Benami Property: Will Cannot Override Law, Rules Supreme Court
Commercial contracts not fiduciary ties, says bench
Confiscation ordered under Section 27 of Benami Act
By Legal Reporter
New Delhi: May 11, 2026:
The Supreme Court of India has ruled that property acquired through a benami transaction cannot be claimed by the real owner merely on the basis of a Will executed by the benamidar. The judgment reinforces the strict application of the Prohibition of Benami Property Transactions Act, 1988, and clarifies that contractual or commercial relationships cannot be disguised as fiduciary ones to escape the law.
For readers studying limitation, sale deed cancellation, recovery of possession and proof of Will in property disputes, the Supreme Court decision in Rajeev Gupta & Ors vs Prashant Garg & Ors is an important ruling. The Court examined issues under Section 100 CPC, Order 6 Rule 17 CPC, Section 41 and 52 of the Transfer of Property Act, limitation for cancellation of sale deeds, and evidentiary requirements for proving a Will in a long-running family property dispute.
Background of the Case
The Supreme Court bench of Justice JB Pardiwala and Justice R Mahadevan recently decided Manjula & Others v. D.A. Srinivas, a dispute over agricultural land purchased in the name of one K. Raghunath. The plaintiff claimed that although the property stood in Raghunath’s name, it was purchased using his funds, and he relied on a registered Will executed by Raghunath in his favor. The defendants, being Raghunath’s heirs, contested ownership.
The trial court rejected the plaintiff’s claim under Order VII Rule 11 CPC, citing the bar under the Prohibition of Benami Property Transactions Act, 1988 (PBPT Act). The High Court reversed this, but the Supreme Court restored the trial court’s order, holding the transaction benami and ordering confiscation.
Key Legal Principles Discussed
1. Prohibition of Benami Property Transactions Act, 1988
- Section 3 & 4: Prohibit benami transactions and bar suits/claims by real owners.
- Section 27: Provides for confiscation of benami property by the Central Government.
- Sections 45 & 65: Bar jurisdiction of civil courts, but not of High Courts or Supreme Court once judicial determination is made.
The Court emphasized that the Act’s purpose is to prevent individuals from concealing ownership through proxies and to ensure confiscation of such properties.
2. Fiduciary Relationship Exception
The plaintiff argued that the property was held in a fiduciary capacity due to an employer-employee relationship. The Court rejected this, clarifying that fiduciary duty arises only when one person is bound to protect another’s interests without personal gain.
- Employer-employee relationships do not qualify.
- Commercial contracts or MoUs cannot be disguised as fiduciary arrangements.
- Recognized fiduciary duties include directors toward companies, trustees toward beneficiaries, etc.
3. Role of Testamentary Documents (Wills)
The Court held that a Will cannot override statutory prohibitions. A testamentary document cannot be used to claim beneficial ownership of property acquired through a benami transaction. The Will was seen as a device to circumvent the law.
Court’s Decision
- The property was declared benami.
- The plaintiff’s claim based on the Will was rejected.
- The defendants, as heirs, also failed to prove independent acquisition by Raghunath.
- The property was ordered to be confiscated under Section 27, with the Central Government directed to appoint an Administrator within eight weeks.
Implications of the Judgment
- Strengthens Benami Law Enforcement: Confirms that neither Wills nor contractual arrangements can bypass statutory prohibitions.
- Clarifies Fiduciary Exception: Limits its scope to genuine trust-based relationships, not commercial dealings.
- Finality of Judicial Determination: Once declared benami, no future claims can be entertained.
- Impact on Agricultural Land Transactions: Reinforces restrictions under state land reform laws, preventing circumvention through benami arrangements.
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General Draft of Last Will and Testament executed by a Father or Mother in favour of their daughters in the absence of any son.
LAST WILL AND TESTAMENT
This Last Will and Testament is made and executed at ____________ on this ___ day of ____, 20, by me, Mr./Mrs. [Full Name], aged approximately ___ years, (holder of Aadhaar No._/PAN No.__/Passport No. ____________, issued on ____________ at ____________), son/wife of Mr. [Father/Husband's Full Name], presently residing at [Full Residential Address], hereinafter referred to as the “Testator”.
1. That since life is inherently uncertain, I, the Testator, consider it prudent and necessary to execute this Last Will and Testament of mine (hereinafter referred to as the “Will”).
2. I hereby revoke, cancel, and annul all my previous Wills, codicils, and any other testamentary dispositions executed by me, if any, in respect of all my properties mentioned therein. I further declare that this Will shall be my sole, valid, and binding Last Will and Testament.
3. I have no son. I have the following daughters:
(i) Ms./Mrs. [Daughter's Name 1], (holder of Aadhaar No.___/PAN No./Passport No. ____________, issued on ____________ at ____________), D/W of Mr. ____________, residing at [Address].
(ii) Ms./Mrs. [Daughter's Name 2], (holder of Aadhaar No.___/PAN No./Passport No. ____________, issued on ____________ at ____________), D/W of Mr. ____________, residing at [Address].
(Add additional names if applicable)
4. I declare that I am the absolute and exclusive owner of various self-acquired movable and immovable properties held solely in my name (hereinafter collectively referred to as the “Said Properties”). These include but are not limited to:
– Residential House
– Residential Plot(s)
– Office/Commercial Space(s)
– Shop(s)
– Apartments
– Industrial/Commercial Property(ies)
– Agricultural Land(s)
– Equity Share(s)/Security(ies)/Mutual Fund(s)
– Bank Account(s)
– Fixed Deposit(s)
– Other movable assets such as Vehicle(s), Jewellery, Artwork(s), Painting(s), Royalty(ies) and others
(Delete whichever is not applicable)
5. I declare and Will as under:
(i) That upon my demise, the Said Properties shall vest in and devolve absolutely and equally, in equal shares, upon my daughters named above, each receiving an equal share, to the exclusion of all my other legal heirs and/or claimants.
(ii) That in the event any of my daughters named above predeceases me, her respective share shall vest in and devolve equally upon her legal heirs, to the exclusion of all my other legal heirs and/or claimants.
6. I further declare that any movable or immovable properties acquired by me or standing in my name and/or to which I am entitled at the time of my death and not specifically mentioned herein shall also vest in and devolve equally upon my daughters named above, each receiving an equal share, to the exclusion of all my other legal heirs and/or claimants. In the event that any of my daughters named above predeceases me, her respective share in such properties shall vest in and devolve equally upon her legal heirs, excluding all other legal heirs and/or claimants of mine.
7(i). I hereby nominate and appoint Mr./Ms./Mrs. [Full Name], S/o, D/o, W/o Mr. [Name], (holder of Aadhaar No._/PAN No./Passport No. _______, issued on ____________ at ________), resident of ________________, OR Mr./Ms./Mrs. [Full Name], S/o, D/o, W/o Mr. [Name], (holder of Aadhaar No./PAN No./Passport No. ____________, issued on ____________ at ____________), resident of ____________________, as the Executor/Executrix of this Will.
(ii) I further declare that the Executor/Executrix shall be authorized to administer and manage the Said Properties and to obtain probate, if necessary, without furnishing any security. He/she shall also have the discretion to appoint a substitute Executor/Executrix of this Will if deemed necessary.
8. I finally declare and affirm as under:
(i) That this Will is my final and binding testamentary instrument and governs all my movable and immovable properties.
(ii) That I am executing this Will voluntarily and of my own free will and volition, without any coercion, force, fraud, undue influence, or inducement from any person or entity.
(iii) That I am of sound mind, memory, and in a fit mental and physical condition.
(iv) That I am capable of fully understanding the nature and implications of this Will.
(v) That the contents of this Will have been read over and explained to me in the language I understand, and I have fully understood and approved the same as per my true intent and desire.
(vi) That I have affixed my signature/thumb impression on this Will in full knowledge and understanding.
9. IN WITNESS WHEREOF, I, the Testator, have set my hand and subscribed to this Last Will and Testament at _____________ on this ___ day of ________, 20, in the presence of the undersigned witnesses who have attested this Will in my presence and in the presence of each other.
|
Affix Photograph of Testator |
XXX
(Signature/Thumb Impression separately at XXX and partly across the photograph and partly on the paper)
Testator: _________________________
10. We, the undersigned, do hereby affirm that the Testator executed this Will in our joint presence and appeared to us to be of sound mind and understanding, and that the Testator signed this Will willingly and without any duress. We sign this Will in the presence of the Testator and in the presence of each other.
Witness 1
Name: _________________________
S/W/D/o: __________________________
Aadhaar No: ________________________
PAN No: ___________________________
Passport No: __________ (Issued on ______ at ________)
Address: ___________________________
Signature: _________________________
Witness 2
Name: _________________________
S/W/D/o: __________________________
Aadhaar No: ________________________
PAN No: ___________________________
Passport No: ___________ (Issued on ______ at ________)
Address: ___________________________
Signature: _________________________
FAQ for Quick Understanding
Q1: What is a benami transaction?
A benami transaction is when property is purchased in the name of one person (benamidar), but the funds come from another (real owner).
Q2: Can a Will executed by a benamidar transfer ownership to the real owner?
No. The Supreme Court held that a Will cannot override the statutory bar under the PBPT Act.
Q3: What is the fiduciary relationship exception under the Act?
It allows certain transactions if the benamidar holds property in trust for another (e.g., trustee-beneficiary, director-company). Employer-employee relationships do not qualify.
Q4: What happens to benami property once declared as such?
It is confiscated by the Central Government under Section 27 of the Act.
Q5: Can heirs of a benamidar claim ownership?
No, unless they prove the property was acquired through independent funds of the deceased.
Q6: Does the High Court or Supreme Court have jurisdiction in benami cases?
Yes. While civil courts are barred, High Courts and the Supreme Court can adjudicate and order confiscation once a transaction is judicially determined as benami.
In essence, the ruling underscores that statutory prohibitions under the Benami Act prevail over private arrangements, ensuring that property acquired through concealment cannot be legitimized through Wills or contracts.