Guidelines of Supreme Court for determining whether a transaction is benami transaction

In the case of Thakur Bhim Singh (Supra) this Court in paragraph 18 observed and held as under:

18. The principle governing the determination of the question whether a transfer is a benami transaction or not may be summed up thus: (1) the burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction; (2) it is proved that the purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary; (3) the true character of the transaction is governed by the intention of the person who has contributed the purchase money and (4) the question as to what his intention was has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the motives governing their action in bringing about the transaction and their subsequent conduct, etc.

8.2. In the case of P. Leelavathi (Supra) this Court held as under:

9.2 In Binapani Paul case (Supra), this Court again had an occasion to consider the nature of benami transactions. After considering a catena of decisions of this Court on the point, this Court in that judgment observed and held that the source of money had never been the sole consideration. It is merely one of the relevant considerations but not determinative in character. This Court ultimately concluded after considering its earlier judgment in the case of Valliammal v. Subramaniam MANU/SC/0699/2004 : (2004) 7 SCC 233 that while considering whether a particular transaction is benami in nature, the following six circumstances can be taken as a guide:

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

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

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

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

(5) the custody of the title deeds after the sale; and

(6) the conduct of the parties concerned in dealing with the property after the sale. (Jaydayal Poddar v. Bibi Hazra (supra), SCC p. 7, para 6)

8.3. After considering the aforesaid decision in the recent decision of this Court in the case of P. Leelavathi (Supra), this Court has again reiterated that to hold that a particular transaction is benami in nature the aforesaid six circumstances can be taken as a guide.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 4805 of 2019 

Decided On: 09.05.2019

Mangathai Ammal  Vs.  Rajeswari and Ors.

Hon'ble Judges/Coram:

L. Nageswara Rao and M.R. Shah, JJ.

Citation: AIR 2019 SC 2918.

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