Calcutta High Court: Amendment to Prohibition of Benami Property Transactions Act Is Provisional

Calcutta High Court: Amendment to Prohibition of Benami Property Transactions Act Is Provisional

The Calcutta High Court (HC) held that the amendment to Prohibition of Benami Property Transactions Act, 1988 (Act) shall not be treated as final and only be treated as provisional until the pendency of the petition.

The single-judge of the HC Justice Shekhar B. Saraf stated that although the judgments of the Bombay High Court in Joseph Isharat and the Gujarat High Court in Niharika Jain are not binding on this Court but have a persuasive effect.

On behalf of the petitioners, it was contended that there is an unconscionable and illegal 'retrospective applicability' of the Act, leading to these proceedings.

Mr. Khaitan the counsel appearing for the petitioners placed reliance on the decision of the division bench in M/s. Ganpati Dealcom Pvt. Ltd v. Union of India (WPO No. 687 of 2017) wherein the HC had interpreted the amendment Act of 2016 to the 1988 Act to be prospective in nature and had also ruled that in the absence of enabling procedural rules under the 1988 Act when the immovable property was purchased, the respondent authorities could not initiate any proceedings in respect of the same.

The petitioner contended that while the 1988 Act entered the statute books, no procedural rules were framed under Section 8 of the 1988 Act for the declaration of the benami property, rendering the 1988 Act effective, merely on paper.

The amendment Act of 2016 which introduced the definitions of "benami property" and "benami transaction", in subsections of (8) and (9) of Section (2) of the 1988 Act, such amendment would not be applicable in respect of transactions pertaining to immovable properties, which predated the implementation of the amendment Act of 2016.

Reliance was also placed on the judgment of the Bombay High Court in the case Joseph Isharat v. Rozy Nishikant Gaikwad and on the decision of the Rajasthan High Court in Niharika Jain v. Union of India & Ors. to buttress that both these High Courts had returned similar findings of law as laid down in M/s. Ganpati Dealcom Pvt. Ltd , insofar as the operation of the amendment Act of 2016 to the 1988 Act was concerned, that is, such amendment Act of 2016 would apply prospectively.

It was mentioned that the decision of the HC is binding upon this Court even though the operation of the said judgment has been stayed by the Supreme Court.

The HC opined that the writ petitioners are entitled to interim orders at this stage. However, Revenue is to be protected as the matter is subjudice before the Supreme Court.

The HC passed the interim orders based on the following directions-

- The reference referred to in Section 24(5) of the Act shall not be treated as final and shall only be treated as provisional during the whole period, the writ applications are pending before this Court.

- Subject to its result, the reference will be treated as final. Thereafter, time to pass the adjudication order under Section 26(7) of the Act will start to run. Hence, it follows that the respondent authorities will not take any further steps in the matter till the disposal of these writ applications.

- The writ petitioners shall not sell, otherwise, transfer, deal with, encumber or part with possession of the subject properties till the disposal of these writ applications.