puja mohan (company secretary) 25 January 2012

Benami transactions

Company ABC Ltd had entered into a transaction to purchase a property in the year 1980 in the name of Mr. X , as nominee of the company, but the consideration was paid by ABC Ltd and the company shows this property as their fixed asset.

Mr. X died in the year 1985. Now the company wants to appoint Mr. Y as nominee in place of Mr. X, who will hold the property for the company till it is sold.

1. Kindly suggest whether section 49 of the companies act is attracted or not?

2. Will this be treated as a benami transaction if yes, what is the legal status as it was entered into before commencement of benami transactions act,1988?

3. What will be the legal consequences on part of Mr. Y , as new nominee and for the Company, ABC Ltd, in case of appointment of new nominee?

Your views will be highly solicited

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2 Replies

(Guest)

section 49 is attracted.

if company has any property in the name of person other than the company, thecompany can tranfer such property in its name. in this way the property will no longer be a benaami property.

if the business of the company is buying and selling of share then sec 49(1) is not applied.

benami transaction after commencement of the act is an offence but transaction entered before commencement of the act is not offence.

all you have to do is to enter yourname in the property title without paying money.

(Guest)

please don't consider the previous post. there is a small mistake.

section 49 will be attracted if the property is an investment in security or shares. in your case i don't know the nature of property *( share or something else).

if it is share only then section 49will be attracted.

if the business of the company is buying and selling of share then sec 49(1) is not applied.

benami transaction after commencement of the act is an offence but transaction entered before commencement of the act is not offence.

all you have to do is to enter yourname in the property title without paying money.