A Practical Guide to The Prohibition of Benami Property Transactions Act, 1988

Introduction

BENAMI TRANSACTIONS (PROHIBITION OF THE RIGHT TO
RECOVER PROPERTY} ORDINANCE, 1988.......................................................2
BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988..................................3
THE PROHIBITION OF BENAMI PROPERTY
TRANSACTIONS ACT, 1988 ..................................................................................7
AMENDMENT BY THE FINANCE ACT, 2021: ..................................................7
FREQUENTLY ASKED QUESTIONS (FAQS)......................................................7

Chapter 1: Preliminary

SECTION 1. SHORT TITLE, EXTENT AND COMMENCEMENT................14
SECTION 2. DEFINITIONS..................................................................................16
FREQUENTLY ASKED QUESTIONS {FAQs) .......................................................94

Chapter 2: Prohibition of Benami Transactions

SECTION 3. PROHIBITION OF BENAMI TRANSACTIONS.....................120
SECTION 4. PROHIBITION OF THE RIGHT TO RECOVER
PROPERTY HELD BENAMI ..............................................................................127
SECTION 5. PROPERTY HELD BENAMI LIABLE TO
CONFISCATION ..................................................................................................134
SECTION 6. PROHIBITION ON RE-TRANSFER OF PROPERTY BY
BENAMIDAR........................................................................................................138
RELEVANT CASE LAWS....................................................................................140
FREQUENTLY ASKED QUESTIONS {FAQ’S}.................................................148

Chapter 3: Authorities

SECTION 7. ADJUDICATING AUTHORITY...................................................159
SECTION 8 TO SECTION 17. Omitted w.e.f. 01/07/2021 ...............................159
SECTION 18. AUTHORITIES AND JURISDICTION........................................159
SECTION 19. POWERS OF THE AUTHORITIES............................................160
SECTION 20. CERTAIN OFFICERS TO ASSIST IN INQUIRY, ETC. ..............165
SECTION 21. POWER TO CALL FOR INFORMATION................................166
SECTION 22. POWER OF AUTHORITY TO IMPOUND DOCUMENTS .......166
SECTION 23. POWER OF AUTHORITY TO CONDUCT
ENQUIRY, ETC.....................................................................................................168
FREQUENTLY ASKED QUESTIONS {FAQS)..................................................169

Chapter 4: Attachment, Adjudication and Confiscation

SECTION 24. NOTICE AND ATTACHMENT OF PROPERTY
INVOLVED IN BENAMI TRANSACTION......................................................174
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SECTION 25. MANNER OF SERVICE OF NOTICE.........................................182
SECTION 26. ADJUDICATION OF BENAMI PROPERTY..............................183
SECTION 27. CONFISCATION AND VESTING OF BENAMI
PROPERTY ................................................................................................................192
SECTION 28. MANAGEMENT OF PROPERTIES CONFISCATED..............196
SECTION 29. POSSESSION OF THE PROPERTY.............................................197
FREQUENTLY ASKED QUESTIONS {FAQS).....................................................204

Chapter 5: Appellate Tribunal

SECTION 30. ESTABLISHMENT OF APPELLATE TRIBUNAL.....................215
SECTION 31. COMPOSITION, ETC., OF APPELLATE TRIBUNAL..............216
SECTION 32. QUALIFICATIONS FOR APPOINTMENT OF
CHAIRPERSON AND MEMBER OF APPELLATE TRIBUNAL....................216
SECTION 33. TERMS AND CONDITIONS OF SERVICES OF
CHAIRPERSON AND MEMBERS OF APPELLATE TRIBUNAL.................218
SECTION 34. TERM OF OFFICE OF CHAIRPERSON AND MEMBERS.....218
SECTION 35. REMOVAL OF CHAIRPERSON AND MEMBER FROM
OFFICE IN CERTAIN CIRCUMSTANCES.......................................................219
SECTION 36. VACANCIES, ETC., NOT TO INVALIDATE
PROCEEDINGS OF APPELLATE TRIBUNAL ..........................................220
SECTION 37. RESIGNATION AND REMOVAL................................................221
SECTION 38. MEMBER TO ACT AS CHAIRPERSON IN CERTAIN
CIRCUMSTANCES ..................................................................................................221
SECTION 39. STAFF OF APPELLATE TRIBUNAL............................................221
SECTION 40. PROCEDURE AND POWERS OF APPELLATE
TRIBUNAL ................................................................................................................222
SECTION 41. DISTRIBUTION OF BUSINESS AMONGST BENCHES
OF APPELLATE TRIBUNAL..............................................................................226
SECTION 42. POWER OF CHAIRPERSON OF APPELLATE
TRIBUNAL TO TRANSFER CASES..................................................................226
SECTION 43. DECISION TO BE BY MAJORITY ...............................................227
SECTION 44. MEMBERS, ETC., TO BE PUBLIC SERVANTS .........................227
SECTION 45. BAR OF JURISDICTION OF CIVIL COURTS...........................227
SECTION 46. APPEALS TO APPELLATE TRIBUNAL ..................................228
SECTION 47. RECTIFICATION OF MISTAKES.................................................231
SECTION 48. RIGHT TO REPRESENTATION ................................................233
SECTION 49. APPEAL TO HIGH COURT..........................................................234
FREQUENTLY ASKED QUESTIONS {FAQS).....................................................246
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Chapter 6: Special Courts

SECTION 50. SPECIAL COURTS ......................................................................256
SECTION 51. APPLICATION OF CODE OF CRIMINAL PROCEDURE,
1973 TO PROCEEDINGS BEFORE SPECIAL COURT ...................................258
SECTION 52. APPEAL AND REVISION..........................................................259
FREQUENTLY ASKED QUESTIONS (FAQS).....................................................260

Chapter 7: Offences and Prosecution

SECTION 53. PENALTY FOR BENAMI TRANSACTION ............................264
SECTION 54. PENALTY FOR FALSE INFORMATION .................................269
SECTION 55. PREVIOUS SANCTION..............................................................270
FREQUENTLY ASKED QUESTIONS (FAQS) .................................................274

Chapter 8: Miscellaneous

SECTION 56. REPEAL OF PROVISIONS OF CERTAIN ACTS ....................279
SECTION 57. CERTAIN TRANSFERS TO BE NULL AND VOID................282
SECTION 58. EXEMPTION ................................................................................283
SECTION 59. POWER OF CENTRAL GOVERNMENT TO ISSUE
DIRECTIONS, ETC...............................................................................................284
SECTION 60. APPLICATION OF OTHER LAWS NOT BARRED..................286
SECTION 61. OFFENCES TO BE NON-COGNIZABLE ..................................288
SECTION 62. OFFENCES BY COMPANIES.......................................................289
SECTION 63. NOTICE, ETC., NOT TO BE INVALID ON CERTAIN
GROUNDS.............................................................................................................294
SECTION 64. PROTECTION OF ACTION TAKEN IN GOOD FAITH .........294
SECTION 65. TRANSFER OF PENDING CASES................................................296
SECTION 66. PROCEEDINGS, ETC., AGAINST LEGAL
REPRESENTATIVE ..............................................................................................297
SECTION 67. ACT TO HAVE OVERRIDING EFFECT.....................................298
SECTION 68. POWER TO MAKE RULES..............................................................298
SECTION 69. LAYING OF RULES AND NOTIFICATIONS BEFORE
PARLIAMENT ..........................................................................................................301
SECTION 70. POWER TO REMOVE DIFFICULTIES .......................................301
SECTION 71. TRANSITIONAL PROVISION.....................................................302
[SECTION 72]. REPEAL AND SAVING ..............................................................303
FREQUENTLY ASKED QUESTIONS {FAQS)..................................................310

Chapter 9: Comparison with Other Acts and Suggestions

(A) COMPARISON OF THE PROVISIONS OF THE BENAMI
TRANSACTIONS (PROHIBITION OF THE RIGHT TO RECOVER
PROPERTY) ORDINANCE, 1988 WITH THE AMENDED
PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988.........323
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(B) COMPARISON OF THE PROVISIONS OF THE BENAMI
TRANSACTIONS (PROHIBITION) ACT, 1988 WITH THE
AMENDED ACT (AMENDED IN 2016) I.E., PROHIBITION OF
BENAMI PROPERTY TRANSACTIONS ACT, 1988.......................................323
(C) COMPARISON OF BENAMI ACT, 1988 WITH PREVENTION
OF MONEY LAUNDERING ACT, 2002 ...........................................................325
(D) COMPARISON OF AMENDED BENAMI ACT, 1988 WITH
INCOME TAX ACT, 1961 ....................................................................................327
(E) SUGGESTIONS...............................................................................................329

Chapter 10: Appendices

I. THE BENAMI TRANSACTIONS (PROHIBITION OF THE
RIGHT TO RECOVER PROPERTY) ORDINANCE, 1988 ..............................333
II. THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988
(45 OF 1988)...........................................................................................................334
Ill. THE BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT
ACT, 2016..................................................................................................336
IV. THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS
ACT, 1988 (45 OF 1988)........................................................................................366
V. THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS
RULES, 2016 ..........................................................................................................394
VI. NOTIFICATIONS ISSUED UNDER THE ACT ..........................................399
VII. SCHEDULE.....................................................................................................401
VIII. RELEVANT SECTIONS OF CODE OF CRIMINAL
PROCEDURE, 1973 ..............................................................................................427
IX. RELEVANT SECTIONS OF INDIAN PENAL CODE, 1860......................441
X. RELEVANT SECTIONS OF CODE OF CIVIL PROCEDURE, 1908..........443
XI. RELEVANT SECTIONS OF TRANSFER OF PROPERTY ACT, 1882......443
XII. RELEVANT SECTIONS OF INDIAN EVIDENCE ACT, 1872.................444
XIII. RELEVANT SECTIONS OF INDIAN SUCCESSION ACT, 1925...........444
XIV. RELEVANT SECTIONS OF INDIAN PARTNERSHIP ACT, 1932 ........444
XV. RELEVANT SECTIONS OF THE INCOME-TAX ACT, 1961...................445
XVI. RELEVANT SECTIONS OF PREVENTION OF MONEY
LAUNDERING ACT, 2002 ..................................................................................460
XVII. RELEVANT SECTIONS OF COMPANIES ACT, 2013 ..........................462
XVIII. RELEVANT EXTRACTS FROM FINANCE ACT, 2016 .......................465
XIX. RELEVANT EXTRACTS FROM FINANCE ACT, 2021..........................465
XX. RELEVANT SECTIONS OF INDIAN TRUSTS ACT, 1882–....................466