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TMI Blog2009 (10) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... r", the fact that such money was fraudulently obtained not having been disputed by the CEGAT.? 2. In order to answer the issue, a few facts will have to be noted. The respondent is an owner of a building. One Shri Nawal Kishore Bangard through his three firms fraudulently obtained drawback amounts. Shri Bangard from the money so received parted with the substantial part of the money in favour of a relative Smt. Vinita Lakhotia. Thereafter Smt. Vinita Lakhotia from the sum of Rs.3 crores received by her had paid an amount of Rs.90.93 lacs towards making payment of earnest money to the respondent herein for the purchase of office premises at 125, Free Press House, Nariman Point, Mumbai. 3. The applicant on coming to know of the fraudulent act of Shri Nawal Kishore Bangard initiated proceedings for recovery of the drawback amount fraudulently received. The Commissioner of Customs by his order dated 11th June 1998 was pleased to confirm the demand of drawback in terms of the order. In the order it was also noted that all proceeds and/or deposits against the properties surrendered amongst others by Smt. Vinita Lakhotia shall be appropriated and adjusted against the demand through pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted in fixed deposit. Further, liberty was given to the respondent to take appropriate proceedings which it may be entitled to in law for challenging the orders dated 24th November 1997, 2nd December 1997 and notice of attachment dated 10th December 1998 as also the order of attachment dated 10th December 1998 against the Assistant Commissioner of Customs (the respondent no.2 in the appeal before the Supreme Court). 7. Subsequent to that, the respondent and another were pleased to prefer an appeal to the Commissioner of Customs (Appeals). The stand of the respondent was that the order of attachment was without authority of law. They had entered into an agreement for sale of the property with one M/s Utopian Financial Solution Pvt. Ltd. The agreement was terminated by a subsequent letter of 10th January 1998. The purchaser was informed of forfeiture of earnest money deposit. There were no customs dues outstanding against them and further the ownership of the property had not passed on to the proposed buyer against whom the customs dues may be outstanding and as such the order of attachment was without jurisdiction. 8. The learned Appellate Authority recorded a finding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Commissioner (Appeals). 10. Reference by the Revenue is in respect of the said order. We may only reiterate as noted by the Tribunal that the agreement for sale was entered into on 17th July 1997 and the earnest money was paid on the same date. The order of termination of the agreement and forfeiture of the earnest money deposit was communicated by letter of 10th January 1998. The notice of attachment with a copy to the respondent is dated 10th December 1998. It is therefore clear that the termination of agreement and forfeiture of the amount took place much earlier to the order of attachment. The respondent itself came to know of the fraud on 16th October 1997. 11. At the hearing of this application, on behalf of the applicant his learned counsel has submitted that the application raises questions of vital importance and there are substantial questions of law. It is submitted that the learned Tribunal misdirected itself in law in holding that as the respondent had received the amount after the order of 11th June 1998 and hence not within the scope of the order passed under Rule 4 and hence not recoverable in terms of the Rules. The sum had been paid by the purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply Co. (P) Ltd., (1970) 77 ITR 20 (SC), the Supreme Court was once again pleased to observe that when the matter is selfevident the High Court was fully justified in declining to concede the prayer for reference. Therefore, if there is no substantial question of law and even if there be a substantial question of law if the matter is selfevident, the High Court need not ask for a reference. 14. Having so said, we may now consider whether the matter is selfevident. As earlier set out, there is no dispute that the respondent is not defaulters. The entire contention has been that the respondent has received monies from a defaulter and in these circumstances, the applicant was entitled to attach the property of the respondent. There is also no dispute as according to the applicant itself, the respondent is the owner of the property. Could therefore the amounts, which had passed into the hands of the respondent out of the purported money fraudulently received by way of drawback, be attached. It is also not disputed that the respondent had terminated the agreement and forfeited the earnest money. Out of the money deposited, the respondent returned the sum of Rs.45,46,500/, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier, starts with the word "any sum payable by any person". Therefore, it could be contended that the expression "any person" considering the expression "under the control" in section 142(1)(c)(ii) is wide enough and it would also be a person like the respondent who has received the monies from the defaulter. Therefore, the expression "person" can include a person other than the defaulter and may include a person like the respondent who had received moneys for purchase of a flat purportedly out of the drawable amount. 17. The first question to be answered would be what is the movable or immovable property belonging to or under the control of such person. What the respondent had received was earnest money deposit towards an agreement for sale of their property (flat). Money had been paid. The question would be whether, in these circumstances, that money could be attached and/or directed to be returned. For that purpose, we may gainfully consider the judgment of the Supreme Court in State Bank of India v. Rajendra Kumar Singh, AIR 1969 SC 401. In that case, the 3rd Respondent before the Supreme Court had come in possession of a sum of Rs.1,50,000/in government currency notes by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, that money could be recoverable in the hands of the respondent. Even otherwise, what is attached is not the money but the immovable property of the respondent. 18. The evidence on record is that the respondent terminated the agreement and forfeited the earnest money deposit on 10th January 1998 much before the notice for order of attachment. The respondent, therefore, appropriated the money by way of penalty for breach of the contract. There is no decree of a court or any authority holding that the transaction itself was fraudulent and/or the money could not have been forfeited by way of penalty. As long as the respondent holds on the money as its own and not on behalf of the defaulters, in the absence of any finding against the respondent that the act of forfeiture of the earnest money deposit is not legal, it cannot be said that the respondent would be that "other person" from whom recovery could be made of the money which was the subject matter of the fraud. If the money cannot be attached, the property which belongs to the respondent who is not a defaulter cannot be attached. In our opinion, the matter is selfevident. The issue has been pending in this Court since ..... X X X X Extracts X X X X X X X X Extracts X X X X
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