Disposed

E.K.Raju v. the Inspector General of Registration

Kerala HC7 Mar 2019WP(C)/22185/2017

Case brief

AI extract

What is this about?

Petitioners sought directions for action on complaints against a Trust regarding unauthorized chit funds and tax evasion. The Court noted prior police action and a pending income tax inquiry. It directed the Income Tax Department to finalize the investigation expeditiously while dismissing directions to other authorities.

What did the court decide?

Direction to the Additional Commissioner of Income Tax to finalize the investigation at the earliest; no direction to Police or Registration authorities.

E.K.Raju Vs the Inspector General of Registration — Company and Corporate | Kerala HC (2019)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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THURSDAY ,THE 07TH DAY OF MARCH 2019 / 16TH PHALGUNA, 1940

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WP(C).No. 22185 of 2017

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PETITIONER/S:

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1 E.K.RAJU, AGED 52 YEARS,S/O.KARUNAKARAN, ERATHARA, THALAYAZHAM.P.O.,VAIKOM, KOTTAYAM DISTRICT- 686 607.

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2 SHAJIMON, AGED 44 YEARS, S/O.SUMATHI, PUTHUPALLICHIRA HOUSE, ULLALA, THALAYAZHAM.P.O., VAIKOM, KOTTAYAM DISTRICT, PIN- 686 607.

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BY ADVS.

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SRI.K.M.SATHYANATHA MENON SMT.KAVERY S. THAMPI

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RESPONDENT/S:

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1 THE INSPECTOR GENERAL OF REGISTRATION, VANCHIYOOR, THIRUVANANTHAPURAM, KERALA-695035

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2 THE DISTRICT REGISTRAR GENERAL, KOTTAYAM, KOTTAYAM-KUMILY ROAD, COLLECTORATE, KOTTAYAM, KERALA-686001

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3 THE INCOME TAX COMMISSIONER (EXEMPTIONS), IIND SAN JUAN TOWERS, KOCHI-682018

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4 THE INSPECTORING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, MINI CIVIL STATION, PALA, KOTTAYAM DISTRICT, PIN- 686 575.

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*ADDL. THALAYAZHAM MERCHANT WELFARE TRUST LIMITED

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*R5 THALAYAZHAM, VAIKOM, KOTTAYAM DISTRICT, PIN-686607, REPRESENTED BY ITS SECRETARY. (ADDL.R5 IS IMPLEADED AS PER ORDER DATED 25.08.2017 IN IA 11227/17.)

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W.P.(C) No.22185 of 2017

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**ADDL. THE COMMISSIONER OF INCOME TAX, R6 KOTTAYAM, PUBLIC LIBRARY BUILDING, LALBAHADUR SHASTRI ROAD, KOTTAYAM-680001. (ADDL.R6 IS IMPLEADED AS PER ORDER DATED 10.08.2017 IN IA 12553/17.)

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BY ADVS. R1 & R2 - SMT. K.M. RESMI, GOVERNMENT PLEADER R3 & R4 - SRI.JOSE JOSEPH, SC, FOR INCOME TAX R5 - SRI.K.R.VINOD

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W.P.(C) No.22185 of 2017

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JUDGMENT

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The following are the reliefs sought for by the

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petitioner in this writ petition:

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“i) Issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1^st respondent to consider and take appropriate action on Ext.P3 complaint expeditiously;

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ii) Issue a writ of mandamus or any other appropriate writ, order or direction, directing the 3^rd respondent to consider and take appropriate action on Ext.P5 complaint expeditiously;

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iii) Issue a writ of mandamus or any other appropriate writ, order or direction, directing the 4^th respondent to consider and take appropriate action on Ext.P6 complaint expeditiously; and

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iv) To grant such other reliefs as this Honourable Court may deem fit in the circumstances of the case.”

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Brief material facts for the disposal of the writ petition are as follows:

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Petitioners were the Secretary and Joint Secretary of the Thalayazham Panchayat Merchants Welfare Society formed in the year 1993. In the year

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2004, the Society got themselves registered as Thalayazham Panchayat Merchant Welfare Trust Limited and having registration No.1/2004. The Trust in the

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guise of the registration as trust, later started to conduct chit without obtaining licence or registration. They were also lending money at exorbitant interest

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W.P.(C) No.22185 of 2017 4

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rate, and even collected investments in the form of

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Fixed Deposit, Recurring Deposit and Savings Deposit, without getting themselves registered as a bank and without following the rules governing such transactions as mandated by the Reserve Bank of India. It is also pointed out that, transactions running to lakhs under the guise of chit were being conducted by the Trust. Further, as security towards the chit transaction, they even used to collect blank cheques from their subscribers. Though Ext.P1 crime was registered against them, alleging illegal conduct of the chit and tax evasion, the same were left unattended. Thereupon, petitioners submitted Ext.P3 complaint before the 1^st respondent, Ext.P4 complaint before the 2^nd respondent

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and Ext.P5 complaint before the 3^rd respondent. However, no action was taken, which constrained the petitioner to approach this Court seeking the reliefs

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specified above. However, later the Income Tax Department is impleaded as the additional 6^th respondent.

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The 2^nd respondent has filed a statement, stating that the alleged unauthorised Chitty conducted by the additional 5^th respondent was enquired into on the basis of a complaint received from the petitioner

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W.P.(C) No.22185 of 2017

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dated 17.04.2017, and a report is submitted by Chitty

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Inspector, Kottayam, evident from Annexure-R2(a). However, no evidence could be gathered in order to prove the allegation in the writ petition with respect to the unauthorised Chitty.

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The 3^rd and 6^th respondents have also filed

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statements to the effect that, a tax evasion petition dated 21.03.2017 in the case of the Trust was received from the 1^st petitioner on 23.03.2017, and thereupon,

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the petition was forwarded to the Income Tax Officer (Exemptions), Kottayam, for conducting necessary

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enquiries in this regard. Accordingly, an enquiry was conducted and reported that the Trust is operating in

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the premises adjacent to the Ullala Market in Thalayazham Panchayat. It is further reported that, the Trust has not registered under Sec.12AA of the Income Tax Act and accordingly it is not coming under

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the jurisdiction of the 3^rd respondent. Thereupon, the Tax Evasion petition is transferred to the additional 6^th respondent. The statement of the additional 6^th

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respondent shows that necessary enquiries are being carried on with respect to the business activities conducted by the additional 5^th respondent and the same are not yet finalized, and necessary action would be

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W.P.(C) No.22185 of 2017

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taken if it is found that the activities carried on by

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the additional 5^th respondent are in violation of the provisions of the Income Tax Act and its Rules.

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The additional 5^th respondent has filed a

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detailed counter affidavit, basically stating that the business activities are carried on by the 5^th respondent in accordance with law and after securing money lending licence. It is also submitted that, the petitioners were removed from the society and the actions were initiated by the petitioner due to the ill-will nurtured by the petitioners on the basis of the same, and therefore, the petitions filed by the petitioners before various authorities are not legally sustainable. It is also pointed out that, a crime was registered by the Vaikom Police Station and finally charge sheet was submitted against the members of the society and was taken into file as C.C No.859 of 2017 of the Judicial First Class Magistrate Court, Vaikom, alleging offences punishable under Sec.3 of the Kerala Money Lenders Act and under Sec.9 of the Prohibition of Charging Exorbitant Interest Act. However, the proceedings were quashed in view of the settlement entered into by and between the complainants and the Trust, in Crl.M.C. No.5901 of 2017 dated 14.09.2017.

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W.P.(C) No.22185 of 2017 7

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I have evaluated the rival submissions made by

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the respective counsel across the Bar, and perused the pleadings and the documents on record.

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So far as the business activities carried on by the additional 5^th respondent are concerned, in

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respect of money lending, Ext.R5(a) licence is secured from the Commercial Taxes Department, dated 13.07.2017, and therefore, it cannot be said that the business of money lending carried on by the 5^th respondent is not in accordance with law. The subject matter of violation of Income Tax Act and Rules is under the scrutiny of

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the additional 6^th respondent and the same is not yet finalized. It cannot be said that on the basis of the

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complaint filed by the petitioners, action was not initiated by the Income Tax Department and the Police. As pointed out above, a crime was registered and investigation was conducted and charge sheet was also submitted. Even though the subject matter was pending consideration before the J.F.C.M Court, Vaikom, in view

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of the settlement arrived at by and between the parties, it was quashed by this Court in the

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proceedings specified above. Therefore, there was clear action on the part of the Police as well as the Income Tax Department on the basis of the complaints

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W.P.(C) No.22185 of 2017 8

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submitted by the petitioners. However, the enquiry

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undertaken by the Income Tax Department is not yet over, and it is clearly stated that, once the

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investigation is completed and if there are any faults, appropriate action will be taken against the Trust and its officers.

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Taking into account all these aspects, I am of

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the considered opinion that, there is no point in

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making directions to the Police as well as the

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Inspector General of Registration. However, since an

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investigation is undertaken by the Income Tax

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Department, there will be a direction to the additional 6^th respondent to finalize the investigation at the

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earliest possible time, and in accordance with law, after providing sufficient opportunity to the parties, as required under law.

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The writ petition is disposed of accordingly.

Sd/-

SHAJI P.CHALY

JUDGE

St/08.03.2019

W.P.(C) No.22185 of 2017

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APPENDIX

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PETITIONER'S/S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE FIR IN CRIME NO.647/2017 OF VAIKOM POLICE STATION. EXHIBIT P2 TRUE COPY OF THE COMMUNICATION DATED 25.1.2017 ISSUED FROM THE OFFICE OF THE PUBLIC INFORMATION OFFICER/SUB REGISTRAR, THALAYAZHAM TO SRI.SHAJIMON.S EXHIBIT P2(A) TRUE COPY OF THE COMMUNICATION DATED 10.2.2017 ISSUED FROM THE OFFICE OF THE PUBLIC INFORMATION OFFICER & INSPECTING ASSISTANT COMMISSIONER, PALA TO SHRI.SHAJIMON.S EXHIBIT P3 TRUE COPY OF THE COMPLAINT SUBMITTED BEFORE THE 1ST RESPONDENT DATED 17.4.2017 SUBMITTED BY THE 1ST PETITIONER. EXHIBIT P3(A) TRUE COPY OF THE RECEIPT ISSUED FROM THE OFFICE OF THE 1ST RESPONDENT DATED 17.4.2017. EXHIBIT P4 TRUE COPY OF THE COMPLAINT SUBMITTED BEFORE THE 2ND RESPONDENT DATED 17.4.2017 SUBMITTED BY THE 1ST PETITIONER. EXHIBIT P4(A) TRUE COPY OF THE RECEIPT ISSUED FROM THE OFFICE OF THE 2ND RESPONDENT DATED 17.4.2017. EXHIBIT P5 TRUE COPY OF THE COMPLAINT SUBMITTED BEFORE THE 3RD RESPONDENT DATED 9.5.2017 SUBMITTED BY THE 1ST PETITIONER. EXHIBIT P5(A) TRUE COPY OF THE RECEIPT ISSUED FROM THE OFFICE OF THE 3RD RESPONDENT DATED 9.5.2017. EXHIBIT P6 TRUE COPY OF THE COMPLAINT SUBMITTED BEFORE THE 4TH RESPONDENT DATED 21.3.2017 SUBMITTED BY THE 1ST PETITIONER AND OTHERS. EXHIBIT P6(A) TRUE COPY OF THE RECEIPT ISSUED FROM THE OFFICE OF THE 1ST RESPONDENT DATED 21.3.2017.

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W.P.(C) No.22185 of 2017

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EXHIBIT P7 TRUE COPY OF THE RELEVANT PAGES OF THE BOOKLET PUBLISHED BY THE ULLALA OMKARESWARA DEWASWOM DHARMA STAPANA TRUST PUBLISHED ON THEIR 90TH ANNUAL GENERAL BODY.

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EXHIBIT P8 TRUE COPY OF THE RELEVANT PAGES OF THE BOOKLET PUBLISHED BY THE S.N.D.P. YOGAM SHAKA NUMBER 117 ON THEIR 83RD ANNUAL GENERAL BODY.

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RESPONDENTS' EXHIBITS/ANNEXURES:

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ANNEXURE-R2(A) TRUE COPY OF THE REPORT SUBMITTED BY THE OFFICER DATED 04.05.2017.

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EXHIBIT R5(A) THE COPY OF THE SAID MONEY LENDING LICENCE ISSUED BY COMMERCIAL TAXES DEPARTMENT OF STATE OF KERALA.

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//TRUE COPY//

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P.S. TO JUDGE

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St/-

E.K.Raju v. the Inspector General of Registration

Case brief

What is this about?

What did the court decide?

E.K.Raju v. the Inspector General of Registration

Case brief

What is this about?

What did the court decide?

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