TaxTMI 
TaxTMI 
2021 (6) TMI 6
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....r Mr. R.Sivaraman (in all WPs) For the Respondents : Mrs.M.Sheela, Special Public Prosecutor (in all WPs) COMMON ORDER These Writ Petitions are filed challenging orders passed by the Adjudicating Authority in terms of Section 26(3) of the Prohibition of Benami Property Transactions Act, 1988 (in short 'Act') dated 26.08.2019 (WP.Nos.35256 of 2019, 2914, 3314, 3319, 3717, 3803, 3874, 3973, 4227, 2132, 2159, 2312, 2340, 4820, 6110, 2612, 2620, 2769, 2910, 4182, 4219, 12888, 14240 and 15526 of 2020), 27.08.2019 (WP.Nos.3877, 4105, 4221, 4231, 4251, 4566, 5004, 5814, 6951, 6954, 4215, 4216, 4254, 4346, 11171, 11197 and 11617 of 2020 ) and 28.09.2019 (WP.Nos.5364, 5372, 5773, 6105, 6196, 6526, 6579, 6993, 4311, 4544, 7024, 7036, 7045, 7048, 7158 & 7237 of 2020). 2. W.P.No.35256 of 2020 is taken to be the lead matter and the facts set out therein are narrated as illustrative of facts involved in all the Writ petitions. 3. The petitioner is a private limited company engaged in the business of real estate and infrastructure development. A search was conducted in the premises of the Marg group of companies and its associated entities, including the petitioner herein, in the c....
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....put forth by the petitioner was rejected, the IO confirming the provisional attachment of the asset under Section 24(3), and passing an order in terms of Section 24(4) of the Act. A reference was made to R1, the Adjudicating Authority (AA), in terms of Section 24(5) of the Act. Based on the reference made, R1 issued a Show Cause Notice commencing adjudication in terms of Section 26 of the Act. 9. The petitioner appeared before the officer and the matter was heard elaborately. It was reserved for orders after final hearing on 17.07.2017 and orders are stated to have been passed on 26.08.2019, 27.08.2019 and 28.08.2019 that are under challenge before me. 10. Though several grounds have been raised by the petitioner, Mr. A.L. Somayaji, learned Senior Counsel appearing for Mr. R.Sivaraman, learned counsel for the petitioners pursues only the ground relating to the bar of limitation. He would expressly restrict his arguments to this ground alone, saving all other issues raised in the affidavit filed in support of the writ petition, to be agitated in statutory appeal, should the occasion arise, with this Court holding adverse to the petitioners on the ground of limitation. Thus, th....
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....n or before 31.08.2019 as, where a period of limitation is set out in Statute, the same has to be adhered to strictly. The order, once passed, must leave the control of the authority who has passed such order, and it is only then can it be said to have been 'passed' in satisfaction of limitation. 16. If the order continues to remain within the control of the authority even beyond the period of limitation stipulated, there is a possibility that such order might be modified or altered even beyond the stipulated period, thus compromising the limitation prescribed. The Adjudicating Authority must thus, give up all control in regard to the order passed and must not continue to wield any beyond the date of expiry of limitation. 17. A compilation in typed set dated 15.02.2021 has been filed by the respondent. The first document is the order sheet for the hearing relating to Case No.R-991/2018 conducted on 10.10.2018, which is the first hearing. At page 2 is an order sheet for the hearing dated 17.07.2019, which is the 9th hearing, when the matters were reserved for orders. At pages 3 and 4 are the first and last page of order passed in reference bearing No.R-991/2018, dated 26.08.20....
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....e been passed on the dates mentioned therein and handed over from the registry of AA to the Registrar on the same dates. 22. The last column in the register maintained by the Registrar under the heading 'sign' contains the dates 04.09.2019 and 11.09.2019, that are stated to be the dates when the orders have been sent for attestation. However, the counter states, at paragraph 8 that the orders were attested as 'certified true copy' on 09.09.2019 and does not refer to either 04.09.2019 or 11.09.19. This is a clear discrepancy, which the respondent is unable to explain despite a specific query being posed in this regard. Paragraph 8 of the counter is extracted below: '8. I submit in reply to 12 & 13, that the Ld. Adjudicating Authority has passed the order within the time limit i.e., on 26.08.2019, as mandated u/s. 26(7) of the Prohibition of Benami Transactions Act, 1988. The Ld. Adjudicating Authority is a Quasi- Judicial Authority and the order, is an elaborate order containing 107 pages. It is submitted that as per the order, the order has been passed by the Ld. Adjudicating Authority on 26.08.2019. However, as per the certificate by the "Administrative Officer-cum....
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....nsactions Act, 1988 are to facilitate the identification of benami transactions and the vesting of rights of such properties in designated authorities by recovering property held benami by individuals, in accordance with the procedure set out therein. The confiscation is absolute and no consideration shall be paid for the property acquired under the Act. The purpose of the statutory enactment and its repercussion on civil rights of citizens is serious. 27. The procedure for such acquisition is set out in Chapter IV dealing with attachment, adjudication and confiscation. The provisions of Sections 24, 26 and 27, insofar as they are relevant to this matter are extracted below: 24. Notice and attachment of property involved in benami transaction.- (1) Where the Initiating Officer, on the basis of material in his possession, has reason to believe that any person is a benamidar in respect of a property, he may, after recording reasons in writing, issue a notice to the person to show cause within such time as may be specified in the notice why the property should not be treated as benami property. ...... (3) Where the Initiating Officer is of the....
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....perty to be a benami property, the Adjudicating Authority shall, after giving an opportunity of being heard to the person concerned, make an order confiscating the property held to be a benami property: Provided that where an appeal has been filed against the order of the Adjudicating Authority, the confiscation of property shall be made subject to the order passed by the Appellate Tribunal under section 46: Provided further that the confiscation of the property shall be made in accordance with such procedure as may be prescribed. ...... (3) Where an order of confiscation has been made under sub-section (1), all the rights and title in such property shall vest absolutely in the Central Government free of all encumbrances and no compensation shall be payable in respect of such confiscation. (4) Any right of any third person created in such property with a view to defeat the purposes of this Act shall be null and void. (5) Where no order of confiscation is made upon the proceedings under this Act attaining finality, no claim shall lie against the Government. 28. Section 24 kick starts the process by issuance of a notice by the ....
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.... Court in the case of Bachhittar Singh V. State of Punjab and another AIR 1963 SC 395, while deciding an appeal by way of Special leave against the decision of the Punjab High Court in Writ Petition emphasized that an order, to be rendered valid, must be communicated to the person concerned. In that context, they quote from an earlier judgment of theirs in State of Punjab V. Sodhi Sukdev Singh AIR 161 2 SCR 3 to the same effect. 34. A distinction was also made between mere conveying of the order, which might be unofficial, but which cannot be legally challenged and a formal communication of the order through official means, which would render that order enforceable and any challenge to it, valid. 35. In State of Punjab V. Amar Singh Harika AIR 1966 SC 1313, a Constitution Bench also noted a distinction between an order taking effect upon its 'passing' thought it may be 'communicated' seven days thereafter. In fine, they reiterated the settled proposition that an order would be said to come into effect only when the authority whom it concerned, came to be aware of it. 36. In the case of Kavanna Vana, Ena Swaminathan alias Chidambaram Pillai v. Lakshmanan Chettiar and anothe....
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....ly. The Gujarat High Court in Kanubhai M. Patel (HUF) V. Hiren Bhatt or His Successors to Office 334 ITR 25 considered the import of the phrase 'shall be issued' employed in Section 149 of the Income Tax Act, 1961. Notices under Section 148 had been challenged on the ground that they had been issued beyond the period of limitation, as they had been sent for booking to the speed post center on 07.04.2010. After noticing the dictionary meanings of the term 'issue' and the fact that the notices had been signed on 31.03.2020, which is the last date of limitation, but sent for booking only on 07.04.2010, the notices were quashed. 38. The ratio of the aforesaid decisions is to the effect that an order, to be valid would have to be communicated to the person whose rights are impinged. This is all the more so in a case where the limitation for a challenge to such order would start to run from the date of passing of order itself, as in the present case. The act of 'passing' of the order thus assumes importance and should be construed as the date on which the order has come to the knowledge of the concerned person. 39. This fact, a jurisdictional one, seen in the context ....
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....of the office would not render it an effective order, an order which is operative. The exceptions are cases where there is requirement of pronouncing the orders and they are pronounced on notified dates. Then irrespective of the actual presence or otherwise of the parties, notice to the parties is assumed. In other cases, if the authority making the order fails to communicate the order, the order could not be said to have been made, for communication of such order is an essential part of making such order. This is naturally so, for any authority who writes out an order and signs it is free to change it at any time before it is communicated. It is not final at all, for the authority may become wiser on information supplied to it or otherwise and may choose to change the order at any time before it is despatched to the party against whom it operates." 43. Following the aforesaid ratio, the Bench in Government Wood Works (supra) accepted the challenge to limitation holding that an order, even assuming that it was prepared, finalized, signed and retained in the files does not become effective till such time it was issued to the party concerned. At paragraph 14 they state as follows:....
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....l consequences that would flow from such order that may be addressed by the aggrieved person only when he gains knowledge of it. 45. Yet another reasoning set forth is that if it is retained in the private possession of the authority long after it is stated to have been passed, there is a possibility of modification of the order based on events that might have transpired after it was originally drafted. Thus, in order to render an order complete and effective, the Bench states that it should be beyond the control of the authority passing the order. 46. A Division Bench of this Court in CIT v. Mohamed Meeran Shahul Hameed TCA No.429 of 2019 dated 03.07.2019 confirms the order passed by the Income Tax Appellate Tribunal applying the decision of the Kerala High Court in Government Wood Workshop (supra) and reiterating the position of law set out therein. 47. The argument in regard to the order being beyond the control of the person passing it is also relevant, based upon the principle that an order must be deemed to be complete and valid only when it is prepared, finalised and transmitted for communication to the concerned person. 48. Let us now apply the above settled pro....
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.... establish transfer of files to the registry/office of the authority in the interim before 31.08.2019. 53. Though it is urged that I assume, by inference, that the orders have been transferred to the registry on the stated dates of the orders, this involves a leap in imagination, that I am not inclined to or willing to make in a matter involving a challenge to limitation. As per records, the files and orders could well have been retained/passed till well after 31.08.19 and transferred thereafter. As held by the Kerala High Court, transparency in the status of the files from date of reserving orders till despatch would have avoided allegations that the orders have been finalised after the expiry of limitation. This leaves me no option but to decide that the strict mandate cast upon the respondents has not been satisfied in this case. 54. The provision imposes a ban upon the passing of an order beyond the period stipulated, a prohibition. It is a burden cast upon the respondent and one that the respondent must comply with, and prove that it has satisfied, within the statutory timeframe provided. In this case, I am of the view that this burden has not been discharged. In fact, t....
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....s founded on public policy, its aim being to secure peace in the community, to suppress fraud and perjury, to quicken diligence and to prevent oppression. It seeks to bury all acts of the past which have not been agitated unexplainably and have from lapse of time become stale. According to Halsbury's Laws of England, Vol. 28, p. 266: "605. Policy of the Limitation Acts.-The courts have expressed at least three differing reasons supporting the existence of statutes of limitations that long dormant claims have more of namely, (1) cruelty than justice in them, (2) might have lost the evidence to disprove a stale claim, and (3) that persons with good causes of that a defendant actions should pursue them with reasonable diligence." 56. The object and purpose of the enactment as well as the rigour it imposes, and the serious civil consequences that it carries require that the procedure and times lines set out there, are followed scrupulously. There must be no shadow cast upon the processes followed in decision making and rendition, that must be unimpeachable and cast-iron. In the paragraphs leading to this conclusion, I have set out the narrative in regard to the decision....