Section 4 of the Benami Act: Prohibition of the Right to Recover Property Held Benami
Section 4 of the Prohibition of Benami Property Transactions Act, 1988 prevents a person claiming to be the real owner of benami property from enforcing that alleged ownership through a suit, claim or action. It also prevents such a person from raising a defence based on an asserted right in the benami property.
What does Section 4 prohibit?
| Section 4(1) | Bars a suit, claim or action by or on behalf of a person claiming to be the real owner to enforce a right in property held benami. |
|---|---|
| Section 4(2) | Bars a defence based on an asserted right in property held benami when raised by or on behalf of a person claiming to be the real owner. |
| Former Section 4(3) | Omitted by Section 7 of the Benami Transactions (Prohibition) Amendment Act, 2016 with effect from 1 November 2016. |
Text of Section 4 - Prohibition of the right to recover property held benami
(1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
(2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.
Meaning and legal effect of Section 4
Section 4 is a statutory bar on enforcing an alleged beneficial or real ownership claim where the property is held benami. Sub-section (1) operates against affirmative proceedings: a person claiming to be the real owner cannot maintain a suit, claim or action to enforce a right in the property merely on the basis that another person holds it benami.
Sub-section (2) applies when the alleged real owner is defending a proceeding. It prevents that person from relying on a right in the benami property as a defence. Thus, Section 4 addresses both an affirmative attempt to recover or enforce rights and a defensive attempt to rely on the alleged benami arrangement.
What is a benami transaction?
The expression benami transaction is defined in Section 2(9) of the Act. The definition covers specified transactions and arrangements in which property is held by one person while the consideration is provided or paid by another for the provider's direct or indirect benefit, subject to statutory exceptions and other categories stated in the definition. Whether a particular arrangement is benami therefore depends on the complete statutory definition and the facts of the transaction.
For the full definition, see Section 2 - Definitions.
Relationship with Sections 3, 5 and 6
Section 4 should be read with the surrounding provisions of Chapter II. Section 3 prohibits benami transactions. Section 5 provides that property which is the subject matter of a benami transaction is liable to confiscation by the Central Government. Section 6 restricts re-transfer of benami property by a benamidar, subject to the statutory exception stated in that section.
Related provisions: Section 3 - Prohibition of benami transactions, Section 5 - Property held benami liable to confiscation, and Section 6 - Prohibition on re-transfer by benamidar.
Official legal sources
The current text of the Act can be verified from the India Code - Prohibition of Benami Property Transactions Act, 1988. The 2016 amending legislation is available from the Income Tax Department - Benami Transactions (Prohibition) Amendment Act, 2016. The Income Tax Department also maintains an official PBPT Act resource.
This page is a general statutory reference. Application of Section 4 can depend on the complete Act, the nature and date of the transaction, pleadings, evidence and binding judicial decisions applicable to the facts.