Purpose of ‘Provisional Order of Attachment’ for Pending Adjudication is to Ensure No Third Party Interest is created over Property: Chhattisgarh HC [Read Judgment]

The High Court of Chhattisgarh while upholding the decision of the Single Judge Bench held that the very purpose of passing ‘provisional order of attachment’ for pending adjudication, is only to see that no third party interest is created over the property.

The Appellants, Tulsiram, and Manki Bai are husband and wife and they own different extents of properties in different villages acquired by utilizing the funds allegedly from their own sources. Ever since purchase or acquisition of the properties, they are stated as enjoying the same with absolute ownership, exclusive possession, and clear and marketable title. While so, the Petitioners were served with a notice issued by the Respondent Authority, Assistant Commissioner of Income Tax (Benami Prohibition) to the effect that, as per the information gathered by theRespondent, the above properties were to be held as ‘ Benami properties’ and hence the said properties were provisionally attached, till final adjudication.

The petitioner contended that all the properties mentioned in the notice, except those items which were specifically pointed out as belonging to somebody else, were purchased prior to the Benami Transaction (Prohibition) Amendment Act, 2016 which came into force only from November 1, 2016, and hence they cannot be proceeded against.

However, another Respondent Authority, Initiating Officer, PBPT Act, Assistant Commissioner of Income Tax (Benami Prohibition) without any regard for the explanation offered by the Petitioners/Appellants issued an order, whereby the earlier order of attachment was confirmed.

The issue raised in this case was that is the respondent authority empowered for the confiscation of such property which was purchased prior to the Benami Transaction (Prohibition) Amendment Act, 2016.

The division bench headed by Justice P. R. Ramachandra Menon while upholding the decision of the Single Judge Bench held that the very purpose of passing ‘provisional order of attachment’ for pending adjudication, is only to see that no third party interest is created over the property.

The bench further noted, “the course of action to be ordered by the 2nd Respondent on the culmination of the adjudication proceedings, is a matter which is still to be ascertained. How the properties of the Appellants/Petitioners, covered by the Annexure P/3, are going to be dealt with by 2nd Respondent is yet to be decided. Whether any provisions of the statute which are ‘substantive’ in character would be applied retrospectively by the 2nd Respondent, is also not known; which can be considered only after passing the final order.”

The bench said that the merits of the case are yet to be decided and the order passed by the respondent authority is just an interim order, which is only to sub-serve the final verdict and always subject to the outcome of the adjudication.