New Delhi: The Supreme Court on Tuesday said the Section 3(2) of the Benami Transactions (Prohibition) Act 1988 as unconstitutional on the ground of being manifestly arbitrary.
A bench headed by Chief Justice N.V. Ramana said the amendment Act of 2016 to the 1988 Act is prospective in nature and it cannot apply retrospectively. Section 3(2) prescribes 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.
The bench said, "We hold Section 3(2) of 1988 unamended act as unconstitutional", and added that such a coercive provision can't have a retrospective effect.
The bench noted that the 2016 amendment cannot be held as merely procedural. A detailed copy of the judgment will be uploaded later in the day.
The top court judgment came on an appeal filed by the Centre against a Calcutta High Court judgment, which held that the 2016 Amendment Act was prospective in nature.
The amendment also increased the punishment for benami transactions from imprisonment up to three years to seven years, and a fine which may extend to 25 per cent of the fair market value of the benami property.
What is the Act about?
In an attempt to curb black money, in July 2016, Modi government decided to amend the original act which was subsequently passed by the Parliament of India as "The Benami Transactions (Prohibition) Amendment Act, 2016".
Thereafter, the Government notified the provisions of the act to come into force from 1 November 2016.
The act defines a 'benami' transaction as any transaction in which property is transferred to one person for consideration paid by another person.
Such transactions were a feature of the Indian economy, usually relating to the purchase of property (real estate), and were thought to contribute to the Indian black money problem.
The act bans all benami transactions and gives the government the right to recover property held benami without paying any compensation.
(with inputs from IANS)
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