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Synopsis

The Supreme Court of India on Friday recalled its decision holding Section 3(2) and 5 of the Benami Transactions (Prohibition) Act 1988 unconstitutional on the ground of being manifestly arbitrary.

A Supreme Court bench headed by then CJI NV Ramana, Justices Krishna Murari and Hima Kohli, had held that the Amendment Act of 2016 to the 1988 Act is prospective in nature and it cannot apply retrospectively. It was noted that the 2016 amendment cannot be held as merely procedural. 

Yesterday, Solicitor General Tushar Mehta, referring to the impugned judgment, told court that without a specific challenge being made, the court had struck down certain provisions.

Chief Justice of India DY Chandrachud led bench found reason in the SG's submission and went on to recall its judgment.

The original plea was filed by Centre against a Calcutta High Court judgment, which held that the 2016 Amendment Act was prospective in nature.

Notably, the amendment also increased the punishment for benami transactions from imprisonment up to three years to seven years, and a fine which may extend to 25 percent of the fair market value of the benami property.

In 2016, Centre amended the original 1988 Act in order to curb black money. Subsequently, certain provisions were notified and the Act came into force on November 1, 2016. 'Benami' transaction is defined in the Act as any transaction in which property is transferred to one person for consideration paid by another person.