The Supreme Court of India (SC) on Tuesday ruled that an amendment to the Benami Act that came into effect on November 1, 2016, cannot be applied retrospectively to the transactions between September 5, 1988, and October 25, 2016.
The apex court also declared section 3 of the amendment act unconstitutional. The section provided a three-year jail term and a penalty for people involved in such transactions.
"There is no doubt that the unamended 1988 Act tried to create a strict liability offence and allowed separate acquisition of benami property. This begs the question whether such a criminal provision, which the State now intends to make use of, in order to confiscate properties after 28 years of dormancy, could have existed in the books of law. Other than the abuse and unfairness such exercise intends to bring about, there is a larger constitutional question about existence of such strict provisions without adequate safeguards," said the SC bench led by Chief Justice NV Ramana.
(Prohibition) Act prohibits Benami transactions and gives the government the right to recover Benami property.
According to the act, a Benami transaction is a transaction "where a property is transferred to or is held by, a person, and the consideration for such property has been provided, or paid by, another person".
It also includes transactions where "the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration."
According to the law, the Centre can confiscate any property that has been tagged as a Benami property.
Cash and sensitive information can also be termed as 'property' under the act.
The amendment that came into effect on November 1, 2016, inserted a sub-section 2 in section 3 of part 3 of the act. It specified that whoever enters a Benami transaction shall be punishable with imprisonment for a term of up to three years or a fine or both.
The new punishment was also being applied retrospectively to the transactions that took place before 2016.
SC, on Tuesday, stated that the provisions under section 3 are 'unduly harsh' and declared them unconstitutional.
The provisions under section 5, which allows the government to confiscate the property, were also declared unconstitutional and they were 'half-baked'.
In view of the latest judgment, you can fight the case and get him released without any punitive action against him.
