Introduction
The Hon'ble Supreme Court recently, in Union of India v. Ganpati Dealcom (P.) Ltd.[i] (‘Ganpati Dealcom 2’) recalled its pronouncement in Union of India v. Ganpati Dealcom (P.) Ltd.[ii] (‘Ganpati Dealcom 1’). In Ganpati Dealcom 1, the Supreme Court had earlier held that ss. 3 and 5 of the Prohibition of Benami Property Transactions Act, 1988 (‘1988 Act’), prior to the 2016 Amendment Act, were unconstitutional.
Brief Facts
In this case, the Union of India ('UOI') filed a review against the judgment of a three-judge bench in Ganpati Dealcom 1.
In Ganpati Dealcom 1, the Supreme Court laid down the following:
S.3 (criminal provision) read with ss. 2(a) and 5 (confiscation proceedings) of the 1988 Act were overly broad, disproportionately harsh and operated without adequate safeguards. The omissions in the 1988 Act were not merely procedural but essential and substantive. In light of the same, ss. 3 and 5 of the 1988 Act were held to be unconstitutional.
On the issue of retroactive application of ss. 3 and 5 of the 2016 Amendment Act held that as ss. 3 and 5 of the 1988 Act are unconstitutional; it would mean that the 2016 amendments created new provisions and offences. Hence, for offences committed between 05.09.1988 and 25.10.2016, the law cannot retroactively invigorate a stillborn criminal offence.
The 2016 Amendment Act was not procedural but prescribed substantive provisions.
All prosecutions or confiscation proceedings for transactions entered into before 25.10.2016 shall stand quashed.
Against the said order, the UOI preferred a review of the Supreme Court's decision.
Held
The Supreme Court in Ganpati Dealcom 2 held that no challenge was made to the constitutional validity of ss. 3 and 5 of the 1988 Act. The Court held that this fact was further evident from the formulation of questions that arose before it.
In light of the above, the Supreme Court held that a challenge to the constitutional validity of a provision cannot be adjudicated upon in the absence of a lis and contest between the parties.
Hence, the review sought in Ganpati Dealcom 2 was allowed, and consequently, Ganpati Dealcom 1 was recalled. Further liberty was granted to seek review in case any other proceedings were decided on the basis of Ganpati Dealcom 1.
Our Analysis
The Supreme Court’s pronouncement in Ganpati Dealcom 2 reiterates the established jurisprudence that courts can only adjudicate upon existing lis. Further, through the said pronouncement, the Supreme Court has undone the effects brought by Ganpati Dealcom 1 on the proceedings pertaining to transactions entered into before the coming into force of the 2016 Amendment Act.
However, the cases will now be placed before a new bench for fresh adjudication, and the fate of proceedings concerning transactions before the enforcement of the 2016 Amendment Act will depend on the outcome of these proceedings.
End Notes
[i] 2024 SCC OnLine SC 2981 dated 18.10.2024.
[ii] 2022 SCC OnLine SC 1064 dated 23.08.2022.
Authored by Huzaifa Salim, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.
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