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Central government files review petition against Supreme Court judgment striking down provisions of Benami Transactions (Prohibition) Act

The Court in that judgment held that the in rem forfeiture provision under Section 5 of the 2016 Amendment Act can only be applied prospectively and not retroactively, since it was punitive in nature.

The Court added that the in rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, is unconstitutional for being manifestly arbitrary.

As a consequence, the Court held that concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, i.e. October 25, 2016.

Hence, the Court quashed all such prosecutions or confiscation proceedings initiated with respect to transactions prior to October 2016.

The bench further held that Section 3(2) of the unamended 1988 Act is unconstitutional for being manifestly arbitrary. Consequently, Section 3(2) of the 2016 Act was also held to be unconstitutional for being violative of Article 20(1) of the Constitution.

Section 3(2) criminalised benami transactions, making it punishable with imprisonment up to 3 years.

Source: Barandbench

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