UNION OF INDIA & ANR versus M/S GANPATI DEALCOM PVT. LTD.

We have heard Mr Tushar Mehta, Solicitor General appearing on behalf of the Union of India, and Mr Ajay Vohra, senior counsel appearing on behalf of the respondent.

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The review has been sought in these proceedings of the judgment of a three-Judge Bench of this Court in Union of India and Another v Ganpati Dealcom Private Ltd. The only question which was framed for consideration by this Court was in the following terms: "3. The short legal question which arises for this Court’s consideration is whether the Prohibition of Benami Property Transactions Act, 1988 (for short “the 1988 Act”), as amended by the Benami Transactions (Prohibition) Amendment Act, 2016 (for short “the 2016 Act”) has a prospective effect. Although a purely legal question arises in this appeal, it is necessary to have a brief factual background in mind before we advert to the analysis.”

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The conclusion which was arrived at by the Court, was in the following terms: 127.1. Section 3(2) (sic Section 3) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution. 127.2. In rem forfeiture provision under Section 5 of the unamended 1988 Act, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary. 127.3. The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. 127.4. In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively. 127.5. The authorities concerned cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act viz. 25-10-2016. As a consequence of the above declaration, all such prosecutions or confiscation proceedings shall stand quashed. 127.6. As this Court is not concerned with the constitutionality of such independent forfeiture proceedings contemplated under the 2016 Amendment Act on the other grounds, the aforesaid questions are left open to be adjudicated in appropriate proceedings.”

p. 2185

The Court has declared Section 3(2) of the unamended provisions of the Prohibition of Benami Property Transactions Act 1988 as unconstitutional for being manifestly arbitrary and as violative of Article 20(1) of the Constitution. The provisions of Section 5 of the unamended Act, prior to the Amendment of 2016, have been declared to be unconstitutional on the ground that they are manifestly arbitrary.

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It is not disputed that there was no challenge to the constitutional validity of the unamended provisions. This is also clear from the formulation of the question which arose for consideration before the Bench in paragraph 3 of the judgment, which has been extracted above. In the submissions of parties which have been recorded in the judgment, the issue of constitutional validity was not squarely addressed.

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A challenge to the constitutional validity of a statutory provision cannot be adjudicated upon in the absence of a lis and contest between the parties. We accordingly allow the review petition and recall the judgment dated 23 August 2022. Civil Appeal No 5783 of 2022 shall stand restored to file for fresh adjudication before a Bench to be nominated by the Chief Justice of India on the administrative side.

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Where any other proceedings have been disposed of by relying on the judgment of this Court in Ganpati Dealcom Private Ltd (supra), liberty is granted to the aggrieved party to seek a review in view of the present judgment.

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Pending application, if any, stands disposed of. Result of the case: Review Petition (Civil) No 359 of 2023 allowed; Civil Appeal No. 5783 of 2022 restored to file for fresh adjudication. Headnotes prepared by: Ankitesh Ojha, Hony. Associate Editor (Verified by: Abhinav Mukerji, Sr. Adv.)

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