Issue No. 252 / December 31^st, 2021

Dear Patrons,

As we end an exceptional year with its ups and down, we look back at the experiences we earned and events that we witnessed. Taxwise, we always have a lot to learn and still look forward to with each passing year. The year 2021 gave us clarity on several legally vexed issues.

We take this opportunity to emphasise on varied rulings surrounding the recovery of tax. The provisions dealing with recovery of tax have several interesting facets as they are the last resort available with the Revenue to exact tax dues. With the development of law and complexity of businesses the recovery provisions have only got more complicated, especially, due to interplay with other laws that also provide for attachment of properties.

The writ jurisdiction of the High Courts has a crucial role to play in the development of law, particularly, where taxpayers' rights are at stake. The High Court’s play an extremely difficult role of striking a balance between the sovereign's powers and taxpayers' legal and fundamental rights. The rulings analysed in the year-end edition of the Newsletter shall make you abreast of various factors that weigh-in in the minds of the judges to decide the tax recovery case in one way or the other.

Year End review 2021 - Selected 15 ruling on Recovery Proceedings Under IT Act, 1961

1) HC: Writ against attachment of savings bank account not maintainable where recovery certificate is drawn by SEBI - HC rejects appellant’s writ seeking quashal of SEBI’s order of attachment and freezing the bank accounts of the appellant; Appellant’s bank account had been attached pursuant to a Certificate No. 1189 of 2017 issued by the SEBI; HC notes that in terms of Section 226(3)(iii), no copy of the notice ought to have been forwarded to the appellant whose name admittedly did not feature in the order passed by the SEBI freezing the bank account; Holds that provisions of Section 226 of the IT Act cannot be resorted to as it deals with cases where no certificate has been drawn under Section 222 of the IT Act and since a certificate was issued u/s 28A of the SEBI Act of 1992 r.w. Section 222 of the IT Act in the appellant’s case; Explains that SEBI Act of 1992 is a special statute and it is a self-contained code as that of the IT Act and hence denies exercise of jurisdiction under Article 226 of the Constitution of India; Directs appropriate application before the competent authority with a prayer for lifting the order of attachment and de-freezing the bank account and term deposit account under the relevant statute…………Click here to read and download HC Judgment

2) HC: Remedy available under the General Law cannot prevent Revenue to recovery tax dues by attaching the property – HC dismiss assessee's writ petition, holds that tax being the State Revenue, it is of paramount importance for the Authorities to recover the tax dues from the defaulters by following the procedures as contemplated. Assessee-Petitioner submitted that he is a third party bonafide purchaser and no way connected with the income-tax liability to be paid by the erstwhile owner Mr K S Thirumalaivasan. If at all, K.S.Thirumalaivasan is the defaulter, the Authorities ought to have initiated action prior to the purchase of the property by the petitioner and the petitioner admittedly purchased the property on 28.02.2013 and the interim order of attachment was passed by the first respondent on 24.07.2017 and therefore, the purchase of the property by the petitioner was well in advance and thus, the interest of the petitioner is to be protected. HC notes that, the declaration contemplated u/s 281 of the Act would be undoubtedly, binding on the assessee / Tax Defaulter and the Income Tax Department. Once, the Authorities initiated appropriate proceedings and when such proceedings are pending with reference to Section 281 of the Act then the assessee / tax defaulter is expected not to deal with the property in contravention to the provisions of the Act. If any such tax defaulter / assessee sells the property in favour of the third person without the knowledge of the Income Tax Department then such third party gets a right to prosecute the seller, who committed an act of fraud, misrepresentation or otherwise. However, in such third-party transactions, the right of the Income Tax Authority under the provisions of the Act can never be taken out. Thus, the declaration u/s 281 cannot be treated as Universal. It is restricted only to the extent that the declaration would be binding on the tax defaulter/assessee and the Income Tax Department. The right of the Income Tax Department to deal with such property cannot be taken away and in the event of meddling in such circumstances, the very spirit of the statute is not only diluted, the recovery of tax also will be prejudiced…………Click here to read and download HC Judgment

3) HC: Recovery from director not allowable u/s 179(1) in case of Public Limited Companies – HC allows writ petition against the proceedings pertaining to recovery of tax arrears of Company in the hands of Directors u/s 179(1) of IT Act, 1961. HC holds that there is no other provision under IT Act akin to Section 179 of IT Act i.e., recovery tax arrears due to Company in the hands of Directors qua Public Limited Company. In the light of the language in which Section 179 couched, it follows as a indisputable sequitur that impugned proceedings are barred and they are liable to be set aside as the same has been made against Directors of a Public Limited Company, when Section 179 applies only to Private Limited Companies and there is no other provision qua Public Limited Companies akin to Section 179 . HC further makes it clear that this order will neither impede nor serve as an impetus if there is any other mode for the Revenue to recover tax arrears. …………Click here to read and download HC Judgment

4) HC: Lifts attachment of property, in order to achieve real purpose of VsV – HC allows assessee's writ petition, directs revenue to lift the attachment on property so as to enable the assessee to deposit the amount of tax payable under the resolution scheme of Direct Tax Vivad Se Vishwas Act, 2020 for the company in which the petitioner was a director. Petitioner before the HC submitted that the value of the attached residential and commercial property in the year 2018 was about Rs.4.52 Cr., against outstanding demand of Rs.1.08 Cr. and in view of orders passed by the ITAT the effective outstanding demand was only Rs.42.96 Lacs. Further due to Covid-­19 pandemic, the petitioner was facing financial liquidity crunch and does not have sufficient amount of liquid asset and to settle the tax dispute with the Income-tax Department with regard to the tax liabilities of the said company and the last date for making payment under the said Scheme is Mar 31, 2021. HC opines that if the attachment placed by the Revenue on commercial property is lifted, there would not be any prejudice to the Income Tax department as it is fully secured by continuing the attachment over the residential property and five bank accounts. …………Click here to read and download HC Judgment

5) HC: Lifts attachment of property, recovery right under SARFAESI overrides Revenue's claim on tax dues – HC upholds right of the Petitioner-Bank as a secured creditor to be superior to Revenue's right to recover tax dues in the light of overriding effect of Section 26-E of SARFAESI Act. HC directs Sub-Registrar to receive the sale deed submitted by the petitioner Bank for transfer of property viz., commercial unit along with land in favour of the auction purchaser as per the sale certificate issued under the provisions of the SARFAESI Act, 2002, and register it within four weeks of such presentation of sale deed. Notes that, after introduction of Section 26-E of the SARFAESI Act, 2002 w.e.f. 24-01-2020, once the security interest created in favour of the Bank is registered with the Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI), the non-obstante clause contained in Section 26-E r/w Section 35 of the SARFAESI Act, 2002 will come into play and override the provision such as Section 26 of the Telangana VAT Act, 2005 (which  give priority to VAT dues over any other claim) or the order of attachment dt.09.09.2016 issued by the Tax Recovery Officer under Rule 48 of the II Schedule to the Income Tax Act, 1961. …………Click here to read and download HC Judgment

6) HC: The “doctrine of constitutional priority” will have precedence over the other priorities - HC dismiss Writ filed by the petitioner-Bank holds that, the principles of 'doctrine of constitutional priority' is to be defined as, in the event of the similar provisions of priority under various enactments, then the statute which is recognised directly by the Constitution for the purpose of upholding the sovereignty and integrity of the Nation is to be considered as holding precedence over the other statutes providing priority. The basic justification for the claim of priority made by the Income Tax Department in the present case rests on the well-recognised principle that the State is entitled to raise money by taxation, because unless adequate revenue is received by the State, it would not be able to function as a sovereign Government at all. It is essential that as a sovereign the State should be able to discharge its primary governmental functions and in order to able to discharge such functions efficiently, it must be in possession of necessary funds and this consideration emphasises the necessity and the wisdom of conceding to the State, the right to claim priority in respect of its tax dues. Notes that the Income Tax Department in their affidavit had stated that the assessee defaulter is in arrears to the tune of Rs.34,52,12,985/-. The demands were raised by the Income Tax Department prior to 31.03.1999, the date of mortgage to the petitioner bank. The petitioner relying on the encumbrance certificate issued by the Registration Department of the State contends that the attachment is made after the mortgage by the petitioner bank. However, Section 281 of the Income Tax Act unambiguously states that during the pendency of any proceedings under the Income Tax Act. Thus, pendency of any proceedings is sufficient to treat any other transfer/mortgage as void. HC holds that the mortgages, transactions or transfers are made during the pendency of the Income Tax proceedings, then all such transfers, mortgages, transactions are void u/s 281 of the Income Tax Act and any such mortgage or attachment made by the Bank during the pendency of the Income tax proceedings, cannot be a ground to claim priority based on the provisions of the SARFAESI Act or DRT Act. HC directs petitioners to approach the Tax Recovery Officer (TRO) by filing an appropriate application under Schedule II, Rule 11 of the Income Tax Act. In the event of filing any such application, the Tax Recovery Officer is directed to investigate the same with reference to the original documents and pass appropriate orders as expeditiously as possible.…………Click here to read and download HC Judgment

7) HC: Mortgage or transfer made after invocation of Section 281 is void ab initio - HC dismisses writ petition filed by the petitioner-Bank to direct the Tax Recovery Officer, Income Tax Department to remove the attachment, holds that the scope of Section 281 of the IT Act is absolutely unconnected with the priority contemplated under Section 26E of the SARFAESI Act. However, Section 26E of the SARFAESI Act provides that when the rights are claimed by more than two persons in respect of any property, then the priority would lie on the secured creditor, in the present case, the petitioner/Bank. Thus, the provisions are independent and different. The scope of these two provisions are to be distinguished, more specifically, with reference to the facts and circumstances of each case. It is not as if the SARFAESI Act will prevail over the IT Act or the IT Act will prevail over the SARFAESI Act. Notes that when it is established that the earliest demand notice under the IT Act with reference to the AYs 2012-13 and 2013-14 was issued by the Income Tax Authorities on 31.03.2015 prior to the mortgage executed in favour of the petitioner-Bank on 27.01.2016 and 06.02.2016, the provisions of Section 281 of the IT Act would be applicable and the question of priority would not arise and therefore, any transfer made thereafter is hit by the provision of Section 281 of the IT Act and all such transfers are void and therefore, the subsequent mortgage became consequently invalid in the eye of law and therefore, the application of SARFAESI Act would not arise at all. HC further holds that when the assessee has no right to mortgage the property purchased, then the Bank cannot accrue any right to deal with the mortgaged property or to claim priority based on the provision of Section 26E of the SARFAESI Act. Though the demand notice was issued to the partnership firm, subject properties were purchased in the name of the partners, in respect of the tax dues, partners as well as the company are individually and jointly liable as per the provisions of the Act.…………Click here to read and download HC Judgment

8) HC: Mere apprehension of huge demand inadequate, quashes provisional attachment orders - HC quashes provisional attachment orders holding that the prerequisites of Section 281-B were not satisfied by the Revenue, relies on recent SC ruling in Radha Krishan Industries; Assessees (Firm and Individuals) were subjected to search consequent to which assessment proceedings u/s 153A were initiated; During the course of assessment, Revenue ordered provisional attachment of Assessees fixed deposits u/s 281B; Assessees contended that the Revenue had not recorded any satisfaction nor provided any cogent reasons to substantiate the passing of provisional attachment orders; Assessee relied on SC ruling in Radha Krishan Industries and Sahara India; HC analyses Radha Kishan Industries delivered in the context of the Himachal Pradesh Goods and Service Tax Act, 2017 and holds that the conditions for passing provisional attachment order are to be strictly followed and that based on tangible material, the Revenue is required to form an opinion that the Assessee would not be able to pay tax demanded; HC highlights, “mere apprehension on the part of the respondents that huge tax demands are likely to be raised on completion of assessment is not sufficient for the purpose of passing a provisional order of attachment”; HC finds that Revenue had passed the provisional attachment orders for protecting its interest based on a likelihood of large tax payments being raised after assessment; Notes mandatory requirements elucidated in Radha Krishan Industries were not complied with prior to passing of the orders and thus, quashes the orders; Remarks that Assessee’s assertion of owning immovable property worth Rs. 300 Cr. renders Revenue’s apprehensions unfounded and baseless..…………Click here to read and download HC Judgment

9) HC: Lifts attachment of property, recovery right under SARFAESI overrides Revenue's claim on tax dues -  HC upholds right of the Petitioner as a secured creditor to be superior to Revenue's right to recover tax dues in the light of overriding effect of Section 26-E of SARFAESI Act; Petitioner, an asset reconstruction company and a secured creditor of the Borrower (company under liquidation), acquired rights, title and interest in the credit facilities granted by the banks to the Borrower alongwith security over properties by a deed of assignment dt. Mar 19, 2014 and Mar 29, 2017 with SBI and Indusind Bank, respectively, and commenced proceedings under SARFAESI Act in 2017 to sell the property to recover it dues; Petitioner learnt that the property was attached by the Revenue in Jaunary, 2013 and thus, requested the Revenue to lift the attachment and issue a no-objection certificate which was not responded to, thus, preferred a writ petition challenging the attachment order seeking recovery of tax dues from the Borrower by claiming a superior and prior charge over the attached property which could not be disturbed in any manner as per Section 26-E of the SARFAESI Act; Petitioner submitted that the priority of charge over the Revenue stands clarified by Section 31-B of RDDB Act, equivalent to Section 26-E of the SARFAESI Act, which is a statutory recognition of the priority of claim of secured creditor which empowered the Petitioner to recover its dues by selling the Borrower's  assets, in priority over all other debts and taxes rendering non-lifting of attachment by Revenue as erroneous, incorrect, arbitrary and unreasonable; Revenue submits that pursuant to survey, the Borrower was summoned to produce various details including details of loans and advances whereby the mortgage of subject property with Petitioner was not mentioned; Further, Revenue admits to difficulty in lifting attachment  in absence of specific provisions under Sections 220 to 232 and Second Schedule of the I-T Act  permitting the Revenue to vacate/lift the attachment until the finalisation/recovery of the demand, thus, fairly submits it would be for the Court to pass appropriate orders..…………Click here to read and download HC Judgment

10) HC: Consider trinity of prima facie case, financial stringency, balance of convenience for granting stay u/s 220(6) - HC sets aside order u/s 220(6), a non-speaking order, which granted stay subject to deposit of 20% of demand; Directs Revenue to pass order in light of the trinity principles i.e., prima facie facts, financial stringency and the balance of convenience; Revenue conducted survey u/s 133A  for AYs 2015-16 and 2016-17 and completed assessment by passing an order after making certain adjustments and simultaneously initiated recovery proceedings; On assessee's application u/s 220(6) for stay of demand until disposal of appeal with CIT(A), Revenue directed payment of 20% demand; Considers assessee's contention that order u/s 220(6) is without consideration of CBDT Instruction No. 95, dated 21.08.1969 and bad in law, notes that CBDT Office Memorandum bearing F.No.404/10/2009-ITCC dated 01.12.2009 made it clear that the 1969 circular ceased to exist and emphasized that Instruction No.1914 dated 02.12.1993 holds the field (which states that the AO should consider all relevant factors having a bearing on the demand raised and communicate his decision in the form of a speaking order); Refers to SC ruling in M.K. Mohammed Kunhi where it was held that the power u/s 220(6) is power of stay by treating the assessee as not being in default during the pendency of appeal, explicates on how such power is to be exercised by the Revenue; Refers to coordinate bench ruling in Kannammal where the parameters for grant of stay were listed as prima facie case, financial stringency and the balance of convenience; Notes that SC in LG Electronics held that assessing officer can grant deposit orders of a lesser amount than 20% pending appeal without making reference to the administrative Pr.CIT/CIT; Although accepts Revenue’s contention that stay petition of assessee is bald and bereft of details, states that Revenue ought to be proactive; Explains “The order impugned in this writ petition is liable to be set aside as it is absolutely non-speaking… The case of the assessee would definitely be projected in the appeal memorandum. Therefore in the light of the stand taken in the appeal memorandum, the Assessing Officer can pass order by applying the trinity principles ... assessees must also ensure that the petition filed under Section 220(6) of the Act contain all the relevant particulars.…………Click here to read and download HC Judgment

11) HC: Dismisses writ against provisional attachment, SCN under Benami Act over transactions entered prior to 2016 amendments - HC dismisses writ petition challenging provisional attachment order and SCN under the Benami law covering transactions entered into prior to 2016 amendments ; Petitioner-Individual (IAS Officer, Managing Director, Tamil Nadu Warehousing Corporation) challenged the order passed u/s Section 24(4)(a)(i) and SCN u/s 26(1) as per se illegal and violative of the principles of natural justice for implicating the Petitioner as the beneficial owner of the property in question without issuing any notice or giving any opportunity of being heard; Petitioner contended that the amendments to Benami Act came into force on Nov 1, 2016 and thus, would not apply to alleged transaction entered into on Oct 28, 2016 which would render the impugned order jurisdictionally defective; Petitioner also contended that the proceedings under the Benami Act are required to be an independent proceedings and an adverse finding of the Initiating Officer against the Petitioner based on statements recorded u/s 131 in an income-tax proceedings as unsustainable; HC observes investigations and search were conducted prior to coming into force of the amendments and the alleged benami transactions also occurred prior to the amendment but the provisional attachment u/s 24 was made after the amendment which is certainly permissible u/s 1(3) of the Act; HC takes note of the legal provisions and holds that the Act is unambiguous on provisional attachment of the property and it is only the commencement of proceedings under the Act whereafter the Petitioner has to respond to the SCN by submitting their explanations/objections along with the documents and evidences and thereafter, the authorities are bound to adjudicate the matter in the manner provided and take appropriate decision; HC holds the petitioner has misconstrued the provisions based on certain incorrect interpretations and remarks that the Petitioner has approached the court at initial stage, pending adjudication of the matter; HC states the Petitioner is at liberty to submit his objections / defence statements, evidence and documents within three weeks from date of receipt of this order, on receipt of which Revenue is bound to continue the proceedings and complete them in accordance with the contemplated procedures; Further directs the Petitioner to co-operate for completion of proceedings, than prolonging and protracting the issues on flimsy grounds..…………Click here to read and download HC Judgment

12) HC: Revokes attachment of property since Revenue stayed demand on 20% deposit -  HC issues writ directing the release of attachment of Assessee's property where Assessee had paid 20% of the tax demand after the attachment and was granted stay on the balance demand; Assessee-Petitioner, for AY 2010-11, was assessed to tax resulting in demand of Rs.3.35 Cr. against which the request for stay was rejected and the Revenue also issued garnishee notices to Assessee’s banker (IDBI Bank) following which the Bank paid Rs.5.16 lacs to the Revenue; Assessee had already paid Rs.2 Lacs prior to the issuance of garnishee notice and paid Rs.50.34 Lacs with a request for not proceeding with tax recovery since more than 15% of disputed tax stood deposited; Revenue attached Assessee’s property at Nariman Point by order dated Nov 25, 2019 whereafter Assessee made further payment of Rs.17 Lacs and requested for stay on demand which was eventually granted on Jan 28, 2020, thus, Assessee requested for lifting of attachment order over its property in Feb'20 which was rejected in Feb'21 as there was no provision in the Second Schedule allowing the lifting of attachment without collecting the entire tax demand; Therefore, Assessee preferred a writ petition and HC observes that attachment order was issued before the granting stay on demand, an appeal was preferred against the assessment order and also notes the law prevents Revenue from lifting the attachment until the entire demand is paid  or dispute is finalised by the appellate forum which appeared to be coming in the way of banks / concerned authority from releasing the attached property; HC holds it proper to release the property from attachment since the Assessee had paid 20% of disputed tax for seeking stay on operation of demand..…………Click here to read and download HC Judgment

13) HC: Holds attachment of corporate's property under Benami Act, invalid; Finds proceedings initiated after 10 years highly belated - HC sets aside the attachment order passed under the Benami Act with all consequential benefits, holds attachment of the commercial property leased out to the Company (Alleged Benamidar) by the Jaipur Development Authority as illegal, unjustified and without jurisdiction; Finds proceedings initiated after 10 years to be highly belated, observes, “any proceeding relating to benami transactions ought to be taken up immediately or atleast within reasonable period of limitation of three years as generally provided under the Limitation Act, 1963”; Also, remarks, "All the transactions in the corporate world made by the company would become benami transaction if the interpretation of definition as understood by the respondents is accepted by this Court"; Petitioner-Company, Kalyan Buildmart Pvt. Ltd. (KBPL), incorporated in 2006 with two shareholders / directors acquired certain agricultural land; An income-tax search on certain Group revealed that payments were made for purchase of land in the name of KBPL and it was then submitted by the Initiating Officer under the Benami Act that the property was purchased solely with the purpose to transfer its shares to the alleged Beneficial Owners (Navrattan Kothari, Vimal Chand Surana and Kushal Chand Surana) in order to avoid liability of payment of stamp duty and therefore the property was liable for confiscation; The agricultural land got vested in Jaipur Development Authority (JDA) under the Rajasthan Land Revenue Act, 1956 and its conversion from agricultural to commercial purposes was also sanctioned; KPBL was thereafter served a notice u/s 24(1) of the Benami Act with the provisional attachment order which were confirmed  by the Adjudicating Authority against which KBPL and alleged Beneficial Owners preferred the writ petition; It was submitted that orders holding KBPL as the Benamidars and the three individuals as Beneficial Owners were wholly erroneous, as the property was held by KBPL throughout and mere change of shareholding did not render it a benami property; Petitioners relied on the SC ruling in Bacha F. Guzdar  to submit that the shareholders do not hold the property of the company and the company remains the actual beneficial owner of the property; Also submitted that the JDA had converted the land as commercial and a registered lease deed was executed in favour of KBPL and the proceedings under the Benami Act were without jurisdiction and infringement of rights under Articles 14, 21 and 300A of the Constitution; Respondents contended the transaction to be a benami transaction and relied on Section 6 to state that re-transfer of property by Benamidar was prohibited; On Petitioner’s contentions that amended provisions of the Benami Act did not have a retrospective application, HC refrains from making any observation with regard to the retrospective or prospective applicability of the Act; HC finds that all the properties in question are in KBPL’s name and that all the applications to JDA are also made in its name, as thus as far as ownership of the land was concerned, it belonged to the KBPL; HC opines that provisions of the Benami Act would not extend to properties purchased by the Company; HC observes that “on account of a benefit accruing to the company, the shareholders would also receive benefit and they may be beneficiaries to a certain extent. This would however not make shareholders as beneficial owners in terms of the definition as provided under Section 2(12) of the Benami Act, 1988” and further remarks that “the entire fulcrum of this case, therefore, rests on misinterpretation of the provisions of the Benami Act, 1988. All the transactions in the corporate world made by the company would become benami transaction if the interpretation of definition as understood by the respondents is accepted by this Court.”; On Respondents' submission for power of lifting corporate veil to examine the original sale deed in relation to Benami Act, HC holds it to be correct but since the original transaction of 2006 was between KBPL and the sellers and the sale deed was executed in favour of KBPL, HC holds that a subsequent registered deed executed by the JDA did not warrant interference and it was not a case of proceeds from the property acquired through a benami transaction; HC further observes the proceedings initiated after 10 years of the purchase to be highly belated and that any proceeding relating to benami transactions ought to be taken up immediately or within reasonable period of limitation of three years as generally provided under the Limitation Act; HC holds that “the transactions done legally under the Companies Act of transferring shares of one shareholder to another, the benefit, if any, which may accrue on account of legally allowed transactions cannot be made as a ground to draw presumption of benami transaction under the Benami Act, 1988.”, and further that no presumption could be made under the Benami Act; HC further holds that once the land was surrendered under Rajasthan Land Revenue Act, converted from agricultural to commercial and registered lease deed was executed by the JDA in KBPL’s favour it was no longer a benami transaction; Sets aside the provisional attachment and the orders passed by Adjudicating Authority and directs for handing over of the property to KBPL..…………Click here to read and download HC Judgment

14) HC: Grants interim relief on Benami proceedings; Follows Ganpati Dealcom despite SC stay order - HC, on writ petitions against initiation of proceedings u/s 24(3) of Prohibition of Benami Property Transactions Act, 1988 (Act), follows the division bench’s ruling in Ganpati Dealcom  as binding in nature despite SC's stay order against the ruling; Passes interim order directing that the reference u/s 24(5) of the Act shall be treated as provisional and not final during pendency of writ petitions which will be treated as final subject to result of the writ petitions whereafter limitation u/s 26(7) would start to run; HC also directs the Respondents to not take any further steps until disposal of the writ petitions and restrains the Petitioners from selling/ transferring/ dealing with subject properties; Petitioners contended that the proceedings u/s 24(3) of the Act could not have been initiated as the amendments brought in 2016 to the Act applies from Nov 1, 2016 whereas the immovable property was purchased prior to Nov 1, 2016, thus, the proceedings would result in an illegal “retrospective applicability” of the law; Petitioners also relied on Bombay HC ruling in Joseph Isharat and Rajasthan HC ruling in Niharika Jain which were in line with Ganpati Dealcom ruling; HC accepts Petitioners’ reliance on SC ruling in Shree Chamundi Mopeds to the effect that an interim order staying the operation of an order ensures that the order impugned before SC would not be operative from date of stay order being passed, without wiping out its existence whereas the quashing of an order results in the impugned order ceasing to exist in law; HC also relies on Calcutta HC rulings in Pijush Kanti Chowdhury  and Niranjan Chatterjee,  where it was held that where an appeal remains pending before SC and a stay order remains operative, and observes, “such stay of order does not amount to any “declaration of law” under Article 141 of the Constitution of India but is merely binding upon the parties to the said proceedings” and such stay order does not obliterate the HC order since no judgement had been passed against the HC order; Referring to SC ruling in Valliama Champaka Pillai and Bombay HC ruling in Thana Electric Supply, HC reiterates the law, “the decision of one High Court is not a binding precedent on another High Court” and is at best, persuasive and thus, HC is only bound by the ruling in Ganpati Dealcom.…………Click here to read and download HC Judgment

15) HC: Holds adjudication under Benami Law time barred, order despatched after expiry of limitation u/s 26(7) - Madras High Court allows writ petition, quashes the impugned order as barred by limitation u/s Sec. 26(7) of Benami Property Transactions Act, 1988; The Petitioner-Company (belongs to Marg group of Companies) was held as Benamidar of its parent company which was alleged as the beneficial owner by the Adjudicating Authority under the Act; The impugned order was challenged only on the ground of limitation for being passed after Aug 31, 2019, last date of passing of the order u/s 26(7); Petitioners point out that they were informed on Oct 29, 2019 to collect the order dt. Aug 26, 2019 and there had been a lapse of time since the matter was reserved for order on July 17, 2019; Respondents argued that the impugned order was passed before the date of limitation, relied on the order-sheet entry dt. July 17, 2019 where “order is passed accordingly” was handwritten; HC observes that Sec. 26(7) is couched negatively for passing the order within one year from the end of the month of receipt of reference u/s 24(5) and thus, there is burden cast on the Adjudicating Authority to pass the order strictly within the period of limitation; HC observes, “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” as there may be a possibility of modification/alteration even beyond stipulated period; HC makes it clear that order was not pronounced in the open court that Respondents had to show that impugned orders were despatched on Aug 31, 2019 or were out of their control by or before that date; HC remarks, “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” and holds that the registers maintained by the Registry were “pale” and “unsatisfactory” and lent no support to the position that the impugned order were passed on the mentioned date; On the point whether the order was beyond the control of adjudicating authority before expiration of limitation period, HC referred to Kerala HC’s ruling in Government Wood Works v. State of Kerala  wherein it was held that only when order comes to be pronounced/reflected in public domain, and the affected person becomes aware of it, can it be said to have been passed as it is insufficient for order to be retained in private possession of the authority as modification of the order is possible; HC disregards the handwritten words on order-sheet entry dt. July 17, 2019 as pronouncement and holds that orders were passed on Sep 4, 2019 and Sep 11, 2019 as per the register but were returned by postal authorities and collected by the Petitioners on Oct 29, 2019 only after being informed by the Registry...…………Click here to read and download HC Judgment

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