TMI Blog2019 (12) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... that the transaction resulting in the said contravention of the 1988 Act as amended in 2016 took place in 2011. That is exactly what the impugned show-cause notice proposed to do. The contention of the Additional Solicitor General that the provision in Section 1(2) of the said Act automatically made the amending Act of 2016 retrospective, is rejected - The 2016 amendment is a new legislation and in order to have retrospectivity it should have been specifically provided therein that it was intended to cover contraventions at an earlier point of time. That express provision is not there. Therefore this contention of the Additional Solicitor General fails. A declaration that the property was benami could not have been made unless a procedure was prescribed by rules made under Section 8 - No rules under that section were ever made. Hence, although the Act was entered in the statute book, it was an Act on paper only and inoperative. By the addition of Chapter III to the Act by the Amendment Act of 2016, an adjudicating authority and its composition, jurisdiction and powers were provided. Exercising powers under Section 28(2) read with Section 59 of the Amendment Act the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be deemed to have come into force on the 19th day of May, 1988. 2. Definitions- In this Act, unless the context otherwise requires,-- (a) benami transaction means any transaction in which property is transferred to one person for a consideration paid or provided by another person; (c) property means property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property. 3. Prohibition of benami transactions- (1) No person shall enter into any benami transaction. (2) Nothing in sub-section (1) shall apply to the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife of the unmarried daughter. (3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence under this section shall be non-cognizable and bailab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. More exceptions were provided. For example under the 1988 Act to attract its rigour, it was enough that a property was transferred to one person for a consideration provided by another. But the amending Act relaxed this liability by the addition of a provision that the property had to be held for the benefit of the person providing the consideration. I will give you another example. In the unamended Act property transferred to the wife or unmarried daughter was outside its purview. By this amendment transfer in favour of any child of the transferee would have a similar effect. In Section 5 of the unamended Act, benami properties were subject to acquisition without any right to receive compensation whereas under Section 27 of the Amendment Act, the property was simply liable to confiscation, without any clarification regarding compensation. On 29th August, 2017 the respondent authority invoked Section 24(1) of the Act after its amendment. They issued a notice to the appellant alleging that the said property was benami under Section 2(8) of the said Act of 1988, as amended. It also alleged violation of Section 2(9)(D) thereof. It said that the consideration for this tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luable right had not been taken away by the amendment. Therefore, a transaction of 2011 against which the government had taken no action could not be revived by the amendment Act which did not have any retrospective effect. In the affidavit-in-opposition of the respondent authority which was affirmed in December, 2018 the following case was made out: 5. a) ................................. b) ................................. c)................................. d) It is further submitted that material on record indicated that Petitioner has invested in property of ₹ 9,44,00,000/- in the financial year 2011-12. Thus, the copy of related purchase deeds was obtained and it is noted that company had purchased a property (land containing 8 Kattash 13 Chattacks together with a residential building having total floor containing 6336 Sq. Ft.) on 02.05.2011 at 9, Sarat Chatter Avenue, Kolkata. It is also gathered that the sources of fund is out of capital of the company. The return of the company was examined for the assessment years 2012-13 to 2016-17. It is seen that company has raised share capital of ₹ 14,89,50,000/- (face ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his own interest. In this case share capital received from the shell companies was invested in the property in the form of (land containing 8 Kattash 13 Chattacks together with a residential building having total floor containing 6336 Sq. Ft.) on 02.05.2011 at 9, Sarat Chatter Avenue, Kolkata in the name of the company (M/s. Ganpati Dealcom Pvt. Ltd.). The learned Additional Solicitor General argued that the amendments were very carefully woven into the fabric of the parent Act. He referred to Section 1(2) of the amending Act which stated that different dates may be appointed for coming into force of different provisions of the Act. He argued that Section 1(3) of the Parent Act said that provisions of the Act except 3, 5 and 8 as per the Act would come into force on 19th May, 1988. The amending Act was grafted into it. Therefore, the amendments of 2016 had retrospective effect. He also argued that the concept of benami property and benami transaction remained the same on amendment. So was the provision regarding acquisition and compensation. The amending Act merely provided a machinery for the implementation of the Parent Act. Learned Additional Solicitor Genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 SCC 630, the Supreme Court interpreting Section 3(1) of the said Act of 1988 opined in paragraph 10 that it created a new offence ..new liability and would have prospective operation in relation to offences which took place after the provision came into force. It also opined in paragraph 18 that the Act was not declaratory or curative legislation but created substantive rights. In Commissioner of Income Tax (Central)- I, New Delhi vs. Vatika Township Private Limited reported in (2015) 1 SCC 1 the Supreme Court laid down the following dictum with regard to retrospectivity of a legislation in paragraph 28 of the report as under: 28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow s backward adjustment of it. Our belief in the nature of the law is founded on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept where that would lead to a repugnancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all . Now there is no question about the correctness of this dictum. But it appears to us that it has no application to this case. It is perfectly true as stated therein that whenever an amended Act has to be (1) (1952) S.O.R. 683. The learned Judge added that this reading of the unamended portion with the amended provisions was to ascertain the meaning of the Act as amended, but subject to the following condition: But this is not the same thing as saying that the amendment itself must be taken to have been in existence as from the date of the earlier Act. That would be imputing to the amendment retrospective operation which could only be done if such retrospective operation is given by the amending Act either expressly or by necessary implication. Bennion on Statutory Interpretation, 6th edition has said in page 262 of the text book the fact that the drafter fails to provide necessary transitional provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the 1988 Act as amended in 2016 the contravention should have been made after the date of coming into force of the amendment. In the absence of retrospective operation of the amending Act, one cannot allege that the transaction resulting in the said contravention of the 1988 Act as amended in 2016 took place in 2011. That is exactly what the impugned show-cause notice proposed to do. Now, it is an accepted principle of law that the statute cannot have any retrospectivity unless expressly provided therein. In Rao Shiv Bahadur Singh and Anr. Vs. State of Vindhya Pradesh reported in AIR 1953 SC 394 , the Supreme Court was concerned with the interpretation and application of Article 20 of our Constitution. The court remarked that this article in its broad import has been enacted to prohibit convictions and sentences under ex-facto laws. It defined ex-post facto laws as those which voided and punished what had been lawful when done. This case was cited to support the argument that the 2016 amendment could not be utilized to charge the appellant with contravention or convict him for an alleged offence under it but which was not so under the 1988 Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o operation only after the relevant provision or form is prescribed in the Rules. In the absence of the Rules the Act cannot be enforced. In Canbank Financial Services Ltd vs Custodian Others reported in (2004) 8 SCC 355 the Supreme Court specifically held in paragraph 67 that the said Act of 1988 had not been made workable as no rules under Section 8 of the said Act for acquisition of benami property had been framed. These two cases were also cited by Mr. Khaitan. Section 6(c) of the General Clauses Act, 1897 is most important. It lays down that repeal of an enactment, which necessarily includes an amendment, would not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed , unless a different intention is expressed by the legislature. Without question, the omission on the part of the government to frame rules under Section 8 of the 1988 Act rendered it a dead letter and wholly inoperative. Assuming that the appellant had entered into a benami transaction in 2011, no action could be taken by the Central government, in the absence of enabling procedural rules. It is well within the right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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