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2025 (5) TMI 1469 - HC - Benami PropertyProhibition of Benami Property Transactions - declaring the petitioners as Benamidars and the seized cash as benami property - HELD THAT - Since petitioners did not choose to appear on any of the dates mentioned in the notices respondent No.2 has no other option and he was forced to pass the impugned order and came to the conclusion that the transaction is benami and said cash seized is a benami property. Further it is also not the case of the petitioners that they are not being provided any opportunity to put up their case or the respondents have committed any breach of non compliance of principles of natural justice. Admittedly the petitioners disown the said property seized and also did not choose to place before the authorities as to the details of ownership of the said property. A perusal of the record would clearly show that the petitioners were given ample opportunity before passing the impugned order as such under Article 226 of the Constitution of India this Court cannot sit over the impugned order passed by respondent No.2 as an appellate authority and so also to adjudicate upon the provisional attachment order passed by respondent No.2 as respondent No.3 being the Adjudicating Authority which is competent to sit over the matter and adjudicate upon the contentions of the petitioners. On perusal of the entire material placed before this Court this Bench is of the considered opinion that though petitioners were granted an opportunity they do not even choose to respond to the notices or appear before the respondents to put up their case. Even to substantiate their contentions that they do not come within the meaning of benamidars. In the absence of the same this Court is of the opinion that there is no violation of principles of natural justice and as such nothing is there to interfere with the impugned order passed by respondent No.2. It is for the petitioners to seek appropriate remedies before Adjudicating Authority which is appropriate authority to decide over the facts whether the petitioners are benamidars and the property under possession is benami property or not. Further the judgments relied upon by the petitioners are relating to attachment of salary bank account; purchase of property; availment of loan from the respondent-Bank by mortgaging the properties and borrower defaulted in payment of loan the said bank initiated proceedings under SARFAESI Act 2002 and auction sale notice was served. Therefore the judgments relied upon by the petitioners are not applicable to the present facts of the case. This Bench is of the opinion that no substantial ground is made out by the petitioners to seek indulgence of this Court to interference with the impugned order dated 22.02.2025 passed by respondent No.2.
Issues Presented and Considered
The core legal questions considered by the Court include:
Issue-wise Detailed Analysis 1. Legality and Jurisdiction of the Impugned Order under Section 24(4)(b)(i) of the Act, 1988 Legal Framework and Precedents: Section 24(4)(b)(i) empowers the competent authority to declare property as benami if the person summoned fails to appear or furnish information. The Act defines 'benami property' under Section 2(8) and 'Benamidar' under Section 2(10). The Court referred to precedents interpreting these definitions and procedural safeguards. Court's Interpretation and Reasoning: The Court observed that the impugned order was passed after issuance of multiple summons and show cause notices under Sections 19 and 24(1) of the Act, 1988, which the petitioners failed to comply with. The authorities, therefore, proceeded ex parte relying on the material on record. The Court found no illegality or lack of jurisdiction in the respondent's action, as the procedure mandated by the Act was followed. Key Evidence and Findings: The petitioners did not appear or submit any documents to establish ownership or source of the seized cash despite repeated notices. The seized amount was deposited with the Principal Director of Income Tax. Bank statements and income tax returns did not justify possession of such cash. Application of Law to Facts: Given the petitioners' failure to respond or appear, the authorities were justified in invoking Section 24(4)(b)(i) to declare the property benami. The Court emphasized that the absence of response amounted to waiver of opportunity and justified ex parte proceedings. Treatment of Competing Arguments: Petitioners argued that the order was arbitrary and lacked jurisdiction, but the Court rejected this, noting sufficient opportunity was given and no breach of natural justice occurred. Conclusion: The impugned order is validly passed within jurisdiction and in accordance with statutory procedure. 2. Whether the Seized Cash Amounts to 'Benami Property' under the Act, 1988 Legal Framework and Precedents: 'Benami property' is defined under Section 2(8) of the Act as property held by one person but paid for by another, including proceeds from such property. The Court considered judgments cited by petitioners involving benami transactions and the scope of the definition. Court's Interpretation and Reasoning: The Court noted that the petitioners disowned the seized cash and did not claim ownership or disclose the beneficial owner, which was recorded as 'unknown'. The absence of credible explanation or documentation linking the cash to lawful sources supported the conclusion that the cash was benami property. Key Evidence and Findings: The seized cash was found in the possession of the petitioners during election-related vehicle inspections. The petitioners failed to justify the source of such large sums. The authorities, therefore, reasonably inferred the cash to be benami property. Application of Law to Facts: The Court applied the statutory definitions and found the cash falls within the scope of benami property as the beneficial owner was unknown and the petitioners failed to rebut the presumption. Treatment of Competing Arguments: Petitioners contended that cash alone cannot be benami property absent a fictitious transaction or transfer of ownership. The Court distinguished the cited precedents as involving different factual matrices such as loan defaults and bank accounts, which are not analogous to the present facts. Conclusion: The seized cash qualifies as benami property under the Act, 1988. 3. Adequacy of Opportunity and Compliance with Principles of Natural Justice Legal Framework: Principles of natural justice require that a person affected by an order be given an opportunity to be heard. The Act mandates issuance of summons and show cause notices before declaring property benami. Court's Interpretation and Reasoning: The Court found that multiple summons and notices were issued to the petitioners by registered post and email, specifying dates for appearance and submission of documents. The petitioners failed to appear or respond on all occasions. Key Evidence and Findings: The record shows detailed notices with DIN/reference numbers and dates of service. The petitioners' non-compliance was noted in official communications. Application of Law to Facts: The Court held that the petitioners waived their right to be heard by their non-appearance and non-response. No breach of natural justice occurred as the authorities provided ample opportunity. Treatment of Competing Arguments: Petitioners did not claim denial of opportunity but challenged the sufficiency of material particulars in the impugned order. The Court rejected this, noting the statutory framework and procedural compliance. Conclusion: Principles of natural justice were duly complied with. 4. Scope of Judicial Review under Article 226 of the Constitution of India Legal Framework: Article 226 permits High Courts to issue writs for enforcement of fundamental rights and for any other purpose. However, interference with quasi-judicial orders passed by specialized authorities is limited, especially when an alternative remedy exists. Court's Interpretation and Reasoning: The Court observed that the impugned order is subject to adjudication by the Adjudicating Authority under the Act, 1988. The Court declined to act as an appellate authority over the order passed by respondent No.2, emphasizing that the petitioners have appropriate statutory remedies before the designated authority. Key Evidence and Findings: The record indicated that the petitioners have not exhausted statutory remedies and the matter is pending adjudication before the competent authority. Application of Law to Facts: The Court exercised judicial restraint and refused to interfere under Article 226, directing the petitioners to seek redressal before the competent Adjudicating Authority. Treatment of Competing Arguments: Petitioners sought quashing of the impugned order on grounds of illegality and lack of jurisdiction. The Court held that such contentions are to be examined by the designated authority and not in writ jurisdiction at this stage. Conclusion: The Court declined to interfere under Article 226 and directed petitioners to pursue statutory remedies. Significant Holdings "Though petitioners were granted an opportunity, they do not even choose to respond to the notices or appear before the respondents to put up their case... In the absence of the same, this Court is of the opinion that there is no violation of principles of natural justice and as such nothing is there to interfere with the impugned order passed by respondent No.2." "It is for the petitioners to seek appropriate remedies before Adjudicating Authority, which is appropriate authority to decide over the facts whether the petitioners are 'Benamidars' and the property under possession is 'benami property' or not." "The judgments relied upon by the petitioners are relating to attachment of salary, bank account; purchase of property; availment of loan from the respondent-Bank by mortgaging the properties and borrower defaulted in payment of loan... Therefore, the judgments relied upon by the petitioners are not applicable to the present facts of the case." Core principles established include:
Final determinations on each issue are in favor of the respondents, resulting in dismissal of the writ petition and upholding the impugned order declaring the petitioners as 'Benamidars' and the seized cash as 'benami property' under the Act, 1988.
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