In recent times, the government has taken major steps to end the rampant problem of unaccounted money or Black money. One of the major areas for generation of black money in India is the Real estate sector. In view of this, Benami Transactions (Prohibition) Act, 1988  having 8 sections, was introduced. The act was later amended by way of the Benami Transactions (Prohibition) Amendment Act of 2016  consisting of 72 Sections. Apart from this, The Prohibition of Benami Property Transactions Rules, 2016 and Prohibition of Benami Property Transactions (1st Amendment), Rules, 2019 are the current rules in regard to benami transactions.
Meaning of Benami Property
The word ‘Benami’ translates to ‘without a name’ or ‘having no name’. In this context, Benami property or Benami transactions simply mean the ones where a person’s own name is not used and instead the name of another person or that of a fictitious person is used. Benami act covers all kinds of properties whether movable or immovable, tangible or intangible, corporeal or incorporeal. It also includes any right or interest or legal document or instrument which evidences title to, or interest in the property, and also in the case where the property is capable of conversion into any other asset. Specifically, proceeds from the property are contained within the concept of ‘property’.
What is a Benami Transaction?
Section 2(9)(A) of the 2016 Act defines a benami transaction as one where the consideration is provided by person other than the transferee, in whose name the said property is held. In Thakur Bhim Singh (Dead) by Lrs and Anr. Vs. Thakur Kan Singh , the Hon’ble Supreme Court explained the concept of “Benami transaction” in detail and included mainly two types of benami transactions as recognised in India. The pertinent extract from the judgement reads as under:
“Two kinds of benami transactions are generally recognized in India.
Firstly, 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 transaction. Here, 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 is where a person who is the owner of the property executes a conveyance in favour of another person without the intention of transferring the title to the property thereunder. Here, the transferor continues to be the real owner.”
In the case of Rangappa Nayakar vs Rangaswami Nayakar , it was held that a “benami” transaction is the one where a person who is the “beneficial owner” buys property in the name of another person who is “benamidar”, without an intention to benefit the other.
Authorities under the Act
The 2016 Benami Act provides for setting 4 main Authorities, namely:
- The Initiating Officer
- The Approving Authority
- The Administrator
- The Adjudicating Authority
Attachment of Benami Property
Provisions for attachment of benami property are provided under Section 24, 25 and 26 of the amended benami law.
- Section 24(3) of the amended benami law provides for the interim provisional attachment of the property by the Initiating officer at the Initial stage of inquiry.
- Section 24(4) of the said law provides for the final provisional attachment of the property by the Initiating officer at the end of the enquiry.
- Section 25 of the said law provides for the manner of service of notice.
- Section 26 of the said law states that after the Initiating Officer has drawn up a statement of the case and refers it to the Adjudicating Authority, the same will issue a notice seeking for documents and evidence.
Procedure for attachment of Benami Property
Section 24 of the 2016 Benami act provides that if the Initiating Officer has a reason to believe that any person is benamidar, will issue notice to-
- The benamidar
- The beneficial owner (if identity is known)
The initiating officer 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 the notice period. However, the same will be done with the approval of the Approving authority.
Within a period of 90 days from the date of issuance of notice, after making inquiries and bearing in mind the evidence and all other relevant material, again, with the approval of the Approving authority, the Initiating Officer shall-
- If there is a provisional attachment:
- Pass an order continuing the provisional attachment of the property till the adjudication order is passed by the Adjudicating Authority; or
- Revoke the order for provisional attachment.
2. If there is no provisional attachment:
- Pass an order for attachment of the property till the adjudication order is passed by the Adjudicating Authority; or
- Make a decision not to attach the property.
If there is any order for attachment of the Benami Property or an order for the continuation of the provisional attachment, the Initiating Officer shall draw up a statement of the case and then refer it to the Adjudicating Authority within 15 days from the date of such attachment.
From then on, the proceedings will take place as per Section 26 of the Amended Benami act. The Adjudicating Authority shall issue a notice to the Benamidar, Beneficial Owner and joint owners (if their identity is known), interested partied in the matter and any person who has made a claim with respect to the Benami Property; within 30 days of reference from the Initiating Officer. The notice is issued in order to furnish all the necessary documents and Evidence.
After receiving a reply for the notice, the Adjudicating Authority will look into all the evidence, necessary documents and relevant materials. An opportunity to be heard will be granted to all the parties counting the Initiating Officer. In view of everything, the Adjudicating Authority will pass an order-
- Revoking the attachment order and holding the property as not a benami property; or
- Confirming the order of attachment of property and holding the property as benami property.
An order shall be passed by the Adjudicating Authority before the expiry of the period of 1 year from the end of the month in which the reference was made.
If the property is held as a benami property then under Section 27 of the 2016 Benami Act, the Adjudicating Authority can pass an order for confiscation of the attached benami property.
The order of the Adjudicating Authority is subject to appeal, if filed by the parties, within 45 days of order before the Appellate Tribunal and within 60 days of order before the High Court.
Take of the Judiciary on the attachment of Benami Property
In the case of M/s. Kavita Infrastructure Pvt. Ltd. vs. The Initiating Officer, Circle, Mumbai, the Appellate Tribunal for Prohibition of Benami Property Transactions Act, At New Delhi  stated that as per section 24 of the Act, the authorities must follow the process of serving notice, conducting enquiry and investigation, ascertaining facts of the person in possession, etc. The burden of proof at the initial stage is on the Initiating Officer to establish with proper evidence that the purchase of the alleged property is not bona-fide.
Similarly, in Smt Sunita Gupta vs. Union of India , it was held that in cases where the order passed by the Initiating Officer is set aside for technical reasons such as procedural defects or for violation of the principles of natural justice, the Initiating officer can re-initiate the proceedings by curing his defects.
The Benami Transactions (Prohibition) Act, 1988 having only 8 sections, did not consist of any process or machinery for the confiscation of Benami Property. In this matter, the amended Benami act of 2016 came to the rescue. The amended act is a comprehensive legislation which provides for the process of attachment and confiscation of Benami property. It has also enacted an administrative structure for proper implementation of the same. The 2016 act has widened the scope of Benami transactions and mandates for stricter punishment up to seven years of imprisonment and fine which may extend to 25% of the fair market value of the Benami Property.
 THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988
 THE BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT ACT, 2016
 (1980) 3 SCC 72
 AIR 1925 Mad. 1005
 W.P. (C) 8522/2018
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