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Payment Of Part Sale Consideration Or Stamp Duty Cannot Be Sole Criteria To Hold Transaction As Benami: SC [Read Judgment]

Ashok Kini
13 May 2019 6:13 AM GMT
Payment Of Part Sale Consideration Or Stamp Duty Cannot Be Sole Criteria To Hold Transaction As Benami: SC [Read Judgment]
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"While considering a particular transaction as benami, the intention of the person who contributed the purchase money is determinative of the nature of transaction."

The Supreme Court has observed that the payment of part sale consideration or stamp duty by another person cannot be the sole criteria to hold the sale/transaction as benami. In Mangathai Ammal vs. Rajeswari, the Apex Court bench comprising Justice L. Nageswara Rao and Justice MR Shah were considering an appeal against Trial Court and High Court orders which held that the suit...

The Supreme Court has observed that the payment of part sale consideration or stamp duty by another person cannot be the sole criteria to hold the sale/transaction as benami.

In Mangathai Ammal vs. Rajeswari, the Apex Court bench comprising Justice L. Nageswara Rao and Justice MR Shah were considering an appeal against Trial Court and High Court orders which held that the suit properties are benami transactions as the part sale consideration was paid by another person (Narayanasamy Mudaliar) at the time of the purchase of the property. It was also found that the stamp duty at the time of the execution of the Sale Deed was purchased by Mudaliar.

The court noted that Mudaliar, who contributed part sale consideration by purchasing property, might have contributed being the husband. The bench said:

"While considering a particular transaction as benami, the intention of the person who contributed the purchase money is determinative of the nature of transaction. The intention of the person, who contributed the purchase money, has to be decided on the basis of the surrounding circumstances; the relationship of the parties; the motives governing their action in bringing about the transaction and their subsequent conduct etc."

It also referred to a recent judgment which reiterated that to hold that a particular transaction is benami in nature these six circumstances can be taken as a guide

  • The source from which the purchase money came;
  • the nature and possession of the property, after the purchase;
  • Motive, if any, for giving the transaction a benami colour;
  • Position of the parties and the relationship, if any, between the claimant and the alleged benamidar;
  • Custody of the title deeds after the sale;
  • Conduct of the parties concerned in dealing with the property after the sale.

Benami Amendment Act Not Retrospective

Another contention raised in this case was as per Section 3 of the Benami Transaction (Prohibition) Act 1988, there was a presumption that the transaction made in the name of the wife and children is for their benefit. However, the defendants contention was that since by Benami Amendment Act, 2016, Section 3 (2) of the Benami Transaction Act, 1988 the statutory presumption, which was rebuttable, has been omitted, the plea of statutory transaction that the purchase made in the name of wife or children is for their benefit would not be available in the present case. In this context, the bench said:

"Aforesaid cannot be accepted. As held by this Court in the case of Binapani Paul (Supra) the Benami Transaction (Prohibition) Act would not be applicable retrospectively"


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