Supreme Court Recalls Its Judgment Which Struck Down Sections 3 & 5 Of Benami Transactions (Prohibition) Act 1988

The Supreme Court on Friday (October) recalled its 2022 judgment in Union of India vs Ganpati Dealcom Pvt. Ltd which struck down Sections 3(2) and 5 of the Benami Transactions (Prohibition) Act 1988 as unconstitutional.

A bench comprising Chief Justice of India DY Chandrachud, Justice JB Pardiwala and Manoj Misra recalled the judgment allowing a review petition filed by the Union Government against the judgment.

The bench noted that the Constitutionality of the provisions of the unamended Benami Transactions Act was never raised in the original proceedings. The only question which was framed by the bench which originally heard the matter was "whether the Prohibition of Benami Property Transactions Act, 1988 , as amended by the Benami Transactions (Prohibition) Amendment Act, 2016, has a prospective effect."

However, the bench in its conclusion held that the provisions  (Sections 3 and 5) of the unamended Act were unconstitutional.

"It is undisputed that there was no challenge to the constitutional validity to the provisions of the unamended Act. This is clear from the formulation of the question. In this view of the matter, the review has to be allowed. It is trite law that the challenge to the validity of a statutory provision cannot be adjudicated upon in the absence of a live lis or a contest. The issue of constitutional validity was not sufficiently addressed," the bench noted.

Allowing the review petition, the bench recalled the judgment and restored the civil appeal for fresh adjudication by a bench. CJI Chandrachud clarified during the hearing that the review bench was not pronouncing anything on the validity of the provisions and that the matter was left for fresh consideration.

Solicitor General of India Tushar Mehta, who appeared for the Union, submitted that it was clear from the judgment itself that neither of the parties raised any argument regarding unconstitutionality. He added that the judgment struck down the unamended provisions, although they were amended in 2016.

The original judgment was delivered by a bench comprising the then CJI NV Ramana, Justices Krishan Murari and Hima Kohli. The judgment had also held that the 2016 amendment to the Benami Act would not have a retrospective effect. "Section 3 (criminal provision) read with Section 2(a) and Section 5 (confiscation proceedings) of the 1988 Act are overly broad, disproportionately harsh, and operate without adequate safeguards in place. Such provisions were still­born law and never utilized in the first place. In this light, this Court finds that Sections 3 and 5 of the 1988 Act were unconstitutional from their inception," the original judgment observed.

Case : Union of India v. Ganpati Dealcom Pvt Ltd | R.P.(C) No. 359/2023

Citation : 2024 LiveLaw (SC) 851

 Click Here To Read/Download Judgment