Chief Justice of India D. Y. Chandrachud on January 31 agreed to consider hearing in open court a review filed by the government against a 2022 judgment which declared as “unconstitutional and manifestly arbitrary” amendments introduced in the benami law in 2016.
The amendments had applied retrospectively and mandated sending a person to prison for three years even as it empowered the Centre to confiscate “any property” subject to a benami transaction.
In an oral mentioning, Solicitor General Tushar Mehta said the judgment tended to apply to provisions in the benami law which were not even under challenge. Mr. Mehta said the judgment had widespread ramifications as lower courts are striking down cases on the basis of the apex court judgment.
The 2022 judgment had declared Sections 3(2) and 5 introduced through the Benami Transactions (Prohibition) Amendment Act of 2016. The 2016 law had amended the original Benami Act of 1988. It had expanded the 1988 Act to 72 Sections from a mere nine Sections.
Section 3(2) had provided for punishment of three years’ imprisonment for those who had entered into benami transactions between September 5, 1988 to October 25, 2016. That is, a person could have been sent behind bars for a benami transaction entered into 28 years before the section even came into existence. The court had held that the provision violated Article 20(1) of the Constitution.
Article 20(1) mandates that no person should be convicted of an offence which was not in force “at the time of the commission of the act charged as an offence”. Section 5 of the 2016 Amendment Act had said that “any property, which is subject matter of benami transaction, shall be liable to be confiscated by the Central Government”. The court had held that this provision cannot be applied retrospectively.
The judgment had dismissed the government’s version that forfeiture, acquisition and confiscation of property under the 2016 Act was not in the nature of prosecution and cannot be restricted under Article 20.
The court had observed that the 2016 Act condemned not only transactions which were traditionally denominated as ‘benami’ but rather a “new class of fictitious and sham transactions”. It had said the intention of the Parliament was to condemn property acquired from ill-gotten wealth.
The court had explained that the 2016 Act contemplated an “in rem forfeiture”, by which the taint of entering into a benami transaction is transposed to the asset itself”.
“When such a taint is being created not on the individual, but on the property itself, a retroactive law would characterise itself as punitive for condemning the proceeds of sale which may also involve legitimate means of addition of wealth,” the judgment had said.
The court had also noted that the Act also granted extensive powers of discovery, inspection, compelling attendance, compelling production of documents to officials. It also empowered authorities to take the assistance of police officers, custom officers, income tax officers, etc, for furnishing information.
“It is also necessary to note that a person who supplies false information before any authority, is subjected to rigorous imprisonment of up to five years under Section 54 of the 2016 Act,” the court had highlighted. The court had dismissed the government’s contentions that the 2016 Act was merely procedural in nature. It said the provisions were substantive on the other hand.
“Authorities concerned cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., October 25, 2016. As a consequence, all such prosecutions or confiscation proceedings shall stand quashed,” the Supreme Court had directed.
