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2022 (12) TMI 568 - HC - Benami PropertyProhibition of Benami Property Transactions - provisional order of attachment - HELD THAT - As it is evident that this Court took the view that Section 2(9)(A) and 2(9)(C) of the Benami Property Act inserted by the Amendment Act of 2016 are prospective in nature because these two provisions have significantly and substantially widened the definition of benami transaction than as was there in the unamended Benami Property Act of 1988. Taking note of the fact that Central Government had notified the date of coming into force of the Amendment Act of 2016 as 01.11.2016, this Court held that these two provisions cannot be applied to a transaction which took place prior to 01.11.2016. In that case, the transaction was dated 14.12.2011. Therefore, the show cause notice, provisional attachment order as well as the adjudicating order were declared null and void being without jurisdiction and consequently, quashed. In Ganpati Dealcom Pvt. Ltd. 2022 (8) TMI 1047 - SUPREME COURT which went to the Supreme Court from a decision of the Calcutta High Court, the question which was considered by the Supreme Court was whether the Benami Property Act as amended by the Amendment Act of 2016 has a prospective effect? While examining this question, Supreme Court went into the constitutionality of the original Act i.e., Benami Property Act. Supreme Court came to the conclusion that Section 3 (criminal provision), Section 2(a) (definition clause) and Section 5 (confiscation proceedings) of the Benami Property Act are overly broad, disproportionately harsh and without adequate safeguards. Though such provisions were in a dormant condition, nonetheless, Supreme Court declared Sections 3 and 5 of the Benami Property Act as unconstitutional from inception. Supreme Court has declared that the Amendment Act of 2016 is not merely procedural but prescribes substantive provisions. Therefore, concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to coming into force of the 2016 Amendment Act i.e., 25.10.2016. As a consequence, all such transactions or confiscation proceedings prior to 25.10.2016 shall stand quashed. Supreme Court has also clarified that in rem forfeiture provision under Section 5 of the Amendment Act of 2016 being punitive in nature can only be applied prospectively and not retroactively. In view of the finality of the law declared by the Supreme Court, the provisional attachment order dated 27.12.2021 cannot be sustained. Accordingly, the same is hereby set aside and quashed.
Issues:
Challenge to provisional order of attachment under Prohibition of Benami Property Transactions Act, 1988. Analysis: 1. Provisional Order of Attachment: The writ petition challenged the provisional order of attachment dated 27.12.2021 made by respondent No.2 under Section 24(4)(b)(1) of the Benami Property Act, attaching agricultural land. The transaction in question was dated 01.10.2016. 2. Interpretation of Benami Property Act: The court referred to previous judgments like Nexus Feeds Limited and Union of India v. Ganpati Dealcom Pvt. Ltd. to interpret the provisions of the Benami Property Act. The court in Nexus Feeds Limited held that the amended provisions of the Act are prospective and cannot be applied to transactions before 01.11.2016. 3. Supreme Court Decision: The Supreme Court, in Ganpati Dealcom Pvt. Ltd., declared Sections 3 and 5 of the Benami Property Act as unconstitutional from inception due to being overly broad and without adequate safeguards. The Court held that the Amendment Act of 2016 would create new provisions and offences, applicable prospectively. 4. Retroactive Application: The Supreme Court clarified that criminal provisions under the Act were arbitrary and incapable of application, thus the 2016 amendment could not retroactively apply to transactions before 25.10.2016. All prosecutions or confiscation proceedings prior to this date were quashed. 5. Final Decision: Based on the Supreme Court's ruling, the provisional attachment order dated 27.12.2021 was set aside and quashed, allowing the writ petition. The court emphasized that concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions before 25.10.2016. 6. Conclusion: The judgment clarified the interpretation and application of the Benami Property Act, emphasizing its prospective nature post the Amendment Act of 2016. It provided a detailed analysis of the unconstitutionality of certain provisions and their impact on past transactions, leading to the quashing of the provisional attachment order in question.
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