As Civil Actions Are Prohibited for Benami Property Claims, Criminal Prosecution by 'Real' Owner Also Not Allowed: Supreme Court
In the case of C. SUBBIAH @ KADAMBUR JAYARAJ AND OTHERS v. THE SUPERINTENDENT OF POLICE AND OTHERS, concerning the Benami Act, the Supreme Court ruled that individuals claiming ownership of benami property cannot file suits or proceedings against those in whose name the properties are registered.
The bench, comprising Justices BR Gavai and Sandeep Mehta, emphasized that despite investing in benami transactions, the complainant could not pursue civil proceedings against the individuals holding the properties.
Furthermore, the Court deemed criminal proceedings on the same allegations untenable, quashing charges under Sections 406 and 420 of the Indian Penal Code. It reasoned that since the Benami Act prohibits civil suits against the accused, initiating criminal prosecution for the same cause of action is legally impermissible.
The Benami Act defines benami transactions as property transfers where consideration is provided by one person but held in another's name. Sections 4(1) and 4(2) of the Act prohibit individuals who pay consideration from recovering benami property or raising any claims against the property holders.
In this instance, the respondent, while employed in the government sector, purchased property in the appellant's name, with the respondent providing the consideration. Disputes arose when the respondent alleged that her rightful share of profit from the property was not given.
Despite the dispute, the Court held that initiating criminal or civil proceedings against the appellant based on the benami property is impermissible under Section 4 of the Benami Act.
Quashing the criminal proceedings against the appellant, the Court affirmed that allowing such actions would constitute an abuse of legal process.