2021 (4) TMI 1325 - HC - Benami Property

Prohibition of Benami Property Transactions - contention of the petitioner as sought to apply the provisions of the Prohibition of Benami Property Transactions Act, 1988 as amended in 2016 to transactions which took place much prior there to in 2013, and such action in giving retrospective affect to provisions which have penal consequences (such as Section 24 introduced by 2016 amendment) is contrary to Article 20(1) of the Constitution of lndia. He also contends that there has been a violation of principles of natural justice since the order was passed without providing the documents and the statements relied upon by the 1 t respondent and without giving opportunity to the petitioner to rebut them, apart from without giving the opportunity to cross-examine persons whose statements were sought to be used against the petitioner and also the impugned order travels way beyond the allegations contained in the show-cause notice HELD THAT - We find considerable force in the said submissions. Therefore, there shall be interim stay as prayed for, subject to the condition that the petitioner does not transfer 4,50,000 shares of the petitioner allotted in the financial year 2011-12 on'14.12.2011 in the name of the 3'd respondent.

Summary

Issues:
1. Retrospective application of the Prohibition of Benami Property Transactions Act, 1988 as amended in 2016.
2. Violation of principles of natural justice in passing the order.
3. Allegations exceeding those in the show-cause notice.
4. Attachment of properties beyond what was proposed in the notice.

Analysis:
1. The petitioner challenged the retrospective application of the Prohibition of Benami Property Transactions Act, 1988 as amended in 2016 to transactions dating back to 2013. The contention was that giving retrospective effect to provisions with penal consequences, like Section 24 introduced by the 2016 amendment, violates Article 20(1) of the Constitution of India. The Court acknowledged the petitioner's argument, finding merit in the submission.

2. Another issue raised was the violation of principles of natural justice in passing the order. The petitioner claimed that the order was issued without providing access to the documents and statements relied upon by the 1st respondent, denying the opportunity to rebut them or cross-examine individuals whose statements were used against the petitioner. This lack of procedural fairness was noted by the Court.

3. The petitioner also contested that the impugned order went beyond the scope of the allegations outlined in the show-cause notice dated 30.12.2019. While the notice proposed attaching movable property, specifically shares of a company and related assets, the final order included the attachment of immovable properties, buildings, machinery, and assets exceeding Rs.100 Crores, along with lease rent received by the petitioner. The Court agreed that such an extension of allegations was impermissible.

4. Lastly, the Court granted an interim stay on the order, preventing the transfer of shares allotted in the financial year 2011-12, subject to certain conditions. This decision was made after considering the arguments presented and finding merit in the petitioner's submissions. The Court's ruling aimed to maintain the status quo pending further proceedings in the case.