The Benami Transactions (Prohibition) Act, 1988 was enacted for banning the transaction carried out under the name of benami and the privilege to get the property which is under the possession of benami and other issues related with benami transactions. The provisions of the enactment shall be applicable to the entire Indian Territory excluding the State of Jammu and Kashmir. The Act specifically states that the provisions of the enactment shall be implemented on May, 19, 1988 except Sections 3,4and 5 which shall have effect immediately. Under the interpretation clause, benami transaction is any contract where the property is reassigned to a person for the payment which is paid by him or remunerated by another person. The Act defines property as any type of property which consists of privileges as well as interests on such assets.
By virtue of the provisions of the Act, it is against law to enter into transactions or contracts through benami. The Act expressly bans transaction with the help of benami. But this provision shall not be applicable with regard to a person who acquires property through his wife or his daughter who is not married. Moreover, if not a different matter is proved, it will be supposed that the acquired land had been acquired for the interests of that spouse or the daughter as aforementioned. A person who transacts through a benami shall be penalized with imprisonment up to three years or by paying fine. Without giving effect to the Criminal procedure Code of 1973, the offences provided under this enactment is non-cognizable and the accused gets the opportunity to get bail.
The Act in addition states that any litigation or step to impose any privilege or right with regard to the assets under the control of the benami as opposed to the person who actually entitles the property or as against a third party or for the person who assert to be the actual owner of the assets shall be prohibited. There shall be no security related with the interests of the assets under the control of benami devoid of the fact that under whose title the assets is being held or next to any person that is permitted in any litigation, assertion or steps in the place of the person who declare to be the actual holder of that assets. The provisions of this Act shall not be implemented with regard to the person under whose title the asset is being embraced as the coparcener of the joint Hindu family. It shall also be not applicable to a person who is the trustee or if the person in whose name the transaction is performed holds near relation and the asset is embraced for the wellbeing of third party for whom he stands as the trustee or to whom such persons holds such position.
Besides, the entire property which is under the control of the benami is permitted to be acquired by the concerned authority in the mode and subsequent to complying with the process which is specified under the enactment. In order to clarify uncertainty, it is also affirmed that compensation shall not be paid for the purpose of acquiring the asset which is stated above. The present legislation is not applicable with respect some matters as specified under the Act. The provisions stated in the present enactment shall not be applied to Section 53 of the Transfer of Property Act enacted in 1882 or other enactments that connect with any assignments for unlawful purpose. The Act repealed some of the provisions of the Indian Trusts Act of 1882 along with provisions of the Civil Procedure Code of 1908. The Act in addition cancelled terms of the Income Tax Act of 1961. The Central Government is empowered under the enactment to formulate rules in some of the areas as provided under the enactment. Besides, the Act annulled the Benami Transactions (Prohibition of the Right to Recover
Property) Ordinance, 1988.