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Informist, Friday, Oct. 18, 2024

 

--SC allows govt's review plea against verdict on benami transactions law 

--CONTEXT: In 2022, SC rejected amendments made to benami law in 2016 
--SC to hear afresh plea against some provisions of benami transactions law 

 

NEW DELHI – Allowing the government's review petition, the Supreme Court on Friday set aside its 2022 verdict which had struck down Section 3(2) and Section 5 of Benami Transactions (Prohibition) Act, 1988. The Bench led by Chief Justice of India D.Y. Chandrachud said that questions regarding constitutionality of the provisions were never raised in the 2022 proceedings.

 

The top court said that the only question which was framed by the previous bench was "whether the Prohibition of Benami Property Transactions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 has a prospective effect." However, the previous bench held that Section 3 (2) and Section 5 of Benami Transactions (Prohibition) Act 1988 were unconstitutional.

 

"In this view of the matter, the review has to be allowed. It is trite law that the challenge to the validity of a statutory provision cannot be adjudicated upon in the absence of a live lis or a contest. The issue of constitutional validity was not sufficiently addressed," said the Bench, also comprising Justice J.B. Pardiwala and Justice Manoj Misra. The top court recalled the previous verdict and directed fresh hearing in the case.  

 

In 2016, the government introduced Section 3(2) and Section 5 in the benami transactions law. Section 3(2) of the law had provided for a three-year imprisonment for those who had entered into benami transactions between Sept. 5, 1988, and Oct. 25, 2016. This meant that a person could have been sent behind bars for a benami transaction entered into 28 years even before the section came into existence. The previous bench had said that the provision was violative of Article 20(1) of the Indian Constitution. 

 

Meanwhile, Section 5 had said that "any property, which is subject matter of benami transactions, shall be liable to be confiscated by the Central Government". The previous bench had said that this provision cannot be applied retrospectively. 

 

The 2016 amendments brought many transactions like cash transfers, property deals, and share issuances under the ambit of the benami transactions law and laid down provisions for punishments. In its 2022 verdict, the top court had said that amendments made to the Benami Transactions (Prohibition) Act in 2016 cannot be applied retrospectively. All prosecutions initiated under the amendment but for pre-2016 deals will stand quashed, the apex court had held.  End

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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