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TMI Blog2023 (2) TMI 1102X X X X Extracts X X X X X X X X Extracts X X X X ..... stallized since 1988, would be in jeopardy. Such implied intrusion into the right to property cannot be permitted to operate retroactively, as that would be unduly harsh and arbitrary. As we hold as under - a) Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution. b) In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary. c) The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. d) In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively. e) Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016. As a consequence of the above declaration, all such prosecutions or confiscation proceedings shall stand quashed. f) As this Court is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oheb Hossain, Sr. Standing Counsel with Mr. Vipul Agarwal and Mr. Parth Semwal, Advs. for Income Tax Department., Mr. Anurag Ahluwalia, CGSC with Mr. Danish Khan, Adv. for UOI. Mr. Zoheb Hossain, Sr. Standing Counsel with Mr. Vipul Agarwal and Mr. Parth Semwal, Advs. for Income Tax Department., Ms. Shiva Lakshmi, CGSC with Ms. Srishti Rawat and Mr. Ritwik Sneha, Advs. for R-2 and 4., Mr. Kunal Sharma and Mr. Zeyhra Khan, Advs. for R-1 and R-3 And Ms. Shiva Lakshmi, CGSC with Ms. Srishti Rawat, Ms. Ritwik Sneha, Advs. for R-2 ORDER This batch of writ petitions assail proceedings initiated by the respondents under the Prohibition of Benami Property Transactions Act, 1988. They assail proceedings initiated under the said enactment for attachment and confiscation of properties which were admittedly acquired prior to the enforcement of the Benami Transactions (Prohibition) Amendment Act, 2016. These petitions would be liable to be allowed in light of the recent decision rendered by the Supreme Court in Union of India Anr. v. Ganpati Dealcom Pvt.Ltd., [2022 SCC OnLine SC 1064] The issue of retrospective application of the provisions introduced by virtue of the 2016 Amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission Reports without there being a principle identified to do away with the aspect of mens rea should be a contributory factor in analysing the constitutionality of the aforesaid criminal provision under the 1988 Act. 60. Second, ignoring the essential ingredient of beneficial ownership exercised by the real owner contributes to making the law even more stringent and disproportionate with respect to benami transactions that are tripartite in nature. The Court cannot forcefully read the ingredients developed through judicial pronouncements or under Section 4 (having civil consequence) into the definition provided under Sections 2 and 3 (espousing criminal consequences), to save the enactment from unconstitutionality. Such a reading would violate the express language of Section 2(a), of excluding one ingredient from the definition of benami transaction‟, and would suffer from the vice of judicial transgression. In removing such an essential ingredient, the legislature did not identify any reason or principle, which made the entire provision of Section 3 susceptible to arbitrariness. Interestingly, for tripartite benami transactions, the 2016 Act brings back this ingredien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place. In this light, this Court finds that Sections 3 and 5 of the 1988 Act were unconstitutional from their inception. Ruling on the powers of attachment and confiscation in respect of properties acquired and in which interests stood created prior to the 2016 Amendment, the Supreme Court observed:- 123. In view of the above discussion, it is manifest that the 2016 Act contemplates an in-rem forfeiture, wherein the taint of entering into such a benami transaction is transposed to the asset itself and the same becomes liable to confiscation. At the cost of repetition, we may note that the taint of benami transactions is not restricted to the person who is entering into the aforesaid transaction, rather, it attaches itself to the property perpetually and extends itself to all proceeds arising from such a property, unless the defence of innocent ownership is established under Section 27(2) of the 2016 Act. When such a taint is being created not on the individual, but on the property itself, a retroactive law would characterize itself as punitive for condemning the proceeds of sale which may also involve legitimate means of addition of wealth. 127. In view of the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings for a long span of time, the rights that have crystallized since 1988, would be in jeopardy. Such implied intrusion into the right to property cannot be permitted to operate retroactively, as that would be unduly harsh and arbitrary. Conclusion 130. In view of the above discussion, we hold as under: a) Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution. b) In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary. c) The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. d) In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively. e) Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016. As a consequence of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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