Prohibition of Benami Property Transactions Act, 1988 – ss. 3(2),5 – Benami Transactions (Prohibition) Amendment Act, 2016 – Held: s. 3(2) of the unamended 1988 Act is unconstitutional for being manifestly arbitrary – Accordingly, s. 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution – Further, in rem forfeiture provision u/s. 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary – 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions – In rem forfeiture provision u/s. 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively – Thus, 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, viz., 1.11.2016 – Consequently, all such prosecutions or confiscation proceedings stand quashed – Constitution of India – Article 20(1).

Benami Property Transactions Act, 1988 – ss. 2(a), 3 – Mens rea, absence of – Effect of – Held: The criminal provision envisaged u/ss. 2(a) and 3 does not expressly contemplate mens rea – Mens rea is an essential ingredient of a criminal offence – Absence of mens rea creates a harsh provision having strict liability –Mere fact that the object of the statute is to promote welfare activities or to eradicate a grave social evil which by itself is not decisive of the question as to whether the element of a guilty mind is excluded from the ingredients of an offence – Mens rea by necessary implication may be excluded from a statute only where it is absolutely clear that implementation of the object of the statute would otherwise be defeated – The language of s. 2(a) coupled with s. 3, completely ignores the aspect of mens rea, as it intends to criminalize the very act of one person paying consideration for acquisition of property for another person – The 1988 law was envisaged on the touchstone of strict liability.

Judicial Review– Law with respect to testing the unconstitutionality of a statutory instrument – Held: Constitutional Courts can test constitutionality of legislative instruments (statute and delegated legislations) both on procedure as well as substantive nature of these instruments – The test should be based on a combined reading of Articles 14, 19 and 21 of the Constitution – Constitution of India – Articles 14, 19, 21.

 Doctrines/Principles – Doctrine of manifest arbitrariness– Discussed.

Interpretation of Statutes – Law declared unconstitutional – Effect of – Held: Such a declaration would render the law not to exist in the law books since its inception – It is only a limited exception under Constitutional law, or when substantial actions have been undertaken under such unconstitutional laws that going back to the original position would be next to impossible – In those cases alone, would this Court take recourse to the concept of ‘prospective overruling’.

Constitution of India – Retroactive/retrospective legislations – Legislature’s power to enact – Held: Legislature has power to enact retroactive/retrospective civil legislations under the Constitution – However, Article 20(1) mandates that no law mandating a punitive provision can be enacted retrospectively – A punitive provision cannot be couched as a civil provision to by-pass the mandate under Article 20(1) of the Constitution which follows the settled legal principle that “what cannot be done directly, cannot be done indirectly”.

Words and Phrases– “Forfeiture”, “Benami”, “Benami transaction”, “Benamidar/ostensible owner”– Discussed.