Centre Seeks Review Of SC Judgement Declaring Section 3(2) Of Benami Transactions Prohibition Act As Unconstitutional

The Central Government has filed a petition seeking review of the Supreme Court judgement which had declared that Section 3(2) of the Benami Transactions (Prohibition) Act 1988 as unconstitutional on the ground of being manifestly arbitrary.

Solicitor General of India Tushar Mehta mentioned the matter before a bench comprising Chief Justice DY Chandrachud and Justice PS Narasimha. 

Through the judgement which has now been challenged, a bench comprising Chief Justice of India NV Ramana, Justice Krishna Murari and Justice Hima Kohli had also held that Benami Transactions (Prohibition) Amendment Act 2016 could not be applied retrospectively. The Court stated that the 2016 amendment could not be held as merely procedural.

SG Tushar Mehta submitted that the judgment struck down certain provisions which were not challenged.

"We seek an open court hearing of the review. Due to this judgment a lot of orders are being passed across India even though some of the provisions of the Benami Act were not even under challenge".

The Solicitor General further said that the issue of retrospective application should not have been looked into as the Act is not a penal legislation.

In 2022, the Delhi High Court had quashed the proceedings initiated against Aam Aadmi Party leader Satyendar Jain under Benami Transactions (Prohibition) Amendment Act, 1988. The court had taken note of the Supreme Court ruling and noted that it was held that the Benami Transactions (Prohibition) Amendment Act 2016 could not be applied retrospectively and Section 3(2) of the unamended 1988 Act was declared as unconstitutional for being manifestly arbitrary. Accordingly, Justice Yashwant Varma of Delhi High Court had allowed a bunch of pleas filed by Jain and others challenging the initiation of proceedings under the Act on the ground that the same were initiated for the attachment and confiscation of properties which were acquired prior to the enforcement of the Amendment Act of 2016.

Through the judgement, the Supreme Court had stated–

1. In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary.

2. The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions.

3. In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively.

4. Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016. As a consequence of the above declaration, all such prosecutions or confiscation proceedings shall stand quashed.