Benami property and fiduciary exception: real consideration from another party sustained benami character, and the statutory exemption failed.

Properties standing in the name of one person were treated as benami where the consideration was shown to have come from another, the bank trail reflected fund movement from the alleged beneficial owner, and the benamidar had no independent means to acquire the lands. The claimed fiduciary-capacity exception under the benami law was rejected because the relationship was only that of employee and labourer, with no trustee-like or agent-like legal basis, no power of attorney, and no clear recital that the purchase was for the beneficial owner. The tribunal held that a broad reading of fiduciary capacity cannot defeat the statute, especially where the arrangement was used to bypass restrictions on transfer of tribal land.

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Issues: (i) Whether the impugned properties were benami properties purchased through the funds of the beneficial owner. (ii) Whether the transaction was protected by the fiduciary-capacity exception under Section 2(9)(A)(ii) of the Prohibition of Benami Property Transactions Act, 1988.

Issue (i): Whether the impugned properties were benami properties purchased through the funds of the beneficial owner.

Analysis: The record showed that the properties stood in the name of the benamidar, while the consideration was supplied by the other appellant, and the bank entries reflected fund movements from the beneficial owner's side before payments were made to the sellers. The purchase period, the financial profile of the benamidar, and the absence of independent means to acquire the lands supported the inference that the benamidar was only a name-lender and that the real purchaser was the beneficial owner.

Conclusion: The properties were benami in nature and were rightly proceeded against under the Act.

Issue (ii): Whether the transaction was protected by the fiduciary-capacity exception under Section 2(9)(A)(ii) of the Prohibition of Benami Property Transactions Act, 1988.

Analysis: The claimed exception was rejected because the benamidar was an employee-labourer and not shown to have held the property in a legally cognisable fiduciary capacity akin to trustee, agent, or similar notified relationship. There was no power of attorney, no clear recital in the sale deeds that the purchase was for the beneficial owner, and the transaction was used to avoid the restrictions governing transfer of tribal land. A broad reading of fiduciary capacity was held incapable of defeating the object of the statute.

Conclusion: The fiduciary-capacity exception did not apply and the appellants were not entitled to exemption.

Final Conclusion: The attachments and the adjudication confirming benami character were sustained, and the appeals failed on merits.

Ratio Decidendi: A purchase made in the name of another with the real consideration supplied by the alleged beneficial owner is benami unless the claimant establishes a genuine fiduciary relationship falling within the statutory exception; a mere employer-employee or trusted-person arrangement, especially when used to bypass another law, does not by itself attract the fiduciary-capacity exclusion.

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