The Benami Transactions (Prohibition) Act,1988 - Contribution of money does not by itself conclusively establishes benami. Intention of parties is necessary.

Recently, the Hon'ble Madras High Court in K.R.Rajeesh Kumar Vs . K.Nalini Raghavan & Others laid out the ingredients to infer benami transaction. In this case, the Plaintiff alleged that his deceased father purchased the properties in the name of his wife as bemani and claimed partition on the property. The Hon'ble High Court negated the contention of the Plaintiff and observed that mere contribution of funds will not attract the provisions of the Act. Intention can alone attract the provisions of the Act. The relevant portion of the judgement is extracted herein under;

“38…Even assuming some money was contributed by her husband in putting up construction of house, it does not by itself conclusively establish the fact of benami.”

39. It was held by the Privy Council in Seth Manik Lal Mansukhbai Vs. Raja Bijoy Singh Dudhoria (AIR 1921 PC 69) that the burden of proof lies on the party assailing transaction as benami, although the circumstances may be suspicious. In such cases, it is essential to take care that the decisions of the courts rests not upon suspicion, but upon legal grounds, established by legal testimony. In cases of this character, the determination of the question depends not only on direct oral evidence, but also upon circumstances and surrounding of the case concerned. It has been held repeatedly that the burden of proof lies heavily on the person who claims against the tenor of the deed, that is, the alleged beneficiary, to show that the ostensible vendee was a mere name lender and the property was in fact purchased only for his benefit. Such burden would be discharged by satisfying the well known criteria viz.(1)source of purchase money relating to the transaction, (2) possession of the property, (3) the position of the parties and their relationship to one another, (4) the circumstances, pecuniary or otherwise, of the alleged transfer,(5) the motive for transaction, (6) the custody and production of title deeds and (7) the previous and subsequent conduct of the parties. Each of abovesaid circumstances, taken by itself is of no particular value and affords no conclusive proof of the intention to transfer the ownership from one person to the other. But, a combination of some or all of them and a proper weighing and appreciation of their value would go a long way towards indicating whether the ownership has been really transferred or where the real title lies. In every benami transaction, the intention of the parties is the essence. Therefore, the true test to determine whether the transaction is benami or not is to look to the intention of the parties viz.whether it was intended to operate as such or whether it was only meant to be colourable.”