Abstract

The historical roots and pre-amendment legal landscape of Benami transactions in India are examined in this research. Indian law primarily distinguished between tripartite (real) Benami arrangements, comprising a transfer to one party with consideration from another for a third party's advantage, and bipartite (sham) transactions, where no genuine transfer of title was intended before the enactment of the Benami Transactions (Prohibition) Act, 1988. By emphasising the rejection of the theory of advancement in India, as seen in Gosain v. Gosain, the paper clarifies this judicial classification and compares it with English law. The research follows the statutory acknowledgement of Benami practices through the Indian Trust Act, 1882, together with subsequent Civil Procedure Code and Income Tax Act specifications. It critically assesses the significant 57th and 130th Law Commission Reports, which called for particular laws to address the underlying problems of Benami transactions. The research also looks at the Benami Transactions (Prohibition) Ordinance, 1988's promulgation and inherent flaws as well as the subsequent Benami Transactions (Prohibition) Act, 1988. These legislative attempts have definitional ambiguity, insufficient enforcement policies, and a narrow scope, especially with relation to sham transactions. Ultimately, this paper emphasises the need of the thorough reforms proposed by the Benami Transaction Prohibition (Amendment) Act, 2016 by stressing the inadequacy of the pre-amendment legal system in properly handling Benami transactions. The paper offers vital background for understanding the development of legal measures meant to avoid and penalise Benami transactions in India by mapping this historical and legislative system.

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