Shri Golla Jagadishwar Narender V. The Union of India

WP/40618/2022

AI Insights

The case revolves around a writ petition filed by Shri Golla Jagadishwar Narender challenging a provisional attachment order issued under the Prohibition of Benami Property Transactions Act, 1988. The petitioner argued that the order was issued arbitrarily, without legal authority, and violated fundamental rights under Articles 14, 19, and 21 of the Indian Constitution. The High Court examined the applicability of the amended provisions of the Benami Property Act to transactions predating the amendment and referenced decisions from the Supreme Court and other High Courts, which clarified that the amended provisions are prospective and cannot be applied retroactively.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 675554 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 05-12-2022
• Assessment Year: misc
• Other Referred Cases: Nexus Feeds Limited v. Assistant Commissioner of Income Tax, Union of India v. Ganpati Dealcom Pvt. Ltd
• Laws Referred To: Prohibition of Benami Property Transactions Act 1988, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: GADI KUMAR; B SARMA
• Assessee Lawyers: ANJALI AGARWAL
• Keywords: Article 14; Article 19; Article 21; Benami property; Provisional attachment; Writ of Mandamus; Illegal Provisional Attachment
• Section: 5; 3; 2(12); 2(9)(c); 2(9)(a); 24(4)(b)(i)

Judgement Text

"[ 32ss ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE FIFTH DAY OF DECEMBER TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE SRI JUSTICE C,V. BHASKAR REDDY Between: AND 1 Shri .Golla. Jagadishwar Narender, S/o Late Sri Golla Rajaiah Jagadishwar, 4S\"9 - 4] years, Occ. Sr. Administrative Assistant, triilitary E-ngineering Services, _Secunderabad, Rl/o 5-53, Prashant Nagar Colony, O[p CVi Gardens, Back side SBl, Old Alwal, Secunderabad-5d0010, tetangani State. .,.PETITIONER The Union 9[!-a.iq,_!tp.is]ry.oJ Finance, Dep. of Revenue Office of Competent Authorty SAPEM_(FOP) A&NDPCA, Shasthri Bhavan, 4th Ftoor, No.26,' Haddows Road, Chennai-6 2. Asst. Commissioner of lncome Tax, (BPU), lnitiating Officer,3rd Floor, Aayakar Bhawan, Basheerbagh, Hyderabad. 3. lnspe^cting officer, SAPEM(FOP) A&NDPC Acts &AApBpT, No.64/1 , G.N.Chetty Road, T.Nagar, Chennai-i 7 ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ, order or direction more particularly one in the natuie of writ of mandamus, by setting aside the Provisional Attachment order under Section 24 (4XbXi) of the Prohibition of Benami property Transactions Act 1988, vide order daled 27-12-21 No. AClr/BPUl1ydt24(4)t236t3t2ss1s- 2016t2021-22 in respect of immovable property, land admeasuring 1.00 acre at Sy. No. 1O2lAl1 , Situated at Bacharam Village, Hayatnagar Revenue Mandal, Ranga Reddy District issued by 2nd respondent, as illegal and the petitioner is beneficial owner as defined in section 2(12) of the said Act in an arbitry manner, without authority of law and without jurisdiction and hence violative of Article 14, 19 and 21 of lndian Constitution. I WRIT PETITION NO: 40618 OF 2022 lA NO: 1 OF 2022 Petition unde' Section 151 CPC praying that in the r:irr:unrsta nces stated in the affidavit filed in support of the petition, the High Cou 1 Ta)/ be pleased to suspend the operati rn of Provisional Attachment order under llection 24 (4Xb)(i) of the Prohibition o1 Benami Property Transactions Act l gtrtl, vide Order dated 27-12-21 No. ACIT /BPUlHydl24(4)123613125585- 201612021..22, in respect of immovable property, land admeasuring 1.00 acre at Sy. No. 102/l /1 , Situated at Bacharam Village, Hayatnagar Revenue Mandal, Ranga RedCy District for consideration u\";us ,rf Rs. 25,00,000/-, pending disposal of tlrr: main writ petition. Counsel for the Peti ioner: Ms. ANJALI AGARWAL REPRESENTII{G FOR SRI P.S.P. SURESH KUMAR Counsel for the Restrondent No.1: GADI PRAVEEN KUMAR (DEPUTY SOL|C|TOR GE vERA.L OF tNDtA) Counsel for the Resl rondent No.2 & 3: SRI B. NARASIMHA S ARM,A The Court made the bllowing: ORDER THE HON 'BLE TIIE CHIEF CE UJJAL B THE HON ,BLE SRI JUSTICE c.v.BHASKAR REDDY WRIT PETITION No.4o6LB of2022 ORDER: Fer the Hon'bte the Chief Justi'e IlJJal Bhugan) Heard Ms. Anj ali Agarwal, learned counsel representing Mr. P'S.P.Suresh Kumar, learned counsel lor the petitioner; Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India appearing for respondent No' 1; and Mr. B.Narasimha Sarma, learned counsel appearing for respondents No.2 and 3' 2. Challenge made in tiris writ petition is to the provisional order of attachment dated 27 '12'202 1 made by respondent No.2. 3. It may be mentionecl that respondent No'2 in exercise of powers under Section 2a(a)(b)(1) of the Prohibition of Benami Property Transacl'ions Act, 1988 (briefly' 'the Benami Property Act' hereinafter) had passed the I HIIYAN impugned order dated 27'12'2021 provisionally attaching the property listed in the said order i'e'' immovable ;'1 AND ll propcrtv bei ng agricultural lar]d admeasuring .r c. i '00 in survey No.1O2/A/ 1 situated at Bachararn Village, Hayatnagar tevenue Mandal, Ranga Reddl' Distt'tct. 4. Learne I counsel for the parties have poin:ed out that the transa :tion vis-a-vls alleged benami property concerned is dated 01.10.20 16. 5. This aspect of the matter was gone into b;' t.hisr Court in Nexus Feeds Limited v. Assistant Commissioner of Income Tax and by the Supreine Court in Uaion of India v. Ganpati l)ealcom Pvt. Ltd2. 6. In Nexrrs Feeds Limited (supra), thrs Cortrt held as foilov',s: Frrm the conspectus of the discussions nLade above it is apparent thai Section 2 (9) (A) end Sectio r 2 (9) (C) are substa;rtive provisions creatitrg the o Tence of benami transaction. These two provis ons are significantly altd substantially uider than he defrnition of benami transaction uI t,ler Sectio r 2 (al of the nnamended 1988 Ar:t. Theref rre, Section 2 (9) (A).and Section 2 (9) (C) can only h lve cffect prospectively. Central GovernnLr-'nt has n rtified the date of coming into force of t-he | 2022 lsl l Mt 26 ) 2 2OZ2 SCC Onlir e SC 1064 J Amendment Act of 2016 as 01.-1 1.2016. Therefore, these two provisions cannot be applied to a transaction which took place prior to 01.1 i.20l6.Admittedly, in the present case, the transaction in question is dated 14.12.2011. That being the position, we have no hesitation to hold that the show cause notice dated 3O.I2.2O19, provisional attachment order dated 31.12.2O l9 and the impugned order dated 30.03.2027 are null alrd void being without jurisdiction. Consequently, the impugned order is set aside and quashed. 7. Thus, from the above, it is evident that this Court took the view that Section 2(9)(A) and 2(9)(C) of the Benami Property Act inserted by the Amendment Act of 2016 are prospective in nature because these two provisions have significantly and substantially widened the definition of 'benami transaction' than as was there in the unamended Benami Property Act of 1988. 8. Taking note of the fact-that Central Government had notified the date of coming into force of the Amendment Act of 2016 as 01.11.2016, this Court held that these two provisions cannot be applied to a transaction which took place prior to 0 I . 1 | .2016. In that case, the transaction was dated l4.I2.2}ll. Therefore, the show cause notice, -+ provisional attachment order as well as the ailju,lioating order ' :er€ declared null and void bei nii without jurisdiction md consequently, quashed. 9. In Ganpati Dealcom Prrt. Ltd. (supra), wrjch went to the Suprem: Court from a decision of the Cirl<:utra High Court, the question which was considered by the Supreme Court was rrhether the Benami Propert5r Act ,ts arnended by the Ame:rdment Act of 20 16 has a prospecl-ive effect? While examining this question, Supreme Coutt went into the constitr ttionality of the original Act i.et. , Benami Propertv Act At the first place, it has been helc as follows: T.re simple question acidressed by the cor nsel appez ring for both sides it whether the ame;rded 2016 Act is retroactive or prospective. Answt:t:ng the i rbove question is inevitably tied to an intern rediate question as to whether the 1988 l ct was c rnstitutional in the first place. The aigumellts addre;sed by the Union of India hinges on the i:rct that t he 1988 Act was a valid substantive law, which required only some gap filIing through the 2016 Act, to ensure that sulEcient procedttral safegr ards and mechanisms are ptesent to enl3r,re the lae. According, to the Union of India. the 2016 Act wi s a mere gap hlling exercise. H(,r,ev{rr, upon studying the prorisions of the 1! 88 Act, we find that there are questions of ) 'r-\"-t legality and constitu tionality which arise with respect to Sections 3 and 5 of 1988 Act. The answers to such questions cannot be assumed in favour of constitutionality, simply because the same was never questioned before the Court of law. We are clarifying that we are not speaking of the presumption of constitutionality as a matter of burden of proof. Rather, we are indicating the assumption taken try the Union as to the validity of these provisions in the present litigation. Such assumption cannot be. made when this Court is ca.lled upon to ansrver whether the impugned provisions are attracted to those transactions that have taken place before 2O 16. 1 0. After elaborate deliberation, Supreme Court came to the conclusion that Section 3 (criminal provision), Section 2(al (definition clause) and Section 5 (confiscation proceedings) of the Benamfelbperty Ac[ are'oveily broad, disproportionately harsh and without adequate safeguards. Though such provisions r,vere in a dormant condition, nonetheless, Supreme Court declared Sections 3 and 5 of the Benami Property Act as unconstitutional from inception. It has been held as follows: From the above, Section 3 (criminal provision) read with Section 2(a) .and Section 5 (confiscation proceedings) of the 1988 Act are overly broad, disproportionately harsh, and operate without adequate safeguards in place. Such provisions were I 6 stillL orn law and never utilized in the lirst pla.e. In this light, this Court hnds 1:hat Secti )ns 3 and 5 of the 1988 Act \"were unco :rstitutional from their inception. 1 1. Contir: uing with the deliberation, Supreme Court observed tt at once Sections 3 and 5 of -he Benami Property Ac were declared as unconstitution ai, it would mean that .he Amendment Act of 2016 r.r'or. L. cl in effect create new provisior-rs axd new offences as .lt e offences under Sect.on 3(i) for the transactions erLtere,d into between 05. C9. 1988 (when th..:: original Act tr:ceived the presider.rtial lssent) and 25.10.20 16 (u,hen the ^.rnertdment Act of 2016 rvers notified), t1'le law cannot :r:troactively invigorate a still-born crimiftal-oftence. Thereirfter, it was categorically held that the Amendment Act of 2016 containirrg c riminal provisions wouid be app it:ab..e only prospectively. Supreme Court iras held as follorrs: In the case at hand, tif-e 2016 Act containing the :riminal provisions is applicable crly prosp,:ctively, as the relevant Sections of the pre- amenr lment 1988 Act containing the p:nal 1;rovis on, have been declared as unconstituti( nal. Therel crc, the question of construction of the 2016 Act as retroactile qua the penal provisions urrder Sectio rs 3 or 53, does not arise. '1 12. Supreme Court has clarified that as it has held that criminal provisions under the Benami Property Act were arbitrary and incapable of application, the law through the 2OL6 amendment could not retroactively apply to confiscation of those trausactions entered into between 05.09.1988 to 25.10.2016 as the same lvould amount to punitive punishment. Finally, the Supreme Court concluded as under: In view of the.,above discussion, we hold as under: a) Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Se&ir*S{O1 of the 20 16 Act is also unconstitutional as it, is violative of Article 20(l) of the Constitution. b) In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2OL6 Amendment Act, was unconstitutional for being manife stly arbitrar.v. c) The 2016 procedural, provisions. Amendment Act was rather, prescribed not merely substantive 8 d) Lr rem forfeiture provision under Section [i of the 2116 Act. being punitive in nature, can orly'be appli :d prospectively and not retroactively. c) C oncerned authorities cannot initratt or contir ruc criminal prosecution or confisc:tion proce:dings for tralsactions entered into prirr to the r loming into force of the 2016 Act, uiz., 25.LC.2016. As a consequence of the ebove dccla atio:r, all such prosecutions or confisc.rtion proce ,'dings shall stand quashed. f) As this Court is not concerned with the const. tutionality of such independent forfe I r.rre proce, :dings contemplated under the ',lt) 16 Amen lment Act on thc cther grounds. the zr,fores aid questions are [e[t open to be adjudicated in aptr ropriate proceedings. 13. From tlre above, it is eviC,nr. rhat Suprem,) Court has declared tha . the Amendment Act of 20 16 is n ot merely procedural but prescribes substantive Drovlslons. Therefore, ( oncerned autho!'ities carnot nitiate or continue crir tinal prosecutior-r or confiscation prrtceedings for transacti( ns entered into prior to coming itrtt> force of the 2016 I mendment Act i.e., 25.10.2O1(' As a consequcnce, ail such transactions or co::rfiscation to 25. lO.2016 shall stand qu:rshed. proceedil-lgs orior - , I I i () Supreme Court has also clarified that fn rem forfeiture provision under Section 5 of the Amendment Act of 2016 being punitive in nature can only be applied prospectively and not retroactivelv. 14 . In view of the finalitv of the 1au, declared by the Supreme Court, the provisional attachment order dated 27.12.2027 cannot be sustained. Accordingly, the same is hereby set aside ald quashed. 15. Consequently, the rvrit petition is allowed Miscellaneous applications pending, if any, shall stand closed. However, there sh;rll be no order as to costs. SD/-A.V.S.PRASAD ASSIS REGISTRAR //TRUE COPY// SECTI N OFFICER '1 . The Union of lndia, Ivlinistry of Finance, Dep. Of Revenue, Office of Competent Authorty SAPEM(FOP) A&NDPCA, Shasthri Bhavan, 4th Floor, No.26, Haddows Road, Chennai-G 2. Asst. Commissioner of lncome Tax, (BPU), lnitiating Officer,3rd Floor, Aayakar Bhawan, Basheerbagh, Hyderabad. 3. lnspecting officer, SAPEM (FOP) A&NDPC Acts &AAPBPT, No.64/1, G.N.Chetty Road, T.Nagar, Chennai-'1 7 4. One CC to SRI P.S.P. SURESH KUMAR, Advocate [OPUC] 5. One CC to SRI GADI PRAVEEN KUMAR (Dy. SOLICITOR GENERAL OF INDIA) Advocate [OPUC] 6. One CC to Sri B. NARASIMHA SARIMA, Advocate IOPUC] 7. Two CD Copies BN GJP )Ak {. To, I HIGH COUR]' DATED:0511212022 ORDER WP.No.4061t of 2022 ALLOWING TI- E WRIT PETITION WITHOUT COS TS .....-- // <\"-' J --:- ) .-.1 ., I 4-u "