Benami means “without name”. Benami is South Asian word that mean no name or without name. It means property purchased by any person not under their name but somebody else’s name is termed as Benami Properties. Benami property involves any property purchased on the name of third personlike spouse or children or a joint property with brother, sister or any other relative for which the consideration is paid out of unknown sources of income. The property is held for the future benefit, direct or indirect, of the person who has provided the consideration.Rather than accumulating black money in cash, most of the people buy property under someone else’s name to save their black money and taxes.This prevents the development and growth of the country due to avoidance of a large amount of taxes.Generally, any Benami Transaction would have two primary factors:
- Benamidar :-A person or a fictitious person, as the case may be, in whose name the benami property is transferred or held.
- Beneficial owner:- A person, whether his identity is known or not, for whose benefit the benami property is held or transferred by the benamidar.
The Hon’ble Supreme Court elaborated the concept of Benami Transaction in the case law of Thakur Bhim Singh v. Thakur Kan Singh. The case includes two types of benami transactions. First when the property is bought by the person with his own money but in the name of another person without any intention to benefit that another person. According to second case benami transaction are, where a person who is the owner of the property executes a conveyance in favor of another without the intention of transferring the title to the property there under.
Generally in India there are two kinds of benami transactions are generally recognized.Where a person buys a property with his own money but in the name of other person without any benefit to such other person, such transaction is called benami. In that case, the transferee holds the property for the benefit of that person who has purchase the property, and he is the real owner of the property.In the second case where a person, who is owner of the property executes a conveyance deed in favour of another person without the intention of transferring the title of the property. In this case, the transferor continues to be the real owner.Before of the Benami Transaction Prohibition Act 1988, benami transactions were not illegal in India and there was no punishment under any law for entering into any benami transaction. The properties which were the subject matter of the benami transaction were also not liable for impounding by the government. However the only thing which was not permitted under the law was recovery of the benami property by the real owner from the person whose name the property was heldi.e.benamidar, if the benami transaction was entered to evade a statute and the parties succeeded in such fraud. As we know there was no law to restrain the blooming benami transactions in India and punish the offenders. The Benami Transactions Prohibition Act 1988 was enacted with an aim to prohibit the benami transactions and punish the offenders. The Act has defined benami transactions as a transaction and prohibited them and provided punishment for entering into any benami transaction with imprisonment which may extend to three years or with fine or may with both. The Act further also prohibited recovery of the property held benami from benamidar by the real owner and properties held benami were also liable for impounding by the government.
The Benami Transactions Prohibition Act 1988has been considerably amended by the 2016 Act, and different provisions and authorities have been established to restrain benami transactions and seize benami Properties. Under the 2016 Act, the scope of benami transaction has been broadened, and the penaltiesand punishment have been made more rigid. In the past especially all Non Resident Indians have innumerable instances where the monies were sent to relatives in India and they purchased the property in their names. Today the generations are still struggling with getting a resolution to their issues. The dispute regarding getting what rightfully belongs to the family has been ongoing for years. The experience of top law firms dealing with land and property disputes can help and assist people in resolving their disputes. It is important to seek proper advice to reach to a logical end and avoid futile litigation.