2022 (2) TMI 602 - HC - Benami Property

Benami transactions - indulgence in prohibited transactions - second appellant passed an order provisionally attaching the property of the respondent company under Section 24(4)(b)(i) of the Act pending adjudication by the first appellant - period of limitation for filing an appeal - as mainly contended on behalf of the respondents that the orders passed by the first appellant are barred by limitation - HELD THAT - Learned Judge was not correct in entertaining the writ petitions, when there being an efficacious appeal remedy under Section 46 of the Act, where all the contentions, including whether the order has been passed by the Adjudicating Authority in accordance with Section 26 (7) of the Act, could have been raised and decided. As already discussed and delved in detail above, the words date of the order appearing in Section 46 can only be interpreted and read to mean date of receipt of the order for the purpose of computing the limitation for filing the appeal under Section 46 of the Act. Learned Judge without going into the question of maintainability of the writ petitions, travelled into the case on the ground of limitation raised by the respondents / writ petitioners, as prescribed under Section 26(7) of the Act and rendered a finding on the same. Therefore, this Court has to necessarily test the said order under appeal in the light of the provisions of the Act and the applicable legal principles. Accordingly, on such application, this Court has reached the firm conclusion that the orders passed by the first appellant do not suffer from infirmity on the ground of alleged violation of Section 26 (7) of the Act. In other words, the orders impugned in the writ petitions are well within the timeline as stated under Section 26 (7) and is immune from attack on this ground. Since the other aspects on the merits of the case are not the subject matter of this batch of appeals and all these intra court appeals have arisen from the order of the Learned Judge, where the only ground taken by the respondents/ writ petitioners was on the limitation as per Section 26(7) of the Act, this Court is not rendering any finding on the merits of the orders passed by the first appellant / Adjudicating Authority under Section 26 (3) of the Act. As therefore left open to the parties to challenge the orders impugned in the writ petitions before the Appellate Authority under Section 46 of the Act, which authority shall entertain the appeal, if it is filed within 45 days from the date of receipt of this judgment, so as to exclude the time consumed in litigation, in the interest of parties, and in consonance with the general principles of the law of limitation. Except the issue decided by this Court with regard to the validity of the orders passed by the first appellant in accordance with section 26(7) of the Act, all other issues are left open to be decided by the Appellate Authority, in accordance with law.

Issues Involved:
1. Legality of the orders passed by the Adjudicating Authority under Section 26(3) of the Prohibition of Benami Property Transactions Act, 1988.
2. Whether the orders are barred by the limitation period prescribed under Section 26(7) of the Act.
3. The maintainability of the writ petitions in light of the available statutory appeal remedy under Section 46 of the Act.
4. The effect of the delay in communication of the orders to the respondents.

Issue-wise Detailed Analysis:

1. Legality of the Orders Passed by the Adjudicating Authority:
The appellants argued that the orders were passed within the statutory period as mandated under Section 26(7) of the Prohibition of Benami Property Transactions Act, 1988. The respondents contended that the orders were communicated beyond the prescribed period, thus invalidating them. The court found that the orders were indeed passed within the statutory period and recorded in the official register, making them legally valid.

2. Whether the Orders are Barred by Limitation:
The respondents argued that the orders were barred by limitation as they were communicated to them after the statutory period had expired. The court examined the statutory provisions and the records, concluding that the orders were passed within the one-year period from the end of the month in which the reference was received, as required by Section 26(7). The delay in communication was deemed a procedural lapse and did not affect the validity of the orders.

3. Maintainability of the Writ Petitions:
The appellants contended that the respondents should have exhausted the statutory appeal remedy under Section 46 of the Act before approaching the court. The court agreed, stating that the writ petitions were entertained without considering the available statutory remedy. The court emphasized that the respondents should have filed an appeal, and the writ petitions were premature.

4. Effect of Delay in Communication:
The respondents argued that the delay in communication of the orders affected their validity. The court applied the doctrine of substantial compliance, stating that the delay in communication did not invalidate the orders as they were passed within the statutory period. The court held that the appeal period should be calculated from the date of receipt of the order, not the date of the order.

Findings:
The court found that the orders passed by the Adjudicating Authority were within the statutory period and valid. The delay in communication was a procedural lapse that did not affect the orders' validity. The court also noted that the writ petitions were premature as the respondents had not exhausted the statutory appeal remedy.

Conclusion:
The court set aside the order of the learned judge and allowed the appeals. The respondents were directed to file an appeal within 45 days from the date of receipt of the judgment. The court also recommended that the appellants adopt the practice of uploading orders online to avoid future procedural delays.

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