Supreme Court recalls ruling striking down Benami Property Act provisions
New Delhi, Oct 18, 2024
Synopsis
Supreme Court has recalled its August 2022 judgment that invalidated prosecutions under the Benami Transactions (Prohibition) Act, 1988. A new bench will now re-adjudicate the matter. The court observed that the constitutionality of the provisions was not addressed in the previous ruling. The 2016 amendments to the Act will have a prospective effect.
Supreme Court has recalled its August 2022 judgment which struck down certain provisions of the Benami Transactions (Prohibition) Act, 1988, and effectively invalidated all prosecutions carried out under the Act before its amendment in 2016.
A bench headed by Chief Justice of India DY Chandrachud said the case will now be adjudicated afresh before a new bench to be set up by CJI.
The bench held that 2022 ruling was passed without addressing any direct constitutional challenge to the 1988 Act's provisions, allowing a review petition filed by the central government.
On August 23, 2022, a three-member bench headed by the then CJI NV Ramana had ruled that the 2016 amendment to the benami property law cannot be applied retrospectively and quashed all cases where transactions prior to October 25, 2016, were being investigated.
The court had also struck down a provision of the 1988 Act that provided for a jail term of up to three years or a fine or both for violations, holding it "unconstitutional" and "manifestly arbitrary".
Hearing the challenge to this ruling, the top court has observed that there was no challenge to the provisions of the unamended Act and the issue of constitutional validity was not addressed in the decision.
The bench observed that the 2022 ruling was not passed in response to a live dispute where the constitutionality of the provisions was raised or debated by the parties. "It is trite law that constitutional validity of a provision can only be decided when the same provision is under challenge... The issue of constitutional validity was not squarely raised," it observed.
The court cannot hold a provision to be unconstitutional when there is no challenge, the bench noted. "It (challenge to the provision) has to be raised, has to be argued, and assessed on suitable grounds," it said.
The only legal question before the court was whether the Prohibition of Benami Property Transactions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016, has a prospective effect, the bench observed. Hence, it recalled the August 2022 judgment.
Appearing on behalf of the Centre, solicitor general Tushar Mehta contended that the unamended Section 3(2) of the Act - deemed unconstitutional in 2022 - was struck down despite no direct challenge to its validity. He further argued that the requirement of mens rea (criminal intent) need not be expressly stated in penal statutes.
In August 2022, the top court had held that the forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively.
"Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016," according to the 96-page judgement authored by the then CJI Ramana. "As a consequence of the above declaration, all such prosecutions or confiscation proceedings shall stand quashed."
With the court now recalling its 2022 judgment, the government retains the authority to enforce the pre-2016 provisions while also affirming the prospective application of the 2016 law.
[The Economic Times]
