Benami Property Transactions Act| Validity Of Order Passed By Adjudicating Authority Not Negated By Procedural Delay To Despatch: Madras HC

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.BackgroundAccording 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.Court's ObservationsRelying 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...

Benami Property Transactions Act| Validity Of Order Passed By Adjudicating Authority Not Negated By Procedural Delay To Despatch: Madras HC

Sebin James

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