2021 (2) TMI 314 - HC - Benami Property

Adjudication under the Prohibition of Benami Property Transaction Act - provisional attachment order passed under section 24(4)(a)(i) of the Act - HELD THAT - We are of the view that debatable questions do arise in the present writ petition. Question is, when the law requires obtaining prior approval for passing of an order of provisional attachment under section 24(4)(a)(i) of the Act, whether such an order can be sustained when approval is granted post-facto. The second issue of substance is whether the amended definition of benami transaction in section 2(9)(D) of the Act can be applied retrospectively or it would have a prospective application. The matter would require further consideration. Issue notice.

Summary

Issues involved: Challenge to order under the Prohibition of Benami Property Transaction Act, 1988 - Lack of jurisdiction and retrospective application of amended definition of benami transaction.

Analysis:

1. Challenge to Order under the Act:
The primary challenge in the writ petition is against the order dated 11.05.2020 passed by respondent No. 4, the adjudicating authority under the Prohibition of Benami Property Transaction Act, 1988. The petitioner's counsel argued that the order lacked jurisdiction as it was affirmed without the prior approval required under section 24(4)(a)(i) of the Act. He contended that the order was passed before obtaining the necessary approval, which was only granted post-facto. Despite technical flaws in the process, the adjudicating authority overlooked these procedural issues, emphasizing the determination of whether the transaction was a benami one. Additionally, the petitioner argued that the application of section 2(9)(D) of the Act, brought in by an amendment in 2016, to a property purchased in 2010 was impermissible. The counsel relied on previous court decisions to support the argument that this provision should have a prospective application only.

2. Respondent's Opposition:
The respondent's counsel opposed the writ petition by highlighting the previous legal actions taken by the petitioner, including a filed writ petition and an interim application for stay against the order dated 11.05.2020. The court had already considered these matters, leading to the conclusion that the proceedings against the petitioner had concluded. The respondent argued that certain aspects, such as the order dated 26.04.2019 and specific prayer clauses, could not be re-agitated without leave from the court. Furthermore, it was contended that the impugned order was appealable under section 46 of the Act, making the writ petition potentially inappropriate for consideration.

3. Judicial Consideration:
Upon hearing the arguments from both parties, the court acknowledged the presence of debatable questions in the petition. The first issue raised was whether an order of provisional attachment under section 24(4)(a)(i) could be valid when the approval was granted post-facto, despite the statutory requirement of prior approval. The second significant issue was the retrospective or prospective application of the amended definition of benami transaction in section 2(9)(D) of the Act. Recognizing the complexity of these issues, the court deemed further consideration necessary and issued notice to the respondents. The court directed the respondents to file a reply affidavit, allowing the petitioner to file a rejoinder if needed. Until the next hearing on 26th February 2021, the court ordered the maintenance of the status quo regarding the property covered by the challenged order dated 11.05.2020.