The SC on May 9, 2019[1] has set aside an order of the Madras High Court, wherein it had been held that the transaction to purchase the properties that formed the subject-matter of the dispute was benami in nature, given that part of the sale consideration was paid by another person at the time of the purchase of the property. The SC noted that the following circumstances should be taken into consideration: (i) the source of the purchase money; (ii) the nature and possession of the property, after the purchase; (iii) the motive, if any, for giving the transaction a benami colour; (iv) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; (v) the custody of the title deeds after the sale; and (vi) the conduct of the parties concerned in dealing with the property after the sale. The SC held that the burden of proving that a particular sale is benami and that the apparent purchaser is not the real owner, always rests on the person making such an assertion.

The SC, while considering whether it was open for the defendant to take the plea that the purchase made in the name of the wife or children was for their benefit, noted that under Section 3 of the Benami Transaction (Prohibition) Act, 1988 (‘BTA’), there was a presumption that a transaction made in the name of the wife and children is for their benefit. However, by way of the Benami Amendment Act, 2016, Section 3(2) of the BTA, which provided for the said statutory presumption, was omitted. In light of the above, the SC noted that the provisions of the BTA were not applicable retrospectively and therefore, the said 2016 amendment would not apply in the present case as the sale deed was executed much prior in time.

[1] Mangathai Ammal v. Rajeswari, 2019 SCC Online SC 717.