Note on Retrospective Operation Of Benami Transactions (Prohibition) Act, 1988:

Section 1(3) provides that ‘the provisions of section 3, 5 and 8 shall come into force at once (5th September 1988) and the remaining provision of this Act shall be deemed to leave come into force on the 19th day of May,1988. The decision of Hon’ble Calcutta High Court in Ganpati Dealcom Pvt. Ltd vs Union Of India & Anr (APO No. 8 of 2019), wherein the DB of Hon’ble High Court has noted “Now, it is an accepted principle of law that the statute cannot have any retrospectivity unless expressly provided therein” However, attention of the DB is not invited to Section 1 (3) of the Amended Act which could answer the basic principle of applicability of act. Therefore, it cannot be denied that the provision of PBPT Act are in force since 1988.  The Benami Act was already in place and definition of Benami Property as also the provision of punishment on offence were prescribed in the Act. Offenses are also punishable from 1988 to 2016.

The DB of Calcutta High Court in the above case of Ganapati (supra), the Contentions of Ld. ASG were repelled as under:

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 express provision is not there. Therefore, this contention of the Additional Solicitor General fails.”

The above observation of the DB runs contrary to the Section 1(3) of the Amended Act which categorically deals with above situation that the remaining provision of this Act shall be deemed to leave come into force on the 19th day of May,1988. Therefore, on this ground alone, the decision of DB of Calcutta High Court is liable to be set-aside.

The second point considered by DB of Calcutta High Court that there was no rule framed under Section 8 of Unamended Act. The DB also relied and referred the decision of Canbank Financial Services Ltd vs Custodian & Others (2004) 8 SCC 355 wherein the Hon’ble Supreme Court noted that the rules under Section 8 are not framed. However, the DB has not appreciated/considered that above lacunae/inoperation of unamended act was cured by way of Prohibition of Benami Property Transaction Rules 2016 in terms of Power conferred u/s 68 of Amended Act. It is to be noted that Section 68 of Amended Act is pari passu to Section 8 of Unamended Act. Rather, notifying the rules under the amended act shows that the amended act has brought the procedural changes in the old act which could be otherwise permissible under the old act. Thus, applying the definition of benami property and benami transaction the Central government could, on the basis of the 2016 amendment started the adjudication proceedings.

The observation of Hon’ble DB that ‘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’ is based upon incorrect appreciation of law. There is no question of prosecution in the pre-amendment benami transaction as Section 3 (2) of the Amended Act deals with prosecution & punishment and provides the same shall be punishable in the same way as it was punishable under the unamended Act i.e. Section 3 (3) of Unamended Act which provides that 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. Thus, so far as, pre-amendment benami transactions are concerned, no change w.r.t. sentence/punishment has been brought on record and it is retained as it was originally in existence.

It would be relevant to refer an old decision i.e. Mithilesh Kumari & Anr V/s Prem Bihari Khare (1989(1) S.C.R.621) wherein the Hon’ble Supreme Court observed that though Section 4(1) is not expressly made retrospective, by the legislature, by necessity implication, it appears to be retrospective and would apply to all pending proceedings wherein right to property allegedly held Benami is in dispute. Therefore, to say that New law has been applied on old transaction failed to hold ground and thus the argument is ought to be rejected and filed.

The Hon’ble Delhi High Court in the case of Anis Ur Rehman vs Mohd. Tahir And Ors. (Judgment dated 21/01/2019 in RFA No. 855/2018) has held as under:

” 7(i). In my opinion, the trial court has clearly erred in holding that the provisions of the Amended Act will not apply because the issue of prospective operation would only arise if some vested right created by the unamended Act is sought to be taken away by the Amended Act. There has to be a specific vested right and such vested right would not be taken away by a repeal of the earlier provision, and this is so because of Section 6 of the General Clauses Act, 1897. 

7(ii). The issue is as to whether the exceptions stated in the unamended provision of Section 4(3) of the unamended Act created a vested right in favour of the respondents/defendants.

7(iii). In my opinion, there does not arise any issue as regards the retrospective application of the provisions of Section 2(9) of the Amended Act inasmuch as the unamended Act, by virtue of Section 4(3) created three exceptions to benami transactions, firstly, when there existed an HUF, secondly, when there is a fiduciary relationship and thirdly, when there is a relationship of a trustee. By the provisions of Section 2(9) of the Amended Act, what has happened is that the expressions HUF‘, fiduciary capacity‘ and ‘trustee‘ have been defined, giving them the meaning which the law required, and this was done to remove any doubt or confusion with respect to the meaning of the expressions fiduciary capacity‘ and trustee‘ as found in the repealed provisions of Section 4(3). Therefore, by defining the expressions fiduciary capacity‘and trustee‘, it is not as if any vested right existing under the earlier provisions of Section 4(3) is taken away. What was the subject matter of Section 4(3) of the unamended Act being the transactions which were exempted from being classified as benami transactions, the said aspects are now brought in the subject matter of Section 2(9) of the Amended Act. The relevant four exceptions [fifth being the Explanation to Section 2(9)] to the definition of benami transaction‘ contained in Section 2(9) of the Amended Act have simply expounded and elaborated and made more exhaustive the meaning of the expressions HUF‘ or fiduciary capacity‘ or trustee‘, thereby only those specific transactions as specified in the four exceptions contained in Section 2(9) of the Amended Act are taken out of the purview of the prohibited benami transactions. There is no vested right in the sense known to law that fiduciary capacity‘ or trustee‘ only mean a particular set of facts and only certain transactions under the repealed provisions of Section 4(3). This argument of the existence of a vested right under the repealed provision of Section 4(3) would have been available, if the expressions fiduciary capacity‘ or trustee‘ were specifically defined under the repealed provision of Section 4(3) as including certain transactions in these expressions and specifically otherwise barring certain transactions as benami (as not being exempted from being benami), and that now by the altered definition of the benami transaction in the Amended Act defining and specifically specifying what is included (and thus also excluded) in the expressions fiduciary capacity‘ and trustee‘, such alleged existing earlier exclusions in the expressions fiduciary capacity‘ and trustee‘ became in the Amended Act allowed as non-prohibited transactions. But, that is not so, inasmuch as, there were no definitions/meaning given to the expressions fiduciary capacity‘ and trustee‘ in the repealed provisions of Section 4(3) prescribing the exclusions to these expressions which will thus not be exempted as not being benami, being fiduciary/trustee transactions. Once that is so, therefore, in my opinion, there did not exist any vested right, and hence, there does not arise any issue of taking away of any vested right on account of the Amended Act giving definitions and meaning to the expressions fiduciary capacity‘ and trustee‘ by the four exceptions (and one Explanation) to prohibited benami transactions as prescribed in Section 2(9) of the Amended Act.

 8. In view of the aforesaid discussion, I cannot agree with the ratio of the judgment of the Bombay High Court in the case of Shri Joseph Isharat v. Mrs. Rozy Nishikant Gaikwad in Second Appeal No. 749/2015 decided on 01.03.2017, which was cited on behalf of respondents/defendants that the provisions of the Amended Act are prospective.”

The question of retrospectivity of the amended act may be seen from the Statement of Object and Reasons of the Amended Act which signifies that machinery provisions have been introduced only to plug the loopholes in the 1988 Act coming in the way of punishing people for entering into benami transactions. The machinery provisions supplement the substantive provision that is anterior to the 2016 Act. Section 24 of the 2016 Act, which deals with provisional attachment and continuation thereof, is a machinery provision only to prevent the disposal of ill-gotten wealth of the beneficial owner which is held by the benamidar pending the adjudication proceedings. As per Section 1(3) of the 1988 Act, Section 3 of the 1988 Act is deemed to be effective from 5.9.1988 whereas Section 24 of the 2016 Act is the machinery provision that provides for provisional attachment of the benami property and it is the intent of the legislature that Section 1(3) and Section 3 of the 1988 Act be read in harmony with Section 24 of the2016 Act to make the 1988 Act workable. If these provisions are not harmonized then beneficial owners would continue to enjoy the fruits of ill-gotten wealth and the society at large would continue to suffer, which would run counter to the very object and purpose behind the 1988 Act as also the Amendment Act, 2016.

The amendment brought into the Act of 1988 by way of amendment Act, 2016 is only amending and incorporating the procedural provisions and by way of the amendment Act, 2016, the original Act of 1988 has not been either superseded or replaced a new provision of law. According to the respondents, the original Act of 1988 is still in operation and also in force and by way of Amendment Act of 2016, certain additional provisions have been incorporated in respect of the procedures to be adopted and also in respect of making the provisions more stringent and deterrent. Therefore, the proceedings initiated by the respondents cannot be said to be without force of law or beyond purview of the Act of 1988 in view of the following:

> Section 1 (3) on the un-amended act i.e. The Benami Transactions (Prohibition) Act, 1988 provides that ‘the provisions of section 3, 5 and 8 shall come into force at once (5th September 1988) and the remaining provision of this Act shall be deemed to leave come into force on the 19th day of May, 1988’. Therefore, the provisions of PBPT Act are in force since 1988.

> Benami Act was already in place and the definition of Benami Property as also the provisions of punishment on offenses were prescribed in the Act. Offenses are punishable from 1988 to 2016 and the relevant provisions are mentioned below:

  • Section 3(1) provided that ‘No person shall enter into any Benami transaction’ 
  • Section 3(2) provided that ‘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’
  • Clause (a) of Section-2 provided the definition of ‘Benami Transaction’ as:

(a)”Benami transaction” means any transaction in which property is transferred to one person for a consideration paid by or provided by another person;

  • Clause (c) of Section-2 provided the definition of ‘Property’ as:

(c) “Property” means property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property.

  • Section 5 (1) provided that :

“All properties held benami shall be subject to acquisition by such authority, in such manner and after following such procedure, as may be prescribed.”

  • And Section 5 (2) provided that :

“For the removal of doubts, it is hereby declared that no amount shall be payable for the acquisition of any property under sub-section (1)”.

Therefore, any offense under PBPT Act [The Benami Transactions (Prohibition) Act, 1988] committed from 1988 to 01.11.2016 is also punishable.

> Amendments were made in the Benami transactions (Prohibition) Act 1988 and was renamed as the Benami Transactions (Prohibition) Amendment Act, 2016 and the said amended act was enforced on 01.11.2016 vide S.O. 3289(E) dated 25.10.2016 and authorities mentioned in the Act was notified.

> It is pertinent to mention here that the intent of the legislature was not to grant immunity to the persons who have entered in the Benami transactions from 1988 to 2016 and that are why the amendment was made in the original act.

> After the amendment the Benami transactions was broadly classified into four categories and was specifically defined in section 2(9) of the amended act.

Thus, on the above grounds it is evident that no immunity has been granted to the Benami transactions which have taken place between 1988 to 2016 and further the authorities who have to identify such transactions and confiscate such Benami properties have been notified vide S.O. 3289(E) dated 25.10.2016. Therefore, the transaction in which the Petitioners have entered is a Benami transactions comes under both the definitions prior to amendment and after the amendment. Further by virtue of provisions of Section 5 of Benami transactions (Prohibition) Act 1988 and notification issued vide vide S.O. 3289(E) dated 25.10.2016 the Initiating Officer is having jurisdiction over the defendant and Benami transactions took place before 01.11.2016.

It is also relevant to mentioned that the Finance Minister while replying to debate on the Amendment Bill in Lok Sabha on 27.07.2016 stated that:

Several members have laid stress on a point that acting on the recommendations of the Standing Committee, a fresh Bill should have been brought instead of bringing an amendment to the original Act of 1988. So, if we had accepted the recommendation of the Standing Committee – repealed the 1988 Act and recreated a new law in 2016- that would have been granting immunity to all people who acquired properties benami between 1988 and 2016. Obviously, the acquisition cannot take place, but the penal provisions of the 1988 Act also would have stood repealed. When a new Act with similar provision would have come, it could only apply for a penal provision to properties which are benami entered into after 2016. This move would not have been in larger public interest, particularly if large amounts of unaccounted and black money has been used to transact those transactions. Therefore, prima facie the argument looks attractive that ‘there is a 9-section law and you are inserting 71 sections into it. As far as penalizing the guilty people is concerned, the required machinery is being made operative under the present amendment for punitive action. Moreover, whistleblowers need not get any protection under this Bill because we have a specific law for them which across laws applies to all whistleblowers. When a whistleblowers gives any information, he gets protection under the Whistleblowers Act. As far as making benami transaction a noncognizable offence is concerned, it has been made non-cognizable because we do not want multiple agencies to come and harass the people. The object is not to harass them, but the object is that there must be prosecution if he has violated a particular law. Furthermore, if you see the list of amendments which the Government has circulated, amendment Nos. 3, 4 and 5, I have proposed to the hon. House that the phrase of ‘income’ in all the three sections wherever it is mentioned, in accordance with the recommendations of the Standing Committee, should be deleted, and the word in the amended section would be ‘known sources’ and not ‘known sources of income’. Besides, your suggestions regarding the right of representation through an authorized representative here also been incorporated in the Bill. You then raised this whole issue of why we have these four stages, that is, initiating officer, the acting officer, the adjudicating officer etc. We have adopted these stages to check the misuse of power by any individual and to reduce the possibility of error. One important question which has been raised by several Members is, as to why should the property vest in the Central Government, why not in the State Government? Under all central legislations where vesting of property takes place, it vests in the Central Government. At least, I am not aware of any law which is a central law under which vesting or acquisition takes place but the property rights then go to some other authority. A legitimate point has been raised that the appellate authority has not been given a specific power of staying the order. I would like to say in this regard that when an appellate authority has a power to pass a final order the power of interim suspension of the order which is inherent in that power of appeal, irrespective of whether it is specifically mentioned or not. So far as the issuing direction by the Central Government is concerned, Section 59(3) clearly says that no order, instruction or direction under sub-section I shall be issued which require the authority to decide a particular case in a particular manner. This law is not in conflict with the Income Tax Act in any way. The Income Tax Act deals with various provisions of taxation, the powers to levy, the procedures etc. This particular law deals with any benami property which is acquired by a person in somebody else’s name to be vested in the Central Government. So, the two Acts are supplementary to each other as far as this Act is concerned. The Section 58 clearly provides that the Government has the right to exempt the properties registered in the name of religious deities and religious organizations. A question has been raised that under Section 53 who would be liable? Is it the person who acquires the property or the person who sells the property? In this regard the language is very clear; whoever enters into benami transaction, and obviously both these people have entered into a benami transaction itself. The last question was with regard to properties in several Schedule areas which are covered by the Fifth Schedule itself. This Act does not exempt those properties. But that exemption would be available in the Article 244 of the Constitution. The Fifth Schedule, Clause 5 clearly says that wherever those scheduled properties are, the Governor of that State has the power to exempt the operation of any Central legislation to those areas. Therefore, any offense under PBPT Act [The Benami Transactions (Prohibition) Act, 1988] committed from 1988 to 01.11.2016 is also punishable.”

Recently, the Hon’ble Chhatisgarh High Court in W.P. (C) No. 3819/2019, Tulsiram & Anr. Vs. ACIT & Ors., vide judgment dated 15.11.2019 dismissed the petition on similar grounds and held as under:

12. What has to be understood at this juncture is that the original Act of 1988 does not stand repealed or superseded in any manner. The Act of 6 1988 is in operation with full force. The Parliament in its wisdom did not find the original Act of 1988 to be effective enough to control the menace of Benami properties being acquired in the country. The Parliament found certain discrepancies and loopholes and also did not find the original Act to be stringent and deterrent enough to achieve the object behind the enactment of the Act of 1988. With an intention to make the Act or the law more effective, forceful and stringent, certain new amendments were made making the law stringent and also prescribing the procedure and the manner in which the proceedings were to be drawn while initiating proceeding to attach and confiscate the Benami properties.

13. To decide the core issue whether the amended Act of 2016 can be made applicable for initiating proceedings against the petitioner in respect of the properties which were purchased or acquired prior to 01.11.2016, it would be necessary to read the Act of 1988 as a whole including the Provisions inserted by way of Act of 2016.

14. Sub Section 3 of Section 1 reads as under: “(3) The provisions of Sections 3, 5 and 8 shall come into force at once, and the remaining provisions of this Act shall be deemed to have come into force on the 19th day of May, 1988. The aforesaid section clearly indicates that the law as it stands shall be deemed to have come into force on the 19th day of May, 1988.

15. Sub sections (2) and (3) of Section 3 reads as under: (2) 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. (3) whoever enters into any benami transaction on and after the date of commencement of the Benami Transactions (Prohibition) Amendment Act, 2016, shall, notwithstanding anything contained in sub-section (2), be 7 punishable in accordance with the provisions contained in Chapter VII.

16. Both these provisions of law have been 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.

17. 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.

18. 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 8 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.

19. So far as the judgment of the Supreme Court in the case of Mangathai Ammal(Supra) relied upon by the petitioners is concerned, the said judgment by the Hon’ble Supreme Court has been delivered in an entirely different contextual background and facts of the said case also is entirely different as compared to the facts of the present case.

20. Moreover, the said judgment has been passed in a Civil Appeal assailing the judgment and decree passed from the Appeal decided by the High Court affirming the judgment of decree passed by the Civil Court in a suit for partition. In addition, the said judgment so far as referring to the provisions of amended Act of 2016 is concerned, was keeping in view the Provisions of unamended Sub sections (2) of Section 3 which stood omitted by the Act of 2016, dealing with the property purchased by a person in the name of his wife or unmarried daughter. Thus, the principles or ratio laid down in the said judgment would not be applicable in the given facts and circumstances of the present case. If we take into consideration, 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 9 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.”

The issue about the violation of fundamental rights of the petitioners as enshrined in the Constitution of India and more particularly the violation of Article 20 (1) of Constitution of India. It is submitted that there is no violation of Article 20 (1) of Constitution of India for the first reason that the proceedings as commenced against the petitioners are not Criminal proceedings. They are adjudicatory proceedings which are of Civil Nature. Furthermore, Section 1(3) of the 1988 Act itself provides for prospectively of its operative portions, viz. its penal clauses, in contra distinction to its definition/defining provisions. 

Criminal Actions could be under challenge on account of violation of fundamental right Under Article 20 (1) of Constitution of India, which is certainly not the present case.

In Sukhram v. Harbheji, [1969] 3 S.C.R. 752, the Hon’ble Supreme Court held:-

Now a law is undoubtedly retrospective if the law says so expressly but it is not always necessary to say so expressly to make the law retrospective. There are occasions when a law may be held to be retrospective in operation. Retrospection is not to be presumed for the presumption is the other way but many statutes have been regarded as retrospective without a declaration. Thus it is that remedial statutes are always regarded as prospective but declaratory statutes are considered retrospective. Similarly sometimes statutes have a retrospective effect when the declared intention is clearly and unequivocally manifest from the language employed in the particular law or in the context of connected provisions. It is always a question whether the legislature has sufficiently expressed itself. To find this one must look at the general scope and purview of the Act and the remedy the legislature intends to apply in the former state of the law and then determine what the legislature intended to do. This line of investigation is, of course, only open if it is necessary. In the words of Lord Selborne in Main v. Stark [1890] 15 A.C. 384 at 388, there might be something in the context of an Act or collected from its language, which might give to words prima facie prospective a large operation. More retrospectivity is not to be given than what can be gathered from expressed or clearly implied intention of the legislature.” (pp. 758-759)”

For Example, It is to be seen that the unamended provision of one of the provision i.e. Section 4 of the unamended Act was meant to protect the innocent creditors who are being cheated by fraudulent persons by transferring the property/properties in the name of benamidars to defeat the rights of creditors as provided in Section 53 of the Transfer of Property Act. The newly amended section 6 of the Benami Act deals with following aspects;

(i) No person, being a benamidar shall re-transfer the benami property held by him to the beneficial owner or any other person acting on his behalf.

(ii) Where any property is re-transferred in contravention of the provisions of sub-section (1), the transaction of such property shall be deemed to be null and void.

(iii) The provisions of sub-sections (1) and (2) shall not apply to a transfer made in accordance with the provisions of section 190 of the Finance Act, 2016.”.

Now the question arises as to whether the amended provisions as provided under newly amended Section 6 were alien to the unamended act and the answer is ‘No’. Section 4 of the unamended Act already had the similar provisions and the same may be read as under:

4. Prohibition of the right to recover property held benami.—

(1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.

(2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.

A bare reading of Section 4 (1) & (2), it is clear that the intent of legislature was to prevent the re-transfer of benami property and prohibits any person including the alleged real owner to claim the ownership of the benami property. Once the prohibitory provisions were there, the implications thereof were to consider the transfer/claims in contravention of Section 4 as illegal, null and void. The same provisions in different color have been provided in Section 6 of the amended act.

In 2016, the PBPT Act was not was not repealed, revoked, cancelled or abolished but several sections were incorporated to remove the aforementioned inadequacies. There is no question of the act being only prospective with effect from 2016, as the Act was enacted in 1988 and was applicable on the date of offense. Thus it is very much applicable to the transactions at hand in the present case.

To refer the decision in the case of Shri. Joseph Isharat vs Mrs. Rosy Nishikant Gaikwad first of all, the issue of present amendment was not under challenge. Thus, it would be highly improper to say that the said decision in any manner, dealt with the amendment of 2016 and declared that the amendments are prospective in nature.

Further, the following reasons were also part of reasoning to arrive at the conclusion of the said judgment:

The central question before the court in this behalf is, whether or not these amended provisions apply to the suit transaction, the suit transaction itself having been executed prior to the amendment and the suit also having been filed and defence raised as well as the suit decreed by the courts below before the amended act was introduced.

It was a civil suit of original jurisdiction which was filed prior to amendment (meaning thereby the cause of action had arisen prior to amendment and even the lis was filed). Further, the pleadings were completed and evidence had been adduced followed by decisions by the Courts below i.e. Trial Court and First Appellate Court. In civil law, the second appeal has to be considered on substantial question of law. The amended act was not considered/raised in original proceedings as well as in Appellate Proceedings at first appellate Court.

In the wake of aforesaid facts, the Ld. Single Judge in the said case referred the proceedings and then, held that ‘The amendments introduced by the Legislature affect substantive rights of the parties and must be applied prospectively.’

The above findings/observations cannot be considered as ‘ratio decidendi’. The same is at the most considered as ‘obiter dicta’. The issue/contentions qua the prospective and retrospective operation of the amended act were not supported by discussion on various issues.

In case of Rajiv Singh Dalal (Dr.) Vs. Chaudhari Devilal University, Sirsa and another, 4 Honourable Supreme Court, after referring to its earlier decisions, has observed that: The decision of a court is a precedent, if it lays down some principle of law supported by reasons. Mere casual observations or directions without laying down any principle of law and without giving reasons do not amount to a precedent.

 In Municipal Corporation of Delhi v. Gurnam Kaur, (1989) 1 SCC 101 and Divisional Controller, KSRTC v. Mahadeva Shetty, (2003) 7 SCC 197, the Hon’ble Supreme Court has observed that “Mere casual expressions carry no weight at all. Not every passing expression of a judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority.”

In Yeshbai and another v. Ganpat and another reported in AIR 1975 Bombay 20, a Hon’ble Division Bench of the Bombay High Court held as follows:

“37. ….we may at this stage refer to a passage from halsbury’s Laws of England, Third Edition, Volume 22, paragraph 1682 on page 796. It is as follows:

“1982. Ratio decided. The enunciation of the reasons or principle on which a question before a court has been decided is alone binding as a precedent. This underlying principle is often termed the ratio decidendi, that is to say, the general reasons given for the decision or the general grounds on which it is based, detached or abstracted from the specific peculiarities of the particular case which gives rise to the decision. The concrete decision alone is binding between the parties to it, but it is the abstract ratio decidendi, ascertained on a consideration of the judgment in relation to the subject-matter of the decision, which alone has the force of law and which, when it is clear what it was, is binding; but, if it is not clear, it is not part of a tribunal’s duty to spell out with difficulty a ratio decidendi in order to be bound by it, and it is always dangerous to take one or two observations out of a long judgment and treat them as if they gave the ratio decidendi of the case. If more reasons than one are given by a tribunal for its judgment all are taken as forming the ratio decidendi”.

 Mangathai Ammal (Died) Through … vs Rajeswari  – SC Judgment:

The Hon’ble Supreme Court was considering a pure civil case i.e. a private dispute and observed as under:

12. It is required to be noted that the benami transaction came to be amended in the year 2016. As per Section 3 of the Benami Transaction (Prohibition) Act 1988, there was a presumption that the transaction made in the name of the wife  and children is for their benefit. By Benami Amendment Act, 2016, Section 3 (2) of the Benami Transaction Act, 1988 the statutory presumption, which was rebuttable, has been omitted. It is the case on behalf of the respondents that therefore in view of omission of Section 3(2) of the Benami Transaction Act, the plea of statutory transaction that the purchase made in the name of wife or children is for their benefit would not be available in the present caseAforesaid cannot be accepted. As held by this Court in the case of Binapani Paul (Supra) the Benami Transaction (Prohibition) Act would not be applicable retrospectively. Even otherwise and as observed hereinabove, the plaintiff has miserably failed to discharge his onus to prove that the Sale Deeds executed in favour of defendant no.1 were benami transactions and the same properties were purchased in the name of defendant no.1 by Narayanasamy Mudaliar from the amount received by him from the sale of other ancestral properties.”

Thus, from a bare reading of aforesaid finding of Hon’ble Supreme Court, based upon the facts of the said case, it is clear that the objection that the earlier provisions of unamended act would not be applicable, was negated by the Hon’ble Supreme Court. This makes it clear that the Hon’ble Supreme Court decided the said case, in peculiar facts, that the statutory presumption in favour of wife/children would remain available. It was not pointed out that the said provision is still available under the amended act. Further, in the case of Binapani, the unamended act was in question and not the unamended act. The Hon’ble Supreme Court in the present case i.e. Mangathai Ammal, nowhere concluded that the present amendments under the act of 2016 will be applicable prospectively.

Again, in the present case of Mangathai Ammal, the observations are not ratio decidendi, as the same were only observation and based upon the facts which were counted by Hon’ble Supreme Court in further words as ‘Even otherwise and as observed hereinabove, the plaintiff has miserably failed to discharge his onus to prove that the Sale Deeds executed in favour of defendant no.1 were benami transactions’.

Thus, it can be safely concluded that the issue of retrospective operation of provisions of Amended Act have not finally adjudicated either by Bombay High Court or by Hon’ble Supreme Court. The decision of Calcutta High Court is not based upon true appreciation of the law declared by the Parliament.

In my view the above issue of retrospective operation of the Amended Act needs to be reviewed by the Hon’ble Supreme Court of India to render a final verdict to settle it once for all.

KANHAIYA SINGHAL

Special Public Prosecutor,

PBPT Act.

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Qualification: LL.B / Advocate
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Location: New Delhi, IN
Member Since: 23 Dec 2019 | Total Posts: 1

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