Retrospective benami amendment barred where penal and confiscatory provisions cannot govern pre-commencement transactions.

The 2016 Benami Transactions (Prohibition) Amendment Act could not be applied retrospectively to transactions and properties acquired before 25.10.2016. The amendment was treated as substantive because it expanded penal and confiscatory consequences, so proceedings based on pre-commencement transactions were impermissible. Show cause notices, provisional attachment orders and adjudication orders issued under the amended regime were therefore unsustainable and liable to be quashed. The controlling principle is that provisions creating or enlarging penal and confiscatory liability operate prospectively unless the legislature clearly provides otherwise.

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Issues: Whether the Benami Transactions (Prohibition) Amendment Act, 2016 could be applied retrospectively to transactions and properties acquired prior to 25.10.2016, and whether the show cause notices, provisional attachment orders and adjudication orders passed under the amended regime were sustainable.

Analysis: The dispute concerned benami proceedings initiated in respect of shares and assets acquired before the commencement of the 2016 amendment. The legal position was already settled that the amended definitions and consequences under the 2016 amendment are substantive in nature and cannot be applied to pre-commencement transactions. The controlling decision of the Supreme Court held that the amendment is not merely procedural, that the penal and confiscatory provisions operate prospectively, and that proceedings in respect of transactions entered into before the notified date cannot be continued. In view of that binding declaration, the notices and consequential orders founded on the amended provisions could not be sustained.

Conclusion: The retrospective invocation of the 2016 amendment was impermissible, and the impugned benami proceedings were unsustainable and liable to be quashed in favour of the petitioners.

Final Conclusion: All writ petitions were allowed and the impugned notices and orders were set aside, as the amended benami regime could not be enforced against pre-commencement transactions.

Ratio Decidendi: Statutory provisions that create or expand penal and confiscatory consequences are substantive in character and, unless the legislature clearly provides otherwise, apply only prospectively and cannot validate proceedings concerning transactions completed before their commencement.

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