Benami Transactions

1. Benami Transactions Muhammad AamirIlyas

2. Benami Transactions “If ‘A’ sells properties to ‘B’ but the sale-deed mentions ‘X’ as the purchaser, the transaction is termed as Benami Transaction”

3. Benami Transactions In Benami transactions sale itself is always genuine. If ‘A’ sells properties to ‘B’ but the sale-deed mentions ‘X’ as the purchaser; the purchaser is ‘B’ and ‘X’ is Benamidar of ‘B’

4. Sham Transactions If ‘at A’ purports to sell his property to ‘B’ without intending that his title should cease or pass to ‘B’. The transaction is called as sham transaction.

5. Difference b/w Benami and Sham transactions The fundamental difference between these two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none such, the transferor continue to retain the title notwithstanding the execution of the transfer deed.

6. No absolute formulae or acid test “Whether a particular sale is benami or not is largely one of fact and for determining this question no absolute formulae or acid test, uniformly applicable in all situations, can be laid down, yet in determining the probabilities and for gathering laid down the criteria to determine the “Benami” transaction” PLJ 2009 SC 261

7. Facts for determination • The source from which the purchase-money was derived; • The possession of the property • The position of the parties and their relation to one another; • The circumstances or otherwise, of the alleged transferor; • His motive in taking the alleged transfer;

8. Facts for determination • The custody and production of title deed and; • The previous and subsequent conduct of parties. 2008 SCMR 143

9. Facts for determination “However, mere proof of the source of purchase-money would not finally establish the benami nature of defendants’ title” AIR 1965 SC 1738

10. Doctrine of Advancement The doctrine of advancement of English law is not applicable in our country so “if a property is purchased or constructed by the father in the name of his minor child, the latter holds the property merely as a benamidar and the parent is the real beneficiary of the property” PLD 1965 Lah. 550

11. Benami transaction or gift? Prima facie when money is advanced by a person to another for whom he has natural love and affection the presumption in law is that one who advances money does not create a benamidar but makes an absolute gift in his favor” 81 Lah 250