June 9, 2023: A husband supplying the money to her wife for property purchase does not necessarily make the transaction a benami one, the Calcutta High Court (HC) has ruled.
For the transaction to qualify as benami transaction, the intention of the husband behind providing this monetary support is crucial, the HC said in an order dated June 7, 2023
For the uninitiated, benami is a Persian term which means something without a name. However, in the present context, it means proxy. So, a benami property is a property bought by the original owner using a proxy. This helps him park his unaccounted money safely while avoiding paying taxes to the government at the same time.
“In the Indian society, if a husband supplies the consideration money for acquiring property in the name of his wife, such fact does not necessarily imply benami transaction. Source of money is, no doubt, an important factor but not a decisive one,” the two-judge Bench of justice Tapabrata Chakraborty and Justice Partha Sarathi Chatterjee said dismissing an appeal filed by one Sekhar Kumar Roy.
“The intention of the supplier of the consideration money is the vital fact to be proved by the party who asserts benami,” it added. The burden of showing that a transfer is a benami transaction always lies on the person who asserts it, the HC further added.
Sekhar Kumar Roy versus Lila Roy & Another: The case
The appeal was filed by one Sekhar Kumar Roy who stated that his late father Sailendra Kumar Roy purchased the suit property in 1969 in the name of his wife, late Lila Roy. Lila, a housewife, did not contribute to the purchase since she had no independent income. Subsequently, Sailendra got the building plan sanctioned in the name of Lila and built a two-storied building using his own funds. Sailendra died intestate on May 29, 1999, leaving behind his widow, the son and one daughter Sumita Saha.
In his plea Sekhar argued that each one of them were entitled to 1/3rd share of the suit property according to Section 8 of the Hindu Succession Act. Sekhar stayed in the suit property till May 11, 2011. After moving out, he demanded partition of the property, which was refused.
In her defence, Lila argued that she purchased the property using her ‘stridhan’ and then constructed the two-storied building from her own fund.
She became the absolute owner of the suit property and same was duly mutated in her name and deed of conveyance dated January 20, 1970, she said, adding that mere payment of requisite consideration money does not, ipso facto, prove benami transaction. The lower court ruled in favour of Lila, after which Sekhar moved the high court.
“Sekhar could not bring any evidence on record to lead any prudent man to infer that his father had a motive to create benami in name of his mother or Sailendra intended to enjoy the full benefit of the title in him alone. Judgments relied upon by the appellant in spite of having unquestionable value of the proposition laid down therein, shall not come in aid of the appellant in the factual matrix of the case at hand,” the HC ruled
“Even if it is proved that Sailendra paid the consideration money, the plaintiff must further prove that Sailendra really intended to enjoy the full benefit of the title alone,” it added.
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An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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