On Friday, October 18, 2024, the Supreme Court of India made a pivotal decision to recall its August 23, 2022, judgment that had declared certain provisions and amendments to the Benami Property Transactions Act, 1988, as unconstitutional and manifestly arbitrary. The 2022 judgment had struck down crucial sections of the Act and invalidated all prosecutions conducted under it prior to its amendment in 2016.

The Supreme Court observed that the 2022 decision was issued without addressing any direct constitutional challenges to the Act’s provisions. The bench, led by Hon’ble Chief Justice of India (CJI) DY Chandrachud and comprising Justices PS Narasimha and Manoj Misra, clarified that the judgment was not rendered in response to a live dispute where the constitutionality of the provisions was raised or debated by the parties.

“The issue of constitutional validity was not squarely raised,” the court noted, emphasizing that such a decision can only be made when constitutional challenges are properly presented in court. The bench highlighted, “We cannot hold a provision to be unconstitutional when there is no challenge. It must be raised, argued, and assessed on appropriate grounds.”

Following this, the court announced that the batch of matters would be adjudicated anew before a new bench to be established by the CJI on the administrative side.

This development signifies the ongoing legal debates surrounding the Benami Property Transactions Act and underscores the importance of thoroughly addressing constitutional challenges in judicial proceedings. The outcome of the fresh adjudication will be closely monitored by legal experts and stakeholders, as it will impact the interpretation and enforcement of laws related to benami transactions.