The court upheld the classification of petitioners as 'Benamidars' under the Prohibition of Benami Property Transactions Act due to their failure to respond to notices or establish ownership of seized cash.

ORDER :

Narsing Rao Nandikonda, J.

This Writ Petition is filed under Article 226 of the Constitution of India seeking to declare the action of the respondent No.2 in invoking the provisions of the Prohibition of Benami Property Transactions Act, 1988 (for short, the Act, 1988) and thereby passing the impugned order, dated 22.02.2025 under Section 24 (4)(b)(i) of the Act, 1988, as arbitrary, illegal, unconstitutional and without jurisdiction and consequently, to set aside the same.

2. Heard Sri N.Naveen Kumar, learned counsel for the petitioners, Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, appearing for respondent Nos.1 and 3 and Ms.K.Mamata, learned Senior Standing Counsel, appearing for respondent Nos.2 and 4. Perused the record.

3. The brief facts of the case are that during the process of election to the State Legislative Assembly of the State of Telangana for the year 2023, criminal proceedings were initiated against the petitioners vide FIR No.1323 of 2023 on the file of Hayathnagar Police Station, Rachakonda Commissionerate, for the offences punishable under Sections 188, 171-B read with 171-E of the Indian Penal Code, 1860 and Section 123 (1) (A) of the Representation of Peoples Act, 1951 alleging that on 22.11.2023, when the Inspector of Police, Hayathnagar Police Station during routine vehicle inspection on the National Highway 65, intercepted the vehicle i.e., Hyundai i20 Car bearing No.AP-23-AG-3719, in which petitioner Nos.1, 2 and 4 were travelling, and seized cash amounting to Rs.2,00,00,000/- to hand over the same to the contesting MLA candidate i.e., Sri Komatireddy Rajagopala Reddy from Munugodu Assembly Constituency for Election purpose. Petitioner Nos.3 and 5 were travelling in Innova Car bearing No.TS-13-G T/R 7153. Aggrieved by registration of said FIR, the petitioners filed Crl.P.No.4033 of 2024 before this Court seeking to quash the proceedings in the said F.I.R. The said Criminal Petition is pending for adjudication. The learned Junior Civil Judge-cum-XIV Additional Metropolitan Magistrate, Hayathnagar, District, vide order, dated 02.05.2024, in Crl.M.P.No.310 of 2024 in C.C.No.548 of 2024 was pleased to direct the Investigation Officer to deposit FD of Rs.2,00,00,000/- before the Principal Director of Income Tax, Hyderabad. Pursuant to the warrant, dated 26.06.2024 under Section 132A of the Income Tax Act, 1961 (for short, ‘the Act, 1961’) issued by the Principal Director of Income Tax (Investigation), panchanama was conducted and the alleged amount was deposited into the account of the Principal Director of Income Tax, Hyderabad.

4. According to the respondents, the subsequent investigation was conducted by the Director of Income Tax (Investigation) Hyderabad. During the course of investigation summons under Section 131 of the Act, 1961 were issued to the petitioners to furnish sources of cash of Rs.2.00 crores seized by the Hayathnagar Police from their possession. None of them appeared nor furnished any information about sources of said cash. On receipt of information as it is a potential benami transaction, approval under Section 23 of the Act, 1988 was sought from the approving authority for conducting further enquiry. Accordingly summons under Section 19 of the Act, 1988 were issued to the petitioners on 28.10.2024 and asked them to appear before the respondent authorities on 04.11.2024. On the said date, none appeared for the petitioners and no documents were filed to establish the ownership of seized cash. Again summons were issued on 07.11.2024 asking the petitioners to appear in person on 8.11.2024. On that date also, none appeared for the petitioners so also even as per the bank statements and income tax returns, the sources of income were insufficient to justify the possession of Rs.2.00 crores by the petitioners. After due enquiry and sufficient opportunity being provided to the petitioners, a show cause notice, dated 15.11.2024 was issued under Section 24 (1) of the Act,