Section 4(1) applies to suits instituted after commencement; does not extinguish substantive rights or affect pending suits filed earlier

SC held that section 4(1) applies to bar suits instituted after its commencement even if the underlying benami transactions predate the provision, but it does not extinguish substantive rights or pending suits instituted before coming into force. The Act is not declaratory or curative; it creates new substantive rights for benamidars and liabilities for real owners. The Division Bench's application of sections 4(1) and 4(2) to suits filed prior to their commencement was erroneous, and an earlier decision to the contrary is disapproved. Matters are remitted to a Division Bench for merits adjudication.

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Issues Involved:
1. Applicability of Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, to suits, claims, or actions initiated prior to its enforcement.
2. Retrospective effect of Section 4(1) and Section 4(2) of the Act.
3. Interpretation of the term "lie" in Section 4(1).
4. Legislative intent behind the Act and its provisions.
5. Impact of the General Clauses Act on the repeal of Section 82 of the Indian Trusts Act, 1882.
6. Declaratory nature of the Act.

Detailed Analysis:

1. Applicability of Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, to suits, claims, or actions initiated prior to its enforcement:
The core issue was whether Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, applies to suits, claims, or actions initiated before the section came into force. The court concluded that Section 4(1) does not apply to such proceedings. It was held that the legislative intent was not to make Section 4(1) retrospective, and therefore, it cannot be applied to pending suits filed before the section's enforcement.

2. Retrospective effect of Section 4(1) and Section 4(2) of the Act:
The court noted that while Section 4(1) might have a limited retroactive effect in that it bars the filing of new suits based on past benami transactions, it does not affect suits already filed before the enforcement of Section 4(1). Similarly, Section 4(2), which disallows defences based on benami transactions, cannot be retrospectively applied to pending suits where such defences were already raised and allowed before the section came into force.

3. Interpretation of the term "lie" in Section 4(1):
The term "lie" was interpreted to mean that no new suits, claims, or actions to enforce any right in respect of any property held benami shall be admitted or entertained after the coming into force of Section 4(1). The court emphasized that this term does not imply that pending suits filed before the enforcement of Section 4(1) would be dismissed or abated.

4. Legislative intent behind the Act and its provisions:
The court examined the legislative history and intent behind the Act, noting that it aimed to prohibit benami transactions and the right to recover property held benami. The Act was not intended to have retrospective effect, as evidenced by the legislative choice not to explicitly make it retrospective. The court also referenced the Law Commission's recommendations and the legislative process leading to the Act's enactment.

5. Impact of the General Clauses Act on the repeal of Section 82 of the Indian Trusts Act, 1882:
Section 7 of the Act repealed Section 82 of the Indian Trusts Act, 1882. The court referred to Section 6 of the General Clauses Act, which protects pending proceedings from being affected by the repeal unless a different intention appears. The court held that pending suits invoking Section 82 of the Indian Trusts Act should continue unaffected by the repeal, as the Act did not express a clear intention to affect such suits.

6. Declaratory nature of the Act:
The court disagreed with the view that the Act is declaratory in nature. It held that the Act is prohibitory and creates new liabilities and rights, thus not fitting the definition of a declaratory statute. The Act prohibits benami transactions and destroys the rights of real owners to claim property held benami, indicating that it is not merely clarifying existing law but creating new legal norms.

Conclusion:
The court concluded that Section 4(1) and Section 4(2) of the Benami Transactions (Prohibition) Act, 1988, do not apply retrospectively to suits, claims, or actions initiated before their enforcement. The decision in Mithilesh Kumari's case, which took a contrary view, was held to be incorrect. The registry was directed to place the matters before an appropriate Division Bench for disposal on merits in light of this judgment.

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