The government’s decision on Thursday to bring a new version of the law dealing with benami transactions is in the right direction, but lacks enough teeth to tackle the menace at a time the country is witnessing political unrest on black money, lawyers and experts said. The Cabinet has proposed to bring the Benami Transactions (Prohibition) Bill, 2011, in Parliament, replacing Benami Transactions (Prohibition) Act, 1988, which was never implemented for want of appropriate rules.
In a benami transaction, a property is purchased not in the name of the real beneficiary, but someone who is his representative. This provides an opportunity for putting black money into more productive use. In the new Bill, the government has also provided safeguards to prevent prosecution of innocent persons. ?A benami property shall be liable for confiscation by the adjudicating authority only after the person concerned has been given an opportunity of being heard,? information and broadcasting minister Ambika Soni said on Thursday.
In its efforts to simplify the legislation, the Bill also excludes from the definition of benami transaction property held by a co-partner (who inherits from ancestors) in a Hindu undivided family and by a person in a fiduciary capacity (a legally appointed person who holds assets in trust on behalf of another).
Experts said more needs to be done to check benami and hawala transactions that are associated with black money. They said the Bill has brought some clarity on certain definitions such as propoerty purchased in the name of a relative, say a spouse. They also said it echoes a softer approach to the issue at a time when black money is a subject of heated public debate.
Diljeet Titus, managing partner, Titus and Company, said the government has taken a softer approach while modifying the existing Act. ?After more than nine years of government’s efforts on the new Bill to simplify and clarify many vague provisions in the previous Act, the outcome doesn’t meet expectations. But certainly, the new Bill is a step forward.?
Ashutosh Limaye, head ?Real Estate intelligence Service, Jones Lang LaSalle India, said the new Bill has many advantages for law enforcement agencies compared to the earlier Act. The Bill defines more cases involving benami properties, as a result of which many transactions which would previously have been dismissed because the laws were too vague, can now be proved in court. That would lead to auctioning of more such properties.
Saroj Jha, senior partner in New Delhi-based law firm SRGR, said, ?The government has tried to clarify a lot but more needs to be done to check black money. Earlier, there were some instances of people buying properties in the names of even their pets. But with this amendment, atleast there is more clarity on certain open-ended provisions than in the earlier Act (that was not enforced for want of rules thereunder) .? This Act did not clearly define immediate family members, which gave a long rope to offenders.
The modification of the existing legislation also allows an individual to acquire property in the name of spouse, brother, sister and any lineal ascendant or descendant. These would be categorised as benami, but the new legislation will not prohibit it as is the case currently.
?The Bill has elaborate provisions dealing with the definition of benami transaction and benami property, prohibited benami transactions, consequences of entering into a prohibited benami transaction and the procedure for implementing the benami law,? Soni said.
The Bill now will also help in checking a lot of investments that have gone into plots, both on the city fringes and even in strategic city locations, by those with privileged access to information about upcoming infrastructure projects and other market drivers. Plots that are released for auction by the new Bill could actually translate into new supply in unexpected locations once judgment on them has been passed.