Back
Supreme Court in Upholds for Pre-2016
The has delivered a landmark clarification on the , ruling that its —including attachment, adjudication, and confiscation—can operate retrospectively on benami transactions entered into before . A two-judge bench comprising Justices J.B. Pardiwala and R. Mahadevan, in the case of , drew a critical distinction between that give effect to an existing prohibition and that must remain .
The Manjula Ruling: A New Precedent
The dispute arose from a civil suit seeking declaration of title based on a Will, where the defendants argued that the plaintiff's own pleadings disclosed a . The Court seized the opportunity to revisit the architecture of the 1988 Act and the 2016 Amendment, particularly in the aftermath of —a 2022 judgment that had held the unamended provisions unconstitutional and halted all proceedings for pre-2016 transactions. That judgment was recalled by the Supreme Court in , reopening the question of retrospectivity.
Distinguishing Machinery from Penalty
The bench clarified that not all parts of the 2016 Amendment are retrospective. Provisions that create new offences or enhance punishment apply only prospectively to transactions after the Amendment's commencement. However, —such as the power to issue notices, attach property provisionally, and adjudicate benami status—can operate retrospectively because they enforce a prohibition that already existed under the 1988 Act.
Crucially, the Court held that confiscation is a attached to the property itself, not a imposed on the person. As the bench observed:
"Confiscation… is a
which is attached to the property, rather than a mere
imposed upon the person, and therefore it does not attract
's prohibition placed on retrospective penal law."
This reasoning shields the from constitutional challenge under , which bars retrospective criminal penalties.
The Conundrum
While the Manjula ruling clarifies the substantive law, the Court also addressed the procedural tension created by the of Ganpati Dealcom . Applying the principle from , the bench held that a subsequent change in law—even one brought about by a larger bench—does not, by itself, provide grounds to review a judgment that has otherwise attained . Consequently, matters that were finally quashed or dismissed on the strength of Ganpati Dealcom cannot be reopened simply because that judgment was later recalled.
This principle was reaffirmed in (), where the Court dismissed the Union's review petitions, holding that the 2024 order could not disturb separate orders that had already attained .
Key Observations
The Court made several pivotal observations:
-
"A Will cannot, merely by its form, transform a benami holding into that of lawful inheritance."
-
"What was added by the Amendment, and what may be operated retrospectively, is the of . is not offended because these provisions do not retrospectively penalise conduct that was lawful when committed."
-
"Confiscation… is a which is attached to the property, rather than a mere imposed upon the person."
Practical Implications
For holders of benami property from before 2016, the message is one of exposure rather than immunity. Unless the case falls within the narrow window where proceedings attained between Ganpati Dealcom () and its (), the principal risk is no longer merely prosecution but the loss of the property itself through confiscation. The Manjula ruling thus provides the governing position on retrospectivity, pending the final determination in the restored Ganpati Dealcom appeal.
The decision also underscores a key legal paradox: a proposition of law may be overruled, but a judgment that applied that proposition does not thereby become reviewable. As the Court in Rathi Steels held, has its own limits, and a subsequent correction of the law does not reopen every final judgment rendered under the law as it was then understood.
