TMI Blog2015 (4) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... or where the orders or proceedings are wholly without jurisdiction or the virus of an Act is challenged or when it is shown that it would be a case of palpable injustice to the petitioner to force him to adopt remedies provided by the statute. Refered case 2005 (7) TMI 353 - SUPREME COURT OF INDIA In the present case, the petitioner has claimed that he has been detained in a summary and arbitrary manner. The petitioner has claimed that his arrest is illegal and is in contravention of principles of natural justice. The petitioner, in short, has made an allegation of infringement of fundamental rights. In the light of such challenge, this Court is not precluded from examining the legality and propriety of the impugned order notwithstanding availability of alternative remedy. In the instant case, the Tax Recovery Officer had not recorded his satisfaction with reasons in writing, as regards the existence of two situations, which are specified in Clause (a) of Rule 73(1). The Tax Recovery Officer has not detained and arrested the petitioner on the ground that he had transferred, concealed or removed any pat of his property. The respondent had stated in the affidavit that upon iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay dues of ₹ 37,62,644/- , ₹ 81,98,863/- and ₹ 45,19,904/- i.e. total aggregate of ₹ 1,64,81,411/- along with further interest and expenses within fifteen days from the respective notices. 4. The petitioner had claimed that in the year 2004 he was a Director of KSPL and was paid monthly salary of ₹ 15,000/-. The petitioner has claimed that he had not received any benefits from ACL/KBL. He had submitted that he used to sign the documents as per the instructions of Shri. Rajkumar Basantani who was the main promoter of both the companies. The petitioner had claimed that he was only a front for the promoters of the said companies and that he had not benefited from any of the alleged transactions. 5. The petitioner claims that pursuant to the said notices, the respondent has attached his bank accounts as well as DEMAT accounts. Under the circumstances, he has no access to any funds in order to satisfy any alleged amounts claimed by the respondent in the said certificates. 6. The petitioner has stated that vide notices dated 21.11.2014 and 10.12.2014 he was called upon to show cause before the Recovery Officer of the respondent as to why he should n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003. 9. The respondent has stated that the petitioner neither challenged the said order nor paid the penalty aggregating to ₹ 1,10,00,000/- despite various reminders, hence the respondent Board initiated prosecution proceeding under Section 20 of SEBI Act before the Magistrate Court at Bandra and Sessions Court at Mumbai. 10. It is the case of the respondent that in exercise of powers conferred under Section 28A of SEBI, 1992, the respondent initiated proceedings against the petitioner by two certificates, one dated 11.7.2014 and another certificate dated 16.7.2014 whereby the petitioner was directed to pay dues aggregating to ₹ 1,61,84,411/-along with further interest and expenses. The petitioner neither responded to the said notices nor made the payment. The Recovery Officer therefore attached all the Bank and DEMAT Accounts. However, except the amount of ₹ 5,160.82 no further bank account details of the petitioner were traceable. The petitioner was therefore directed to appear before the Recovery Officer. However, the petitioner forwarded a reply dated 11.11.2014 stating that he was not liable. The respondent therefore issued notice under Rule 73(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f natural justice. 15. Learned Senior Counsel Shri Khambatta has raised the issue of maintainability of the petition in view of the efficacious and alternative remedy of appeal before the Securities Appellate Tribunal. Learned Senior Counsel Shri Khambatta has contended that the petitioner had not challenged the order of penalty, hence the same had attained finality. The petitioner had not paid the dues despite giving sufficient opportunity. Referring to the averments in the affidavit-in-reply, learned Counsel for the respondent has urged that though the Bank and DEMAT Account of the petitioner were attached, only an amount of ₹ 5160.82 was traceable in the account held by the petitioner in Punjab National Bank at Mira Road. Learned Senior Counsel Shri Khambatta therefore claims that this situation necessitated the Recovery Officer to exercise the powers conferred under the SEBI Act and issue notices as stipulated under Rule 73. Learned Senior Counsel Shri Khambatta has submitted that the petitioner was given fair hearing as well as sufficient time and opportunity to make the payment, despite which the petitioner has failed to pay the dues and has also failed to show the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wide power in the matter of issuing writs. However, the remedy of writ is an absolutely discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted. 21. Another Constitution Bench of this Court in State of Madhya Pradesh and Anr. v. Bhailal Bhai etc., AIR (1964) SC 1006, held that the remedy provided in a writ jurisdiction is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defence legitimately open in such actions. The power to give relief under Article 226 of the Constitution is a discretionary power. Similar view has been reiterated in N.T. Veluswami Thevar v. G. Raja Nainar and Ors., AIR (1959) SC 422; Municipal Council, Khurai and Anr. v. Kamal Kumar and Anr., AIR (1965) SC 1321; Siliguri Municipality and Ors. v. Amalendu Das and Ors., AIR (1984) SC 653; S.T. Muthusami v. K. Nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of infringement of fundamental rights, or where the orders or proceedings are wholly without jurisdiction or the virus of an Act is challenged or when it is shown that it would be a case of palpable injustice to the petitioner to force him to adopt remedies provided by the statute. 19. In the present case, the petitioner has claimed that he has been detained in a summary and arbitrary manner. The petitioner has claimed that his arrest is illegal and is in contravention of principles of natural justice. The petitioner, in short, has made an allegation of infringement of fundamental rights. In the light of such challenge, this Court is not precluded from examining the legality and propriety of the impugned order notwithstanding availability of alternative remedy. 20. The next question which, therefore, follows is whether the arrest of the petitioner is in accordance with law. It is not in dispute that the Adjudicating Officer of the respondent vide orders dated 28.4.2010 and 10.6.2010 had called upon the petitioner to pay penalty aggregating to ₹ 1,10,00,000/- for committing fraudulent activities. The petitioner had not challenged the said order and had not paid the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. Sub-Rule (2) of Rule 73 provides that notwithstanding anything contained in sub-rule (1), a warrant for the arrest of the defaulter may be issued by the Tax Recovery Officer if the Tax Recovery Officer is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate, the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Tax Recovery Officer. Whereas Sub-Rule(3) of Rule 73 deals with other contingencies and provides where appearance is not made in obedience to a notice issued and served under sub rule (1), the Tax Recovery Officer may issue a warrant for the arrest of the defaulter. Sub-Rule (4) mandates that every person arrested in pursuance of a warrant of arrest under [this rule] shall be brought before the Tax Recovery Officer [issuing the warrant] as soon as practicable and in any event within twenty-four hours of his arrest (exclusive of the time required for the journey): Rule 74 which provides for hearing of the defaulter states that when a defaulter appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The petitioner having failed to pay the dues was served with a notice dated 21.11.2014 and subsequent notice dated 10.12.2014, whereby the petitioner was informed that recovery proceedings were initiated against him. The petitioner was directed to appear in person before the Recovery Officer on 18.12.2014 and show cause why he should not be committed to the civil prison. 25. The notice dated 10.12.2014 was followed by a hearing on 18.12.2014 and consequent order dated 18.12.2014 under Rule 75 and 76 of Part V of Schedule II. The impugned order dated 18.12.2014 states that the petitioner had failed to pay the amounts specified in the notice of demand. Hence, he was served with a notice under Rule 73 (1). The impugned order states that the petitioner had appeared before the Tax Recovery Officer on 18.12.2014 and that in the course of the proceedings the petitioner was advised to make payment towards the dues and or submit a proposal for payment of dues. The impugned order further states that the defaulter i.e. the petitioner herein had failed to furnish any substantial proposal for payment of the dues, except stating that he was not responsible for any activities for which penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of the petitioner, except Punjab National Bank at Mira Road (E) branch and only an amount of ₹ 5160.82 was recovered by the respondent Board. By these averments, the respondent has sought to justify the arrest. Needless to state that having failed to record the reasons as regards existence of the situation in clause (a), the respondent cannot rectify the lacuna by stating the reasons in the reply. 30. It is also not the case of the Respondent Authority that the petitioner had failed to pay to dues despite having means to pay the arrears or some substantial part thereof. On the contrary, a bare perusal of the impugned order reveals that the petitioner was detained and arrested for non-payment of dues and further for not giving a proposal of payment. 31. Needless to state that Rule 73 does not confer power on the Tax Recovery Officer to arrest and detain the defaulter for not giving a proposal for payment of dues. Ordering arrest and detention for not giving a proposal of repayment is a sheer abuse of power. Similarly, in the absence of the finding that the petitioner had means to pay, the mere nonpayment of dues does not constitute neglect or refusal to pay. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as required by Rule 73(1) r/w 76(1). 36. As stated earlier, the arrest and detention of the petitioner is illegal, hence, he is entitled to be released forthwith. The apprehension of the respondent that the petitioner may go abroad if released, can be alleviated by imposing appropriate conditions and or securing an undertaking that he will not leave the country during the pendency of the proceedings. Learned Counsel representing the petitioner has also stated that the passport of the petitioner is already attached by the E.O.W. Crime Branch, Mumbai and there is no possibility of the petitioner leaving the country. 37. Under the circumstances, we pass following order :- ORDER (i) The Writ Petition is allowed. (ii) The impugned orders dated 18.12.2014 and 29.12.2014 are quashed and set aside. (iii) The petitioner is ordered to be released from the civil prison forthwith. (iv) The matter is remitted to the Tax Recovery Officer with directions to decide the same afresh in accordance with law within a period of three weeks from the date of receipt of this order. (v) The petitioner shall not leave the country during the pendency of the proceedings before the Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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