Benami Transactions

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This is a collection of articles archived for the excellence of their content.


Benami Transactions (Prohibition) Act

No significance assigned to age of `benamidar'

Dhananjay Mahapatra|Benami law doesn't consider the age of property holder|Jul 14 2017 : The Times of India (Delhi)

Contrary to the assertions of Bihar deputy chief minister Tejashwi Yadav, both the Benami Transactions (Prohibition) Act, 1988, and the comprehensive amendment carried out in 2016 do not assign any significance to the age of the `benamidar' (holder of benami property). Tejashwi had ridiculed allegations by investigating authorities about numerous benami properties registered in his name, saying when the benami properties were allegedly acquired, he was just “14-15 years old“. “Can a minor commit such illegalities?“ he had asked.

But the 1988 Act and subsequent amendments are clear that benami properties -once authorities establish its nature of ownership as benami -are liable to be confiscated by the central government. This means, irrespective of the age of Tejashwi and his sister Misha Bharti at the time of alleged acquisition of benami properties, these are liable for confiscation by central government agencies.

While the 1988 law and the 2016 amendment are unequivocal on confiscation of benami properties, the amendment adds punishment for those who deal with sale and purchase of benami properties.

Whether the amendment will apply to transactions dealing with benami properties acquired before 2016, when it came into force, will depend on the way a court of law interprets it if the person to be prosecuted challenges the prosecution.

The amendment provides stringent punishment for those dealing in sale and purchase of benami properties and the age of the person has not been taken into consideration. The amended law provides that anyone attempting to “alienate benami property to frustrate provisions of any law, he will be liable to punishment for a minimum period of one year imprisonment and which could go up to seven years imprisonment“.In addition, the person could be fined up to 25% of the fair market value of the benami property being transacted.

The law also makes it an offence if any benamidar provides wrong information to authorities or furnishes wrong documents. This offence will attract a punishment of minimum six months imprisonment which could go up to five years, in addition to fine that could be 10% of the fair market value of the property in question.

However, both the Benami Transactions (Prohibition) Act and the amendment make it no offence for the child, if the property is registered in his name by herhis parents. But the moment it is established that the property is held in the name of the child by the parents, the onus of establishing legitimate acquisition of the property will shift to the parents, and if they are public servants, under the more stringent Prevention of Corruption Act.

Court judgements

Wife’s name, purchasing assets in, not always benami

Aheli Banerjee, June 12, 2023: The Times of India

Kolkata : Property bought in a wife’s name “cannot necessarily” be called a benami transaction, the Calcutta high court has said.

“In Indian society, if a husband supplies the money for acquiring property in the name of his wife, such a fact does not necessarily imply benami transaction. Source of money is, no doubt, an important factor but not a decisive one,” a division bench of Justices Tapabrata Chakraborty and Partha Sarthi Chatterjee said in its order last week.

The court was hearing a case in which a son at the centre of a family assets dispute claimed his late father had given a benami property to his mother.

The HC ruled that the son had failed to prove his charge. “The burden of showing thata transfer is a benami transaction always lies on the person who asserts it,” the court said, terming it a “well-settled principle”. 

The court said two kinds of benami transactions are generally recognised: in the first type, a person buys aproperty with his own money but in the name of another person without any intention to benefit the other person.

The second type, “loosely termed as a benami transaction”, is where the owner of the property executes a deed of conveyance in favour of another without the intention of transferring the title to the property. “In the latter case, the transferor continues to be the real owner,” the court said. 
In this case, the father had bought and registered the property in 1969 in the name of his wife — a homemaker without any source of income. He built a two-storey house on it. After he died in 1999, going by succession laws, his wife, son and daughter inherited a third of the property each. The son stayed in that house till 2011 but when he moved out, wanted the property to be split between him, his mother and sister, a proposal the other two rejected. The son then moved court alleging a benami transaction.

To complicate matters, the mother, exasperated by her son’s conduct, gifted her share of the property to her daughter before she passed away in 2019.

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