2020 (2) TMI 877 - HC - Benami Property

Prohibition of Benami Property Transactions Act 'provisional attachment' of the property has been ordered till the final adjudication - power to confiscate the property - HELD THAT - Show cause notice was issued to the Appellants on 02.05.2019, which was served on 09.05.2019 and pursuant to their request, notice was also served on the Appellants in 'Hindi', by post, on 04.06.2019. On submitting a reply to the show cause notice, it was considered and the 2nd Respondent found that the particulars furnished by the Appellants did not reconcile with the materials on record. It was accordingly, that a prima facie finding was rendered to the effect that the matter required to be proceeded further; thus passing Annexure P/1 order of provisional attachment in terms of the mandate under Section 24 (5) of the Act of 1988. Annexure P/1 provisional attachment was later confirmed, pending final adjudication, vide Annexure P/2 dated 27.08.2019. Considering the sequence of events and the nature of challenge raised by the Appellants/writ Petitioners, in the light of the version put forth by the Respondents as discussed by the learned Single Judge, it is evident that no prejudice has been caused to the Appellants/Petitioners in any manner, because of the 'provisional attachment'. This is more so, in view of the submissions made by the learned counsel for the Appellants during the course of hearing, that the Petitioners/Appellants would undertake that they would not alienate the properties till the adjudication is finalized. If the Appellants do not have any intention to alienate the property, they need not feel worried about Annexures P/1 and P/2 'provisional attachment'. What will be the course of action to be ordered by the 2nd Respondent on culmination of the adjudication proceedings, is a matter which is still to be ascertained. How the properties of the Appellants/Petitioners, covered by the Annexure P/3, are going to be dealt with by 2nd Respondent is yet to be decided. Whether any provisions of the statute which are 'substantive' in character would be applied retrospectively by the 2nd Respondent, is also not known; which can be considered only after passing the final order. The very purpose of passing 'provisional order of attachment', pending adjudication, is only to see that no third party interest is created over the property. When the Appellants concede that they do not have any intent/idea to alienate the properties, there cannot be any genuine grievance in this regard as well. The Annexures P/1 and P/2 order passed by the proceedings issued by the 2nd Respondent are only of interim measure; which is only to sub-serve the final verdict and always subject to the outcome of the adjudication. This Court finds that the interference declined by the learned Single Judge is not liable to be assailed under any circumstance.

Summary

Issues Involved:
1. Prematurity of the writ petition challenging provisional attachment under the Prohibition of Benami Property Transactions Act, 1988.
2. Retrospective application of the Amendment Act, 2016.
3. Substantive vs. procedural nature of the amendments.
4. Validity of provisional attachment orders (Annexures P/1 and P/2).

Issue-wise Detailed Analysis:

1. Prematurity of the Writ Petition:
The writ petitioners, who are appellants in this case, challenged the provisional attachment of their properties under the Prohibition of Benami Property Transactions Act, 1988. The learned Single Judge dismissed the petition as premature since the matter was still pending before the competent authority and only a provisional attachment had been ordered. The appellants argued that the provisional attachment was unjustified, but the court held that the challenge was premature and that the appellants could raise their contentions before the adjudicating authority.

2. Retrospective Application of the Amendment Act, 2016:
The appellants contended that the properties were purchased before the Amendment Act, 2016, which introduced the power to confiscate benami properties, came into force on 01.11.2016. They argued that the amendments should not have retrospective effect. The court examined the legislative intent and the statutory provisions, noting that the amendments were substantive regarding punishment but procedural concerning the steps to be followed. The court referenced the Finance Minister's clarification in the Lok Sabha and various judicial precedents to support the view that the procedural aspects of the amendments could apply retrospectively.

3. Substantive vs. Procedural Nature of the Amendments:
The appellants argued that the changes brought by the Amendment Act, 2016, were substantive and thus could not be applied retrospectively. They relied on judgments from the Rajasthan High Court and the Supreme Court case of Mangathai Ammal. The respondents countered that the amendments were procedural and aimed at providing an effective mechanism for dealing with benami transactions. The court agreed with the respondents, stating that the procedural mechanisms introduced by the amendments were curative in nature and could be applied retrospectively.

4. Validity of Provisional Attachment Orders (Annexures P/1 and P/2):
The appellants challenged the provisional attachment orders, arguing that they were based on insufficient evidence and that the properties were purchased with their own funds. The court noted that the provisional attachment was an interim measure intended to prevent the creation of third-party interests in the properties until the final adjudication. The court found no prejudice to the appellants from the provisional attachment, especially since the appellants had undertaken not to alienate the properties until the adjudication was finalized. The court upheld the provisional attachment orders, emphasizing that they were subject to the outcome of the adjudication.

Conclusion:
The court dismissed the appeal, affirming the learned Single Judge's decision that the writ petition was premature. The court ruled that the appellants could raise all their contentions before the adjudicating authority. The court clarified that it had not expressed any opinion on the merits of the case and that the provisional attachment orders were interim measures subject to the final adjudication.