CHAPTER - I MEANING, ORIGIN AND NATURE OF BENAMI 1.1 Introduction: Benami transactions have been a common practice in India since a very long period of time. The word ‘benami’ is of Persian origin and literally means ‘property without a name’. It signifies a transaction where a person buys property in the name of another or gratuitously transfers property to another without an intention to benefit that other. A benami transaction was one where property was purchased or transferred in the name of one person but another person paid the consideration for the transfer. The person in whose name the property was transferred was only the nominal owner while the person from whom the consideration flowed was the real owner of the property. Benami Transactions means acquiring or holding or purchase of property in false name of another person, who does not pay the consideration but merely name lender, while the real title vests in another person who actually purchased the property for his own benefit. Property was purchased out of love and affection in not a benami transaction. The practice of Benami transactions was not restricted to Hindus but was also common among Muslims as furzee transactions. Moreover, benami transactions were not confined to purchases in the name of a person but also applied to leases and mortgages i.e. a person may take a lease of property in the name of another or he may buy property in his own name and subsequently convey or mortgage it to another for a fictitious consideration. Benami transactions had been
in this Indian
subcontinent for a long time and became a valid custom, thereafter got formal legislative recognition by introducing the Trust Act, 1882.The practice of Benami transactions was not only familiar among the Hindu community but also common phenomenon among Muslims as furzee transactions. Consequently, Benami transactions were recognized by the Courts. 1 The essential legal characteristic of these transactions is that there is no intention to benefit the person in whose name the transaction is made, the name of that person popularly known as the `benamdar'. Benamdar is simply an alias for that of the person beneficially interested. The benamdar has the ostensible title to the property standing in his name; but the beneficial ownership of the property does not vest in him but in the real owner. A benamdar merely represents the real owner. Moreover, benami transactions were not confined to purchases in the name of a person but also applied to leases and mortgages i.e. a person may take a lease of property in the name of another or he may buy property in his own name and subsequently convey or mortgage it to another for a fictitious consideration.A proceeding by or against the 1
Nurjahan Begum Vs. Mahmudur Rahman Mullick 34 DLR (AD) 61=1 BLD (AD) 506
benamdar, although the beneficial owner is no party to it, is fully binding on the beneficial owner.2 The expression Benami is a persion origin the meaning of which is fictitutious.3 In the matter of Ali Azam Vs. Mohammad Majib Ullah4 his lordship Mr. Hasan Foez Siddique,J Observed that: The word "Benami" is a Parsian compound word consisting of (i) Be which means 'without' and (ii) Nam', which means 'name. It literally means without a name that is nameless or fictitious and is used to denote a transaction which is really done by a person without using his own name. That is, not in the name of real purchaser, but in the name of another. In every such benami transaction there are three persons concerned; the vendor, the real purchaser and the name lender…………The word benami transaction means a transaction in which the purchase is made in the name of someone other than the real purchaser. It was further observed that, to come under the purview of the Benami transaction, the property must be in the name of one person, whereas the sale price or consideration should be paid or provided by another. The consideration thus flows from a person other than the person in whose name the property is purchased. If the person in whose name the property is purchased has made a contribution towards the sale consideration, then the transaction may not amount to a Benami transaction. Further, the reasons or intention for withholding the names of the persons making the contributions for the purchase of the property will also be looked into. A deed cannot be partially benami partially shwanami. In the alleged transaction it appears that the name of the real purchaser as well as his alleged benamder are appeared in the kabala deed. So apparently the instant transaction is not a benami transaction within the meaning of the words benami' "benamder" and "benami transaction.
1.2 Origin and development of the Benami Transaction: Roman law which is one of the oldest known legal systems recognized something like the benami transaction. The law of property of the Romans required that for the conveyance of lands, slaves, horses, oxen 2
Kutubuddin Ahamed vs Hasna Banu and another 40 DLR (AD)75
Anasuya Vs. Rayudu, 1988(2) ALT (N.R.C.)55.
11 BLT 26 (2003)
and the objects of first consequence to a primitive people the elaborate ceremony of mancipation had to be gone through. These were called res mancipi, that is, things which required a mancipation. Mancipation is described by Gaius with particular reference to the conveyance of moveable (res mancipi) as a pretended sale in the presence of not less than five citizens as witnesses and a libripens holding a pair of copper scales. The transferee with one hand on the thing transferred and using certain words of style declared it his by purchase with a piece of copper (which he held in his other hand) and the scales (hoc arer aeneaque libra); and simultaneously he struck the scales with the as which he then handed to the transferor as figurative of the price. The principal variation when it was immoveable that was being transferred was that the mancipation did not require to be on the spot; the land was simply described by its known name in the valuation roll. As observed by Maine in his AncientLaw, the entire solemnities must ke scrupulously completed by persons legally entitled to take part in them or else the conveyance is null and the seller is re-established in the right of which he had vainly attempted to divest himself. The Praetor remove this hardship by recognizing titles acquired by conveyance to which part only of the ceremony of mancipation had been applied and vested the beneficial interest in the purchaser to whom the property had keen delivered. If the ceremony of mancipation had been carried so far as to involve a traditio or delivery the Praetor would protect the possession of the purchaser which the course of two years at the most ripened into full ownership by what was called usucapion as known to Roman law. The concept is not also foreign to Hindu law. Manu divided the whole of Hindu law into eighteen titles. Rights and modes of procedure which were beyond the pale of the older law were recognized by later sages and designated for want of a specific name by the term "Miscellaneous". One of the rights under this "Miscellaneous Title" probably was the right of a beneficiary of property the apparent signs of the ownership of which were allowed belonging to another. Coming to English law the trust was the posthumous offspring of the mediaeval use. Use is derived not from usus but from opus. The phrase ad opus meum meaning "on my behalf" or "for my profit or advantage" is very old. In equity alone there is the idea of A holding land permanently to the use of B. It is this permanence of dominion and stewardship that really distinguishes the word as used by equity from the word as used by common law. The real beginning of uses is according to Mait-land to be found in the thirteenth century when the practice grew up of conveying land to the use of Franciscan friars. But Sir William Holds worth found cases in Bracton's Notebook and other places and put them at a much earlier date.4 Uses were designed to serve various ends. The feudal dues imposed a crushing burden on the tenant by knight service. Of these the most
irksome were wardship and marriage. The lord had the custody of the person and lands of the infant heir of his tenant and could dispose of that heir in marriage. Benami transactions were noticed as early as the year 1778 in Mr. Justice Hyde’s notes after the establishment of British rule in India. In Gopeekrist Gosain Vs. Gungapersuad,case it was (1854) 6 MLA 53, held that benami transaction is a custom of the country and must be recognized till otherwise ordered by law. In 1882 sections 81 and 82 of Indian Trusts Act gave legislative recognition to the practice of benami transactions and the courts were bound to enforce it. In the case of Nurjahan Begum, wife of Mahmudur Rahman Vs. Mahmudur Rahman Mullick5 it was observed that, The practice of benami developed in the Indian sub-continent long before its conquest by the Muslims and during the Muslim rule the practice of benami received full recognition from the authorities and the Courts as well. That the practice of benami was widely practiced throughout the sub-continent is evident from the early history of the East India Company. The company started administering the province of Bengalin 1757. Law reports of cases involving benami transaction decided by the Sudder Diwany Adawlat and the Supreme Court of Bengal amply show that the benarni system became an institution which was accepted in the common parlance though the Judges used to refer to it as a "pernicious system" but were obliged to recognise it and give effect to such transactions which were otherwise valid. In 1882 the practice of benami received formal legislative recognition when the Indian Trust Act (Act II of 1882) was enacted. 1.3 Causes of the Benami Transaction: Benami transactions used to take place to evade law of perpetuity, because of parda system, to avoid annoyance, Zamindar’s desire to avoid indignity and legal disability, mysterious desire etc. Various writers on Hindu Law and the 57th Law Commission Report of India have identified various reasons why people entering into benami transactions were such a common phenomenon. •
Some people had superstitions regarding certain names being lucky or unlucky and therefore they preferred to purchase property in the name of a real or fictitious person that they considered lucky.
34 DLR (AD) 61
A desire to make secret provisions in the Joint Hindu family system is one factor, which might have led to the practice of benami.
Another reason could have been the want to commit fraud on creditors.
The desire to evade taxes thereby committing fraud on the State and not an individual could have been another reason for the same.
Benami transactions might have originated in a desire to avoid certain political and social risks. Such practices grew up in Indian society at a time when there was an appreciable risk from one generation to another of hostile conquests and confiscation. Moreover the instability of the political climate at the time of the takeover of the Mughal Empire by the British explained the dangers perceived by people owning property. The persistence of habits after the reasons for their coming into existence disappeared is not a surprising phenomenon.
1.4 The Nature of Benami Transactions: In a benami transaction real owner of a property allows it to appear in the name of an ostensible owner, himself remaining the beneficiary of the property.6 However, this raised confusion as to in who the title to the property vested. In case of a trust, the legal ownership of the property vests in the trustee while the beneficial ownership vested with the person for whom the trust was created 7.There was no difference in this regard if the trust was express or a resulting or constructive trust. If a benami transaction created a resulting trust, then the legal ownership should vest with the benamidar while the beneficial ownership continued to remain with the real owner. The position of Indian Courts is rather obscure on the point. The Bombay High Court has held that the import of S.82 was only that a benamidar stood in a fiduciary relation with the real owner and therefore had all the obligations of a person in such position with respect to the real owner. He was no more than the ostensible owner of the property though his acts with respect to third parties were of such a nature as to bind the real owner of the property. But it would be fallacious to urge that the legal ownership of the property vested in him as it does in the case of a trustee. The principal distinction between a trustee as known in English law and a benamidar is that the 6
Nurjahan Begum, wife of Mahmudur Rahman Vs. Mahmudur Rahman Mullick (1982) 34
DLR (AD) 61 7
“The trustee is destitute of any right of beneficial enjoyment of the Trust property. His
ownership is nominal rather than real.” Salmond on Jurisprudence (12th ed., P.J. Fitzgerald ed., Bombay: N.M. Tripathi Pvt. Ltd., 1966) at 256.
trustee is the legal owner of the property standing in his name and the cestui que trust is only the beneficial owner whereas in the case of a benami transaction, the real owner has got the legal title though the property is in the name of the benamidar. The benamidar has some of the liabilities of the trustee but not all his rights. However, the Oudh High Court had held in Gur Prasad v. Hansraj that the legal title of the property in case of a benami transaction vested in the benamidar as he held the property as a trustee of the real owner. 1.5
Motive for benami Transaction: It is true that the absence of motive for benami is
not always conclusive or. the question, but when the purchase in the names of one or other or some of the members of the family is consistent with an intention to make the acquisitions for the family and there is nothing unusual in such acquisition, certainly, the Court may give some weight to the absence of motive and absence of an acceptable explanation for taking the sale-deeds in the names of his sons. Ever: as the absences of a motive need not necessarily exclude the theory of benami, the fact that some motive is shown will equally not bars the rejection of the plea of benami. While on questions of benami, the Court will not indulge in suspicion and surmise, it will have to take into consideration the facts and circumstances as established by the record and from an overall picture of the entire evidence, draw its inference. Motive, the source of consideration, possession of the property and its enjoyment, custody of title-deeds, these are various features, which may severally or cumulatively weigh and tilt the scale one way or other. But these features are not exhaustive of the circumstances on which the final conclusion of the Court has to be based. Nor can it be said that in all cases the presence or absence of one or the other of these circumstances will be helpful in deciding the real position. At times other considerations than motive, possession and sources of consideration may play a vital part in the determination. In, certain circumstances only one or the other of the above specified elements may alone be of assistance. In case of Rupe Jahan Begum vs Lutfe Ali Chowdhury and others8 It was held that, â€œBy the deed dated 20-12-74 the plaintiff No. 1 purchased 2 and a half decimal of land in the name of defendant No. 2 as benami inasmuch as the Matriculation Certificate of defendant No. 2 shows that he was born on 2-4-1959 for which when the deed in question was registered he was a boy of 13 years and in the absence of his independent source of income it can be said the deed in question was a benami. Moreso, all the deeds of the plaintiffs including the deed dated 20-12-74 were 8
49 DLR (AD) 73
produced from the custody of the plaintiffs and hence the defendant No. 1 did not acquire any title in the suit land by exchange deedâ€?.
CHAPTER- II BENAMI DISTINGUISHED FROM OTHER LEGAL RELATIONSHIPS 2.1. Religious endowment: The tests of a bona fide endowment are how have the founder and his descendants treated the endowed property and whether the income has been continuously applied to the objects of the dedication. As the Privy Council pointed out in Fuggut Mohini v. Sookheemony, a mere abuse of trust by a trustee for the time being cannot affect the validity of the endowment when there is no question about its being a real and valid endowment originally; but when the question itself is whether originally the endowment was real or fictitious the way in which it was dealt with by the founder and his successor would be the essential factors for consideration. When there is a document which purports to create the debutter it may still be proved that the deed is benami or fictitious and was not meant to be acted upon. If, however, the founder's intention to dedicate is established and divestiture of interest is contemporaneous nothing further need be proved. The following are illustrations of inoperative endowments: (i) Even after death of endower no change taking place in the accounts or in the management or dealings with the business or estate or proceeds thereof everything done in the same manner as if the deeds had not been executed. (ii) Within fifteen days of the date of the endowment endower transferring to his brother half of the endowed property. No proof that the income of the so called endowment lands had been continuously devoted to the service of the idol. (iii) No mutation of name of idol and expenditure on idol at most one tenth of the total income. (iv) Dedicated property allowed standing as secular property in the Land Registration Department and mode of dealing with the property showing that parties still regarded the property as belonging to the estate. 9 But where the deed of endowment is intended to be acted upon and is not a benami deed, instances of unlawful diversion of property from the services of the idol to other purposes in later years are immaterial and do not affect the Debuttur. 9
. Sri Thakur Parmod v. Atkins, 4 P. L. J.537.
The fact that the property is called debutter is doubtless evidence in the plaintiff's favour but it does not relieve them of the whole burden of proving that the land was dedicated and is inalienable. B. K. Mukcijea10 thinks Mookerjee, J; in Budh Singh vs. Nirod11 went a little too far when he laid down that the question whether the bawd had been absolutely dedicated for a public charitable purpose was wholly ismign to an enquiry in the resumption proceedings and quoted the following observations of Brett and Sherfuddin, IT, in Madhab Chandra v. Rani Sarat & seeari as laying down the correct law: "We are of opinion that it would acrtainly be open to an officer acting under that Regulation to enquire man the grounds set forward in support of a rent-fee grant claimed and when ,Aese grounds are based on the allegation that. The lands had been dedicatcd for a public charitable purpose, then it would be necessary for such ,blic officer for the purpose of arriving at a conclusion as to whether or not there was a valid rent-free grant to take into consideration and decide incidentally question whether there has been a dedication for a charitable purpose. Such a incidental decision would not amount to a final determination of the question Imr could it be relied upon for such a purpose." The fact that a claim. was put forward by the shebait that the property was debutter and the claim, was admitted by the revenue authorities would certainly make the rubkagis evidence her Sec. 13, Indian Evidence Act, but they could not by any means be carded as conclusive but they should be weighed and appraised for what they were worth along with other evidence in the case. Entries in settlement records are pared under Chapter X of the Bengal Tenancy Act have a greater evidentiary value; they carry a presumption of their correctness under Sec. 103-B of the Act. The mere fact that the proceeds of any land were used for the support of a- idol may not by itself establish debutter for it is well known that worship of .rnily deities may be, and sometimes is, carried on with the income of specific property belonging to the family. But such fact may in certain circumstances have an important bearing in determining whether the property is debulter or not. When account papers are produced showing that rents were separately colkted and applied for the worship of the idol or where there is apparently good evidence going back for more than, half a century that land was given for the support of an idol, proof that from time to time the proceeds of the land had been so expended would be strong corroborative evidence of debutler. Though purchase of a B. K. Mukerjea's Tagore Law Lectures on Hindu Law of Religious and Charitable Trusts, 1951, p. 173. 10
2 C.L.J. 431.
property in the name of a deity is not per se evidence of dedication when however it is proved that the person who advanced the money described himself as the dharnaakarta or shebait in the document that would be good evidence of dedication. The employment of priests or archakas for the performance of worship in accordance with the rites of the sect for whose benefit the endowment is alleged to be made also constitutes material evidence in support e (dedication. Hearsay evidence given of a tradition. in plaintiff's family that an ancestor of the defendant had established two deities and granted the plaintiffs an annuity in perpetuity for the worship charged Upon the grantor's tstate was excluded by the Privy Council in Maharaja Srish Chandra v. Rukhalanandan though it had been admitted by the High Court.
2.2 Sham transactions: A nominal transfer is distinct from a sham transfer. In the latter there is no intention to transfer at all while in the former there is an intention to transfer to one's nominee so that he shall hold the property openly for himself but secretly for the transferor, using the document as a cloak to save it from his creditors. The essence of a sham transaction is that though a deed of transfer is brought into existence no title of any kind is intended to be passed- to any person. If there is no intention of passing the title in the property to a. third person the transaction is a sham one.
2.3 Benami and sham transactions: Distinctions between.-Meaning of the word benami and a distinction between benami and sham transaction has been clearly drawn by their Lordships of the Supreme Court in Sree Minakshi Mills Ltd., Madurai v. Commissioner of Income-tax, Madras12 : "The word benami. Observed their Lordships, "is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real, as for example, when A sells properties to B, but the sale-deed mentions X as the purchaser. Here the sale itself is genuine, but the real purchaser is B, X being the benamidar. This is the class of transactions which is usually termed as benami. But the word benami is also occasionally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none such, the 12 A.
I. R. 1957 S. C. 49 at pp. 66, 67:1956 S. C. A. 1139: (1957) 31 I. T. R. 28 (1957) 1 M. L.J. (S. C.) 1: 1956 S. C. R. 691.
transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid. Hence, it is a most unreal question to raise of firms and companies whose only business consists of sham transactions as to who found the capital for them or who was running them.
2.4 Trust: Trust in the strict sense of the term in which an English lawyer uses it are unknown to Hindu and Mohammedan laws. The English law of trusts recognizes two estates of interests in the subject-matter of the trust, namely, the legal estate of the trustee and the equitable estate of the cestui que trust. Under that law there may be two persons holding different estates in the same property. Both are entitled to convey their estates, both are entitled to the rents and profits, one the legal owner to receive them and the other the equitable owner to enjoy them. The trust relationship under English law is that which arises where property is vested in a person or persons which they are obliged to hold in continual dominion and stewardship for the accomplishment of a particular purpose or for other persons according to their directions such persons being given by equity a quasi-proprietary right analogous to the common law right of ownership which will prevail not only against the trustee himself but against any one into whose hands the property co es except only a bona fide purchaser of his estate. It is possible for a trust to be imposed on B in favour of C of property which A in turn holds on trust for B. There can be a trust on a trust. Nevertheless, trusts in the wider sense of the term, namely, obligations annexed to the ownership of property which arise out of a confidence reposed in and accepted by the owner for the benefit of another are constantly created by Indians and are frequently enforced by the Courts. In a benami transaction some sort of confidence is reposed by the real owner in the benamidar but the benamidar does not by virtue of that confidence acquire any right of ownership over the property so as to give rise to the trust relationship. The real owner retains the possession himself and never gives the benami deed to the benamidar. In many cases the benamidar does noteven know of the existence of the benami deed, the assent of the benamidar not being necessary for such a transaction. Till recently the benamidar was held not entitled to bring suits in his own name. The benamidar is therefore a mere alias for the real owner and in no
sense a trustee except in those rare cases where the legal estate happens to vest in him. But there are cases which take the contrary view that a benamidar is a trustee. There is also a difference of opinion as to whether a benami transaction creates an implied or a resulting trust.13 But although benami transactions have been held to be in the nature of resulting trusts all the rules governing them are not applicable to them. The English doctrine of advancement has not been applied. All things considered, it will be found best for all practical purposes to deal with the subject of benami as one in the nature of an implied or resulting trust. But though ordinarily the benami transaction whether by way of transfer or conveyance does not create a trust nor constitute the relationship of cestui que trust and trustee between the real owner and the benamidar, there may be circumstances which may convert a mere benamidar in whose name the property stands into a trustee. Thus, there is nothing in the law which prevents a real owner from vesting the legal possession of the property kept in his name in the benamidar when he creates the benami so as to make him a trustee ; or the benamidar may by his own act, conduct and course of dealing with the property make himself so liable to the real owner that the law may imply a trust being imposed upon him in favour of the real owner.14 After the Privy Council decision of Gurnarayan v. Sheolal Singh,15 it has been settled that the benamidar represents in fact the real owner and so far as their relative legal position is concerned he is a mere trustee for him. Ameer Ali, J., who wrote the judgment of the Board in the above-noted cases, delivered himself as follows: "So long, therefore, as a benami transaction does not contravene the provisions of the law the Courts are bound to give effect to it. As already observed, the benamidar has no beneficial interest in the property or business that stands in his name ; he represents, in fact, the real owner, and so far their relative legal position is concerned he is a mere trustee for him. Their Lordships find it difficult to understand why, in such circumstances, an action cannot be maintained in the name of the benamidar in respect of the property although the beneficial 1912 M. W. N. Jour, pp. 83-84, Gopeekrist Gossain v. Gungapersaud Gossain, 6 M.L.A. 53; Tagore v. Tagore, 4 Beng. L. R. 0. C. J. 103 ; on appeal, 18 W. R. 359 at p. 368 : 9 Beng. L. R. 377 : 1. A. Sup., Vol. 133 (implied trust); Desilva v. Dcsilva, 5 Beng. L.R 784 (resulting trust) ; Mayne on Hindu Law, I Ith Ed., p. 954 (resulting trust). 13
13 C.L. J. Jour., tpp.21, 22. Save in the above exceptional cases the benamidar incurs no liability if he does not protect the property standing in his name. A trustee is liable for neglect in safeguarding the interests of the trust by not taking reasonable care with it such as a prudent man would bestow in his own affairs but there is no case in which a mere benamidar was held liable for failure to sue for recovery of money due on a trust standing in his name. 14
I. R. 1918 P. C. 140 at p. i 23 :46 LA. 1 : I. L. R. 46 Cal. 566.
owner is no party to it. The bulk of judicial opinion in India is in favour of the proposition that in a proceeding by or against the benamidar, the person beneficially entitled is fully affected by the rule of res judicata. With this view their Lordships concur. It is open to the latter to apply to be joined in the action; but whether he is made a party or not, a proceeding by or against his representative in its ultimate result is fully binding on him." The older theory that the benamidar is not a trustee can be said to have been definitely overruled by the above Privy Council ruling. Nevertheless, it would be a complete mistake to judge the status of a benamidar by reference to the strict conception of art express trustee. In truth the benami relationship is sui gezeris and cannot be compressed within the straight jacket of any known legal division. It is not agency because it does not arise out of contract. It is not trust because all the incidents of trust do not attach. It is in truth a cross between truncated agency, heritable trust and estoppel. It would be wisdom to recognize this fact. The Privy Council in Gurnarayan's case did not intend to lay down that the benamidar was a person charged with the administration of a trust and that he held an office for the incidents of which the law of trust is to be looked into. The Privy Council had in mind only resulting trusts as an earlier passage in the judgment makes clear and what they desired to emphasize was that a benamidar having no separate or any interest in the property but the owner's and being a person who had been trusted by the owner to lend to the property the appearance of his ownership for that of himself there was no reason why he could not represent the property in legal proceedings in his own name or why the representation by him should not bind the owner's interest. It is only in the limited sense of holding the property standing in his name for the benefit of the real owner and of appearing to the world in the latter's place and stead that the benamidar seems to have been called a trustee. There is no question of performing any other function. It is impossible in the very nature of things that a trust of this character should, as a matter of law be limited to the lifetime of the trustee. The essence of benami is secrecy. What is done is that property belonging to one person is placed in the name of another with every appearance of the latter being the true and full owner which involves that to external appearance the property will descend as a matter of course along the line of the ostensible owner until and unless the real owner or his heirs choose to disclose their interest and terminate the appearance. So long as that is not done and the real owner goes on maintaining the appearance of the benannidar's ownership there must be an ostensible succession in the line of the ostensible owner and an heir of the benamidar will represent the property and personate the true owner just as his predecessor-in-interest did. A benamidar may be a trustee in relation to the true owner, but to the world at large he is the real owner
and that appearance must necessarily go on devolving till the true owner comes out into the open. The result of the above discussion can be summed up thus: (1) A benami transaction creates a resulting trust but the benamidar is in no
sense an express trustee. (2) As a corollary, the trust is not terminated by the death of a binamidar as in
the case of express trusts and the heir of the benamidar can go on personating the true owner till he comes out into the open and prikes the bubble of apparent ownership. (3) In cases where the real owner vests the legal possession in the benamidar the incidents of an express trust are thereby attracts. The benamidar may also by his own act and conduct and course of dealing with the property become an express trustee.
CHAPTER - III : Resulting Trust & Doctrine of advancement: Its applicability in Banami Transaction 3.1. General rule in England: The general rule in England is that where a person purchases property in the name of a third person, a trust "results" in favour of the purchaser or his representative. This rule has its origin in the natural presumption 16 in the absence of all rebutting circumstances that he who supplies the money means the purchase to be for his own benefit. There is an important difference as between conveyance to a relation of the purchaser 16
Story, Equity Jurisprudence, (1919), page 507, para. 1201.
and a conveyance to a person who is not a relation. In the former case, the presumption is that the purchaser did not intend to benefit the nominal transferee, and a trust results to the man who advanced the purchase money.17 Purchase in anther's name has been described in England18 one of the most important and common forms of resulting trusts. The rule is that where real19 or personal20 property is vested in a purchaser jointly with others or in another or other persons alone, a resulting trust will be presumed in favour of the person who is proved to have paid the purchase money; the beneficial interest in the property "results" to the true purchaser. The general principle of such trusts was established as long ago as in 1788 in Dyer v. Dyer21 by Eyre C. B. The same doctrine is applied to cases where securities are taken in the name of another person, as, if A takes a bond in the name of B, for a debt due to himself, B will be a trustee for A for the money. 22 If the conveyance is to the wife or child of the purchaser, then the presumption in England is the other way, namely, that the purchaser intended to benefit the child or wife. This is known as the presumption of `advancement'23
3.2 Resulting trusts: In English law ‘resulting trusts’ are one of the two main categories of such informal trusts, the other being that of ‘constructive trusts’. The circumstances in which property will become subject to a resulting trust were recently examined by the House of Lords in Westdeutsche Landesbank Girozentrale v Islington London Borough Council.24 Lord Browne-Wilkinson identified two circumstances in which a resulting trust would arise: “Under existing law a resulting trust arises in two sets of circumstances: (A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a 17
Dyer v. Dyer, (1788) 2 Cox 92.
Parker and Mellows, Modern Law of Trusts, (1966), page 101,
Dyer v. Dyer, (1788) 2 Cox Eq. 92 (real property).
Re Scotish Equitable Life Assurance Society, (1902) Ch. 282 (ina respect of personal property). 20
Dyer v. Dyer, (1788) 2 Cox Eq. 92, 93.
(a) Ebrand v. Dancer, 2 Ch. C. 26; s.c. I Eq. Abr. 382, p1. 11;2 Mad. Pr. Ch. 101. (b) Lloyd v. Read, LP. Will. 607. (c) Rider v. Kidder, 10 Ves. 366.
5. Para 3.6, supra.
 AC 669. See  RLR 3 (Birks).
presumption that A did not intend to make a gift to B; the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchaser by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter presumption of advancement or by direct evidence of A’s intention to make an outright transfer . . . (B) Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest.’25
3.3 Distinguishing resulting and constructive trusts: In some cases, the House of Lords seem to have used ‘resulting’ and ‘constructive’ trusts as interchangeable terms, 26 suggesting that it is not necessary to distinguish between them. However it is submitted that they are fundamentally different, operating on different principles and that they need to be strictly differentiated. Constructive trusts are imposed by the court as a consequence of the conduct of the party who becomes a trustee. The equitable interests is said to ‘result back’ to the transferor, thus ensuring that he retains his interest in the property. Re Densham (A Bankrupt)27 concerned a dispute as to the ownership of a matrimonial home. Whilst the husband was the sole legal owner of the house, his wife had contributed towards the purchase price and they had also agreed that the ownership should be jointly shared. Goff J held that, in consequence of the agreement, the wife was prima facie entitled to a beneficial half share in the ownership of the house by way of a constructive trust, and that through her direct financial contribution to the purchase price she was also entitled to a ninth share of the beneficial ownership by way of a resulting trust. This need was reiterated by the Court of Appeal in Drake v Whipp,28 where the central issue was as to the proportion of the equitable interest that the plaintiff enjoyed in a barn owned by her erstwhile partner by virtue of her contributions to the purchase price and work done, where there was also a common intention that she was to enjoy a share of the ownership. Peter Gibson LJ remarked: “A potent source of confusion, to my mind, has been suggestions that it matters not 25
 AC 669 at 708.
4 Eg Gissing v Gissing  AC 886 at 905, per Lord Diplock; Tinsley v Milligan  3 All ER 65 at 86–87, per Lord Browne-Wilkinson. 26
 1 WLR 1519.
 1 FLR 826.
whether the terminology used is that of the constructive trust, to which the intention, actual or imputed, of the parties is crucial, or that of the resulting trust which operates as a presumed intention of the contributing party in the absence of rebutting evidence of actual intention.29Thus, whilst by means of a resulting trust the plaintiff would only be entitled to a share of the beneficial interest directly equivalent to the proportion of her contribution to the purchase price of the barn (which was 19.4%), by way of a constructive trust she was entitled to a third interest”.30
3.4 Rationale of resulting trusts: In Westdeutsche Landesbank Girozentrale v Islington London Borough Council31 Lord Browne Wilkinson stated that resulting trusts arise to fulfill the implied intentions of the parties: “Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intentions of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention”.32 As Lord Browne Wilkinson himself observed, a resulting trust of the first type arises because ‘there is a presumption that A did not intend to make a gift to B. 33 A resulting trust will arise in favour of A in such circumstances even though B anticipated that he was the beneficiary of an absolute gift, and in this sense B will be required to hold the property on resulting trust against his intentions. In Re Sick and Funeral Society of St John’s Sunday School,Golcar34 Megarry V.C stated that,A resulting trust is essentially a property concept; any property that a man does not effectually dispose of remains his own. This clearly recognises that a resulting trust arises because of the failure of the transferor to make an absolute gift of his property. As Lord Reid observed in Vandervell v IRC: 29
 1 FLR 826 at 827.
Midland Bank Plc v Cooke  4 All ER 562.
 AC 669.
 AC 669 at 708.
 AC 669 at 708.
 Ch 51.
“Where it appears to have been the intention of the donor that the donee should not take beneficially, there will be a resulting trust in favour of the donor”.35 A more nuanced understanding of the operation of resulting trusts was provided by The Privy Council in Air Jamaica Ltd v Charlton, where Lord Millet stated: “Like a constructive trust, a resulting trust arises by operation of law, although unlike a constructive trust it gives effect to intention. But it arises whether or not the transferor intended to retain a beneficial interest”.36
3.5 Presumption of resulting trusts: Where it is presumed that the transferor of property did not intend to dispose of his entire ownership interest in the property transferred. Under English law there is a rebuttable presumption that a transferor of property does not intend to make a gift of it, and unless this presumption is rebutted the transferee will hold it on resulting trust for the donor. English law adopts two basic presumptions about the intentions of property owners, both of which are rebuttable by evidence of a contrary intention. The general principle was stated by Lord Reid in Pettitt v Pettitt that, “In the absence of evidence to the contrary effect, a contributor to the purchase-price will acquire a beneficial interest in the property”.37
A presumption against gifts: First, it is presumed that, outside of certain relationships, an owner of property never intends to make a gift. If an owner voluntarily transfers the legal title of his property to a third party without receiving any consideration in return, he is presumed to have intended to retain the equitable interest for himself. The transferee will therefore hold the property on resulting trust for him.
 2 AC 291, HL.
 1 WLR 1399 at 1412.
 AC 777 at 794.
This presumption was invented by equity to defeat the misappropriation of property as a consequence of potentially fraudulent or improvident transactions.38
A presumption in favour of the provider of purchase money: By extension of this first presumption, it is also presumed that a person who provides the money required to purchase property intends to obtain the equitable interest in the property acquired. Therefore, when the property is purchased in the name of someone who did not provide the purchase money, he will be presumed to hold the legal title on trust for the provider thereof. This presumption is long established and was recognised in Dyer v Dyer, where Eyre CB stated: “The trust of a legal estate . . . whether taken in the names of the purchasers and others jointly, or in the names of others without that of the purchaser; whether in one name of several; whether jointly or successive, results to the man who advances the purchase-money”.39 Where a person has only contributed a part of the purchase price of property a resulting trust will be presumed in his favour of an equivalent proportion of the equitable interest.40
Operation of the presumption of resulting trust: The operation of the presumption of a resulting trust is well illustrated by Re Vinogradoff.41Mrs Vindogradoff transferred a £800 War Loan into the joint names of herself and her infant granddaughter. Farwell J held that the stock was held on resulting trust for her, 42 and that therefore on her death it belonged in equity to her estate. In Thavorn v Bank of Credit and Commerce International SA43a resulting trust was found to exist where a woman opened a bank
Lynch v Burke  2 IR 159, per O’Flaherty J.
(1788) 2 Cox Eq Cas 92 at 93.
Midland Bank plc v Cooke  4 All ER 562; Drake v Whipp  1 FLR 826.
 WN 68. See also Re Muller  NZLR 879.
The granddaughter was held to be a trustee of the resulting trust despite her minority. See Law of Property Act 1925, s 20. 42
 1 Lloyd’s Rep 259. Compare also Re Howes (1905) 21 TLR 501.
account in favour of her infant nephew. In Aroso v Coutts44 it was held that the presumption of resulting trusts operated when Sr Aroso transferred money into a joint account opened in the names of himself and his nephew, although the presumption was held to have been rebutted by evidence that a gift had been intended.
Operation of the presumption of resulting trust in the context of land: In Hodgson v Marks45 the Court of Appeal held that a resulting trust arose in favour of an elderly lady who had transferred the legal title to her house to her lodger on the basis of an oral understanding that he would look after her affairs. However in Lohia v Lohia46 Nicholas Strauss QC recently held that The presumption of resulting trust had been abolished in respect of a voluntary conveyance of land. Thus a presumption of resulting trust will only arise if there is some fact in addition to the lack of consideration, such as that the parties are strangers. In the light of this interpretation, he held that no resulting trust had arisen where a son had conveyed his share in the family home to his father. The mere fact that there was no evidence of any sensible reason why he had so conveyed his share in the house to his father, and that he had continued to share mortgage payments and rental income, was not sufficient to lead to the inference of a resulting trust.
Operation of the presumption of resulting trust in the context of personal property: The presumption of a resulting trust of personal property was raised in Fowkes v Pascoe.47John Pascoe was the son of Elizabeth Anne Pascoe, the widow of the only son of Sarah Baker. Over a period of some five years, Sarah Baker purchased annuities totalling ÂŁ7,000 in the joint names of herself and John Pascoe. The Court of Appeal accepted that there was thus a presumption of a resulting trust in favour of Sarah Baker, but held the evidence rebutted this presumption and demonstrated that a gift had been intended. In The Venture48 a resulting trust was held to have arisen in favour of a contributor to the purchase price of a yacht. In Abrahams v Trustee in Bankruptcy of
 1 All ER (Comm) 241.
 Ch 892.
 WTLR 101.
(1875) 10 Ch App 343.
 P 218.
Abrahams49 it was held that a presumption of resulting trust operated where a wife, who was separated from her husband, contributed to a syndicate purchasing National Lottery tickets in the names of her husband. Since the presumption was not rebutted the husband held his share of the winnings, some £242,000, on resulting trust for his wife.In Foskett v McKeown50 concerned the question whether a contributor to the premiums of a life insurance policy thereby gained a proportionate share of the proceeds of the policy. A Mr Murphy had taken out a life insurance policy in 1986 which would provide a death benefit of £1 million. He paid the annual premiums for the first two years using his own money, but paid subsequent premiums using misappropriated trust money. He committed suicide in 1991, at which point at least 40% of the premiums had been paid using trust money. The question was whether the beneficiaries were entitled to a proportionate share of the proceeds of the policy. Whilst there was no doubt that the trust money had been used to pay premiums, under the terms of the policy the death benefit would still have been payable even if they had not been made, due to the payment of the earlier premiums. In Re Policy No 6402 of the Scottish Equitable Life Assurance Society 51 Joyce J had held that resulting trust principles were applicable to a life policy. In the Court of Appeal52Scott V-C held that this case was distinguishable because the contributions giving rise to the resulting trust had been made from the outset of the policy, so that it did not apply in favour of contributors of latter premiums which would have the effect of divesting those already entitled to the proceeds of the policy.53
Contribution to the purchase price: A direct contribution to the purchase price of the land will give rise to a presumed resulting trust, normally in proportion to the amount of the contribution. In Tinsley v Milligan54 a lesbian couple purchased a house in the sole name of Tinsley. The purchase price of £29,000 was raised by way of a mortgage of £24,000, with the remainder derived from the sale of a car that they owned jointly.
 BPIR 637.
 3 All ER 97.
 1 Ch 282.
 3 All ER 392.
 3 All ER 392 at 406.
 1 AC 340.
The House of Lords held that this direct contribution gave rise to a presumption of a resulting trust in favour of Milligan of a half share in the house. 55In Midland Bank plc v Cooke56 a house was purchased in the sole name of a husband for £8,500. Whilst the majority of the purchase price was raised by way of a mortgage, the deposit was provided largely by a wedding gift of £1,100 from the husband’s parents. As this gift had been made to the husband and wife jointly, it was held that she had contributed £550 to the purchase price, and that this gave rise to a presumption of a resulting trust in her favour. Where such a direct contribution has been made to the purchaser price, the contributor will be entitled to a proportionate share of the beneficial interest mathematically equivalent to the proportion of her contribution. In Midland Bank plc v Cooke it was held that Mrs Cooke’s contribution of £550 to the purchase price entitled her to a 6.74% share of the beneficial interest of the house by way of a presumed resulting trust. A contributor will only be able to demonstrate an entitlement to a share of the beneficial interest greater than the exact mathematical equivalent of her contribution if she can demonstrate that the land was held on constructive trust. 57 The Court of Appeal subsequently held that there was sufficient evidence to conclude that Mrs Cooke was entitled to a 50% share of the property by way of a constructive trust. This aspect of the case is discussed in the following chapter.
Contribution to mortgage repayments: In the majority of cases land is not purchased outright but with the help of a mortgage. In such circumstances it might be thought that a person who contributes to the mortgage repayments should be treated as having contributed to the purchase price, thus raising a presumption of resulting trust in his or her favour in proportion to his contributions. However a distinction must be drawn between contributions made to the repayment of a mortgage on the basis of an agreement made when the mortgage is taken out, and subsequent payments of mortgage installments. In the former case the payment of mortgage installments will be taken to give rise to a resulting trust. This was explained in Cowcher v Cowcher where Bagnall J considered the consequences of a conveyance of a house to A for £24,000,where A had
The mortgage was repaid from the proceeds of their joint business.
 4 All ER 562; (1997) 60 MLR 420 (O’Hagan);  Conv 66 (Dixon). See also McHardy and Sons (A firm) v Warren  2 FLR 338. 56
Drake v Whipp  1 FLR 826.
provided £8,000 of his own money and the remainder was provided by a mortgage taken out in the name of B:
suppose that at the time A says that as between himself and B he, A, will be responsible for half the mortgage repayments . . . Though as between A and B and the vendor A has provided £8,000 and B £16,000, as between A and B themselves A had provided £8,000 and made himself liable for the repayment of half the £16,000 mortgage namely a further £8,000,a total of £16,000; the resulting trust will therefore be as to two-thirds for A and one-third for B. 58Applying this principle, Bagnall J held that a resulting trust was presumed in favour of a wife who had made some of the repayments on a mortgage taken out by her husband. 59Similarly in Tinsley v Milligan60 the House of Lords held that there was a resulting trust where the parties had agreed that the mortgage repayments would be made form an account containing the proceeds of their joint business operation, even though this was in the sole name of Tinsley.
Contribution by qualification for a discount in the purchase price: If a house is purchased at a discounted price, the amount of the discount is regarded as a contribution to the purchase price. Therefore, the person who qualified for the discount will be presumed to be the beneficiary of a resulting trust to that extent in the property. In Marsh v Von Sternberg61 Bush J held that a discount gained on the market value of a long lease because one of the parties was a sitting tenant was to be treated as a contribution to the purchase price in assessing their respective interests under a resulting trust. In Springette v Defoe62a discount of 41% of the market value of a council flat obtained
 1 WLR 425.
In McQuillan v Maguire  1 ILRM 394 a wife was held entitled to a 50% share of a matrimonial home purchased in the name of her husband because she had contributed indirectly towards the discharge of the mortgage. In Cowcher v Cowcher Bagnall J’s analysis was based upon the intention of the parties at the date of purchase. Where there is no clear intention at that date, and a share of the ownership arises from contributions to repaying a mortgage, backward tracing appears to be operating: see Chapter 31, pp 771–772. 59
 1 AC 340.
 1 FLR 526.
 2 FLR 388.
because the plaintiff had been a tenant for more than eleven years was counted as a contribution to the purchase price by the Court of Appeal.
Contributions to the cost of repairs or renovation: Where the property is repaired or renovated, and its value is thereby increased, a person who contributes towards the cost of such repairs or renovations will be entitled to an interest in the land by way of a resulting trust proportionate to the extent to which the increase was attributable to their contribution.63Improvements made much later than the date of purchase may give rise to a constructive trust.
Contributions to general household expenses: In contrast to indirect contributions to the purchase price of land, it seems that contributions made to general household expenses will not give rise to a presumption of resulting trust in favour of the contributor because they are not sufficiently referable to the purchase price. In Burns v Burns64 Mr and Mrs Burns began living together as man and wife in 1961. In 1963 a house was purchased in the sole name of Mr Burns, who financed the purchase by way of a mortgage. Mrs Burns began to work in 1975. She used part of her earnings to pay the rates and telephone bills and to buy various domestic chattels for the house. When they split up in 1980, she claimed to be entitled to an equitable interest in the house by reason of her contributions. The Court of Appeal held that she was not entitled to an interest by way of resulting trust because she had â€˜made no direct contribution to the purchase priceâ€™.65 It should be noted that although such contributions to family expenses will not give rise to a presumption of resulting trust, they may, if substantial, constitute sufficient detriment to lead to the imposition of a constructive trust.
3.6 Rebutting the presumption of resulting trust: The presumption of a resulting trust, whether arising from a voluntary transfer or a contribution to the purchase price of property, will be rebutted by evidence that the transferor or contributor had no intention to retain any beneficial interest in the property. The strength of the evidence required to rebut the presumption of a resulting trust will depend upon the strength of the presumption, which 63
Drake v Whipp  1 FLR 826.
 Ch 317.
 Ch 317 at 326, per Fox LJ.
will in turn depend upon the facts and circumstances which gave rise to it. 66 In Fowkes v Pascoe67makes clear that the quality of evidence required to rebut a presumption of a resulting trust will vary depending on the circumstances in question, because the presumption of resulting trust will be given varying weight depending upon the context. As Lord Upjohn observed in Pettitt v Pettitt: ‘If a wife puts property into her husband’s name it may be that in the absence of all other evidence he is a trustee for her, but in practice there will in almost every case be some explanation however slight of this today rather unusual course. If a wife puts property into their joint names I would myself think that a joint tenancy was intended, for I can see no other reason for it.68 In Knightly v Knightly69the Court of Appeal went so far as to say there is no room for the presumption of a resulting trust in favour of a wife unless ‘a wife advances money to her husband for the purchase of either realty or personality and there is no evidence of any agreement or understanding between them as to who is to own the property and no evidence from conduct and circumstances going to show what their intentions as to rights and interests were.70
Circumstances rebutting the presumption of resulting trust: a)
Evidence a gift was intended: It was noted above that in Fowkes v Pascoe71 a presumption of a resulting trust was raised when Sarah Baker purchased annuities in the joint names of herself and John Pascoe. However, this presumption was rebutted by evidence indicating that a gift had been intended. In Arosos v Coutt’s & Co72 Collins J held that the presumption of resulting trust was rebutted where a wealthy Portuguese gentleman had transferred money into a joint account in the names of
Vajpeyi v Yijsaf  EWHC 2339, per Peter Prescott QC at .
 LR 10 Ch App 343.
 AC 777 at 815.
 11 Fam Law 122.
 11 Fam Law 122 at 123, per Lawton LJ.
 LR 10 Ch App 343.
 1 All ER (Comm) 241.
himself and his nephew. The evidence, primarily the mandate establishing the account which clearly stated that the beneficial interest was to be held jointly and the evidence of the bank client relationship officer who had explained the effect of the account, established that he had intended the nephew to take the property beneficially. This approach was adopted in Russell v Scott,73where an aunt had opened a joint account in the names of herself and her nephew, but did not intend her nephew to benefit during her lifetime.
Evidence a loan was intended: The presumption of a resulting trust will also be rebutted where evidence shows that money was advanced by way of a loan. In Re Sharpe (a bankrupt)74Mr and Mrs Sharpe lived in a maisonette with their 82-year-old aunt, Mrs Johnson. The property had been purchased in the name of Mr Sharpe for ÂŁ17,000.Mrs Johnson had contributed ÂŁ12,000 towards the purchase price, whilst the remainder was raised by way of a mortgage. Mr and Mrs Sharpe were subsequently declared bankrupt and Mrs Johnson claimed to be entitled to a proprietary interest in the maisonette by means of a resulting trust presumed from her contribution to the purchase price. Browne-Wilkinson J held that the money had in fact been advanced by way of a loan, with the intention that it would be repaid. She was not therefore entitled to any share of the equitable interest of the property. A presumption of a resulting trust was also rebutted by evidence that a loan was intended in the more recent case of Vajpeyi v Yijaf.75In this case the claimant provided the defendant, who was her lover, with ÂŁ10,000 to enable him to purchase a house in his sole name. At the time of the purchase in 1980 the defendant was a young man of limited means. The claimant alleged that by virtue of this payment she was entitled to a 33.89% share of the equitable ownership of the property on the basis of a presumed resulting trust, whereas the defendant claimed that the money had been advanced by way of a loan, which he had repaid. Peter Prescott QC held that the following factors had rebutted the presumption of a resulting trust in favour of a loan: the fact that the defendant had been a young man of limited means who was anxious to get on the
55 CLR 440.
 1 WLR 219.
 EWHC 2339.
property ladder whereas the claimant was a lady who was already on the property ladder when the money was advanced; the fact that the claimant had tolerated the defendant collecting rents from the property and keeping them for himself for some 21 years; the fact that the claimant had failed to propound her claim to an interest for 21 years and the fact that she had never said anything about her alleged interest in the house when it was mortgaged by the defendant to enable him to purchase her matrimonial home some years previously.
Admissibility of evidence to rebut a presumption of resulting trust : Any acts or declarations by the parties forming part of the transaction to which the presumption of a resulting trust relates will be admissible in favour of, or against, the parties performing them. However, in Shephard v Cartwright76the House of Lords held, in the context of the rebuttal of a presumption of advancement, that subsequent acts and declarations are admissible only as evidence against the party who made them, and not in his favour.
3.8Presumed resulting trust arising in the context of an illegal purpose: In Tinsley v Milligan77the House of Lords was faced with the question whether a plaintiff was entitled to rely on a presumption of resulting trust arising in the context of a transaction entered to facilitate an illegal purpose. The majority of the Court of Appeal rejected the application of such a strict principle in favour of the adoption of a â€˜public conscience testâ€™, which would vest the court with discretion to balance the consequences of either granting or refusing relief to the person seeking to claim an interest. The House of Lords in turn rejected this discretionary approach, favouring the application of a strict rule to determine when a plaintiff could assert an interest. However it was divided as to the appropriate rule. Lord Goff and Lord Keith held that the equitable maxim requiring clean hands should be strictly applied.78In Silverwood v Silverwood 79an elderly lady had transferred money to her grandchildren to enable her to claim income support to 76
 AC 431.
 1 AC 340
 3 AII ER 65 at 75.
 74 P & CR 453.
contribute towards the costs of her residential care. The Court of Appeal held that the plaintiff, who was a beneficiary under her will, was entitled to maintain that the money was held on resulting trust by the recipients, as he did not need to rely on the illegality to establish the resulting trust. In Lowson v Coombes80a man had purchased a flat together with his mistress, but it was conveyed into her sole name so that his wife would not be able to maintain any claim to it. The Court of Appeal held that he was entitled to assert a half-interest by way of a resulting trust, despite the illegal purpose of frustrating any potential claim under Matrimonial Causes Act 1973, because he did not need to rely on the illegal purpose to establish his entitlement. In Silverwood v Silverwood81 Nouse LJ described the principle adopted in Tinsley v Milligan as a ‘straightjacket’ and indicated that he would have preferred a more flexible approach. In particular the approach adopted by the House of Lords arbitrarily differentiates between situations where a presumption of resulting trust and a presumption of advancement are operative. Whilst Milligan was held able to assert her interest by way of a presumed resulting trust without the need to rely on the fact of her illegal conduct, a more difficult problem would have arisen if the countervailing presumption of advancement had applied between Tinsley and herself. In such circumstances she would only have been entitled to assert her interest if she could rebut the presumption, which would require evidence of the illegal purpose of the transaction. The Court of Appeal was forced to grapple with such a difficulty in Tribe v Tribe,82 where a presumption of advancement did arise between the parties. As Nourse LJ observed in Silverwood v Silverwood: ‘It is not at all easy to understand or to see any public or other policy or advantage behind a rule which regulates the claimant’s right of recovery solely according to whether the other party to the transaction is his wife, child or fiancée on the one hand or his brother, grandchild or anyone else on the other.83 In the light of such criticisms the law regarding illegality has recently been reviewed by the Law Commission, which has recommended the abandonment of the ‘reliance principle’ adopted in Tinsley v Milligan in favour of granting the court a discretion to declare a trust
 Ch 373.
 74 P & CR 453.
 Ch 107.
 74 P & CR 453 at 458.
illegal or invalid.84
3.9 Resulting trusts operating to reverse unjust enrichment: English law did not historically recognise a right to restitution founded on a general principle against unjust enrichment, in Likpin Gorman v Karpnale Ltd85 the House of Lords held that ‘unjust enrichment’ should be recognised as a valid autonomous cause of action. This recognition has been reiterated in many subsequent decisions86 and is now beyond doubt. In a significant article, Professor Birks argued that a resulting trust should arise whenever a defendant receives an unjust enrichment conferred by mistake or under a contract the consideration for which wholly fails.87
3.9 Nature of the presumption of advancement: In some circumstances where a person voluntarily transfers property into the name of another, or contributes to its purchase, the law presumes that a gift was intended and that the transferor/contributor did not intend to retain any interest in the property concerned. This presumption, known as the ‘presumption of advancement’, displaces the presumption of resulting trust. The presumption of advancement arises as a consequence of a pre-existing relationship between the parties to the transfer or acquisition, where the transferor/contributor is regarded as morally obliged to provide for the person benefiting. As Lord Eldon stated in Murless v Franklin: ‘The general rule that on a purchase by one man in the name of another, the nominee is a trustee for the purchaser, is subject to exception where the purchaser is under a species of natural obligation to provide for the nominee.88 The range of relationships where equity recognises a presumption of advancement reflects a Illegal Transactions: The Effect of Illegality on Contracts and Trusts’ (1999), Law Comm CP No 154. 84
 2 AC 548. See  LMCLQ 473 (Birks).
See Woolwich Equitable Building Society v IRC  AC 70; Westdeutsche Landesbank Girozentrale v Islington London Borough Council  AC 669; Kleinwort Benson Ltd v Glasgow City Council  1 AC 153, HL. 86
Birks, ‘Restitution and Resulting Trusts’, in Goldstein (ed), Equity: Contemporary Legal Development (1992). See also Chambers, Resulting Trusts (1997), pp 93–219. 87
 1 Swan 13 at 17.
nineteenth-century understanding of family responsibility, and it is clear that, today, the strengths of the presumptions vary to reflect differing social circumstances.
Relationships giving rise to a presumption of advancement:
Father and child: Traditionally, there was a strong presumption of advancement
between a father and his child.89In Re Roberts (Decd)90Evershed J held that the presumption of advancement applied where a father had made payments on a policy of assurance taken out on his son’s life. He said that: “It is well established that a father making payments on behalf of his son prima facie, and in the absence of contrary evidence, is to be taken to be making and intending an advance in favour of the son and for his benefit.91 In B v B92a Canadian court held that the presumption of advancement applied where a father had purchased a winning lottery ticket in the name of his 12-year old daughter.She was therefore entitled to the winnings absolutely. The rationale for the presumption of advancement between a father and child is that a father, by the very nature of his position, is under a duty to provide for his child. 93 This may include the child’s mother if she stands in loco parentis. There is no presumption of advancement in the case of other family relationships.94The strength of this presumption of advancement between a father and child was questioned by the Court of Appeal in McGrath v Wallis,95 where Nourse LJ stated: Shephard v Cartwright  AC 431. In Oliveri v Oliveri (1995) 38 NSWLR 665 Powell J suggested that a presumption of advancement could operate between a step-father and step-child. 89
 Ch 1.
 Ch 1 at 5.
 65 DLR (3d) 460.
Bennet v Bennet (1879) LR 10 Ch D 474 at 476, per Jessel MR.
Eg sister (Noack v Noack  VR 137; Gorog v Kiss (1977) 78 DLR (3d) 690); son-inlaw (Knight v Biss  NZLR 55); and nephew (Dury v Dury (1675) 75 SS 205; Russell v Scott (1936) 55 CLR 440). 94
 2 FLR 114.
Ever since the decision in Pettitt v Pettitt it has been my understanding that, in its application to houses acquired for joint occupation, the equitable presumption of advancement has been reclassified as a judicial instrument of last resort, its subordinate status comparable to that of the contra proferentem rule in the construction of deeds and contracts . . . For myself, I have been unable to recollect any subsequent case of this kind in which the presumption has proved decisive.96
Persons standing in loco parentis: A presumption of advancement also arises
between a child and a person standing in loco parentis.97The rationale for this extension of the presumption was stated by Jessel MR in Bennet v Bennet: As regards a child, a person not the father of the child may put himself in the position of loco parentis to the child, and so incur the obligation to make provision for the child.98
Husband and wife: The presumption of advancement also arises between a husband
and his wife. The principle was stated in Re Eykyn’s Trusts, by Malins V-C: ‘The law of this court is perfectly settled that when a husband transfers money or other property into the name of his wife only, then the presumption is, that it is intended as a gift or advancement to the wife absolutely at once, subject to such marital control as he may exercise. And if a husband invests in money, stocks, or otherwise, in the names of himself and his wife, then also it is an advancement for the benefit of the wife absolutely if she survives her husband.99 The operation of the presumption in this context reflects a nineteenth-century social understanding of a husband’s obligation to provide for his wife.Although these comments were cited in Pettitt v Pettitt,100the House of Lords acknowledged that the presumption
 2 FLR 114 at 115.
Hepworth v Hepworth (1870) LR 11 Eq 10; Re Orme (1883) 50 LT 51; Shephard v Cartwright  AC 431; Re Paradise Motor Co Ltd  1 WLR 1125, CA. 97
[1878–79] LR 10 Ch D 474.
 6 Ch D 115 at 118.
 AC 777 at 815, per Lord Upjohn.
between husband and wife had reduced in significance. 101 Lord Reid suggested that the only reasonable basis for the presumption had been the economic dependence of wives on their husbands, and that given the changes in social circumstances ‘the strength of the presumption must have much diminished.102Lord Diplock considered that it was not appropriate that transactions between married couples should be governed by presumptions ‘based upon inferences of fact which an earlier generation of judges drew as to the most likely intentions of earlier generations of spouses belonging to the propertied classes of a different social era.103The presumption of advancement also applies between a man and his fiancee.104
III.11 Relationships where no presumption of advancement arises
Mother and child: No presumption of advancement arises between a mother and her child, and therefore if a mother transfers property voluntarily to her child the counter presumption of resulting trust will apply.105In Bennet v Bennet106Jessel MR explained the absence of the presumption on the basis that ‘there is no moral legal obligation . . . no obligation according to the rules of equity on a mother to provide for her child.Again, such reasoning reflects nineteenth century concepts of the family, and in modern social conditions mothers almost invariably share the responsibility to provide for their children.107Despite the socially archaic rationale, more modern cases have confirmed that there continues to be no presumption of advancement between a mother and child. The presumption of resulting trust was applied by the Court of
Silver v Silver  1 All ER 523 at 525, per Evershed MR. The presumption of advancement between husband and wife also applies in Ireland and Australia: Heavey v Heavey  111 ILTR 1; M v M  114 ILTR 46; Doohan v Nelson  2 NSWLR 320; Napier v Public Trustee (Western Australia) (1980) 32 ALR 153. 101
 AC 777 at 792.
 AC 777 at 792.
Moate v Moate  2 All ER 486; Silver v Silver  1 WLR 259; Tinker v Tinker (No 1)  P 136; Mossop v Mossop  Fam 77. 104
Re De Visme (1863) 2 De GJ & Sm 17; Bennet v Bennet (1878–79) LR 10 Ch D 474. See also: Sayre v Hughes (1867–68) LR 5 Eq 376; Gore-Grimes v Grimes  IR 470. 105
(1878–79) LR 10 Ch D 474.
Dullow v Dullow  3 NSWLR 531.
Appeal in Gross v French,108and by Hoffmann J in Sekhon v Alissa.109In the latter case, a mother had provided ÂŁ22,500 to help her daughter purchase a house. In the absence of sufficient evidence to rebut the presumption of a resulting trust, the mother was held entitled to an interest in the property.Despite the absence of a presumption of advancement between mother and child the presumption of resulting trust arising in default is relatively weak and easily rebutted. As Jessel MR said in Bennet v Bennet: â€˜We arrive then at this conclusion, that in the case of a mother . . . it is easier to prove a gift than in the case of a stranger: in the case of a mother very little evidence beyond the relationship is wanted, there being very little additional motive required to induce a mother to make a gift to her child.110 In Nelson v Nelson111 the Australian High Court has held that a presumption of advancement should operate between a mother and child.112 In England the recent decision in Re Cameron (Decd)113 suggests a possible avenue by which it might be found that the presumption should operate between a mother and child. Lindsay J held that, in the light of the difference between Victorian and modern attitudes to the ownership and ability to dispose of property, it would be appropriate nowadays to take both parents to be in loco parentis unless the contrary is proved for the purposes of the succession rule against double portions.114
Wife and husband: Similarly, no presumption of advancement operates between a wife and her husband, so that if a wife voluntarily transfers property into the name of her husband, or contributes to the purchase of property in his name, a presumption of resulting trust arises. Thus, in Re Curtis,115 in the absence of evidence that a gift
 238 Estates Gazette 39.
 2 FLR 94.
 10 Ch D 474 at 480.
(1995) 132 ALR 133.
In Re Dreger Estate (1994) 97 Man R (2d) 39 it was held that in modern conditions the presumption of advancement ought to be applicable between mother and child. 112
 2 All ER 924.
 2 All ER 924 at 939.
(1885) 52 LT 244.
was intended, a wife was presumed to enjoy the equitable interest in shares, which she had voluntarily transferred into the name of her husband, by way of a resulting trust. 116 The absence of the presumption seems to have been accepted in the more recent case of Mossop v Mossop,117 and led to the presumption of a resulting trust in Abrahams v Trustee in Bankruptcy of Abrahams,118where a wife contributed to a syndicate purchasing National Lottery tickets in the name of her husband. The absence of the presumption of advancement between a wife and her husband reflects nineteenthcentury social circumstances. As was noted above, 119 in Pettitt v Pettitt120 the House of Lords held that the presumption of resulting trust between a wife and her husband was of much diminished strength and would be rebutted by very slight evidence that a gift was intended.
Co-habiting couples/mistresses : There is no presumption of advancement between cohabiting couples (whether heterosexual or homosexual), 121 nor between a man and his mistress.122 The presumption of resulting trust will therefore apply if property is voluntarily transferred in such cases.
III.12 Doctrine of advancement : Advancement is a common law doctrine of intestate succession that presumes that gifts given to a person's heir during that person's life are intended as an advance on what that heir would inherit upon the death of the parent. The act of giving a gift is accomplished so easily that the legal consequences often escape See also Mercier v Mercier  2 Ch 98; Pearson v Pearson (1965) Times, 30 November; Pettitt v Pettitt  AC 777; Heseltine v Heseltine  1 WLR 342; Northern Bank Ltd v Henry  IR 1; Allied Irish Banks Ltd v McWilliams  NI 156. 116
 2 All ER 202 at 206, where Lawton LJ cited the relevant principles from Snell, Principles of Equity (28th edn, 1982), p 183. 117
 BPIR 637.
See above, p 249.
 AC 777
Rider v Kidder (1805) 10 Ves 360; Soar v Foster (1858) 4 K & J 152; Allen v Snyder  2 NSWLR 685;Calverly v Green (1984) 56 ALR 483. 121
Diwell v Farnes  1 WLR 624.
the donor. Even when a donor stops to contemplate the legal significance of her or his act, a parental donor probably is unaware that a gift to a child may affect the child's inheritance rights in the parent's estate.An advancement is an irrevocable gift by a parent to his/her child, by anticipation, in whole or in part, of what it is supposed the child will be entitled to from the estate of the parent making the advancement. The doctrine of advancements is invoked only in cases of partial or total intestacy. In Tennessee, a child who is the recipient of an advancement must account for it in the final division and distribution of the estate, the purpose being to render absolute equality among the children of the decedent. The law of Tennessee presumes that any inter vivos transfer of money, land, or other gift of personalty to a child is an advancement that must be accounted for upon the distribution of the estate of the transferor.
III.13 Rebutting a presumption of advancement : (a) Evidence required to rebut a presumption of advancement: A presumption of advancement will be rebutted by evidence that the transferor (or contributor) did not intend to make a gift but wished to retain an interest in the property transferred or acquired. In Re Gooch123Sir Daniel Gooch transferred shares into the name of his eldest son. The son paid the dividends from the shares to his father, who also retained the share certificates. Kay J held that the presumption of advancement was rebutted by evidence that the shares had been transferred to qualify the son to become a director of the company, and that no gift had been intended. In Warren v Gurney124a father purchased a house in the name of his daughter prior to her wedding. He retained the title deeds until his death. The Court of Appeal held that the presumption of advancement was rebutted by evidence that at the time of the transaction the father had intended her husband to repay the money. The retention of the title deeds was considered a very significant fact, as â€˜one would have expected the father to have handed them over either to [his daughter] or her husband, if he had intended the giftâ€™. 125 In McGrath v 123
(1890) 62 LT 384.
 2 All ER 472. See also Webb v Webb  1 All ER 17; refd  3 All ER 911. 124
 2 All ER 472 at 473, per Morton LJ.
Wallis126a house was acquired for joint occupancy by a father and son in the sole name of the son. The purchase price was provided partly by the proceeds of sale of the father’s previous house and partly by means of a mortgage. The Court of Appeal held that the presumption of advancement was rebutted by evidence that the father had intended to retain an interest in the ownership of the house, including an unsigned declaration of trust which would have shared the beneficial ownership in the proportions represented by the deposit and mortgage respectively. The mere fact that any rents and profits generated from the property concerned are returned to the purchaser or transferor will not conclusively rebut a presumption of advancement. In Stamp Duties Comrs v Byrnes127 a father had purchased property in Australia in the name of his sons. They paid over to him the rents received from the properties, and he paid for rates and repairs. The Privy Council held that as it was not unusual for a father to transfer property to a son whilst continuing to receive any rents and profits during his lifetime, the presumption of advancement had not been rebutted;‘Having regard to the state of the family and the relations subsisting between Mr Byrnes and his two sons who were living at home, it seems very natural that the sons receiving advances should yet feel a delicacy in taking the fruits during their father’s lifetime. They had all they wanted as things were, and if they were unduly favoured it might possibly have created some feeling of jealousy among the rest.128 Although the opening of a bank account by a husband in the joint names of himself and his wife will lead to the presumption of a joint tenancy of the money therein, 129 the presumption of advancement operating between them may be rebutted. In Marshal v Crutwell
it was held that the presumption of advancement was rebutted where a husband
had transferred his bank account into the joint names of himself and his wife. The court held that the transfer was merely for convenience, since the husband was in ill health and could not draw cheques himself. His wife was not therefore entitled to the balance in the account on his death. In Anson v Anson131 the presumption of advancement was rebutted where a husband had entered a guarantee of an overdraft on a bank account in his wife’s name. After their 126
 2 FLR 114.
 AC 386.
 AC 386 at 392.
See Re Bishop  Ch 450; Re Figgis  1 Ch 123.
(1875) LR 20 Eq 328.
 1 QB 636.
divorce he was called to pay £500 to the bank under the guarantee, and demanded repayment from the wife. Pearson J held that the intention was that the debt would remain her debt, and the guarantee to the bank was not intended to relieve her of her obligation but merely to solve her immediate banking emergency.
(b) Rebuttal of a presumption of advancement by evidence of an illegal purpose: As a general rule, a plaintiff will not be permitted to rely on evidence of his own illegal conduct to rebut a presumption of resulting trust. 132 He will similarly be prevented from relying on evidence of an illegal purpose to rebut a presumption of advancement. In Gascoigne v Gascoigne133 a husband took a lease of land in his wife’s name. The judge at first instance held that the presumption of advancement was rebutted by evidence that he had not intended to make a gift of the lease to his wife because it had been taken in her name only to defeat the claims of his creditors. However, the Court of Appeal held that he was not entitled to rebut the presumption by raising evidence of the illegal purpose underlying the transaction: ‘. . . what the learned judge has done is this: He has permitted the plaintiff to rebut the presumption which the law raises by setting up his own illegality and fraud, and to obtain relief in equity because he has succeeded in proving it. The plaintiff cannot do this .134 This restriction was followed by the Court of Appeal in Tinker v Tinker135 where a husband had purchased a house in the name of his wife, on the advice of his solicitor, again with the intention of preventing the house being seized by creditors if his business failed. On the breakdown of the marriage it was held that he could not rebut the presumption of advancement. Lord Denning MR stated: He cannot say that the house is his own and, at one and the same time, say that it is his wife’s. As against his wife, he wants to say that it belongs to him. As against his creditors, that it belongs to her. That simply will not do. Either it was conveyed to her for her own use absolutely; or it was conveyed to her as trustee for her husband. It 132
See Tinsley v Milligan  3 All ER 65 at 90.
 1 KB 223.
 1 KB 223 at 226.
 P 136.
must be one or the other. The presumption is that it was conveyed to her for her own use: and he does not rebut that presumption by saying that he only did it to defeat his creditors.136 In Re Emeryâ€™s Investments Trusts137 a husband was held unable to rebut a presumption of advancement when he had purchased American stock in the name of his American wife to avoid taxation under American Federal law, and in Chettiar v Chettiar138 a father could not rebut a presumption of resulting trust where he had purchased a rubber estate in the name of his son to avoid a provision restricting the maximum area of rubber land that an individual could own. Whilst the policy objective of this strict approach is to discourage persons from entering illegal transactions, in the more recent case of Tribe v Tribe139 the Court of Appeal demonstrated a marked reluctance to disallow a father from rebutting the presumption of advancement arising when he had transferred property voluntarily to his son to achieve an illegal purpose. The father was the owner of a majority shareholding in a family company and the tenant of two properties occupied by the company as licensee. The landlord of these premises served notice of various alleged dilapidations on the father, requiring him to carry out substantial repairs. The father was advised by his solicitor that, if the claims were valid, he might be forced to sell the company shares to pay for the repairs. He therefore transferred them to his son as a means of safeguarding his assets. The transfer was stated to be made for a consideration of ÂŁ78,030, but no money was ever paid. In the event, the father was never required to carry out the repairs and he sought to recover the shares from his son. The son refused to re-transfer them to him, and the father alleged that he held them on bare trust for him. The son argued that the presumption of advancement applied in his favour and that the father could not rebut it by evidence of the illegal attempt to evade his creditors. Whilst accepting that the decision of the House of Lords in Tinsley v Milligan140 had the general effect that a presumption of advancement cannot be rebutted by evidence of an underlying 136
 P 136 at 141.
 Ch 410.
 1 All ER 494.
 4 All ER 236; (1996) 112 LQR 386 (Rose);  CLJ 23 (Virgo); (1997) 60 MLR 102 (Creighton). See also (1995) 111 LQR 135 (Enonchong);  RLR 78 (Enonchong). 139
 3 All ER 65.
illegal purpose, the Court of Appeal held that this general rule was subject to an exception if the ‘illegal purpose has not been carried into effect. The transferor can lead evidence of the illegal purpose whenever it is necessary for him to do so provided that he has withdrawn from the transaction before the illegal purpose has been wholly or partly carried into effect.141To rebut the presumption it is necessary to show that he intended to retain a beneficial interest and conceal it from his creditors.142 The reality is that in both Tribe v Tribe and Tinsley v Milligan143 the respective courts were attempting to avoid the perceived unfairness that would result from the application of a strict rule against illegality intended to serve a general public policy of deterring wrongdoers. It was also rejected by the High Court of Australia in Nelson v Nelson,144 where Deane and Gummow JJ described it as a ‘harsh and indiscriminate principle. As was noted above the current law regarding illegality has recently been reviewed by the Law Commission.145 Given its unsatisfactory nature the Law Commission has recommended the abandonment of the ‘reliance principle’ adopted in Tinsley v Milligan in favour of a granting the court a discretion to declare a trust illegal or invalid. This discretion would be structured so that a court would have to take into account a number of specified factors in reaching its decisions: Those factors should be: (a) The seriousness of the illegality; (b) The knowledge and intention of the illegal trust beneficiary; (c) Whether invalidity would tend to deter the illegality; (d) Whether invalidity would further the purpose of the rule which renders the trust “illegal”; and (e) Whether invalidity would be a proportionate response to the claimant’s participation in the illegality.146
1995] 4 All ER 236 at 259.
 4 All ER 236 at 259.
 1 AC 340.
(1995) 132 ALR 133.
Illegal Transactions: The Effect of Illegality on Contracts and Trusts’ (1999), Law Comm CP No 154. See Enonchong, ‘Illegal Transactions: The Future?’  RLR 82. 145
 RLR 82 at para 8.63.
3.14 Indian Subcontinents Laws, Bangladeshi law & deferent’s: Where the purchase is in the name of a relation, the Indian law is the reverse of the English law. The provision in the Trust Act147 as to resulting trusts continues to operate, and is not displaced 148 by a presumption of advancement as in England149 . So far as the purchase in the name of a stranger is concerned; the position is not different in England and in Bangladesh. Under the Trusts Act,150 there is a resulting trust in this case.The English presumption of advancement has not been applied in India on the ground that it is a rule of positive English law and not founded on natural justice.151-152Of course, evidence of intention could still be given to turn the scales,153 and it appears that very little evidence might suffice to turn the scale. There does not exist the concept of benami transactions in England which it is submitted is a result of the peculiar circumstances of India. However, we can relate the concept of benami to that of a resulting trust. The rule regarding resulting trust has already been stated. The presumption of the creation of a resulting trust was not an absolute presumption, which could be rebutted by evidence. There seem to be two exceptions to the rule regarding the creation of a resulting trust. The Supreme Court also quoted with approval Knight Bruse LJ in Gopeekrist Gosain's case, the doctrine of advancement is not applicable in India so as to raise the question of a resulting trust. Further, it has been stated that when a property is purchased by a husband in the name of his wife or by a father in the name of his son it must be presumed that they are benamidars. If they claim it as their own by alleging that the husband or the father intended to make a gift of the property to them, the onus rests on them to establish such a gift. Support for the view can be had from para 866 page 1464 of Mayne's Hindu Law and Usage, 16th Edition which deals with doctrine of “advancement” and presumption as applicable in England and in India.154 So, the presumption is otherwise than what has been stated by you 147
Section 82, Trusts Act.
Ditta v. Ram Ditta, (1928) 32 Calcutta Weekly Notes 871 A.I.R. 1928 P.C. 172.
Para 3.6 to 3.12, supra.
Section 82, Indian Trusts Act, 1882.
Gopeekrit v. Gunga Prasad, (1854) 6 Moore's Indian Appeals :53.
See also para 1.12, supra.
Mohammad Sidiq v. Fakhar Jahan, (1931) 59 LA. 1, 15.16, 36 Calcutta Weekly Notes 137, 146 (P.C.). 153
and the doctrine of advancement is not applicable in India. Doctrine of advancement does not apply in Bangladesh ,minor is merely a bemander and Father is real beneficiary of the property.155 â€˘
The first is the presumption of advancement which means that in certain cases it may be presumed that the resulting trust is for the benefit or advancement of the party in whose name the property was purchased. This applies where the party in whose name the property was purchased was the lawful wife or child of the purchaser or one to whom he stood in loco parentis. However, this presumption was also rebuttable based on evidence of the actual intention of the purchaser, which had to be gauged from the facts and circumstances of the case. In Kerwick v. Kerwick156 , the parties were English but had been residing in India as the husband was in the Subordinate Civil Service. The appellant husband had purchased two sites and constructed two houses on them out of his own or borrowed capital and had caused the same to be conveyed to the respondent wife. Thereafter, there was an estrangement between them. The appellant then brought the present suit for a declaration by the Court that his wife held the property as his benamidar and should therefore be required to convey the property to him. The respondent contended that the conveyance had been made for her advancement and hence she was beneficially entitled to the same. The Court held that applying the English law to the parties, though there was a presumption in the respondentâ€™s favour, the appellant had discharged the onus placed on him since he had established that he had conveyed the property to his wife as he was under the erroneous impression that the rules of the government prohibited civil servants from acquiring immovable property in India.
The second exception arises where the purchaser transfers property to another without consideration or purchases property in the name of another for an illegal purpose. This is a rule of equity, which has now become elided in the common law rule. The rule is the same whether the plaintiff relies on a legal or an equitable title; he is entitled to recover if he is not forced to plead or rely on the illegality even if it emerges that the title on which he relies was obtained in the course of an illegal transaction. 157 It is derived from the equitable principle that a person must come to Court with clean
Sheikh Bahadur Ali v. Sheikh Dhomu, 1 Cal Sud Diw Rep 250
Sheo Narayan v. Mata Prasad, (1905) 27 All 3.
hands. The majority of the recent cases in this category have been those where the presumption of advancement applied. The leading case on the point is Gascoigne v. Gascoigne158, where a husband took a lease of land in the name of his wife and built a house upon it with his own money. He used his wife’s name in the transaction with her connivance as he was in debt and was desirous of protecting his property from creditors. In an action by him for a declaration that his wife held the property as trustee for him, the Court held that he could not be allowed to set up his own fraudulent design as proof to rebut the presumption of advancement in her favour and that she was entitled to retain the property for her own use notwithstanding the fact that she was a party to the fraud. This case has been followed in Re Emery’s Investment Trusts, Emery v. Emery
In Tinker v. Tinker160, the husband acting
honestly on the advice of his solicitors had conveyed into his wife’s name a property which was to be used as the matrimonial home to provide for a contingency in the future of his incurring debts in his new garage business and hence to avoid creditors. Thereafter, the marriage broke up. The Court held that a transaction could not be effected whereby with respect to his creditors, the house belonged to his wife and against his wife the house belonged to him. The presumption was that the house was conveyed to the wife absolutely for her own use and this presumption was not displaced by the husband. In India, the presumption of advancement did not exist. In Gurun Ditta v. Ram Ditta161, a Hindu had deposited his money in the bank in the joint names of himself and his wife, payable to ‘either or survivor’. It was held that the property on his death did not constitute a gift from him to his wife, but there was a resulting trust in his favour in the absence of proof of a contrary intention. In Gopeekrist Gosain v. Gungapersaud Gosain162, the appellant and respondent were brothers. Certain property had been purchased by their father in the name of the respondent. At the time of purchase of the property , the father was in joint estate with his brother. The appellant contended that the property in the name of the respondent was a 158
Sree Meenakshi Mills Ltd. v. Income Tax Commissioner, AIR 1957 SC 49.
Sreemanchunder Dey v. Gopaul Chunder Chuckkerbutty, Doorgapersaud and others, (1866) 11 MIA 28. 159
T.P. Petherpermal Chetty v. R. Muniandi Servai, (1908) 35 IA 98.
Tinker v. Tinker,  1 All E R 540.
Yeshwant v. Walchand, AIR 1951 SC 216.
benami purchase by his father and was a part of their joint properties. The Court held that where a purchase of real estate was made by a Hindu in the name of one of his sons, the presumption of law was that it was a benami purchase and the burden of proof lay on the benamidar to show that he was solely entitled to the legal and beneficial interest in the property purchased. It is only in England that the doctrine of advancement is applicable. In Controller of Estate Duty v Aloke Mitra163
and in particular the quotation from Sura
Lakshmiah Chetty's case164 it was it was observed that, â€œThere can be no doubt now that a purchase in India by a native of India of property in India in the name of his wife unexplained by other proved or admitted facts is to be regarded as a benami transaction by which the beneficial interest in the property is in the husband although the ostensible title is in the wifeâ€?.
CHAPTER - IV Right and Obligation under Benami transaction 4.1 To whom does the title vest: In case of a trust, the legal ownership of the property vests in the trustee while the beneficial ownership vested with the person for whom the trust was created.165 There was no difference in this regard if the trust was express or a resulting or constructive trust.166 If a benami transaction created a resulting trust, then the legal ownership should vest with the benamidar while the beneficial ownership continued to remain with the real owner. The Bombay High Court has held that the import of S.82 was only that a benamidar stood in a fiduciary relation with the real owner and therefore had all the obligations of a person in such position with respect to the real owner. He was no more than the ostensible owner of the property though his acts with respect to third parties were of such a nature as to bind the real owner of the property. But it would be fallacious to urge that the 163
(1980) 126 ITR 599 at page 612
164 (1925) AIR 1925 PC 181 165
Gurun Ditta v. Ram Ditta,  55 IA 235.
Indranarayan v. Roop Narayan Hegde, AIR 1971 SC 1962
legal ownership of the property vested in him as it does in the case of a trustee. 167 The principal distinction between a trustee as known in English law and a benamidar is that the trustee is the legal owner of the property standing in his name and the cestui que trust is only the beneficial owner whereas in the case of a benami transaction, the real owner has got the legal title though the property is in the name of the benamidar. The benamidar has some of the liabilities of the trustee but not all his rights.168
4.2 Benamidar representing the true owner: In general, the benamidar fully represents the owner of the property in dealings with, the third persons. 169 In a suit for specific performance of contract the subsequent real purchaser brought the suit property in the names of his wife and minor children.The real purchaser and his children were made parties to the suit but the wife left out. It was held that,Defendant No . 3 being the real purchaser, non-joinder of wife did not affect the maintainability of the suit. 170 The property stands in the name of the benamidar, and a third party would not be able to challenge his title so long as the real owner does not come in the picture. It is clear that the Benamidar cannot tact in opposition to the real owner.171 In Kutubuddin Ahmed Vs. Hasna Banu and another172It was observed that, A benamder is a trustee for the beneficial owner and he represents the real and beneficial owner and as the legal title is in him, he can maintain in his own name ……………A proceeding by or against the benamder is fully binding on the beneficial owner.
4.3 Whether any document is essential for the real owner from Benamder to establish rights of ownership: For ascertaining the real owners title there is no need to rectify the name of benamder. Real owner got decree declaring the transaction as benami, there is no need for any transfer deed executed by the benamdar.173 167
Kerwick v. Kerwick,  47 IA 275.
Krishnanand v. State of Madhya Pradesh, (1977) 1 SCC 816.
Kutubuddin Ahamed vs Hasna Banu and another 40 DLR (AD)75
Momtazul K arim Vs. -Abut Hossain, (1970) 22 DLR 146
Kutubuddin Ahamed vs Hasna Banu and another 40 DLR (AD)75
Sultan Ahmned Vs. Md. Waziullah and others; 7BLD(HCD)235 =6 BSCD 43.
4.5Position as between real owner and third parties: As to the position between the real owner of the property and third parties, ordinarily the real owner will not have an occasion to make any assertions about title. If, however, such a situation does arise, then law will have regard to the reality, and disregarding the ostensible title of the benamidar, the law will allow the real owner to assert his ownership, as a general rule. The real owner can avoid the transfer by his benamdar provided that no reasonable care was taken by the transferee in getting the transfer from the benamdar.174 A benami document does not bar the plaintiff's right to recover possession of his land, and that it is unnecessary for him to have it set aside as a preliminary to his obtaining the relief he claims.175Purchaser from a benamder is protected under section 41 of the Transfer of Property Act provided he satisfies the conditions laid down in the proviso to the said section. The real owner can avoid the transfer by his benamder provided no reasonable care was taken by the transferee. 176 Law doesnâ€™t support an unjust enrichment therefore there is no exception taken place under a benami transaction. When a suit is based on joint ownership and enjoyment, a co-sheerer in possession is ways entitled to seek partition simplicitor without seeking any declaration of his title. In deciding such suit, questions of title and nature of particular transaction may come up for decision, incidentally and need to be decided as incidental to adjudication of the shares of the coowners.177 In case of Amjad Sheikh & others Vs. Siddik Hossain Sikdar & others 178it was held that, â€œIt would be grossly unjust to allow him to take advantage of his position and deprive his co-sharers of their respective shares. The purchase made by him would ensure for the benefit of all the other co- sharers and the property Khondker Ansar Ahmed vs. A.T.M Monsuur Ali Mallik 12MLR(AD)261=19 BLT
Nazir Ahamed Serang Vs. Benoy Bhusan Saha & Others(1956 ) 8 DLR 159.
Sultan Ahmed Vs. Mohd. Waziullah & others 39 DLR 329
Birendra Nath Mondal & Ors Vs. Dulal Chandra Mondal & Ors 13 BLT 10=10 BLC
(1956) 8 DLR 217 (222).
must be regarded as being held for the benefit of all the co-sharers according to their respective interests at the date of the sale subject to repayment of the expenses properly incurred in the purchase together with interest thereon calculated at the rate of 6 per cent per annum from the date of the sale up to the date of the reconveyance.â€?
4.6 Whether Benamder is a necessary party of a suit: When no relief has been claimed against benamdar in a suit, the suit cannot be thrown out on the ground that the benamdar has not been impleaded in the suit inasmuch as in such a suit the benamdar is not a necessary party but merely a proper party. 179 Suit for declaration of title and recovery of possession by benamder claiming as real owner , Since the benamder can bring the suit except against the real or beneficial owner, it matters not whether the plaintiff sues as a real owner or as a benamder.180
4.7 Whether a decree against a benamder is binding on real owner: It is now a settled principle of law that A proceeding by or against the benamdar, although the beneficial owner is no party to it, is fully binding on the beneficial owner. 181But it has sume exception.When the plaintiff obtained the decree against the benamdar fraudulently knowing fully well that the real owner-defendant was in possession. When a decree is obtained by the plaintiff practicing fraud it is not necessary to file a separate suit for avoiding such decree but the said decree can be impugned in another suit by such person aggrieved by such fraudulent decree.182
CHAPTER -V Statutory and Judicial Recognition of Benami Transactions 6.1 Judicial Recognition of Benami Transactions: Judicial recognition of benami transactions dates back to the 19th century where in one of the Calcutta cases in the Sadar Diwani Adalat, a purchase made by a husband in the name of his wife was held to be farzi or 179
Shamsha Khatoon Ys. Abut Sukir (1970) 22 DLR 296
Shefalika Debi Vs. Balarani Debi and others; 1 BLD(HCD)256.
Kutubuddin Ahamed vs Hasna Banu and another 40 DLR (AD)75
Sultan Ahmned Vs. Md. Waziullah and others; 7BLD(HCD)235
fictitious.183 Benami transactions were recognized in Indian Subcontinent by the Privy Council. The principle behind the acceptance of benami transactions by the Court was that recognition should be given to the real and not the nominal owner of a property unless to do so would be contrary to public policy or the demands of justice. 184However, even post independence the Apex Court of the Country has recognised that benami transactions were lawful.185
6.2 Statutory Recognition of Benami Transactions: The practice of benami developed in the Indian sub-continent long before its conquest by the Muslims and during the Muslim rule the practice of benami received full recognition from the authorities and the Courts as well. That the practice of benami was widely practised throughout the subcontinent is evident from the early history of the East India Company. The company started administering the province of Bengalin 1757. Law reports of cases involving benami transaction decided by the Sudder Diwany Adawlat and the Supreme Court of Bengal amply show that the benarni system became an institution which was accepted in the common parlance though the Judges used to refer to it as a "pernicious system" but were obliged to recognise it and give effect to such transactions which were otherwise valid. In 1882 the practice of benami received formal legislative recognition when the Indian Trust Act (Act II of 1882) was enacted. 186The reason for such observations can be seen in the fact that benami transactions as per the law then were not per se illegal. S.5 of the TP Act, which talks about transfer, does not prohibit a transfer in the name of X for the benefit of Y;187 such transfers were not prohibited by any other law either. The law was that where a transaction was made out to be benami, effect would be given to the real and not the nominal title. The above rule was derived from the English rule of resulting trusts which provided that where a person purchases property in the name of another or in the name of himself and another jointly or gratuitously transfers property in the name of himself and another jointly then unless there is some further intimation or indication of the intention at that time to 183
Chettiar v. Chettiar,  1 All E R 494.
Das Pandey v. Mussumat Shah Sundri Dibiah,  3 MIA 229.
Gascoigne v. Gascoigne,  1 KB 223.
Nurjahan Begum, wife of Mahmudur Rahman Vs. Mahmudur Rahman Mullick 34 DLR (AD) 61=1 BLD(AD)506 186
Girijanandani v. Brijendra Narain Chowdhary, AIR 1967 SC 1124.
benefit the other person, the property is deemed in equity to be held on a resulting trust for the purchaser or transferor.188 S.82 of the Trusts Act 189, which talks about resulting trust, was used to give a statutory justification to benami transactions. Section 82 of the Trusts Act reads as follows190: 82. Transfer to one for consideration paid by another
: Where property is
transferred to one person for a consideration paid or provided by another person, and it appears that such other person did not intend to pay or provide such consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or provided the consideration.
CHAPTER- VI Benami Transaction prohibited by law 6.1 General Prohibition: The Benami Transaction gives rise to countless litigation and witnessed evil effect in the society. The evil effect flowing from benami Transaction had been noticed by to legislators, the law makers of Bangladesh. Subsequently, by the Land Reforms Ordinance, 1984 the concept of Benami transaction stood abolished; no one is allowed to set up the claim of Benaimi Transaction191. 188Gopeekrist
Gosain v. Gungapersaud Gosain,  6 MIA 36.
Gur Prasad v. Hansraj AIR 1946 Oudh 144.
S. D. Daliluddin Vs. Moulvi Bazlur Rahman 8BLT (HCD) 171
6.2 Defeat the rights of innocent transferees for value from the benamidar: Where a benamidar sells, mortgages or otherwise transfers for value property held by him without the knowledge of the real owner, the real owner is not entitled to have the transfer set aside, unless the transferee had notice actual or constructive that the transferor was merely a benamidar. In Sarjoo Parshad v. Bir Bhaddar Sewak Pandey192, certain villages were purchased by A for which he borrowed a certain amount of money from the appellant. Thereafter, A mortgaged the shares to the appellant to pay back the loan. However, since he was unable to pay the loan, in execution of the decree of the Court, A’s property was sold by auction, where the appellant became the purchaser of the property. The respondents then appealed saying that they were to be regarded as the real owners of the property and A was only the benamidar. The appellant was aware that A was a benamidar but at the same time the respondents were also aware of the mortgage. The Court held that even if the mortgagor had not created a valid hypothecation of property, the appellant was entitled in equity that the sums advanced were a charge thereon.193 The object of the benami transaction was to defraud the creditors of the real owner and the object had been accomplished. However, if the contemplated fraud has not yet been affected, the real owner is entitled to get the property back from the benamidar.194 In T.P. Petherpermal Chetty v. R. Muniandi Servai195, the respondent’s predecessor had collusively executed a benami deed of sale to the appellant’s predecessor in order to defeat the claims of an equitable mortgagee who at once sued the parties to the said benami deed and obtained satisfaction with costs. The respondent thereafter brought a suit against the appellant as real owner but the appellant who had paid off the mortgagee’s claim asserted his title to the land. It was held that the purpose of the fraudulent conveyance having been defeated, the respondent was entitled to a decree and the appellant could not rely upon the contemplated fraud as an answer to the action. 6.3 The transaction was against public policy: When law prohibits a person from purchasing property, but he purchases property benami in the name of someone, he cannot
R.Rajgopal Reddy v. Padmini Chandrasekharan, AIR 1996 SC 238
Radhakrishnan v. Union of India, AIR 1959 Bom 102.
Re Emery’s Investment Trusts, Emery v. Emery,  1 All E R 577
Rangappa v. Rangaswamy, AIR 1925 Mad 1005.
assert his title against the benamidar. In Sheo Narayan v. Mata Prasad196 Kanungoes, a certain kind of revenue officials were forbidden by law to purchase land in the district they were posted on penalty of dismissal from office. A kanungo purchased land in the district he was posted in the name of his brotherâ€™s son. It was held that he cannot get a declaration against the benamidar.
6.4 Statutory prohibition: There are numerous provisions where Benami transaction is expressly prohibited, chief amongst which are the following: (i) Section 5 of The Land Reform Ordinance,1984 (ii) Section 66, Code of Civil Procedure, 1908 (iii) Section 21 of The Public Demands Recovery Act,1913
(i) Section 5 of the Land Reform Ordinance, 1984: The provision of section 5 of the Land Reform Ordinance, 1984 makes it clear that, acquisition of the 'immovable property' by benami transaction has been prohibited.197 The Land Reforms Ordinance came into force on January 26, 1984 when the same was published in the Bangladesh Gazette extraordinary and on coming into force of the said Ordinance; no one is allowed to set up the claim of Benaimi Transaction198.Section 5 reads as follows199: 5. No benami transaction : (1) No person shall purchase any immovable property for his own benefit in the name of another person. (2) Where the owner of any immovable property transfers or bequeaths it by a registered deed, it shall be presumed that he has disposed of his beneficial interest therein as specified in the deed and the transferee or legatee shall be deemed to hold the property for his own benefit, and no evidence, oral or documentary, to show that the owner did not intend to dispose of his beneficial interest therein or that the transferee or legatee holds the property for the benefit of the owner, shall be admissible in any proceeding before any Court or authority. 196
Sarjoo Parshad v. Bir Bhaddar Sewak Pandey, (1908) 35 IA 98.
SN Kabir vs Fatema Begum 15 BLC 585
S. D. Daliluddin Vs. Moulvi Bazlur Rahman 8BLT 171
(3) Where any immovable property is transferred to a person by a registered deed, it shall be presumed that such person has acquired the property for his own benefit, and where consideration for such transfer is paid or provided by another person it shall be presumed that such other person intended to pay or provide such consideration for the benefit of the transferee, and no evidence, oral or documentary, to show that the transferee holds the property for the benefit of any other person or for the benefit of the person paying or providing the consideration shall be admissible in any proceeding before any Court or authority. The law was intended to prevent future Benami transaction only. The section is never intended to cover any Benami tansaction held before the law came into force. Nor the law was made retrospective.200 It is clear that no person shall purchase any immovable property for his own benefit in the name of another person and not only that no evidence, oral or documentary, to show that the transferee holds the property for the benefit of any other person or for the benefit of the person praying or providing the consideration shall be admissible in any court or authority. 201 There is no ambiguity in the language of section 5 of the Ordinance. It is to be read as it is. By importing or adding the word 'rural' or 'urban' in the section it need not be interpreted otherwise. For the purpose of applicability of this section in the entire part of the country the legislature did neither used the word rural or urban nor used the word agricultural land or non agricultural land in the section. So, we have found that by making the provision of section 5 acquisition of the 'immovable property' by benami transaction has been prohibited. The plaintiff had no legal title in the suit property to get declaration that the defendant is benamdar and he has acquired the property through benami transaction and as such the suit is barred under section 42 of the Specific Relief Act.202
(ii) Section 66, Code of Civil Procedure, 1908: Where a property was sold under a decree of the Court or for arrears of revenue and it was purchased benami and the benamidar was certified to be the purchaser, the real purchaser could not maintain a suit against the benamidar for recovery of the property as per S.66 (1) of the Code of Civil Procedure, 1908. S.66 (1) of the Code of Civil Procedure, 1908. Read as follows, 200
Birendra Nath Mondal & Ors Vs. Dulal Chandra Mondal & Ors 13 BLT 10=10 BLC 170
Md.Shah Alam vs.Md.Omar farooq 12MLR(AD)268.
SN Kabir vs Fatema Begum 15 BLC 585
66 (1). Suit against purchaser not maintainable on ground of purchase being on behalf of plaintiff -No suit shall be maintained against any person claiming title under a purchase certified by the Court in such manner as may be prescribed on the ground that the purchase was made on behalf of the plaintiff or on behalf of someone through whom the plaintiff claims and in any suit by a person claiming title under a purchase so certified, the defendant shall not be allowed to plead that the purchase was made on his behalf or on behalf of someone through whom the defendant claims.â€? Section 66 provides that no suit shall be maintained against any person claiming title under a purchase certified by the Court on the ground that the purchase was made on behalf of the plaintiff or on behalf of someone through whom the plaintiff claims. Formerly, the opening words were, no suit shall be maintained against a certified purchaser and the change was made to protect not only the certified purchaser but any person claiming title under a purchase certified by the Court. The protection is thus available not only against the real purchaser but also against anyone claiming through him. 203 When a suit is instituted by the real woner claiming his title against the benamder and the benamder comes forward and resist the claim of the real owner, the matter ends there and the Suit is hit by section 66(1) of the Code. But where the real owner instituted a suit against the benamder claiming that benamder is not the real owner simply benamder and if the benamder or any one claiming under him does not come forward to contest the claim of the plaintiff in that case, section 66(1) of the said Code will have no manner of application and the suit would not be barred under the said Provisions of the Code-in the present case, since the benamder or his heirs did notcontest the suit, the suit is not hit by section 66(1) of the Code of Civil Procedure.204If a third person has any claim against the real owner of the property sold at Court auction in the name of any ostensible owner he is not prohibited from bringing a suit for obtaining relief against the nominal purchaser.
All cases of purchase made in a Court's auction on behalf of or on
account of the plaintiff fall within the mischief of this section. 206 Provisions of section 66 being contrary to equitable principles must be construed strictly and should never be extended beyond 203
1964 AIR 1254, 1964 SCR (6) 780
Sananda Mohan Barua & Ors. Vs. Niranjan Proshad Barua & Ors., 4 BLT 187
Jagadish Chandra Majumder Vs. Badsha Miah & ors. BCR 1987 AD 49.
Gani Howlader (Md) and another Vs. Abdus Somed Howlader and others 51 DLR
its legitimate limits.207This section does not exclude from its purview benami purchases made for the benefit of a plaintiff by a defendant in his own name who was already acting as the agent of the plaintiff. The capacity which the deffedant filed prior to the purchase cannot enter the judicial verdict. The only test is whether the court action purchase was made on behalf of the plaintiff or of someone of whom the plaintiff traces his title. In other words if the suit is founded on the averments that the real purchaser was the plaintiff and the certified purchaser had no beneficial interest therein section 66 CPC comes in the operation.208Where a property was sold under a decree of the Court or for arrears of revenue and it was purchased benami and the benamidar was certified to be the purchaser, the real purchaser could not maintain a suit against the benamidar for recovery of the property.209
(ii) Section 21 of The Public Demands Recovery Act,1913: Section 21 of the PDR Act corresponds with section 66 of the CP Code in the same language. Section 21 of the PDR Act has put a stop in benami purchase in certificate sale and section 66 of the CP Code has put a stop to benami purchase in Court sale. The object of both the sections is the same-to put a stop to benami purchase in auction sale. Both the sections have provided that no suit shall be maintainable against a certified purchaser.210 Section 21 of The Public Demands Recovery Act, 1913 reads as follows211: 21. Suit against purchaser not maintainable on ground of purchase being on behalf of plaintiff: (1) No suit shall be maintained, against any person claiming title under a purchase certified by the Certificate-officer in such manner as may be prescribed, on the ground that the purchase was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims. (2) Nothing in this section shall bar a suit to obtain a declaration that the name of any purchaser certified as aforesaid was inserted in the certificate fraudulently or without the 207
Rai Bahadur Brajendra Vs. Tamyuddin Biswas, (1964) 16 DLR 125.
208 Abdul 209
Goni Howlader Vs.Abdus Somed Howlader 51DLR522
Pundit Ram Narayan v. Maulvi Mohammad Hadi and Others, 26 IA 38.
210 Angada 211
Chandra Roy Vs. Amrendra Noth Mondal and others, I BLC 567=48 DLR 595
consent of the real purchaser, or interfere with the right of a third person to proceed against the property, though ostensibly sold to the certified purchaser, on the ground that it is liable to satisfy a claim of such third person against the real owner.
CHAPTER â€“ VII PRESUMPTIONS IN AND PROOF OF BENAMI
5.1 Presumption of Benami Transaction: Principle that transaction is presumed to be for benefit of person providing money. Where property is acquired in the name of one person but the purchase price is paid by another, a presumption arises that the transaction was one for the benefit of the person providing the money. Such cases are common in India where benami transactions are recognised. Long possession belied the case of Benami. 212 When property stands in the name of wife and minor children of the assessee, presumption is that they are the real owners unless contrary is shown by evidence led by Income Tax Authority.213
5.2 Burden and Standard of Proof: The system of putting property benami is so extremely common in Indian subcontinent that the mere fact of a deed being executed in a proper form and apparently effecting a valid transfer to another is not as good evidence of real transfer as it would be in other countries and even a slight quantity of evidence to show
Hasan Ali vs Jytendra Biswas. 1984 BLD (AD) 307.
M/S. E. R. Chowdhury V. Commissioner of Taxes 37 DLR 210
that it was a sham or benami transaction would suffice. 214 Section 92 of Evidence Act is no bar to prove or show that a particular document is a benami transaction .Under Provision (1) Any Fact may be proved which would invalidate any documents. 215 In case of A.H. Md. Ali Haider Quoraishi Vs. Shaheen Quoraishi & Ors216 it was held that, The essential ingredients of a benami transaction are as to who has paid the consideration money, who is in possession of the suit property, who has the custody of title deeds and also how the property is dealt with in the sense who enjoys the property and collects the rent. The onus of proof of these ingredients lies upon him who claims certain transaction as benami. In other words, the motive of benami transaction as well as the conduct of the parties including their dealings and enjoyment of the property also become factors for consideration. The question whether a particular deal is benami or not is essentially a question of fact. 217 The burden of proving that a particular property was benami lies on the person asserting the same218 and like in all criminal offences, the standard of proof here is beyond reasonable doubt.219It is now well settled that besides the source of consideration and custody of document, motive for the transaction, position and relationship between the real owner and ostensible owner i.e. the Benamdar and the conduct dealing with the property are dominant circumstances for the Court to be guided in deciding the question of Benami. 220 In case of Nurul Haque vs.Abdus Salam Chowdhury221it was observed that, 214
Mosammat Nurunnahar Begum and another Vs. Abdul Jabbar Mondal and others I
Fuljan lessa Bibi vs.Shamsher Ali Biswas 6 BSCR 43
(1951) 3 DLR 476
Mahmudul Huq vs. Mst. Golap Mia, 41 DLR 314
Krishnanand v. State of Madhya Pradesh, (1977) 1 SCC 816.
220 Abdur 221
Rashid chowkidar vs Raji Haider & others58 DLR 470
In all case of benami transaction it is necessary to consider the motive for benami transaction for benami transaction, how and by whom the consideration was paid, the conduct of the parties both during and after the transaction, custody of title deeds, possession of property and various other matters connected with the transaction. The criterion to determine whether a property was benami or not was to consider the source from which the money came with which the property was purchased. 222 Once it has been established that the purchase price of a property was paid by another person and not the recorded owner, the burden of proof shifts to that person to show that he had intended to gift or lease it to the recorded owner. 223 Yet this was not an absolute criterion. It merely created a resumption of benami which could be rebutted by the facts and circumstances of the case. 224In case of Bina rani Vs. Shantosh Chandra Dev225it was observed that, It is true that intention or motive to create a benami transaction is also an important relevant fact for deciding the question who is the real owner of the property where the same has been claimed to be a benami one, but that does not mean that intention or motive should receive the only consideration by a court of law for deciding the nature of the alleged transaction. Benami transaction will be scrutinised by the court very carefully and unless it is established very firmly no transaction should be termed benami. 226 In Pundit Ram Narayan v. Maulvi Mohammad Hadi and Others227it was observed that,
Dhurm Das Pandey v. Mussumat Shah Sundri Dibiah,  3 MIA 229.
Nand Kishore Mehra v. Sushila Mehra, (1995) 4 SCC 572.
Bina Rani vs. Shontosh chondra day 8BLT(AD)9=21BLD(AD)99=9 BSCD 3
226Hasan Ali Mollah 227
26 IA 38.
and others Vs. Janendra Mohan Biswas and others; 4BLD (AD)307
Though property was purchased in the name of the respondent by the appellant’s father out of his own income, the respondent’s possession of the property for nine and a half years without being called upon by the appellant’s father to account for the rents and the fact that the respondent had performed various valuable services for the latter was sufficient to establish a claim on the latter’s generosity and hence established that it was not a farzi transaction but a gift in favour of the respondent. In deciding question of benami in respect of a transaction matters or factors generally taken into consideration are source of the purchase money, custody of the deed, possession of the property, motive for benami transaction, subsequent conduct of the person who said to have made the benami transaction and the intention of the person as regard the transfer claimed to be benami and subsequent dealing with the property by the person who is claiming transaction as benami228.In case of SD Daliluddin vs Moulvi Bazlur Rahman229 it was held that, Custody of title deed came from the side of the defendant opposite party when the plaintiff petitioner signally failed to prove motive or intention in obtaining the deed in the benami of the defendant opposite party and the possession of the plaintiff petitioner on the suit property is nothing but a permissive possession under defendant opposite party. Certified copy of the power of attorney can be accepted when original power of attorney was filed in the High Court Division in a civil revision case when certified copy bore the seal of the High Court Division. From a totality of the evidences facts and circumstances of the case it eminently emerges that the plaintiffpetitioner signally failed to discharge the burden of proof that the transaction in dispute is a benami one and the plaintiff-petitioner is the true owner of the suit property and the defendant opposite party is a benamidar. It does not mean that intention or motive should receive the only consideration by a court of law for deciding the nature of the alleged transaction as a benami transaction.230 In proper case
Mahmudul Huq vs. Mst. Golap Mia, 41 DLR 314
5 BLC 221
Bina Rani vs. Shontosh chondra day 8BLT(AD)9=21BLD(AD)99=9 BSCD 3
Intention and motive may be exempt,231Intention of benami transaction means for whose interest transaction had done.232 Although the source of purchase money is an important criteria but is not conclusive where there are other circumstances showing that the purchaser intended, property to belong to the person.233 In case of Rupe dahan Begum and others Vs. Lutfe Ali Chowdhury and others234It was observed that, â€œAlthough the original kabala documents came from the custody of the plaintiff, the defendant offered sufficient explanation and the plaintiff failed to prove the motive of acquisition of the suit lands in the benami of his daughter and he also failed to prove that he had paid the consideration money for the transaction and that he was out of possession which was enough to negative the inference that the transaction was benami.â€? When it is not possible to obtain direct evidence of a conclusive or real character to establish or refute the evidence as to the payment of consideration, the case must be dealt with on reasonable possibilities, surrounding circumstances, the position of the parties, their relation to one another, the motives which govern their actions and their subsequent conduct including their dealings with the property, and legal inference from proved or admitted facts.235Thus in determining a question of benami there is no hard and fast rule to be applicable in all situations.236The courts in deciding the issue are usually guided by the circumstances as to237:
34 DLR (AD) 61
Sananda Mohan Barua & Ors. Vs. Niranjan Proshad Barua & Ors 4 BLT 187
2 BLC (AD) 32=9 BSCD 2
Sudhanshu Kumar Mitra Vs. Barada Charan Sarkar & others (1951) 3 DLR 476
Shamsul Haque Vs.Luna Fahmida Rahman 58 DLR 51
Mosharraf Hossain Chowdhury and others Vs. Md. Jahurul Islam Chowdhury and
others. 61 DLR (AD) 133.
(a) The source from which the investment came; (b) The nature and possession of the property after acquisition; (c) Motive, if any, for giving the transaction a benami colour; (d) The position of the parties and their relationship, if any; (e) The custody of the title deeds; and (f) The conduct of the parties in dealing with the property. In a landmark judgment of the Calcutta High Court in the case of Smt. Usha Bhar v Sanat Kumar Bhar,238 several guidelines have been laid down.The High Court held that in a suit claiming a property as benami, there should be cogent and sufficient evidence to conclude that the apparent is not the real. In order to ascertain whether a particular sale is benami and the apparent purchaser is not the real owner, the burden lies on the person asserting to prove so. Such burden has to be strictly discharged based on legal evidence of a definite nature. Such evidence directly proves the fact of benami or establishes circumstances unerringly and reasonably.239
CHAPTER â€“ VIII Concluding part 9.1 Observation: The upshot of the above analysis is that the prime object of benami transaction of property has been and is â€œconcealment of the real ownerâ€? till the time he desires or his hidden purposes are served. In old times, he concealed himself either to submerge into the secure unity of joint Hindu-Family or to protect his land from usurpatory conquests. But now when those reasons have faded, he still conceals, with a difference that previously his motives were somehow justifiable but now there is not a single respectable motive; for their being hardly any legitimate and noble motive left for such a practice in modern times. This type of custom has found legal recognition nowhere in the world apart 238
 135 Taxman 526
from the Sub-continent. Even the British rulers have never accepted this custom wholeheartedly.240 The Benami Transaction gives rise to countless litigation and witnessed evil effect w the society. The evil effect flowing from benami Transaction had been noticed by to legislators, the law makers of Bangladesh.Subsequently, by the Land Reforms Ordinance, 1984 the concept of "Benami transaction" stood abolished. The Land Reforms Ordinance came into force on January 26, 1984 when the same was published in the Bangladesh Gazette extraordinary and on coming into force of the said Ordinance; no one is allowed to set up the claim of "Benaimi Transaction 241.Why Benami Transactions are a common phenomenon242? Some people had superstitious belief that certain names were lucky • Commit fraud on creditors • The desire to evade tax thereby committing fraud on the state. • To avoid certain political and social risks. • Provides an opportunity for putting black money into more productive use. Although there is no prohibitation of benami transaction regarding to movable property •
except company share. A man can well maintain benami bank account on protection of section 82 of trust Act read with section 103 of Bank Company Act.
9.2 Recommendation: In the light of the above discussion, I recommended as follows: (i) Prohibition of benami transactions should cover all kinds of property; (ii) Entering into a benami transaction should be declared as an offence. However, an exception should be made for transactions entered into by the husband or father for the transfer of properties in the name of the wife or unmarried daughter for their benefit. By this, the doctrine of advancement as obtaining in the English law will be incorporated into the Statute Book; (iii) Voluntary organisations should be authorised to file complaints about the entering into of benami transaction and the District Judges should be designated as Tribunals; http://www.pakistanlaw.net/law-articles/properties-law/motives-for-benami-propertiesand-politico-economic-interests-of-state/ 240
S. D. Daliluddin Vs. Moulvi Bazlur Rahman 8BLT 171
(iv) No suit to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall be instituted in any court by or on behalf of a person claiming to be the real owner of such property; (v) In any suit, no defence based on any right in respect of any property held benami. (vi) The following provisions are hereby repealed, namely,a. Section 82 of the Indian Trusts Act, 1882; b. Section 66 of the Code of Civil Procedure, 1908; c. Section 103 & 104 of the Bank Company Ordinance,1994.
Bibliography: Books Reference: Encyclopedia Britannica, 11th Ed. B. K. Mukerjea's Tagore Law Lectures on Hindu Law of Religious and Charitable Trusts,1936 Salmond on Jurisprudence (12th Ed. ) P.J. Fitzgerald ed., Mayne on Hindu Law, 11th Ed.
Hanburyon Modern Equity, 6th Ed. Parker and Mellows, Modern Law of Trusts, (1966) Illegal Transactions: The Effect of Illegality on Contracts and Trusts (1999), Law Comm CP No 154. Enonchong, â€˜Illegal Transactions: The Future?â€™  RLR 82. Re Scotish Equitable Life Assurance Society, (1902) Story, Equity Jurisprudence, (1919) Agnew on Tagore Law Lectures on Trusts. Casperz's Law of Esloppel. Collett'sSpecific Relict; 4th Ed.
Internet Sources: http://bdlaws.minlaw.gov.bd/ http://legalsutra.org/1259/benami-transactions/ http://www.pakistanlaw.net/law-articles/properties-law/motives-for-benami-properties-andpolitico-economic-interests-of-state/ http://www.slideshare.net/altacitglobal/benami-transactions http://sbn-caselaw.blogspot.com/ http://www.vakilno1.com/ http://www.lawguru.com/ http://www.indialawjournal.com/ http://indiancourts.nic.in/ http://www.indlii.org/index.aspx http://www.legalindia.in/ http://www.clcbd.org/
List of leading Cases: Rupa jahan Begum and others vs. Lutfe ali chowdhury & others 17 BLD (AD)66= 2BLC(AD)32 = 1MLR(AD)374 =5BLT(AD)94 Nurjahan Begum Vs. Mahmudur Rahman Mullick 34 DLR (AD) 61=1 BLD (AD) 506 Kutubuddin Ahamed vs Hasna Banu and another 40 DLR (AD)75; Ali Azam Vs. Mohammad Majib Ullah11 BLT 26 Kutubuddin Ahamed vs Hasna Banu and another 40 DLR (AD)75 SN Kabir vs Fatema Begum 15 BLC 585 S. D. Daliluddin Vs. Moulvi Bazlur Rahman 8BLT 171 Kutubuddin Ahamed vs Hasna Banu and another 40 DLR (AD)75 Sultan Ahmned Vs. Md. Waziullah and others; 7BLD(HCD)235 =6 BSCD 43. Khondker Ansar Ahmed vs. A.T.M Monsuur Ali Mallik 12MLR(AD)261=19 BLT (AD)129 Nazir Ahamed Serang Vs. Benoy Bhusan Saha & Others(1956 ) 8 DLR 159. Sultan Ahmed Vs. Mohd. Waziullah & others 39 DLR 329 Birendra Nath Mondal & Ors Vs. Dulal Chandra Mondal & Ors 13 BLT 10=10 BLC 170.
Shamsha Khatoon Ys. Abut Sukir (1970) 22 DLR 296 Shefalika Debi Vs. Balarani Debi and others; 1 BLD(HCD)256. Kutubuddin Ahamed vs Hasna Banu and another 40 DLR (AD)75 Sultan Ahmned Vs. Md. Waziullah and others; 7BLD(HCD)235 Chettiar v. Chettiar,  1 All E R 494. Dhurm Das Pandey v. Mussumat Shah Sundri Dibiah,  3 MIA 229. Gascoigne v. Gascoigne,  1 KB 223. Nurjahan Begum, Vs. Mahmudur Rahman Mullick 34 DLR (AD) 61=1 BLD(AD)506 Girijanandani v. Brijendra Narain Chowdhary, AIR 1967 SC 1124. Gopeekrist Gosain v. Gungapersaud Gosain,  6 MIA 36. Gur Prasad v. Hansraj AIR 1946 Oudh 144. S. D. Daliluddin Vs. Moulvi Bazlur Rahman 8BLT (HCD) 171 Birendra Nath Mondal & Ors Vs. Dulal Chandra Mondal & Ors 13 BLT 10=10 BLC 170 Md.Shah Alam vs.Md.Omar farooq 12MLR(AD)268. SN Kabir vs Fatema Begum 15 BLC 585 Sananda Mohan Barua & Ors. Vs. Niranjan Proshad Barua & Ors., 4 BLT 187 Jagadish Chandra Majumder Vs. Badsha Miah & ors. BCR 1987 AD 49. Abdul Gani Howlader (Md) and another Vs. Abdus Somed Howlader and others 51 DLR 522. Rai Bahadur Brajendra Vs. Tamyuddin Biswas, (1964) 16 DLR 125. Abdul Goni Howlader Vs.Abdus Somed Howlader 51DLR522 Pundit Ram Narayan v. Maulvi Mohammad Hadi and Others, 26 IA 38. Angada Chandra Roy Vs. Amrendra Noth Mondal and others, I BLC 567=48 DLR 595 Hasan Ali vs Jytendra Biswas. 1984 BLD (AD) 307. M/S. E. R. Chowdhury V. Commissioner of Taxes 37 DLR 210 Mosammat Nurunnahar Begum and another Vs. Abdul Jabbar Mondal and others I BLD56. Fuljan lessa Bibi vs.Shamsher Ali Biswas 6 BSCR 43 Mahmudul Huq vs. Mst. Golap Mia, 41 DLR 314 Krishnanand v. State of Madhya Pradesh, (1977) 1 SCC 816. Abdur Rashid chowkidar vs Raji Haider & others58 DLR 470 Dhurm Das Pandey v. Mussumat Shah Sundri Dibiah,  3 MIA 229. Nand Kishore Mehra v. Sushila Mehra, (1995) 4 SCC 572. Bina Rani vs. Shontosh chondra day 8BLT(AD)9=21BLD(AD)99=9 BSCD 3 Hasan Ali Mollah and others Vs. Janendra Mohan Biswas and others; 4BLD (AD)307 Mahmudul Huq vs. Mst. Golap Mia, 41 DLR 314
Bina Rani vs. Shontosh chondra day 8BLT(AD)9=21BLD(AD)99=9 BSCD 3 Sananda Mohan Barua & Ors. Vs. Niranjan Proshad Barua & Ors 4 BLT 187 Sudhanshu Kumar Mitra Vs. Barada Charan Sarkar & others (1951) 3 DLR 476 Shamsul Haque Vs.Luna Fahmida Rahman 58 DLR 51 Mosharraf Hossain Chowdhury & others Vs. Md. Jahurul Islam Chowdhury & others. 61 DLR (AD) 133.
S. D. Daliluddin Vs. Moulvi Bazlur Rahman 8BLT 171 Kutubuddin Ahamed vs Hasna Banu and another 40 DLR (AD)75 Momtazul K arim Vs. -Abut Hossain, (1970) 22 DLR 146 B. Anasayu v. B. Rayadu, AIR 1989 AP 290. R.Rajgopal Reddy v. Padmini Chandrasekharan, AIR 1996 SC 238 Radhakrishnan v. Union of India, AIR 1959 Bom 102. Re Emeryâ€™s Investment Trusts, Emery v. Emery,  1 All E R 577 Rangappa v. Rangaswamy, AIR 1925 Mad 1005. Sarjoo Parshad v. Bir Bhaddar Sewak Pandey, (1908) 35 IA 98. Anasuya Vs. Rayudu,1988(2) ALT (N.R.C.)55. Bhim Singh v. Kan Singh, AIR 1980 SC 727. Radhakrishnan v. Union of India, AIR 1959 Bom 102. Pitchayya v. Rattamma, AIR 1929 Mad 268. Ganganarain v. Brindaban 3 W. R. 142 Singh Sanatan v. Singh Rajput, 65 I. A.106 Watson v. Ramchand, I. L. R. 18 Cal. 10. Ganganarain v. Brindaban, 3 W.R. 142. Sri ThakurJi v. Sukhdco, I. L. R. 42 All. 295 (F. B.). Sri Thakur Parmod v. Atkins, 4 P. L. J.537. Madhab Chandra v. Rani Sarat Kumari, 15 C. W. N. 126. Muddan Lal v. Srimuttec Kumal Bibce,8 W. R. (Cr.) 42. Pecsapti v. Kandur, 18 M. L. T. 543. Secretary v. Davy, 50 I. C. 539; Rangappa v. Rangaswami Nayakar, A. I. R. 1925 Mad. 1005 Mst. Ratnibai v. Khcmraj, T.L.R. (1944) Nag. 125 A. I. R. 1944 Nag. 133; Ghanabai v. Sr'nivasa, 4 M- H. C. R. 84 ; Minakshi Mills Ltd., Madurai v. Commissioner of Income-tax, Madras, A.T.R. 1957 S. C. 49 Tagore v. Tagore, 9 Beng. L. R. 401. Subbamma v. Kuhunna, I. L. R. 30 Mad. 298 ;
Umasundari v. Dwaraknath, 2 Beng. L. R. A. C. 284 ; Issur Chandra Dutt v.Gopal Chandra Das, I. L. R. 25 Cal. 981 Sohendro Nath Mukerjee v. Kali Proshad Johuri, I. L. R. 30 Cal. 265 : 7 C. W. N. 5.229; Tirumalayappa Pillai v. Swami Naicker, I. L. R. 18 Mad. 469 ; Kuthaperumal Rajali v. Secretary of State for India in Council, I. L R. 30 Mad. 245 Suryanarayan Jagapatirajur. Goluguri Bapiraju, I. L. R. 34 Mad 43 Kalee Mohan Paul v.Bholanath, 7 W.R. 138; Gopeekrist Gossain v. Gungapersaud Gossain, 6 M.L.A. 53; Dyer v. Dyer, (1788) 2 Cox 92. Dyer v. Dyer, (1788) 2 Cox Eq. 92, 93. Ebrand v. Dancer, 2 Ch. C. 26; s.c. I Eq. Abr. 382, p1. 11;2 Mad. Pr. Ch. 101. Lloyd v. Read, LP. Will. 607. Rider v. Kidder, 10 Ves. 366. Eg Gissing v Gissing  AC 886 Tinsley v Milligan   1 FLR 826. Midland Bank Plc v Cooke  4 All ER 562. Lynch v Burke  2 IR 159 Midland Bank plc v Cooke  4 All ER 562; Drake v Whipp  1 FLR 826. McHardy and Sons (A firm) v Warren  2 FLR 338. Drake v Whipp  1 FLR 826. Drake v Whipp  1 FLR 826. Woolwich Equitable Building Society v IRC  AC 70; Westdeutsche Landesbank Girozentrale v Islington London Borough Council  AC 669; Kleinwort Benson Ltd v Glasgow City Council  1 AC 153, HL. Silver v Silver  1 All ER 523 Heavey v Heavey  111 ILTR 1; M v M  114 ILTR 46; Doohan v Nelson  2 NSWLR 320; Napier v Public Trustee (Western Australia) (1980) 32 ALR 153. Moate v Moate  2 All ER 486; Silver v Silver  1 WLR 259; Tinker v Tinker (No 1)  P 136; Mossop v Mossop  Fam 77.
Re De Visme (1863) 2 De GJ & Sm 17; Bennet v Bennet (1878–79) LR 10 Ch D 474. Sayre v Hughes (1867–68) LR 5 Eq 376; Gore-Grimes v Grimes  IR 470.. Dullow v Dullow  3 NSWLR 531. In Re Dreger Estate (1994) 97 Man R (2d) 39 Mercier v Mercier  2 Ch 98; Pettitt v Pettitt  AC 777; Heseltine v Heseltine  1 WLR 342; Northern Bank Ltd v Henry  IR 1; Allied Irish Banks Ltd v McWilliams  NI 156. Rider v Kidder (1805) 10 Ves 360; Soar v Foster (1858) 4 K & J 152; Allen v Snyder  2 NSWLR 685; Calverly v Green (1984) 56 ALR 483. Diwell v Farnes  1 WLR 624. Tinsley v Milligan  3 All ER 65 at 90. Guran Ditta v. Ram Ditta, (1928) 32 Calcutta Weekly Notes 871 A.I.R. 1928 P.C. 172. Sheikh Bahadur Ali v. Sheikh Dhomu, 1 Cal Sud Diw Rep 250 Sheo Narayan v. Mata Prasad, (1905) 27 All 3. Sree Meenakshi Mills Ltd. v. Income Tax Commissioner, AIR 1957 SC 49. T.P. Petherpermal Chetty v. R. Muniandi Servai, (1908) 35 IA 98. Tinker v. Tinker,  1 All E R 540. Yeshwant v. Walchand, AIR 1951 SC 216. Gurun Ditta v. Ram Ditta,  55 IA 235. Indranarayan v. Roop Narayan Hegde, AIR 1971 SC 1962 Kerwick v. Kerwick,  47 IA 275. Krishnanand v. State of Madhya Pradesh, (1977) 1 SCC 816.
Published on Sep 11, 2013
Benami transactions have been a common practice in India since a very long period of time. The word ‘benami’ is of Persian origin and litera...