Benami Law: Comparative Analysis of Retrospectivity and Judicial outlook Pre and Post Amendment of 2016

The Authors are Advocate Rahul Rai and Advocate V Govinda Ramanan.

HISTORY OF THE ACT,

The Prohibition of Benami Property Transaction Act, 1988 has quite a long and curious history. The limelight was first thrust upon the concept of benami transactions in the Law Commission’s[1] 57^th Report which was submitted on 07.08.1973 under the chairmanship of former Chief Justice of India - Justice PB Gajendragadkar[2]. Interestingly, the issue of retrospectivity was a concern then also, as it had been admittedly stated in the report that exceptions are being made for past transactions, as such transactions would have been entered into after keeping in mind the legal position as understood at the time of their execution. However, it was left open for the legislature to apply the proposed provisions retrospectively on transactions executed for fraudulent and illegal motives[3].

Despite the report being submitted in the year 1973, delay in implementation on part of legislature it seems, as will be seen later also, was characteristic for the benami law as it took almost 15 years to bring into operation the recommendations of the Law Commission. Initially the law regulating benami transactions was first brought into existence qua an Ordinance promulgated by the president on 19.05.1988 and was christened as The Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988[4]. The intent/object of the ordinance was to prohibit the right to recover property held benami, as there were real controversies at that time vis-à-vis people filing suits seeking redress to restore / recoup properties which were purchased benami in the name of the defendants by the plaintiff.

Subsequently, the Law Commission was again summoned to give its views, in order to replace the Ordinance with a bill. The Law Commission[5], now under the chairmanship of Justice D.A. Desai submitted its report on 14.08.1988 as it was instructed by the Ministry of Law and Justice to send the report as soon as possible due to time limitation of the Ordinance. The issue of retrospectivity was addressed in this report also, as it was mentioned in clear terms that the previous report of 1973 was a notice enough to the wrong-doers for setting their house right and as such no indulgence is to be granted and law be applied retrospectively. Further it was also mentioned that such retrospective application will not be violative of Article 20(1) of the Constitution as the Parliament possesses plenary powers to legislate retroactively apart from criminal legislations[6]. It seems that the Law Commission was not intending the proposed law to be a criminal law.

Following the report, the Benami Transactions (Prohibition) Bill 1988, was introduced and after getting the nod from both the houses, THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 was enforced w.e.f. 05.09.1988. Despite of the Law Commission’s vigour in recommending the law to be enforced retrospectively, the legislature in its wisdom applied the provisions of the Act retrospectively in a very limited manner, as apart from sections 3, 5, and 8 the remaining provisions were brought into force from the date of promulgation of the ordinance i.e. 19.05.1988. Rest all the provisions applied prospectively and were to be enforced and applied from 05.09.1988.

Controversies by their very nature refused to stay dormant and cropped up soon enough pertaining to the application of the 1988 Act on the pending suits and appeals before the judiciary awaiting adjudication,

The Act of 1988, is a prime example of an unwanted and hurried legislation as the provisions were restricted to a mere 9 sections and provided for compulsory acquisition of benami property by the state[7] and also envisaged prosecution of the person involved in  a benami transaction[8].  However and for inexplicable reasons - No procedure, rules, authority, officers for acquisition of identified properties  etc. were determined for giving effect to these provisions and it remained on the statute books as a toothless and dormant law.

Thereafter with a change of guard at the Centre and a new government dispensation the legislature revived and infused life into this dead letter Act and with great alacrity came out with The Benami Transactions (Prohibition) Amendment Act, 2016[9] just prior to the historic announcement of the Demonetisation of high value legal tender. This amendment Act rechristened the old act of 1988 as the Prohibition of Benami Property Transactions Act, 1988 and was made effective from 1^st November 2016.

The most glaring question with respect to the amendment arose as to why an amending act was required, which completely and comprehensively  overhauled the previous Act, making the previous nine sections statute into a larger and broader seventy two sections enlarging the scope and jurisdiction in one single sweep.. The answer as to why the old Act was revived rather than a new Act legislated  lies in the speech of the then Hon’ble Finance Minister Late Mr. Arun Jaitley, while addressing arguments pertaining to the Amendment Act, clearly stating that in order to not provide any immunity or escape to the perpetrators between the period of 1988-2016, it was required that the old Act be not repealed and instead the amending act be enforced as a 28 year immunity would not have been in larger public interest. However it is pertinent to note here that the object of not repealing the old Act as stated by Late Sh. Arun Jaitley was to save the penal provisions and he had categorically stated that the acquisition cannot take place under the new law[10].

RETROSPECTIVE OPERATION OF A STATUTE

It is a general principle of law that every statute will have prospective operation. This prospectivity principle is in consonance to fair procedure as any law passed today cannot apply to the events of the past. If we do something today, we do it, keeping in view the law of today and in force and it is unreasonable and unfair to expect any person to anticipate a future law and the backward adjustment of it. Therefore it is only fair that actions of today are expected to be executed and conforming to extant laws. The Constitution of India also mandates laws to be having a prospective operation[11], as a Fundamental Right, though the same is primarily prescribed for penal laws i.e. prosecution, conviction and penalty only. 

Notwithstanding the above, the legislature does possess plenary powers to enact laws that have retrospective operation, by which the legislature may make a law which is operative for a limited period prior to the date of its coming into force. This principle is recognized, tested and endorsed by the judicial precedents as well.

“It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. “nova constitutio futuris formam imponere debet non praeteritis” new law ought to regulate what is to follow not the past and this presumption operates unless shown to the contrary by the express provisions in the stature or is otherwise discernible by necessary implication[12].”

However it is imperative to note here that it is not obligatory upon the legislature to insert a specific clause to make an enactment retrospective in nature, as it can be read into the act qua necessary implication.

“It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole [13].

 Instead of express words the device of legal fiction may also be used to bring about retrospective operation by implication[14].

Further it may be pertinent to mention here that it is also a settled principle of law that legislations exclusively dealing with procedure and which do not touch upon the substantive rights/liabilities have been deemed to be retrospective by the judiciary. Statutes dealing with merely matters of procedure are presumed to be retrospective unless such a construction is textually inadmissible as no person has a vested right in any course of procedure. The distinction whether a provision is merely procedural or substantive will be need to be cogently addressed while determining the validity of actions of the authorities applying section 24 of the Prohibition of Benami Property Transactions Act, 1988 retrospectively to transaction that predate the amendment of 1^st November 2016.

Another controversy which has not yet been discussed / addressed, but which may be a topic of discourse as the jurisprudence pertaining to the benami law develops is whether the amendment, as made qua the 2016 Act, are retrospective or retroactive in nature as the un-amended section 3, which is the same as was passed in the year 1988 and states that rest of the provisions of the Act are deemed to be enforced from 19.05.1988, and a simplistic reading makes the amendments retroactive in nature. While it may be argued that since the amendment act itself independently doesn’t declare the operation of the provisions of the amending act to be applicable from a previous date, the authorities are applying the new provisions on old transactions retrospectively. 

ISSUES OF RETROSPECTIVITY VIS-À-VIS BENAMI LAW

• The old pre-amendment act of 1988 was passed to curb the menace of parties executing benami transactions to escape liabilities and sanctions and later on filing a suit to enforce rights under such a transaction. As such the provisions of the old Act placed a bar on the parties to a suit to not to take benami as a defence or as a ground to specifically enforce a right[15]. Therefore, the chief question that arose was whether such a bar will apply to transactions executed before the enforcement of the Act in 1988.
• The major issue which  cropped up post the amendment of 2016, and which has left the legal practitioners in a quandary is that the procedure now inserted in the Act involves proceedings to be initiated by the Benami Prohibition Unit of the Income Tax Department, which has no jurisdiction while assailing transactions which have been executed in years/decades preceding the vestment of authority in their office, and whether such actions of the authorities are constitutionally and judicially valid or not.
• With respect to the actions of the Benami Prohibition Unit, it is also interesting to note here that the definition of ‘benami transaction’ has  also seen a radical transformation post amendment of 2016, however the authorities are impugning the transactions executed prior to November 2016 by resorting to the  definition as given in section 2 of the new amended act.  This is vexing the best of judicial minds and a ruling is awaited from the Apex court to settle this issue once for all.
• The prohibition/protection under Article 20 of the Constitution of India, is mandated for Convictions for offences, in that perspective, it is also imperative to determine whether the provisions pertaining to attachment and confiscation of properties as introduced qua the amending act of 2016, will be considered as penal provisions or not and the person affected will be able to avail the protection as given under Article 20(1).

JUDICIAL OUTLOOK

Now in light of the above, it is imperative to analyse and evaluate the outlook of the judiciary with specific reference to the benami law and its retrospective applicability. Since the Act was totally overhauled in the year 2016, therefore the correct approach will be to examine the court’s view prior and subsequent to the amendment.

PRE AMENDMENT:

The Division bench of the Apex Court in Mithilesh Kumari and Anr. Vs. Prem Behari Kilare[16] answered in affirmative the question ‘whether Section 4(1) of the Benami Transactions (Prohibition) Act, 1988 can be applied to suit, claim or action to enforce any right in property held benami against person in whose name such property is held or any other person, if such proceeding is initiated by or on behalf of a person claiming to be real owner thereof, prior to the coming into force of Section 4(1) of the Act.

However a 3 judge bench of the Supreme Court in R. Rajgopal Reddy V. Padminichadra Chandrasekaran[17], overruled the above decision and held that although the provisions of the 1988 Act will apply to the transactions executed prior to enforcement of the act, but the provisions will not affect the rights of parties in a pending suit or appeal where plea of benami was not taken previously. The principles as established in R. Rajgopal Reddy (supra) were adeptly summarised in Rebti Devi Vs. Ram Dutt & Ors.[18] as follows:-

(1) "Firstly while Section 4(1) prohibited a plea of benami to be raised in a suit, claim or action and again Section 4(2) precluded a defence of benami in suits, claims or actions, these two provisions did not come in the way of a decision on such pleas in matters pending as on 19.5.1988 if such-pleas were already raised before 19.5.1988, by one party or other. This was because such pleas which were already raised before 19.5.1988 were not intended to be affected by the Act, if they were raised in suits, claims or actions pending as on 19.5.1988. The repeal provisions in Section 7 repealed Section 82 of the Trust Act only in that manner and to that extent.

(2) Secondly on the express language of Section 4(1), any right inhering in the real owner in respect of any property held benami would be not enforceable once Section 4(1) operated, even if such transaction had been entered into prior to 19.5.1988 and no suit could be filed on the basis of such a plea after 19.5.1988. The same prohibitions applied in case of Section 4(2) to a defence taken after 19.5.1988 pleading benami in respect of a transaction prior to 19.5.1988. The Act could be said to be retrospective only to that extent. But from this it did not follow that where such a plea was already taken before 19.5.1988 to the effect that the property was held benami, such a plea got shut out merely because the proceeding in which such the plea was raised before 19.5.1988 was pending on 19.5.1988.

(3) Thirdly, where a suit had been filed before 19.5.1988, and in any written statement filed on or after 19.5.1988, a plea of benami was raised, then such a plea of benami could not also be gone into. If however such a plea in defence had been raised before 19.5.1988, the Act did not preclude that question to be decided in proceedings which were pending on 19.5.1988. Mithilesh Kumari's case was wrong in holding that such a defence could not be decided after 19.5.1988 even though the plea was raised before 19.5.1988.

(4) Fourthly, if such an interpretation as stated in (1) to (3) was given, it could not be validly contended that a question of invalid discrimination arose between cases where suits were filed on or before 19.5.1988 and those filed after 19.5.1988.

(5) Fifthly, even though the word 'suit' might include appeal or further appeals, Section 4(1) and 4(2) could not be made applicable to these subsequent stages.

(6) Sixthly pleas by plaintiffs on applicants and defences after 19.5.1988 of real owners against benamidars were barred under Section 4(1) and Section 4(2), only to the extent indicated above.”

The 2 judge bench in Rebti Devi (supra), in-fact, added two more principles by itself, which majorly pertained to the exceptions as given in Section 3 of the old Act of 1988 and stated that the judgment of R. Rajgopal Reddy (supra) will not stop from parties taking advantage of the exceptions as provided in the Act, even in pending suits. The principles established are as follows:-

(7) Seventhly, if in a suit, claim or action a plea or defence based on benami is raised even after 19.5.1988 and the purchase is in the name of a wife or unmarried daughter, such a plea of benami is permissible and R. Rajgopal Reddy's case will not come in the way merely because the plea is raised after 19.5.88. Such a plea if raised, will however have to be decided taking into account the statutory presumption laid down in Section 3(2). This is because the Act says that if the purchase is in the name of the wife or unmarried daughter, the prohibition in Section 3(1) will not apply. Section 3(2) is enacted as an exception to the provisions in the Act and does not depend for its interpretation on the question as to what extent Sections 4(1) and 4(2) are retrospective.

(8) Eighthly, if the case falls within the exception in Section 4(3)(a) i.e. where the person in whose name the property is held is a coparcener in a Hindu Undivided Family and the property is held for the benefit of the coparceners in the family, or where as stated in Section 4(3)(b) the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity, then in both situations if such a plea or defence is raised in a suit filed after 19.5.88, the same can be decided by the Court notwithstanding Sections 4(1) or 4(2) and notwithstanding what is decided in R. Rajagopala Reddy's case.

Therefore effectively it can be said that the sections 4(1) and 4(2) applied to transactions which were executed prior to the 1988 Act, however the parties in a pending suit/proceeding will have no effect to their rights and liabilities if plea of benami had not been taken prior to the enforcement of the Act.

POST AMENDMENT:

As stated before, the Benami Transaction (Prohibition) Act, 1988 was completely overhauled and rechristened as Benami Property Transactions Act, 1988. It is interesting to note that although the amending act made wholesale changes to the Act, yet the section 1 (3) was kept untouched which clearly stated that the provisions of sections 3, 5 and 8 shall come into force at once (05.09.1988), and the remaining provisions of this Act shall be deemed to have come into force on the 19th day of May, 1988. Therefore the amended provisions were also inserted in such a way that it may be deemed that they have a retroactive operation. Further, the speech of the Finance Minister also made it clear that the object of amending the act and not repealing it was to circumvent any immunity that might have befallen on transactions effected between 1988-2016.

It may be pertinent to note here that the amended Act in its new avatar is no more restricted to Civil matters, but it provides for altogether new procedure and authorities for the provisional attachment and ultimate confiscation of properties held benami by the state. However with respect to implication of the amended act in civil proceedings was referred to the Apex Court in Mangathai Ammal (Died) through L.R.s and Ors. Vs. Rajeswari and Ors.[19], wherein it was held, inter-alia, as follows:-

12. It is required to be noted that the benami transaction came to be amended in the year 2016. As per Section 3 of the Benami Transaction (Prohibition) Act 1988, there was a presumption that the transaction made in the name of the wife and children is for their benefit. By Benami Amendment Act, 2016, Section 3(2) of the Benami Transaction Act, 1988 the statutory presumption, which was rebuttable, has been omitted. It is the case on behalf of the Respondents that therefore in view of omission of Section 3(2) of the Benami Transaction Act, the plea of statutory transaction that the purchase made in the name of wife or children is for their benefit would not be available in the present case. Aforesaid cannot be accepted. As held by this Court in the case of Binapani Paul (Supra) the Benami Transaction (Prohibition) Act would not be applicable retrospectively. Even otherwise and as observed hereinabove, the Plaintiff has miserably failed to discharge his onus to prove that the Sale Deeds executed in favour of Defendant No. 1were benami transactions and the same properties were purchased in the name of Defendant No. 1 by Narayanasamy Mudaliar from the amount received by him from the sale of other ancestral properties

Largely it is essential to note here that the issue of retrospectivity of the amended act was not an issue under consideration  by the Hon’ble Supreme Court and the observation made therein even otherwise takes reliance of the case Binapani Paul Vs. Pratima Ghose [20] which itself is a decision prior to the amendment of 2016, therefore it cannot be held to have conclusively decided the issue of retrospectivity of the amendment of 2016.

Niharika Jain and Ors. Vs. Union of India and Ors.[21]

A single bench of the Hon. Rajasthan High Court, mulled upon the question whether the provisions of Benami Amendment Act, 2016, shall be applicable retrospectively or not and whether the Prohibition of Benami Property Transaction Rules, 2016, as framed under the amended act are valid or not, as by virtue of Section 68 of the Benami Amendment Act of 2016, the rules were notified on 25^th October, 2016, i.e. even before the substantive section 68 of the Benami Amendment Act of 2016, was made effective, for which date appointed for enforcement is 1st November, 2016.

The court found force in the argument of the rules are invalid on the ground as stated above and observed as under:-

“From a glance of notification dated 25th October, 2016, it is evident that Central Government, in exercise of powers conferred by Section 68 of the Benami Amendment Act, 2016; has framed the rules and made them effective w.e.f. 1st November, 2016, i.e. the date from which the Benami Amendment Act, 2016, has been enacted. Thus, it is evident that the Central Government exercised the powers, to frame the rules, conferred by virtue of Section 68, introduced vide Benami Amendment Act, 2016, which itself came into effect from the appointed date i.e. 1st November, 2016. Hence, the rules framed, in exercise of power under Section 68, have been framed and notified by notification dated 25th October, 2016, even before the amendment incorporating Section 68, was made operative that is w.e.f. 1st November, 2016. Therefore, the plea of the petitioners as to the rules having been framed contrary to and in absence of power available to the Central Government under Section 68 of the Benami Amendment Act, 2016, which was made operative and effective w.e.f. 1st November, 2016; has substance.

Further with respect to the question of the amending Act altering vested rights of the petitioners and the same being invalid, the court observed that the rights accrued in favour of any person owing to a transaction in the nature of contract which is protected under a statute, in such a case the transgression of those rights could only be by a legislation with retrospective effect, however the amending Act of 2016 has been held to be non-retrospective and therefore unable to affect the vested rights in the properties. The Court while placing reliance on copious precedent set by the various High Courts as well as the Apex Court held as under:-   

“…….This Court has no hesitation to hold that the Benami Amendment Act, 2016, amending the Principal Benami Act, 1988, enacted w.e.f. 1st November, 2016, i.e. the date determined by the Central Government in its wisdom for its enforcement; cannot have retrospective effect………...”

“……Thus, the authority concerned would examine each case on its own merits keeping in view the fact that amended provisions introduced and the amendments enacted and made enforceable w.e.f. 1st November, 2016; would be prospective and not retrospective……..”

The above judgment of the court has been challenged by the Respondent- BPUand the appeal is pending before a Division bench of the Hon’ble Rajasthan High Court.

Tulsiram & Anr. Vs. Assistant Commissioner of Income Tax (Benami Prohibition) & Ors.[22]

This judgment given by the single judge bench of the Hon. Chattisgarh High Court also considered the same question of retrospective application of the 2016 amendment Act. The Court rejected the plea of the petitioner that the Act cannot be applied retrospectively and while considering the judgment in Mangathai Ammal (supra), the court observed that the same has been passed in a different context and so far as it pertained to the amendment Act of 2016, it referred to the Provisions of unamended sub sections (2) of Section 3 which stood omitted by the Act of 2016, which dealt  with the property purchased by a person in the name of his wife or unmarried daughter.

The Court while holding that the Amendment Act of 2016 applied to properties purchased prior to 01.11.2016, observed that the section 24 of the amendment Act is mere procedural in nature and as such the same can be applied on previously executed transactions as procedural laws are commonly understood to have retrospective operation. The observations made by the Hon. Court are as below:-

“……..The Parliament in its wisdom did not find the original Act of 1988 to be effective enough to control the menace of Benami properties being acquired in the country. The Parliament found certain discrepancies and loopholes and also did not find the original Act to be stringent and deterrent enough to achieve the object behind the enactment of the Act of 1988. With an intention to make the Act or the law more effective, forceful and stringent, certain new amendments were made making the law stringent and also prescribing the procedure and the manner in which the proceedings were to be drawn while initiating proceeding to attach and confiscate the Benami properties.

 13. To decide the core issue whether the amended Act of 2016 can be made applicable for initiating proceedings against the petitioner in respect of the properties which were purchased or acquired prior to 01.11.2016, it would be necessary to read the Act of 1988 as a whole including the Provisions inserted by way of Act of 2016. So far as Chapter IV particularly Section 24 is concerned, the same is only a procedural law or procedural provision inserted in the original Act of 1988 by way of amendment w.e.f. 01.11.2016. Plain reading of the impugned order Annexure P-1 shows that the petitioners have in fact been given a fair and reasonable opportunity of hearing before the same was passed……”

“……It can also not to be said that provisions of the Amended Act of 2016 could not have been made applicable in respect of properties which were acquired prior to 01.11.2016. The whole Act of 1988 as it stands today inclusive of the amended provisions brought into force from 01.11.2016 onwards applies irrespective of the period of purchase of the alleged Benami property. Amended Act of 2016 does not have an existence by itself. Without the provisions of the Act of 1988, the amended provisions of 2016 has no relevance and the amended Provisions are only laying down the proceedings to be adopted in a proceeding drawn under the Act of 1988 and the penalties to be imposed in each of the cases taking into consideration the period of purchase of Benami property……”

Although the judgment has adjudicated on plausible grounds, however it will be incorrect to state that section 24 of the amended Act is a merely procedural provision as it trespasses substantive rights of the parties which are being affected qua its operation and seeks to divest the parties of their constitutional right to property.

Nonetheless, the above judgment in clear terms holds that the amending Act does have retrospective application and operation and the properties acquired prior to the amending Act can be assailed under the provisions of the amended Act.

Ganpati Dealcom Pvt. Ltd. Vs. Union of India and Ors.[23]:

The Division bench of the Calcutta High Court decided in favour of the petitioner and held invalid the action of issuance of Show Cause Notice (SCN) by the Respondent and observed that the Respondent could not have impugned transactions executed prior to the enforcement of the amended Act.

The Petitioner was issued a SCN in August 2017 by the Respondents, with respect to a property purchased in the year 2011 and claimed violation of section 2(9)(D) of the amended Act. The arguments raised by the Petitioner were that SCN could not have been issued under the amended act for the offences allegedly committed before enactment and enforcement of the amendment. Further, SCN issued to show cause why immovable property was not benami under 2(8) of the Act, however there was no section 2(8) at the time of execution of the transaction for the property i.e. in the year 2011 when the said property was acquired.

The Respondent countered that Section 1(3) of the act which is unamended provides that except for the provisions of section 3, 5 and 8 rest of the provisions of the Act would come into effect from 19^th May 1988 and the amendment act was grafted into the parent act and had retrospective effect. It was also stated that the concept of benami transaction and benami property was not altered from the parent act and only a machinery/procedure was provided qua the amending act.

The court, while allowing the petition, inter-alia, observed that:-

“…….The definitions of benami transaction and property are radically changed by the amending Act. So are the provisions regarding investigation of contraventions, offences etc., the consequence of it namely, confiscation, prosecution etc. The show cause notice dated 29th August, 2017 was issued under Section 24(1) of the 1988 Act as amended. It referred to the alleged benami transaction by the appellant under Section 2(8) and 2(9)(D) thereunder Therefore to allege contravention of the 1988 Act as amended in 2016 the contravention should have been made after the date of coming into force of the amendment. In the absence of retrospective operation of the amending Act, one cannot allege that the transaction resulting in the said contravention of the 1988 Act as amended in 2016 took place in 2011. That is exactly what the impugned show-cause notice proposed to do……”

“…..The 2016 amendment is a new legislation and in order to have retrospectivity it should have been specifically provided therein that it was intended to cover contraventions at an earlier point of time. That express provision is not there…….”

“….A declaration that the property was benami could not have been made unless a procedure was prescribed by rules made under Section 8. No rules under that section were ever made. Hence, although the Act was entered in the statute book, it was an Act on paper only and inoperative……”

“……Without question, the omission on the part of the government to frame rules under Section 8 of the 1988 Act rendered it a dead letter and wholly inoperative. Assuming that the appellant had entered into a benami transaction in 2011, no action could be taken by the Central government, in the absence of enabling procedural rules. It is well within the right of the appellant to contend that the Central government had waived its rights. It could also contend that no criminal action could be initiated on the ground of limitation. Now, these rights which had accrued to the appellant could not, in the absence of an express provision be extinguished by the amending Act of 2016. In other words, applying the definition of benami property and benami transaction the Central government could not, on the basis of the 2016 amendment allege contravention and start the prosecution in respect of a transaction in 2011…...”

Therefore, the Hon. Court while holding the amendment Act as a prospective law held that the rights in a property, which have already been vested, now cannot be taken away by the state qua the retrospective effect to the amending act as the state has waived off its rights of taking any action previously, owing to non-prescription of any rules/procedure/machinery to do the same.

The Respondent has challenged the above judgment before the Hon’ble Supreme Court of India and as of now, the Apex court qua its order dated 03.02.2020 passed in the matter UOI & Anr. Vs. M/s Ganpati Dealcom Pvt. Ltd.[24] has stayed the operation of the impugned order, insofar as it holds that the 2016 amendment was prospective in nature.

CONCLUSION

The above discussed judicial precedents do point that previously also the provisions of the Benami Act have been held to be applicable to transactions preceding the enforcement of such provisions. Further the jurisprudence pertaining to retrospectivity of statutes also enables the legislature to enact laws which can have retrospective effect qua a express provision or by necessary implication.

What works in favour of the amendment Act, 2016 to operate retrospectively is the express provision i.e. section 1(3), which states that all the provisions of the Act except sections 3, 5 and 8 will have effect from 19.05.1988. Further seen from the viewpoint of necessary implication, the speech of the Hon’ble Finance Minister which clearly states the intention of legislature to apply the amending act retrospectively, quite clears any implication. Therefore, the scale of arguments heavily weighs in favour of the amending Act of 2016 being applicable to transactions for property executed in the years prior to the amendment.

Further the protection under Article 20(1) of the Constitution of India are available for convictions and penalty only and as such it is interesting to note here that the provisions for attachment and confiscation of the property are given in Chapter IV (Section 24-29) of the Prohibition of Benami Property Transaction Act, 1988, while the penalty provisions are prescribed in Chapter VII (Section 53-55) of the Act. Since two separate and independent proceedings have been prescribed, it can be said that a clear distinction has been made for penal and non-penal provisions within the Act. Therefore it can be opined that the protection as provided under Article 20(1) will be given for the proceedings specified as penal in the Act and not for attachment and confiscation proceedings.

Nonetheless, the final word will be coming from the Hon’ble Supreme Court which is now seized of the matter to decide the retrospectivity of the Benami law, however this time the limited question pertains to the Amending Act of 2016 only. Therefore, the legal tussle pertaining to retrospective application of the benami law, which began in the year 1973 continues and needs to be set at rest, else we could be staring at a pile up of avoidable litigation in the overburdened Courts.

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