The Benami Transactions

(Prohibition) Act, 1988

Kalpeshkumar L Gupta
Assistant Professor of Law
kalpesh.gupta@aurouniversity.edu.in

2016
1

What does word Benami

means?
Benami
word is originated from Persia which
means No Names or Without Name

Objectives of Act
An act to prohibit be benami transactions and
the right to recover property held benami and
for matters connected therewith or incidental
thereto.

Benami Transaction
(Sectionany
2(a))
means
transaction in which property
(2(c)) is transferred to one person for a
consideration paid or provided by another
person.

Property (Section
2(c))
.means property of any kind, whether
movable or immovable, tangible or intangible
and includes any rights or interest in such
property.

Prohibition of benami transaction

(Section
3) shall enter into any benami
1. No person
transaction.
2. Nothing in sub-section (1) shall apply to the
purchase of property by any person in the
name of his wife or unmarried daughter and it
shall be presumed, unless the contrary is
proved, that the said property had been
purchased for the benefit of the wife or the
unmarried daughter.
3. Whoever enters into any benami
transaction
shall
be
punishable
with
imprisonment upto 3 years or with Cont
fine or
both.

Cont

Plea of benami transaction whether

heritable by heirs of real owner.
An ostensible owner does not hold any interest or
title over the property in a benami transaction.
The title lies with the real owner. Upon his death,
necessarily the property remains as an estate of
real owner and becomes liable for inheritance
according to law of succession governing the
parties.
the heirs of benamidar do have a legal right to
set up a plea of benami and to claim the property
from the ostensible owner (T. Jayamma v/s.
Devamma, AIR 2004 Kant. 96).
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Prohibition of the right to recover

property held benami (Section 4)
No suit, claim or action to enforce any right in
respect of any property held benami against
the person in whose name the property is
held or against any other person shall lie by
or on behalf of a person claiming to be real
owner of such property.

Property held benami liable to

acquisition (Section 5)
1. All properties held benami shall be subject
to acquisition by such authority, in such
manner and after following such procedure
as may be prescribed.
2. For the removal of doubt, it is hereby
declared that no amount shall be payable
for the acquisition of any property under
sub-section (1).

Act not to apply in certain cases

(Section 6)

Nothing in this act shall affect the provisions

of Section 53 of the Transfer of Property Act,
1882 (Fraudulent Transfer) or any law relating
to transfer for an illegal purpose.

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Power to make rules (Section 8)

Central Govt. may by notification in the official
gazette, make rules for carrying out the purpose
of this Act.
Rules may provide for
- The authority competent to acquire properties
under Sec. 5.
- The manner in which, and the procedure to be
followed for the acquisition of properties under
Sec. 5.
- Any other matter which is required to be or may
be prescribed.
Rules not made till date
11

Changes in Benami Act will block black

money in realty (The Economics Times, March
13, 2015)proposed
Govt.
amendment to Benami
Transaction Act will enable confiscation of
such property, prosecution of offenders as
also help deal effectively with the menace of
black money within the country.
Earlier in 2011 new bill was introduced
replacing old act but bill lapses as 15th
Loksabha
dissolved.
Property
can
be
transferred to Spouse/Siblings.
Budget proposed amendment in Income Tax
Act to prohibit acceptance or payment of
advance of Rs. 20,000 or more in cash for
purchase of immovable property.

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Benami definition to go stricter, may

include only wife, unmarried daughter
(The Economics Times, March 21, 2015)

The new law is likely to say that

property acquired in the name
of any other person brother,
sister, father, mother, son
risks being confiscated and
would lead to jail time.
The legislation will lead to
confiscation of benami property
and provide a mechanism for
this. The Benami Transaction
(Prohibition)
Act
was
first
enacted in 1988 but has not
been notified due to some
infirmities. Rules under that law
were
never
framed.

13

The Benami Transactions (Prohibition)

Amendment Bill, 2015
The
Benami
Transactions
(Prohibition)
Amendment Bill, 2015 cleared by cabinat. The
Bill seeks to amend the Benami Transactions Act,
1988. The Act prohibits benami transactions and
provides for confiscating benami properties. *

* Economic Times, May 13, 2015

http://economictimes.indiatimes.com/news/politics-and-nation/cabinet-clears-bill-tocheck-benami-transactions-aimed-at-curbing-domestic-blackmoney/articleshow/47262290.cms

14

The Benami Transactions (Prohibition)

Amendment Bill, 2015
The Bill seeks to:
(i) amend the definition of benami transactions,
(ii) establish adjudicating authorities and an
Appellate Tribunal to deal with benami
transactions, and
(iii) specify the penalty for entering into benami
transactions.

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The Benami Transactions (Prohibition)

Amendment Bill, 2015
The Act defines a benami transaction as a
transaction where a property is held by or
transferred to a person, but has been provided for
or paid by another person.
The Bill amends this definition to add other
transactions which qualify as benami, such as
property transactions where: (i) the transaction is
made in a fictitious name, (ii) the owner is not
aware of denies knowledge of the ownership of the
property, or (iii) the person providing the
consideration for the property is not traceable.

16

The Benami Transactions (Prohibition)

Amendment Bill, 2015
The Bill also specifies certain cases will be
exempt from the definition of a benami
transaction.
These include cases when a property is held by:
(i) a member of a Hindu undivided family, and is
being held for his or another family members
benefit, and has been provided for or paid off
from sources of income of that family;
(ii) a person in a fiduciary capacity;
(iii) a person in the name of his spouse or child,
and the property has been paid for from the
persons income;
17

The Benami Transactions (Prohibition)

Amendment Bill, 2015
The Bill defines benamidar as the person in
whose name the benami property is held or
transferred, and a beneficial owner as the
person for whose benefit the property is being
held by the benamidar.

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The Benami Transactions (Prohibition)

Amendment Bill, 2015
Initiating
Officer

Appellate
Tribunal

Adjudicati
ng
Authority

Approving
Authority

Administr
ator

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The Benami Transactions (Prohibition)

Amendment Bill, 2015
If an Initiating Officer believes that a person is
a benamidar, he may issue a notice to that
person. The Initiating Officer may hold the
property for 90 days from the date of issue of the
notice, subject to permission from the Approving
Authority. At the end of the notice period, the
Initiating Officer may pass an order to continue
the holding of the property.

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The Benami Transactions (Prohibition)

Amendment Bill, 2015
If an order is passed to continue holding the
property, the Initiating Officer will refer the case to
the Adjudicating Authority. The Adjudicating
Authority will examine all documents and evidence
relating to the matter and then pass an order on
whether or not to hold the property as benami.

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The Benami Transactions (Prohibition)

Amendment Bill, 2015
Based on an order to confiscate the benami
property, the Administrator will receive and
manage the property in a manner and subject to
conditions as prescribed.

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The Benami Transactions (Prohibition)

Amendment Bill, 2015
The Bill also seeks to establish an Appellate
Tribunal to hear appeals against any orders
passed by the Adjudicating Authority. Appeals
against orders of the Appellate Tribunal will lie to
the high court.

23

The Benami Transactions (Prohibition)

Amendment Bill, 2015
Under the Act, the penalty for entering into
benami transactions is imprisonment up to 3
years, or a fine, or both. The Bill seeks to change
this penalty to rigorous imprisonment of one
year up to seven years, and a fine which may
extend to 25% of the fair market value of the
benami property.

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The Benami Transactions (Prohibition)

Amendment Bill, 2015
The Bill also specifies the penalty for providing
false information to be rigorous imprisonment of
six months up to five years, and a fine which may
extend to 10% of the fair market value of the
benami property.

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The Benami Transactions (Prohibition)

Amendment Bill, 2015
Certain sessions courts would be designated as
Special Courts for trying any offences which are
punishable under the Bill.

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Thank you !
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