7 Feb 2022 3:18 PM GMT
In a recent judgment, Madras High Court has held that a reasonable delay in communication of the order will not be counted as non-compliance of the limitation prescribed under Section 26(7) of the Prohibition of Benami Property Transactions Act, 1988. Since the application of the limitation period is uninfluenced by such delay, the court has also clarified that the delay won't negate the...
In a recent judgment, Madras High Court has held that a reasonable delay in communication of the order will not be counted as non-compliance of the limitation prescribed under Section 26(7) of the Prohibition of Benami Property Transactions Act, 1988. Since the application of the limitation period is uninfluenced by such delay, the court has also clarified that the delay won't negate the validity of the order passed under Section 26(3) of the Act by adjudicating authority.
Section 26(7) of the Act prescribes that an order of adjudication has to be passed within a period of one year from the end of the month, in which the reference under section 24(5) is received by the Adjudicating Authority.
"...The principle that an order takes effect only on the date of communication of the order and not immediately on passing of the order, if there is any time lag between the date of passing of the order and the date of actual communication of the order, by itself cannot be understood to have a bearing on the very validity of the orders passed by the Adjudicating Authority under section 26 (3), on the premise that the orders have been passed on 26/27/28.08.2019 within the period as mentioned under sub section 7 of section 26, which was duly recorded in the Register maintained by the authority as 'order is passed accordingly'..."
A Division Bench of Justices Mohammed Shaffiq and R. Mahadevan also held that the limitation period for filing an appeal against the order of adjudicating authority, i.e, 45 days, would be counted only from the date of receipt of the order impugned. However, the court also underscored that the consideration of limitation period for filing an appeal against the adjudicating authority's order is independent from the consideration of the limitation period under Section 26(7) for ascertaining the validity of the adjudicating authority's order itself. Relying on Chhattisgarh State Electricity Board v. Central Electricity Regulatory Commission & others [(2010) 2 SCC 79], Commissioner of Income Tax, Madurai and Others v. Saravana Spinning Mills (p) Ltd. [(2007) 7 SCC 298], Muthiah Chettiar v. I.T. Commissioner, Madras [AIR 1951 Mad 2004] and other case laws, the bench observed that,
"...in cases where 'the date of the order' and 'the date of receipt of the order' are separated by considerable time, it is only the date of receipt of the order, which would be material for the purpose of calculating the limitation for appeal and this factor cannot have any bearing on the validity of the orders impugned in the writ petition."
This is especially significant since there is no provision in the Act to apply for certified copies of orders passed which leads us to a presumption that the parties will have to wait for the copy from the adjudicating authority.
According to the respondents, they are subsidiaries of MARG Limited, a private limited company engaged in the business of real estate and infrastructure development. A search was conducted in the premises of MARG Limited and its associated entities during 2017 and some documents were impounded. According to the show-cause notice issued thereafter by the Deputy Commissioner of Income Tax (Benami Prohibition), it was alleged that the respondents were benamidars of MARG Limited which was the beneficial owner of all the properties therein. Marg Limited submitted that the respondents were not benamidars but duly registered subsidiaries to overcome the limitation for acquiring land beyond 15 Acres in the urban Land Ceiling and Regulation Act, 1976.
However, the Deputy Commissioner of Income Tax rejected these submissions made by MARG Limited and passed orders for provisional attachment of properties. Thereafter, the Commissioner made a reference to the adjudicating authority within 15 days from the date of provisional order as contemplated in Section 24(5). The period of one-year limitation for passing orders commenced on 01.08.2018 when the references were taken on the file by adjudicating authority and expired on 31.08.2019. The final orders, including attachment of properties owned by MARG Limited, was passed by the adjudicating authority on 26/ 27 /28.08.2019. However, according to the appellant authorities, the certified copies of the orders in the batch of 69 cases couldn't be sent to the respondents within 31.08.2019, and a delay of two weeks occurred. This was challenged by the Respondents by invoking the writ jurisdiction of the High Court.
The single-judge bench of Justice Anitha Sumanth agreed with the submissions made by MARG Limited and held that the order was not valid owing to the fact that the order was not communicated to the respondent company within 31.08.2019. The said order of the single judge was challenged by the appellant authorities.
Relying on the 'doctrine of substantial compliance' as laid down in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal and others [(2011) 1 SCC 236], the court held that the delay in despatching the order copies was a 'procedural delay'.
"A perusal of the records would reveal that after the references were taken on file by the first appellant on 01.08.2018, there were as many as nine hearings and during the ninth hearing i.e., on 17.07.2019, orders were reserved. The orders thereafter came to be passed on 26/27/28.08.2019, which fact was duly recorded by the first appellant in the register as 'Order is passed accordingly'. Thus, the same would show that the adjudicating authority has exercised his jurisdiction in a manner as to comply with the timeline as prescribed under the Act", observed the court.
Relying on Section 35 of the Evidence Act, the court came to the conclusion that the order sheets register and the file movements register indicates that the adjudicating orders were passed within the statutorily prescribed limit under Section 26 (7).
Section 35 of the Evidence Act states as follows:
"an entry in any public or other official book, register or stating a fact in issue or relevant fact and made by a public servant in the discharge of his official duty, or by any other person in performance of a duty specially enjoined by the law of the country in which such book, register, is kept, is itself a relevant fact"
"...Applying the same to the facts of the present case, wherein the orders impugned in the writ petitions were passed on 26/27/28.08.2019, i.e., within the limitation period as prescribed under section 26(7) of the Act and the factum of passing of the orders was also duly recorded in the Register as 'order is passed accordingly' and the movement register also disclosed the same, this court has no hesitation to arrive at a decision that the first appellant complied with the statutory mandate and passed the adjudication orders within the period of one year from the end of the month in which the references were received", the bench clarified.
Even though it is legally correct that if an order remains within the control of an authority beyond the limitation period, there is a possibility that the order might be altered or modified thereafter compromising the limitation period, the court observed the facts and circumstances of the present case are different.
"Whereas in the present case, there was not a single case, but a batch of 69 cases with each order running to hundreds of pages as contended by the learned counsel for the appellants, the period of 15 days from the date of passing of the orders to the date of dispatch (which period was consumed for preparation of certified copies in triplicate), would certainly appear to be a reasonable period. The assumption that such period would create possibility for modification or alteration of the substance of the orders, can at best be said to be rooted in suspicion and conjecture without having any basis in reality, in the facts and circumstances of the case."
Moreover, Section 114 of the Evidence Act creates a presumption in favour of the adjudicating authority that the official acts have been carried out in a proper manner unless there is any glaring discrepancy or any specific averment disputing the statement made by an authority as in the records.
Therefore, the single judge bench order about the limitation period under Section 26(7) of the Act was quashed by the Division Bench and the appeals filed were allowed by the Division Bench.
"...In other words, the orders impugned in the writ petitions are well within the timeline as stated under Section 26 (7) and is immune from attack on this ground", the court underlined.
The court, however, refused to comment anything on the merits of the case as to whether the respondents were benamidars or not, leaving it open to the parties to challenge the orders impugned in the writ petitions before the Appellate Authority under Section 46 of the Act.
The court also observed in the findings that many cases can be avoided if the appellants adopt the practice of uploading the orders passed by the Adjudicating Authority as well as Appellate Authority online in a dedicated website.
The bench also added that the single judge erred in entertaining the writ petitions since there was an alternative remedy prescribed by Section 46 of the statute.
"...Only if the appeal was not entertained by the appellate authority on the ground that it was after the limitation period, then, the issue would have been arisen for consideration of this Court. Such a scenario never arose and the writ petitions were filed on the basis of mere apprehension. "
Case Title: The Adjudicating Authority under the Prohibition of Benami Property Transactions Act, 1988 & Anr. v. Anuttam Academic Instituitions Private Limited & Anr.
Case No: WA Nos. 1682 of 2021 etc. batch
Citation: 2022 LiveLaw (Mad) 50
Click Here To Read/ Download Judgment