BY Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High Court
Email id: email@example.com
Mobile No.: +91 9810081079
And Aditya Dhar, Advocate
Mobile: +91 9971873110
The Law Commission of India, Ministry of Law, Justice & Company Affairs came up with its 57th Report of Law Commission on 'Benami Transactions' in the year 1973. In the said report, the Law Commission discussed various aspects relating to Benami Transactions. One of the aspects was the comparison of Benami Transactions under the English Law and the Indian Law, which is discussed in brief in this article.
In England, purchase in another's name has been described as one of the most important and common forms of resulting trusts. The rule is that where real and personal property is vested in a purchaser jointly with others or in another or other persons alone, a resulting trust will be presumed in favor of a person who is proved to have paid the purchase money. The beneficial interest in the property results to the actual purchaser.
However, the presumption which arises on a purchase in the name of another, is rebuttal on the ground that the purchaser intended to benefit the other. In certain circumstances, there is a presumption the other way, namely that there is no resulting trust. This applies where the person in whom the property is vested is the lawful wife or child of the purchaser or was a person to whom he stood in loco parentis.
In English law, there is a presumption that when a property is purchased in the name of a person, and the consideration for such property has been paid by the legal ascendant of such person, it is presumed that the legal ascendant has gifted the said property to his/her heir as an advance on what he /she will inherit upon death of the ascendant. This is known as the DOCTRINE OF ADVANCEMENT.
Though the Indian law does not accept such Doctrine Of Advancement in its entirety, the legislature has carved out certain exceptions to the benami transaction under Section 2(9)A of the Prohibition of Benami Property Transactions Act, 1988 (As amended by The Benami Transactions (Prohibition) Amendment Act, 1988) including the following:
- When the property is held by any
person being an individual in the name of his spouse or the
name of any child of such individual and the consideration
for such property has been provided or paid out of the known
sources of the individual.
Condition: The consideration for such property has been provided or paid out of the known sources of the individual.
- When the property is held by any
person in the name of his brother or sister or lineal
ascendant or descendant, where the names of brother or
sister or lineal ascendant or descendant and the individual appear
as joint owners in any document, and the consideration for such
property has been provided or paid out of the known sources of the
- The names of brother or sister or lineal ascendant or descendant and the individual appear as joint owners in any document.
- The consideration for such property has been provided or paid out of the known sources of the individual.
By way of such exceptions and subject to such conditions as stated, a person has a defense to oust himself from an allegation of benami transaction alleged by the concerned Initiating Officer, Benami Prohibition Unit.
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