Court quashes Recovery Officer's orders, citing "illegal and arbitrary" detention. Procedural lapses noted.

The court quashed the orders of the Recovery Officer, declaring the detention and arrest of the petitioner as "patently illegal and arbitrary." It found procedural lapses in the recovery proceedings, emphasizing the failure to comply with Rule 73 of the Second Schedule to the Income Tax Act. Despite the availability of alternative remedies, the court entertained the writ petition under Article 226 due to violations of natural justice. The petitioner was released from civil prison, and the matter was remitted for a fresh decision while imposing restrictions on leaving the country and retaining the passport by the Economic Offences Wing.

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Issues Involved:
1. Validity of the orders dated 18.12.2014 and 29.12.2014 passed by the Recovery Officer.
2. Petitioner's claim of non-involvement in the management of the companies.
3. Legality of the recovery proceedings and attachment of the petitioner's bank and DEMAT accounts.
4. Petitioner's claim of being denied a fair hearing and representation by a lawyer.
5. Compliance with the procedural requirements under Rule 73 of the Second Schedule to the Income Tax Act.
6. Maintainability of the petition under Article 226 of the Constitution of India despite the availability of alternative remedies.

Issue-wise Detailed Analysis:

1. Validity of the Orders Dated 18.12.2014 and 29.12.2014:
The petitioner challenged the orders of the Recovery Officer committing him to civil prison. The court found that the Recovery Officer had not recorded the necessary satisfaction in writing as required under Rule 73(1) of the Second Schedule to the Income Tax Act. The officer failed to establish that the petitioner had either dishonestly transferred property or had means to pay but refused or neglected to do so. Consequently, the court held that the detention and arrest were "patently illegal and arbitrary" and quashed the impugned orders.

2. Petitioner's Claim of Non-involvement in the Management of the Companies:
The petitioner claimed he was a non-existing Chairman of Adan Camsof Ltd. and Kolar Biotech Ltd., with no role in their management. He stated that he signed documents under instructions from the main promoter, Rajkumar Basantani, and did not benefit from any transactions. However, the court focused on procedural lapses rather than the merits of this claim.

3. Legality of the Recovery Proceedings and Attachment of Bank and DEMAT Accounts:
The respondent initiated recovery proceedings and attached the petitioner's bank and DEMAT accounts due to unpaid penalties aggregating Rs. 1,64,81,411/-. The petitioner argued he had no access to funds to satisfy the dues. The court noted procedural lapses in the recovery process but did not delve deeply into the validity of the attachment itself.

4. Petitioner's Claim of Being Denied a Fair Hearing and Representation by a Lawyer:
The petitioner alleged that his request to be represented by a lawyer was arbitrarily rejected and that he was not given a fair hearing. The court found that the Recovery Officer had detained the petitioner on the same day as the hearing without conducting a proper inquiry, thereby violating principles of natural justice. This contributed to the court's decision to quash the detention order.

5. Compliance with Procedural Requirements Under Rule 73 of the Second Schedule to the Income Tax Act:
The court emphasized that Rule 73(1) requires the Tax Recovery Officer to record satisfaction in writing that the defaulter either transferred property to obstruct execution or had means to pay but refused or neglected to do so. The Recovery Officer failed to record such satisfaction, rendering the arrest and detention illegal. The court highlighted that mere non-payment of dues or failure to provide a repayment proposal does not justify detention.

6. Maintainability of the Petition Under Article 226 of the Constitution of India:
Despite the availability of an alternative remedy of appeal before the Securities Appellate Tribunal, the court entertained the writ petition under Article 226. The court cited precedents allowing writ jurisdiction in cases of violation of natural justice, procedural lapses, or infringement of fundamental rights. Given the petitioner's claims of arbitrary detention and denial of a fair hearing, the court found it appropriate to exercise its writ jurisdiction.

Conclusion:
The court allowed the writ petition, quashed the impugned orders, and ordered the petitioner's release from civil prison. The matter was remitted to the Tax Recovery Officer for a fresh decision in accordance with the law. The petitioner was also restricted from leaving the country during the proceedings, and the Economic Offences Wing (EOW) was directed not to return his passport.

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