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

In a recent ruling, the Supreme Court clarified that under the Benami Transactions (Prohibition) Act 1988, a person claiming ownership of a Benami property cannot file civil or criminal proceedings against the individual in whose name the property is registered. The court highlighted that Sections 4(1) and 4(2) of the Benami Act prohibit the recovery of property held to be Benami, barring individuals from raising defenses based on such property rights. \r

In a specific case where the respondent, working in government service, invested in a property registered in the name of the appellant, a dispute arose over profit sharing. Despite paying the property's consideration, the respondent opted for the appellant's name due to her government job. When the respondent alleged non-payment of her due share of profits, she filed a criminal complaint under IPC Sections 406 and 420. \r

The court emphasized that initiating criminal proceedings based on Benami transactions is impermissible under the Act, even disallowing civil suits for recovery. Thus, the court quashed the criminal proceedings, citing abuse of legal process due to the statutory bar under Section 4 of the Benami Act. The ruling effectively underscores the Act's provisions to prevent misuse of the legal system in cases involving Benami transactions.