Buying property in wife’s name can’t always be called benami: HC
Kolkata, June 12, 2023
A transaction where a man buys property in his wife's name cannot necessarily be called a benami transaction, the Calcutta High Court has said.
"In Indian society, if a husband supplies the money for acquiring property in the name of his wife, such fact does not necessarily imply benami transaction," the division bench of Justice Tapabrata Chakraborty and Justice Partha Sarthi Chatterjee said on Wednesday. "Source of money is, no doubt, an important factor but not a decisive one," the bench held.
The court was hearing a case in which a son had charged his father with giving a benami property to his mother. The court ruled that the litigant had failed to prove his charge that the property in question was benami.
"The burden of showing that a transfer is a benami transaction always lies on the person who asserts it," the court said, terming it a "well-settled principle".
The court said that two kinds of benami transactions are generally recognised: in the first type, a person buys a property with his own money but in the name of another person without any intention to benefit the other person; and the second type, "loosely termed as a benami transaction", where the owner of the property executes a conveyance in favour of another without the intention of transferring the title to the property. "In the latter case, the transferor continues to be the real owner," the court said. In the case the HC was hearing, a person had bought a property in 1969 in his wife's name. The wife was a homemaker, without any source of income, when the property was bought. Her husband registered the land in her name and built a two-storey house on it. After he died in 1999, going by succession laws, his wife, son and daughter inherited a third of the property each. The son stayed in that house till 2011, and when he moved out, wanted the property to be split up between him, his mother and sister, a proposal the other two did not agree to. The son then moved court alleging a benami transaction.
To complicate matters, the mother, exasperated by her son, executed a gift deed of her share of property to her daughter before she passed away in 2019. The HC dismissed the son's contention.
What is Benami?
According to Section 2a of the Benami Transaction (Prohibition) Act 1988: Benami transaction is a transaction in which property is transferred to one person for a consideration period or provided by another person.
Therefore a Benami transaction is irrespective of date or duration
2 kinds in India
- In first: When a property is bought with one's own money but in the name of another, without the intention to benefit the other. The transferee who holds the property becomes the owner.
- In second: A loose kind of Benami. Transferer remains real owner of property, although he/she executes conveyance in favour of another without intention of transferring the title
Can be for moveable and immovable assets including intellectual property and shares.
[The Times of India]
