2024 (5) TMI 384 - HC - Benami Property

Summoning order quashed under Section 53 PBPT Act for failing to establish essential offense ingredients

The Allahabad HC quashed a summoning order under Section 53 of the PBPT Act, finding that the prosecution failed to establish essential ingredients of the ... Benami transaction - The applicant was found in possession of a significant amount of cash during an income tax raid - whether the bare ingredients of the offence under Section 53 read with Section 3 of PBPT Act were satisfied in the present case? - applicant submit that the applicant is an innocent person and has been falsely implicated in the present case due to enmity - whether sufficient ground for proceeding exists in the case or not? - HELD THAT:- Prosecution under Section 53 of PBPT Act can be initiated only in a case where the alleged transaction is either a Benami transaction pertaining to a Benami property or has been entered in order to defeat the provisions of any law or avoid payment of statutory dues or avoid payment to creditor whereas the complaint filed against the applicant does not make any whisper in this regard. In the absence of any allegation to the effect that the alleged transaction was entered by the applicant in order to defeat the provisions of any law or avoid payment of statutory dues or avoid payment to creditor, prosecution under Section 53 of PBPT Act could not have been initiated against the applicant, thus, the impugned summoning order dated 27.02.2024 fails on this count also. It is also observed here that from the perusal of impugned summoning order dated 27.02.2024 it is evident that the learned trial court has not even applied its mind to the fact that whether the bare ingredients of the offence under Section 53 read with Section 3 of PBPT Act were satisfied in the present case or not. Further, this Court is of the view that summoning an accused is a very serious matter and the summoning order has to be passed after considering the legal aspects and material available on record in this regard Hon'ble Supreme Court of India has held that the order of issuance of process is not an empty formality. The Magistrate is required to apply his mind as to whether sufficient ground for proceeding exists in the case or not in the cases of Lalankumar Singh [2022 (10) TMI 1135 - SUPREME COURT], Pepsi Foods Ltd. [1997 (11) TMI 518 - SUPREME COURT], Mehmood UL Rehman [2015 (3) TMI 1349 - SUPREME COURT] After going through the facts and circumstances of the case, this Court finds that learned trial court has not applied its judicial mind while summoning the applicant and has completely relied on the averments made in the complaint dated 27.02.2024 and also the order of summoning is a non-speaking order, therefore, in the opinion of this Court, the applicant has made out a case for interim relief. The matter requires consideration on fact and law both. Learned Counsel for the opposite party Nos.1 and 2 prays for and is granted four weeks' time to file the counter affidavit. Two weeks' time thereafter shall be available to learned Counsel for the applicant for filing rejoinder affidavit.Accordingly, list/put up this case on 30.08.2024. Issues Involved:1. Quashing of the summoning order dated 27.02.2024.2. Legality of the complaint and proceedings under Section 53 and 3 of the Prohibition of Benami Property Transaction Act, 1988 as amended.3. Validity of provisional attachment and adjudicatory authority's order.4. Requirement of mens rea in the complaint.5. Legal aspects and application of judicial mind by the trial court.Summary:1. Quashing of the Summoning Order:The applicant sought quashing of the summoning order dated 27.02.2024 issued by the IXth Additional Sessions Judge, Lucknow, in Criminal Complaint Case No.274 of 2024, under Section 53 and 3 of the Prohibition of Benami Property Transaction Act, 1988 as amended.2. Legality of the Complaint and Proceedings:The applicant argued that the complaint and proceedings were initiated without establishing the requirement of mens rea and that the trial court overlooked the order of the Interim Board for Settlement VII, Chennai, which declared the seized cash as the applicant's income. The trial court's summoning order was termed as a non-speaking order passed in a mechanical manner.3. Validity of Provisional Attachment and Adjudicatory Authority's Order:The cash amounting to Rs. 10,74,91,000/- was provisionally attached under Section 24(4) of the PBPT Act, and the Adjudicatory Authority upheld this attachment. However, the applicant challenged this order, and the appeal is still pending. The applicant contended that the proceedings should be kept in abeyance until the appeal is resolved.4. Requirement of Mens Rea in the Complaint:The applicant contended that the complaint lacked allegations of mens rea, which is essential for prosecution under Section 53 of the PBPT Act. The trial court failed to consider whether the bare ingredients of the offence were satisfied.5. Legal Aspects and Application of Judicial Mind by the Trial Court:The applicant's counsel argued that the summoning order did not reflect the application of judicial mind and was passed without considering the legal aspects and material on record. They cited Supreme Court judgments emphasizing that the issuance of process is not an empty formality and requires the Magistrate to apply his mind to whether sufficient ground for proceeding exists.Court's Findings:The court found that the trial court did not apply its judicial mind and relied solely on the complaint's averments. The summoning order was a non-speaking order, and the prosecution under Section 53 of PBPT Act lacked necessary allegations. The court granted interim relief, staying further proceedings in the case until the next hearing.Next Steps:The opposite party was granted four weeks to file a counter affidavit, and the applicant was given two weeks thereafter to file a rejoinder affidavit. The case was listed for further hearing on 30.08.2024, with proceedings stayed till then.