M/S Truism Infratech Pvt.Ltd, Bbsr Vs Union of India — Orissa HC (2025) — LawSathi Research

M/S Truism Infratech Pvt.Ltd, Bbsr Vs Union of India — Orissa HC (2025) — LawSathi Research

What the court decided

AI extract

Outcome

No interference with the show cause notice; writ petition disposed of with liberty to the petitioner to raise both factual and legal pleas (including the retrospectivity objection and the Section 24 compliance plea) in its reply to the Adjudicating Authority, which is to decide them on merit after a hearing and by recording proper reasons, independently of the Court's observations, and is requested to conclude the case preferably within four months of the filing of the reply.

Issue for consideration

Whether a transaction made before the amended provisions of the PBPT Act, 1988 came into force (w.e.f. 01.11.2016) can be invalidated or treated as a benami transaction, i.e., whether the amended provision can be given retrospective/retroactive effect so as to render a previously lawful transaction illegal. +2 more

Court's answer

The retrospectivity/retroactivity objection to the amended provisions was not decided in the writ petition; it is open to the petitioner to take both factual and legal pleas while filing the reply to the impugned show cause notice, and the Adjudicating Authority shall decide such pleas on merit after affording an opportunity of hearing and by recording proper reasons.

Ratio / Principle

Judicial review of a show cause notice issued by the Adjudicating Authority is limited: interference is warranted only if the issuing authority inherently lacks jurisdiction/power, the notice is not in conformity with the provisions of the Act, or the language of the notice is ambiguous and does not clearly spell out what the addressee must meet.

Key takeaways

Where the Authority has not applied its mind and has not arrived at a final decision, the writ court should be slow and circumspect in interfering at that stage.ratio¶25
The plea that the initiating officer did not follow the mandates of Section 24 of the Act is a plea of defence, which can be raised by filing the reply to the show cause notice issued by the Adjudicating Authority, not pursued through this writ petition.ratio¶26
By way of abundant precaution, the Court clarified that mere dismissal of the writ petition or any observation touching upon the merit of the claim or defence shall not have a persuasive impact on the Adjudicating Authority's decision, which must be taken independently in accordance with law.

Detailed headnote1 paragraphs

Benami law / show cause notice / judicial review — Writ petition under Article-unnamed WP(C) jurisdiction challenging a further show cause notice issued by the Adjudicating Authority under Section 24(5) of the Prohibition of Benami Property Transactions Act, 1988 (Chapter IV proceeding initiated under Section 24; Act amended by Act 43 of 2016 w.e.f. 01.11.2016), arising from an allegation that the petitioner-company sold a flat to one of its Directors to siphon off money, the Company being the real owner and the Director an ostensible owner. HELD: (i) the scope of judicial review of a show cause notice is limited — interference lies only where the issuing authority inherently lacks jurisdiction/power, the notice is not in conformity with the provisions of the Act, or its language is ambiguous; (ii) where the Authority has neither applied its mind nor arrived at a final decision, the writ court should be slow and circumspect in interfering; (iii) the objections that the amended provisions cannot operate retrospectively/retroactively and that the initiating officer did not follow the mandates of Section 24 are pleas of defence properly raisable in the reply to the show cause notice; (iv) the Adjudicating Authority shall decide such pleas on merit after affording hearing and recording proper reasons, uninfluenced by the dismissal of the writ petition or the Court's observations, and was requested to conclude the proceedings preferably within four months of the filing of the reply. Petition disposed of. No precedent was cited or relied upon.