As Civil Suit To Enforce Claim In Benami Property Is Barred, Criminal Proceeding By 'Real' Owner Also Impermissible: Supreme Court

In a recent ruling regarding the Benami Act, the Supreme Court determined that individuals claiming ownership of benami properties cannot initiate civil or criminal proceedings against those in whose name the properties are held. Justices BR Gavai and Sandeep Mehta clarified that despite investing in benami transactions, the complainant cannot sue the property holder in civil court or institute criminal proceedings based on the same allegations.\r

Section 4 of the Benami Transactions (Prohibition) Act, 1988, prohibits individuals who paid consideration for benami properties from recovering them or raising defenses against the property holder. The case involved a dispute where the respondent, who invested in a property held in the name of the appellant, filed criminal complaints under Sections 406 and 420 of the IPC alleging non-payment of her due share of profits. \r

However, the court, citing Section 4 of the Benami Act, deemed the initiation of criminal proceedings impermissible. Furthermore, it ruled that even initiating civil proceedings for profit recovery wouldn't be permissible under Section 4. Consequently, the court quashed the criminal proceedings against the appellant/accused. The ruling clarifies the limitations imposed by the Benami Act on individuals seeking legal recourse in disputes related to benami properties.