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2022 (7) TMI 779 - HC - Benami PropertyBenami Transactions - Notice and attachment of property involved in benami transaction - applicability of the principles of natural justice and fair play - HELD THAT - Sub section (3) to section 24 states that the Initiating Officer, who is of the opinion that the person in possession of the property held benami, may alienate the property during the period specified in the notice, may, with the previous approval of the Approving Authority, by order in writing, attach the property provisionally, for a period of 90 days from the last day of the month in which the notice under section 24(1) is issued. According to section 24(4)(a)(i), the Initiating Officer, after conducting enquiry and calling for reports / evidence and taking into account all the relevant materials, shall pass an order continuing the provisional attachment of the property till the passing of the order by the Adjudicating Authority under sub section (3) of section 26. Under section 24(4)(a)(ii), the Initiating Officer may revoke the provisional attachment of the property with the prior approval of the Approving Authority. Section 24(5) requires the Initiating Officer, who passes an order continuing the provisional attachment of the property under section 24(4)(a)(i), to draw up a statement of the case and refer it to the Adjudicating Authority, within fifteen days from the date of the attachment. As noticed earlier, the appellants in the writ proceedings, questioned the action of the first respondent under section 24(4)(a)(i) of the Act, in ordering continuance of the attachment made under section 24(3) till the final order under section 26(3) is passed by the Adjudicating Authority. Upon considering the rival submissions and the decisions relied on by the parties, the learned Judge has dismissed the writ petitions filed by the appellants, along with other connected cases, by the common order dated 25.10.2021. As grievance of the appellants is that the first respondent did not furnish the entire documents relied on by them, nor provided any opportunity to the appellants to cross examine the persons whose statements have been referred to in the impugned proceedings and as such, the orders passed under section 24(4) of the Act, which were impugned in the writ petitions, are arbitrary, illegal and violative of the principles of natural justice. Whereas, it is the specific stand of the respondents that they have supplied the required documents to the appellants and that, there is no provision for providing an opportunity to cross examine the witnesses from whom they have collected the information regarding benami properties, at the preliminary stage and therefore, the question of violation of the principles of natural justice does not arise herein. Concededly, in the notices dated 01.11.2019 issued under section 24(1) of the Act, the first respondent has set out the reasons for forming an opinion that the appellants are benamidars in respect of the properties in question; and they were called upon to show cause as to why the properties should not be treated as benami properties, on or before 18.11.2019. Though the appellants raised their objections to the same, failed to produce the documents called for by the first respondent, to show that the alleged transactions were reversed subsequently, but they complained that there is no fair play on the part of the respondent authorities, while passing orders under section 24(4) of the Act. As we are of the opinion that in the absence of any provision of law as well as the compelling circumstances warranting the respondent authorities to provide an opportunity of cross examination of witnesses, whose statements have been relied on by the respondent authorities, to the appellants at the stage of section 24 proceedings, the plea raised by the appellants in this regard, cannot be countenanced. No error in the orders passed by the first respondent, under section 24(4) of the Act, as an interim measure, in order to protect the interest of the Revenue. The learned Judge has also rightly affirmed the same and directed the respondent authorities to proceed further in accordance with law. Thus, the appellants have not made out any case to interfere with the order impugned herein as well as the orders impunged in the writ petitions at this stage.
Issues Involved:
1. Legality of the orders dated 29.01.2020 under Section 24(4) of the Prohibition of Benami Property Transactions Act, 1988. 2. Alleged violation of principles of natural justice by not providing documents and opportunity to cross-examine witnesses. 3. Prima facie satisfaction and the scope of preliminary enquiry under Section 24 of the Act. 4. Applicability of the principles of natural justice in the context of the Act. 5. The scope of judicial review at the stage of provisional attachment under Section 24. Detailed Analysis: 1. Legality of the Orders under Section 24(4): The appellants challenged the orders dated 29.01.2020 passed under Section 24(4) of the Prohibition of Benami Property Transactions Act, 1988, seeking to quash them as illegal, arbitrary, and without jurisdiction. The orders were issued for the continuance of the provisional attachment of the properties till the order of the Adjudicating Authority under Section 26(3) of the Act. The court upheld the legality of these orders, stating that the orders were provisional and interim measures to protect the interest of the Revenue. 2. Alleged Violation of Principles of Natural Justice: The appellants contended that the first respondent did not furnish the documents relied upon nor provided an opportunity to cross-examine the witnesses whose statements were referred to in the proceedings. The court observed that the principles of natural justice are flexible and depend on the facts and circumstances of each case. It was noted that the proceedings under Section 24 only require a prima facie opinion as to the benami nature of the transaction and that the appellants failed to furnish necessary documents to substantiate their stand. The court cited several precedents to conclude that the opportunity for cross-examination is not mandatory at the preliminary stage and is only required during the adjudication proceedings. 3. Prima Facie Satisfaction and Scope of Preliminary Enquiry: The court emphasized that the enquiry under Section 24 is preliminary, based upon prima facie reasons and conclusions. It is intended to form an initial opinion on whether the property is benami. The detailed verification of evidence is reserved for the adjudication stage. The court supported this view by referring to the statutory provisions and relevant case law, highlighting that the process of provisional attachment is of a narrower scope compared to the adjudication process. 4. Applicability of Principles of Natural Justice: The court reiterated that the principles of natural justice are not rigid and their application depends on the statutory provisions and the specific circumstances of each case. It was held that the appellants were given sufficient opportunities to present their case and that the requirement for providing documents and cross-examination arises only at the adjudication stage, not during the preliminary enquiry under Section 24. 5. Scope of Judicial Review at the Stage of Provisional Attachment: The court noted that judicial review at the stage of provisional attachment under Section 24 is limited. The provisional orders are subject to further review and adjudication by the Adjudicating Authority. The court cited several judgments to support the view that interference by the court at the preliminary stage is unwarranted and that the appellants have the opportunity to raise all their contentions during the adjudication proceedings. Conclusion: The court dismissed the writ appeals, affirming the legality of the orders passed under Section 24(4) of the Act. It held that the appellants' contentions regarding the violation of principles of natural justice and the need for cross-examination were premature and should be addressed during the adjudication process. The court directed the respondent authorities to proceed with the adjudication in accordance with the law, providing the appellants with the opportunity to present their case comprehensively before the Adjudicating Authority.
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