Transferable beneficial interest in trust-like unit holdings defeated automatic attachment under the Special Courts Act.

A beneficial interest in CANCIGO units arose where the units were applied for in others' names on behalf of a claimant, the consideration came from that claimant's funds, and the units and returns were treated as his property. That interest was transferable, and the scheme's transfer restrictions limited recognition by the trustee rather than creating an absolute bar on transfer. The Benami Transactions (Prohibition) Act did not extinguish the underlying beneficial interest on these facts, and the Special Courts Act could attach only property belonging to the notified person on the relevant date. A pre-existing third-party interest could not be overridden by automatic attachment, so the appellant's acquisition was valid and the attachment failed.

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Issues: Whether the respondent had a transferable beneficial interest in the CANCIGO units, and whether that interest could be attached under the Special Courts Act, 1992 notwithstanding the restrictions in the scheme and the Benami Transactions (Prohibition) Act, 1988.

Analysis: The CANCIGO units were applied for in the names of respondents 3 and 4 on behalf of respondent 2, with consideration paid from respondent 2's funds and the units and their returns treated as belonging to him. On those facts, the arrangement created a beneficial interest in respondent 2 in the nature of a trust or fiduciary holding, and such beneficial interest was transferable. The scheme's transfer restrictions operated only to limit recognition by the trustee and did not create an absolute legal bar on transfer. The Benami Transactions (Prohibition) Act did not defeat the claim, because the transaction was not treated as a benami transaction in the statutory sense so as to extinguish the underlying beneficial interest, and the custodian's power extended only to property belonging to the notified person on the relevant date. A third party's pre-existing interest could not be ignored by automatic attachment.

Conclusion: The respondent 2 had a transferable interest in the CANCIGO units, and the appellant's acquisition of that interest was valid; the attachment and direction to hand over the units to the custodian could not stand.

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