Initiating Officer Under Benami Property Act Must Call For Beneficial Owner's Reply In Notice: Karnataka High Court

The Karnataka High Court recently directed that Initiating Officers appointed under the Prohibition of Benami Property Transaction Act, 1988, to henceforth, in any notice issued under sub-Section (1) of Section 24 of the Act to a Benamidar and marked to the beneficial owner categorically state that the beneficial owner is also required to reply, submit explanation or submission within the time frame as that provided to the Benaminar in the said notice.Justice Suraj Govindaraj issued the direction while allowing a petition filed by one Nara Suryanarayana Reddy who is the beneficial owner of a Benami property. A notice had been issued to a Benamidar contending that the Benamidar was holding the property of the petitioner as a beneficial owner under sub-Section (1) of Section 24 of the Act. The benamidar had replied to the notice and orders had been passed. It is challenging - the same that the petitioner-beneficial owner approached the court. The primary arguments raised by the petitioner was that though the notice was issued to the Benamidar and it was marked to the beneficial owner, there was no mention made in the said notice that the beneficial owner is required to reply to the said notice. Thus the rights of the petitioner have been impinged upon, the principles of natural justice had been violated. The orders have been passed without affording an opportunity to the petitioner to reply to the show cause notice, which have affected the petitioner. The respondents argued that there is no requirement for the revenue to specifically call upon the beneficial owner to reply to the notice issued to the Benamidar under sub-Section (1) of Section 24 of the Act. What is required is only for a copy to be marked to the beneficial owner, which has been done by the revenue. Moreover, it was for the beneficial owner if he wanted to do so, provide an explanation or submission within the time period specified for the Benamidar to reply. The bench noted that In terms of sub-Section (2) of Section 24 of the Act, where a notice under sub-section (1) specifies any property as being held by a Benamidar, a copy of the notice is required to be issued to the beneficial owner if his identity is known; that would mean that if the identity is not known, there is no requirement to forward a copy to the beneficial owner. But where identity is known, it would be required to be marked to the beneficial owner. Further, under Sub-Section 2A has been inserted by way of Amendment Act No.15 of 2024, which came into effect from 01.10.2024, which provides that the Benamidar to whom a notice has been issued under sub-Section (1) or the beneficial owner to whom a copy of such notice has been issued under sub-Section (2), shall furnish the explanation or submission, if any, within the period specified in the said notice or such period as may be extended by the Initiating Officer not exceeding 3 months from the end of the month in which the said notice was issued. Following which it said “A perusal of the impugned notices would only indicate that there are references made to the beneficial owner and finally a copy has been marked to the beneficial owner. There is nothing in the notice calling upon the beneficial owner to reply to the said notice.” Then it held “I am of the considered opinion that Section 2A recognises the right of the beneficial owner to reply to the notice under sub-Section (1) of Section 24 of the Act. But there is nothing in the impugned notice calling upon the beneficial owner to reply to the impugned notice.” It observed that “It would be required for the revenue while issuing a notice under sub-Section (1) of Section 24 of the Act to the Benaminar, mark a copy thereof under sub Section (2) of Section 24 of the Act and call upon the beneficial owner to reply to the same by way of furnishing explanation or submission by specifically stating so in the said notice.” Thus it said “If at all, the same had been specifically stated, this kind of a technical objection could not have been raised by the petitioner delaying the matter.” Allowing the petition the court said “The petitioner is permitted to reply to the notice under sub-Section (1) of Section 24 of the Act issued to the benamidar, which has been marked to the beneficial owner within 15 days from today.” Appearance: Advocate Gangadhar J M for Petitioner.Advocate M Thirumalesh AND Advocate D Roopa for Respondents. Citation No: 2025 LiveLaw (Kar) 356Case Title: Nara Suryanarayana Reddy AND Initiating Officer & Others Case No: WRIT PETITION NO.107184 OF 2025Click Here To Read/Download Order

Initiating Officer Under Benami Property Act Must Call For Beneficial Owner's Reply In Notice: Karnataka High Court

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