The Supreme Court on August 23 ruled the amended Benami Act, which came into effect on November 1, 2016, applied only prospectively, besides declaring “unconstitutional” one of the provisions of the law dealing with a three-year jail term and a penalty.
- The verdict came on an appeal filed by the central government challenging a Calcutta high court decision of December 12, 2019 quashing show cause notices issued by the Centre under the 2016 Act to owners of a company M/s Ganpati Dealcom Pvt Ltd. The high court held that the Act cannot be applied retrospectively as the transaction in question by the company relates to purchase of a property in 2011.
Key highlights
- Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for (benami) transactions entered into prior to the coming into force of the 2016 Act, (period between September 5, 1988 to October 25, 2016). As a consequence of the above declaration, all such prosecutions or confiscation proceedings shall stand quashed.
- In this light, this Court finds that Sections 3 and 5 of the 1988 Act were unconstitutional from their inception.
- The Chief Justice of India, N.V Ramana led bench stated that this provision violated Article 20(1) of the Indian Constitution.
- According to Article 20(1), no person should be convicted of an offence or violation which was not in force “at the time of the commission of the act charged as an offence”.
- Benami Provisions Act 2016 has section 5 which states that “any property which is a subject matter of a benami transaction shall be liable to be confiscated by the central government.” The Supreme court announced that this provision cannot be applied retrospectively.
- The decision will not apply to the prosecution and confiscation procedure under the 2016 Act as the same was not under consideration before the court.
- The jail provision was quashed on grounds of it being “manifestly arbitrary” — something that will provide relief to individuals and companies.
About Benami Transactions (Prohibition) Act, 1988
- Benami Transactions (Prohibition) Act, 1988 or 1988 Benami Property Act is an act of the Indian parliament that disallows certain financial transactions.
- This act labels a ‘benami’ transaction as any transaction in which property is transferred to one person for the amount paid by another person.
- In legal terms, it means any transaction in which property is transferred to one person for a consideration paid or provided is called a ‘benami transaction’.
(Source: BS)
