2019 (12) TMI 457 - HC - Benami Property

Prohibition of Benami Property Transactions Act - Scope of amended Act of 2016 - whether the provisions of the Act of 1988 providing for confiscation of properties found to be 'Benami' could be applied in respect of the transactions carried out prior to 01.11.2016? - HELD THAT - As inserted by way of the amendment Act of 2016 w.e.f. 01.11.2016. A plain reading of both these provisions makes it evident that Sub Section 2 would be applicable upon any Benami Transactions made prior to 01.11.2016 and Sub Section 3 would be applicable upon only those properties or Benami Transactions made on or after the commencement of the Amendment Act, 2016 i.e. 01.11.2016. This again leads us to draw a safe inference that the proceedings under the Act of 1988 could very well be initiated against a person who has entered into a Benami transaction irrespective of the date when the amendment act came into force. So far as Chapter IV particularly Section 24 is concerned, the same is only a procedural law or procedural provision inserted in the original Act of 1988 by way of amendment w.e.f. 01.11.2016. Plain reading of the impugned order Annexure P-1 shows that the petitioners have in fact been given a fair and reasonable opportunity of hearing before the same was passed. Reading the impugned order Annexure P-1 that is the order of provisional attachment, it reveals that petitioners have given an extensive explanation to the show cause notice which was duly considered by the Initiating Officer and taking into consideration the explanation and statements made by the petitioners the Provisional order of attachment has been issued. So far as Annexure P-1 is concerned, the same is purely in accordance with the provisions of Section 24 of the Act of 1988. So also Annexure P-2 again is a proceeding drawn strictly in accordance with the said provisions and as such the two orders cannot be said to have been passed without jurisdiction or authority of law. The proceedings drawn is only to determine whether the property standing in the name of the petitioners are a Benami property or not? - The final adjudication is yet to be done. Petitioners have been called upon in the said proceedings and it is only pending the final adjudication of whether the properties in the name of the petitioners are Benami Properties or not, the authorities concerned as a matter of precaution passed an order of provisional attachment until the dispute is finally resolved. The provisions Sub Section 3 of Section 1 and read it along with other amendments which have been brought in the Act of 1988 vide Amendment Act of 2016, this Court is compelled to reach to the conclusion that proceedings drawn against the petitioners in the given factual matrix of the case cannot be found fault with. It can also not to be said that provisions of the Amended Act of 2016 could not have been made applicable in respect of properties which were acquired prior to 01.11.2016. The whole Act of 1988 as it stands today inclusive of the amended provisions brought into force from 01.11.2016 onwards applies irrespective of the period of purchase of the alleged Benami property. Amended Act of 2016 does not have an existence by itself. Without the provisions of the Act of 1988, the amended provisions of 2016 has no relevance and the amended Provisions are only laying down the proceedings to be adopted in a proceeding drawn under the Act of 1988 and the penalties to be imposed in each of the cases taking into consideration the period of purchase of Benami property.

Summary

Issues:
Challenge to provisional attachment of immovable properties under the Prohibition of Benami Property Transactions Act, 1988 and notice regarding confirmation of the attachment.

Analysis:
The core issue in the writ petition is whether the Act of 1988, allowing confiscation of 'Benami' properties, can be applied to transactions predating 01.11.2016. The petitioners, a husband and wife, are accused of owning land allegedly belonging to another individual. They argue that the Act cannot be retroactively applied as the properties were acquired before the Act's provisions were in force.

The petitioners contest the legality of the orders, claiming the properties were purchased before the Act's enforcement. They rely on a Rajasthan High Court judgment and a Supreme Court decision to support their position. However, the respondents argue that the Act, as amended in 2016, enhances procedural provisions without replacing the original Act, making it applicable to pre-2016 transactions.

The High Court notes that the Act of 1988 remains in effect, with amendments aimed at strengthening its effectiveness. The amendments, effective from 01.11.2016, provide procedural guidelines for attaching and confiscating Benami properties. The Court emphasizes that the amended Act supplements the original Act, applying to all transactions, regardless of purchase date.

Regarding the petitioners' argument on the retrospective application of the Act, the Court examines specific provisions. It clarifies that while certain sections apply to transactions post-2016, the Act's entirety, including the amendments, is relevant to all Benami property cases. The Court upholds the provisional attachment orders as lawful, emphasizing the need for final adjudication on the property's ownership.

The Court dismisses the petitioners' reliance on a Supreme Court judgment, stating its inapplicability to the present case. It underscores that the amended Act's provisions are integral to the Act of 1988, ensuring proper proceedings and penalties for Benami transactions. Ultimately, the Court finds no merit in the petitioners' claims, rejecting the writ petition for lacking substantial grounds.