BENAMI TRANSACTIONS (PROHIBITION) ACT’ 1988 defines ‘Benami Transaction’
as any transaction, in which a property is transferred to one person for a
consideration provided by another.
This definition is very narrow and restrictive as what we have
understood the term ‘Benami’ would include ‘not for the benefit of the person’
besides the provision of money by another.
Section 3 of this Act, prohibits such transactions and makes it a
criminal offence. Section 5 empowers the State to acquire the properties,
conveyed benami. The object behind these penal provisions is obvious. That it
seeks to discourage laundering the ill-gotten money with the purchase of
properties in the names of others.
However it is not in all cases, the benami transactions are born out of
such malafide intentions. It is not uncommon for a man to purchase property in
the name of his family members out of genuine love and affection. It is
necessary to insulate and protect such transactions, at least in the case of
transactions made in the name of wife and unmarried daughters. In our societal
set up, womenfolk very often takes the responsibility of running the home and
rearing children, leaving the men the burden of earning money. In such a
scenario it is nothing unethical for the husband to purchase property in the
name of his wife as she being a ‘home-maker’ is entitled to a share of what he
earns. Similarly a girl child may not get the same kind of attention and
education as a boy and it is risky to leave her as a dependent of someone else.
Hence it is to be encouraged that man, earning money to buy properties in the
names of his wife and daughters. Sure, such ownership will bring a sense of
security and economic independence to the women, who are denied an opportunity
to earn money.
In my assumption, the legislature having this in mind had taken care to
introduce Section 3(2) to exclude the act of purchasing property in the name of
wife or unmarried daughter from the prohibition of Section 3(1). In view of
such exclusion, it is not prohibited for anyone to purchase property in the
name of his wife or unmarried daughter. If it is not prohibited, the natural
corollary is that it is not an offence and that no acquisition can be resorted
to.
There is another objective, which this Act seeks to achieve. Section 4
prohibits any person from prosecuting or defending any litigation on the claim
that the property was benami. Earlier it was not possible for any one to rest
assure about the ownership of a person, holding a title deed in his name. One
may not know when a stranger would file a suit, claiming ownership that he
provided money for the purchase of the property!
Section 4 at one stroke has put an end to such claims and reducing the
litigations on the basis of benami, thus removing the uncertainty in purchasing
the properties.
However the Supreme Court in the case of Nand Kishore Mehra Vs Sushila
Mehra reported in 1995 (4) SCC 572 = AIR 1995 SC 2145 has brought back the
uncertainty and even worse dealt a heavy blow to the economic independence of
women. The damage is still undone.
In this case, the Supreme Court was persuaded to question - Whether the
prohibition of Section 4 is applicable to the benami transactions of purchasing
a property by a man in the name of his wife or unmarried daughter?
It is an irony that the provisions of Section 3 (2), which strives to
bring some relief to the women is used by the Supreme Court to take away the
shield protecting women against the claim of their husbands / fathers or even a
stranger transferee. In view of this Judgment, not only Nand Kishore Mehra but
many other husbands succeeded in the following years to deprive their wives/
daughters of their properties.
The Supreme Court in my respectful opinion, failed to take note that the
exclusion in Section 3(2) reads ‘Nothing in sub-section (1) shall apply to –‘
and therefore excludes a benami transaction in the name of wife and unmarried
daughter only from the prohibition in Section 3(1). The said clause cannot be
allowed to be taken advantage by men to defeat the right of women.
What was excluded specifically from Section 3(1) cannot be meant to
exclude from Section 2(a) or Section 4.
One may doubt how to seize the property from the hands of a wife, if it
is found that the husband has purchased a property from his ill-gotten money.
Section 3(2) further speaks about a presumption and it is always possible to
prove that the purchase in the name of this wife was not for her bonafide
benefit and thus removing the protection. The result- criminal prosecution and
acquisition!
The Supreme Court has drawn inspiration from the presumption clause in
Section 3(2) to make it applicable to Section 4. The presumption is
appropriately placed in Section 3(2) to bring within the ambit of criminal act,
if the transaction in favour of the wife is not bonafide. No specific
presumption is necessary for the operation of Section 4 as it is already established
by the consistent judicial precedents that the burden is heavily on the
shoulders of the person alleging benami to prove the ingredients of benami,
which includes among others that ‘the property was not purchased for the
benefit of benami’
The ratio of Nand Kishore Mehra stands the test of time for about two
decades but my understanding of the provisions of the Benami Transactions
(Prohibition) Act’1988 is persuading me to say that it requires a
reconsideration…
Madurai
10/04/14
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