What is Benami Transaction? Meaning & Legal Provisions

A benami transaction is when a property is bought in the name of one person but paid for by another, and the real owner (beneficial owner) hides their identity. Such dealings are forbidden by the Prohibition of Benami Property Transactions Act, 1988 (amended in 2016).

Section 2(9) defines benami transactions, Section 3 prohibits them, and Section 5 permits the government to confiscate such properties. Section 24 allows for the freezing of suspected benami properties.

Recently, the Supreme Court put a hold on a Madhya Pradesh High Court order for the release of ₹350 crore value shares in Som Distilleries, terming it as "bordering on perversity" since the shares were said to be benami.