2017 (8) TMI 383 - HC - Benami Property

Judicial review by adjudicating authority - Prohibition of Benami Property Transaction Act, 1988 - Held that - After providing due opportunity of hearing to alleged Benamindar, adjudicating authority may pass the order to declare the property as Benami Property and confirm the attachment order or he may hold that the property cannot be treated as Benami Property . In that case, he may revoke the attachment order. Pertinently, as per Sub-section (6) of Section 26, the adjudicating authority may at any stage of proceeding, either on the application of any party or suo-moto strike out the name of any property improperly joined or add the name of any person whose presence before the adjudicating authority may be necessary to enable him to adjudicate upon and settle all the questions involved in the reference. In this view, the principles of natural justice are codified in terms of Subsection (6) of Section 26 of the Act.The impugned order is subject to judicial review before the adjudicating authority. The order passed by the adjudicating authority can be assailed before the appellate tribunal constituted under Section 31 of the Act. The order of appellate tribunal can also be called in question by preferring appeal to the High Court within a period of 60 days. A microscopic reading of provisions make it clear that principles of natural justice are reduced in writing in the shape of amendment in the said act. The amended provisions contains a complete code in itself. In the present case show cause notice has been issued, opportunity has been given to the petitioner. The order impugned is provisional/tentative in nature. It is subject to judicial review by adjudicating authority. If order of adjudicating authority goes against the petitioner, the further forums of judicial review of said order is available to the petitioner before the appellate tribunal and then before this Court. Hence,against the tentative/provisional order, no interference is warranted by this court at this stage. As per the scheme of the Act, the petitioner can raise all possible grounds before the adjudicating authority. The adjudicating authority is best suited and statutorily obliged to consider all relevant aspects. Thus, at this stage no case is made out for interference.

Summary

Issues:
1. Violation of principles of natural justice by the Initiating Officer under the Prohibition of Benami Property Transaction Act, 1988.
2. Provisional attachment order issued under Section 24(4) of the PBPT Act.
3. Jurisdiction and powers of the adjudicating authority under Sections 24 and 26 of the PBPT Act.
4. Judicial review and appeal mechanisms under the PBPT Act.

Analysis:

Issue 1: Violation of principles of natural justice
The petitioner challenged the order of the Initiating Officer prohibiting the transfer of property, alleging a violation of natural justice principles. The petitioner argued that the show cause notice was issued without documentary evidence and that the documents requested were not provided. The court noted that the provisional attachment order was issued under Section 24(4) of the PBPT Act and subject to adjudication. The court highlighted Section 26(3) which mandates the adjudicating authority to consider replies, conduct inquiries, and provide an opportunity to stakeholders before passing an order on whether the property is benami or not.

Issue 2: Provisional attachment order under Section 24(4)
The court emphasized that the provisional attachment order was issued with the prior approval of the approving authority but remained subject to the adjudicating authority's necessary order. The Initiating Officer's obligation to refer the case to the adjudicating authority under Section 24(5) was highlighted. The court explained the process of reference, notice issuance, and the adjudicating authority's examination of the issue and relevant material under Section 26(3).

Issue 3: Jurisdiction and powers of the adjudicating authority
The court analyzed Section 26(3) in detail, outlining the adjudicating authority's responsibilities, including examining replies, conducting inquiries, considering relevant materials, and providing an opportunity for stakeholders to be heard. The court noted that the adjudicating authority could declare the property as benami or revoke the attachment order based on the evidence and submissions before it. The court highlighted the provisions for adding or striking out parties during the proceedings under Section 26(6).

Issue 4: Judicial review and appeal mechanisms
The court discussed the availability of judicial review before the adjudicating authority, appeal to the appellate tribunal under Section 31, and further appeal to the High Court within 60 days. The court emphasized that the principles of natural justice were codified in the Act, providing a comprehensive framework for review and appeal. The court cited a previous case to differentiate situations where natural justice principles were violated and where they were upheld, concluding that no interference was warranted at the current provisional order stage.

In conclusion, the court dismissed the petition, noting that the adjudicating authority had scheduled a hearing, and the petitioner could raise all grounds during that process. The court highlighted the statutory obligations and review mechanisms available under the PBPT Act, emphasizing the importance of following due process and exhausting available remedies before seeking judicial intervention.