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The Bombay High Court recently quashed a ‘benami assets’ complaint filed in 2021 along with proceedings initiated against minister and Ajit Pawar faction NCP leader Chhagan Bhujbal, his son Pankaj and nephew Sameer Bhujbal and their firms.
The Benami Prohibition Unit and Income Tax (Benami prohibition unit) Department had levelled charges under a newly enacted criminal law against the Bhujbals. The department had said the assets were allegedly created by them using a maze of about four dozen shell companies.
A single-judge bench of Justice Rajesh N Laddha on December 8 noted that the issue raised in petitions by Armstrong Infrastructure and two other firms related to the Bhujbal family was squarely covered by the judgment in the Union of India & another vs Ganpati Delcom Pvt. Ltd case. The Supreme Court had held that the amendments to the Prohibition of Benami Property Transactions Act, 1988 brought by the Benami Transactions (Prohibition) Amendment Act, 2016 do not have retrospective effect.
The petitioners had sought a direction from the court to quash and set aside the 2021 complaint filed by the Deputy Commissioner of Income Tax (Benami prohibition) Unit and the November 17, 2021 order of the magistrate court initiating proceedings against the Bhujbal family, Satyan Appa Kesarkar, director of the Parvesh Constructions Private Limited M/s. Devisha Constructions Private Limited of Sameer Bhujbal.
The bench also granted liberty to the authorities to revive the proceedings in case the review petition pending before the Supreme Court filed by the Central Board of Direct Taxes (CBDT) is allowed.
The provisional attachment notice had been issued in 2017 under Section 24(3) of the Benami Transactions (Prohibition) Act, 2016 (where the tax authority thinks the person in possession of the property held benami may alienate the property). The immovable assets attached under the order included Girna sugar mills in Nashik valued at over Rs 80.97 crore and multi-storeyed residential building Solitaire in Mumbai’s Santacruz West area valued at more than Rs 11.30 crore.
The attachment also included the Habib Manor and Fatima Manor building in Bandra West area valued at over Rs 43.61 crore (benamidar: Parvesh Construction Pvt Ltd) and a plot of land in Panvel in Raigad valued at over Rs 87.54 crore (benamidar: Devisha Infrastructure Pvt Ltd).
While the total cost of the attached ‘benami’ assets has been valued at over Rs 223 crore, the department had said its “market value” was more than Rs 300 crore.
Senior advocate Aabad Ponda, representing the petitioners, argued that the impugned complaint and order initiating proceedings against his clients was premature, arbitrary and illegal.
He argued that in the present case, the new definition of ‘benami’ transaction was invoked to allege the transaction entered into prior to November 1, 2016 was a ‘benami’ transaction. It is settled law that any provision which creates new liability or offence has to be given prospective effect and not the retrospective effect, which is the case, therefore the complaint be quashed and set aside, which the bench allowed.
Meanwhile, the Enforcement Directorate (ED) on November 29 withdrew its plea in the High Court challenging a special court order from October 16, 2018 through which special judge M S Azmi had allowed Chhagan and Sameer Bhujbal to renew their passports and permitted them to travel abroad.
Chhagan Bhujbal was granted bail by the Bombay High Court in a money laundering case in May, 2018, after which he had sought permission to travel abroad before the special court. The plea by the ED against relief granted to Bhujbal’s son is pending before the HC.
Earlier this year, ED had told HC that it could not locate its own petition against the Bhujbals.
On November 29, advocate Harsh Dedhia representing the ED on instructions from officials of the central agency sought leave from the court to withdraw the pleas against the two. “Leave granted. The petition stands dismissed as withdrawn,” Justice Laddha had noted.
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