THE BENAMI TRANSACTIONS (PROHIBITION) ACT, 1988
An Act to prohibit benami transactions and the right to recover properly held benami and for
matters corrected therewith or incidental thereto.
Be it enacted by Parliament in the Thirty-ninth Year of the Republic of India as follows: -
1. Short title, extent and commencement- (1) This Act may be called the Benami Transactions
(Prohibition) Act, 1988.
(2) It extends to the whole of India except the State of Jammu and Kashmir.
(3) The provisions of sections 3, 5 and 8 shall come into force at once, and the remaining
provisions of this Act shall be deemed to have come into force on the 19th day of May, 1988.
2. Definitions- In this Act, unless the context otherwise requires,-
(a) benami transaction means any transaction in which property is transferred to one person for a
consideration paid or provided by another person;
(b) prescribed means prescribed by rules made under this Act;
(c) property means property of any kind, whether movable or immovable, tangible or intangible,
and includes any right or interest in such property.
3. Prohibition of benami transactions- (1) No person shall enter into any benami transaction.
(2) Nothing in sub-section (1) shall apply to the purchase of property by any person in the name
of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the
said property had been purchased for the benefit of the wife of the unmarried daughter.
(3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term
which may extend to three years or with fine or with both.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence
under this section shall be non-cognizable and bailable.
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.
(3) Nothing in this section shall apply,-
(a) where the person in whose name the property is held is a coparcener in a Hindu undivided
family and the property is held for the benefit of the coparceners in the family; or
(b) where the person in whose name the property is held is a trustee or other person standing in a
fiduciary capacity, and the property is held for the benefit of another person for whom he is a
trustee or towards whom he stands in such capacity.
5. Property of benami liable to acquisition - (1) All properties held benami shall be subject to
acquisition by such authority, in such manner and after following such procedure as may be
(2) For the removal of doubts, it is hereby declared that no amount shall be payable for the
acquisition of any property under sub-section (1).
6. Act not to apply in certain cases - Nothing in this Act shall affect the provisions of section 53
of the Transfer of Property Act, 1882 (4 of 1882.), or any law relating to transfer for an illegal
7. Repeal of provisions of certain Acts - (1) Sections 81, 82 and 94 of the Indian Trusts Act,
1882 (2 of 1882.), section 66 of the Code of Civil Procedure, 1908 (5 of 1908.) and section 281A
of the Income-tax Act, 1961 (43 of 1961.), are hereby repealed.
(2) For the removal of doubts, it is hereby declared that nothing in sub-section (1) shall affect the
continued operation of section 281A of the Income-tax Act, 1961 (43 of 1961.) in the State of
Jammu and Kashmir.
8. Power to make rules - (1) The Central Government may, by notification in the Official
Gazette, make rules for carrying out the purposes of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may
provide for all or any of the following matters, namely:-
(a) the authority competent to acquire properties under section 5;
(b) the manner in which, and the procedure to be followed for, the acquisition of properties under
(c) any other matter which is required to be, or may be, prescribed.
(3) Every rule made under this Act shall be laid, so soon as may be after it is made, before each
House of Parliament, while it is in session for a total period of thirty days which may be
comprised in one session or in two or more successive sessions, and if, before the expiry of the
session immediately following the session or the successive sessions aforesaid, both Houses agree
in making any modification in the rule or both Houses agree that the rule should not be made, the
rule shall thereafter have effect only in such modified form or be of no effect, as the case may be;
so, however, that any such modification or annulment shall be without prejudice to the validity of
anything previously done under that rule.
9. Repeal and saving - (1) The Benami Transactions (Prohibition of the Right of Recover
Property) Ordinance, 1988 (Ord.2 of 1988.) is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance
shall be deemed to have been or taken under the corresponding provisions of this Act.