Madras High Court
Dr.T.Shanmuganathan vs The Adjudicating Authority on 25 March, 2025
Author: D.Bharatha Chakravarthy
Bench: D.Bharatha Chakravarthy
2025:MHC:865
W.P.No.33170 of 2024 etc., (batch cases)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 25.03.2025
CORAM :
THE HON'BLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
W.P.Nos.33170, 33187, 33186, 33193, 33185, 33184, 33183, 33182, 33181,
33177, 33175, 33178 & 33188 of 2024; 9078, 9103, 9099, 9096, 9106,
9120, 9131, 9133, 9127, 9124 & 9136 of 2025
and W.M.P.Nos.35938, 35934, 35929, 35928, 35925, 35947, 35962, 35933,
35916, 35957, 35956, 35955, 35953, 35949, 35969, 35924, 35968, 35963,
35944, 35942, 35940, 35939, 35931 & 35917 of 2024; 10209, 10206,
10197, 10218, 10213, 10232, 10239, 10236, 10235, 10228 & 10227 of 2025
In W.P.Nos.33170, 33187, 33186, 33193, 33185, 33184, 33183, 33182,
33181, 33177, 33175, 33178 & 33188 of 2024:-
Dr.T.Shanmuganathan, MD., (General Medicine),
Plot No.3B/4, Raman Enclave,
Silappathikara Street, Eswari Nagar,
Muthamizh Nagar, Medical College Road,
Thanjavur - 631 007. .. Petitioner
Versus
1. The Adjudicating Authority,
Office of the Competent Authority
[SAFEM(FOP)A & NDPSA],
Shastri Bhavan, New Building Complex, 4th Floor,
No.26, Haddows Road, Nungambakkam,
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W.P.No.33170 of 2024 etc., (batch cases)
Chennai - 600 006.
2. The Initiating Officer,
Deputy Commissioner of Income Tax (BPU),
Room No:2 Income Tax Investigation wing Building,
Ground Floor, 46, Mahatma Gandhi Road,
Nungambakkam, Chennai - 600 034. .. Respondents
In W.P.Nos.9078, 9103, 9099, 9096, 9106, 9120, 9131, 9133, 9127, 9124 &
9136 of 2025:-
Dr.T.Shanmuganathan, MD., (General Medicine),
Plot No.3B/4, Raman Enclave,
Silappathikara Street, Eswari Nagar,
Muthamizh Nagar, Medical College Road,
Thanjavur - 631 007. .. Petitioner
Versus
1. The Adjudicating Authority,
Office of the Competent Authority
[SAFEM(FOP)A & NDPSA],
Shastri Bhavan, New Building Complex, 4th Floor,
No.26, Haddows Road, Nungambakkam,
Chennai - 600 006.
2. The Initiating Officer,
Deputy Commissioner of Income Tax (BPU),
Room No:2 Income Tax Investigation wing Building,
Ground Floor, 46, Mahatma Gandhi Road,
Nungambakkam, Chennai - 600 034.
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W.P.No.33170 of 2024 etc., (batch cases)
3. The Approving Authority,
Additional Commissioner of Income Tax,
Benami Prohibition Unit,
Room No.201, Income Tax Investigation Wing Building,
Ground Floor, 46, Mahatma Gandhi Road,
Nungambakkam, Chennai - 600 034. .. Respondents
Prayer in W.P.No.33170 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
56/2023, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-56/2023 by directing the 1st
respondent to implead the M/s.Thirumalai Thirumal Nidhi Ltd., as beneficial
owner and to pass a suitable order within a stipulated time.
Prayer in W.P.No.33187 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order by first respondent
passed in Ref Nos.R-64/2023, dated 07.10.2024 and quash the same and
consequently allow the application filed under Section 62 in Ref Nos.R-
64/2023, dated 09.08.2024 by directing the 1st respondent to implead the
M/s.Thirumalai Thirumal Nidhi Ltd., as beneficial owner and to pass a
suitable order within a stipulated time.
Prayer in W.P.No.33186 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
17/2024, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-17/2024 by directing the 1st
respondent to implead the M/s.Thirumalai Thirumal Nidhi Ltd., as beneficial
owner and to pass a suitable order within a stipulated time.
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W.P.No.33170 of 2024 etc., (batch cases)
Prayer in W.P.No.33193 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
60/2023, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-60/2023 by directing the 1st
respondent to implead the M/s.Thirumalai Thirumal Nidhi Ltd., as beneficial
owner and to pass a suitable order within a stipulated time.
Prayer in W.P.No.33185 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
04/2024, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-04/2024, dated 09.08.2024
by directing the 1st respondent to implead the M/s.Thirumalai Thirumal
Nidhi Ltd., as beneficial owner and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.33184 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed by first
respondent in Ref Nos.R-66/2023, dated 07.10.2024 and quash the same and
consequently allow the application filed under Section 62 in Ref Nos.R-
66/2023, dated 09.08.2024 by directing the 1st respondent to implead the
M/s.Thirumalai Thirumal Nidhi Ltd., as beneficial owner and to pass a
suitable order within a stipulated time.
Prayer in W.P.No.33183 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
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62/2023, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-62/2023, dated 09.08.2024
by directing the 1st respondent to implead the M/s.Thirumalai Thirumal
Nidhi Ltd., as beneficial owner and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.33182 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order by first respondent
passed in Ref Nos.R-65/2023, dated 07.10.2024 and quash the same and
consequently allow the application filed under Section 62 in Ref Nos.R-
65/2023, dated 09.08.2024 by directing the 1st respondent to implead the
M/s.Thirumalai Thirumal Nidhi Ltd., as beneficial owner and to pass a
suitable order within a stipulated time.
Prayer in W.P.No.33181 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
61/2023, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-61/2023, dated 09.08.2024
by directing the 1st respondent to implead the M/s.Thirumalai Thirumal
Nidhi Ltd., as beneficial owner and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.33177 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
63/2023, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-63/2023, dated 09.08.2024
by directing the 1st respondent to implead the M/s.Thirumalai Thirumal
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Nidhi Ltd., as beneficial owner and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.33175 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
59/2023, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-59/2023, dated 09.08.2024
by directing the 1st respondent to implead the M/s.Thirumalai Thirumal
Nidhi Ltd., as beneficial owner and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.33178 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
58/2023, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-58/2023, dated 09.08.2024
by directing the 1st respondent to implead the M/s.Thirumalai Thirumal
Nidhi Ltd., as beneficial owner and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.33188 of 2024 : Writ Petition filed under Article 226 of
the Constitution of India, pleased to issue a Writ of Certiorarifed Mandamus
calling for the records relating to the impugned order passed in Ref Nos.R-
57/2023, dated 07.10.2024 and quash the same and consequently allow the
application filed under Section 62 in Ref Nos.R-57/2023 by directing the 1st
respondent to implead the M/s.Thirumalai Thirumal Nidhi Ltd., as beneficial
owner and to pass a suitable order within a stipulated time.
Prayer in W.P.No.9078 of 2025 : Writ Petition filed under Article 226 of the
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Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-56/2023 by
first respondent dated 28.01.2025 and to quash the same and to pass a
suitable order within a stipulated time.
Prayer in W.P.No.9103 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-59/2023 by
first respondent dated 28.01.2025 and to quash the same and to pass a
suitable order within a stipulated time.
Prayer in W.P.No.9099 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-58/2023 by
first respondent dated 28.01.2025 and to quash the same and to pass a
suitable order within a stipulated time.
Prayer in W.P.No.9096 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-57/2023 by
first respondent dated 28.01.2025 and to quash the same and to pass a
suitable order within a stipulated time.
Prayer in W.P.No.9106 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-60/2023 by
first respondent dated 28.01.2025 and to quash the same and to pass a
suitable order within a stipulated time.
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Prayer in W.P.No.9120 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-63/2023
dated 28.01.2025 and to quash the same and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.9131 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-62/2023
dated 28.01.2025 and to quash the same and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.9133 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-66/2023
dated 28.01.2025 and to quash the same and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.9127 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-61/2023
dated 28.01.2025 and to quash the same and to pass a suitable order within a
stipulated time.
Prayer in W.P.No.9124 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-65/2023
dated 28.01.2025 and to quash the same and to pass a suitable order within a
stipulated time.
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Prayer in W.P.No.9136 of 2025 : Writ Petition filed under Article 226 of the
Constitution of India, pleased to issue a Writ of Certiorari calling for the
records relating to the impugned final order passed in Ref Nos.R-64/2023
dated 28.01.2025 and to quash the same and to pass a suitable order within a
stipulated time.
For Petitioner : Mr.S.Anil Sandeep,
(in all W.Ps) Asstd. by Mr.L.Pachiyappan
For Respondents : Mrs.M.Sheela,
(in all W.Ps) Special Public Prosecutor (I.T)
COMMON ORDER
All these writ petitions are interconnected and, therefore, are
addressed and resolved by this common order.
2. These Writ Petitions challenge either the interim orders that deny
the impleading application and the request for cross-examination or the final
orders issued by the adjudicating authority under the Prohibition of Benami
Property Transactions Act, 1988 (hereinafter referred to as 'the Act').
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W.P.No.33170 of 2024 etc., (batch cases)
3. The factual matrix in which these Writ Petitions arise is that it is
alleged that the petitioner, T.Shanmuganathan, was a Director of
M/s.Thirumalai Thirumal Nidhi Limited from 13.02.2014 to 20.07.2019. It
is further alleged that the petitioner and his family members engaged in
clandestine activities by exploiting third-party names, misusing their KYC
details, and creating fixed deposits in M/s.Thirumalai Thirumal Nidhi
Limited without the knowledge of the said individuals, thereby parking
unaccounted income to the tune of Rs.2,99,56,796/-. Additionally, it is
alleged that such fixed deposits were opened in the name of third parties in
the year 2016. Later, in 2018, these fixed deposits were converted to joint
holdings under the category of Either-or Survivor, with the names of the
family members added in the same year. According to the Initiating Officer,
this action was taken to facilitate the receipt of accrued interest and deposit
renewals, with the ultimate goal being to receive the proceeds of these
deposits upon maturity. In view of this, the initiating officer passed a
provisional attachment order under Section 24(4) of the Act and
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subsequently made references to the adjudicating authority under Section
24(5) of the Act.
4. In the said references, the petitioner submitted two applications.
The petitioner sought to implead M/s.Thirumalai Thirumal Nidhi Limited as
a party in the references. Additionally, the petitioner filed an application to
cross-examine the initiating officer. Separate orders were issued regarding
these applications. By the order dated 07.10.2024, the adjudicating authority
addressed the request to implead the aforementioned Nidhi, ruling that such
a request could not be granted and rejecting the application. The
adjudicating authority also considered the question of cross-examination in
the order dated 24.07.2024. After considering that the initiating officer
serves as both the investigating and initiating authority, as well as the
petitioner's need for certain specific information, the application was
disposed of with the ruling that cross-examination is permissible. However,
subsequently, the petitioner was instructed that it would be in the mode of a
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questionnaire, which shall be circulated to the initiating authority, who can
respond on a question-wise basis. This information can then be utilised by
the petitioner for his purposes. Aggrieved by both orders, the petitioner filed
W.P.No.33170 of 2024 & batch of cases.
5. The matters originally came up for admission on 07.11.2024. This
Court, while issuing notice to the respondent authorities and noting that the
learned Counsel is taking notice for the first respondent, passed an interim
order allowing the enquiry to proceed before the adjudicating authority;
however, it restrained the adjudicating authority from passing final orders
until 11.11.2024. Again, when the matters were heard on 11.11.2024, the
interim order was extended until 14.11.2024, with all matters posted on that
date. However, it appears that the matters were not subsequently listed, and
the interim order was not further extended. Therefore, the adjudicating
authority, recognising that the entire process is a time-bound exercise per
Section 26(7) of the Act, took up the issue and issued final orders on
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28.01.2025, making the attachment absolute and aligning with the initiating
authority. Aggrieved by this, the second set of Writ Petitions in
W.P.No.9078 of 2025 etc., batch of cases were filed.
6. Heard Mr.S.Anil Sandeep, learned counsel for the petitioner, and
Mrs.M.Sheela, learned Special Public Prosecutor (I.T.) for the respondents.
7. The learned Counsel for the petitioner submits that when this Court
grants an interim order allowing the enquiry to proceed but stipulating that
final orders need not be issued, the adjudicating authority violates this
interim order by issuing a final order on 28.01.2025. Therefore, those orders
must be set aside. Other grounds are also raised to challenge the final
orders. Regarding the original orders challenged in the first set of Writ
Petitions in W.P.No.33170 of 2024 etc., the learned Counsel for the
petitioner submits that the petitioner is not the actual beneficiary of those
deposits. In this case, it is the aforementioned Company, M/s.Thirumalai
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Thirumal Nidhi Limited, which serves as the complainant. It intends to
frame this petitioner for the excesses and malpractices committed by it. In
fact, if the petitioner is not claiming the said deposits, then, the Nidhi would
be the beneficial owner and thus has a significant interest in the entire
proceedings.
8. Furthermore, the petitioner is making several allegations against the
aforementioned Nidhi, including the forgery of the petitioner's signature on
numerous documents. Therefore, if Nidhi or its other officers/employees
forged the petitioner's signatures and created the deposits, the petitioner
cannot, in fairness, be considered the beneficial owner, and now a penalty is
being sought solely against the petitioner. Consequently, according to the
petitioner, when Section 26 of the Act allows for the benamidar, the
beneficial owner, and any other interested party or individual who has made
a claim to be included as parties, the application to implead the Nidhi should
have been allowed by the adjudicating authority.
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9. Mr.S.Anil Sandeep, the learned Counsel would submit that
concerning the instant Act, the initiating authority also acts as the
investigating authority. Apart from forming an opinion as a reason to
believe, it also investigates the matter and gathers all the evidence and
particulars. The power to make inquiries is contained in Section 24(4) of the
Act. A perusal of Section 23 shows that it is not only the inquiry but also the
investigation that is conducted by the same person. Once the person
conducts the investigation, the petitioner is entitled to cross-examine the
authority. If this position is admitted, the very purpose of cross-examination
is to elicit answers from the witness, and a pre-prepared questionnaire will
not serve that purpose. Unless the petitioner is given an opportunity for
extempore cross-examination, the truth cannot be elicited. How the
statements are recorded, the opinion formed, and the relevant materials on
record must all be put to the person and answers elicited. Only then will the
petitioner have a fair opportunity to defend himself against the charges
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made. Therefore, he would submit that the earlier set of Writ Petitions
should be allowed by this Court.
10. Per contra, Mrs.M.Sheela, the learned Special Public Prosecutor
(I.T.) for the respondent authorities, would submit that once the enquiry
concluded and the interim order was not extended by this Court, the
adjudicating authority proceeded with the enquiry and issued the order, as
the proceedings are time-bound. Since the interim order was not extended,
the petitioner cannot hold the adjudicating authority accountable. In fact, the
interim order expired on 14.11.2024, and the order was passed only in
January 2025. Therefore, the adjudicating authority bear no fault.
11. Regarding the earlier set of writ petitions, the learned Special
Public Prosecutor (I.T.) would rely on the scheme of the Act, specifically
Sections 19, 23, and 24, and would submit that in this case, the initiating
authority exercises a statutory power that includes conducting an inquiry
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into the matter, forming an opinion as to the reason to believe, and passing
an order of provisional attachment. He is not merely a witness in the case;
rather, he is an authority adjudicating the matter. The adjudicating authority
has the power to make the provisional attachment absolute. If the
adjudicating authority agrees with the initiating officer, then, the original
provisional order of attachment is made absolute. Therefore, upon closer
scrutiny of the scheme of the Act and the provisions contained therein, it
cannot be stated that the initiating officer is merely a witness; since the
person is an authority under the Act, there can be no permission for cross-
examination.
12. Regarding the prayer for the impleading of the Nidhi,
Mrs.M.Sheela, the learned Special Public Prosecutor submits that it is
specifically the case of the initiating officer, after investigation and enquiry,
that for all these deposits, only the petitioner is the beneficial owner. The
initiating officer is making this charge based on the materials before them,
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and if the adjudicating authority agrees, the provisional order of attachment
will become absolute. Therefore, for deciding this issue, the Nidhi need not
be made a party. It is up to the petitioner to establish his case in the manner
known to law. Consequently, the adjudicating authority rightly rejected the
impleading application.
13. In reply, Mr.S.Anil Sandeep, the learned Counsel for the petitioner,
would specifically point out in some paragraphs, even while deciding the
interim applications, where the adjudicating authority has observed, based
on earlier proceedings, that the case is an open-and-shut case and there is
nothing for the petitioner to defend himself against. He would submit that
because certain defences were not taken or certain documents were not
produced before the authorities on an earlier occasion, there cannot be any
embargo on the petitioner from defending the present set of charges
vigorously, and this Court should also consider such a pre-determined
notion.
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14. I have reviewed the opposing submissions from both sides and
examined the case records.
15. The first question to be decided is whether the adjudicating
authority was correct in issuing the final orders of adjudication dated
28.01.2025. In this regard, the petitioner had filed two sets of applications in
various references for impleading and cross-examination. By the
aforementioned orders, those requests were rejected. The petitioner then
filed W.P.No.3310 of 2024 and batch of cases, which came up for hearing on
07.11.2024, and the interim order passed by this Court is extracted below for
ready reference:
"Mr.K.S.Jeyaganesan, learned Senior Panel Counsel (GOI)
takes notice for the first respondent.
2. Notice to the second respondent returnable by
11.11.2024. Private notice is also permitted.
3. List the matter on 11.11.2024.
4. The enquiry pending on the file of the first respondent
may go on. However, the first respondent shall not pass
any final order till 11.11.2024."
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16. Subsequently, once more, the matters were scheduled for
11.11.2024. On 11.11.2024, the following order was issued:
"At the request of the learned counsel appearing for the
petitioners, list these matters on 14.11.2024.
2. Interim order already granted by this Court is extended
till 14.11.2024."
17. However, it can be seen that from 14.11.2024 onwards, the matters
were not listed. It is settled law that once the Court grants an interim order,
no orders have since been issued by the Court to vary or vacate the interim
order merely because the matters were not listed before the Court; the
interim order cannot be deemed vacated. It is true that the proceedings are
time-bound. However, the adjudicating authority should have approached
the Court for clarification or by filing a memo regarding permission to
proceed further. Furthermore, at least one hearing should have been held,
with the petitioner being asked for an extension of the interim order, but this
was also not done. This Court specifically adjourned the matter, querying
the learned Special Public Prosecutor (I.T.) for the respondents as to whether
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W.P.No.33170 of 2024 etc., (batch cases)
any hearing occurred after 14.11.2024, and the answer was negative. No
hearing took place at all, though a mail was sent to the petitioners seeking
for the extended orders if any.
18. Earlier, when the interim application was filed and subsequently
rejected, the petitioner approached this Court to address the issue. Although
the interim order was granted and extended, the impugned order was passed
suddenly without a hearing. Thus, while it may not be classified as a
violation or willfulness on the part of the adjudicating authority, it should
still be deemed that the final order is passed when the interim order of this
Court is in force. As a result, the parties should be restored to their original
position to avoid prejudice. Therefore, I hold that the final order passed on
28.01.2025 cannot be sustained.
19. Regarding the orders passed in the interim applications, firstly,
concerning the question of impleading the Nidhi, it is essential to extract
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W.P.No.33170 of 2024 etc., (batch cases)
Section 26(1) of the Act, which reads as follows:
"26. Adjudication of benami property.—(1) On receipt
of a reference under sub-section (5) of section 24, the
Adjudicating Authority shall issue notice, to furnish such
documents, particulars or evidence as is considered
necessary on a date to be specified therein, on the
following persons, namely:—
(a) the person specified as a benamidar therein;
(b) any person referred to as the beneficial owner therein
or identified as such;
(c) any interested party, including a banking company;
(d) any person who has made a claim in respect of the
property"
20. In the instant case, the Nidhi has not claimed to be an interested
party, nor has it laid any claim regarding the fixed deposits. On the other
hand, it seems to be the complainant in this matter. If the individual is a
complainant, statements from the other employees of Nidhi could have been
recorded, and they would all be witnesses in this case. Essentially, the
petitioner's defense is that only the Nidhi performed these actions and that
the petitioner is either wrongfully accused or has not even signed many of
the fixed deposits, with other officers/employees of the Nidhi allegedly
forging the petitioner's signature. Establishing that defence differs from
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W.P.No.33170 of 2024 etc., (batch cases)
adding Nidhi as a party among the respondents. When the provisional order
of attachment is made with a specific allegation against the petitioner, and as
the petitioner defends the claims, Nidhi would, at best, only be considered a
third party concerning the essential question. Therefore, the mere non-
impleadment of Nidhi shall not, in any way, affect the petitioner's defence
nor their presence as a party is necessary to decide the issue.
21. The petitioner, inter alia, can still argue that the entire matter was
handled by the Nidhi and that their complaint was erroneous. Therefore, it is
unnecessary to include the Nidhi as a party. It is not making any claims
regarding the fixed deposits. Consequently, no exception can be taken
against the authorities for rejecting the application for impleadment.
However, the mere rejection of the impleading application does not imply a
rejection of the petitioner's defence concerning the Nidhi. The petitioner can
establish the aforementioned contentions in a manner recognised by law.
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W.P.No.33170 of 2024 etc., (batch cases)
22. The next question concerns the cross-examination. In this context,
the Act is a sui generis legislation containing unique provisions. The statute
grants both the power of investigation and the ability to initiate proceedings,
forming the basis for belief and enabling the issuance of provisional orders
of attachment after hearing the petitioner on the same authority. In fact, the
Act defines ‘authority’ under Section 2(6), which is extracted as follows:-
"2. Definitions.— In this Act, unless the context otherwise
requires,—
.
.
.
(6) “authority” means an authority referred to in sub-
section (1) of section 18;"
23. Section 18(1) is extracted hereunder:-
"18. Authorities and jurisdiction.—(1) The following
shall be the authorities for the purposes of this Act,
namely:—
(a) the Initiating Officer;
(b) the Approving Authority;
(c) the Administrator; and
(d) the Adjudicating Authority."
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W.P.No.33170 of 2024 etc., (batch cases)
It is evident that the initiating officer is also an authority within the
meaning of the Act.
24. Thereafter, the powers of the Civil Court regarding discovery,
inspection, etc., are conferred on all authorities under the Act. It is relevant
to extract Section 19 of the Act, which reads as follows:
"19. Powers of authorities.—(1) The authorities shall, for
the purposes of this Act, have the same powers as are
vested in a civil court under the Code of Civil Procedure,
1908 (5 of 1908), while trying a suit in respect of the
following matters, namely:—
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any
official of a banking company or a public financial
institution or any other intermediary or reporting entity,
and examining him on oath;
(c) compelling the production of books of account and
other documents;
(d) issuing commissions;
(e) receiving evidence on affidavits; and
(f) any other matter which may be prescribed.
(2) All the persons summoned under sub-section (1) shall
be bound to attend in person or through authorised agents,
as any authority under this Act may direct, and shall be
bound to state the truth upon any subject respecting which
they are examined or make statements, and produce such
documents as may be required.
(3) Every proceeding under sub-section (1) or sub-section
(2) shall be deemed to be a judicial proceeding within the
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meaning of section 193 and section 228 of the Indian
Penal Code (45 of 1860).
(4) For the purposes of this Act, any authority under this
Act may requisition the service of any police officer or of
any officer of the Central Government or State
Government or of both to assist him for all or any of the
purposes specified in sub-section (1), and it shall be the
duty of every such officer to comply with the requisition
or direction.
(5) For the purposes of this section, “reporting entity”
means any intermediary or any authority or of the Central
or the State Government or any other person as may be
notified in this behalf."
25. Section 20 of the Act designates the officers who can assist in the
enquiry, etc. Section 21 defines how the initiating officer or other authorities
should request information. Section 22 grants the power to impound
documents, etc. Section 23 of the Act allows the authority to conduct an
enquiry or investigation, and it is essential to extract this information for
ready reference:
"23. Power of authority to conduct inquiry, etc.—The
Initiating Officer, after obtaining prior approval of the
Approving Authority, shall have power to conduct or cause
to be conducted any inquiry or investigation in respect of
any person, place, property, assets, documents, books of
account or other documents, in respect of any other
relevant matters under this Act."
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26. Thereafter, Chapter-IV outlines the processes of attachment,
adjudication, and confiscation. It is essential to extract the entirety of
Section 24, which reads as follows:-
"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.
(2) Where a notice under sub-section (1) specifies
any property as being held by a benamidar referred to in
that sub-section, a copy of the notice shall also be issued
to the beneficial owner if his identity is known.
(3) Where the Initiating Officer is of the opinion
that the person in possession of the property held benami
may alienate the property during the period specified in
the notice, he may, with the previous approval of the
Approving Authority, by order in writing, attach
provisionally the property in the manner as may be
prescribed, for a period not exceeding ninety days from
the date of issue of notice under sub-section (1).
(4) The Initiating Officer, after making such
inquires and calling for such reports or evidence as he
deems fit and taking into account all relevant materials,
shall, within a period of ninety days from the date of issue
of notice under sub-section (1),—
(a) where the provisional attachment has been
made under sub-section (3),—
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(i) pass an order continuing the provisional
attachment of the property with the prior approval of
the Approving Authority, till the passing of the order by
the Adjudicating Authority under sub-section (3) of
section 26; or
(ii) revoke the provisional attachment of the
property with the prior approval of the Approving
Authority;
(b) where provisional attachment has not been
made under sub-section (3),—
(i) pass an order provisionally attaching the property
with the prior approval of the Approving Authority, till
the passing of the order by the Adjudicating Authority
under sub-section (3) of section 26; or
(ii) decide not to attach the property as specified
in the notice, with the prior approval of the Approving
Authority.
(5) Where the Initiating Officer passes an order
continuing the provisional attachment of the property
under sub-clause (i) of clause (a) of sub-section (4) or
passes an order provisionally attaching the property under
sub-clause (i) of clause (b) of that sub-section, he shall,
within fifteen days from the date of the attachment, draw
up a statement of the case and refer it to the Adjudicating
Authority."
Therefore, it is evident that under Section 24(3), the initiating officer
must first form an opinion that the individual in possession of the property,
deemed benami, may alienate the property during the period specified in the
notice. If the initiating officer has reason to believe this, he must issue an
order for provisional attachment.
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W.P.No.33170 of 2024 etc., (batch cases)
27. Thereafter, an enquiry is also contemplated under Section 24(4),
where, after making such enquiries and calling for reports or evidence within
90 days, he must pass an order continuing the provisional attachment with
the prior approval of the adjudicating authority. Thus, it is clear that the
initiating officer is not merely a witness in this case. He is also not the final
adjudicating authority. Therefore, the scheme of the Act places him in a
unique position. Considering the special features of the Act and the right of
cross-examination, along with its relevance as enunciated in the judgment of
the High Court of Madhya Pradesh in Harivallabh Mohanlal Joshi and
Ors. Vs. Union of India in W.P.No.16633 of 2018, and the judgment of the
Hon'ble Supreme Court of India in Ayaaub Khan Noor Pathan Vs. The
State of Maharashtra and Ors. , as well as other judgments, the following
order has been passed:-
"7. However, having said that, I am inclined to accept the
plea of D2 for examination of documents, statements and
relied upon documents, and direct the I.O u/s 26(3)(b) read
(2013) 4 SCC 465
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with Section 45 of PBPT Act and Sec.51 of Code of Civil
Procedure to allow D2 or his Authorized Representative
as provided u/s 26(8) to cross examine the facts,
documents, statements and relied upon documents
including signature of D2 appearing on them for their
veracity only in the above mentioned Reference cases,
wherein such documents along with show cause notice,
were already provided to D2 under acknowledgement.
The above exercise should be completed before
24.08.2024.
8. Both the I.O and D2 or his Authorized Representative
on a mutually agreeable date may perform the above
cross-examination proceedings as per laid down
procedures. A mahazar may be drawn to record the
proceedings and a copy of the same reflecting the entire
proceedings of performance of the above cross-
examination may be forwarded to this office for records
and further proceedings going forward.
This disposes of the Common Memo filed by D2
in Re-56/2023 to R-66/2023 dated 25.03.2024 and Petition
filed u/s 45 read with Sec. 151 of dated 25.03.2024 filed
by Shri Sushanth Malligeswaran, Advocate and Ld.
Counsel for D2 strictly within the above mentioned
parameters and as per law established."
28. It is submitted that when the learned Counsel proceeded further
for the cross-examination, the adjudicating authority required him to present
the pre-prepared questionnaire, stating that the questions would be answered
by the initiating officer. Although the original order did not impose such a
condition, this condition cannot be deemed to be illegal. The petitioner will
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W.P.No.33170 of 2024 etc., (batch cases)
now be given the opportunity to prepare the questionnaires by the date set by
the authorities, and the initiating officer shall answer them. Based on this,
any further supplementary questions or additional questionnaires can be
permitted by the adjudicating authority at his discretion, and this Court will
refrain from intervening in the adjudication process at this stage. It will
remain open for the parties to make such requests before the authority.
29. Aside from this, if there are any other witnesses whose statements
are relied upon, the petitioner is certainly entitled to cross-examine them.
Questionnaires need not be administered for these witnesses, and if the
petitioner wishes to cross-examine those who have provided witness
statements, they may be summoned for that purpose, allowing the petitioner
to cross-examine them effectively. In support of his defence, the petitioner
can also muster evidence on his behalf and examine any witnesses he wishes
to call to support his defence. Such opportunities shall be afforded to the
petitioner. The learned Counsel for the petitioner states that certain
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applications to summon documents have also been filed. These will be
decided on their own merits by the authority. The petitioner will be granted
such opportunities as may be necessary to establish the defence. It is
important to note that the findings of the adjudicating authority in the orders
refusing the impleading application, as well as the order concerning cross-
examination, indicate that the case has already been concluded because
earlier references have been addressed against the petitioner. These findings
should be regarded as relating to the issuance of interim orders, and all
objections that may be raised and defences will be considered objectively by
the adjudicating authority.
30. In view thereof, these Writ Petitions are disposed of on the
following terms
(i) The impugned order, dated 28.01.2025, passed in 11 references
bearing Ref.Nos.R-56/2023, R-59/2023, R-58/2023, R-57/2023, R-60/2023,
R-63/2023, R-62/2023, R-66/2023, R-61/2023, R-65/2023, R-64/2023, is
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quashed. The matters are remitted back to the file of the first respondent for
continued adjudication.
(ii) The impugned orders, dated 24.07.2024 and 07.10.2024, passed in
13 references bearing Ref.Nos.R-56/2023, R-64/2023, R-17/2024, R-
60/2023, R-04/2024, R-66/2023, R-62/2023, R-65/2023, R-61/2023, R-
63/2023, R-59/2023, R-58/2023, and R-57/2023, stand upheld, subject to the
other observations made in the order stated above.
(iii) The petitioner will first be given an opportunity to submit the
questionnaire to the initiating authority. Depending on the answers, the
petitioner will be entitled to make further prayers before the adjudicating
authority;
(iv) With reference to other witnesses, the petitioner will be entitled to
request the cross-examination of witnesses who have provided statements,
summon any documents for the petitioner, and examine any witness on his
behalf;
(v) By providing the aforesaid opportunities, it is up to the
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adjudicating authority to proceed further and complete the adjudication;
(vi) The petitioner shall also cooperate to expedite the process;
(vii) The period from 07.11.2025 until the date of receipt of a web
copy of this order shall be excluded from the mandatory one-year period
prescribed under Section 26(7) of the Act;
(viii) There will be no order regarding costs. Consequently,
associated miscellaneous petitions are closed.
25.03.2025
Neutral Citation : yes/no
grs
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W.P.No.33170 of 2024 etc., (batch cases)
To
1. The Adjudicating Authority,
Office of the Competent Authority
[SAFEM(FOP)A & NDPSA],
Shastri Bhavan, New Building Complex, 4th Floor,
No.26, Haddows Road, Nungambakkam,
Chennai - 600 006.
2. The Initiating Officer,
Deputy Commissioner of Income Tax (BPU),
Room No:2 Income Tax Investigation wing Building,
Ground Floor, 46, Mahatma Gandhi Road,
Nungambakkam, Chennai - 600 034.
3. The Approving Authority,
Additional Commissioner of Income Tax,
Benami Prohibition Unit,
Room No.201, Income Tax Investigation Wing Building,
Ground Floor, 46, Mahatma Gandhi Road,
Nungambakkam, Chennai - 600 034.
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W.P.No.33170 of 2024 etc., (batch cases)
D.BHARATHA CHAKRAVARTHY, J.
grs
W.P.No.33170 of 2024 etc., (batch cases)
25.03.2025
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W.P.No.33170 of 2024 etc., (batch cases)
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