Petition challenging summons and provisional attachment orders under Benami Act Sections 19 and 24 dismissed

The HC dismissed the petition challenging summons under Section 19 and provisional attachment orders under Section 24 of the Benami Act. The petitioner, acting as a conduit through shell companies with fictitious existence, channelized money from undisclosed sources into property purchases. The court found prima facie material indicating transactions involved fictitious consideration sources under Section 2(9)(D) of the Benami Act. The HC ruled that investigating and adjudicating authorities had proper jurisdiction, noting the Act provides a self-contained code under Section 26. The petitioner was directed to participate in ongoing proceedings before the Adjudicating Authority, with statutory remedies available under Sections 30 and 31.

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Issues Involved:
1. Jurisdiction of respondent-authorities under the Benami Act.
2. Retrospective application of the 2016 Amendment to the Benami Act.
3. Compliance with principles of natural justice.
4. Maintainability of writ petition under Article 226 of the Constitution of India.

Summary:

1. Jurisdiction of respondent-authorities under the Benami Act:
The petitioner challenged the summons issued u/s 19 and the provisional order of attachment u/s 24 of the Benami Act. The petitioner argued that the respondent-authorities lacked jurisdiction to initiate proceedings under the Benami Act. They contended that the basic ingredients for assumption of jurisdiction under the Benami Act were not fulfilled. The petitioner disclosed the source of purchase money as loans from other companies, arguing that the transactions did not fall within the purview of Section 2(9) of the Act. The respondents relied on Section 2(9)(D), which includes transactions where the person providing the consideration is not traceable or is fictitious. The court held that there was no ex facie erroneous assumption of jurisdiction by the authorities under the Benami Act.

2. Retrospective application of the 2016 Amendment to the Benami Act:
The petitioner argued against the retrospective application of the 2016 Amendment, citing Union of India and another Vs. Ganpati Dealcom Private Ltd., arguing that the transactions occurred prior to the 2016 Amendment. The court noted that the definition of "benami transactions" had been altered by the 2016 Amendment, introducing sub-clause (D). The court did not find merit in the argument against the retrospective application in this context.

3. Compliance with principles of natural justice:
The petitioner argued that the principles of natural justice were not met, as there was no hearing before the issuance of the provisional attachment order u/s 24(3). The court observed that Section 24 does not require a prior opportunity of hearing before issuing a provisional attachment order, as the alleged benamidar gets a right of hearing under Section 26. The petitioner had the opportunity to reply to the show-cause notice, which they did. The court held that the principles of natural justice were codified in Section 26 and complied with.

4. Maintainability of writ petition under Article 226 of the Constitution of India:
The petitioner contended that the writ petition was maintainable, citing similar cases. The court referred to multiple judgments, including Union of India and Anr. Vs. Kunisetty Satyanarayana, where it was held that ordinarily a writ petition should not be entertained against a show-cause notice or provisional attachment order. The court concluded that a strong jurisdictional objection is required to challenge such notices under Article 226. In this case, the court found no ground to interfere with the impugned notice or provisional orders, as the matter was already referred to the Adjudicating Authority u/s 26 of the Benami Act.

Conclusion:
The writ petition was dismissed, with the court emphasizing that the petitioner has ample remedies under Sections 26 and 27, and by way of appeal under Sections 30 and 31 of the Benami Act. The findings were of a tentative nature, and the Adjudicating Authority was directed to act independently in accordance with law.

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