Benami Act of 2016 cannot be used retrospectively: Supreme  Court

In a landmark decision, the Supreme Court ruled that the Benami Transaction (Prohibition) Amendment Act of 2016 will apply prospectively, thus firewalling benami properties transacted between 1988, when the original law was enacted, and 2016, when the amended law came into being, from confiscation and shielding perceived offenders from the mandatory three-year jail term.

Terming as illegal the punitive actions taken by various agencies through retrospective application of the 2016 law to benami properties transacted for 28 years without sanction of an established procedure, a bench of Chief Justice N V Ramana and Justices Krishna Murari and Hima Kohli declared Sections 3(2) and 5 of the Act as unconstitutional.

Under Section 3(2), punishment of three years is mandated for those who entered into benami transactions from September 5, 1988 to October 25, 2016. Section 5 of the Act allowed the central government to confiscate benami properties without there being laid-down procedure, and even in the absence of the transaction being declared illegal through a criminal trial.