PTBP Web Desk
The Federal Appellate Tribunal, Special Bench Karachi, has issued a landmark decision declaring that the Benami Transactions (Prohibition) Act, 2017 (BTPA 2017) cannot be applied retrospectively to properties created from past transactions or those declared under Pakistan’s Asset Declaration Ordinance 2019 (Amnesty Scheme).
The detailed order was released against the Benami Adjudication Authority Karachi, marking a major development in the ongoing legal debate surrounding benami properties and retrospective application of the law.
This ruling, passed by a two-member bench of the tribunal, has wide-ranging implications for builders, developers, and individuals whose properties were questioned under the Benami Act but were based on transactions that occurred prior to 2017 or were disclosed under government amnesty schemes.
In its judgment, the Federal Appellate Tribunal Karachi clarified that any benami property can only be confiscated if it is part of a transaction executed after the enactment of the Benami Transactions (Prohibition) Act, 2017. Transactions that occurred before the Act’s promulgation cannot be subjected to confiscation because, at the time, such transactions were not prohibited by law.
The tribunal categorically ruled that the provisions of the BTPA 2017 do not apply to transactions completed before its enactment. Therefore, the confiscation of any property created out of these past transactions would be legally unsustainable.
The bench observed:
“A Benami Property can be confiscated only in case it is subject matter of a benami transaction after the enactment of the BTPA 2017 for its violation and does not apply to the transactions executed before the promulgation of the BTPA 2017.”
This statement reinforces that retrospective enforcement of the Benami law contradicts the principles of legality and fairness, as it imposes penalties for actions that were not unlawful at the time they occurred.
The tribunal further noted that there exists no legal mechanism or procedure for the confiscation of properties held benami if the underlying transactions were executed before the Benami Act 2017 came into force. Since such transactions were not prohibited under the previous legal framework, confiscation would exceed the lawful jurisdiction of the adjudicating authorities.
This part of the order addresses long-standing concerns among property owners and real estate developers, many of whom have faced uncertainty due to the retrospective interpretation of the Benami law by certain authorities.
In addition to past transactions, the Federal Appellate Tribunal Karachi also ruled that the Benami Transactions (Prohibition) Act, 2017 does not apply to properties declared under the Asset Declaration Ordinance 2019, commonly known as the Amnesty Scheme.
The Amnesty Scheme was introduced by the government to allow individuals to declare previously undisclosed assets by paying a one-time tax, thereby regularizing them under the law. The tribunal’s decision clarifies that once assets were declared under this scheme, they could no longer be classified as benami or be subjected to confiscation under the BTPA 2017.
The tribunal observed that since such declarations were made in accordance with law and accepted by the government, any attempt by the Benami Adjudicating Authority to reopen or confiscate those properties is invalid and without jurisdiction.
The ruling emphasized that the Benami Adjudicating Authority Karachi and the Initiating Officer had exceeded their legal authority by applying the Benami law retrospectively. The tribunal stated that both had gone beyond their jurisdictional capacity, resulting in invalid proceedings and unsustainable confiscation orders.
The tribunal concluded that:
“The Initiating Officer as well as Benami Adjudicating Authority exceeded its jurisdictional capacity by applying the law retrospectively to transactions dating prior to the Act, which have since become past and closed transactions, and vested rights have accrued in respect of the beneficial owners.”
In its decision, the Special Bench Karachi set aside the adjudication orders and attachment orders pertaining to the involved properties, effectively releasing them from any ongoing confiscation proceedings.
This judgment is particularly significant for the real estate sector in Karachi and across Pakistan. Many developers, builders, and investors have faced inquiries from tax and anti-benami authorities for properties acquired or constructed before 2017.
By ruling that the Benami Transactions Act 2017 cannot be applied to such cases, the tribunal has provided clarity and relief to numerous stakeholders who have maintained that their property transactions were lawful and transparent at the time they were executed.
Legal experts believe this ruling could serve as a precedent for other similar cases pending before adjudication authorities in Islamabad, Lahore, and other regions. It reinforces the principle that laws cannot be applied retrospectively unless expressly permitted by legislation.
The decision strengthens the rule of law and property rights in Pakistan by ensuring that government authorities cannot reinterpret laws to target past transactions arbitrarily.
By reaffirming that vested civil rights cannot be overturned retroactively, the tribunal has emphasized the importance of legal certainty, particularly in matters concerning private property and investment.
Furthermore, the verdict aligns with the broader principle that every citizen has a right to due process, and any action taken by the state must be rooted in existing law, not applied retrospectively.
The Benami Transactions (Prohibition) Act, 2017, was enacted to curb the practice of holding properties in the name of another person to conceal beneficial ownership. While the law remains a crucial tool in tackling tax evasion and money laundering, its implementation has faced criticism over ambiguities regarding its retrospective scope.
This latest ruling by the Federal Appellate Tribunal Karachi provides much-needed judicial interpretation, reinforcing that the BTPA 2017 applies only to transactions made after its enactment, ensuring fairness and consistency in enforcement.
