law: Benami Transactions Act (Prohibition), 1988
  4. Prohibition of the right to recover
  
  property held benami. -
  (1) No suit, claim or action to enforce any
  
  right in respect of any property held benami against the person in whose name
  
  the property is held or against any other person shall lie by or on behalf of a
  
  person claiming to be the real owner of such property.
  (2) No defense based on any right in respect
  
  of any property held benami, whether against the person in whose name the
  
  property is held or against any other person, shall be allowed in any suit,
  
  claim or action by or on behalf of a person claiming to be the real owner of
  
  such property.
  (3) Nothing in this section shall apply-
  (a) where the person
  
  in whose name the property is held is a coparcener in a Hindu undivided family
  
  and the property is held for the benefit of the coparceners in the family; or
  (b) where the person
  
  in whose name the property is held is a trustee or other person standing in a
  
  fiduciary capacity, and the property is held for the benefit of another person
  
  for whom he is a trustee or towards whom he stands in such capacity.
  COMMENTS
  (i) Sub-section (1) of section 4 has no
  
  application to the claim made in the suit as this is not a suit filed by or on
  
  behalf of defendant No.1 against defendant No.2 or the legal representatives of
  
  defendant No..2, instead it is a suit filed by a third party for specific
  
  performance of the suit contract against the real owner as well as benamidar,
  
  Murlidhar Bapuji Valve v. Yallappa Lalu Chaugule, AIR 1994 Bom 358.
  (ii) The defense raised by the contesting
  
  respondents that the transaction of the sale under the sale deed dated 9th
  
  October, 1957 executed in favor of the appellants was a benami transaction is
  
  prohibited in view of section 4(2) of the Benami Transactions (Prohibition)
  
  Act, 1988; Duvuru Mohand Reddy v. Alluru Nagi Reddy, AIR 1994 SC 1647.
  (iii) The defense taken by the defendant that
  
  the plot in fact was purchased by him in the name of his brother i.e. the plot
  
  was purchased benami, cannot be allowed by virtue of section4(2) of the Benami
  
  Transactions (Prohibition) Act, 1988; Om Prakash Rawal v. Justice Amrit Lal
  
  Bahri, AIR 1994 HP 27.
  (iv) Under section 88 of Indian Trusts Act, an
  
  agent or other person bound is in a fiduciary character to protect the interest
  
  of the principal and the former would hold the property for the benefit of the
  
  principal or the person in whose behalf he acted as an agent. Held that a real
  
  purchaser is the respondent, the petitioner as an agent and power of attorney
  
  had purchased the property but ostensibly had his name entered in the sale
  
  certificate fraudulently and without consent of the principal and the question
  
  of benami does not arise though section 4 prohibits such a plea; P. V. Sankara
  
  Karup v. Leelavathy Nambiar, AIR 1994 SC 2694.
  (v) A coparcenery is purely a creature of law
  
  and it cannot be created by act of parties whereas a composite family is the
  
  result of an agreement express or implied. There are incidents to the
  
  constitution of a composite family, but all incidents are consequences of the
  
  agreement between the parties. Held that exception is section4(3) could not be
  
  attracted in the present case of an alleged composite family; B. Rajagopal Reddy
  
  v. Padmini Chandrasekharan, AIR 1990 Mad 353.
  (vi) On coming into force of the Benami
  
  Transactions (Prohibition) Act, defense raised for the proof of the fact that
  
  the property held by a person is in the capacity of a benamidar is expressly
  
  prohibited. Neither the court is permitted in law to consider such defense nor
  
  to record its findings. Held that the Income-tax Deptt. would be prohibited
  
  from raising a defense that the suit property held by the wife is benami and
  
  the real owner is her husband; Smt. Khateeja Bai v. Union of India, AIR 1994
  
  NOC 136 MP.
  (vii) The plaintiff cannot lay any claim in
  
  view of section 4 to the house on the ground that they stand in the name of
  
  step mother benami for her deceased father, Baghyavathi v. Lakahmikathammal,
  
  AIR 1993 Mad 346.
  (viii) The burden of showing that a transfer
  
  is a benami transaction lies on the person who asserts that is such a
  
  transaction. The governing principal for determining the question whether a
  
  transaction is benami or not is to be proved by showing that the purchase money
  
  came from a person other than the person in whose favor the property is
  
  transferred . The intention of the person who contributed towards the money has
  
  to be inferred from the circumstances and the relationship of the parties and
  
  the motive governing their action in bringing about the transaction and their
  
  subsequent conduct; Mahinder Singh v. Pardaman Singh, AIR 1992 Del 357.
  (ix) In view of section 4, there is a total
  
  prohibition against any suit based on benami transaction and the
  
  plaintiff-respondent is not entitled to get any decree in such suit or in
  
  appeal, an appeal being a constitution of suit and in the present case the
  
  appeal was pending before this court. In s suit for recovery of benami property
  
  if any appeal is pending on the date of coming into force of section 4 the
  
  appellant court can take into account the subsequent legislative changes; Om
  
  Prakash v. Jai Prakah, AIR 1992 SC 885.
  (x) Section 4 of the Benami Transaction
  
  (Prohibition ) Act, must be taken to relate of section 2 of the Benami
  
  Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988. It
  
  is clear that in spite of the recommendation of the Law Commission of India to
  
  bar institution of suits only, the Ordinance making authority has thought if it
  
  to bar other proceedings also and has also provided in express words barring of
  
  all claims and actions to enforce the right of a person alleging to be the real
  
  owner against the benemidar. The Legislature by using the expression ‘shall
  
  lie’ made departure from the usual expression ’shall be institute’ clearly
  
  demonstrate its resolve to regulate all such suits, claims or actions also
  
  which would be lying in the court on the date of its commencement; Urmila Bala
  
  Dasi v. Probodh Chandra Ghosh, AIR Cal 283.
  (xi) The expression any property held benami
  
  is not limited to any particular time, date or duration i.e. the Benami
  
  Transactions (Prohibition) Act, 1988 is retrospective in operation. Once the
  
  property is found to have been held benami no suit, claim or action to enforce
  
  any right in respect thereof shall lie. Sub-section (2) of section 4 similarly
  
  nullifies the defenses based on any right in respect of any property held
  
  benami. Section 4 in its sweep envisages past benami transaction also within
  
  its retroactivity. In this sence the Act is both a penal and a disqualifying
  
  statute. Held that as the appeal was pending in Supreme Court on commencement
  
  of the Benami Transactions (Prohibition) Act, 1988, the matter becomes
  
  sub-judice and thereafter the ‘Supreme Court’ had seisin of the whole case and
  
  the decree passed by the lower courts annihilated and the suit dismissed;
  
  Mithilesh Kumari v. Prem Behari Khare, AIR 1989 SC 1247.
  (xii) The benamidar before the enactment of
  
  Benami Transactions (Prohibition) Act, 1988 could not have any right, title and
  
  interest in the property which the benamidar could convey. By the principle of
  
  fictional relation back as propounded by the Supreme Court in Mithlesh Kumari,
  
  the benamidar should be deemed to have title to the property on the date he
  
  executed the deed or release. Held that Surendra Kumar was the benamidar and in
  
  point of act on the date of execution of the deed of release he had no right or
  
  interest in the property; Ratanlal Bansilal v. Kishorilal Goenka, AIR 1993 Cal
  
  144.
  (xiii) It has been held that the suit is not
  
  hit by sections 2 and 4 of the Benami Transactions (Prohibition) Act, 1988 as
  
  the plaintiff has not alleged that the defendant No 1 i.e. one of the partners
  
  was or is a benamidar or that the money was paid by the plaintiff or that the
  
  property was purchased in the name of the defendant No.1 as benamidar apart
  
  from that the under section 14 and 15 of the Partnership Act, a partnership can
  
  acquire asserts in the name of partners and these sections have not been
  
  deleted by the Benami Transactions (Prohibition) Act, 1988; Md. Hasan Hashmi v.
  
  Smt. Kaberi Roy, AIR 1993 Cal 70.
  (xiv) Section 4 takes into its ambit the right
  
  of a real owner vis-ŕ-vis ostensible owner. The prohibition under section 4(1) and
  
  (2) does not prohibit the right of a third party to get a declaration. The
  
  third party has the right to raise the contention that someone was the real
  
  transferee and the sale deed was only executed in the name of the transferee
  
  who was a benamidar, Gopal Bariha v. Satyanarayan Das, AIR 1991 Ori 131.
  (xv) Section 2 of the Benami Transactions
  
  (Prohibition of the Right to Recover Property) Ordinance, 1988 relates to
  
  section 4 of the Benami Transaction (Prohibition) Act, 1988 and according to
  
  section 2 of the Benami Transactions (Prohibition of the Right to Recover
  
  Property) Ordinance, 1988, action means a civil proceeding commenced by
  
  "writ" or in such other manner, as may be prescribed by rules of
  
  court but does not include a criminal proceeding, therefore the term
  
  "action" is wide enough to take in an appeal or a second appeal;
  
  Velayudhan Ramkrishan v. Rajeev, AIR 1989 Ker 12.
  (xvi) In the context and setting of section 4
  
  the word ‘held ‘ has to be understood as "possessed or occupied". If
  
  the possession or occupation is not benami, section 4 can have no application
  
  and as a sham transaction or bipartite transaction is not a benami. Section 4
  
  does not apply to such a transaction; Ouseph Chacko v. Raman Nair, AIR 1989 Ker
  
  317.
  (xvii) Section 4 and 7 of the Benami
  
  Transactions (Prohibition) Act, 1988 relate to sections 2 and 4 of the Benami
  
  Transactions(Prohibition of the Right to Recover Property) Ordinance, 1988.
  
  Both section 7 of the Benami Act and section 4 of the Benami Ordinance repeal
  
  section 82 of the Trusts Act keeping section 81 of the Trusts Act intact.
  
  Keeping in view section 81 of Trusts Act nominal transactions are not intended
  
  to be covered and are not hit by section 4;B. Rayudu, AIR 1989 AP 290.