In this article, I propose to take up a critical examination of the “Law relating to Benami Transactions”. This topic can be discussed with reference to the period both before and after the passage of the Benami Transactions (prohibition) Act, 1988. (hereinafter known as ‘the Act’)
The Parliament, in the preamble of the Act, declared it to be “an Act to prohibit benami transactions and to prohibit the right to recover property held benami” coupled with the object of delegating powers to the Central Government to frame the relevant rules for carrying out the objectives of the Act.
An earlier Ordinance was repealed with the passage of the Act. The Ordinance was promulgated to prevent tax evasion and also to curb the circulation of black money through such transactions.
It appears that the Bill, introduced to replace the Ordinance, was passed through the Parliament in great haste without thoroughly discussing the various provisions that were thought desirable to be incorporated in the Act.
The Bill was introduced on the recommendations of the Law Commission given in a report submitted to the Government after examining the earlier Ordinance referred to the commission. Finally, the Bill was placed before the Parliament on 31st August, 1988 and was immediately passed.
The Parliament, when it repealed the Ordinance and replaced it with the Act, though it desirable not only to prohibit the right to recover property held benami but also thought it fit to put an end to the general practice of the public in entering into benami transactions.
The Legislature adopted a multi-dimensional strategy to put an end to the hitherto widely practice of entering into benami transactions through the stringent provisions of the Act.
First, the Act specially laid down that, from 5th September, 1988
* Sri Raghu Raman C.S Full-Time Lecture in Law , 3-6-215 , Pendikanti Law college , Himayat Nagar , Hyderabad – 500 029.
1. Received the assent of the President on 5th September , 1988.
2. See the ‘Preamble’ of the Act.
3. Ref. Sec. 8 of the Act – “power to make rules”.
4. The Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988.
5. Ref. Sec. 9 (1) of the Act.
6. One of the many reasons for the promulgation of the Ordinance – Ref. Para 1.7(c) Chapter 1 of 5th Report of Law Commission, Delhi.
7. 130th report of the Law Commission of India, Delhi
8. Submitted on 14th Augutst, 1988.
9. Referred to the Commission on 22nd July,1988.
10. The Original Ordinance did not contain such general prohibition.
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