Benami law cant be applied retrospectively: SC

Source: The post is based on the article “Benami law cant be applied retrospectively: SC” published in The Hindu on 24th August 2022.

What is the News?

The Supreme Court has struck down two vital provisions of the Prohibition of Benami Property Transactions Act, 1988 which were introduced in the Benami law in 2016.

Background

In 2016, the Government of India enacted the Benami Transactions (Prohibition) Amendment Act of 2016. The law amended the original Benami Act of 1988.

Section 3 (2) introduced through the amendment mandates a punishment of three years imprisonment for those who have entered into Benami transactions between September 5, 1988, and October 25, 2016. That is, a person can be sent behind bars for a Benami transaction entered into 28 years before the section even came into existence.

Section 5 said that any property which is the subject matter of a benami transaction shall be liable to be confiscated by the Central Government.

In 2019, the Calcutta High Court ruled that the Benami Transactions (Prohibition) Amendment Act, 2016 cannot be applied retrospectively. The Central government then appealed to the Supreme Court against this judgement.

What was the Supreme Court verdict on these amendments?

The Supreme Court has declared Sections 3(2) and 5 introduced through this amendment as unconstitutional and held that these provisions cannot be applied retrospectively.

The court also held that the amendment also violated Article 20(1) of the Constitution. Article 20(1) mandates that no person should be convicted of an offence which was not in force “at the time of the commission of the act charged as an offence”.

The court dismissed the government’s version that forfeiture, acquisition and confiscation of property under the 2016 Act was not in the nature of prosecution and cannot be restricted under Article 20.