| Principle 'Benami' transaction means a transaction in which property is transferred to one person for a consideration paid by another. This law does not apply if purchase is made by a person in favour of his wife or unmarried daughter. Any person who enters into a Benami transaction shall be punished with imprisonment for 3 years. |
| Facts Mahendra a rich industrialist buys a plot of land in the name of his concubine. Decision is Mahendra liable for imprisonment? |
A) No, because the exception applies to his case
B) Yes, because he has entered into a Benami transaction
C) Yes, because exception does not apply to his case
D) Both 'b' and 'c'
Correct Answer: C
Solution :
According to the Transfer of Property Act, 1882 and the principle given here, there are two exceptions regarding the Benami transaction, firstly it is not applicable, if purchase is made by a person in favour of his wife or unmarried daughter. But in this case Mahendra is liable for imprisonment, because his transaction is not within the scope of exceptions as he bought as plot of land in the name of his concubine.
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