PROJECT REPORT

ON

BENAMI TRANSACTIONS AND TRANSFER BY

OSTENSIBLE OWNER

UNDER

TRANSFER OF PROPERTY ACT, 1882

SUBMITTED TO: SUBMITTED BY:

DR. RAJINDER KAUR RAKSHIT TANEJA
B. Com LLB (HONS.)
7TH SEMESTER
189/16 SECTION-D

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CONTENTS

ABSTRACT............................................................................................................................... 2

INTRODUCTION ..................................................................................................................... 4

OSTENSIBLE OWNER AND RULE OF NEMO DAT QUOD NON HABET ...................... 6

ESSENTIAL CONDITIONS FOR SECTION 41 OF TPA ...................................................... 7

CONCEPT OF BENAMI TRANSACTIONS ......................................................................... 11

ENACTMENT OF THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 ......... 14

NEED AND SCOPE OF THE BENAMI TRANSACTIONS (PROHIBITION)

AMENDMENT ACT, 2016..................................................................................................... 15

PROCESS OF ATTACHMENT OF BENAMI PROPERTY ................................................. 16

ADJUDICATION OF BENAMI PROPERTY ........................................................................ 17

CONFISCATION OF BENAMI PROPERTY ........................................................................ 17

APPEALS ................................................................................................................................ 18

PROHIBITION OF & PENALTY FOR BENAMI TRANSACTIONS ................................. 18

COMPARISON BETWEEN 1988 ACT AND 2016 AMENDMENT ACT........................... 19

CONCLUSION ........................................................................................................................ 20

BIBLIOGARPHY .................................................................................................................... 21

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 ABSTRACT

Transfer of Property means an act by which a living person can convey property, in present
or in future, to one or more other living persons, or to himself, or to himself and one or more
or other living persons, and to transfer property is to perform such act.

Further, Section 41 of Transfer of Property Act provides for Transfer by Ostensible Owner
and essential conditions wherein the transfer by ostensible owner or benamidar was held to be
valid.

With the ever-changing law of the country, benami transactions were prohibited and thereby
the applicability of Section 41 was made subject to Benami Transactions (Prohibition) Act,
1988 which would be discussed in detail.

With relevant case laws and illustrations, the concept of Benami Transactions has been
defined in further pages. Further, there is an insight into the changes brought into the law of
benami transactions from the Act of 1988 to recent amendment in 2016.

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 INTRODUCTION
Concept of Benami Transaction:

The term “Benami” literally means ‘without a name’. Therefore, an asset without a legal
owner or fictitious owner is called a benami. It can be a property of any kind, whether
movable or immovable, acquired by way of benami transaction.

The first Act in Indian Jurisprudence which dealt with benami transactions was Benami
Transactions (Prohibition) Act, 1988. Due to certain inefficiencies in the said Act, certain
amendments were made in the Act. Thereafter, in the year 2016 Benami Transactions
(Prohibition) Amendment Act, 2016 (Act of 2016) was enacted.

The 1988 Act has been substantially amended by the 2016 Act, and various provisions and
authorities have been established to curb benami transactions and confiscate benami
Properties. Under the 2016 Act, the scope of benami transaction has been widened, and the
punishment and penalties have been made more stringent.

Under the 2016 Act, the term "Benami Property" has been defined under section 2(8).

A Benami Property means any property which is the subject matter of a benami transaction
and also includes the proceeds from such property.

From the above definition, it is clear that even the proceeds received from a property which is
part of a Benami Transaction, will be covered under the definition of Benami Property. The
definition of property under 2016 Act include assets of any kind, whether movable or
immovable, tangible or intangible, corporeal or incorporeal.

Under Section 2 (9) of the 2016 Act, the term "Benami Transaction" has been defined as
under:

According to the Act of 2016, it has been mandated that following transactions shall fall
under the scope of Benami Transaction:

(1) Where the property is held by or transferred to another person, and the property is held by
that another person, for the immediate or future benefit of the person who has provided the
consideration for such property;

(2) Where a transaction has been made under a fictitious name;

(3) Where the owner is not aware or denies knowledge of the ownership of the property; and

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(4) The person providing the consideration is not traceable.

Further Section 41 of The Transfer of Property Act, 1882 provided for the concept of
Transfer by Ostensible Owner which is in relation to the concept of Benami Transactions and
the statutory changes brought forward by the Act of 2016.

Section 41. Transfer by ostensible owner – Where with the consent, express or implied, of the
persons interested in immovable property, a person is the ostensible owner of such property
and transfers the same for consideration, the transfer shall not be voidable on the ground that
the transferor was not authorized to make it.

Provided that the transferee after taking reasonable care to ascertain that the transferor had
power to make the transfer, has acted in good faith.

Further it can be explained that since ostensible owner is not a real owner of the property, he
has no authority to make the transfer. But under the circumstances laid down in this section,
the transfer is binding upon the real owner; it cannot be denied by him. Thus, the law
incorporated in this section is similar to the rule of estoppel given under section 115 of The
Indian Evidence Act. Which provides that where a person by his declaration or act permits
another person to believe a thing to be true and to act upon such belief, he shall not be
allowed later on to deny the truth of that thing.

Ostensible owner is a person who has all the indicate of the ownership without being the real
owner. Without being an actual owner, such person has apparently all the characteristics of a
real owner. Thus, a person may have possession and enjoyment of the property and may also
have his name entered in the official records but even then he may not be the real owner of
the property. Where a person purchases property in the name of another person its is called a
benami transaction. The person in whose name the property is purchased is called benamidar.
A benamidar is an ostensible owner.

It must be noted that there had been certain changes in the applicability of Section 41 of TPA
after the enactment of Benami Transactions (Prohibition) Act, 1988 and further the
amendment brought forward in the Principal Act in the year 2016.

The concept of ostensible owner and the changes in the law with respect to benami
transactions will be discussed in this project work.

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 OSTENSIBLE OWNER AND RULE OF NEMO DAT QUOD NON
HABET
The rule enunciated in this section 41 is an exception to the general rule that a person cannot
convey a better title than he himself has in the property. i.e. Nemo dat quod non habet. To
this general principle there is a well-recognized exception that if the true owner, as by
entrusting him with the documents of title or in some other way, a third person, who (after
due inquiry) bona fide deals with that other, may acquire a good title to the property as
against the true owner. This section is based on the principle that where one of the two
innocent persons must suffer from the fraud of the third party, the loss should fall on him who
has created or could have prevented the opportunity for the fraud and that in such cases
hardship is caused by the strict enforcement of the general rule that no one can confer a
higher right on property than he himself possesses.

In this sense Section 41 of the Transfer of Property Act, 1882 provides an equitable remedy
to a bona fide purchaser for value without notice.

Section 41 is applicable only where the transferor is an ostensible owner. But it is difficult to
ascertain whether a person is ostensible owner or real owner because he has all the
characteristics of a real owner except the intention to own the property. Thus, it is for the
court to establish whether the transferor was an ostensible owner.

In the landmark case of Jaydayal v. Bibi Hazra1, the Supreme Court observed that whether a
person is an ostensible owner, is a subjective question to be decided on this basis of facts and
circumstances of the case. The Court observed further that following considerations must be
taken into account while deciding whether a person is ostensible owner or not:

(i) Source of the purchase – money i.e. who paid the price?

(ii) Nature of possession after the purchase i.e. who had the possession?

(iii) Motive for benami transaction i.e. why the property was purchased in the name of the
other person?

(iv) Relationship between the parties i.e., whether the real owner and the ostensible owner
were related to each other or were strangers or friends?

1
Jaydayal v. Bibi Hazra, AIR 1974 SC 171.

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(v) Conduct of the parties in dealing with the property i.e., who used to take care of and
control over the property.

(vi) Custody of the title deeds.

The burden of proof that a transaction is benami and that the transferor is an ostensible owner
lies on the person who claims that he is the real owner.

Further, dealing with the essence of burden of proof in the transaction referred to under
Section 41. The Supreme Court in the case of Mahinder Singh v. Pardaman Singh2, clarified
the position by saying that the burden lies on the person who asserts that it is such a
transaction. 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.

ESSENTIAL CONDITIONS FOR SECTION 41 OF TPA

1. There is transfer of an immovable property by ostensible owner with express or implied
consent of the real owner.

The transfer must be made by an ostensible owner with express or implied consent of the real
owner and it must be a free consent. Where a benamidars obtains the consent of the real
owner by fraud, force or coercion, the consent is not free and this section cannot apply.
Similarly, if the real owner is incapable of giving any consent (e.g., he is insane or minor) his
consent is no consent. If the real owner is minor he is incapable of giving any consent.
Therefore section 41 does not apply where ostensible owner transfers the property of minor
real owner.3

The consent of the real owner is express if it is given in clear words authorising him to make
the transfer. But such consent must not be brought about by a misapprehension of legal
rights. The consent is implied if the real owner knows that the benamidar is dealing with the

2
Mahinder Singh v. Pardaman Singh, AIR 1992 Del. 357.
3
Gurucharan Singh v. Punjab State Electricity Board Patiala, AIR 1989 P. & H. 127.

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property as if it were his own but remains silent. The real owner’s silence or inaction implies
consent.

In the leading case of Anoda Mohan v. Nilphamari4, A purchased a property in the name of
his wife B. B’s name was entered in the revenue records and she used to deal with property.
After A’s death B mortgaged the property to C who took it in good faith believing that B had
authority to make the transfer. It was held that since A himself had entered B’s name in the
revenue record and since A allowed her to deal with property, there was an implied consent
of A to hold out B as an ostensible owner authorising him to transfer the property.
Accordingly, the mortgage could not be avoided and it was protected under this section.

The law incorporated in section 41 is based on the rules laid down by the Privy Council in the
leading case of Ramcoomar Koondoo v. Macqueen5 wherein the Privy Council made
following well-known observations:

“It is a principle of natural equity which must be universally applicable that where one man
allows another to hold himself out as the owner of an estate and a third person purchases it
for value , from the apparent owner in the belief that he is the real owner, the man who so
allows the allows the other to hold himself out shall not be permitted to recover upon the
secret title”.

2. The transfer is for consideration:

Section 41 is applicable only where the transfer by an ostensible owner is with consideration.
It does not apply to gifts or gratuitous transfers. Therefore, the real owner is not precluded
from denying a gift made by an ostensible owner. However, if the transfer is with
consideration. It may be any kind of transfer of property e.g., it may be sale, exchange,
mortgage or lease.

3. The transferee has acted in good- faith:

It is necessary that transferee acts in good faith i.e., he has purchased the property in the
honest belief. Good faith means bona fide intention. When a person purchases property with

4
Anoda Mohan v. Nilphamari, AIR 1921 Cal. 549.
5
Ramcoomar Koondoo v. Macqueen, (1872) 11 Beng. L.R. 46,52.

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full knowledge that the transferor is merely an apparent owner his intention is not bonafide
and there is no good faith on his part. Principles of equity on which this section is based,
protects the interest only of a bonafide purchaser. He who seeks equity must do equity. Thus,
this section can protect the interest only such purchaser whose own conduct is equitable and
just. In the absence of good faith, the court may presume collusion between ostensible owner
and the purchaser. Accordingly if the transaction is a sham (false) one, section 41 cannot
apply because the transferee would then be in the knowledge of the reality.6 And it should
also be noted that even if the purchaser makes due enquiry about the title of the seller but has
no good faith i.e. purchases the property with dishonest intention, he cannot get the benefit of
this section. This section imposes both conditions: good faith and reasonable enquiry about
the title; they are not so in the alternative.7

4. The transferee has exercised reasonable care in finding out the transferor’s power to make
the transfer.

Reasonable care means that care which a man of ordinary prudence should take while making
inquiries regarding the title of an immovable property. But it is not possible to lay down any
general rule regarding the nature of enquiry to be made by the transferee which may be called
as ‘reasonable care’ for all the cases. The standard of enquiry expected from the transferee
depends upon the facts and surrounding circumstances which may vary according to the
different circumstances of each case.8 However, the enquiry must be diligent and not
superficial or casual .Some specific circumstance or fact should be pointed out as starting
point of an enquiry which might have led to some result. In the case of Gurubaksh Singh v.
Nikka Singh9, Subba Rao J. said that Section 41 being an exception, the onus certainly is on
transferee to show that the transferor was the ostensible owner of the property and that he
had, after taking reasonable care to ascertain that the transferor had power to make the
transfer, acted in good faith.

The law relating to transfer by an ostensible owner as given in section 41 of the act is now
subject to the provisions of the Benami Transactions (Prohibition) Amendment Act, 2016.

6
Rai Sunil Kumar v. Thakur Singh, AIR 1984 Pat. 80.
7
Khwaja Afzal v. Md. Saheb, AIR 1936 Nag. 214.
8
Beyas Singh v. Ram Janam Ahir, AIR 1961 SC 128.
9
Gurubaksh Singh v. Nikka Singh, AIR 1963 SC 1917.

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According to Sec. 2(9) of the Act of 2016 “benami transactions” means any transaction in
which property is transferred to one person for a consideration paid or provided by another
person. This act provides where a property is transferred benami, the person in whose name
the property is held, shall become the real owner.

Here any property held benami is not limited to any particular time, date or duration i.e. the
Act, 1988 is retrospective in operation. Once the property is found to have been held benami
no suit, claim or action to enforce any right in respect thereof shall lie.10

Sec.4(1) of the Act lays down that- 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 the real owner of such
property.

Further Sec. 4(2) of the Act provides that – No defence based on any right in respect of any
property held benami whether against the person in whose name the property is held or
against any other, shall be allowed in any suit, claim or action by or on behalf of a person
claiming to be the real owner of such property.

In Om Prakash Rawal v. Justice Amrit Lal Bahri11 the defence taken by the defendant that the
plot in fact was purchased by him in the name of his brother i.e. the plot was purchased
benami, cannot be allowed by virtue of section 4(2) of the Benami Transactions (Prohibition)
Act, 1988.

As by way of an exception to the above-mentioned rules, Section 2(9) of the Act by way of
Amendment in 2016 provides that that now an ostensible owner has become a real owner
except where he is a coparcener in a Hindu Undivided Family or a trustee while acting in a
fiduciary capacity. Accordingly, the law laid down in section 41 of the Transfer of Property
Act stands modified except where benamidars is a coparcener of a trustee or a person
standing in a fiduciary capacity. Also, in usual bonafide transactions where person purchases
property in the name of his wife or unmarried daughter or in the name of brother or sister or
lineal ascendant or descendant. Section 2(9) of the Act prohibiting Benami Transactions by
way of exception provides that there is no prohibition on such transactions.

10
Mithilesh Kumari v. Prem Behari Khare, AIR 1989 SC 1247.
11
Om Prakash Rawal v. Justice Amrit Lal Bahri, AIR 1994 HP 27.

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Further Section 5 of the Amended Act of 2016 provides for confiscation of any property
which is subject matter of benami transaction and Section 6 prohibiting the retransfer of
benami property by benamidar to beneficial owner or to any person on his behalf.

Section 5. Any property, which is subject matter of benami transaction, shall be liable to be
confiscated by the Central Government.

Section 6(1). No person, being a benamidar shall re-transfer the benami property held by him
to the beneficial owner or any other person acting on his behalf.

(2) Where any property is re-transferred in contravention of the provisions of sub-section (1),
the transaction of such property shall be deemed to be null and void.

CONCEPT OF BENAMI TRANSACTIONS

The word 'Benami' has been originated from Persian vocabulary and it literally means
‘property without a name’. Therefore, an asset without a legal owner or fictitious owner is
called a benami. It can be a property of any kind, whether movable or immovable, acquired
by way of benami transaction.

Under the Benami Transactions (Prohibition) Amendment Act, 2016 (Act of 2016), the term
"Benami Property" under section 2(8) has been defined as under:

A Benami Property means any property which is the subject matter of a benami transaction
and also includes the proceeds from such property.

Under Section 2 (9) of the Act of 2016, the term "Benami Transaction" has been defined as
under:

A Benami Transaction means a transaction or an arrangement, where a property is transferred

to, or is held by, a person, and the consideration for such property has been provided, or paid
by, another person and the property is held for the immediate or future benefit, direct or
indirect, of the person who has provided the consideration, except when the property is held
by- (i) a Karta or a member of a Hindu undivided family;

(ii) a person standing in a fiduciary capacity for the benefit of another person towards whom
he stands in such capacity;

(iii) any person being an individual in the name of his spouse or child;

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(iv) any person in the name of his brother or sister or lineal ascendant or descendant; or

A transaction or an arrangement in respect of a property carried out or made in a fictitious

name; or

A transaction or an arrangement in respect of a property where the owner of the property is

not aware of or denies knowledge of such ownership; or

A transaction or an arrangement in respect of a property where the person providing the

consideration is not traceable or is fictitious.

According to the Act of 2016, it has been mandated that following transactions shall fall
under the scope of Benami Transaction:

(1) Where the property is held by or transferred to another person, and the property is held by
that another person, for the immediate or future benefit of the person who has provided the
consideration for such property;

(2) Where a transaction has been made under a fictitious name;

(3) Where the owner is not aware or denies knowledge of the ownership of the property; and

(4) The person providing the consideration is not traceable.

It must be noted that in India the first legislation which dealt with the concept of benami
transactions was introduced in the year 1988.

Despite the fact, the Benami Transactions (Prohibition) Act, 1988 came into force on
19.05.1988 (hereinafter referred as "1988 Act") in India, even at that time the concept of
benami transaction was not alien in India.

It was due to the 1988 Act that the benami transactions were prohibited and the concept of
acquisition of benami property by government without any compensation was introduced and
also the punishment was provided for each and every person who acted in contravention of
provisions of 1988 Act.

It was in the year 1980 when the concept of benami transactions was discussed in detail by
the hon’ble Supreme Court in the landmark case of Thakur Bhim Singh (Dead) by Lrs and

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Anr. v. Thakur Kan Singh12, the court while elaborating upon benami transactions included
such transactions broadly and primarily within two types. Firstly, when a person buys a
property with his own money in the name of another person without any intention to benefit
such other person and secondly, when a person who is owner of the property executes a
conveyance in favour of another without the intention of transferring the title to the property.
The relevant extract from the judgment reads as under:

Two kinds of benami transactions are generally recognized in India.

The first case is where a person buys a property with his own money but in the name of
another person without any intention to benefit such other person, the transaction is called
benami. In that case, the transferee holds the property for the benefit of the person who has
contributed the purchase money, and he is the real owner.

The second case which is loosely termed as a benami transaction is a case where a person
who is the owner of the property executes a conveyance in favour of another without the
intention of transferring the title to the property thereunder. In this case, the transferor
continues to be the real owner.

The difference between the two kinds of benami transactions referred to above lies in the fact
that whereas in the former case, there is an operative transfer from the transferor to the
transferee though the transferee holds the property for the benefit of the person who has
contributed the purchase money, in the latter case, there is no operative transfer at all and the
title rests with the transferor notwithstanding the execution of the conveyance. One common
feature, however, in both these cases is that the real title is divorced from the ostensible title
and they are vested in different persons."

Furthermore, in the above case the Supreme Court has also laid down the parameters for
determining, whether a transaction is Benami or not, as under:

"The principle governing the determination of the question whether a transfer is a benami
transaction or not may be summed up thus:

(1) the burden of showing that a transfer is a benami transaction lies on the person who
asserts that it is such a transaction;

12
Thakur Bhim Singh (Dead) by Lrs and Anr. v. Thakur Kan Singh, (1980) 3 SCC 72.

13
(2) if it is proved that the purchase money came from a person other than the person in whose
favour the property is transferred, the purchase is prima facie assumed to be for the benefit of
the person who supplied the purchase money, unless there is evidence to the contrary;

(3) the true character of the transaction is governed by the intention of the person who has
contributed the purchase money, and

(4) the question as to what his intention was has to be decided on the basis of the surrounding
circumstances, the relationship of the parties, the motives governing their action in bringing
about the transaction and their subsequent conduct etc."

It is important to note that before coming of 1988 Act, benami transactions were not illegal in
India and there was no bar or punishment under any law for entering into any benami
transaction and the said properties which were the subject matter of the benami transaction
were also not liable for confiscation 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
benamidar (in whose name the property was held), if the benami transaction was entered to
evade a statute or to commit a fraud and the parties succeeded in such evasion or fraud.

ENACTMENT OF THE BENAMI TRANSACTIONS (PROHIBITION)

ACT, 1988
As, there was no law to curb the flourishing benami transactions in India and punish the
offenders, the 1988 Act was enacted with an aim to prohibit the benami transactions. The
1988 Act defined benami transactions as a transaction in which property is transferred to one
person for a consideration paid or provided by another person, prohibited them and provided
punishment for entering into any benami transaction with imprisonment for a term which
may extend to three years or with fine or with both. The 1988 Act further prohibited recovery
of the property held benami from benamidar by the real owner and properties held benami
were also liable for confiscation. However, during the process of formulating the rules for
implementing certain provisions of the 1988 Act, it was found that owing to infirmities in the
legislation it would not be possible to formulate the rules without bringing the comprehensive
legislation and repealing the existing 1988 Act. Due to the infirmities in the 1988 Act,
relevant rules for implementing the certain provisions of the 1988 Act couldn't see the light of
the day. The 1988 Act further didn't provide any mechanism or process of

14
confiscation/acquisition of the benami property and hence, no such effective action for
confiscation of benami property could be taken.

On perusal of the 28th report of the Standing Committee on Finance, dated April 2016, on the
Benami Transactions Prohibition (Amendment) Bill, 2015, it can be seen that the reason
behind amending the 1988 Act instead of repealing the said Act, was to include all the
benami transactions under its ambit on which no action was taken under the 1988 Act, so that
consequential action could follow. The Ministry of Law was of the opinion that in case, 1988
Act gets repealed by new act then no action would be possible on any such transaction which
occurred between 1988 and the date of repealing the 1988 Act, as the benami transactions
during the intervening period of twenty six years, would have in fact resulted in immunity
since no action could be initiated in the absence of a specific provision in the Repeals and
Savings clause. It was therefore suggested by the Ministry of Law, that it would be advisable
to comprehensively amend the existing Benami Transactions (Prohibition) Act, 1988, so that
the offences committed during the last twenty-six years are also covered.

NEED AND SCOPE OF THE BENAMI TRANSACTIONS

(PROHIBITION) AMENDMENT ACT, 2016
The Benami Transactions (Prohibition) Amendment Act, 2016 (hereinafter also referred as
"2016 Act") which is also called as amendment to Prohibition of Benami Property
Transactions Act, 1988 finally came into force with effect from 1st November 2016.

The 1988 Act has been substantially amended by the 2016 Act, and various provisions and
authorities have been established to curb benami transactions and confiscate benami
Properties. Under the 2016 Act, the scope of benami transaction has been widened, and the
punishment and penalties have been made more stringent.

It must be noted that previously in the 1988 Act, there was only provision for acquisition of
benami property by government without providing for any kind of compensation. But with
introduction of 2016 Amendment Act, requisite procedure has been provided for confiscation
of benami property by the government. The provision for establishment of different
authorities has been provided for in the Act. The process of attachment of property has been
provided. A proviso for establishment of Adjudicating Authority which would give an order
that whether a property is liable for attachment or not. Further, provisions have been made for
Appeals against order of such Adjudicating Authority to the Appellate Tribunals and High

15
Court. Further, prohibitions and penalty have also been made more stringent and effective in
comparison to 1988 Act.

The new changes brought forward by the Amendment of 2016 are discussed as follow:

AUTHORITIES ESTABLISHED UNDER THE 2016 ACT:

The 2016 Act provides for setting 4 major Authorities, namely:

1. The Initiating Officer

2. The Approving Authority

3. The Administrator

4. The Adjudicating Authority

For the purpose of the 2016 Act, the above authorities have been vested with the same
powers as those of the Civil Courts under Civil Procedure Code, 1908.

PROCESS OF ATTACHMENT OF BENAMI PROPERTY

Under Section 24 of the 2016 Act, the Initiating Officer, if has reason to believe that any
person is benamidar, will issue notice to:

Benamidar and Beneficial owner (if identity known).

The Initiating Officer with the approval of Approving Authority can attach the property for a
period not exceeding 90 days, if in his opinion, the person to whom notice has been issued
may alienate the property during notice period.

The Initiating Officer shall after making inquiries and considering evidence and all other
relevant material, with the approval of Approving Authority and within a period of 90 days
from the date of issuance of notice:

If there is a provisional attachment:

Pass an order continuing the provisional attachment of the property till the adjudication order
by the Adjudicating Authority; or revoke the provisional attachment order.

If there is no provisional attachment: pass an order for attaching the property till the
adjudication order by the Adjudicating Authority; or decide not to attach the property.

16
If there is any order for attachment of the property or continuation of the provisional
attachment, the Initiating Officer shall draw up a statement of the case and refer it to
Adjudicating Authority within 15 days from the date of such attachment.

ADJUDICATION OF BENAMI PROPERTY

After the reference is made to the Adjudicating Authority by the Initiating Officer, the
Adjudicating Authority under Section 26 of the 2016 Act, within 30 days of the reference,
shall issue notice to:

(i) Benamidar;

(ii) Beneficial owner (if identity known);

(iii) Any interested party (including banking company);

(iv) Any person who has made claim in the respect of the benami property; and

(v) All the joint owners if the property is held jointly (if identity known).

(vi) To furnish all documents and evidence in their support.

A period of at least 30 days shall be given to the person, to whom the notice has been issued.

After considering the reply, evidence and all other relevant material, and granting an
opportunity of being heard to the affected parties and the Initiating Officer, the Adjudicating
Authority should pass an order holding property:

As not to be benami and revoking the attachment order; or

As to be benami and confirming the attachment order.

Adjudicating Authority has to pass an order before the expiry of one year from the end of the
month in which the Initiating Officer has made the reference.

CONFISCATION OF BENAMI PROPERTY

If the Adjudicating Authority has held any property as benami property, the Adjudicating
Authority under Section 27 of the 2016 Act, shall after giving an opportunity of hearing to
the concerned person, pass an order to confiscate the attached property.

17
If an appeal has been preferred against the order of attachment passed by Adjudicating
Authority, the property shall be confiscated after the order of the Appellate Tribunal.

If any property is held or acquired by any person from the benamidar for adequate
consideration prior to the issuance of the Notice by Initiating Officer, that property won't get
confiscated.

Any right of any third person created in such property with a view to defeat the purposes of
this Act shall be null and void.

Pursuant to the order of confiscation, all the rights and title in such property shall vest
absolutely with the central government free of all encumbrance and no compensation shall be
payable. The Administrator will administer the confiscated property.

APPEALS
Any person aggrieved by the order of the Adjudicating Authority of holding the property as
benami or not, can file an appeal to the Appellate Tribunal within 45 days from the date of
the order. An appeal against the order of the Appellate Tribunal may be preferred in the High
Court within 60 days.

PROHIBITION OF & PENALTY FOR BENAMI TRANSACTIONS

Any person who had entered into any benami transaction prior to the commencement of the
2016 Act shall be punishable with imprisonment for a term which may extend to three years
or with fine or with both.

Under Section 53 of the 2016 Act, whosoever enters into any benami transaction on and after
the date of commencement of the 2016 Act i.e. 11th November 2016, and any other person
who abets or induces any person to enter into the benami transaction, shall be guilty of the
offence of benami transaction and shall be punishable with rigorous imprisonment for a term
which shall not be less than one year, but which may extend to seven years and shall also be
liable to fine which may extend to 25% of the fair market value of the property.

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 COMPARISON BETWEEN 1988 ACT AND 2016 AMENDMENT ACT
From comparison of the 1988 Act with the 2016 Act, it becomes clear that 1988 Act didn't
have any mechanism or process of confiscation/ acquisition of the benami property and
therefore, no benami property could be acquired by the government. On the other hand, the
2016 Act is a comprehensive law which not only provides for the mechanism and process for
attachment and confiscation of the benami property, but has also enacted the administrative
structure for proper implementation of such provisions.

Further, the 2016 Act has not only widened the ambit of benami Transaction, but the Act also
mandates for more stringent punishment. From the maximum punishment of 3 years in the
erstwhile 1988 Act, the punishment has been increased to maximum of 7 years and also
providing for fine which may extend to 25% of the fair market value of the property.

By the 2016 Act, the Government of India has made its intentions abundantly clear that the
benami transactions occurred during the intervening period of 1988 to 2016 are not going to
be spared. Thus, providing for the operation of the Act of 2016 retrospectively and covering
within its ambit all the prohibited benami transactions done within a period of 28 years.

In addition to all the effective changes brought forward by Amendment of 2016, significant
changes have been made in order to protect the bona fide purchaser of the benami property.
One can understand from the bare reading of Section 27 clause (3) and (4) of the 2016 Act,
that efforts have been made by the 2016 Act to exclude the benami properties which have
been purchased by the bona fide purchaser for adequate consideration, prior to the issuance of
notice by the Initiating Officer, from the scope of confiscation under the 2016 Act.

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 CONCLUSION
After analyzing different cases and concept of benami transactions. One can reach to the
conclusion that after enactment of Benami Transactions (Prohibition) Act the situation is
quite clear. It may be stated that now an ostensible owner has become a real owner except
where he is a coparcener in a Hindu Undivided Family or a trustee. Besides them the
provisions of this Act do not apply, also in usual bona fide transactions where person
purchases property in the name of his wife or unmarried daughter. Therefore, significant
changes have been made in application of Section 41 of Transfer of Property Act, 1882 which
deals with transfer by ostensible owner. By the introduction of Benami Transactions
(Prohibition) Act, 1988 and Benami Transactions (Prohibition) Amendment Act, 2016
various measures have been provided for confiscation of benami property by the Central
Government and providing for stringent punishment for all those taking part in benami
transactions.

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 BIBLIOGARPHY

1. Principles of the law of Transfer of Property, S.M. Shah, N.M. Tripathi Pvt Ltd.,
1969.
2. The Transfer of Property Act, Dr. R.K. Sinha, Central Law Agency, 2010.
3. Bare Act-The Transfer of Property Act, 1882.
4. Commentary on Transfer of Property, MULLA, 2012.

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