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Interim stay order by the Supreme Court does not extirpate the binding effect of judgment by High Court: Calcutta High Court

Any interim stay order given in refutation of an earlier judgment of any high court does not diminish its binding value. In the present matter surrounding property transactions under the Prohibition of Benami Property Transactions Act, 1988, the bench comprising of Shekhar B. Saraf J. delved into the persuasive value of interim stay orders by the Supreme Court in the matter of Deific Abode LLP v. Union of India & Ors [WPA 11123 of 2020].

The petitioners contended that the impugned show cause notices have been issued under the 1988 Act. The said impugned notices under the 1988 Act, as per the contention of the petitioners, do not record any reasons as mandated by law. The fundamental point of contention was narrowed to the unconscionable and illegal ‘retrospective applicability’ of the 1988 Act, leading to these proceedings. The impugned proceedings could not have been initiated under the said 1988 Act as the amendment Act of 2016 to the said 1988 Act had come into force on November 1, 2016 and the immovable property, which has been designated as a benami property under the 1988 Act was purchased much prior to the coming into force of the said amendment Act on November 1, 2016

To adjudge the provisions of the said Act, the Court referred to the judgment rendered in M/s. Ganpati Dealcom Pvt. Ltd v. Union of India (WPO No. 687 of 2017) dated December 12, 2019, which had interpreted the amendment Act of 2016 to the 1988 Act to be prospective in nature, and had also ruled that in the absence of enabling procedural rules under the 1988 Act when the immovable property was purchased. In other words, what was to be noted was the fact that while the 1988 Act entered the statute books, no procedural rules were framed under Section 8 of the 1988 Act for the declaration of the benami property, rendering the 1988 Act effective, merely on paper.

The bench relied on the decision of Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association, Madras, (1992) 3 SCC 1 wherein the Hon‟ble Supreme Court had explained the difference between an order of stay of operation of an impugned order and the quashing of impugned order. It was accordingly seen that the effect of the order of stay in a pending appeal before the Apex Court does not amount to any declaration of law but is only binding upon the parties to the said proceeding and at the same time, such interim order does not destroy the binding effect of the judgment of the High Court as a precedent because while granting the interim order, the Apex Court had no occasion to lay down any proposition of law inconsistent with the one declared by the High Court which is impugned.

The court ordered that “The Division Bench Judgment in M/s. Ganpati Dealcom Pvt. Ltd is binding upon this Court even though the operation of the said judgment has been stayed by the Supreme Court. Accordingly, I am prima facie of the opinion that the writ petitioners are entitled to interim orders at this stage. However, in further view that the Revenue is to be protected as the matter is sub-judice before the Supreme Court.”

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