SC Recalls 2022 Verdict on Benami Act
Concurs with the Centre’s submissions that the validity of two provisions were not under challenge before the earlier bench
New Delhi:The Supreme Court on Friday recalled its 2022 verdict that had struck down two crucial provisions of the Benami Property Transactions Act that invalidated all prosecutions carried out under the law before its amendment in 2016. The apex court noted that the previous judgment came without addressing any direct challenge to the Act’s provisions.
Recalling the 2022 judgment delivered by a three-judge bench headed by former CJI N.V. Ramana, the apex court concurred with the Centre’s submissions put up by Solicitor General Tushar Mehta that the validity of these two provisions were not under challenge before the earlier bench.
In its August 2022 verdict, the top court had held that Sections 3(2) and 5 of the Prohibition of Benami Property Transactions Act, 1988 being “manifestly arbitrary” were unconstitutional. While Section 3 of the Act deals with prohibition of benami (a property held by a person through proxies) transactions, Section 5 pertains to benami property liable to acquisition.
A bench of Chief Justice of India D.Y. Chandrachud, Justices P.S. Narasimha and Manoj Misra on Friday said, “In this view of the matter, the review would have to be allowed. It is trite law that challenge to the constitutional validity of a statutory provision can’t be adjudicated upon in the absence of a live lis (lawsuit) and contest between the parties.
The bench also said the civil appeal, on which the August 2022 verdict was delivered, will stand restored to the file for a fresh adjudication before a bench nominated by the Chief Justice on the administrative side.
The apex court was dealing with a legal question -- whether the 1988 Act, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 had a prospective effect.
The 2022 verdict was delivered on the Centre’s appeal challenging a Calcutta high court judgment, holding that the amendment made in the 1988 Act in 2016 would apply prospectively. The Centre had contended that the 2016 Act would be applicable retrospectively.
The Benami law was enacted to prohibit such transactions and enforce the right to recover properties held to be “benami”. The law punishes a violator with a three-year jail term or fine or both.