On Friday, in a historic decision, the Supreme Court of India overturned its 2022 ruling, which had declared two provisions of the Benami Transactions (Prohibition) Act unconstitutional. These provisions are critical in prohibiting benami (nameless or proxy) property transactions and authorizing authorities to seize such properties. Additionally, in another significant judgment, the Court upheld the validity of Section 6A of the Citizenship Act, further shaping India’s legal framework regarding citizenship and property ownership.
These two decisions come at a time when India is witnessing heightened debates around corruption, black money, and illegal immigration. The Supreme Court’s rulings signal an emphatic response to such challenges, ensuring that law enforcement agencies can act decisively against those exploiting legal loopholes.
The Benami Property Case: A Legal U-Turn
In August 2022, a three-judge bench headed by former Chief Justice of India NV Ramana had delivered a verdict that struck down certain provisions of the Benami Transactions (Prohibition) Act, citing them as unconstitutional. These provisions allowed authorities to confiscate properties bought under benami arrangements—a practice where a property is held in someone else’s name but is paid for by another party, usually with illicit funds. The ruling had a chilling effect on the central government’s ongoing crackdown against black money and illicit property holdings.
The 2022 decision was a setback for the Modi government, which had implemented the Benami Transactions (Prohibition) Act in 2016 as a part of its larger fight against corruption. The Act gave sweeping powers to enforcement agencies like the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) to seize and attach properties that were deemed to be benami. Critics argued that the law was retrospective in its application, punishing individuals for transactions made before the law’s enactment, thereby violating principles of legal fairness.
The central government, led by Prime Minister Narendra Modi, responded by filing a review petition, seeking a reconsideration of the 2022 verdict. On Friday, a bench comprising Chief Justice of India (CJI) DY Chandrachud, Justice PS Narasimha, and Justice Manoj Mishra reviewed the matter and decided to overturn the previous ruling. The Court declared that the issues surrounding the constitutionality of the benami law were not properly addressed in the original judgment, and the provisions were thus reinstated.
This reversal has revitalized the government’s anti-corruption measures. By revalidating the provisions of the benami law, the Court has empowered agencies to restart their efforts in identifying and seizing properties held under proxy names. This decision is likely to cause widespread ramifications for individuals and entities who have amassed vast amounts of wealth through these fraudulent means.
What Is Benami Property?
Under the Benami Transactions (Prohibition) Act, benami property refers to any asset bought under someone else’s name, but paid for by another person, typically with the intent to avoid legal ownership disclosure. These properties are often used to launder black money or hide assets gained through illicit means. In simple terms, if a property is registered in one person’s name, but another person finances it, the property is classified as benami.
Since its enactment, the Benami Act of 2016 had armed the government with legal tools to confiscate properties, penalize offenders, and prevent the transfer of assets through illegal means. After the 2022 Supreme Court ruling struck down these provisions, the government’s efforts to curb benami transactions were curtailed, leaving a legal void that was exploited by corrupt entities. However, the reversal of this ruling has now set the stage for renewed action.
Implications of the Benami Verdict Reversal
This ruling will have a far-reaching impact on India’s efforts to root out corruption and black money. With the benami law back in place, enforcement agencies are expected to resume their crackdown on illicit property dealings. The decision will also send a strong message to political leaders, bureaucrats, and business elites who have used benami arrangements to acquire vast properties, insulating themselves from legal consequences.
Prime Minister Modi’s anti-corruption campaign, a central theme of his governance since 2014, will receive a significant boost. The ruling reaffirms the government’s commitment to transparency and accountability in property transactions and helps close loopholes that have been used to launder black money.
The Citizenship Act: Upholding Section 6A
In another critical ruling delivered on the same day, the Supreme Court upheld the validity of Section 6A of the Citizenship Act. This provision, which was added through an amendment in 1985, is linked to the Assam Accord and grants citizenship to migrants who entered India from Bangladesh before March 24, 1971. The amendment was designed to address the influx of migrants into Assam and other northeastern states during and after Bangladesh’s war of independence.
A bench led by CJI Chandrachud affirmed that Section 6A does not violate the Constitution. The provision ensures that those who migrated into India before the cutoff date are granted citizenship, while those who entered the country afterward would not be eligible unless special exemptions are granted. This decision has immense significance, particularly in the context of India’s ongoing debates over illegal immigration and the controversial National Register of Citizens (NRC) in Assam.
Clarifying Citizenship Rights
The Court’s decision to uphold Section 6A reinforces the legal framework for determining citizenship, particularly in sensitive regions like Assam where demographic changes due to immigration have long been a contentious issue. The ruling also puts to rest concerns raised by certain political groups about the applicability of the Citizenship Act, including its implications for the Citizenship Amendment Act (CAA) and NRC.
Chief Justice Chandrachud noted that while Section 6A provides a mechanism for granting citizenship to certain groups, it does not supersede the broader constitutional provisions for determining citizenship. The Court emphasized that only those individuals who fulfill the criteria specified by the law are entitled to citizenship, protecting the legal boundaries set by the Constitution.
The Broader Impact: A Legal and Political Turning Point
These two rulings—on benami property and citizenship—represent watershed moments for India’s legal and political landscape. On the one hand, the restoration of the Benami Transactions Act strengthens the government’s hand in combating corruption, black money, and unlawful property dealings. On the other, the reaffirmation of Section 6A of the Citizenship Act clarifies the legal status of migrants in India, offering a more structured approach to the ongoing debate on illegal immigration.
For the Modi government, these rulings vindicate its longstanding efforts to enhance transparency and accountability in governance. The benami law had been a cornerstone of Modi’s anti-corruption drive, and its reinstatement reenergizes the government’s push against corrupt practices. Likewise, the citizenship ruling aligns with the government’s stance on illegal immigration, a key political issue in states like Assam and West Bengal.
Looking Ahead: Legal Repercussions and Future Debates
The Supreme Court’s decisions mark the beginning of a new phase in India’s legal battles against corruption and illegal immigration. In the coming months, enforcement agencies are likely to accelerate their investigations into benami properties, and more cases of confiscation and legal action could be expected. Meanwhile, the citizenship ruling may influence ongoing debates on the CAA and NRC, particularly regarding their implementation across the country.
Chief Justice DY Chandrachud, who will retire in November 2024, will be remembered for these landmark decisions, which will shape India’s legal discourse for years to come. His successor, Justice Sanjeev Khanna, who will take over the reins of the Supreme Court, will inherit a judiciary poised to address even more significant constitutional questions, as India navigates the complex interplay of law, politics, and governance.
In conclusion, the Supreme Court’s rulings on benami property and citizenship reaffirm the power of the judiciary to steer the nation through complex legal and political challenges. These decisions underscore the critical role of law in shaping India’s future, both in terms of governance and social justice.