2024 (1) TMI 541 - HC - Benami Property

Prohibition of Benami Property Transaction - Applicability of provisions of Section 5 of the Amended Act, 2016 - funds infused into the shell companies by multiple layering in the guise of share capital or loan - Initiating Officer had reasons to believe that the arrangements made by the respondent with various shell companies is a benami transaction within the meaning of Section 2 A (9) of the Prohibition of Benami Property Transactions Act, 1988 - as contended on the side of the appellants that Section 5 of the Prohibition of Benami Property Transactions Act, 1988, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 will have retrospective effect and therefore, the common order passed by the Tribunal, to the contrary, is liable to be interfered with. HELD THAT - Today, when the matters were taken up for hearing, the learned counsel appearing for both sides in unison, submitted that a batch of appeals challenging the very same impugned order of the Appellate Tribunal, was disposed of, by this court, by passing a detailed judgment 2023 (12) TMI 620 - MADRAS HIGH COURT wherein as opinioned that as on date, the decision of the Hon'ble supreme court in Union of India v. Ganapati Dealcom Pvt Ltd 2022 (8) TMI 1047 - SUPREME COURT holds the field and hence, the arguments advanced on the side of the appellants that the provisions of Section 5 of the Amended Act, 2016 have to be applied retrospectively, cannot be countenanced. It is to be noted that in the Review Petition 2023 (1) TMI 1327 - SC ORDER filed by the Department to review the order passed by the Honourable Supreme Court in Union of India vs. Ganapati Dealcom Pvt Ltd 2022 (8) TMI 1047 - SUPREME COURT delay was condoned and the application for oral hearing of the review petition was allowed, however, no stay order was granted. In such circumstances, pendency of the review of the decision in Union of India vs. Ganapati Dealcom Pvt. Ltd, cannot be a ground to interfere with the order passed by the Tribunal. It is also well settled that mere pendency of the Review Petition will not be a ground to assail the orders impugned in the appeals.

Summary

Issues involved:
The issues involved in the judgment include the retrospective application of Section 5 of the Prohibition of Benami Property Transactions Act, 1988 as amended in 2016, and the impact of the decision of the Honourable Supreme Court in Union of India vs. Ganapati Dealcom P Ltd. on the appeals filed challenging the order of the Appellate Tribunal.

Issue 1 - Retrospective Application of Section 5:
The main issue in this batch of appeals was whether Section 5 of the Benami Property Transactions Act, 1988 as amended in 2016 should have retrospective effect. The appellants contended that the Tribunal's order was contrary to this position. The Tribunal had relied on the Supreme Court's decision in Union of India vs. Ganapati Dealcom P Ltd., which held that the provisions of the 2016 Amendment Act, particularly Section 5, should be applied prospectively, not retrospectively. The Tribunal's order set aside actions related to benami transactions before the 2016 Amendment Act. The Telangana High Court and the Supreme Court upheld this view, emphasizing that the 2016 Amendment Act introduced substantive provisions that could not be applied retroactively.

Issue 2 - Review Petition and Pending Decision:
The appellants sought to challenge the Tribunal's order based on a Review Petition filed by the Department before the Supreme Court. However, the Court noted that the pendency of a Review Petition alone was not sufficient grounds to interfere with the Tribunal's order. Citing a Supreme Court decision, the Court emphasized that High Courts should decide cases based on existing law and not wait for outcomes of references or review petitions. The Court found no valid reason to overturn the Tribunal's order based solely on the pending Review Petition.

Separate Judgment by the Supreme Court:
In a separate judgment, the Supreme Court dismissed an appeal related to similar issues, stating that the matter was already covered by the Union of India vs. Ganapati Dealcom P Ltd. decision. The Court allowed for a fresh petition to be filed in case the review petition was successful, but for the present, the existing judgment stood.

Therefore, the High Court of Madras upheld the Tribunal's order, emphasizing the prospective application of the 2016 Amendment Act, and dismissed the appeals, leaving room for further action based on the outcome of the pending Review Petition before the Supreme Court.