benami transaction
Benami means “without a name”. In a benami transaction property is transferred to or held by one person (the benamidar) while the consideration is paid or provided by another (the beneficial owner), for whose benefit it is held. Benami holdings were long used to hide wealth or evade land ceiling and tax laws.
The Prohibition of Benami Property Transactions Act, 1988, overhauled in 2016, prohibits such transactions, bars the real owner from suing to recover the property, and allows confiscation. It excludes, among others, property held by a karta or coparcener for the HUF, by a person in a fiduciary capacity, and property bought by a person in the name of a spouse, child or certain relatives from known sources of income.
Example
Since the father bought the flat in his son's name from his own known income, it fell within the family exception and was not a benami transaction under s.2(9).
In Indian law
- Section 2(9), Prohibition of Benami Property Transactions Act, 1988 (benami transaction defined)
- Sections 3 and 4, Prohibition of Benami Property Transactions Act, 1988 (prohibition; bar on recovery)
See also
ostensible owner · trust · Hindu undivided family · title
Read more in the study notes
- Parallel economy and black money (Economic Development in India)
- Prospective and retrospective operation of statutes (Interpretation of Statutes and Principles of Legislation)
- Modernisation, agrarian reform and sustainable development (Law and Social Transformation in India)
- Ownership: the idea and its analysis (Legal Concepts)
- Ownership in society: social engineering, burdens and benefits, liberty, power, and land to the tiller (Legal Concepts)
- Company auditor: rights, powers and duties, the audit report, CARO 2020 and NFRA (Principles and Practice of Auditing)