2018 (10) TMI 2017 - HC - Benami Property

Benami transactions - provisional attachment orders - procedure the authorities have adopted in passing the impugned provisional attachment order - HELD THAT - Section 5 and Section 27, as can see, deal with confiscation. We are 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 u/s 24(4)(b)(i) of the Act. Even otherwise, a judicial or quasi-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. Petitioner's grievance concerns the authority's alleged violation of Section 5 or its inapplicability - Section 5 speaks of confiscation of any property, suspected to be Benami property. First, the authorities have not yet determined whether the property is Benami; second, Section 5 concerns confiscation, but the proceedings are at a preliminary stage--provisional attachment. We have, not yet reached the stage of confiscation. Indeed, it takes an elaborate procedure of hearing and adjudication for the authorities to confiscate any property. Must, then, hold that even Section 27 concerns only with confiscation and vesting of benami property. And we have not reached that stage, yet. No merit in the writ petition. We 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.

Summary

Issues:
Challenge to proceedings initiated under the Prohibition of Benami Property Transactions Act, 1988.

Analysis:
The petitioner, a Private Limited Company engaged in real estate, faced proceedings under the Benami Property Transactions Act. The petitioner challenged the show-cause notice (Ext. P1), rejection order (Ext. P2), provisional attachment order (Ext. P3), and reference order (Ext. P4). The petitioner sought to quash these orders and restrain the respondents from confiscating properties under the Act. The main contention was the provisional attachment's legality concerning properties acquired before 01.11.2016, based on Section 5 of the Act.

The petitioner argued that the provisional attachment lacked statutory backing due to an amendment in Section 5 post-01.11.2016. Conversely, the Central Government Counsel contended the petition was premature, as provisional attachment was temporary to preserve property pending proceedings. The Counsel suggested the petitioner present its defense before the adjudicating authority to prove property ownership and lack of benami involvement, asserting Section 5's inapplicability.

The Court acknowledged the undisputed facts and focused on the Ext. P3 provisional attachment order's legality. Section 5 of the Act mandates confiscation of benami properties. The Ext. P3 order was passed under Section 24(4)(b)(i) for provisional attachment, indicating statutory support. Section 27 details confiscation procedures, emphasizing that the current stage was provisional attachment, not confiscation.

The Court concluded that premature examination of confiscation principles was unwarranted as only provisional attachment had occurred. The petitioner's concern about Section 5's violation or inapplicability was premature since confiscation proceedings had not commenced. Dismissing the writ petition, the Court clarified the petitioner's right to defend before the adjudicating authority or any competent body in the future.