Damini Suraj Singh vs Sebi

Order Reserved on: 8.4.2019 Date of Decision :16.4.2019

Appeal No.284 of 2015

Vinod Hingorani D/63, Punarvasu Srushti, Sector-3, Mira Road, Thane- 401104. ..... Appellant

Versus

Securities and Exchange Board of India SEBI Bhawan, Plot C4-A, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051. ...... Respondent

Ms. Ankita Singhania, Advocate with Ms. Surabhi Agrawal, Advocate i/b. Govind Solanke for the Appellant.

Mr. Gaurav Joshi, Senior Advocate with Mr. Mihir Mody and Mr. Sushant Yadav, Advocates i/b. K. Ashar & Co. for the Respondent.

With Appeal No.23 of 2016

Damini Suraj Singh Flat no.104, Bldg-15, Solitaire-3, Poonam Garden, Opp. S.K. Stone, Mira Road (E), Thane-401107. ..... Appellant

Versus

1.

D.V. Sekhar General Manager & Recovery Officer Securities and Exchange Board of India SEBI Bhavan, C4-A, G Block, Bandra-Kurla Complex, 2

Bandra (E), Mumbai - 400 051.

2. Pimmi Hingorani C/o. Juli Singh A-301, Rekha Retreat Shanti Park, Mira Road (E), Thane - 401107.

3. Vinod Hingorani D/63, Punarvasu Co-operative HSG. Soc, Sector-3, Shrishti Complex, Mira Road (E), Thane- 401104. ... Respondent

Mr. L.S. Shetty, Advocate with Mr. U.R. Naik, Mr. Arnav Misra, Ms. Sanika Lalit and Mr. M.M. Nair, Advocates i/b. L.S. Shetty & Associates for the Appellant.

Mr. Gaurav Joshi, Senior Advocate with Mr. Anubhav Ghosh and Ms. Vidhi Jhawar, Advocates i/b. The Law Point for the Respondent No.1.

None for the Respondent Nos.2 and 3.

With Appeal No.24 of 2016 Sarika Suraj Singh Flat no.104, Bldg-15, Solitaire-3, Poonam Garden, Opp. S.K. Stone, Mira Road (E), Thane-401107. ..... Appellant Versus

1. D.V. Sekhar General Manager & Recovery Officer Securities and Exchange Board of India SEBI Bhavan, C4-A, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051.

2. Pimmi Hingorani C/o. Juli Singh A-301, Rekha Retreat Shanti Park, Mira Road (E), Thane - 401107.

3. Vinod Hingorani 3

D/63, Punarvasu Co-operative HSG. Soc, Sector-3, Shrishti Complex, Mira Road (E), Thane- 401104. ... Respondents

Mr. L.S. Shetty, Advocate with Mr. U.R. Naik, Mr. Arnav Misra, Ms. Sanika Lalit and Mr. M.M. Nair, Advocates i/b. L.S. Shetty & Associates for the Appellant.

Mr. Gaurav Joshi, Senior Advocate with Mr. Anubhav Ghosh and Ms. Vidhi Jhawar, Advocates i/b. The Law Point for the Respondent No.1.

None for the Respondent Nos.2 and 3.

With Appeal No. 25 of 2016

Rinki Suraj Singh Flat No.104, Bldg-15, Solitaire-3, Poonam Garden, Opp. S.K. Stone Mira Road (E), Thane - 401107. ..... Appellant

Versus

1. D.V. Sekhar General Manager & Recovery Officer Securities and Exchange Board of India SEBI Bhavan, C4-A, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051.

2. Pimmi Hingorani C/o. Juli Singh A-301, Rekha Retreat Shanti Park, Mira Road (E), Thane - 401107.

3. Vinod Hingorani D/63, Punarvasu Co-operative HSG. Soc, Sector-3, Shrishti Complex, Mira Road (E), Thane- 401104. ... Respondent 4

Mr. L.S. Shetty, Advocate with Mr. U.R. Naik, Mr. Arnav Misra, Ms. Sanika Lalit and Mr. M.M. Nair, Advocates i/b. L.S. Shetty & Associates for the Appellant.

Mr. Gaurav Joshi, Senior Advocate with Mr. Anubhav Ghosh and Ms. Vidhi Jhawar, Advocates i/b. The Law Point for the Respondent No.1.

None for the Respondent Nos.2 and 3.

With Appeal No.382 of 2016

1. Damini Suraj Singh

2. Rinki Suraj Singh

3. Sarika Suraj Singh Flat No.104, Bldg-15, Solitaire-3, ..... Appellant Poonam Garden, Opp. S.K. Stone Mira Road (E), Thane - 401107.

Versus

1. D.V. Sekhar General Manager & Recovery Officer Securities and Exchange Board of India SEBI Bhavan, C4-A, ......

G Block, Bandra-Kurla Complex, Respondent Bandra (E), Mumbai - 400 051.

2. Pimmi Hingorani C/o. Juli Singh A-301, Rekha Retreat Shanti Park, Mira Road (E), Thane - 401107.

3. Vinod Hingorani D/63, Punarvasu Co-operative HSG. Soc, Sector-3, Shrishti Complex, Mira Road (E), Thane- 401104.

Mr. L.S. Shetty, Advocate with Mr. U.R. Naik, Mr. Arnav Misra, Ms. Sanika Lalit and Mr. M.M. Nair, Advocates i/b. L.S. Shetty & Associates for the Appellant.

5

Mr. Gaurav Joshi, Senior Advocate with Mr. Anubhav Ghosh and Ms. Vidhi Jhawar, Advocates i/b. The Law Point for the Respondent No.1.

None for the Respondent Nos.2 and 3.

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M.T. Joshi, Judicial Member

Per : Justice Tarun Agarwala

1. In these group of appeals a common issue is involved and,

therefore, all the appeals are being decided together. For

facility, the facts in Appeal no.284 of 2015 Vinod Hingorani vs.

Securities and Exchange Board of India is being taken into

consideration.

2. Three separate orders were passed against the appellant

Vinod Hingorani dated 28th April, 2010, 28th April, 2010 and

10th June, 2010 imposing a penalty of Rs.25 lakhs, Rs. 30 lakhs

and Rs.55 lakhs respectively for violation of Securities and

Exchange Board of India (Prohibition of Fraudulent and Unfair

Trade Practices relating to Securities Market) Regulations, 2003

(referred to hereinafter as 'PFUTP Regulations') and Securities

and Exchange Board of India (Prohibition of Insider Trading

Regulations) 1992 (referred to hereinafter as 'PIT Regulations').

The three orders became final and the appellant consequently

was aware of his liability to pay his dues in terms of the three 6

orders. The appellant failed and neglected to pay the dues even

after the expiry of 45 days from the date of the orders.

3. Three recovery certificate nos. 211, 231 and 288 of 2014

dated 11th July, 2014, 11th July, 2014 and 16th July, 2014 were

issued requiring the appellant to pay an amount of

Rs.37,62,644/-, Rs.81,98,863/- and Rs.45,19,904/- aggregating

Rs.1,64,81,411/- which included the principal amount plus

interest failing which it was specified that the amount would be

recovered by following one or any of the modes specified under

Section 28A of the Securities and Exchange Board of India Act,

1992 (referred to hereinafter as 'SEBI Act').

4. Inspite of the issuance of the Recovery Certificate and the

notice of demand the appellant failed to pay the amount as a

result the Recovery Officer issued an order dated

18th December, 2014 directing civil imprisonment of the

appellant for a period of six months. The order of civil

imprisonment was challenged by the appellant by means of a

Writ Petition No.639 of 2015 before the Bombay High Court

which was allowed by judgement dated 10th March, 2015. The

order of the Recovery Officer requiring the appellant to be

detained in civil imprisonment for a period of six months was

quashed and the appellant was released forthwith. The matter 7

was remitted to the Recovery Officer to decide the same afresh

in accordance with law in the light of the directions and

observations made in the judgement. The Bombay High Court

held that before issuing an order for detention and arrest for

non-payment of dues, the Recovery Officer was required to be

satisfied in accordance with the provisions of Rule 73(1) of

Second Schedule of the Income Tax Act, 1961, namely, that the

appellant with the object of obstructing the execution of the

certificate had dishonestly transferred the property or the

appellant despite having means to pay the arrears or some

substantial part thereof refused or neglected to pay the dues.

The Bombay High Court held that since this satisfaction was not

recorded by the Recovery Officer the order of detention could

not be sustained and was set aside.

5. Pursuant to the judgement of the Bombay High Court, a

show cause notice dated 10th March, 2015 was served upon the

appellant stipulating therein that inspite of the penalties imposed

by SEBI in the year 2010 the appellant had refused and

neglected to pay the amount. Further, in order to escape from

the recovery of the said amount and to evade the fine imposed

the appellant had dishonestly transferred his Flat No.D 63,

Punarvashu Co-operative Housing Society to his brother-in-law 8

by a registered agreement to sell dated 30th January, 2013. It

was also alleged that fifty percent of the sale consideration was

paid to his wife and the remaining fifty percent to his mother. It

was also alleged that the appellant's wife in turn purchased

another Flat No.A-1101 in Dev Paradise, Beverly Park Road,

Mira Road East, Thane on 2nd March, 2013 and thereafter

executed an agreement of sale dated 19th January, 2015

transferring the flat to three of her nieces (brother's daughters,

namely, Ms. Rinki, Ms. Damini and Ms. Sarika). It was also

alleged that the consideration deposited in the name of mother

was subsequently diverted to purchase Flat No.A-1101, Dev

Paradise. The show cause notice also alleged that the appellant

was doing business in the name of 'Kunal Beer Shop' and civil

contracts, interior decorations works, real estate brokerage, etc

under the name and style as 'Om Sai Interiors' and, therefore,

was directed to show cause that since he had transferred the

property with a dishonest intention and further he still had the

means to pay the arrears he was directed to pay the amount

failing which proceedings for detention and arrest would be

initiated. After giving an opportunity of hearing, the Recovery

Officer passed an order dated 20th April, 2015 indicating that he

was satisfied that the appellant with the object of obstructing 9

execution of the certificate had dishonestly concealed and

transferred some of his properties and also that the appellant

inspite of having sufficient means to pay a substantial part of the

arrears had been continuously avoiding since 2010 to pay the

penalty and, therefore, directed the appellant to pay atleast

Rs.30 lakh within four weeks from the date of the order failing

which steps would be initiated for his arrest in execution of the

certificate. The appellant being aggrieved by the said order of

the Recovery Officer has filed the present Appeal no.284 of

2015.

6. The appellant Damini Suraj Singh filed Appeal No.23 of

2016, Sarika Suraj Singh filed Appeal No.24 of 2016 and Rinki

Suraj Singh filed Appeal No.25 of 2016 and Damini Suraj Singh

and Ors. filed Appeal No.382 of 2016 challenging the

attachment order dated 2nd December, 2015 passed by the

Recovery Officer vide which Flat no.A1101, Dev Paradise has

been attached for recovery of dues of the appellant Vinod

Hingorani.

7. We have heard Ms. Ankita Singhania, Advocate assisted

by Ms. Surabhi Agrawal, Mr. L.S. Shetty, Mr. U.R. Naik, Mr.

Arnav Misra, Ms. Sanika Lalit and Mr. M.M. Nair, learned

counsel for the appellants and Mr. Gaurav Joshi, Senior 10

Advocate assisted Mr. Mihir Mody, Mr. Sushant Yadav and Mr.

Anubhav Ghosh, learned counsel for the respondents at length.

8. The basic contention of the appellant Vinod Hingorani is,

that the order directing payment of the dues and initiating

proceedings for detention and arrest is in violation of Rule 73 of

Part V of the Second Schedule of the Income Tax Act and,

therefore, the order is liable to be set aside. It was contended

that Rule 73 is mandatory and the conditions mentioned therein

are required to be satisfied before proceeding to take steps for

detention and arrest. It was contended that there has to be a

specific finding that the defaulter had dishonestly transferred

any part of his property after the drawing up of the certificate.

It was contended that in the instant case the transfer of the

property by the appellant Vinod Hingorani was done prior to the

issuance of the certificate and, therefore, such transfer was not

in violation of Rule 73(1)(a) of the Second Schedule of the

Income Tax Act. It was further contended that the appellant

Vinod Hingorani had also not violated the provisions of Rule

73(1)(b) of the Second Schedule of the Income Tax Act in as

much as the finding of the Recovery Officer that the appellant

Vinod Hingorani had the means to pay the arrears or some

substantial part thereof was based on suspicion and on such 11

suspicion which cannot replace proof cannot lead to the arrest of

the appellant Vinod Hingorani.

9. To enlarge the submission it was contended by the learned

counsel Ms. Ankita Singhania that Vinod Hingorani admittedly

had transferred the property D 63 in favour of Mr. Suresh

Basantani who is the brother in law of the appellant by a

registered agreement of sale dated 30th January, 2013 whereas

the certificate was drawn up by the Recovery Officer much after

the alleged sale on 11th July, 2014 and 16th July, 2014. It was,

thus, contended that since the appellant had not transferred the

property after the drawing up of the certificate the question of

obstructing the execution of the certificate or dishonestly

transferring the property with a view to avoid the payment of

penalty did not arise. In support of her submission, the learned

counsel has placed reliance on a decision of the Calcutta High

Court in Gajendra Kumar Banthia vs. Union of India, 1996

SCC Online Cal 455 wherein it was held that the provision of

Rule 73 was mandatory in nature. It was also urged that the

finding in the impugned order that the appellant is the owner of

the business in Kunal Beer Shop and Om Sai Interiors and is

therefore earning money and has sufficient means to pay the

arrears or substantial part thereof is based on suspicion. It was 12

urged that there is no evidence to show that the appellant is the

owner of aforesaid two businesses. In support of her

submission, the learned counsel has relied upon a decision of

this Tribunal in Vision Technology India Ltd. vs. SEBI

Appeal no.270 of 2004 decided on 20th February, 2006

wherein the Tribunal held that suspicion howsoever strong

cannot take place of proof while relying upon the observation of

the Supreme Court in Union of India vs. Chaturbhai M. Patel

& Co. AIR 1976 SC 712.

10. In order to address this issue, it is essential to consider

Section 28A of the SEBI Act. For facility, the said provision is

extracted hereunder:

"28A. Recovery of amounts. (1) If a person fails to pay the penalty imposed under the Act or fails to comply with any direction of the Board for refund of monies or fails to comply with a direction of disgorgement order issued under section 11B or fails to pay any fees due to the Board, the Recovery Officer may draw up under his signature a statement in the specified form specifying the amount due from the person (such statement being hereafter in this Chapter referred to as certificate) and shall proceed to recover from such person the amount specified in the certificate by one or more of the following modes, namely:--

(a) attachment and sale of the person's movable property;

(b) attachment of the person's bank accounts;

(c) attachment and sale of the person's immovable property;

13 (d) arrest of the person and his detention in prison;

(e) appointing a receiver for the management of the person's movable and immovable properties,

and for this purpose, the provisions of sections 220 to 227, 228A, 229, 232, the Second and Third Schedules to the Income-tax Act, 1961 (43 of 1961) and the Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to time, in so far as may be, apply with necessary modifications as if the said provisions and the rules made thereunder were the provisions of this Act and referred to the amount due under this Act instead of to income-tax under the Income-tax Act, 1961.

Explanation 1.-- For the purposes of this sub-section, the person's movable or immovable property or monies held in bank accounts shall include any property or monies held in bank accounts which has been transferred directly or indirectly on or after the date when the amount specified in certificate had become due, by the person to his spouse or minor child or son's wife or son's minor child, otherwise than for adequate consideration, and which is held by, or stands in the name of, any of the persons aforesaid; and so far as the movable or immovable property or monies held in bank accounts so transferred to his minor child or his son's minor child is concerned, it shall, even after the date of attainment of majority by such minor child or son's minor child, as the case may be, continue to be included in the person's movable or immovable property or monies held in bank accounts for recovering any amount due from the person under this Act.

Explanation 2.-- Any reference under the provisions of the Second and Third Schedules to the Income-tax Act, 1961 (43 of 1961) and the Income-tax (Certificate Proceedings) Rules, 1962 to the assessee shall be construed as a reference to the person specified in the certificate.

Explanation 3.-- Any reference to appeal in Chapter XVIID and the Second Schedule to the Income-tax Act, 1961 (43 of 1961), shall be construed as a reference to 14

appeal before the Securities Appellate Tribunal under section 15T of this Act.

(2) The Recovery Officer shall be empowered to seek the assistance of the local district administration while exercising the powers under sub-section (1).

(3) Notwithstanding anything contained in any other law for the time being in force, the recovery of amounts by a Recovery Officer under sub-section (1), pursuant to non- compliance with any direction issued by the Board under section 11B, shall have precedence over any other claim against such person.

(4) For the purposes of sub-sections (1), (2) and (3), the expression "Recovery Officer" means any officer of the Board who may be authorised, by general or special order in writing, to exercise the powers of a Recovery Officer."

11. The aforesaid provision was inserted by Act no.27 of

2014. The object of inserting Section 28A to the SEBI Act was

to provide a mechanism for recovery of the amounts due to

SEBI. Instead of prescribing an independent mechanism for

collection and recovery of the amounts due to SEBI, the

legislature deemed it fit to follow the mechanism provided

under the Income Tax Act and accordingly inserted Section 28A

to SEBI Act wherein the provisions of the Income Tax Act

relating to 'collection and recovery' have been incorporated.

Thus, the legislature by inserting Section 28A to SEBI Act has

provided that if a person fails to pay the amounts referred in

Section 28A, then the RO shall draw up a statement/certificate

and proceed to recover the amounts specified in the certificate 15

by any one or more of the five modes specified therein and for

that purpose the provisions of Section 220 to 227, 228A, 229,

232, the Second and Third Schedules to the Income-tax Act,

1961 and the Income-tax (Certificate Proceedings) Rules, 1962

as in force from time to time, in so far as may be, would apply

with necessary modifications as if the said provisions and the

rules made thereunder were the provisions of SEBI Act and

referred to the amount due to SEBI under the SEBI Act.

12. The aforesaid provision clearly indicates that where a

person fails to pay the penalty imposed under the Act the

Recovery Officer would draw a certificate and proceed to

recover from such person the amount specified in the certificate

by one or more modes mentioned therein and for recovery of the

amount the provisions of Sections 220 to 227, 228A, 229, 232,

of the Second and Third Schedule of the Income Tax Act and

the Income Tax Certificate Proceedings Rules, 1962 in so far as

it may be applied with necessary modifications. Explanation 1

expressly provides that the defaulter's moveable or immovable

property or monies would include any movable or immovable

property or monies transferred directly or indirectly or after the

date when the amount specified in the certificate had become

due.

16

13. It thus becomes clear that any amount which has been

specified in an order passed under the SEBI Act if not paid can

be recovered by any of the modes specified under Section 28A

for which purpose a certificate would be drawn up by the

Recovery Officer. In the instant case, the order of penalty was

passed in the year 2010 and the appellant Vinod Hingorani was

directed to pay the penalty within forty five days from the date

of the order. The said amount was not paid within the

prescribed period and accordingly the order became final and

the amount became due and payable. Under Explanation 1 of

Section 28A the amount can be recovered from the defaulter's

moveable or immovable property or monies held in bank

account which has been transferred directly or indirectly after

the amount had become due. The word "certificate" indicated

in Explanation 1 of Section 28A has to be read in the light of the

words "had become due". The amount of penalty specified in

the original order had become due and payable after 45 days

from the date of the order. Thus, the word "certificate" used

under Explanation 1 of Section 28A would include the penalty

imposed under an order passed by SEBI.

14. Rule 73 of the Second Schedule of the Income Tax Act

provides as under:-

17

"73. Notice to show cause. - (1) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Tax Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Tax Recovery Officer, for reasons recorded in writing, is satisfied--

(a ) that the defaulter, with the object or effect of obstructing the execution of the certificate, has, after the drawing up of the certificate by the Tax Recovery Officer, dishonestly transferred, concealed, or removed any part of his property, or

(b ) that the defaulter has, or has had since the drawing up of the certificate by the Tax Recovery Officer, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same.

(2) Notwithstanding anything contained in sub-rule (1), a warrant for the arrest of the defaulter may be issued by the Tax Recovery Officer if the Tax Recovery Officer is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate, the defaulter is likely to abscond or leave the local limits of the jurisdiction of the Tax Recovery Officer.

(3) Where appearance is not made in obedience to a notice issued and served under sub-rule (1), the Tax Recovery Officer may issue a warrant for the arrest of the defaulter.

(3A) A warrant of arrest issued by a Tax Recovery Officer under sub-rule (2) or sub-rule (3) may also be executed by any other Tax Recovery Officer within whose jurisdiction the defaulter may for the time being be found.

(4) Every person arrested in pursuance of a warrant of arrest under this rule shall be brought before the Tax Recovery Officer issuing the warrant as soon as 18

practicable and in any event within twenty-four hours of his arrest (exclusive of the time required for the journey):

Provided that, if the defaulter pays the amount entered in the warrant of arrest as due and the costs of the arrest to the officer arresting him, such officer shall at once release him.

Explanation.--For the purposes of this rule, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter."

15. The usage of the word "after the drawing up of the

certificate" contained in Rule 73(1)(a) and the usage of the word

'since the drawing up of the certificate' contemplated under

Rule 73(1)(b) has to be read in the light of the provision of

Section 28A requiring the person to pay penalty imposed under

an order passed under SEBI Act. Such drawing up of the

certificate or since the drawing up of the certificate would

include the order of SEBI imposing penalty under the SEBI Act.

Viewing from this angle it becomes apparently clear that

pursuant to an order imposing penalty and directing the

defaulter to pay the amount within 45 days and subsequently

failure on the part of the defaulter to pay the said amount and

dishonestly transferring or removing any part of the property

would amount to obstructing the execution of the certificate. In

our view, the contention that there was no obstruction of the 19

execution of the certificate by the appellant Vinod Hingorani

after the drawing up of the certificate is patently erroneous and

cannot be accepted.

16. At this stage, we may point out that it is true that

ordinarily we should follow the literal rule of interpretation

while construing a statutory provision, but if the literal

interpretation makes the provision unconstitutional or

unworkable we can depart from it so that the provision becomes

constitutional or workable. Sometimes the plain language of the

provision has to be read down in order to uphold the validity of

the statute as invalidating a statute is a grave step. Hence we

may sometimes have to read down a statute in order to make it

constitutional.

17. The Supreme Court in several cases has adopted the

principles of reading down the provisions of the statute. The

reading down of a provision of a statute puts into operation the

principle that so far as it is reasonably possible to do so, the

legislation should be construed as being within within its power.

It has the principle effect that where an Act is expressed in

language of a generality which makes it capable, if read

literally, of applying to matters beyond the relevant legislative

provision, the Court will construe it in a more limited sense so 20

as to keep it with provision. Accordingly, Rule 73 has to be

read in this light along with the main provisions, i.e., Section

28A of the Act.

18. Similarly, the contention that Rule 73(1)(b) is also not

applicable as the appellant Vinod Hingorani has no means to

pay the arrears and is not earning from any business as he is not

the owner thereof is patently erroneous and cannot be accepted.

There is conclusive evidence which has come on record to

indicate there were large transfer of monies from the accounts

of Kunal Beer Shop to the accounts of the appellant and his wife

which leads to an irresistible inference that the appellant Vinod

Hingorani had the means to pay the arrears or some substantial

part of the amount. Refusal or neglecting to pay the amount

inspite of having means satisfies the condition contemplated

under Rule 73(1)(b). The decisions cited by the learned senior

counsel for the respondent, namely, Gajendra Kumar Banthia

(supra) and Vision Technology India Ltd. are distinguishable

and not applicable to the present facts and circumstances of the

case. The contention raised by the learned counsel for the

appellant thus lacks merit.

21

19. In so far as Appeal nos.23, 24, 25 and 382 of 2016 are

concerned, the learned counsel for the appellant Shri Shetty

contended that the appellants are bonafide purchasers of the flat

for value and, therefore, the attachment orders cannot be

sustained and are liable to be set aside.

20. In this regard, we find that property No.D-63, Punarvashu

Co-operative Housing Society was registered in the name of

Vinod Hingorani, appellant in Appeal no.284 of 2015 by

registered agreement to sell dated 30th January, 2013. The said

appellant transferred the flat to his brother-in-law Mr. Suresh

Basantani by a registered agreement to sell dated 30th January,

2013 for a consideration of Rs.44 lakhs. Part of the

consideration of Rs.22 lakhs was paid to the wife of the

appellant Vinod Hingorani. The wife of the appellant Vinod

Hingorani purchased Flat No.1101, Dev Paradise on 2nd March,

2013 and subsequently executed a registered agreement of sale

dated 19th January, 2015 in favour of the appellants Ms. Damini,

Ms. Sarika and Ms. Rinki, appellants in Appeal nos.23, 24 and

25 respectively. The Recovery Officer has found evidence that

Flat No.D 63, Punarvashu Co-operative Housing Society which

was owned by Vinod Hingorani and against whom an order of 22

SEBI was passed imposing a penalty and in order to evade the

payment initially transferred the property to his brother in law

as part amount was paid to his wife Pimmi Hingorani. She in

turn purchased Flat no.1101, Dev Paradise in her name and

thereafter transferred it to Ms. Damini, Ms. Sarika and Ms.

Rinki, the appellants who are her nieces. The Recovery Officer

has found a clear trail of the monies of Vinod Hingorani and has

also given a categorical finding that Vinod Hingorani's wife

Pimmi Hingorani was a house wife. A feeble attempt was made

contending that Vinod Hingorani and Pimmi Hingorani were

living separately and that Rs.22 lakhs paid to Pimmi Hingorani

was with regard to settlement of their marital dispute. This

contention cannot be accepted as we find there is no judicial

order of separation. Further ample evidence has come on record

to show that joint account were being continuing and in

operation.

21. In the light of the aforesaid, it is clear that Vinod

Hingorani in order to avoid and evade the imposition of penalty

transferred the flat in a malafide manner. Consequently, the

attachment of Flat No.1101, Dev Paradise by the Recovery

Officer was perfectly justified. The decision cited by the 23

learned counsel namely M/s. Sree Foundation vs. The Tax

Recovery Officer-I, 2015 (5) LW 244, Samson John vs. Tax

Recovery Officer, Raigad and Others, 2008 (4) SCC Online

771, Electro Zavod (India) Pvt. Ltd. and Others vs.

Commissioner of Income-Tax and Others, 2005 SCC Online

Cal 735, Jaymac Lasetron P. Ltd. and another vs.

Commissioner of Income-Tax and Others, 2006 SCC Online

Cal 825 are not applicable and distinguishable in the facts and

circumstances of the case.

22. For the reasons stated aforesaid all the appeals lack merit

and are dismissed. In the circumstances of the case there shall

be no order as to costs.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member

Sd/-

Justice M.T. Joshi Judicial Member

16.4.2019 Prepared and compared by RHN 24

After the pronouncement, the learned counsel for the

appellant in Appeal No.284 of 2015 has prayed for stay of the

operation of our judgement on the ground that the appellant is

bedridden. Be that as it may. We do not find any justification

to stay the effect and the operation of our order. The oral

request is rejected.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member

Sd/-

Justice M.T. Joshi Judicial Member

16.4.2019 Prepared and compared by RHN