TaxTMI 
TaxTMI 
TaxTMI 
2015 (4) TMI 413
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....ent had also issued notice of demand dated 11.7.2014 and 16.7.2014 under Rule III and Part I of second Schedule to the Income Tax Act 1961 r/w. Section 28A of the Securities and Exchange Board of India, 1992, whereby the petitioner was directed to pay dues of Rs. 37,62,644/- , Rs. 81,98,863/- and Rs. 45,19,904/- i.e. total aggregate of Rs. 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 Rs. 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 b....
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....imposed penalty of Rs. 25 lakhs, and by order dated 10.6.2010 the Adjudicating Officer had imposed penalty of Rs. 55 lakhs for violationg Regulations 3(a), 3(c), 4(1), 4(2)(a) and 4(2)(e) of SEBI Regulations 2003. 9. The respondent has stated that the petitioner neither challenged the said order nor paid the penalty aggregating to Rs. 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 Rs. 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 Rs. 5,160.82 no further bank account details of the petitioner were traceable. The petitioner was therefore directe....
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....of the Recovery Officer to give a proposal of settlement. Learned Counsel therefore claims that the order of detention is arbitrary and illegal and is in violation of the principles of 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 Rs. 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....
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.... SC 86 and M/s K.S. Venkataraman and Co. (P) Ltd. v. State of Madras, AIR (1966) SC 1089, held that Article 226 of the Constitution confers on all the High Courts a very 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 Cou....
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....ined in appropriate cases where there is violation of principles of natural justice, or procedure required for decision has not been adopted or there is an allegation 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....
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....s property. (b) that the defaulter has, or has had since [the drawing up of the certificate by the Tax Recovery Officer ], the means 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 ....
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....14 and the third dated 16.07.2014, directing to pay dues with interest aggregating to Rs. 1,64,81,411/-. 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 f....
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....that upon issuance of the attachment orders, none of the banks have reported any accounts in the name of the petitioner, except Punjab National Bank at Mira Road (E) branch and only an amount of Rs. 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 t....