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63 Moons Technologies Limited, Rep by its Authorised Signatory, John Dheepak v/s The Deputy / Assistant Commissioner of Income Tax- Initiating Officer, (Under Prohibition of Benami Property Transactions Act 1988), Nungambakkam

    W.P. No. 10468 of 2021 & WMP. No. 14075 of 2021
    Decided On, 25 October 2021
    At, High Court of Judicature at Madras
    For the Petitioner: Nithyesh Natraj, Advocate. For the Respondent: M. Sheela, Senior Standing Counsel.

Judgment Text
(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to Writ of Mandamus to direct the Respondent to initiate appropriate actions pursuant to the complaint sent by the petitioner on 23.12.2020 under the prohibition of Benami Transaction Act 2002 and consequently pass an order of Provisional attachment under section 24 of the Benami Transaction (Prohibition) Act 2002 of the Properties mentioned in the schedule hereunder or any other properties as this Honble Court may deem fit and further direct the Respondent to initiate investigation in this matter in terms of section 23 of the Prohibition of Benami Transaction Act 2002.)

This Petition, though styled as Writ Petition seeking the relief of mandamus is, more or less in substance, a Public Interest Litigation. The petitioner is a listed company incorporated under the provisions of the Companies Act, 1956 providing financial, technological research and development and technology in various market spaces.

2. The Writ Petition targets Dewan Housing Financial Corporation Limited (DHFL), which is a listed, housing financing company and its erstwhile Promoters and Directors Kapil Wadhawan and Dheeraj Wadhawan and other key managerial personnel. According to the petitioner, it had lodged a complaint on 23.12.2020 before the Deputy/Assistant Commissioner of Income Tax, the initiating officer under the Prohibition of Benami Property Transactions Act, 1988 (in short ‘Act’) calling for the initiation of investigation against the Company and its erstwhile Promoters and Directors.

3. Allegations have been made therein that the individuals have channelled their unaccounted funds through DHFL and after such investment, shell entities were created to channel/siphon away the funds of DHFL in the guise of project loans. A substantial asset base has thus come to be created in the name of benamies.

4. The complaint was transferred to the Deputy Commissioner of Income Tax, Unit I, Benami Prohibition Unit, Mumbai for necessary action on 04.11.2021, but has been lying unattended thereafter. Hence, this Writ Petition. Seeing as the representation of the petitioner has been transferred to the Officer at Mumbai, I had though it appropriate that, that authority also be arrayed as a respondent in this Writ Petition.

5. On 27.04.2021, I had passed the following order:


2. The petitioner only seeks a Mandamus for disposal of its representation dated 23.12.2020 (at page 347), admittedly received by the Deputy Commissioner of Income Tax - Initiating Officer (Under Prohibition of Benami Property Transactions Act 1988), Chennai. Though the representation has been received by him, he has forwarded the same to his colleague viz., The Deputy Commissioner of Income Tax, Unit -1, Benami Prohibition Unit, Nariman Point, Mumbai, insofar as, he was of the view that the Officer at Mumbai would be the proper Officer to consider the same. In such an event, it is appropriate that the said authority be also arrayed as respondent in this writ petition. Let the needful be done on the next date of hearing.


6. The petitioner has thereafter moved a petition seeking impleadment of the Deputy Commissioner of Income Tax, Unit I, Benami Prohibition Unit, Mumbai as respondent to which a counter has been filed on the ground that the proposed respondent would not fall within the territorial jurisdiction of this Court under Article 226 of the Constitution of India.

7. A counter affidavit has also been filed to the writ petition on behalf of the original respondent, wherein he disavows himself of any responsibility to investigate the matter on the ground that DHFL and its subsidiary companies have their registered office in Mumbai, the alleged beneficial owners, i.e., erstwhile Promoters and Directors of DHFL as well as their family members reside within the territorial jurisdiction of Mumbai, and thus no cause of action arises within the territorial jurisdiction of this Court.

8. Thus, while the original investigating officer at Chennai puts the ball in the Court of his colleague at Mumbai, who would be the appropriate authority, according to him to make the investigation, the proposed respondent at Mumbai washes his hands off the matter saying that he is not bound to respond to a Writ Petition filed before this Court.

9. On behalf of the proposed respondent, reliance is placed upon a decision of a Division Bench of this Court rendered in the case of Techpro Systems Limited V. Union of India, represented by the Assistant Commissioner of Income Tax (2016 – 5 L.W. 865) dismissing that writ petition on the ground that no mandamus would lie as against an Income Tax Officer at New Delhi restraining him from taking steps for recovery of income tax arrears as against the petitioner. In this context, the Bench relies upon the ratio of several judgments, particularly Kusum Ingots & Alloys Ltd. V. Union of India and another (2004 (6) SCC 254).

10. The effort of the petitioner is to bring to light and resolve, what the petitioner terms, a very significant financial scam with serious revenue implications on investors in the Country. The Reserve Bank of India has taken note of the irregularities in the activities of DHFL and proceedings are stated to be on-going by various enforcement agencies in this regard.

11. In fact, this very petitioner has filed W.P.No.13451 of 2021 wherein a direction is sought to the Securities and Exchange Board of India to initiate appropriate action as against DHFL for the same financial irregularities as projected in this Writ Petition, though the thrust of the present matter is to the alleged benami transactions of DHFL and the remedial action in that regard. The aforesaid Writ Petition is being listed before the Hon’ble First Bench of this Court.

12. This petitioner has also filed another Writ Petition in W.P.No.1747 of 2021 seeking a mandamus to direct the respondent to pass an order of provisional attachment in terms of Section 5 of the Prevention of Money Laundering Act, 2002 of all proceeds of crime that are in the possession of the promoter/directors and key managerial personnel of DHFL in file No.ECIR/CEZO-1I 39/2020, wherein notice has been issued. This writ petition had last come up on 01.02.2021 before the Court.

13. Being of the nature of a Public Interest Litigati

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on, the petitioner only seeking to remedy a social evil in general and not alleging any specific prejudice that has been caused to it by virtue of the alleged benami transactions, it would have been appropriate had this Writ Petition been filed before the Division Bench. Also, seeing as the Bench is presently considering the remedial action sought to be initiated by SEBI for the financial irregularities, of DHFL at the instance of this very petitioner, it would be appropriate, in my view, that this matter including the petitioner for impleadment be listed for hearing along with W.P.No.13451 of 2021 before the Division Bench. 14. Place the matter before the Hon’ble the Chief Justice for appropriate orders.