2018 (2) TMI 1907 - HC - Benami Property

Offence under Prohibition of Benami Property Transactions Act, 1988 - property in question is being held by the benamidar - HELD THAT - Respondent No.3 in the impugned order has taken into consideration the information received from the Income Tax Department as well as the reply to the show cause notice filed on behalf of Aditya Parakh and Tara Chand Parakh and after recording detailed reasons has passed the order under Section 24(4) of the PBPT Act. The respondent No.3 has formed a prima facie opinion that the property in question is being held by the benamidar and it is a fit case to refer it to the adjudicating authority. After hearing learned counsel for the petitioner and after perusing the material available on record and the order dated 18.11.2017 passed by the Initiating Officer under Section 24(4) of the PBPT Act, it cannot be said that the respondent No.3 has passed the order dated 18.11.2017 without there being any material on record. This Court at this stage cannot record a finding to the effect that Shri Aditya Lodha cannot be termed as benamidar or the property in question is not a benami property. It is for the adjudicating authority to adjudicate upon the matter, referred to it by the Initiating Officer, after providing opportunity of hearing to Shri Aditya Lodha as per the provisions of Section 26 of the PBPT Act. Hence, no case for interference is made out, therefore, the writ petition fails and is hereby dismissed in limine.

Summary

Issues:
1. Legality of provisional attachment order dated 18.11.2017
2. Legality of proceedings under section 26 of the Prohibition of Benami Property Transactions Act, 1988
3. Direction to vacate the attachment and release bank accounts and properties
4. Declaration regarding the applicability of the Act of 1988 to the petitioner
5. Restraining respondents from making any attachment/recovery
6. Any other appropriate directions in the case

Analysis:

Issue 1: Legality of provisional attachment order dated 18.11.2017
The petitioner challenged the provisional attachment order dated 18.11.2017, arguing it was illegal. The High Court noted that the order was based on information from the Income Tax Department and a detailed enquiry. The Initiating Officer formed a prima facie opinion that the property was held by a benamidar, justifying referral to the adjudicating authority. The Court held that there was sufficient material for the order, and it was not appropriate to interfere at that stage.

Issue 2: Legality of proceedings under section 26 of the Act
The petitioner contended that the proceedings under section 26 of the Prohibition of Benami Property Transactions Act, 1988 were illegal. The petitioner argued that the partner of the firm could not be termed as a benamidar. The Court examined the definitions provided in the Act and found that the Initiating Officer had the authority to refer the matter to the adjudicating authority. It held that the adjudicating authority should decide on the matter after providing an opportunity for hearing.

Issue 3: Direction to vacate the attachment and release bank accounts and properties
The petitioner sought directions to vacate the attachment and release bank accounts and properties. The Court found no grounds for interference, dismissing the writ petition and the stay petition.

Issue 4: Declaration on the applicability of the Act of 1988
The petitioner requested a declaration that the provisions of the Act of 1988 were not applicable to them. The Court did not find merit in this argument, upholding the actions taken under the Act.

Issue 5: Restraining respondents from making any attachment/recovery
The petitioner sought restraint on the respondents from making any attachment or recovery. However, the Court did not find grounds to grant this relief.

Issue 6: Any other appropriate directions
The petitioner requested any other appropriate directions as deemed fit by the Court. Since the main reliefs were dismissed, no further directions were granted in the case.

In conclusion, the High Court dismissed the writ petition, finding no grounds for interference in the actions taken under the Prohibition of Benami Property Transactions Act, 1988. The Court emphasized the need for the adjudicating authority to decide on the matter after providing a fair opportunity for hearing.