Prohibition of Benami Property Transactions Act, 1988

Section 6: Prohibition on Re-transfer of Property by Benamidar

Section 6 of the Prohibition of Benami Property Transactions Act, 1988 prevents a benamidar from re-transferring benami property to the beneficial owner, or to another person acting on the beneficial owner's behalf. A re-transfer made in violation of Section 6 is treated as null and void.

What does Section 6 prohibit?

The purpose of Section 6 is to prevent the person in whose name a benami property is held from restoring that property to the beneficial owner through a private re-transfer. The provision operates alongside the Act's broader prohibition of benami transactions and the statutory consequences that can follow in respect of benami property.

Meaning of important terms

Benamidar

Under Section 2 of the Act, a benamidar is the person in whose name the benami property is transferred or held and includes a person who lends his or her name for the purpose of a benami transaction. Whether a transaction is legally a "benami transaction" depends on the statutory definition and exclusions contained in Section 2.

Beneficial owner

The beneficial owner is the person, whether or not his or her identity is known, for whose benefit the benami property is held by a benamidar.

For the complete statutory definitions, see Section 2 - Definitions.

Section 6 - statutory text

Effect of a prohibited re-transfer

Section 6(2) gives the prohibition a direct legal consequence. If a benami property is re-transferred contrary to Section 6(1), that re-transfer is deemed to be null and void. The provision therefore does not merely regulate the form of transfer; it denies legal effect to a transfer made in contravention of the statutory prohibition.

Exception under Section 6(3)

Section 6(3) preserves the specific exception for a transfer made in accordance with Section 190 of the Finance Act, 2016. This exception forms part of the statutory text and should be read according to the terms and historical operation of that Finance Act provision.

Related provisions

Section 6 should be read with the surrounding provisions in Chapter II of the Act: Section 3 - Prohibition of benami transactions, Section 4 - Prohibition of the right to recover property held benami, and Section 5 - Property held benami liable to confiscation. The next current provision is Section 7 - Adjudicating Authority.

Key points to remember

• Section 6 applies to re-transfer of benami property by a benamidar.
• The prohibited recipient is the beneficial owner or a person acting on the beneficial owner's behalf.
• A re-transfer made in violation of Section 6(1) is deemed null and void under Section 6(2).
• Section 6(3) contains the specific statutory exception referring to Section 190 of the Finance Act, 2016.
• The legal character of a transaction must be tested against the definitions and exclusions in Section 2 of the Act.