• There have been significant crackdowns on Benami properties in recent years. Understanding the Benami Act and its small details can assist you in comprehending the law and its potential effects on you. If you own a property with legal clearance, it is prudent to obtain a home insurance policy for that property.

• What Does ‘Benami’ Mean and When is a Transaction ‘Benami Transaction’?
• The term Benami signifies something that is owned, executed, or transacted under the name of another individual. Therefore, a Benami transaction pertains to transactions in which a property is assigned to one person’s name while another individual pays for the considerations. For instance, let’s consider a property purchased by Mr A, but not in his name. Instead, he uses the name of Mr Z for the property acquisition. Nonetheless, the funds for the transaction originate from Mr A. In these situations, the property is designated as a Benami property. Here, Mr Z only serves as a name or figure, while Mr A is the true beneficiary.

• What are Benami Properties?
• As stated previously, if a property is acquired by one individual but stands in the name of another, it is classified as a Benami property. A typical example in our context involves a scenario where a house or property is purchased by someone in the name of their daughter-in-law. The property or house is sold to the woman, but all payments are made by her father-in-law. The property in this instance is considered a Benami property.
• It is crucial to recognize that Benami property is not confined solely to immovable assets. It is fundamentally applicable to all asset types. Although houses and properties predominantly represent Benami properties, vehicles and jewelry can also qualify as Benami.

• Is Benami Transaction Illegal/Unlawful?
• Such transactions have existed in India for some time now. An early example in Calcutta involved an individual buying a house under the name of a fictitious spouse. However, over time, Benami transactions have been utilized for various other purposes, including money laundering and tax evasion.
• There have also been numerous cases where these transactions are employed to transfer a person’s assets to another’s name. This results in defrauding creditors and dismissing their claims. With a rise in fraudulent activities, Benami transactions were classified as illegal. Consequently, it becomes increasingly vital to secure home insurance for your property or house to protect it from unforeseen events.

• Implications of a Benami Transaction
• As we have talked about earlier, Benami transactions are prohibited and illegal. If Mr. A acquires a property under Mr. Z’s name, it qualifies as a Benami transaction. If Mr. A attempts to initiate a case to reclaim the property from Mr. Z, it will not be considered and the claim will be denied. However, this does not imply that Mr. Z can benefit from owning the property. Following the revision of the 1988 Benami Law in 2016, such properties may now be seized and confiscated when necessary.

• Administration’s Role Post Confiscation
• Once a decision is made to confiscate a property, an administrator is assigned the task of receiving and overseeing the property as well. After the order is issued, the administrator will start to take control of the subject property. Within 7 days of receiving the order, the administrator will instruct the occupants of the property to vacate it.

Remedies for Wrongful Attachment of Property

● Take Help Of Appellate Tribunal
Any individual issued a confiscation order, including the initiating officer, may file an appeal with the Appellate Tribunal within 45 days of receiving the directive. If the claim has any merit, the Appellate Tribunal may opt to consider the case within a year from the order. This applies to any party adversely affected by a confiscation order. For your home, be sure to obtain a home insurance policy to assist you in such legal matters.

● Writ With High Court
Although it is not a frequent approach, in extraordinary circumstances you may submit a writ petition to the High Court challenging the confiscation order issued by either the initiating officer or adjudicating authority. This option can be investigated if there has been a breach of principles or fundamental rights or if the authorities are evidently arbitrary. A home insurance policy will provide complete peace of mind.

Defenses to Benami Charges

Here are several instances of transactions that may not necessarily violate the Benami Law.
● Hindu Undivided Family/Karta
If a property is owned by a Hindu undivided family or the Karta of that family, the property is held for the welfare of the family members, with the payment being well recognized by the family.

● Spouse/Children
If a transaction occurs where a property is purchased in the name of a spouse, children, brother, sister, or lineal ascendant or descendant and the payment comes from known sources.

● Fiduciary Capacity
If a property is owned by an individual in a fiduciary role, that property can be managed for the benefit of another person if the former is capable of acting in a fiduciary capacity. Typical examples include executor, partner, depositor, trustee, or company director. If you are placing your trust in someone for this purpose, it is advisable that you also invest in a home insurance plan.

Share Purchases

It is conceivable that the name of a person appears in the registry of shareholders of a corporation, yet that individual is not the actual holder of the shares. In these cases, the individual whose name is listed in the registry is required to notify the company within a specified period and manner. Otherwise, the person holding the beneficial interest in the shares cannot assert any such claims.