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Judgment
The petitioners have filed the instant petition under Article 226 of the Constitution of India, seeking the following reliefs:-
“(a) That the Hon’ble High Court be pleased to call for the records of the proceedings regarding the impugned SCN in case no.R-327/2017
from the Ld. Adjudicating Authority (PBPT Act, 1988) and after examining the same be pleased to issue appropriate writ to direct the Ld
Adjudicating Authority to allow the prayers of the Petitioners in their Interim Applications dated 20.02.2018 in view of the dictum of the Hon’ble
Supreme Court as cited in paragraph No.5 of this petition.
(b) Any other relief which this Hon’ble High Court deems just and necessary in the facts and circumstances of the case be also passed in favour
of the Petitioners.â€
As per the emerging facts of the case in the proceeding pending before respondent No.2 under Section 19 and 26 of Prohibition of Benami Property
Transactions Act, 1988 (in short “PBPT Act, 1988â€), the petitioners filed two interim applications dated 20.02.2018 available on record as
Annexure-P/2A & P/2B requesting the Adjudicating Authority to direct to the Initiating Officer for production of certified copies of the documents
relied upon as annexed in Annexure-B-1, E, F, I, J, K, L & M of the impugned Reference on which the Initiating Officer has made foundation of the
allegation that the petitioners are the beneficial owner of the property alleged as Benami. The petitioners have also claimed that the Initiating Officer
be also directed that the petitioners be permitted to cross-examine the makers and authors of the documents whose names have been mentioned in
paragraph 4 of the application and their statement have been relied by the Initiating Officer in the impugned Reference. By and large, the petitioners
have claimed that the certified copies of the documents shown in the list attached with the impugned Reference be supplied to them and they may also
be provided an opportunity to cross-examine the persons on whose allegations the petitioners have been said to be Benamidar.
The petitioners have contended that as per Section 11 of PBPT Act, 1988, the Adjudicating Authority is under obligation to follow the principle of
natural justice in the proceeding initiated before him and on that strength, the petitioners have a right to ask for possession of the documents on which
the respondents are relying upon and to have an opportunity for cross-examining the persons who made allegations against them inasmuch as it is an
integral part of the principle of natural justice and is a mandatory requirement. Learned counsel for the petitioners submits that as per Section 19,
respondent No.2 is an authority acting like a Civil Court and therefore the petitioners are having right to call for certified copies of the documents and
also to cross-examine the persons who made allegations against them.
Per contra, Shri Lal, learned counsel appearing for respondent No.3 filed a reply and submitted that that maximum documents have been supplied to
the petitioners alongwith the show cause notice dated 31.08.2017 issued under Section 24(1) of PBPT Act, 1988. He further submits that giving of
certified copy of each and every document is not requirement of law and that there is no provision under which the petitioners can claim cross-
examination of the persons from whom the respondents have collected the information regarding Benami properties of the petitioners. As per Shri Lal,
if the Adjudicating Authority has not given the documents or opportunity of hearing to cross-examine then the order passed by the said authority is not
final and a remedy of appeal can be invoked before the Appellate Tribunal and the petitioners can satisfy the authority that the principle of natural
justice has not been followed. But at this stage by appearing before this Court, filing a petition under Article 226 of the Constitution of India seeking
interference by this Court in the matter is not permissible. He further submits that the cross-examination and supplying the certified copy of each and
every document is not the requirement of following the principle of natural justice. Shri Lal also submits that in his reply, he has shown the conduct of
the petitioners before the Initiating Officer and the Adjudicating Authority and given a table showing different dates in which the petitioners had to
appear before the authorities, but they did not appear despite notices/summons issued to them. He has also contended that the petitioners have also not
furnished any explanation sought by way of show cause notice issued under Section 24(1). He also submits that maximum documents relied upon by
them have been provided to the petitioners alongwith show cause notice and even thereafter considering the requirement of the petitioners vide letter
dated 11.09.2017 and 18.09.2017, the petitioners have been asked to collect the requested documents on 25.09.2017 and their representative collected
the same on 27.07.2017. However, learned counsel for the petitioners denied the contentions of respondents and submitted that the authority is under
obligation to pass order on their applications but said authority has neither passed any order on their applications nor has assigned any reason for not
considering the applications submitted by the petitioners. Therefore, left with no option, the petitioners are seeking intervention of this Court in the
matter claiming that the authority be directed to at-least pass some order on their applications following the minimum requirement of principle of
natural justice for providing them requested documents and also to afford an opportunity of cross-examination.
As per the confined arguments advanced by the parties, the only question which arises for consideration is whether the respondents, at this stage,
are under obligation to supply the certified copies of the requisite documents and to afford an opportunity for cross-examining the persons who have
made allegations against the petitioners.
As per the arguments of the learned counsel for the petitioners, who relied upon Section 11 of the PBPT, Act 1988, the Adjudicating Authority has
to follow the principle of natural justice and as such he is under obligation to supply the certified copies of all the documents relied upon by him and
also to provide an opportunity of cross-examination. For the purpose of convenience, Section 11 is reproduced hereinbelow;
“11. Power of Adjudicating Authority to regulate its own procedure;- The Adjudicating Authority shall not be bound by the procedure laid down by
the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the
Authority shall have powers to regulate its own procedure.â€
Indeed, from perusal of the above provision, it reflects that there is no dispute that the Adjudicating Authority was to follow the principle of natural
justice, but Section 11 is very specific that it is for the authority to regulate its own procedure in which he would conduct the proceeding pending
before him. It is to be ascertained whether in the present circumstance, giving certified copies of the documents and affording opportunity of cross-
examination can be considered to be integral part of the principle of natural justice or not. It is to be seen as to what extent, the Adjudicating Authority
has to follow the principle of natural justice. Learned counsel for the petitioners has placed reliance on a judgment of the Supreme Court in case
reported as (2013) 4 SCC 465 parties being Ayaaubkhan Noorkhan Pathan v. State of Maharashtra and others, in which he has emphasized the
observations made by the Hon’ble Apex Court in paragraph 30, which read thus;
“30. The aforesaid discussion makes it evident that, not only should the opportunity of cross-examination be made available, but it should be one of
effective cross-examination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, it cannot be held
that the matter has been decided in accordance with law, as cross-examination is an integral part and parcel of the principles of natural justice.â€
Based on the above enunciation of law, the petitioners have claimed that it is highly unjustified on the part of the respondents thereby not
considering their applications and not passing any order on their applications and as such it is clear violation of the principle of natural justice.
Shri Lal appearing for respondent No.3 placed reliance on various decisions, they are â€" AIR 1967 SC 122 (State of Jammu and Kashmir vs.
Bakshi Ghulam Mohammad; AIR 2006 SC 1445 (Transmission Corporation of A.P. Ltd. and Others vs. Sri Rama Krishna Rice Mill); decision of
Division Bench of Allahabad High Court in 1987 (32) ELT 520 (Heera Electrodes vs. Union of India (UOI) and another; 1999 (2) RajasthanLR. 194
(Ganpat Singh and another vs. Ashok Kumar and Others); 2011 (269) ELT 221 (Century NF Castings vs. Union of India); 2010(3) AllLJ 649 (Smt.
Java Kalia vs. Smt. Manju Agrawal and another) and 1977 (2) ILR (Kerala) 322 (M.K. Thomas vs. State of Kerala).
In case of Bakshi Ghulam Mohammad (supra), the Supreme Court has dealt with the issue as to in what manner the principle of natural justice has
to be followed in respect of the proceeding initiated by the Government against a person with his friends and relatives who has misused his official
position. Here in this case also there are allegations against the Government Officers who have used their post with the help of their friends and
relatives while entering into several Benami transactions. The Supreme Court has observed as follows;-
“19. It remains now to deal with the last point. This was directed against the proceedings of the Commission. It was said that the proceedings had
been conducted in a manner contrary to the rules of natural justice and to statutory provisions. Two specific complaints were made. The first was that
the Commission had not allowed Bakshi Ghulam Mohammad to inspect all the documents before he was called upon to answer the allegations made
against him. The second was that the Commission had refused him permission to cross-examine persons who had filed affidavits supporting the
allegations made against him. We have now to set out the procedure followed by the Commission. It first called upon the Government to file affidavits
in support of the allegations in the second schedule to the Notification and to produce the documents which supported them. It then asked Bakshi
Ghulam Mohammad to file his affidavit in answer. Thereafter the Commission decided whether any prima facie case had been made for Bakshi
Ghulam Mohammad to meet and in that process rejected some of the allegations. Bakshi Ghulam Mohammad was told that there was no case which
he had to meet in respect of them. Out of the remaining allegations, a group was selected for final consideration and it was decided that the rest would
be taken up gradually thereafter. In connection with that group of cases, counsel for Bakshi Ghulam Mohammad wanted to cross-examine all the
persons who had filed affidavits supporting the Government's allegations in the cases included in that group. The Commissioner ordered that he would
not give permission to cross-examine all the deponents of affidavits but would decide each case separately. It was after this that the petition for the
writ was presented.
The question of inspection is no longer a live question. It is true that when Bakshi Ghulam Mohammad was directed to file his affidavits he had not
been given inspection of' all the documents and files which the Government proposed to use to support their case. On behalf of Bakshi Ghulam
Mohammad it was said that this was a denial of the rules of natural justice. It is not necessary to consider this question because it is admitted that
since then inspection of the entire lot of files and documents has been given. At the final hearing of the allegations, therefore, Bakshi Ghulam
Mohammad would no longer be at any disadvantage.
The next point is as to the right of cross-examination. This claim was first based on the rules of natural justice. It was said that these rules require
that Bakshi Ghulam Mohammad should have been given a right to cross-examine all those persons who had sworn affidavits supporting the allegations
against him. We are not aware of any such rule of natural justice. No authority has been cited in support of it. Our attention was drawn to Meenglas
Tea Estates v. Its Workmen, but there all that was said was that when evidence is given viva voce against a person be must have the opportunity to
hear it and to put the witnesses questions in cross-examination. That is not our case. Furthermore, in Meenglas Tea Estate case the Court was not
dealing with a fact finding body as we are. Rules of natural justice require that a party against whom an allegation is being inquired into should be
given a hearing. Bakshi Ghulam Mohammad was certainly given that. It was said that the right to the hearing included a right to cross-examine. We
are unable to agree that that is so. The right must depend upon the circumstances of each case and must also depend on the statute under which the
allegations are being inquired into. This Court has held in Nagendra Nath Bora and Another Vs. The Commissioner of Hills Division and Appeals,
Assam and Others, that ""the rules of natural justice vary with the varying constitution of statutory bodies and the rules prescribed by the Act under
which they function; and the question whether or not any rules of natural justice had been contravended, should be decided not under any
preconceived notions, but in the light of the statutory rules and provisions."" We have to remember that we are dealing with a statute which permits a
Commission of Inquiry to be set up for fact-finding purposes. The report of the Commission has no force proprio vigore. This aspect of the matter is
important in deciding the rules of natural justice reasonably applicable in the proceedings of the Commission of Inquiry under the Act. Then we find
that s.10 to which we have earlier referred, gives a right to be heard but only a restricted right of cross-examination. The latter right is confined only to
the witnesses called to depose against the person demanding the right. So that Act did not contemplate a right of hearing to include a right to cross-
examine. It will be natural to think that the statute did not intend that in other cases a party appearing before the Commission should have any further
right of cross-examination. We, therefore. think that no case has been made out by Bakshi Ghulam Mohammad that the rules of natural justice require
that he should have a right to cross- examine all the persons who had sworn affidavits supporting the allegations made against him.
We will now deal with the claim to the right to cross-examine based on statutory provision. That claim is based on s. 4(c) of the Act. The relevant
part of the section is as follows:--
The Commission shall have the power of a Civil Court, while trying a suit under the CPC Svt. 1977, in respect of the following matters, namely:-
(a) summoning and to enforce the attendance of a person and examining him on oath;
(b) ….
(c) receiving evidence on affidavits.
It is not in dispute that the CPC of Jammu and Kashmir State referred to in this section is in the same terms as the Indian Code of Civil
Procedure. Order 19 r. 1 of the Indian Code reads as follows:--
Any Court may at any time for sufficient reason order that any particular fact or facts may be proved by affidavit, or that the affidavit of any witness
may be read at the hearing, on such conditions as the Court thinks reasonable:
Provided that where it appears to the Court that either party bona fide desires the production of a witness for cross-examination, and that such witness
can be produced, an order shall not be made authorising the evidence of such witness to be given by affidavit.
The contention is that the powers of the Commission therefore to order a fact to be proved by affidavit are subject to the proviso that that power
cannot be exercised when a party desires the production of the persons swearing the affidavits for cross-examining them.
The contention was accepted by the High Court. We take a different view of the matter. We first observe that the inquiry before the Commission
is a fact-finding inquiry. Then we note that s. 10 which, in our opinion, applies to a person whose conduct comes up for inquiry by the Commission
directly, has a right to cross-examine only those persons who give viva voce evidence before the Commission against him. If s. 4(c) conferred a right
to cross-examine every one who swore an affidavit as to the facts involved in the inquiry, then s. 10(2) would become superfluous. An interpretation
producing such a result cannot be right. It also seems to us that O. 19 r. 1 has to be read with O. 18 r. 4 which states that the evidence of the
witnesses in attendance shall be taken orally in open court. It would appear, therefore, that O. 19 r. 1 is intended as a sort of exception to the
provisions contained in O. 18 r. 4. The Act contains no provision similar to O. 18 r. 4. Therefore, when s. 4(c) of the Act gave the Commission the
power of receiving evidence on affidavits, it gave that as an independent power and not by way of an exception to the general rule of taking evidence
viva voce in open court. It would be natural in such circumstances to think that what the Act gave was only the power to take evidence by affidavit
and did not intend it to be subject to the proviso contained in O. 19 r. 1. If it were not so, then the result really would be to require all evidence before
the Commission to be given orally in open court. If that was intended, it would have been expressly provided for in the Act. We should here refer to
Khandesh SPG. & WVG. Mills Co. Ltd. Vs. The Rashtriya Girni Kamgar Sangh, Jalgaon, where this Court dealing with a somewhat similar section
like s.4(c) observed that facts might be proved by an affidavit subject to O. 19 r. (1). The observations appear to have been obiter dicta. In any case
that case was dealing with a statute different from the one before us. The observation there made cannot be of much assistance in interpreting the
Jammu and Kashmir Inquiry Act. The number of witnesses swearing affidavits on the side of the Government may often be very large. In fact, in this
case the number of witnesses swearing affidavits on the side of the Government is, it appears, in the region of four hundred. The statute could not
have intended that all of them had to be examined in open court and subjected to cross-examination, for then, the proceedings of the Commission
would be interminable. We feel no doubt that the Act contemplated a quick disposal of the business before the Commission, for, otherwise, the object
behind it might have been defeated. While on this topic, we would impress upon the Commission the desirability of speedy disposal of the inquiry. For
these reasons, in our view, s. 4(c) of the Act does not confer a right on a party appearing before the Commission to require a witness giving evidence
by an affidavit to be produced for his cross-examination. The Commission would, of course, permit cross-examination in a case where it thinks that
necessary. The view that we take should not put any party in any difficulty. He can always file affidavits of his own denying the allegations made in
affidavits filed on behalf of the other party. If the evidence on both sides is tendered by affidavits, no one should be at any special disadvantage. We
have also to remember that s. 9 of the Act gives the Commission power to regulate its own procedure subject to any rules made under the Act. We
find that the rules provide that evidence may be given by affidavits and the Commission may after reading it, if it finds it necessary to do so, record the
evidence of the deponents of the affidavits and also of others; see Rules 6, 7 and 8. Rule 10 reproduces the restricted right of cross-examination given
by s. 10. Rule 11 says that in all matters not provided by the rules, the Commission may decide its own procedure. One of the matters covered by the
rules in cross-examination of witnesses. So the rules contemplate cross-examination as a matter of procedure and the Commission is free to decide
what cross-examination it will allow provided that in doing so it cannot go behind the rules relating to cross-examination. Section 9 of the Act has to be
read in the light of these rules. All this, we think, supports the interpretation we have put on s.4(c). We also feel that the procedure before a body like
the Commission has necessarily to be flexible. We, therefore, reject the last contention.â€
(emphasis supplied)
Likewise the Hon’ble Apex Court in the case of Sri Rama Krishna Rice Mill (supra) has observed as to what extent authority is under
obligation to follow the principle of natural justice. The relevant portion of the aforesaid judgment is reproduced hereinbelow;-
“9. In order to establish that the cross examination is necessary, the consumer has to make out a case for the same. Merely stating that the
statement of an officer is being utilized for the purpose of adjudication would not be sufficient in all cases. If an application is made requesting for
grant of an opportunity to cross examine any official, the same has to be considered by the adjudicating authority who shall have to either grant the
request or pass a reasoned order if he chooses to reject the application. In that event an adjudication being concluded, it shall be certainly open to the
consumer to establish before the appellate authority as to how he has been prejudiced by the refusal to grant opportunity to cross-examine any official.
As has been rightly noted by the High Court in the impugned judgment where the reliance is only on accounts prepared by a person, cross examination
is not necessary. But where it is based on reports alleging tampering or pilferage, the fact situation may be different. Before asking for cross
examination the consumer may be granted an opportunity to look into the documents on which the adjudication is proposed. In that event, he will be in
a position to know as to the author of which statement is necessary to be cross-examined. The applications for cross-examination are not to be filed in
routine manner and equally also not to be disposed of by adjudicator in casual or routine manner. There has to be application of mind by him. Similarly,
as noted above, the consumer has to show as to why cross examination is necessary.â€
(emphasis supplied)
In case of M.K. thomas (supra), the Full Bench of Kerala High Court dealt with the issue what are the ingredients of reasonable opportunity to be
afforded to an assessee and has observed, the relevant extract is as follows;-
“10 .…… It was stated that the Income-tax Officer is not bound to disclose the source of his information. Surely this decision cannot be
understood as recognising a right of cross-examination as part of reasonable opportunity or of natural justice in assessment proceedings………… If,
as noticed in the decisions referred to, the assessing authority is not bound to disclose the source of its information and it is enough to draw the
assessee's attention to the material collected, the assessee's right of cross-examination seems to rest on rather slender foundation.
We may first deal with the question of breach of natural justice. On the material on record, in our opinion, there has been no such breach. In the
show-cause notice issued on August 21, 1961, all the material on which the customs authorities have relied was set out and it was then for the
appellant to give a suitable explanation. The complaint of the appellant now is that all the persons from whom enquiries were alleged to have been
made by the authorities should have been produced to enable it to cross-examine them. In our opinion, the principles of natural justice do not require
that in matters like this the persons who have given information should be examined in the presence of the appellant or should be allowed to be cross-
examined by them on the statements made before the customs authorities. Accordingly we hold that there is no force in the third contention of the
appellant. â€
(emphasis supplied)
In case of Century NF Castings (supra) the Division Bench of Punjab and Haryana High Court dealing with the issue of cross-examination
refused by the Commissioner of Central Excise, has observed as follows:-
“5. We are unable to accept the submission. No doubt cross examination is a valuable right, the effect of not permitting the cross-examination
depends upon the facts and circumstances of each case. At this interim stage when decision on merits is yet to be taken, we do not find any ground to
adjudicate upon the question whether absence of cross-examination will affect the case of the petitioner. Question can be examined at appropriate
stage by the concerned authorities and by this Court, if necessary.â€
In view of the above it is clear that the cross-examination in the proceeding initiated by the respondents, cannot be said to be a right of the
petitioners and can be considered to be an integral part of the principle of natural justice, which is required to be followed in view of Section 11 of the
PBPT Act, 1988 as the proceeding before the Adjudicating Authority has to be guided by the principle of natural justice. It is noteworthy to mention
that as per subsection (5) of Section 24 of the PBPT Act, 1988 in which impugned show cause notice has been issued referring the matter to the
Adjudicating Authority, the Initiating Officer after passing the provisional attachment of property is obliged to draw up the statement of the case and
refer it to the adjudicating authority. On receipt of reference under Sub-section (5) of Section 24, the adjudicating authority shall issue notice to the
stakeholders as provided under Sub-section (1) of Section 26 of the Act. Section 26(3) makes it clear that the adjudicating authority will examine the
entire issue and relevant material. Sub-section (3) of Section 26 reads as under:
“(3) The Adjudicating Authority shall, afterâ€
(a) considering the reply, if any, to the notice issued under sub-section (1);
(b) making or causing to be made such inquiries and calling for such reports or evidence as it deems fit;and
(c) taking into account all relevant materials, provide an opportunity of being heard to the person specified as a benamidar therein, the Initiating
Officer, and any other person who claims to be the owner of the property, and, thereafter, pass an orderâ€
(i) holding the property not to be a benami property and revoking the attachment order; or
(ii) holding the property to be a benami property and confirming the attachment order, in all other cases. â€
A plain reading of Sub-section (3) makes it clear that the adjudicating authority is obliged to examine the stand of alleged Benamindar in reply to the
show cause notice. He is further obliged to make further inquiry or take into account further report or evidence which he deems fit for deciding the
question. He can take into account all relevant documents. After providing due opportunity of hearing to alleged Benamindar, he may pass the order to
declare the property as Benami Property and confirm the attachment order or he may hold that the property cannot be treated as Benami Property. In
that case, he may revoke the attachment order. Pertinently, as per Sub-section (6) of Section 26, the adjudicating authority may at any stage of
proceeding, either on the application of any party or suo moto strike out the name of any property improperly joined or add the name of any person
whose presence before the adjudicating authority may be necessary to enable him to adjudicate upon and settle all the questions involved in the
reference.
This Court also in one of almost identical situation in W.P.No.10280/2017 (Kailash Assudani vs. Commissioner of Income Tax, Aayakr Bhawan &
others) decided on 03.08.2017 dealing with the issue in respect of the provisions of PBPT Act, 1988 has observed in respect of following the principle
of natural justice has observed as follows:-
“ In my view, the principles of natural justice are codified in terms of Subsection (6) of Section 26 of the Act. The impugned order is subject to
judicial review before the adjudicating authority. The order passed by the adjudicating authority can be assailed before the appellate tribunal
constituted under Section 31 of the Act. The order of appellate tribunal can also be called in question by preferring appeal to the High Court within a
period of 60 days. A microscopic reading of provisions make it clear that principles of natural justice are reduced in writing in the shape of amendment
in the said act. The amended provisions contains a complete code in itself.â€
In view of the law laid down by the Supreme Court as well as other High Court, as quoted above, I am of the opinion that that the right to cross-
examine cannot be considered to be an integral part of the principle of natural justice, however, it is open for the authority to examine the available
circumstances and if deems fit, the opportunity to cross-examine can be provided, but not as a matter of right.
Thus, considering the overall circumstances without expressing any opinion whether the respondents have to provide an opportunity of cross-
examination or to supply the certified copies of the documents requested by the petitioners, an order has to be passed by the authority assigning reason
on the pending applications filed by the petitioners as to why such applications cannot be accepted. It is not proper on the part of the respondents not
answering the applications submitted by the petitioners and sitting silent over the applications demanding documents and asking opportunity for cross-
examination is itself arbitrary and in violation to the principle of natural justice.
Accordingly, this petition is disposed of directing the respondent No.2 to pass appropriate order on the pending applications of the petitioners
assigning reason for not providing the certified copies of the documents and not giving opportunity to cross-examine. The authority should pass an
order in accordance with law within a period of 10 days from the date of submitting the certified copy of this order.
Accordingly, the petition is disposed of.