dismissed on the premise it is premature, it does not affect the petitioner's right to approach the adjudicating authority, that is the 3rd respondent or any other competent authority, to put forward its defence, and prosecute the matter. Sd/- DAMA SESHADRI NAIDU JUDGE das -9- W.P.(C). No. 31660 of 2018 APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 THE TRUE COPY OF NOTICE DATED 17.01.2018 ISSUED BY THE 2ND RESPONDENT TO THE 1ST PETITIONER UNDER SECTION 24(1)OF THE ACT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1567/2018. EXHIBIT P1 A THE TRUE COPY OF NOTICE DATED 17.01.2018 ISSUED BY THE 2ND RESPONDENT TO THE 1ST PETITIONER UNDER SECTION 24(1)OF THE ACT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1787/2008. EXHIBIT P1 B THE TRUE COPY OF NOTICE DATED 17.01.2018 ISSUED BY THE 2ND RESPONDENT TO THE 1ST PETITIONER UNDER SECTION 24(1)OF THE ACT,IN RESPECT OF LAND COVERED BY DOCUMENT 1905/2008. EXHIBIT P1 C THE TRUE COPY OF THE NOTICE DATED 17.01.2018 ISSUED BY THE 2ND RESPONDENT TO THE 1ST PETITIONER UNDER SECTION 24(1)OF THE ACT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1459/2008. EXHIBIT P2 THE TRUE COPY OF THE ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4)OF THE ACT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1567/2008. EXHIBIT P2 A THE TRUE COPY OF THE ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4)OF THE ACT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1567/2008. -10- W.P.(C). No. 31660 of 2018 EXHIBIT P2 B THE TRUE COPY OF THE ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4)OF THE ACT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1905/2008. EXHIBIT P2 C THE TRUE COPY OF THE ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4)OF THE ACT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1459/2008. EXHIBIT P2 D THE TRUE COPY OF THE ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4)OF THE ACT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1606/2008. EXHIBIT P3 THE TRUE COPY OF THE PROVISIONAL ATTACHMENT ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4) (B)(I)OF THE ACT IN RESPECT OF LAND COCERED BY THE DOCUMENT NO.1567/2008. EXHIBIT P3 A THE TRUE COPY OF THE PROVISIONAL ATTACHMENT ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4) (B)(I)OF THE ACT IN RESPECT OF LAND COCERED BY THE DOCUMENT NO.1787/2008. EXHIBIT P3 B THE TRUE COPY OF THE PROVISIONAL ATTACHMENT ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4) (B)(I)OF THE ACT IN RESPECT OF LAND COCERED BY THE DOCUMENT NO.1905/2008. -11- W.P.(C). No. 31660 of 2018 EXHIBIT P3 C THE TRUE COPY OF THE PROVISIONAL ATTACHMENT ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4) (B)(I)OF THE ACT IN RESPECT OF LAND COCERED BY THE DOCUMENT NO.1459/2008. EXHIBIT P3 D THE TRUE COPY OF THE PROVISIONAL ATTACHMENT ORDER DATED 13.04.2018 ISSUED BY THE 2ND RESPONDENT UNDER SECTION 24(4) (B)(I)OF THE ACT IN RESPECT OF LAND COCERED BY THE DOCUMENT NO.1606/2018. EXHIBIT P4 THE TRUE COPY OF THE REFERENCE ORDER (WITHOUT ANNEXURES)DATED 16.04.2018 ISSUED BY THE 2ND RESPONDENT,WHICH ARE ADDRESSED TO THE 3RD RESPONDENT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1567/2008. EXHIBIT P4 A THE TRUE COPY OF THE REFERENCE ORDER (WITHOUT ANNEXURES)DATED 16.04.2018 ISSUED BY THE 2ND RESPONDENT,WHICH ARE ADDRESSED TO THE 3RD RESPONDENT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1787/2008. EXHIBIT P4 B THE TRUE COPY OF THE REFERENCE ORDER (WITHOUT ANNEXURES)DATED 16.04.2018 ISSUED BY THE 2ND RESPONDENT,WHICH ARE ADDRESSED TO THE 3RD RESPONDENT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1905/2008. EXHIBIT P4 C THE TRUE COPY OF THE REFERENCE ORDER (WITHOUT ANNEXURES)DATED 16.04.2018 ISSUED BY THE 2ND RESPONDENT,WHICH ARE ADDRESSED TO THE 3RD RESPONDENT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1459/2008. -12- W.P.(C). No. 31660 of 2018 EXHIBIT P4 D THE TRUE COPY OF THE REFERENCE ORDER (WITHOUT ANNEXURES)DATED 16.04.2018 ISSUED BY THE 2ND RESPONDENT,WHICH ARE ADDRESSED TO THE 3RD RESPONDENT,IN RESPECT OF LAND COVERED BY DOCUMENT NO.1606/2008. EXHIBIT P5 THE TRUE COPY OF THE COVERING LETTER (WITHOUT ANNEXURES).DATED 12.07.2018 WITH ACKNOWLEDGEMENT OF RECEIPT SHOWING FILING OF THE APPLICATION BEFORE THE NCLT,CHENNAI BENCH. EXHIBIT P6 A COPY OF THE INTERIM ORDER DATED 19.12.2017 PASSED BY THIS HON'BLE COURT IN WRIT PETITION NO.39494 OF 2017. "