We are all aware of a famous phrase from Shakespeare, “what’s in a name?”, well the Law of the Land says “a lot !!”. And with that thought in mind, along with the essential need of curbing the increasing ‘Black money’ problem, acts like the ‘Benami Transactions Act’, our topic for today, was passed.

Benami Transactions Act, 1988, now known as Prohibition of Benami Property Transaction Act, 1988 after the amendment of 2016, is an Act dealing with the prohibition of certain kinds of transactions. ‘Benami’ literally means ‘without a name. Benami property meaning is that it means any property, the owner of which is different from the person who has consideration for buying it. It may be a movable or immovable, tangible or intangible asset without a legal owner.  ‘Benami’ transaction is a type of transfer of property in which property is transferred to one person and the consideration of it is given by another person. This Act was introduced in order to check the problem of Indian black money. This property declares Benami transactions as void and the Government can recover such property without giving any compensation to the holders. This is a very short Act, consisting of only 9 sections but its impact is far-reaching.

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The Benami transactions act is partly prospective and partly retrospective in nature. For this, we need to know what prospective law is and what retrospective law is. ‘Retrospective’ are usually those laws that are to take effect before the passing of the law. Thus, its effect exists on other laws before its passing. ‘Prospective’ laws have effects in the future but do not interfere with the laws made before the passing of the concerned Benami Transaction Act.

The law categorizes the following as a Benami transaction:

1. A transfer where the owner of the property is not the person who has given consideration for the property. However, it is held for the future benefit of the person providing consideration, directly or indirectly.
2. A transaction carried out by using a made-up name.
3. A transaction of a property where the owner is not aware of his ownership.
4. A transaction where the person giving consideration is not traceable or is fictitious.

However, in the following cases, the transaction is not a Benami transaction:

1. Any property held by the Karta of a Hindu undivided family for any of the members of the family and the consideration is given out of the common source of the family.
2. An individual buys a property in the name of his/her spouse or children and the consideration is given out of the known resources of the individual.
3. An individual buys a property in the name of his brother or sister or lineal ascendants or descendants and they appear as joint- owners and the consideration is given by the individual.
4. A person standing in a fiduciary relationship with any other person receiving the benefit like a trustee, executor, partner, depository, etc.

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The scope of this law can be divided into 4 categories:

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1. Suits filed before the Act came into force by the real owner or the plaintiff.
2. Suits filed after the Act came into force by the real owner or the plaintiff.
3. Suits filed before the Act came into force by the Benami/ ostensible owner or someone else and the real owner or someone else is the defendant.
4. Suits based on Benami transactions that have been filed by the Benami/ ostensible owner or someone else and the real owner or someone else is the defendant who has not yet filed the written statement before the Act came into force.

Benefits

It was actually designed with the noble idea of holding all the black money from India. However, due to some in-build disputes, it could not be fully implemented before the amendment of 2016. Benami transactions are also used if they want to hide the true ownership of the Benami property from their creditors or from the bank. This is also caught and checked under this Act. It also has a provision in which the Benami property would automatically vest in the Government, thereby increasing the profit of the Government. Also, the Benami property vested in the Government may be given to the landless laborers in need. To cross-check, the Act prohibits resale of the Benami property from the benamidar to the real owner and such transfer would be null and void.

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Grounds of Offence

Whether a transaction is Benami or not, the burden of proof is on the person asserting to prove the same. Such things need to be proven based on legal evidence of a definite nature. It is a case of ‘men’s rea’ where the intention of the transaction is important, which is often shrouded by a thick veil. However, the question is largely based on fact. To determine whether a transaction is Benami or not, the following guidelines may be followed:

1. The source for the consideration of money.
2. The nature and possession of the property, after the purchase.
3. The motive of the transaction
4. The position and the relationship between the claimant and the alleged benamidar.
5. The custody of the title deeds after the sale.
6. The conduct of the parties dealing with the property after the sale.

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Conclusion

In case of doubt regarding the nature of the transaction (whether Benami or not), the ostensible title cannot be displaced except upon clear evidence. The primary test for Benami transactions is the source of the consideration money. However, if a female is accompanied by her husband, it cannot be presumed that it is a Benami transaction. Spouses and children are an exception to it. Also, there is nothing to doubt if the custody of the title deed is with the wife after the purchase. Thus, the Benami Act provides the grounds of offence as the above-given circumstances.