A new
law is proposed to strengthen
punishment procedures for benami
transactions.
Upon
the Benami Transactions (Prohibition)
Bill, 2011 becoming an Act, it shall replace the Benami
Transactions (Prohibition) Act, 1988. The Bill is to consolidate and
amend the law relating to benami transactions, prohibit holding property in
benami and restrict right to recover or transfer property held benami and
provide mechanism and procedure for confiscation of property held benami and
for matters connected therewith or incidental thereto.
Property means property of any kind whether movable or immovable and benami property means any property which is the subject matter of a benami transaction. Benamidar means a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a name lender. Beneficial owner means a person, whether his identity is known or not, for whose benefit the benami property is held by a benamidar.
Benami transaction means a transaction or arrangement:
a)
where a property is transferred to, or is
held by a person for a consideration provided, or paid by, another person and
the property is held for the immediate or future benefit, direct or indirect of
the person providing the consideration except when the property is held by a
karta or a member of Hindu undivided family for
his benefit or benefit of other members in the family or except when the
property is held by a person standing in a fiduciary capacity, such as a
trustee, executor, partner, agent, director of a company or legal advisor, etc
for the benefit of another person towards whom he stand in such capacity,
b)
In respect of a property carried out or
made in a fictitious name, or
c)
In respect of a property where the owner of
the property is not aware of, or denies knowledge of such ownership. It is
provided that no person shall on or after the commencement of the Act enter into
any benami transaction. However this shall not apply to any transaction entered
into by any person being an individual, in the name of his spouse, brother or
sister or any lineal ascendant or descendant.
It is provided that any property which is the subject matter of a benami transaction shall be liable to be confiscated by the Central Government. Where any property is attached, the Adjudicating Authority shall after giving an opportunity to the person concerned to be heard make an order confiscating the property held to be a benami property. However if a person acquires a benami property from the benamidar for adequate consideration without his having knowledge of the benami transaction, the same shall not be liable for confiscation.
It is further provided where any person enters into a benami transaction in order to defeat the provisions of any law or to avoid payment of statutory dues or to avoid payment to creditors, the beneficial owner, benamidar and any other person who abets or induces any person to enter into such benami transaction shall be guilty of the offence of benami transaction. Whoever is found guilty of such offence shall be punishable with imprisonment for a term not less than 6 months but which may extend up to 2 years and shall also be liable to a fine which may extend to 25% of the fair market value of the property.
The Benami Transactions (Prohibition) Act, 1988 was found to be inadequate to deal with the benami transactions as the Act inter-alia
I.
does not contain any specific provision for
vesting of confiscated property with the Central Government,
II.
does not have any provisions for appellate
mechanism against any action taken by the authorities under the Act, while
barring jurisdiction of the Civil Court,
III.
does not confer powers of the Civil Court
upon the authorities for its implementation. In view of the above circumstances,
the present bill is brought forward so that a comprehensive legislation is put
in place of the Benami
Transactions (Prohibition) Act, 1988.
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