The Supreme Court Today (Oct 18) recalled its 2022 judgment that struck down certain provisions of the Benami Transactions (Prohibition) Amendment Act, 1988 and 2016 amendments to it. The Bench allowed the review petition filed by the Central government against the top court’s August 22 judgment. The Court said there was no challenge to the provisions of the unamended Act and the issue of constitutional validity was not addressed in the decision. It recalled the judgment and restored the original case for hearing before a new bench.
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NEW DELHI: The Supreme Court of India on Friday reversed its 2022 judgment that had declared certain provisions of the Benami Transactions (Prohibition) Amendment Act, 1988, and the 2016 amendments unconstitutional.
The decision was delivered by a bench comprising Chief Justice of India (CJI) DY Chandrachud, Justice PS Narasimha, and Justice Manoj Misra, who allowed the Central government’s review petition challenging the August 22, 2022, judgment.
The reversal of the 2022 judgment arose after the Court observed that there had been no specific challenge to the provisions of the unamended Benami Transactions Act of 1988. The Supreme Court noted that the constitutional validity of the provisions had not been addressed in the earlier decision.
As a result, the Court decided to recall the 2022 judgment and reinstate the original case for a fresh hearing before a newly constituted bench.
According to the Court,
“It is trite law that constitutional validity of a provision can only be decided when the same provision is under challenge.”
Background of the 2022 Judgment
The 2022 judgment, which was delivered by a bench led by then Chief Justice NV Ramana and Justices Krishna Murari and Hima Kohli, held that Section 3(2) of the unamended 1988 Benami Transactions Act was ‘unconstitutional’.
The section was deemed “manifestly arbitrary” due to the lack of clarity and fairness in its enforcement. Section 3(2) criminalized benami transactions, making them punishable with imprisonment for up to three years.
Furthermore, the judgment extended this reasoning to the 2016 amendments, striking down Section 3(2) of the amended 2016 Act on the grounds that it violated Article 20(1) of the Indian Constitution.
Article 20(1) prohibits the imposition of criminal penalties for acts that were not illegal when committed, essentially safeguarding individuals from retrospective criminal legislation.
Review Petition and Court’s Reasoning
During the review hearing, Solicitor General Tushar Mehta, representing the Central government, pointed out that the provisions struck down in the 2022 judgment had not been explicitly challenged before the Court. This procedural oversight became a key point in the review.
Agreeing with this argument, Justice PS Narasimha remarked,
“Yes, before a provision is held as unconstitutional then there has to be a challenge at least.”
This statement underscored the Court’s adherence to established legal principles, ensuring that constitutional questions are addressed only when explicitly raised before the judiciary.
Although the Supreme Court initially indicated it would schedule the review petition for further hearings, it ultimately chose to recall the 2022 decision after a detailed examination of the judgment and after hearing arguments from the counsel.
This action effectively reinstates the case and opens the door for a new legal examination of the provisions of the Benami Transactions Act.
Conclusion
The Supreme Court’s decision to recall its 2022 ruling represents a significant shift in the legal landscape surrounding the Benami Transactions Act. By restoring the original case for fresh hearing, the Court has signaled the importance of properly challenging legal provisions before rendering constitutional judgments.
As the case proceeds to a new bench, the constitutional validity of these provisions will once again be scrutinized, with potentially wide-ranging implications for how benami transactions are regulated in India.
This case highlights a fundamental principle of constitutional law:
“It is trite law that constitutional validity of a provision can only be decided when the same provision is under challenge.”
The legal community will closely watch the developments as the case moves forward under a newly constituted bench of the Supreme Court.
CASE TITLE:
Union of India v. Ganpati Dealcom
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