The original law relating to Benami transactions was laid down in The Benami Transactions (Prohibition) Act, This Act consisted of only. The Benami Transactions (Prohibition) Act – Property Lawsin India at , a website for Indian Laws and bareacts, legal advice. The Benami Transactions (Prohibition) Act, (‘Primary Act’) was enacted in the year to prohibit all benami transactions. The Act.

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Parliament has conveyed its intention that the word benami transaction is not confined to one section alone and also that the definition would contain only one category tripartite of benami transaction. The parliament has choosen to confine prohibiition definition to one category only.

The idea was to make the intention abundantly clear that parliament did not want to encircle the second category i.

A retrospective operation is not be given to a statute so as to impair existing rights or obligations. The presumption against retrospective operation is strong in cases in which the statute if operated retrospectively would prejudicially affect vested rights or the illegality of the past transactions, or impair contracts, or impose new duty, or attach new disability in respect of past transactions or consideration already passed and as defined in section 2 a a transaction must be benami irrespective of its date of duration, i.

Mer suspicion is no evidence to hold any transaction to be benami one, but should be proved by direct evidence; Drigpal Singh v.

The Benami Transactions (Prohibition) Act 1988

Chabbahan Bibi, air Cal ; Urmila Dasi v. Ghosh, AIR Cal acr The second class or kind of transaction is the sham transaction in which one person purports to transfer his property to another without intending to pass the title to the transferee. In the first type of transaction since there are three persons involved, it is also referred as tripartite benami transaction.

The fundamental difference between the two categories of transactions is that in the former there is an operative transfer resulting in the vesting of title in the transferee, whereas in the latter there is no operative transfer and the transferor continues to retain title of the property notwithstanding execution of the documents; Bhargavy P.

The Benami Transactions (Prohibition) Act

I Sub-section 2 of section 3 of the Benami Transactions Prohibition Benaml, contemplates that when a property is purchased by a person in the name of his wife, there is a reputable presumption that the property had been purchased for the benefit of the wife. The first respondent has not let in any satisfactory evidence to rebut the presumption that the petition mentioned property was purchased for transactiions benefit of the petitioner.

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Therefore it has been held that the transaction is not a benami transaction and that the first respondent is not the real owner of the petition mentioned property; Rajam Ammal v. Pillai, AIR Transacctions They are not disjunctive provisions in a comprehensive legislation intended to prohibit benami transactions.

Both section 3 and benam are complementary to each other to achieve the same object i. Held that a real purchaser is the respondent, the petitioner as an agent and power of attorney had purchased the property but ostensibly had his name entered in the sale certificate fraudulently and without consent of the principal and the question of benai does not arise though section 4 prohibits such a plea; P.

There are incidents to the constitution of a composite family, but all incidents are consequences of the agreement between the parties. Held that exception is section4 3 could not be attracted in the present case of an alleged composite family; B. Neither the court is permitted in law to consider such defence nor to record its findings.

Held that the Income-tax Deptt.

Benami Transactions (Prohibition) Act, 1988

Lakahmikathammal, AIR Mad The governing principal for determining the question whether a transaction is benami or not is to be proved by showing that the purchase money came from a person other than the person in whose favour the property is transferred. The intention of the person who contributed towards the money has to be inferred from the circumstances and the relationship of the parties and the motive governing their action in bringing about the transaction and their subsequent conduct; Mahinder Singh v.

In s suit for recovery of benami property if any appeal is pending on the date of coming into force of section 4 the appellant court can take inot account the subsequent legislative changes; Om Prakash v. It is clear that in spite of the recommendation of the Law Commission of India to bar institution of suits only, the Ordinance making authority has thought if it to bar other proceedings also and has also provided in express words barring of all claims and actions to enforce the right of a person alleging to be the real owner against the benemidar.

Once the property is found to have been held benami no suit, claim or action to enforce any right in respect thereof shall lie. Sub-section 2 of section 4 similarly nullifies the defences based on any right in respect of any property held benami. Section 4 in its sweep envisages past benami transaction also within its retroactivity.

In this sence the Act is both a penal and a disqualifying statute. By the principle of fictional relation back as propounded by the Supreme Court in Mithlesh Kumari, the benamidar should be deemed to have title to the property on the date he executed the deed or release. Held that Surendra Kumar was the benamidar and in point of act on the date of execution of the deed of release he had no right or interest in the property; Ratanlal Bansilal v.


The prohibition under section 4 1 and 2 does not prohibit the right of a third party to get a declaration. The third party has the right to raise the contention that someone was the real transferee and the sale deed was only executed in the name of the transferee who was a benamidar, Gopal Bariha v.

Rajeev, AIR Ker If the possession or occupation is not benami, section 4 can have no application and as a sham transaction or bipartite transaction is not a benami.

Section 4 does not apply to such a transaction; Ouseph Chacko v. Both section 7 of the Benami Act and section 4 of the Benami Ordinance repeal section 82 of the Trusts Act keeping section 81 of the Trusts Act intact. Keeping in view section 81 of Trusts Act nominal transactions are not intended to be covered and are not hit by section 4;B. Section 5 of the Benami Transactions Prohibition Act, applies only to tripartite or benami transactions and not to bipartite or sham transactions, for if it had been so, the property covered by bipartite transactions would also be liable to be acquired without compensation or payment of any amount and the Legislature too has not declared it as opposed to public policy and prohibit the same prospectively; Bhargavy P.

Nothing in this Act shall affect the provisions of Section 53 of the Transfer of Property Act, 4 ofor any law relating to transfer for an illegal purpose. The object of the Benami Transaction Prohibition Act, is vest ownership rights in benamidar as against the real owner.

It is not the intention of the Benami Act to protect such person from the creditors who allege diversion of funds by such persons in a fraudulent manner in order to escape their liability to the creditor. Therefore when it is alleged that the diversion of prohigition movable property by defendant No.

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