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TMI Blog2019 (12) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the date of coming into force of the amendment - In the absence of retrospective operation of the amending Act, one cannot allege that the transaction resulting in the said contravention of the 1988 Act as amended in 2016 took place in 2011. That is exactly what the impugned show-cause notice proposed to do. The contention of the Additional Solicitor General that the provision in Section 1(2) of the said Act automatically made the amending Act of 2016 retrospective, is rejected - The 2016 amendment is a new legislation and in order to have retrospectivity it should have been specifically provided therein that it was intended to cover contraventions at an earlier point of time. That express provision is not there. Therefore this contention of the Additional Solicitor General fails. A declaration that the property was benami could not have been made unless a procedure was prescribed by rules made under Section 8 - No rules under that section were ever made. Hence, although the Act was entered in the statute book, it was an Act on paper only and inoperative. By the addition of Chapter III to the Act by the Amendment Act of 2016, an adjudicating authority and its composition, juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May, 1988. 2. Definitions- In this Act, unless the context otherwise requires,-- (a) benami transaction means any transaction in which property is transferred to one person for a consideration paid or provided by another person; (c) property means property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property. 3. Prohibition of benami transactions- (1) No person shall enter into any benami transaction. (2) Nothing in sub-section (1) shall apply to the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife of the unmarried daughter. (3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence under this section shall be non-cognizable and bailable. 5. Property of benami liable to acquisition- (1) All properties held benami shall be subject to acquisition by such authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of a provision that the property had to be held for the benefit of the person providing the consideration. I will give you another example. In the unamended Act property transferred to the wife or unmarried daughter was outside its purview. By this amendment transfer in favour of any child of the transferee would have a similar effect. In Section 5 of the unamended Act, benami properties were subject to acquisition without any right to receive compensation whereas under Section 27 of the Amendment Act, the property was simply liable to confiscation, without any clarification regarding compensation. On 29th August, 2017 the respondent authority invoked Section 24(1) of the Act after its amendment. They issued a notice to the appellant alleging that the said property was benami under Section 2(8) of the said Act of 1988, as amended. It also alleged violation of Section 2(9)(D) thereof. It said that the consideration for this transaction was provided by "non-traceable fictitious/shell entities having no real business", rendering the transaction benami. On 6th September, 2017 the appellant replied to this show cause notice stating that the property had been acquired by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in December, 2018 the following case was made out: "5. a) ................................. b) ................................. c)................................. d) It is further submitted that material on record indicated that Petitioner has invested in property of ₹ 9,44,00,000/- in the financial year 2011-12. Thus, the copy of related purchase deeds was obtained and it is noted that company had purchased a property (land containing 8 Kattash 13 Chattacks together with a residential building having total floor containing 6336 Sq. Ft.) on 02.05.2011 at 9, Sarat Chatter Avenue, Kolkata. It is also gathered that the sources of fund is out of capital of the company. The return of the company was examined for the assessment years 2012-13 to 2016-17. It is seen that company has raised share capital of ₹ 14,89,50,000/- (face value ₹ 10/- and premium ₹ 390/- per share) during the financial year 2007-08. From the return for the assessment year 2008-09 (financial year 2007-08) it is observed that the company's turnover is Nil. On perusal of records it is noted that petitioner company had invested ₹ 9,44,00,000/- in property during the financial y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 1(2) of the amending Act which stated that different dates may be appointed for coming into force of different provisions of the Act. He argued that Section 1(3) of the Parent Act said that provisions of the Act except 3, 5 and 8 as per the Act would come into force on 19th May, 1988. The amending Act was grafted into it. Therefore, the amendments of 2016 had retrospective effect. He also argued that the concept of benami property and benami transaction remained the same on amendment. So was the provision regarding acquisition and compensation. The amending Act merely provided a machinery for the implementation of the Parent Act. Learned Additional Solicitor General also argued that the proceedings emanating from the show-cause notice were yet to be finally adjudicated upon. The appellant/writ petitioner should be directed to participate in those proceedings. If they find themselves aggrieved by any order to be passed they are free to approach the appellate authority. This writ application was disposed of by a final judgment and order made on 18th December, 2018 by Mr. Justice Basak. His lordship ruled that the show-cause needed to be adjudicated upon as "questions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictum with regard to retrospectivity of a legislation in paragraph 28 of the report as under: "28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre, a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act as amended, but subject to the following condition: "But this is not the same thing as saying that the amendment itself must be taken to have been in existence as from the date of the earlier Act. That would be imputing to the amendment retrospective operation which could only be done if such retrospective operation is given by the amending Act either expressly or by necessary implication." Bennion on Statutory Interpretation, 6th edition has said in page 262 of the text book "the fact that the drafter fails to provide necessary transitional provisions does not mean that a new provision inserted in an Act is to be treated s having been present since the Act was originally passed." Again in pages 264 and 265, the author wrote as follows "A more subtle problem concerns the effect of the new wording on the words that remain. An Act is to be construed as a whole. Are the unaltered words of the Act to be construed as meaning what they did before the others were amended? It was held in A-G Vs. Lamplough reported in (1878) 3 EX D 214 that, unless the contrary intention appears from the amending Act, the answer to this question is yes……………… ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted principle of law that the statute cannot have any retrospectivity unless expressly provided therein. In Rao Shiv Bahadur Singh and Anr. Vs. State of Vindhya Pradesh reported in AIR 1953 SC 394, the Supreme Court was concerned with the interpretation and application of Article 20 of our Constitution. The court remarked that "this article in its broad import has been enacted to prohibit convictions and sentences under ex-facto laws." It defined ex-post facto laws as those which "voided and punished what had been lawful when done." This case was cited to support the argument that the 2016 amendment could not be utilized to charge the appellant with contravention or convict him for an alleged offence under it but which was not so under the 1988 Act. All the above authorities were cited by Mr. Khaitan. I reject the contention of the Additional Solicitor General that the provision in Section 1(2) of the said Act automatically made the amending Act of 2016 retrospective. The 2016 amendment is a new legislation and in order to have retrospectivity it should have been specifically provided therein that it was intended to cover contraventions at an earlier point of time. That expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... important. It lays down that repeal of an enactment, which necessarily includes an amendment, would not affect "any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed", unless a different intention is expressed by the legislature. Without question, the omission on the part of the government to frame rules under Section 8 of the 1988 Act rendered it a dead letter and wholly inoperative. Assuming that the appellant had entered into a benami transaction in 2011, no action could be taken by the Central government, in the absence of enabling procedural rules. It is well within the right of the appellant to contend that the Central government had waived its rights. It could also contend that no criminal action could be initiated on the ground of limitation. Now, these rights which had accrued to the appellant could not, in the absence of an express provision be extinguished by the amending Act of 2016. In other words, applying the definition of benami property and benami transaction the Central government could not, on the basis of the 2016 amendment allege contravention and start the prosecution in respect of a transaction in 2011. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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