Supreme Court Recalls Judgment on Benami Law: Union of India vs. Ganpati Dealcom (18 October 2024)

Date of the Judgment: 18 October 2024

Citation: 2024 INSC 799

Judges: Dr. Dhananjaya Y Chandrachud, CJI, Pamidighantam Sri Narasimha, J., Manoj Misra, J.

Can a judgment be recalled if the constitutional validity of a law was not specifically challenged during the proceedings? The Supreme Court of India recently addressed this question by recalling its previous judgment in the case of Union of India vs. Ganpati Dealcom Pvt Ltd. The court found that its earlier ruling had declared certain provisions of the Benami law unconstitutional without a proper challenge to their validity, leading to a review of the judgment.

The Supreme Court bench, composed of Chief Justice Dr. Dhananjaya Y Chandrachud and Justices Pamidighantam Sri Narasimha and Manoj Misra, heard the review petition filed by the Union of India. The court decided to recall its earlier judgment and restore the original civil appeal for fresh adjudication.

Case Background

The case revolves around the interpretation and application of the Prohibition of Benami Property Transactions Act, 1988, particularly after its amendment in 2016. The core issue was whether the amended Act could be applied to transactions that occurred before the amendment came into force. The Supreme Court, in its earlier judgment, had declared certain provisions of the Act unconstitutional.

The Union of India, the petitioner, sought a review of this judgment, arguing that the constitutional validity of the unamended provisions was not specifically challenged during the original proceedings. The respondent, M/s Ganpati Dealcom Pvt Ltd, was the other party in the case.

Timeline

Course of Proceedings

The Supreme Court’s earlier judgment in *Union of India and Another v Ganpati Dealcom Private Ltd* (2023) 3 SCC 315, was delivered by a three-judge bench. The court had framed a question regarding the prospective effect of the 2016 amendment to the Benami Act. However, the review petition highlighted that the constitutional validity of the unamended provisions was not specifically challenged or argued by either party.

The Supreme Court noted that a challenge to the constitutional validity of a statutory provision cannot be adjudicated without a proper legal contest between the parties. This procedural gap led to the decision to recall the original judgment and restore the civil appeal for fresh consideration.

Legal Framework

The core legal framework in this case is the Prohibition of Benami Property Transactions Act, 1988, and its amendment in 2016. The key provisions under scrutiny were:

• Section 3(2) of the unamended 1988 Act: This section was declared unconstitutional by the earlier judgment for being manifestly arbitrary. The court also declared Section 3(2) of the 2016 Act unconstitutional as it was violative of Article 20(1) of the Constitution.
• Section 5 of the unamended 1988 Act: This section, which dealt with in rem forfeiture, was also declared unconstitutional for being manifestly arbitrary.
• Section 5 of the 2016 Act: This provision, concerning in rem forfeiture, was held to be punitive and applicable prospectively.

The Supreme Court’s earlier judgment had concluded that the 2016 Amendment Act was not merely procedural but contained substantive provisions. It also held that authorities could not initiate or continue criminal prosecution or confiscation proceedings for transactions prior to 25-10-2016.

Arguments

Arguments by the Union of India (Petitioner):

• The Solicitor General, representing the Union of India, argued that the constitutional validity of the unamended provisions of the Benami Act was not specifically challenged by either party during the original proceedings.
• The Union of India contended that the Supreme Court’s earlier judgment had declared certain provisions unconstitutional without a proper ‘lis’ or contest on the issue of constitutional validity.
• The petitioner submitted that a challenge to the constitutional validity of a statutory provision cannot be adjudicated upon in the absence of a specific challenge and contest between the parties.

Arguments by M/s Ganpati Dealcom Pvt Ltd (Respondent):

• The respondent’s arguments were not explicitly detailed in the review judgment, as the focus was on the procedural lapse in the earlier proceedings. However, it can be inferred that the respondent would have supported the earlier judgment which had declared certain provisions of the Act unconstitutional.

Issues Framed by the Supreme Court

The Supreme Court did not frame new issues in the review judgment. The primary concern was whether the earlier judgment could stand given the lack of a specific challenge to the constitutional validity of the unamended provisions of the Benami Act.

The key issue was the procedural lapse in the original judgment, where the court had declared provisions unconstitutional without a proper contest on their validity.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The judgment did not explicitly cite any authorities. The primary basis for the decision was the procedural impropriety in the earlier judgment, where the constitutional validity of the unamended provisions of the Benami Act was not specifically challenged.

Judgment

How each authority was viewed by the Court?

There were no authorities cited in the judgment.

What weighed in the mind of the Court?

The primary factor that weighed in the mind of the Court was the procedural impropriety in the earlier judgment. The Court emphasized that a challenge to the constitutional validity of a statutory provision cannot be adjudicated in the absence of a proper legal contest between the parties. The absence of a specific challenge to the constitutional validity of the unamended provisions of the Benami Act led the Court to recall its earlier judgment.

Logical Reasoning:

The Court did not consider any alternative interpretations, as the primary issue was the procedural lapse. The Court’s decision was based on the principle that constitutional challenges require a specific contest between the parties, which was absent in the original proceedings.

The Supreme Court decided to recall the judgment due to the absence of a specific challenge to the constitutional validity of the unamended provisions of the Benami Act. The court emphasized that such challenges require a proper legal contest between the parties.

The Court’s decision was unanimous, with all three judges concurring on the need to recall the earlier judgment.

The Court’s reasoning was based on the fundamental principle of procedural justice, ensuring that constitutional issues are adjudicated only when there is a specific challenge and contest between the parties.

The implications of this decision are that any judgments that declared a law unconstitutional without a specific challenge to its validity are liable to be reviewed and recalled. This ensures that the constitutional validity of laws is decided only when there is a proper legal contest.

Key Takeaways

• Constitutional validity of a law cannot be decided without a specific challenge in the proceedings.
• The Supreme Court recalled its earlier judgment due to a procedural lapse.
• The civil appeal has been restored for fresh adjudication.
• Judgments that rely on the recalled judgment are also subject to review.

Directions

The Supreme Court directed that 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.

The Court also granted liberty to any aggrieved party to seek a review in view of the present judgment, where any other proceedings have been disposed of by relying on the judgment of this Court in *Ganpati Dealcom Private Ltd*.

Development of Law

The ratio decidendi of this case is that 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. This decision clarifies that the constitutional validity of a law cannot be decided without a specific challenge in the proceedings.

This decision also sets a precedent that any judgment which has declared a law unconstitutional without a specific challenge to its validity is liable to be reviewed and recalled.

Conclusion

The Supreme Court’s decision to recall its earlier judgment in *Union of India vs. Ganpati Dealcom Pvt Ltd* highlights the importance of procedural correctness in judicial proceedings. The Court emphasized that a challenge to the constitutional validity of a law requires a specific contest between the parties. The civil appeal has been restored for fresh adjudication, ensuring that the matter is decided with due process.