Calcutta High Court
M/S. Ganapati Dealcom Pvt. Ltd vs Union Of India & Anr on 18 December, 2018
Author: Debangsu Basak
Bench: Debangsu Basak
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
G.A. No. 3351 of 2018
W.P. No. 687 of 2017
M/S. GANAPATI DEALCOM PVT. LTD.
Versus
UNION OF INDIA & ANR.
-And-
G.A. No. 3374 of 2018
W.P. No. 687 of 2017
M/S. GANAPATI DEALCOM PVT. LTD.
Versus
UNION OF INDIA & ANR.
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
Date : 18th December, 2018.
For Petitioner : Ms. Manju Agarwal with
Mr. Bajrang Manot & Ms. Bhoomija Verma, Advs.
For Respondents : Mr. Kaushik Chanda with
Mr. Anil Gupta & Ms. Debjani Ray, Advs.
G.A. No.3351 of 2018 is an application made at the behest of the respondents seeking liberty to conclude and complete the adjudication proceedings initiated against the petitioner under the provisions of the Prohibition of Benami Property Transaction Act, 1988.
G.A. No. 3374 of 2018 is an application made at the behest of the writ petitioner seeking extension of the interim order. 2
When the two application were taken up for hearing on the previous occasion, it was found that the main writ petition should be disposed of along with the two applications. The parties agreed thereto. Consequently, the writ petition was placed in the list.
Learned Advocate appearing for the petitioner draws attention of the Court to the show cause notice impugned in the writ petition and the reply given thereto. She also draws attention of the Court to the order of the provisional attachment passed by the authority purporting to the jurisdiction under the provision of the Act of 1988. She submits that initially when the Prohibition of Benami Property Transaction Act, 1988 came into force, the nature, scope, ambit and context of the Act of 1988 was different than those pertaining today. She submits that, in 2016 the Act of 1988 underwent a drastic change by virtue of the amendments introduced. The Act of 1988 is now known as Prohibition of Benami Property Transaction Act, 1988.
Referring to a judgment of Bombay High Court, she submits that retrospective effect of the Act of 1988 as it originally stood as also the retrospective effect of the amendments introduced in the Act of 1988 as also the subsequent amendment in 2016 were found to be without any retrospectivity. She relies upon a judgement of Supreme Court reported at 3 (1995) 2 SCC 630 (Rahagopal Reddy (Dead) By Lrs. & Anr. -vs.- Padmini Chandrasekharan (Dead) by Lrs.) in support of her contention.
Referring to the facts of the present case, she submits that, the petitioner before the Court purchased an immovable property by virtue of a registered deed of conveyance dated May 2, 2011. The vendors were numerous. The petitioner is in possession of such immovable property since then. However, subsequent to the purchase, the petitioner underwent amalgamation by which various companies stood amalgamated. The petitioner is the resultant company of the order of amalgamation sanctioned by the High Court on March 17, 2016. She submits that the company and their shareholders are separate legal entities. The authority of purported jurisdiction under the provisions of Prohibition of Benami Property Transaction Act, 1988 treated the shareholders of the petitioner to be the provisional owner of the immovable property owned by the petitioner. Such an approach is incorrect. The consequential enquiry into such transaction sought to be undertaken by the authority purported to exercise jurisdiction under the amended Act of 1988 is also wholly without jurisdiction.
The respondents are represented by the learned Additional Solicitor General.
4
Learned Additional Solicitor General submits that the proceedings are yet to be finally adjudicated. He submits that the petitioner should be asked to attend the adjudication proceedings. In the event the petitioner is aggrieved by the order passed by the adjudicating authority, the amended Act of 1988 provides the Appellate Authority which the petitioner may avail.
Having heard the rival contentions of the parties, I find that although a provisional order of adjudication exists in the proceedings, the show cause notice is yet to be disposed of. The petitioner raises issues which needs to be considered by the adjudicating authority. The issues raised by the petitioner are both questions of law, fact and mixed questions of law and fact. The issue whether a shareholder and a company are separate legal entities and that a shareholder cannot be treated as a beneficial owner within the meaning of the amended Act of 1988 in respect of a property owned by a company incorporated under the provisions of the Companies Act, 1956 needs to be gone into. It would be appropriate to allow the petitioner to participate in the adjudication proceedings before the authority exercising jurisdiction under the amended Act of 1988. Such participation will, however, be without prejudice to the rights and contentions of the parties including the contention of the petitioner that the authority has no jurisdiction to initiate such proceedings. The Court is 5 informed that the petitioner has submitted a detailed report to show cause notice. Learned Advocate for the petitioner seeks leave to submit a detailed reply to the show cause notice on merits. Such leave is granted.
The attention of the Court is also drawn to Section 26 of the amended Act of 1988 which requires that the adjudicating authority will not pass any order under sub Section (3) of Section 26 after expiry of one year from the end of the month under which the reference of Section 24(5) was received. In the facts of the present case, the impugned show cause notice is dated October 9, 2017. The petitioner is enjoying a stay of such proceedings since January 17, 2018. Such stay expired on November 30, 2018. So for a period of about 11 months, the adjudicating authority was restrained from proceeding with the adjudication proceedings. Such restraint was at the behest of the petitioner. Therefore, in the facts of the present case, it would be appropriate to permit the adjudicating authority to conclude the proceedings within 12 weeks from date. The adjudicating authority will not afford any unnecessary adjournment to any of the parties.
All points raised by the parties are kept open. In particular, the adjudicating authority will consider the issue of the shareholder and a company being separate legal entities in its order of adjudication. 6
G.A. No. 3351 of 2018, G.A. No. 3374 of 2018 and W.P. No. 687 of 2017 are disposed of accordingly.
There shall be no order as to costs.
(DEBANGSU BASAK, J.) K. Banerjee