2021 (4) TMI 1108 - HC - Benami Property

Prohibition of Benami Property Transactions - petitioners contend that the impugned show cause notices have been issued under the 1988 Act which do not record any reasons as mandated by law - HELD THAT - Bombay High Court judgment in Joseph Isharat 2017 (3) TMI 1618 - BOMBAY HIGH COURT and decision in Niharika Jain 2019 (7) TMI 1001 - RAJASTHAN HIGH COURT are not binding on this Court even though they are having persuasive effect. As already concluded earlier, the Division Bench Judgment in M/s. Ganpati Dealcom Pvt. Ltd 2020 (3) TMI 899 - SUPREME COURT is binding upon this Court even though the operation of the said judgment has been stayed by the Supreme Court. Accordingly, we are prima facie of the opinion that the writ petitioners are entitled to interim orders at this stage. However, I am of the further view that the Revenue is to be protected as the matter is sub-judice before the Supreme Court. Accordingly, the following interim orders are passed A. The reference referred to in Section 24(5) of the 1988 Act shall not be treated as final and shall only be treated as provisional during the whole period, the writ applications are pending before this Court. B. Subject to its result, the reference will be treated as final. Thereafter, time to pass the adjudication order under Section 26(7) of the 1988 Act will start to run. Hence, it follows that the respondent authorities will not take any further steps in the matter till the disposal of these writ applications. C. The writ petitioners shall not sell, otherwise transfer, deal with, encumber or part with possession of the subject properties till the disposal of these writ applications. The respondent authorities are granted a period of six weeks to file their affidavits-in-opposition from date. Affidavits-in-reply, if desired to be submitted by the writ petitioners, be submitted within a period of two weeks thereafter.

Summary

Issues Involved:
1. Validity of show cause notices under the Prohibition of Benami Property Transactions Act, 1988.
2. Retrospective applicability of the 2016 amendment to the 1988 Act.
3. Binding nature of precedents from other High Courts.
4. Effect of a stay order by the Supreme Court on the binding nature of a High Court judgment.

Issue-wise Detailed Analysis:

1. Validity of Show Cause Notices:
The petitioners challenged the show cause notices issued under Section 24(3) of the Prohibition of Benami Property Transactions Act, 1988 (the '1988 Act'). They argued that the notices did not record any reasons as mandated by law, making them invalid.

2. Retrospective Applicability of the 2016 Amendment:
The primary contention was the 'retrospective applicability' of the 1988 Act as amended by the 2016 Act. The petitioners argued that the proceedings could not be initiated under the 1988 Act because the amendment came into force on November 1, 2016, and the properties in question were purchased before this date. The Division Bench judgment in M/s. Ganpati Dealcom Pvt. Ltd v. Union of India held that the 2016 amendment to the 1988 Act was prospective and not retrospective. This interpretation was supported by judgments from the Bombay High Court in Joseph Isharat v. Rozy Nishikant Gaikwad and the Rajasthan High Court in Niharika Jain v. Union of India.

3. Binding Nature of Precedents from Other High Courts:
The court examined whether the decisions of other High Courts, such as the Bombay and Rajasthan High Courts, were binding. It was concluded that the decisions of one High Court are not binding precedents on another High Court but have persuasive value. This principle was supported by the Supreme Court's ruling in Valliama Champaka Pillai v. Sivathanu Pillai and the Bombay High Court's decision in Commissioner of Income Tax v. Thana Electric Supply Ltd.

4. Effect of a Stay Order by the Supreme Court on the Binding Nature of a High Court Judgment:
The court discussed the impact of the Supreme Court's stay order on the Division Bench ruling in M/s. Ganpati Dealcom Pvt. Ltd. It was noted that a stay order does not amount to a 'declaration of law' under Article 141 of the Constitution and does not destroy the binding effect of the High Court's judgment as a precedent. This was supported by the Supreme Court's ruling in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association and the Division Bench of the Calcutta High Court in Pijush Kanti Chowdhury v. State of West Bengal.

Interim Orders:
Given the binding nature of the Division Bench judgment in M/s. Ganpati Dealcom Pvt. Ltd., the court granted interim relief to the petitioners:
A. The reference under Section 24(5) of the 1988 Act will be treated as provisional during the pendency of the writ applications.
B. The respondent authorities will not take any further steps until the disposal of the writ applications.
C. The petitioners are restrained from selling, transferring, or dealing with the subject properties until the writ applications are resolved.

Conclusion:
The court held that the Division Bench judgment in M/s. Ganpati Dealcom Pvt. Ltd. is binding despite the Supreme Court's stay order. The decisions from other High Courts have persuasive value but are not binding. The petitioners were granted interim relief, and the respondent authorities were given six weeks to file their affidavits-in-opposition.