2018 (8) TMI 2101 - HC - Benami Property

Benami transaction - Power of Adjudicating Authority to regulate its own procedure - not giving opportunity to cross-examine - reason on the pending applications filed by the petitioners - HELD THAT - Cross-examination in the proceeding initiated by the respondents, cannot be said to be a right of the petitioners and can be considered to be an integral part of the principle of natural justice, which is required to be followed in view of Section 11 of the PBPT Act, 1988 as the proceeding before the Adjudicating Authority has to be guided by the principle of natural justice. It is noteworthy to mention that as per subsection (5) of Section 24 of the PBPT Act, 1988 in which impugned show cause notice has been issued referring the matter to the Adjudicating Authority, the Initiating Officer after passing the provisional attachment of property is obliged to draw up the statement of the case and refer it to the adjudicating authority. On receipt of reference under Sub-section (5) of Section 24, the adjudicating authority shall issue notice to the stakeholders as provided under Sub-section (1) of Section 26 of the Act. Section 26(3) makes it clear that the adjudicating authority will examine the entire issue and relevant material. It the right to cross-examine cannot be considered to be an integral part of the principle of natural justice, however, it is open for the authority to examine the available circumstances and if deems fit, the opportunity to cross-examine can be provided, but not as a matter of right. Thus, considering the overall circumstances without expressing any opinion whether the respondents have to provide an opportunity of cross-examination or to supply the certified copies of the documents requested by the petitioners, an order has to be passed by the authority assigning reason on the pending applications filed by the petitioners as to why such applications cannot be accepted. It is not proper on the part of the respondents not answering the applications submitted by the petitioners and sitting silent over the applications demanding documents and asking opportunity for cross-examination is itself arbitrary and in violation to the principle of natural justice. This petition is disposed of directing the respondent No.2 to pass appropriate order on the pending applications of the petitioners assigning reason for not providing the certified copies of the documents and not giving opportunity to cross-examine.

Summary

Issues Involved:
1. Whether the Adjudicating Authority is obligated to supply certified copies of the documents relied upon by the Initiating Officer.
2. Whether the petitioners have the right to cross-examine the persons who made allegations against them under the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act, 1988).

Issue-wise Detailed Analysis:

1. Obligation to Supply Certified Copies of Documents:
The petitioners filed interim applications requesting the Adjudicating Authority to direct the Initiating Officer to produce certified copies of the documents relied upon in the impugned Reference. The petitioners argued that under Section 11 of the PBPT Act, 1988, the Adjudicating Authority must follow the principle of natural justice, which includes providing access to the documents relied upon by the respondents. The respondents contended that maximum documents were already supplied along with the show cause notice and that supplying certified copies of each document was not a legal requirement. The court noted that Section 11 allows the Adjudicating Authority to regulate its own procedure while being guided by the principles of natural justice. It concluded that the principle of natural justice does not inherently require providing certified copies of all documents, but the Adjudicating Authority should pass an order explaining reasons if it decides not to provide such documents.

2. Right to Cross-Examine:
The petitioners claimed the right to cross-examine the makers and authors of the documents relied upon by the Initiating Officer, arguing that cross-examination is an integral part of the principle of natural justice. They relied on a Supreme Court judgment (Ayaaubkhan Noorkhan Pathan v. State of Maharashtra), which emphasized that effective cross-examination is essential to meet the requirements of natural justice. The respondents, however, argued that there is no provision under the PBPT Act, 1988 that mandates cross-examination in such proceedings. The court examined various precedents, including the Supreme Court's rulings in Bakshi Ghulam Mohammad and Sri Rama Krishna Rice Mill, which indicated that the right to cross-examine depends on the specific circumstances and statutory provisions. The court concluded that cross-examination is not an inherent right under the principle of natural justice in the context of the PBPT Act, 1988, but the Adjudicating Authority has the discretion to allow it if deemed necessary.

Conclusion:
The court directed the Adjudicating Authority to pass an appropriate order on the pending applications of the petitioners, providing reasons for not supplying the certified copies of documents and not allowing cross-examination. The authority was instructed to act in accordance with the law within ten days from the submission of the certified copy of the court's order. The petition was disposed of with these directions.