In This Issue

Benami Transactions (Prohibition) Amendment Act, 2016

From November, 2016 onwards the Central Government will confiscate all benami property after due adjudication as provided in the detailed process laid down in the Benami Transaction Act, 2016.


Bombay High Court’s say upon the powers of NGT

In Bombay HC’s recent judgment, the Court described the limits of Tribunals. HC said that NGT has only those powers which are prescribed by the Act and that the power of deciding the vires of a statute.  



Work More, Earn More – The Factories (Amendment) Bill, 2016

The Union Cabinet and the Lok Sabha have passed the amendment to Sections 64 and section 65 and noteworthy section 115 of the Factories Act, 1948 (Act) through the Factories (Amendment) Bill, 2016. 


Clarification by MCA to revise IEPF Rules, 2016

The MCA, released a Clarification saying matters of simplification of transfer process and extension of due date under IEPF Rules 2016, are likely to be revised.


Benami Transactions (Prohibition) Amendment Act, 2016




In a regime to wash off black money from the Country, the Indian Government took another laudable leap by initiating the Benami Transactions Bill, 2015 for amending the Benami Transactions (Prohibition) Act, 1988. The Benami Transactions (Prohibition) Amendment Act, 2016(hereinafter referred to as the “Act”) received the President’s assent on August 10, 2016 and has come into force from November 1, 2016. The Act provides for expedite procedures to deal with benami property, authorities to execute such procedures and stringent punishment for offenders. In other words, the Act makes the erstwhile Act more executable and practicable.


There are many forms of transactions where people prefer to deal in another person’s name instead of their own, either to evade taxation, to surpass property ceiling laws or to invest their black money etc. It was also a prevalent custom in traditional Hindu families to buy properties in the name of daughters, sons, fathers or wives. The Act seeks to deal with all such transactions which are carried out by a certain person but the consideration is provided and benefits are availed by some other person. With this, the beneficiary/financer enjoys the property but does not fulfill legal responsibilities towards such properties. This article discusses the major implications of the amended Act.


What is a Benami Transaction? Who is a Benamidar?


A benami transaction, as defined under Section 2(9) of the Act is a transaction in which:


  1. the property is held by one person and paid for by another; or

  2. it is held in a fictitious name; or

  3. the owner of such property is unaware of or denies having knowledge of such ownership; or

  4. the person financing such transaction is not traceable.

However, the Act prescribes certain exceptions to benami transactions under Section 2(9). These exceptions include property held by:


  1. karta for his or his family member’s benefit; or

  2. a person standing in fiduciary capacity for the benefit of another, including a trustee, an executor, a partner, a company director or a depository participant or agent; or

  3. a person for the benefit of his spouse or child; or

  4. a brother or sister or lineal ascendant or descendent.


Provided the consideration paid for such transactions comes from known and traceable resources.


Also, the Central Government may, by notification, exempt any property relating to charitable or religious trusts from the operation of this Act.


A Benami transaction applies to properties (assets) whether movable or immovable, tangible or intangible, corporeal or incorporeal. A Benamidar is a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name.


What are the Authorities established under the Act?


The Act provides for 4 major Authorities ie. The Initiating Officer, the Approving Authority, the Administrator and the Adjudicating Authority as appointed by the Central Government. The office of the Initiating Officer will be held by an officer who is the Assistant Commissioner or a Deputy Commissioner as required by the Income Tax Act, 1961. The authorities will have the same powers as those of the Civil Courts under Civil Procedure Code, 1908.


What will happen to the Benami Property?


1. Issuing a show cause notice:


If, upon the material available to the Initiating Officer, he has reason to believe that any person is a benamidar in respect of a property, he may, issue a notice to the person to show cause why the property should not be treated as benami property within the time specified in the notice. He must record the reasons in writing.


2. Effect of Alienation after notice:


If any person, after receiving a show cause notice from the Initiating Officer in respect of any property, attempts to alienate that property, such a transaction will be held null and void. 

3. Provisional Attachment:


If the Initiating Officer has reason to believe that the property held is a benami property and the notified person may alienate such property during the period specified in the notice, he may, by order in writing, attach provisionally the property in the manner as may be prescribed, for a period not exceeding ninety days from the date of issue of notice. Before attaching the property, he must seek the approval of the Approving Authority. This provisional attachment can be continued by an order passed by the Initiating Officer.


4. Reference to Adjudicating Authority:


Where the Initiating Officer passes an order continuing the provisional attachment of the property or passes an order provisionally attaching the property, he shall, within fifteen days from the date of the attachment, draw up a statement of the case and refer it to the Adjudicating Authority.


5. Attachment and Confiscation:  


Upon providing notice (within a period of 30 days of receiving reference) and a subsequent reasonable opportunity of hearing to the benamidar the Adjudicating Authority may pass an order either revoking or confirming the order of Attachment. The Adjudicating Authority shall, after giving an opportunity of being heard to the person concerned, make an order confiscating the property held to be a benami property.


Where an order of confiscation has been made, all the rights and title in such property shall vest absolutely in the Central Government, free from all encumbrances and no compensation shall be payable in respect of such confiscation.

An appeal from the order of the Adjudicating Authority can be made to the Appellate Tribunal established under the Act, within 45 days of the date of such order.


6. Administration


The Administrator shall have the power to receive and manage the property, in relation to which an order of confiscation is made. He is empowered to take such measures as are necessary for managing such property. He also has the powers to enforce possession by giving reasonable notice to the occupier of such property.


What are the Penalties under this Act?


The Act prescribes that whoever is found guilty of the offence of a benami transaction shall be punishable with rigorous imprisonment for a term which shall not be less than 1 year, but which may extend to 7 years and shall also be liable to fine which may extend to 25 % of the fair market value of the property. Further, if any person knowingly provides false information to any authority or furnishes any false document he/she shall be punishable with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to five years and shall also be liable to fine which may extend to 10% of the fair market value of the property.

These provisions of penalty are stricter than those given in the erstwhile Act, which prescribed penalty by way of imprisonment only upto 3 years. Also, there was no provision related to fine in the earlier Act.




The detailed procedure and authorities prescribed under the Act are appreciable as they will expedite the process of adjudication. The Act is a considerable leap in the regime for eradication of black money. The subsequent rapid developments of demonetization, amendments to the income tax laws and introduction of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 altogether form a tough barricade for cornering corruption and making it difficult for the corrupt to escape. There is evident optimism in the Nation and even the remotest of places are showcasing support Indian Government’s regime against black money.

It is further notable, that all these new policies of the Government directly or indirectly lead towards a cashless (transactions) society (and maybe later towards a classless one!).
















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Bombay High Court’s say upon the powers of NGT  



The Indian legal fraternity has seen innumerable cases where the courts have time and again determined the extent of powers the Acts or Rules have conferred upon the Tribunals formed under them. The Bombay High Court’s recent Judgement[a1] upon the powers of the National Green Tribunal, has become yet another contribution in the age old discussion on Separation of Powers. This highlights the Court’s long established, strict and faithful adherence to the Doctrine of Separation of Powers. The doctrine of separation of powers requires the three pillars of the State to exercise only the powers which have been lawfully conferred upon them. It is a time tested principle that usurpation of power results in tyrannical ruling.

What are tribunals? What is NGT?


Tribunals are special adjudicating authorities formed under a statute for adjudication in specific areas of law. They have powers and privileges as are enumerated in the statutes. In this regard they differ from mainstream judiciary, which derives its powers from the Constitution itself and their powers are not subject to or limited by any other statute. The Courts have many inherent powers which are not present with the Tribunals. The powers a tribunal exercises are supposed to be strictly within the purview of the statute which empowers it.


The National Green Tribunal has been established under the National Green Tribunal Act, 2010(hereinafter referred to as “the NGT Act”)for dealing with cases relating to environmental protection and conservation of forests and other natural resources including enforcement of any legal right relating to environment. Tribunals are especially formed for expediting the process of administration of justice and therefore they are not bound by the procedures under Civil Procedure Code, 1908. Needless to say, environment protection requires speedy decision making as delay may cause irreparable losses to the environment, life and property.


The Indian judiciary had considered the question of powers of tribunals in great detail in L. Chandrakumar’s[a2] case. This case dramatically changed the legal opinion established in Sampath Kumar’s[a3] case. Here, the Apex Court held that, Supreme Court and the High Courts are the sole repositories of the power of judicial review and that such power, has only been entrusted to the constitutional courts, i.e., the High Courts and not the Tribunals. Here, Article 323 A and 323 B of the Indian Constitution along with the Administrative Tribunal Act, 1985 formed under it were challenged. The Court observed that tribunals cannot perform the functions inherently vested in the Higher Judiciary and that tribunals will have limited powers of, not substituting the mainstream judiciary but supplementing its work.


Incidentally, the court observed that Tribunals cannot be substitutes to the existing mainstream judiciary. The power of deciding the vires of a statute necessarily lies with the mainstream judiciary and cannot be delegated to the Tribunals.


In the case of Central India AYUSH Drug Manufacturers Association v. State Of Maharashtra the Bombay High Court has substantially reiterated the principles established in the landmark judgement of L Chandrakumar’s case.


Questions before the Court:


The petitioners, vide a writ under Article 226, sought a declaration that Rule 17 of the Biological Diversity Rules, 2004 did not apply to the Indian entities or body corporates. In the alternate, it was prayed that to the extent the said Rule envisages equitable sharing of benefits by the Indian entities, it should be declared ultra vires to the provisions of the Biological Diversity Act, 2002 and, therefore, unconstitutional. Also, a prayer to declare the Benefits Sharing Regulations, 2014 ultra vires to Sections 23 and 24 of the Biological Diversity Act, 2002 ( “B. D. Act”) was made.


However, by a primary objection, the Respondents contended that the present grievance in the writ petition should be raised before the National Green Tribunal in view of provisions contained in Section 14 of the NGT Act, 2010. Hence the main question before the Court was whether the Jurisdiction to hear the matter vested with itself or with the Tribunal.


The Respondents filed an objection to the Petition stating that according to Section 14 of the NGT Act, 2010 the jurisdiction to try ‘all civil cases’ which included “substantial issues related to the environment” would be heard by the National Green Tribunal and that this alternative remedy was available to the Petitioners.



[a1]Central India AYUSH Drug Manufacturers Association v. State Of Maharashtra. WRIT PETITION NO. 6360/2015

[a2]L. Chandra Kumar v. Union of India A.I.R 1997 SCC 1125

[a3]S. P Sampath Kumar v. Union of India 1987 SCR (3) 233, 1987 SCC Supl. 734


Section 14(1) reads as follows:


14. Tribunal to settle disputes. –


1. The Tribunal shall have the jurisdiction over all civil cases where a substantial question relating to environment (including enforcement of any legal right relating to environment), is involved and such question arises out of the implementation of the enactments specified in Schedule I.


According to the Respondents, in consequence of this, the High Court should not entertain the said writ petition. The Respondents further supported their contentions saying that the challenged provisions were those of a sub-ordinate legislation framed under the B. D. Act and therefore a Tribunal has powers to decide upon its vires.


Negating these contentions, the Petitioners replied that when there is challenge to vires of any Act or Rule, Tribunals do not possess jurisdiction. As the vires of Rules or Guidelines/Regulations could not have been looked into by any authority functioning under the B.D. Act, same also cannot be looked into by the Tribunal constituted under the NGT Act. Hence the Petitioners prayed for dismissal of preliminary objection, and prayed to entertain the petition on merits.


Court’s Decision:


In Alpha Chem’s[a4] case the Supreme Court, while considering the challenge to Section 4A of the U.P. Sales Tax Act, 1948 held that the challenge to constitutionality of a statute is maintainable under Article 226 or Article 32 of the Constitution of India and it is not open in proceedings before authorities constituted under a statute itself or even in appeal or revision before the High Court from such proceedings.


Considering this and other cases, the Bombay High Court ordered upon the objection, stating that, as the question involved is that of deciding upon the vires of statute and does not fall within the purview of statutory powers conferred upon the Tribunal by the relevant statutes the same cannot be tried by the Tribunal. These disputes therefore, must be civil in nature, must arise out of implementation of enactments specified in Schedule I of the NGT Act, 2010 and therein, a substantial question relating to environment must be involved.


The High Court observed that the “Parliament’s intention to limit the power to decide certain specified nature of disputes is apparent. The scheme of N.G.T. Act does not permit National Green Tribunal to decide upon the vires of any of the enactments which confer appellate or other jurisdiction upon it and find mention in Schedule I of N.G.T. Act. It also does not empower it to examine validity of any Rules or Regulations made under these enactments. Writ petition does not qualify as a civil case wherein substantial question relating to environment is involved. Similarly, the National Green Tribunal does not possess power to adjudicate upon the vires or validity of any enactment in Schedule I or of subordinate legislation framed under such enactment.”


Hence, High Court having rejected the preliminary objection stated that the petitioners do not have any alternative remedy before the NGT.


Take Away:


‘Power Corrupts, and Absolute Power Corrupts Absolutely’. The Courts have always been driven to ensure that there is constitutional separation of powers to avoid tyrannical ruling.


The Tribunals were formed with the view of expediting justice and reducing the burden of the Courts. However, the ultimate power of adjudication cannot be passed on to a body working parallel to the existing judicial machinery. The Courts are vested with the paramount power of safeguarding the Constitution and Statutes, therefore the primary power of deciding the validity of statutes at the touchstone of the Constitution, lies with them and cannot be delegated to another entity.


It is noteworthy that the question of constitutional validity of the Rule 17 of the Biological Diversity Rules, 2004 and Benefits Sharing Regulations, 2014 against Sections 23 and 24 of the Biological Diversity Act, 2002 is still to be decided.


We endeavor to keep you updated on the conclusions of the merits of the case as well.












[a4]Alpha Chem and another v. State of U.P. and Ors. 1991 Supp (1) SCC 518




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Work More, Earn More – The Factories (Amendment) Bill, 2016


The Union Cabinet and the Lok Sabha have passed the amendment to Sections 64[1] and section 65[2] and noteworthy section 115 of the Factories Act, 1948 (Act) through the Factories (Amendment) Bill, 2016 (hereinafter referred to as “Bill”). The Bill is currently pending before the Rajya Sabha .[3] The amending provisions increase the number of overtime hours of work at a factory. The Bill empowers the central government and the state government (as the case may be) as “Prescribed” authorities to be read under Sections 2[4] , 64 and 65 respectively. Following are the key highlights of the Bill:


  • The “Prescribed” Authority will be empowered to make rules on various matters including inter alia double employment, details of adult workers to be included in the factory’s register and conditions that are related to freedom to certain workers, etc.

  • Under the Act, no rule made under Section 64 could apply after five years of their passing. However, the bill modifies this standpoint removing the five year limitation for any exempting rule issued under Section 64.



[1]Enumerates Powers to make exempting rules.

 [2]Enumerates the powers to make exempting orders.


[4]Section 2(p) wherein the term “Prescribed” would now mean anything prescribed by the “Central Government or, as the case may be, the State Government.”  

  • Additionally, the Central and State Governments have been bestowed with powers to make rules for exemption of workers. The Governments may pass rules to define persons who may hold confidential or management positions and exempt workers engaged in the task of making urgent repairs from straightjacketed working hours or periods of rest etc.

  • The “Prescribed” authorities can make rules regarding overtime hours that earlier could not exceed 50 hours a quarter to now not exceed 100 hours a quarter. Also, if the factory has exceptionally heavy work load, the Bill permits the “Prescribed” authorities to change the upper limit of overtime hours of adult workers from 75 hours to 115 hours for every quarter.

  • The “Prescribed” authorities may extend the 115 hour bracket to 125 hours if the situation calls for it due to extreme work load or if it is required to meet public interest.

The object of the Act is to ensure suitable care measures and to promote the health and prosperity of the workers. It is pertinent to note that no worker will be allowed to work overtime, for more than seven days at a stretch. Further, even with all the proposed changes, the Bill has increased the overtime hours without contravening the International Labour Organization standards that prescribe a quarterly upper limit of 144 hours of overtime.[5]






[5]PTI, Lok Sabha Passes Bill to Double Overtime Hours for Factory Workers, August 10, 2016,



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Clarification by MCA to revise IEP Rules, 2016


Pursuant to the power conferred upon the Central Government, the Ministry of Corporate Affairs recently notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafter referred to as “the Rules”) which came into effect from September 7, 2016.


The Rules provided for a detailed procedure for transferring all shares, in respect of the dividends which have remained unclaimed since the last 07 years continuously, to the IEPF suspense account within a period of 3 months from the date of the Rules coming into force. However, there were clarifications sought by various companies in respect of the due date for effecting transfer.  

Hence, on December 07, 2016 the Ministry of Corporate Affairs released a Clarification vide General Circular No. 15/2016 , in view of the representations it received from various companies. Vide the said Circular, it has been informed by the Ministry that matters including simplification of transfer process and extension of date for such transfer, are under consideration and the rules are likely to be revised. The revised rules will be notified in due course.


We endeavor to keep you updated in regards to the revised Rules as and when they come into effect.


For highlights of the IEPF Rules, 2016 refer to our Article here




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