Supreme Court recalls 2022 judgment striking down sections of Benami Act as unconstitutional

Allowing a review filed by the Union government, the Supreme Court recalled the judgment noting that the constitutionality of the provisions was not an issue raised in the original proceedings.

New Delhi: The Supreme Court on Friday recalled its 2022 judgment, which had declared Section 3(2) of the Benami Transactions Prohibition Act, 1988, as unconstitutional.

A bench of Chief Justice of India D Y Chandrachud and Justices J B Pardiwala and Manoj Misra noted that the constitutionality of the provisions of the unamended Benami Transactions Act was never raised or argued in the original proceedings.

The court allowed the Centre's review plea upon hearing Solicitor General Tushar Mehta.

The bench noted that it appeared that Section 3 (2) of the unamended provision of the Benami Transactions Prohibition Act 1988, was declared unconstitutional for being manifestly arbitrary and violative of the Article 20 (1) of the Constitution.

It observed that the provision of Section 5 of the unamended Act prior to the amendment of 2016 have been declared to be unconstitutional on the ground that they are manifestly arbitrary.

"It is undisputed that there was no challenge to the constitutional validity of the unamended provision. As a matter of fact, it is clear from the formulation of the question which arose for consideration before the bench, the review would have to be allowed," the bench said.

“It is trite law that the challenge to the constitutional validity of a statutory provision cannot be adjudicated upon in the absence of contest between the parties,” the bench added.

The bench also noted the issue of constitutional validity was not squarely addressed.

"We accordingly allow the review petition and recall the judgment dated August 23, 2022. Civil appeal accordingly stands restored for fresh adjudication for a bench to be nominated by the Chief Justice on the administrative side,” the bench said.

The bench clarified that the review bench was not pronouncing anything on the validity of the provisions and that the matter was left for fresh consideration.

Mehta, for the Centre, contended that it was clear from the judgment itself that neither of the parties raised any argument regarding unconstitutionality.

He said that the judgment struck down the unamended provisions, although they were amended in 2016.

The August 2022, judgment held that the 2016 amendment to the Benami Act would not have a retrospective effect.

A three-judge bench presided over by then Chief Justice of India N V Ramana struck down the provisions of the Benami Transactions (Prohibition) Act of 1988, which provided for imprisonment for a term that may extend to three years or with fine or with both for those indulging in ‘benami’ transactions.