Supreme Court Guidelines

Benami Transactions

Jaydayal Poddar (Dead) Through LRs v. Bibi Hazra, AIR 1974 SC 171: (1974) 1 SCC 3

It is well-settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact or benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of a benami is the intention of the party or parties concerned; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation, and the person expressly shown as the purchaser in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs. Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformly applicable in all situations, can be laid down; yet in weighing the probabilities and for gathering the relevant indicia, the courts are usually guided by these circumstances:

(i)      the source from which the purchase money came;

(ii)    the nature and possession of the property, after the purchase;

(iii)   motive, if any, for giving the transaction a benami colour;

(iv)   the position of the parties and the relationship, if any, between the claimant and the alleged benamidar;

(v)     the custody of the title-deeds after the sale; and

(vi)          the conduct of the parties concerned in dealing with the property after the sale.

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M. A. Rashid

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