Section 3(2) of The Prohibition of Benami Property Transactions Act, 1988 is declared as unconstitutional for being manifestly arbitrary. Section 3(2) of The Benami Transactions (Prohibition) Amendment Act, 2016 is also unconstitutional as it is violative of Article 20(1).
Joseph Shine v. Union of India, (2019) 3 SCC 39 while declaring Section 497, IPC as unconstitutional, reiterated, “manifest arbitrariness must be something done by Legislature capriciously, irrationally and/or without adequate determining principle… also, when something is done which is excessive and disproportionate, such legislation would be manifestly arbitrary.”
– Hon’ble Chief Justice of India, Hon’ble Justice N.V. Ramana, Union of India v. M/s. Ganpati Dealcom Pvt. Ltd., [Civil Appeal No. 5783 of 2022].