The issue arose in the context of the Ganpati Dealcom case, where a three-judge bench of the Supreme Court had earlier examined the question of whether the provisions of the 1988 Act, as amended by the Benami Transactions (Prohibition) Amendment Act, 2016, had a prospective or retroactive effect. The central legal question was whether the amendment’s provisions could be applied to transactions that occurred before the 2016 amendments came into force.

In its initial ruling, the Court struck down certain provisions of the 1988 Act as unconstitutional, particularly Section 3(2) of the unamended Act, deeming it manifestly arbitrary and in violation of Article 20(1) of the Constitution. The judgment also invalidated the in-rem forfeiture provision under Section 5 of the unamended Act, declaring it unconstitutional on similar grounds. The Court declared that these provisions, as amended by the 2016 Act, could only be applied prospectively, and therefore, any ongoing criminal prosecutions or confiscation proceedings based on transactions prior to the 2016 Amendment were to be quashed.

The Union of India filed a review petition, arguing that the constitutional validity of the unamended provisions of the 1988 Act had not been adequately challenged or addressed during the original proceedings. In its submissions, the Union pointed out that the Court’s judgment had addressed matters of constitutional validity without a proper contest or lis (dispute) between the parties.

In light of these arguments, the Supreme Court allowed the review petition and recalled its earlier judgment dated 23 August 2022. The judgment, which had originally quashed ongoing prosecutions and confiscation proceedings related to benami transactions before 2016, was set aside.

As a result of this order, Civil Appeal No. 5783 of 2022 has been restored for fresh adjudication. The matter will be reconsidered by a newly constituted bench, to be nominated by the Chief Justice of India. This development opens the door for further legal examination of the constitutional validity of the 1988 Act's provisions, especially in light of the amendments introduced in 2016.

Additionally, the Court granted liberty to any aggrieved party to seek a review of any other proceedings that had relied on the judgment in Ganpati Dealcom, in light of the current recall.

This decision marks a crucial step in the legal understanding of benami transactions in India, especially with regard to the application of the 2016 amendments to the 1988 Act. By allowing the review and recalling the earlier judgment, the Supreme Court has acknowledged the need for a more thorough examination of the constitutional issues surrounding the benami law.