Benami Property and Benami Transactions

What is a benami transaction? As the word itself suggests, a benami transaction is one where a person purchases something, invests money, but purchases it in someone else's name. For example, a person is abroad; he sends money to his father, sister, brother, uncle, or cousin, telling them to buy this plot for him — they buy it in their own name, on your instructions, because you are the one sending them the money. This is called benami property. What are the elements of benami property?
1. Intent
2. Consideration
3. Possession of the property
4. Being the holder of the original ownership documents

1. Intent
For example, you are abroad and cannot come; buy it in your own name and I will get it transferred to my own name once I come. There has to be some intent or other. Intent is one element of a benami transaction.

2. Consideration
The 'money trail' is a very commonly used phrase these days. Money trail means that you sent the money to buy that property, and that same money was used to buy that property. There can also be wrongful motives — that some legal proceedings are ongoing, and out of fear that this property too may come into their scope, I buy it in someone else's name. Attention must be paid to the money trail — to whom you sent this money and how it was earned.

3. Possession of the property
You will have to prove that possession is with him — how, and why. This you will have to prove. Of these first three elements — intent, consideration, and possession of the property — the most important is that your money trail must exist.

4. Being the holder of the original ownership documents
This is a very important thing. Being the holder of the original ownership documents in a benami transaction is how you can satisfy the court that this property is held benami — that I sent the money and made this person the benamidar, and clear proof of that is that his original documents are in my possession.

Now, a benami transaction has become a crime. Now if you go to court and say that this property is held benami, I am the real owner, and this property should be transferred into my name — you will not even be able to file that claim; rather, the court may directly refer you to a law enforcement agency, [saying] that a claimant of a benami transaction has come forward, that this transaction is benami, investigate it. The Benami Transactions (Prohibition) Act became law in 2017 — that a benami transaction is a crime, punishable under Section 51 with up to seven years' imprisonment. This is why I was not telling you the elements for securing a benami transaction, nor its precautionary measures, because it has now become a crime.

If a person says that this property is benami property and it should be transferred into my name, then in fact he is making a confessional statement, confessing to a crime, that I have committed this offence — for this he can be punished with up to seven years' imprisonment. There can also be a fine — how much of a fine? It can be 25% of the market value of the property — if it is a one-crore house, the fine can be up to twenty-five lakh rupees, and the most important element is that this will be a fine on top of it being a one-crore house — it does not mean that once the twenty-five-lakh fine is paid or the sentence served, the matter ends — the house will be confiscated, it will be confiscated, forfeited to the state.