The Senate may have passed the Benami Transactions Bill 2016, but to understand what the concept of benami is and why it is used, Dawn spoke to noted legal expert Supreme Court advocate Akram Sheikh.

Q. What does benami mean and why do people acquire benami properties?

A. A benami transaction refers to any transaction where property is transferred to one person for a consideration paid by another person. Generally, this term is used for property, but it could be expanded to the all kinds of movable or immovable assets.

In the 2004 Iqbal Turabi case, the Supreme Court defined the two characters of a benami transaction: the real owner and the benamidar.

In benami transactions, the source of finances is different from the owner in whose name the property is registered.

The real owner purchases the property in the name of the benamidar and keeps the documents in the name of the benamidar. If a person purchases property in the name of a wife, son, daughter or other close relative, it could be termed a gift as well, and it is not a crime. But if a front-man purchases property to dodge [legalities], it is not permissible under the law.

Q. How and when was the term benami introduced?

A. The concept of benami is centuries old, but in the subcontinent’s judicial history, the term has been used for around 150 years.

In the past, people without financial benefits or other considerations allowed trusted individuals to purchase properties in their names to avoid inheritance disputes. But today benami properties are purchased through frontmen.

Q. Could someone keep a benami property in the United Kingdom?

A. To my knowledge, benami property is not permissible under UK laws, therefore it is very difficult to purchase benami property in the UK.

The individual who deals with such transactions is subject to punishments as prescribed by the law.

Q. Is it profitable to keep benami property?

A. Keeping benami property is not profitable. However, people still purchase benami properties to earn profits that may be beyond their known sources of income.

In the Iqbal Turabi case, the SC found both him and his spouse Najma Turabi guilty. Turabi purchased property for Najma, but they could not justify their source of income. The apex court subsequently declared both of them guilty.

This is also a risky job — if the real owner dies, the benamidar may refuse to return the property to the owner’s legal heirs. The benamidar can also deny the real investor’s ownership and in such a case, the matter may have to be settled in court.

Published in Dawn, January 18th, 2017