Benami Amendment Act 2016 is prospective, Rajasthan HC [Read Judgment]

The Rajasthan High Court recently had the occasion to reiterate that the effect of the Benami Amendment Act, 2016 is prospective. Justice Veerendr Singh Siradhana ruled,.“… this Court has no hesitation to hold that the Benami Amendment Act, 2016, amending the Principal Benami Act, 1988, enacted w.e.f. 1st November, 2016, i.e. the date determined by the Central Government in its wisdom for its enforcement; cannot have retrospective effect.”.The judgment was passed in view of the bar on making criminal offences retrospective under Article 20 of the Constitution and given the law laid down by the Supreme Court in Mangathai Ammal (died) through Lrs and Ors. v. Rajeshwari & Ors. .As noted in the judgment,.“In the case of Mangathai Ammal (died) through L.Rs. & ors. (supra), the Apex Court of the land while dealing with issue of retrospective effect of the Benami Amendment Act, 2016, in unambiguous terms held that Benami Transaction Act would not be applicable retrospectively…..… Article 20 of the Constitution of India is fundamental right guaranteed under Part-III of the Constitution and the penal consequences emanating from the Benami Amendment Act, 2016, in infraction to the mandate of fundamental rights guaranteed under Article 20 of the Constitution; cannot be given retrospective effect in absence of a clear stipulation by the Parliament on retrospectivity.”.The Court passed the ruling after also noting that the 2016 amendment cannot be implied to have retrospective effect, particularly when it is neither curative nor declaratory law, but rather a penal law. The Court observed,.“By now, it is well settled law that a substantive provision unless specifically made retrospective or otherwise intended by the Parliament should always be held to be prospective. The power to confiscate and consequent forfeiture of rights or interests are drastic being penal in nature, and therefore, such statutes are to be read very strictly. However, there can be no exercise of powers under such statutes by way of extension or implication”.A notification passed in October 2016 had laid down that the 2016 Amendment would come into effect on November 1, 2016. The new Act contained more definitions relevant to benami transactions, substituted certain terminology under the prior 1988 principal Act and enhanced the punishment for entering into benami transactions from 3 years’ imprisonment to 7 years’ imprisonment. Further, rules were also introduced under the Act for the first time..In the case at hand, proceedings under the 2016 Benami Amendment Act had been initiated against the petitioners, even though the transactions under scrutiny predated November 1, 2016 i.e. the date on which the Amendment Act came into force..Defending the decision to apply these provisions retrospectively, the State contended that the 2016 Benami Amendment Act did not impose any new liability on pending benami transactions. Rather, it was argued that its object was only to make the Prohibition Of Benami Property Transaction Act, 1988 more effective by curing mischief sought to be curbed by this principal Act. The State also disputed the maintainability of the petition..However, the Court, after an extensive examination of various case laws, rejected the objections to the maintainability of the petitions..Further, in view of the above observations, the Court also highlighted that the 2016 Amendment Act cannot be applied retrospectively when it comes to the transactions of the petitioners..Therefore, the Court disposed of the petitions with a direction to the adjudicatory authorities under the Benami Act to examine the petitioners’ case on merits bearing in mind that the 2016 Amendment Act would not apply to their transactions predating November 1, 2016..The Court concluded as follows,.“It is made clear that this Court has neither examined nor commented upon merits of the writ applications but has considered only the larger question of retrospective applicability of the Benami Amendment Act, 2016 amending the original Benami Act of 1988. .Thus, the authority concerned would examine each case on its own merits keeping in view the fact that amended provisions introduced and the amendments enacted and made enforceable w.e.f. 1st November, 2016; would be prospective and not retrospective.“.Senior Advocates KK Sharma, MM Rangan and advocates Sandeep Taneja, Rohan Agarwal, Anant Kasliwal, Vaibhav Kasliwal, Charu Pareek, Pradeep Kumar, Gunjan Pathak and NL Agarwal appeared for various petitioners. Senior Advocate Prabhuling K Navadagi, with advocates Prabhansh Sharma and RB Mathur appeared for the respondents/state authorities. [Read Judgment]