Mere financial assistance provided to purchase property for the welfare of family members cannot be classified as a benami transaction, the Supreme Court has held in a recent judgment.
HC order upheld
A Bench led by Justice L. Nageswara Rao has upheld a Karnataka High Court order which dismissed a plea that the financial help given by G. Venkata Rao to his family members to purchase property was a benami transaction.
Financial assistance or source of money cannot be sole determinative factor or circumstance to hold that a purchase of property is benami.
“The intention of the late G. Venkata Rao was to provide financial assistance for the welfare of his sons and not beyond that,” the court noted.
Own precedents
The court reiterated its own precedents while considering the nature of benami transactions.
“The source of money had never been the sole consideration. It is merely one of the relevant considerations but not determinative in character,” Justice Rao wrote in the verdict.
Bhim Singh case
It referred to the apex court’s judgment in the Thakur Bhim Singh’s case, in which it had held that “while considering a particular transaction as benami, the intention of the person who contributed the purchase money is determinative of the nature of transaction.”
“It is further observed by this court as to what the intention of the person, who contributed the purchase money, has to be decided on the basis of the surrounding circumstance; the relationship of the parties; the motives governing their action in bringing about the transaction and their subsequent conduct, etc,” the Bench observed.
The Bench held that courts are usually guided by various circumstances to conclude the nature of a transaction as benami.
Key factors
These factors include the source from which the purchase money came; the nature and possession of the property, after the purchase; motive, if any, for giving the transaction a benami colour; the position of the parties and the relationship if any, between the claimant and the alleged benamidar; the custody of the title deeds after the sale and the conduct of the parties concerned in dealing with the property after the sale.
