2022 (5) TMI 663 - HC - Benami Property

Offence under Prohibition of Benami Property Transactions - attachment/confiscation proceeding - HELD THAT - Considering the arguments advanced by the learned counsel for the applicant, learned Special Counsel for the Income Tax Department and going through the pleadings in the application, impugned orders as well as other relevant documents, it is evident that attachment/confiscation order has already been stayed by the Tribunal vide order dated 04.12.2019, but in the complaint, this fact is not disclosed. Rather, emphasis has been made that the property of the applicant is already adjudicated and confiscation order was already remanded by the competent authority. The matter requires consideration. Respondent may file counter affidavit within four weeks. Rejoinder affidavit, if any, may be filed within one week thereafter. List in the 3rd week of July, 2022. Till the next date of listing, impugned proceedings shall remain stayed.

Summary

Issues:
Seeking quashing of complaint under Prohibition of Benami Property Transactions Act, 1988 and summoning order; Dropping proceedings of Case No. 359 of 2021.

Analysis:
The applicant filed an application to quash a complaint under Section 53 read with Section 3 of the Prohibition of Benami Property Transactions Act, 1988 and the summoning order issued by the Additional Sessions Judge. The applicant claimed that the property in question was purchased by Rekha Devi with financial assistance from the applicant and was provisionally attached under the Act, which was upheld by the Adjudicating Officer. The applicant argued that the proceedings initiated against him were challenged before the Appellate Tribunal, which stayed the prosecution and confiscation of the property. However, the criminal complaint was filed without disclosing that the attachment proceedings were stayed by the Tribunal since 2019. The respondent opposed the prayer, stating that the applicant should present these facts before the lower court. The High Court noted that the attachment/confiscation order had been stayed by the Tribunal, which was not disclosed in the complaint. The court directed the respondent to file a counter affidavit and stayed the proceedings until the next listing date in July 2022. The parties were given the option to expedite the case before the Tribunal.

This case involves the interpretation of the Prohibition of Benami Property Transactions Act, 1988 and the legality of the complaint filed under Section 53 read with Section 3 of the Act. The key issue is the non-disclosure of the stay order by the Tribunal regarding the attachment/confiscation proceedings in the criminal complaint. The applicant argued that this non-disclosure was deliberate, while the respondent suggested presenting the facts before the lower court. The High Court found that the non-disclosure was significant and required further consideration, leading to the stay of proceedings until the matter is resolved.

The applicant's contention revolves around the procedural irregularity in the criminal complaint, emphasizing the non-disclosure of the Tribunal's stay order on attachment/confiscation proceedings. The applicant's argument is supported by the fact that the Tribunal had already stayed the prosecution and confiscation of the property, which was not mentioned in the complaint. On the other hand, the respondent did not dispute the existence of the stay order but suggested addressing the issue in the lower court. The High Court acknowledged the importance of disclosing such crucial information in legal proceedings and directed the respondent to file a counter affidavit while staying the proceedings until the next listing date.

The High Court's decision to stay the proceedings highlights the significance of transparency and full disclosure in legal matters, especially regarding crucial orders and stays issued by higher authorities like the Tribunal. The court's direction for the respondent to file a counter affidavit indicates a thorough review of the case is necessary to ensure procedural fairness and adherence to legal requirements. The option given to the parties to expedite the case before the Tribunal shows the court's commitment to resolving the matter efficiently while upholding the principles of justice and due process.