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2020 (2) TMI 527 - HC - Income TaxRecovery proceedings - membership right - priority of Income tax Department over Stock Exchange - prohibitory and attachment orders issued by the Income Tax Department in respect of the income tax dues payable by card holders of the Bombay Stock Exchange in the hands of the petitioner - HELD THAT - As decided in 2016 (12) TMI 1814 - BOMBAY HIGH COURT it is agreed position between the parties that the decision of the Apex Court in Bombay Stock Exchange Vs. V.S. Kandalgaonkar Ors. 2014 (10) TMI 368 - SUPREME COURT cover both the issues in principle in favour of the petitioner. The Apex Court has held that the membership card is only a personal privilege granted by the petitioner - Exchange and that no right to that card has ever been transferred to the card holder for the petitioner - Exchange so as to enable it's attachment by the Income Tax Department. So far as security deposit is concerned, the Apex Court has held that the petitioners would have a priority on the security deposits over the Income Tax Department.
Issues:
1. Recovery proceedings initiated against a stock exchange by the respondents. 2. Legality and validity of impugned notices and prohibitory orders. 3. Right of nomination in membership rights. 4. Restraint on respondents from taking steps during pending petition. Analysis: Issue 1: Recovery Proceedings The Writ Petition was filed by the Stock Exchange Bombay, now known as Bombay Stock Exchange Limited, challenging the recovery proceedings initiated by the respondents against M/s. Sumatilal Jamnalal and others. The petitioner sought various writs, including certiorari, mandamus, and declaration under Article 226 of the Constitution of India. Issue 2: Legality of Notices and Orders The petitioner requested the court to quash the impugned notices dated 7th December 1988 and 20th March 1989, along with the prohibitory orders dated 4th February 1987 and 7th March 1990. The court considered the legality and validity of these notices and orders in light of the petitioner's arguments. Issue 3: Right of Nomination One of the prayers in the petition was to declare that the petitioner had the right to nominate individuals for membership rights and to deal with securities placed with the petitioner. The court was asked to permit the exercise of this right and to allow appropriation of securities as per the rules and regulations of the petitioner. Issue 4: Restraint on Respondents Pending the hearing and final disposal of the petition, the petitioner requested the court to restrain the respondents from taking any steps against the petitioner in connection with the recovery proceedings. Additionally, the petitioner sought permission to exercise the right of nomination during this period and to deal with securities accordingly. The court noted that previous writ petitions filed by the same petitioner had been disposed of following a decision of the Supreme Court. The judgment in those cases had clarified the rights of the petitioner regarding membership cards and security deposits. The court referred to specific orders and decisions related to the issues raised in the present petition. In conclusion, the court found that the issues raised in the present Writ Petition were squarely covered by previous decisions. Therefore, the court disposed of the current petition in line with the decisions referred to, thereby providing clarity on the recovery proceedings and related matters involving the stock exchange and the respondents.
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