The High Court allowed the petition quashing an order dated 27.04.2022 by the Adjudicating Authority. Based on the Supreme Court's decision that the 2016 Amendment to the Benami Act applied prospectively, the impugned order was set aside.
The impugned order dated 27.04.2022 is set aside. The writ petition is allowed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction)
TUESDAY ,THE TWENTIETH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY TWO
PRESENT
THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE SRI JUSTICE C.V. BHASKAR REDDY
WRIT PETITION NO: 36185 OF 2022
Between:
lqlus^Vt/e-lll_l9ne_AgritechInternational Ltd., (Represented by its AdditionalDirector) D.No.B-1-301/86-87, Plot l,lq tOt, Shaikpet Nala, Saipriy'a Residency, Laksluni Nagar Colony, Hyderabad-500008.
AND
...PET|T|ONER
...RESPONDENTS
Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ, order or direction in nature of writ of mandamus decldring the impugned Order OCA/MD 5t34312021-pBpT dt.27.04.2022 issued by the 1st respondent as being arbitrary, illegal, violative of principles of natural justice and without authority of law and set aside the same.
il2t
IANO: 1O F 2022
Petition under section i 51 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to stay the operation of the impugned order No. ocA/MDSt343l2o21- pBpr dt. 27 04 2022 by the 1st respondent.
Counsel for the Petitioner: MS. ANUSKHA RASTOGI FOR SRI. YAMMANURU SIRI REDDY
Counsel for the Respondent Nos.1 & 2: SRI B. NARASIMHA SHARMA SC FOR CENTRAL GOVERNMENT
Counsel for the Respondent No.3: NONE APPEARED
Counsel for the Respondent No.4: SMT B. KAVITA YADAV
The Court made the following: ORDER
THE HON'BLETHECI.IIE F IUSTICEUIIAL BH AN AND ,TIC E BL W.P.No. 36185 of2022
ORDE(Per thellon'bktheChief Jtuti'etljial Bhq:an) the Fleard lv{s. AnwhkaRastogi, leamedcounselfor petitioner and l4r.B.NarsimhaSarma,leamed counselfor respondent Nos.1and 2.
J In the irutant case,allegedtransaction of benami proPerry took place on31.03-2016i.e., mtch before the amendment of 2016 came into force.
has been heldas follows:
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T1-re issue before us is no longer res inlegra not only in view of the law laid down by this C-oun in Nexus Feeds Limited v. the Assistant Commissioner of Income Taxl, but in view of the law declared by the Supreme Coun in Union of India v. Ganpati Dealcom Pvt. Ltd.2
In Union of India v. Ganpati Dealcom Pvt. Ltd. (2 supra), which went to the Supreme Courc from a decision of the Calcutta L[gh Coun, the question, which was considered by the Supreme C.ourt was whether the Benami Properry Act as amended by the Amendment Act of 2016 has a prospective effect ? \Xihile examining this question, Supreme Court went into the consdrutionaliry of the original Act ra., Benami Properry Act. At the fint place, it was held as foliows:
Tle simple question addressed by the counsel appearing for both sides is whether the amended 2076 Act is retroactive or prospective. Answering the above question is inevitably tied to an intermediate question as to whetier the 1988 Act was constirutional in the first place. The argunen$ addressed by the Union of India hinges on the fact that the 1988 Act was a valid substantive law, which required only some gap filing through the 2016 Act, to ensure that sufficient procedural safeguards and mechanisms are present to enforce the law. According, to the Union of India, the 2016 Act was a mere gap filling exercise.
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However, upon. studying the provisions of the 1988 Act, we find that there arc questions of legality and constirutionaliry which arise with respect to Secrions 3 and 5 of 1988 Act. The answers to such questions cannot be assumed in
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favour of constitutionaliry simplybecause the samewasnever questioned before the C-oun of law.We are clarifying thatweare not speaking of the presumptionof constitutionalityas a mnfter of burden ofproof. Rathet we are indicating the assumption taken by the Union as tothe validiry of theseprovisionsin the present Litigadon. Suchassumptioncannot be made whenthis Coun is called upon toanswer whetherthe impugned provisions are attracted to those ransacdonsthat have taken place before 2016.
After elaborate deliberation, SupremeCouncameto the conclusion that Section 3(criminal provision), Section2(a) (definicion clause) and Section 5(confiscation Proceedings)of the Benami Properry Act are overly broad,disproponionatelyhanh and wi$out adequate safeguards.Thoughsuch provisionswere in a dormant condition,nonetheless, SupremeCoun declaredSections 3 and 5 of the BenamiProperry Act as unconstitutionalfrom inception. It was heid as follows:
From the above, Section 3(crimirnl provision)readwith Section 2(a) and Section 5(confiscationproceedings)of the 1988 Act are overly broad, disproponionatelyharsh,and operate without adequate safeguar& inplace. Suchprovtionswere still- bom law and never utilized in thefint place. In this light,this Coun finds that Sections 3and 5 of the 1988 Actwere unconstitutional from theirinception.
/
Continuing with the deliberation,Supreme Court observed rhat once Sectiors 3 and 5 ofthe Benami ProperryActwere declared as unconstitutional,it would mean that the Amendment Act of 2016 would in effectcreate new provisions andnew offences as the offences underSecdon 3(1) for the traruactions entered into
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berween O-5.09.1988 (uten the original Act received the presidential assent) and 25.10.2A1,6 (when the Amendment Act of 2016was nodfied), the law cannot retroacdvely invigorate a still- bom criminal offence. Thereafter, it was categorically held that the Amendment Act of 2016 containing criminal provisions wouldbe applicabie only prospectively. Supreme Coun held as follows:
In the case at hand, the 2016 Act containing the criminal provisions is applicable only prospectively, as therelevant Sections of the pre-amendment 1988 Act containing thepenal provision, have been declared as unconstitudonal. Therefore, the question of constmction o[ the 2016 Act as retroactive qu the penal provisions under Sections 3 or 53, does not arise.
Supreme Crun clarified that as it has held that criminal provisions under the Benami Properry Act were artitrary and incapable of application, the law through rhe 2076 amendment could not retroactively apply for confiscation of those transactiorx entered into berween 05.09.1988 to 25.70.2016 as tle same would amount to punitive punbhment. Finally, the Supreme Coun concluded as under:
In view of the above discussion, we hold as unden a) Section 3(2) of the unamended 1988 Act is declared as unconstitutional for b.i"g manifestly arbitrary.
Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Anicle 20(1) of the Constitution.
<br>
b) In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstirutional for being manifesdy artitrary.
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c) The 2Oi6 AmendmentActwas not merely procedunl,nther, prescribed subsuntive provisions.
d) In rem forfeiture provtion underSection 5 of the 2016Act, being punitive in nature, can only beapplied Prospectivelyand not retroactively.
e) C-oncemed authorities cannotinitiate or continue criminal prosecudon or confiscationproceedings fortransactions entered into prior to the coming into force ofthe 2016 Act, rzi., 25.10.2016. As a consequence of theabove declantion, all such prosecutions or confiscation proceedings shallstand quashed.
0fu tlrn Coun is not concemedq/ith the constitutiorulityof such independent forfeitureproceedingscontemplated underthe 2015 Amendment Act on the othergrorurds, theaforesaid questions are left oPen to bead.)udicated inappropriate proceedings.
From the above, it is evident thatSupreme C-ounhas declared that the Amendment Act of20.16 is not merely procedural but prescribes substantive provisions.Therefore,concemed autlorities cannot ;nitiate orcontinue criminalprosecutionor confiscation proceedings fortransactionsentered into prior to coming into force of the 2016Amendment Act i.e.,25.10-2016. As a consequence, all such ransacdonsor confiscationproceedings shall stand quashed. Supreme Counhasalso clarified that in rcm forfeiture provision under Section 5 ofthe Amendment Act of 2016 being punirive in nature can only be appliedprospectively and not retroactively.
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byrespondent No.1 is herebyset aside.
fu a sequel, miscellaneous petitions, pending if any, stand
closed.
SD/.G,SIREESHA ASSISTANT-BEGTSTRAR //TRUE COpyil To, sEcTtoN oFFICER 1. The Adiudicatino Authorrty, (SAFEM(FOp)A and NDPSA), Qhastri Bhavan, 4th Floor. New Buirding ccimprex, Nd.zo, lirilo*. Road, chennai_600006. 2. The Assista nt Comm is"sionur;ii;;;;;iax] jin rtiating officeD Benami Transactionsprohibition u"11 SyoeiJ6ao Sb.Ftoor, n"ayrti;;'6r;;;:,' ^Basheerbagh, Hyderabad_ SOOOba ---- -'-' J. I he Secretarv (Revenue)) Union of lndia, North Block, New Delhi 4. one cc to sii. vammani'rl'si;i R;;jy;Aij;;.tu 1oeuc1 5. one cc to sri g r.rarasrmni-Shr;;;,tci;;dentrar Government rv' lopuc\rv r 6. one CC to Smr B Kavita VJairlAjrb"rt.jjbFudl 7. Two CD Copies 8. One Spare Coov CHR SBN'
HIGH COURT
DATED:2010912022
ORDER
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W.P.No.36185 of 2022
ALLOWING THE WRIT PETITION WITHOUT COSTS
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2 issues framed by the court
Whether the impugned order dated 27.04.2022 by the Adjudicating Authority under Section 26(3) of the Benami Act, 1988, is arbitrary and illegal.
Whether the Supreme Court's declared prospective nature of the 2016 Amendment renders the impugned order unsustainable.
Colour shows how this judgement treated each authority
Union of India v. Ganpati Dealcom Pvt. Ltd.Distinguished¶4
Union of India v. Ganpati Dealcom Pvt. Ltd.
Nexus Feeds Limited v. the Assistant Commissioner of Income TaxExplained¶33
Nexus Feeds Limited v. the Assistant Commissioner of Income Tax
Batch decision of 3319 of 2022Referred¶4
W.P.No.3319 of 2022
2 provisions across 2 enactments
Elite Agrotech International Ltd.
The Adjudicating Authority
Assistant Commissioner of Income Tax
Pillarisetti Bhaskar Rao
Union of India
Ujjal Bhuyan
Sri Justice C.V. Bhaskar Reddy
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
