Benami transactions provisional attachment: pre-2016 confiscation and attachment set aside; prospective proceedings allowed under Supreme Court guidance

Benami transactions and provisional attachment prior to the 2016 amendment were held covered by the Supreme Court's decision in Union of India v. M/s. Ganpati Dealcom, resulting in setting aside the Adjudicating Authority's order, attachment and reference insofar as they relate to preamendment in rem forfeiture and confiscation proceedings. The tribunal permitted the Department, nonetheless, to initiate or continue proceedings only prospectively if the law so permits, provided such action complies with the Supreme Court's directions (including para 130(f)) and does not infringe that judgment. Factual and legal issues may be reopened in appropriate proceedings if required.

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Issues: Whether provisional attachment, reference and related proceedings based on alleged benami transactions entered into prior to the coming into force of the Benami Transactions (Prohibition) Amendment Act, 2016 (25.10.2016) can be sustained in light of the Apex Court's decision in Union of India v. M/s. Ganpati Dealcom Pvt. Ltd. (23.08.2022).

Analysis: The appeals concern attachments and reference proceedings that arise from transactions said to have occurred before the Amending Act of 2016. The Apex Court's conclusions in paragraph 130 of its judgment address the constitutionality and temporal operation of key provisions, including that certain provisions are unconstitutional as manifestly arbitrary, that in rem forfeiture provisions under the 2016 Act are punitive and operate only prospectively, and that authorities cannot initiate or continue confiscation or prosecution for transactions entered into prior to 25.10.2016. Both parties seek disposal of these appeals by applying the Apex Court's decision while preserving parties' rights to raise factual or legal issues in appropriate future proceedings and preserving the Department's liberty to act within the limits allowed by the Apex Court and by law.

Conclusion: Appeal allowed; the impugned attachment order, the order of the Adjudicating Authority refusing to confirm attachment, and the reference are set aside insofar as they relate to transactions prior to 25.10.2016. Findings of the Adjudicating Authority are not binding on the parties and the parties have liberty to pursue appropriate proceedings or remedies, including fresh action by the Department consistent with the Apex Court's judgment and any subsequent review thereof.

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