A Practical Guide to The Prohibition of Benami Property Transactions Act, 1988

Introduction BENAMI TRANSACTIONS (PROHIBITION OF THE RIGHT TO RECOVER PROPERTY} ORDINANCE, 1988.......................................................2 BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988..................................3 THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988 ..................................................................................7 AMENDMENT BY THE FINANCE ACT, 2021: ..................................................7 FREQUENTLY ASKED QUESTIONS (FAQS)......................................................7 Chapter 1: Preliminary SECTION 1. SHORT TITLE, EXTENT AND COMMENCEMENT................14 SECTION 2. DEFINITIONS..................................................................................16 FREQUENTLY ASKED QUESTIONS {FAQs) .......................................................94 Chapter 2: Prohibition of Benami Transactions SECTION 3. PROHIBITION OF BENAMI TRANSACTIONS.....................120 SECTION 4. PROHIBITION OF THE RIGHT TO RECOVER PROPERTY HELD BENAMI ..............................................................................127 SECTION 5. PROPERTY HELD BENAMI LIABLE TO CONFISCATION ..................................................................................................134 SECTION 6. PROHIBITION ON RE-TRANSFER OF PROPERTY BY BENAMIDAR........................................................................................................138 RELEVANT CASE LAWS....................................................................................140 FREQUENTLY ASKED QUESTIONS {FAQ’S}.................................................148 Chapter 3: Authorities SECTION 7. ADJUDICATING AUTHORITY...................................................159 SECTION 8 TO SECTION 17. Omitted w.e.f. 01/07/2021 ...............................159 SECTION 18. AUTHORITIES AND JURISDICTION........................................159 SECTION 19. POWERS OF THE AUTHORITIES............................................160 SECTION 20. CERTAIN OFFICERS TO ASSIST IN INQUIRY, ETC. ..............165 SECTION 21. POWER TO CALL FOR INFORMATION................................166 SECTION 22. POWER OF AUTHORITY TO IMPOUND DOCUMENTS .......166 SECTION 23. POWER OF AUTHORITY TO CONDUCT ENQUIRY, ETC.....................................................................................................168 FREQUENTLY ASKED QUESTIONS {FAQS)..................................................169 Chapter 4: Attachment, Adjudication and Confiscation SECTION 24. NOTICE AND ATTACHMENT OF PROPERTY INVOLVED IN BENAMI TRANSACTION......................................................174 xii Contents SECTION 25. MANNER OF SERVICE OF NOTICE.........................................182 SECTION 26. ADJUDICATION OF BENAMI PROPERTY..............................183 SECTION 27. CONFISCATION AND VESTING OF BENAMI PROPERTY ................................................................................................................192 SECTION 28. MANAGEMENT OF PROPERTIES CONFISCATED..............196 SECTION 29. POSSESSION OF THE PROPERTY.............................................197 FREQUENTLY ASKED QUESTIONS {FAQS).....................................................204 Chapter 5: Appellate Tribunal SECTION 30. ESTABLISHMENT OF APPELLATE TRIBUNAL.....................215 SECTION 31. COMPOSITION, ETC., OF APPELLATE TRIBUNAL..............216 SECTION 32. QUALIFICATIONS FOR APPOINTMENT OF CHAIRPERSON AND MEMBER OF APPELLATE TRIBUNAL....................216 SECTION 33. TERMS AND CONDITIONS OF SERVICES OF CHAIRPERSON AND MEMBERS OF APPELLATE TRIBUNAL.................218 SECTION 34. TERM OF OFFICE OF CHAIRPERSON AND MEMBERS.....218 SECTION 35. REMOVAL OF CHAIRPERSON AND MEMBER FROM OFFICE IN CERTAIN CIRCUMSTANCES.......................................................219 SECTION 36. VACANCIES, ETC., NOT TO INVALIDATE PROCEEDINGS OF APPELLATE TRIBUNAL ..........................................220 SECTION 37. RESIGNATION AND REMOVAL................................................221 SECTION 38. MEMBER TO ACT AS CHAIRPERSON IN CERTAIN CIRCUMSTANCES ..................................................................................................221 SECTION 39. STAFF OF APPELLATE TRIBUNAL............................................221 SECTION 40. PROCEDURE AND POWERS OF APPELLATE TRIBUNAL ................................................................................................................222 SECTION 41. DISTRIBUTION OF BUSINESS AMONGST BENCHES OF APPELLATE TRIBUNAL..............................................................................226 SECTION 42. POWER OF CHAIRPERSON OF APPELLATE TRIBUNAL TO TRANSFER CASES..................................................................226 SECTION 43. DECISION TO BE BY MAJORITY ...............................................227 SECTION 44. MEMBERS, ETC., TO BE PUBLIC SERVANTS .........................227 SECTION 45. BAR OF JURISDICTION OF CIVIL COURTS...........................227 SECTION 46. APPEALS TO APPELLATE TRIBUNAL ..................................228 SECTION 47. RECTIFICATION OF MISTAKES.................................................231 SECTION 48. RIGHT TO REPRESENTATION ................................................233 SECTION 49. APPEAL TO HIGH COURT..........................................................234 FREQUENTLY ASKED QUESTIONS {FAQS).....................................................246 Contents xiii Chapter 6: Special Courts SECTION 50. SPECIAL COURTS ......................................................................256 SECTION 51. APPLICATION OF CODE OF CRIMINAL PROCEDURE, 1973 TO PROCEEDINGS BEFORE SPECIAL COURT ...................................258 SECTION 52. APPEAL AND REVISION..........................................................259 FREQUENTLY ASKED QUESTIONS (FAQS).....................................................260 Chapter 7: Offences and Prosecution SECTION 53. PENALTY FOR BENAMI TRANSACTION ............................264 SECTION 54. PENALTY FOR FALSE INFORMATION .................................269 SECTION 55. PREVIOUS SANCTION..............................................................270 FREQUENTLY ASKED QUESTIONS (FAQS) .................................................274 Chapter 8: Miscellaneous SECTION 56. REPEAL OF PROVISIONS OF CERTAIN ACTS ....................279 SECTION 57. CERTAIN TRANSFERS TO BE NULL AND VOID................282 SECTION 58. EXEMPTION ................................................................................283 SECTION 59. POWER OF CENTRAL GOVERNMENT TO ISSUE DIRECTIONS, ETC...............................................................................................284 SECTION 60. APPLICATION OF OTHER LAWS NOT BARRED..................286 SECTION 61. OFFENCES TO BE NON-COGNIZABLE ..................................288 SECTION 62. OFFENCES BY COMPANIES.......................................................289 SECTION 63. NOTICE, ETC., NOT TO BE INVALID ON CERTAIN GROUNDS.............................................................................................................294 SECTION 64. PROTECTION OF ACTION TAKEN IN GOOD FAITH .........294 SECTION 65. TRANSFER OF PENDING CASES................................................296 SECTION 66. PROCEEDINGS, ETC., AGAINST LEGAL REPRESENTATIVE ..............................................................................................297 SECTION 67. ACT TO HAVE OVERRIDING EFFECT.....................................298 SECTION 68. POWER TO MAKE RULES..............................................................298 SECTION 69. LAYING OF RULES AND NOTIFICATIONS BEFORE PARLIAMENT ..........................................................................................................301 SECTION 70. POWER TO REMOVE DIFFICULTIES .......................................301 SECTION 71. TRANSITIONAL PROVISION.....................................................302 [SECTION 72]. REPEAL AND SAVING ..............................................................303 FREQUENTLY ASKED QUESTIONS {FAQS)..................................................310 Chapter 9: Comparison with Other Acts and Suggestions (A) COMPARISON OF THE PROVISIONS OF THE BENAMI TRANSACTIONS (PROHIBITION OF THE RIGHT TO RECOVER PROPERTY) ORDINANCE, 1988 WITH THE AMENDED PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988.........323 xiv Contents (B) COMPARISON OF THE PROVISIONS OF THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 WITH THE AMENDED ACT (AMENDED IN 2016) I.E., PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988.......................................323 (C) COMPARISON OF BENAMI ACT, 1988 WITH PREVENTION OF MONEY LAUNDERING ACT, 2002 ...........................................................325 (D) COMPARISON OF AMENDED BENAMI ACT, 1988 WITH INCOME TAX ACT, 1961 ....................................................................................327 (E) SUGGESTIONS...............................................................................................329 Chapter 10: Appendices I. THE BENAMI TRANSACTIONS (PROHIBITION OF THE RIGHT TO RECOVER PROPERTY) ORDINANCE, 1988 ..............................333 II. THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988 (45 OF 1988)...........................................................................................................334 Ill. THE BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT ACT, 2016..................................................................................................336 IV. THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988 (45 OF 1988)........................................................................................366 V. THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS RULES, 2016 ..........................................................................................................394 VI. NOTIFICATIONS ISSUED UNDER THE ACT ..........................................399 VII. SCHEDULE.....................................................................................................401 VIII. RELEVANT SECTIONS OF CODE OF CRIMINAL PROCEDURE, 1973 ..............................................................................................427 IX. RELEVANT SECTIONS OF INDIAN PENAL CODE, 1860......................441 X. RELEVANT SECTIONS OF CODE OF CIVIL PROCEDURE, 1908..........443 XI. RELEVANT SECTIONS OF TRANSFER OF PROPERTY ACT, 1882......443 XII. RELEVANT SECTIONS OF INDIAN EVIDENCE ACT, 1872.................444 XIII. RELEVANT SECTIONS OF INDIAN SUCCESSION ACT, 1925...........444 XIV. RELEVANT SECTIONS OF INDIAN PARTNERSHIP ACT, 1932 ........444 XV. RELEVANT SECTIONS OF THE INCOME-TAX ACT, 1961...................445 XVI. RELEVANT SECTIONS OF PREVENTION OF MONEY LAUNDERING ACT, 2002 ..................................................................................460 XVII. RELEVANT SECTIONS OF COMPANIES ACT, 2013 ..........................462 XVIII. RELEVANT EXTRACTS FROM FINANCE ACT, 2016 .......................465 XIX. RELEVANT EXTRACTS FROM FINANCE ACT, 2021..........................465 XX. RELEVANT SECTIONS OF INDIAN TRUSTS ACT, 1882–....................466