Benami Transaction

(LIAQAT ALI, Kashmore)

Etymology: Literally the word Benami, used in legal terminology, is a Persian compound word Be (without) + Nami (Name) that means "without name" or "no name". Benamidar means having benami transfer in one’s name. The word is used to define a transaction in which the real beneficiary is not the one in whose name the property is purchased. As a result, the person in whose name the property is purchased is just a mask of the real beneficiary. In other words it can be said benamidar, an ostensible owner or Benami sale ostensible sale.

Technically “benami transaction” means a transaction or arrangement where a property is transferred to, or is held by, a person for a consideration provided, or paid by, another person. Under NAB Ordinance, 1999, a benamidar means any person who ostensibly holds or is in possession or custody of any property of an accused on his behalf for the benefit and enjoyment of the accused.

In different Pakistan Laws the Benami transactions are protected and as such are fully supported and recognized, except in few fresh legislation it is going to put a few restrictions and make such transactions liable to legal consequences. We may find a clue in the following lines by discussing different existing laws one by one.
The Trust Act 1882 section 82,

82. Transfer to one for consideration paid by another - Where property is transferred to one person for a consideration paid or provided by another person, and it appears that such other person did not intend to pay or provide such consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or providing the consideration.

[Nothing in this section shall affect the provisions of the Code of Civil Procedure, 1908]

Code of Civil procedure Section 66 reads as:
66. (l) No suit shall be maintained against any person claiming title under a purchase certified by the Court in such manner as may be prescribed on the ground that the purchase was made on behalf of the plaintiff or on behalf of someone through whom the plaintiff claims.
(2) Nothing in this section shall bar a suit to obtain a declaration that the name of any purchaser certified as aforesaid was inserted in the certificate fraudulently or without the consent of the real purchaser, or interfere with the right of a third person to proceed against that property, though ostensibly sold to the certified purchaser, on the ground that it is liable to satisfy a claim of such third person against the real owner,
Transfer of Proper Act, 1882 deals with the ostensible owner as under:
41. Transfer by ostensible owner. Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it:
Provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.

Proof of transaction to be a benami: Where any party asserts that the transaction in the name of certain other person is a benami transaction, lies upon him to prove it to be benami transaction/sale. under Article 118 of the Qanun-e-Shahadat Order 1984, it is provided that if no evidence is lead the onus of proof lies upon the one who fails this proposition is also known as onus probandi. The apex courts of Pakistan has usually considered the following points to ascertain whether the transaction is Benami one or otherwise.
• The source of income of the purchaser, to raise certain property.
• From whose custody the original title deed, bill and other documents came in evidence.
• Who is in possession of the suit property.
• What was the motive of benami transaction.
• Conduct of both parties regarding property in question.

In different countries the legislators have felt that this type of transactions must be banned thus india has also took steps to ban such transactions and declare it to be illegal. Thus the Benami Transactions (Prohibition) Act, 1988 was enacted by the Parliament which came into force on 19 May 1988 which was restricted to the state of Jamu and Kashmir only. However, due to various deficiencies in the Act, the rules required for operationalizing the Act were not framed. To address these deficiencies, several years later, in 2011, the Govt of India introduced "Benami Transactions (Prohibition) Bill, 2011".Purpose

It is the need of hour to defeat the face masks of criminals and culprits who are otherwise using the proposition of benami to disguise the real source of income and to convert black money to white money with a view to prevent law enforcement agencies to clutch them. Though the Pakistan Law and Justice Commission is currently working on Regulating the benami transaction, it requires to be completed expeditiously and an effective law may be promulgated. In the present scenario and observations of the Honourable Supreme court, in Karachi Be-Amni suo motu Case, that the black money of Narcotics, real estate, money laundering, weapons are being used in terrorism also. This fact draws attention to an alarming situation and to bring an effective legislation to curb the menace of the terror, narco and monetary crimes.

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25 Mar, 2015 Total Views: 1300 Print Article Print
About the Author: LIAQAT ALI

Deputy Director Government of Pakistan
Law Graduate from IIU Islamabad
LL.M from Sindh University, Jamshoro
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