The Prohibition of Benami Property Transactions Act, 1988 (Benami Act) is a legislation that has led to the attachment of several properties and initiations of prosecutions. The Finance Bill 2024 has introduced a crucial amendment that potentially redefines the role of the Initiating Officer (IO), allowing for the grant of immunity to parties, such as the benamidar or any other person who abets or induces a person to enter into a benami transaction as referred to in Section 53 of the Act except the beneficial owner. This allows for the grant of immunity to parties who comply with the prescribed terms as stated in Clause 55A of the Finance Bill, 2024 and this new amendment is analyzed in this Article.
At the outset, this amendment seems beneficial to the benamidars and moves away from the earlier strict punitive structure to a more conciliatory and compliance-oriented approach. However, there are difficulties that are associated with this amendment as it is read currently.
The current provision that is to be inserted aims for a power to be given to the IO to tender immunity from prosecution and reads as follows:
“55A. (1) The Initiating Officer may, with a view to obtaining the evidence of the benamidar or any other person as referred to in section 53, other than the beneficial owner, tender immunity from prosecution for any offence under the said section to the benamidar or such other person, with the previous sanction of the competent authority as referred to in section 55, on the condition that the benamidar or such other person makes a full and true disclosure of the whole circumstances relating to the benami transaction.
(2) The tender of immunity made to, and accepted by, the benamidar or such other person, shall, to the extent to which the immunity extends, render him immune from prosecution for the offence in respect of which the tender was made and from the imposition of any penalty under section 53.
(3) If it appears to the Initiating Officer that any person to whom immunity has been tendered under this section has not complied with the conditions subject to which the tender was made, or is wilfully concealing anything, or is giving false evidence, the Initiating Officer may record a finding to that effect, and with the previous sanction of the competent authority as referred to in section 55, withdraw the immunity tendered.
(4) Any person against whom the immunity tendered is withdrawn in accordance with sub-section (3), may be tried for the offence in respect of which the tender of immunity was made or for any other offence of
which he appears to have committed in connection with the same transaction and shall also be liable to any penalty under this Act to which he would otherwise have been liable.” [Emphasis supplied]
This provision is victim to vagueness in its language in a multitude of aspects, which could lead to arbitrary actions by the authorities under the Act. The language indicates that the powers given to the authorities under the Act are wide in nature regarding both granting immunity and withdrawing such immunity that is granted. Moreover, it does not specify the stage in which such immunity can be conferred or withdrawn and this goes against the interests of the benamidars or any other person
who are involved in such disclosure.
While there is a possibility that this procedural loophole might be addressed by the lawmakers, the language of the substantial parts of the provision would still give an undue advantage to the authorities under the Act. The phraseology is ambiguous, such as the use of “with a view to obtaining the evidence”, which deviates from the benefit that it aspires to confer on the benamidars in the first place. The amendment is made as a means of protection to the benamidar as understood by a reading of the Memorandum Explaining the Provisions in the Finance Bill, 2024. The Memorandum states that imposing the same penalty on benamidars as the beneficial owner could be disproportionate considering that many benamidars are poor and illiterate. It further considers that such tender of immunity is envisaged
under various other laws. This clearly gives a purported beneficial intention to the amendment, which does not seem to be necessarily true considering the actual wordings of the provision sought to be inserted.
To draw a parallel between this provision and other statutes which contain a similar provision, Section 64 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) uses almost the same wordings, in addition to other laws such as Section 291 of the Income Tax Act, 1961 and Section 60 of the Foreign Exchange Regulation Act, 1973. To understand the scope and implication of this amendment, the judgement in Jasbir Singh v Vipin Kumar Jaggi & Ors. [2001] 8 SCC 289 where the Supreme Court made observations about the scope of Section 64 of the NDPS Act is analyzed. In this judgement, the Supreme Court stated that the word “prosecution” must be read to mean the entire proceeding till the judgement of the Court is delivered, concluding that the power to tender immunity under Section 64 of the NDPS Act can be exercised at any time before the judgement is delivered. Moreover, the Hon’ble Court observed that the respondent had given evidence that was promised by him and it is unjust to refuse him immunity thereafter.
Taking this parallel into consideration, it is evident that such situations might arise where a person is promised immunity which is later withdrawn arbitrarily due to the wide powers given to the authorities under the Benami Act.
Therefore, it is concluded that this new amendment at the first blush appears beneficial to the benamidars but the lack of clarity of its scope of application in addition to the stringent penalties that the persons face under this Act would cause difficulties to the persons prosecuted under this Act. The success of this initiative would only depend on its implementation with clear procedures while also staying true to the objectives aimed to be achieved by such amendment.
