Benami transaction means any transaction in which property is transferred to one person for a consideration paid or provided by another person for property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property. Benami buys means buying properties in the name of a person who doesn’t pay for the deal but merely lends his name.
The current law provides for Prohibition of benami transactions as follows:
(1) No person shall enter into any benami transaction.
(2) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both.
(3) An offence under this section shall be non-cognizable and bailable.
Although the current law, the Benami Transaction (Prohibition) Act, 1988, prohibits benami transactions, but the provisions of the law have not been operationalised. The Act gives the government powers to frame rules to provide for an authority to confiscate benami properties, but, such a body has not been notified.
The present Act defines a benami transaction as one in which a property is transferred to one person for a consideration paid or provided by another person. To put it simply, it means a transaction in which property is not transferred in the name of the person who actually pays the purchase price, but is held in the name of some other person. Any asset, movable or immovable, tangible or intangible, can be termed benami as per the provisions of the Act.
The government will introduce amendments to the Benami Transactions (Prohibition) Act, which will give it the power to confiscate any property that is declared benami. The bill may be introduced in the monsoon session of Parliament.
If the proposed changes in this law are approved by the Parliament, benami transactions would become difficult to execute and where discovered, the authorities would have greater powers to act against the offenders. The present law empowers the government to make rules that would provide for a competent authority to acquire such properties. But experts say unless the main law provides for such powers, the rules are meaningless.
