Topic: Section 3. Prohibition of benami transactions

(1) No person shall enter into any benami transaction.

(2) Nothing in sub-section (1) shall apply to the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter.

(3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both.

(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2of 1974), an offence under this section shall be non-cognizable and bailable.

COMMENTS

(I) Sub-section (2) of section 3 of the Benami Transactions (Prohibition) Act, 1988 contemplates that when a property is purchased by a person in the name of his wife, there is a reputable presumption that the property had been purchased for the benefit of the wife. The first respondent has not let in any satisfactory evidence to rebut the presumption that the petition mentioned property was purchased for the benefit of the petitioner. Therefore it has been held that the transaction is not a benami transaction and that the first respondent is not the real owner of the petition mentioned property; Rajam Ammal v. P.K. Pillai, AIR 1991 Mad 310.

(ii) Sub-section (2) of section 3 of the Benami Transactions (Prohibition) Act, 1988 will not save acquisition of property in the name of wife of a corparcener by the by the joint family as it is a benami transaction; Rameshwar Mistry v. Babulal Mistry, AIR 1991 Pat 53.

(iii) Sections 3 and 4 of the Behami Transactions (Prohibition) Act, 1988 have to be read together and understood together. They are not disjunctive provisions in a comprehensive legislation intended to prohibit benami transactions. Both section 3 and 4 are complementary to each other to achieve the same object i.e. prohibition of benami transactions, Ouseph Chacko v. Raman Nair, AIR 1989 Ker 317.