SAFEMA Tribunal Landmark Ruling: Properties of an Abettor Cannot Be Attached Under PBPTA Without Proof of Being Benami
The legislative framework surrounding benami transactions in India is notoriously stringent, designed to root out unaccounted wealth and black money. However, the enforcement of these laws must strictly adhere to statutory boundaries. In a highly significant judicial determination, the Appellate Tribunal under SAFEMA (Smugglers and Foreign Exchange Manipulators Act) at New Delhi, in the matter of Shrenik Shah Vs Initiating Officer, has established a crucial safeguard for individuals classified merely as "abettors" in benami transactions.
The Tribunal unequivocally ruled that while an abettor can face severe penal prosecution under the Prohibition of Benami Property Transactions Act, 1988 (PBPTA), their personal, legitimately acquired assets cannot be automatically subjected to provisional attachment. The authorities must conclusively prove that the specific assets being attached are, in themselves, benami properties.
The Genesis of the Dispute
The present legal discourse stems from an appeal challenging a confirmation order dated 30 May 2019. This contested order was originally promulgated under Section 26(3) of the Prohibition of Benami Property Transactions Act, 1988, by the Adjudicating Authority in New Delhi. The Authority had ratified a Provisional Attachment Order (PAO) initially issued on 26 April 2018 under Section 24(4) of the PBPTA by the Initiating Officer, BPU, Ahmedabad.
The factual matrix of the case is deeply intertwined with the nationwide demonetization exercise. The investigative authorities alleged that a massive quantum of demonetized currency was systematically routed through a complex web of bank accounts to convert it into legitimate funds.
Specifically, the financial trail revealed that an amount aggregating to ₹47,40,000 was transferred via RTGS channels from M/s Gujarat Enterprise (proprietorship of Mo. Rizwan Mujahid Saiyed) to M/s Shivam Jewellers. The core allegation was that Old High Denomination (OHD) notes were illicitly deposited into benami accounts and subsequently layered through the banking system using RTGS/NEFT mechanisms under the guise of bullion trading.
Investigative Proceedings and Evidentiary Statements
To unravel the financial web, the authorities conducted extensive investigations, recording statements from multiple individuals under oath. The chronological recording of these statements provided the foundation for the Initiating Officer's actions: