Benami ownership and sham transfer principles turn on source of funds, possession of benefits, and surrounding evidence of intent.

Benami ownership is determined chiefly by the source of consideration and by who actually enjoyed the property, with admissions and surrounding documentary evidence carrying substantive weight. Where the purchaser cannot credibly prove that he supplied the purchase money or exercised ownership, the apparent holder may be treated as only the ostensible owner and the real provider of funds as beneficial owner. A later transfer will also be treated as sham where the surrounding facts show a hurried arrangement, existing liability, prior attachment efforts, and control by persons seeking to place the asset beyond creditors' reach.

---

---

Issues: (i) Whether the house was purchased benami by defendant No. 2 in the name of defendant No. 3 and whether defendant No. 3 was the real owner; (ii) Whether the subsequent transfer of the house to the company was a sham transaction intended to defeat or delay the creditors of defendant No. 3.

Issue (i): Whether the house was purchased benami by defendant No. 2 in the name of defendant No. 3 and whether defendant No. 3 was the real owner.

Analysis: The source of consideration was the decisive test, along with enjoyment of the benefits of the transaction. Defendant No. 2 failed to establish, on credible evidence, that he had provided the purchase money or enjoyed the property as owner. The admissions of defendant No. 3, together with the surrounding documentary material, showed that the consideration came from his funds and that the property was shown by him as his own in tax-related records. The High Court erred in excluding this material and in misdirecting itself on the law relating to benami transactions.

Conclusion: The purchase was benami, defendant No. 2 was only the ostensible owner, and defendant No. 3 was the real owner.

Issue (ii): Whether the subsequent transfer of the house to the company was a sham transaction intended to defeat or delay the creditors of defendant No. 3.

Analysis: The surrounding facts, including the existing tax liability, the prior attachment proceedings, the failure to secure release of the property, the formation of the company, and the hurried sale thereafter, established that the transfer was not genuine. The company was dominated by defendant No. 2 and his relations, and the transaction was structured to place the property beyond the reach of the revenue authorities. The trial court's finding was supported by the record and required no interference.

Conclusion: The sale to the company was a sham transaction and was intended to defeat or delay the creditors of defendant No. 3.

Final Conclusion: The trial court's decree was restored, and the property remained available for recovery of the tax arrears as belonging beneficially to defendant No. 3.

Ratio Decidendi: In determining a benami transaction, the real test is the source of consideration together with who enjoyed the property, and admissions by a party regarding ownership and source of funds are substantive evidence against that party.

---