Read Time: 07 minutes

The Madras High Court has declared Section 32(2) of the Prohibition of Benami Property Transactions Act, 1988 as unconstitutional and has directed the Union Government to frame provisions regarding the same, while keeping in mind the directions of the judgments of the Supreme Court.

The bench of  Chief Justice Munishwar Nath Bhandari and Justice D Bhartha Chakravarthy passed the order while considering a writ petition filed by one V. Vasanthakumar, who appeared in person challenging the validity of Section 9 and Section 32(2) (a) of the Prohibition of Benami Property Transaction Act, 1988 as amended by the Benami Transaction (Prohibition) Amendment Act, 2016.

The Additional Solicitor-General, R.Sankaranarayanan appearing for the respondents argued that as Section 9 was already deleted, the court had to only consider the scope of Section 32(2) which reads as below -

"32. Qualifications for appointment of Chairperson and Members of Appellate Tribunal —

 (1) A person shall not be qualified for appointment as Chairperson of the Appellate Tribunal unless he is a sitting or retired Judge of a High Court, who has completed not less than five years of service.

 (2) A person shall not be qualified for appointment as a Member unless he—

(a) in the case of a Judicial Member, has been a Member of the Indian Legal Service and has held the post of Additional Secretary or equivalent post in that Services; ………..”

The petitioner contended that the provision was hit by the judgment of the Apex Court in Union of India v. R.Gandhi, President, Madras Bar Association (2010) where the Court precisely mentioned that, the post of Judicial Member should be manned only by a person who served as a Judge or a member of the Bar and not by a member of Indian Legal Service.

The petitioner further relied on the Apex Court's decision in Shamnad Basheer v. Union of India and others (2015) where the appointment of a member of the Indian Legal Service for the post of Chairperson or Judicial Member of the Intellectual Property Appellate Board was declared unconstitutional.

However, ASG Sankaranarayanan submitted that the provision under challenge does not offend any constitutional provision and that the government was empowered to legislate on the subject matter. He also averred that a mere reference to the judgment of the High Court and the Supreme Court would not be sufficient to hold a provision unconstitutional.

Court took into consideration the concept of separation of powers and held that the powers that remain in the domain of the administration should be exercised by them and similarly the exercise of power by the Legislature should be within its sphere, making the judicial system independent.

"The independence of the judicial system remains a vital issue and for that emphasis was made that there would be a separation of powers, so that independence of the judiciary is maintained", Court said.

Court further held that in Shamnad Basheer’s case also, the Apex Court had emphasized the necessity and importance of the appointment of a judicial member who served as a Judge or was a member of the bar.

"The reason for this was that prior to the constitution of the Tribunals, the adjudication was done by courts. Therefore, with the constitution of the tribunals, they would be discharging the work earlier discharged by the courts," Court noted. 

Accordingly, Court declared Section 32(2) (a) of the Prohibition of Benami Property Transactions Act, 1988 to be unconstitutional.

Case Title: V.Vasanthakumar v. The Union of India