Court Dismisses 17-Year-Late Writ Petition by HUF Member

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Case Name:

Alay Rakesh Shah Vs Department of Income Tax (High Court of Gujarat)

R/Special Civil Application No.13477 of 2018

Key Takeaways:

1. A member of an HUF cannot restart litigation long after the cause of action if the Karta has already pursued legal remedies.

2. Timely action is crucial for maintaining a writ petition under Article 226 of the Constitution of India.

3. Courts do not recognize multiple actions by different HUF members years after the cause of action arose.

Issue:

Can a member of an HUF file a writ petition 17 years after the cause of action, on the ground that he recently attained majority, when the Karta had already taken legal steps at the relevant time?

Facts:

- The case involves Rakesh K. Shah HUF, with Alay Rakesh Shah as a member.

- In November 2000, Income Tax authorities conducted a search at Shah Enterprises, a proprietary concern of Keyur P. Shah.

- The search warrant was issued for Shah Finance, Keyur P. Shah, and Rakesh K. Shah, but not for Rakesh K. Shah HUF.

- Several cheques belonging to Rakesh K. Shah HUF were seized during the search.

- The seized cheques couldn't be deposited within the valid period.

- Proceedings under sections 158BC and 158BD of the Income Tax Act, 1961 were carried out against various assesses.

- The Karta of the HUF made multiple efforts to release the cheques and filed complaints with various authorities.

- Alay Rakesh Shah filed the writ petition in 2018, claiming he was born in 1997 and had recently attained majority.

Arguments:

Petitioner's arguments:

- The search and seizure were illegal as there was no authorization against Rakesh K. Shah HUF.

- The Income Tax department's actions caused significant financial loss to the HUF.

- The petitioner only recently attained majority and thus should be allowed to file the petition now.

Department's likely arguments (inferred from the judgment):

- The Karta of the HUF had already taken appropriate legal steps at the relevant time.

- The petition is time-barred and cannot be entertained after 17 years.

Key Legal Precedents:

The judgment doesn't explicitly mention any specific legal precedents. However, it refers to Article 226 of the Constitution of India, which pertains to the High Courts' power to issue writs.

Judgement:

The High Court dismissed the petition, stating:

1. The petitioner cannot maintain this litigation as a member of the HUF when the Karta had already taken appropriate steps.

2. The law doesn't recognize multiple actions by different HUF members years after the cause of action arose.

3. Timely action is essential for maintaining a writ petition under Article 226 of the Constitution.

4. The petitioner can't file a writ petition 17 years later on the ground of recently attaining majority.

5. The petitioner doesn't have an independent right to raise grievances on behalf of the HUF.

FAQs:

Q1: Can a member of an HUF file a separate legal action if they're dissatisfied with the Karta's efforts?

A1: Generally, no. The court ruled that individual members can't restart litigation if the Karta has already taken appropriate legal steps.

Q2: Does attaining majority give someone the right to file a petition for past events?

A2: Not necessarily. The court emphasized that timely action is crucial, and attaining majority doesn't override the principle of limitation.

Q3: What's the significance of Article 226 in this case?

A3: Article 226 gives High Courts the power to issue writs. The court stressed that this power is discretionary and timely action is an essential element for maintaining such petitions.

Q4: Can the Income Tax department seize documents from entities not named in the search warrant?

A4: While the judgment doesn't directly address this, it suggests that such actions might be challenged, but it must be done in a timely manner by the appropriate party.

Q5: What options does the petitioner have now?

A5: The judgment doesn't mention further options. Given that the High Court dismissed the petition, the petitioner might consider appealing to a higher court, but the same time-bar issues would likely apply.

1. Petitioner is a member of one Hindu Undivided Family ('HUF' for short) i.e. Rakesh K. Shah HUF. He has prayed that the respondents i.e. the Union of India and Income Tax department be directed to pay to him a sum of Rs.33,51,29,256/­. This prayer arises in following background.

2. According to the petitioner, a search was carried out by the Income Tax authorities at the premises of one Shah Enterprises, a proprietary concern of Keyur P. Shah. According to the petitioner, the search warrant of authorization dated 29.11.2000 was issued in the name of i) Shah Finance; ii)Keyur P. Shah and iii)Rakesh K.Shah. These three persons/entities had no concern with either Shah Enterprise or Rakesh K. Shah HUF. Despite this, the authorities seized several cheques belonging to Rakesh K. Shah HUF drawn on Catholic Syrian Bank ('the bank' for short). On account of such seizure the cheques could not be deposited within the valid period. Subsequently, proceedings under section 158BC and 158BD of the Income Tax Act, 1961 ('the Act' for short) was carried out against various assessees. According to the petitioner, in absence of any search authorization against Rakesh K. Shah HUF, the documents and valuable articles could not have been seized, nor could the said assessee be subjected to proceedings under section 158BC of the Act. Despite various efforts by the Karta of the HUF Rakesh K. Shah, the department did not release the cheques. The petitioner would point out that initially complaint was filed before the Consumer District Redressal Commission, Gujarat, against the bank. The Commission however, held that the remedy of the assessee did not lie against the bank but only against the Income Tax department. Appeal filed against such judgment of the Commission failed. Subsequently also, multiple applications and representations were made by the Karta of the HUF tothe Income Tax department without any success. Case of the petitioner therefore is that due to such illegal action on the part of the Income Tax authorities in seizing the cheques of the HUF, huge amounts were lost since the cheques could not be deposited in time. The petitioner has therefore raised multiple claims against the Income Tax department which include the principal amounts indicated in the cheques with interest computed at the rate of 18% per annum and also damages for such treatment meted out by the Income Tax department.

3. In our opinion, the petitioner cannot maintain this litigation. The petitioner is a member of HUF. His father Rakesh K. Shah was a Karta of HUF, as stated in the petition, had taken appropriate steps at the relevant time to protect the interest of the HUF. The cause of action arose way back in the year 2001. The petitioner has filed this petition in the year 2018 only on the ground that he was born in the year 1997 and therefore attained majority only recently.

4. The Karta of the HUF having initiated the litigation and having persuade the remedies against the action of the Income Tax department, in absence of any allegations of misfeasance at the hands of the Karta, a member of the HUF individually cannot restart the same litigation. The law does not recognize multiple actions at the hands of different members of an HUF long many years after the cause of action had arisen. One of the essential elements of maintaining a writ petition under Article 226 of the Constitution of India which pertains to Court's discretionary powers of issuing writs, is timely action at the ends of the petitioner. The petitioner cannot file a writ petition 17 years later on the ground that he only recently attained majority. Essentially, the petitioner is taking up the cause for and on behalf of the HUF and not in his individual capacity. The Karta of the family was at the helm of the affairs at the relevant time. The petitioner does not have an independent right to raise the grievances.

5. In the result, petition is dismissed.

(AKIL KURESHI, J)

(B.N. KARIA, J)