NEW DELHI: With a historic decision, the Supreme Court on Tuesday ruled that the 2016 Benami Transaction (Prohibition) Amendment Act will apply prospectively, thus blocking the benami properties traded between 1988, when the original law was enacted, and 2016, when the amended law went into effect. , from confiscation and shielding alleged offenders from the mandatory three-year prison sentence.
Defining as illegal the punitive actions taken by various agencies through the retrospective application of the 2016 law to benami properties treated for 28 years without sanction of an established procedure, a college of Chief Justice NV Ramana and judges Krishna Murari and Hima Kohli declared sections 3 (2) and 5 of the law unconstitutional.
Under section 3, paragraph 2, the three-year sentence is provided for those who entered into benami transactions from September 5, 1988 to October 25, 2016. Section 5 of the law allowed the central government to confiscate benami property without this being established procedure, and even in the absence of the illegality of the operation through a criminal trial.
Benami Act: judicial proceedings in the agreements before 25 October ’16 rubbish
Writing the 96-page judgment that the 2016 Benami Transaction (Prohibition) Amendment Act will apply prospectively, CJI Ramana said: “The authorities concerned cannot initiate or continue criminal proceedings or confiscation proceedings for transactions initiated prior to the entry into force of the 2016 law, which is 25 October 2016”.
“As a result of the above statement, all judicial or confiscation proceedings (for transactions between 1988 and 2016) will be overturned,” the court said. The CJI stated: “Section 3 (criminal provision) read with section 2 (a) and section 5 (confiscation procedure) of the 1988 Act are overly broad, disproportionately harsh, and operate without adequate safeguards in place. they were stillborn laws and never used in the first place. In light of this, this court considers sections 3 and 5 of the 1988 law to be unconstitutional from their inception. ”
However, in an important clarification, the college stated: “We make it abundantly clear that the above discussion does not prejudice the civil consequences contemplated by article 4 of the 1988 law, or any other provision”.
The Center had alleged that the provisions have remained in the statute book since 1988 without being challenged and that it would not have been necessary for the court to delight in examining their constitutionality. The court said: “The continued presence of an unconstitutional law in the statute, or the assertion that such law has not been challenged before constitutional courts, does not prevent this court from holding that such unconstitutional laws cannot last for the benefit or be used to retroactively modify the laws to remedy existing constitutional defects “.
The CS said its decision to warn against confiscation without proving criminal intent on the part of the authorities was to dissuade state agencies from taking over the properties without seriously prosecuting the alleged offenders.
The bank led by the CJI said: “At the cost of repetition, we can see that the contamination of benami transactions is not limited to the person who is entering the aforementioned transaction, but sticks to the property perpetually and extends to all proceeds from that transaction. property, unless the defense of innocent property is established under Section 27 (2) of the 2016 law. When such defilement is created not on the individual, but on the property itself, a retroactive law would characterize itself as punitive for the condemnation of the proceeds of the sale which may also involve legitimate means of adding wealth “.
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