Benami Transaction Suits And Its Methodology

The transaction is a process carried out by two or more persons for the purpose of benefit and reciprocal concession to each other. As there are various kinds of business transactions, one of them is Benami Transaction.

Keeping in view the technicalities, importance of this unique type of Transaction (Benami); its History and the law relating to Benami Transaction is discussed here-in-below.

Benami Transaction

Benami transaction is a kind of transaction in which the purchased property is in the name of “Benamidar” but the actual owner is someone else who had been actually paid the consideration called the real owner.

In other words, where a person purchases property with his own money but in the name of another person without any intention to benefit such other person.

In this type of Transaction, there are always three persons, in certain circumstances more than three persons.

  • Benamindar: The Ostensible owner on whose name only the property is purchased is called Benamidar. Or the Nominal owner is called benamidar.
  • Seller: The person who sell-out the property.
  • The Real Owner: The Person who actually has paid the consideration amount to purchase the property in the name of another person (Benamidar) without intending to give any benefit to him.

Plaint In Suits Relating To Benami Transaction

While filling suit of Benami in court the plaintiff must include the most important facts in his plaint. Some important things that ought to be mentioned are explained below.

  • The plaint in suits relating to Benami transactions must contain, statements of facts constituting a cause of action.
  • It must have an explanation that the original title deeds regarding the property subject of Benami transactions are in possession of the plaintiff.
  • It must contain facts showing why the plaintiff deemed it expedient to purchase the property in the name of the defendant.
  • The Plaintiff must highlight the circumstances under which the purchase money was paid by the plaintiff.
  • The plaint must also show the motive for purchasing the property in the name of the defendant/benamidar.
  • It must also show that the plaintiff is in possession of the property is enjoying usufruct of the property.
  • If the defendant/benamidar is in possession of the property in dispute, the plaint must show that the rent and profit had been enjoyed by the plaintiff and that the defendant was in possession as a trustee for the plaintiff.
  • The plaint must also show that the defendant has endangered the title of the plaintiff to the property by setting up an adverse title in him.

In Ghulam Qadir’s case, reported in 2008 CLC 887 Lahore, it is held that “plaintiff had failed to mention in the plaint any reason or motive for the purchase of land in an open auction in the name of the defendant. Order of dismissal of suit maintained”.

Written Statement In Suit Relating To Benami transaction

The defendant may contest the suit by filing written statement and he may raise an objection regarding

  • The non-maintainability of the suit
  • The transaction is either is void or voidable.
  • He can allege that the title deeds are in his name.
  • If he is in possession of the title deeds subject of the Benami transaction, he can show the facts in this respect.
  • If he is in the occupation of the property he can show this position.
  • He can encounter and challenge the motive forwarded by the plaintiff.

In other cases, if the defendant is not the Benamidar/ostensible owner and if he is a real purchaser, he can allege facts in this respect by showing that he is the certified owner/purchaser by giving particulars of the sale.

In some cases limitation, estoppel and other legal applicable pleas may also be forwarded in a written statement in order to contest the claim of the plaintiff.

Limitation For Benami Suits

In the Limitation Act, 1908 there is no specific Provision/Article in its first schedule providing limitation for suits relating to Benami transaction.

In the case titled: Mst. Sara Bai Vs Iqbal reported in 2006 MLD 1429 Karachi citation a, it is held that “suit for which no period of limitation is provided elsewhere in the schedule can be filed under Article 120 of the Limitation Act, 1908. within six years when the right to sue to accrue”.

Onus to prove the Benami transaction is always on that person who asserts or alleges. The parties to the suit cannot go beyond the facts which are mentioned in the plaint or in written statement.

The question of court fee and misusing the Benami transaction and what are the negative effect can occur because of unauthorized use of these transaction and many other aspects of this concept are explained in detail on a link given below.

In an article written by Abdul Zakir Tareen Advocate High Court of Peshawar Pakistan.

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