Posted in Law Basics

The Algorithm of Benami Transaction

This article has been written by Eashwari Nair. Eashwari is currently a student in Symbiosis Law School, Hyderabad.

I. WHY CALL UPON THE EXAMINATION OF THIS CONCEPT?

Ever since the apparent surgical strikes that took place in the industry of the economy  of India ,in the form of demonetisation, the not very clean wealthy people of the society are trying to figure out means to keep their black money with disclosing it , despite repeated attempts made by the central government to do so.  One of the most affected areas of the economy is the real estate category, where it was seen that there existed a parallel economy itself.  This bombshell made up of demonetisation exploded where nobody thought it would.

The rich just seem so very greedy and it can be seen via the fact that they refuse to disclose the money they own, they just refuse to deposit it. Instead they fall within the clutches of Benami transactions without them even knowing it.

This topic technically came into play on  the 1st of November when the 2016  amendment to the original  Prohibition of Benami Property Transactions Act, 1988 was created.  Not just unclean builders but those trying to get rid of the unaccounted money they hold fall into the tempting jaws of Benami Transactions.

II. WHAT ARE BENAMI TRANSANCTIONS ?

In order to understand what Benami Transactions are , let’s break it down into 2 parts , first let’s understand what the term Benami indicates followed by the term of Transaction.

  • BENAMI:-

The word Benami is seen to be rooted to the Persian language signifying “no name”  or “without a name”. Benami is almost always spoken with respect to real estate and the property involved. Thereby the person in whose name the property is purchased is just a mask of the real beneficiary.

  •  TRANSACTION:-

The transaction which is spoken off is in terms of transfer of property. This transfer of property can take place via various methods. It can be in form of a sale deed, gift etc which are further elucidated in property law. The form of transfer that comes into play with respect to Benami transaction is that of a sale deed.

  • THE FINAL EQUATION INDICATES:-

And hence clubbing the individual terms together gives us the equation signifying a property is held or transferred to a person, but the consideration[1] for this property is paid by somebody else. For example:- X,Y and Z are three parties ,  X purchases property from Y where the consideration is paid by Z.[2]

III. OTHER TERMINOLOGIES REGARDING THE BENAMI TRANSACTION.

  • BENAMI PROPERTY.

The subject matter i.e. the property involved in a Benami transaction is termed as Benami property.

  • BENAMIDAR:-

Is the fictitious person whose name the Benami property is transferred.

IV. VARIOUS TRANSACTIONS THAT QUALIFY AS A BENAMI TRANSACTION:-

There are various methods of carrying out a transaction that is considered to be a Benami transaction by nature. The following types of transactions are considered to be Benami by nature .

  • Those transactions that involve the interests of a third party, i.e the property is transferred or held by one particular individual but the consideration for this property is paid by another person .
  • Next, Any sort of transaction or arrangement made out or carried out with respect to a property in the name of a fictitious name.
  • Furthermore the scope of a Benami transaction extends to those transactions where the owner of the property is either not aware of his/her ownership or denies the knowledge of ownership.
  • Also Benami transactions include those transactions that take place where the person providing the consideration for the Benami property is either not traceable or is fictitious in nature.

V. THE EXCEPTIONS TO A BENAMI TRASACTION( IN BREIF)

Taking into account the recent amendment of the Benami Transaction, there are certain transactions that do not fall under the ambit of a Benami transaction. Those transactions that do not qualify as Benami Transactions are:-

  • A karta, or a member of a Hindu undivided family holds the property for his benefit or for the benefit of other members of the family and the consideration for such property has been provided out of the known sources[3] of the Hindu undivided family.
  • Also Benami Transactions do not include those transactions where a person standing in fiduciary [4]capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company etc.
  • Furthermore any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of income.
  • In addition to the above, the scope of a Benami transaction does not catch those transactions that take place in the name of the individual’s brother or sister , provided the brother and or sister involved appear to be joint owners in the document, and the consideration for the subject matter i.e the property that is considered has been provided or paid out of the known sources of the individual.

VI. CONCLUSION:-

It is seen that the original bill contained few sections , but the recent amendment bought about 72 new changes . The most interesting part of this bill i personally find is the timing of the implementation of this bill. Just when our hon’ble Prime Minister drops the bomb of demonetization, furthermore this bill aids the very object of demonetization by being it’s ally with respect to curbing the menace of black money via keeping an on the methods of property transactions.

[1] Consideration = money.

[2] A highly basic example .

[3] Known sources does not implicitly imply known sources of income.

[4] Fiduciary capacity implies – >nvolving trust, especially with regard to the relationship between a trustee and a beneficiary.



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Posted in Criminal Law, Law Basics

High Court’s inherent power

This article is written by Amardeep Kumar. Amardeep is a student of Law, pursuing his BA.LLB (Hons) course from School of Law, KIIT University, Bhubaneswar.

 

 

“The CrPC has obviously tried to make itself exhaustive and complete in every respect; and it has generally succeeded in every attempt. However, if the court finds that the Code has not made specific provision to meet the exigencies of any situation, the court has inherent power to mould the procedure to enable it to pass such orders as the ends of justice require.”[1]

 

The power to quash FIR is among the inherent powers of the High Courts of India. Courts possessed this power even before the CrPC was enacted. Added as Section 482 by an amendment in 1923, it is a reproduction of section 561(A) of the 1898 code. Since High Courts could not render justice even in cases in which the illegal was apparent, the section was created as a reminder to prevent injustice done by a subordinate court. Section 482 deals with inherent powers of the Court. It is under the 37th Chapter of the Code titled miscellaneous. It comes into action when the courts act judicially and pass an order. If the order is passed by Executive Officer of State in administrative capacity it has no application. Therefore persons aggrieved by such order cannot approach High Court to exercise its inherent power under this section. As the inherent powers are vested in High Court by law within the meaning of Article. 21 of Constitution consequently any order of High Court in violation of any right under Article 21 is not ultra vires. Cancelling of bail bond by High Court thereby depriving a person’s personal liberty is one of such instance.

Section 482 of CrPC is being read as follows:-

Nothing in this code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this code, or to prevent abuse of the process of any court or otherwise to secure the ends of justice.

The bare reading of the section itself makes it clear that the provisions of the code are not intended to limit or affect the inherent powers of the High Courts. The inherent power can be exercised only for either of the three purposes mentioned in the section i.e.

  1. To give effect to an order under the code.
  2. To prevent abuse of the process of the Court.
  3. To otherwise secure the ends of justice.

This inherent power cannot naturally be invoked in respect of any matter covered by the specific provisions of the code. It cannot also be invoked if its exercise would be inconsistent with any of the specific provisions of the code. The question then crops up is that when this section will be used?

The section can be used only if   the matter in question is not covered by any specific provision of the code that section 482 can come into operation, subject further to the requirement that the exercise of such power must serve either of the abovementioned three purposes mentioned in the said section. In prescribing the rules of procedure, legislature has undoubtedly attempted to provide for all cases that are likely to arise; but it is not possible that any legislative enactment dealing with the procedure, however carefully it may be drafted, would succeed in providing for all cases that may possibly arise in future. Lacunae are sometimes discovered in procedural law and it is to cover such lacunae and to deal with cases where such lacunae are discovered that procedural law invariably recognises the existence of inherent power in courts. It would be noticed that it is only where the High Court’s inherent power has been recognised by section 482, and even in regard to the high court’s inherent power definite salutary safeguards have been laid down as to its exercise. It is only where the High Court is satisfied either that an order passed under the code would be rendered ineffective or that the process of any court would be abused or that the ends of justice would not be secured that the High Court can and must exercise its inherent power under section 482 of the Code.[2] It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. It has been held that Section 482 cannot be invoked in non-criminal proceedings such as those under the customs act.[3] Inherent jurisdiction is a term which is incapable of definition or enumeration, and capable at the most of the test, according to well established principles of criminal jurisprudence. The framers of the Code could not have provided which all cases should be covered as abuse of the process of Court. It is for the court to take a decision in particular cases.[4] The inherent power contemplated by section 482 has to be exercised sparingly, carefully and with caution and only where such exercise is justified by the tests specifically laid down in the section itself.[5]

The following cases (summarised) have been stated by the Supreme Court, by way of illustration wherein the extraordinary power under Article 226 or inherent power under Section 482 can be exercised by the High Court to prevent abuse of process of any court or to secure justice.[6]

  1. Where the allegations in the FIR/ Complaint, even if they are taken at their face value do not prima facie constitute any offence against the accused.
  2. Where the allegations in the FIR or other materials do not constitute a cognizable offence justifying an investigation by the police under Section 156(1) of the code except an order of a Magistrate within the purview of Section 155(2).
  3. Where the uncontroverted allegations in the FIR/complaint and the evidence collected thereon do not disclose the commission of any offence.
  4. Where the allegations in the FIR/complaint do not constitute any cognizable offence but constitute only non-cognizable offence to which no investigation is permitted by the police without the order of a Magistrate under Section 155(2).
  5. Where the allegations are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is a sufficient ground for proceeding against the accused.
  6. Where there is an express legal bar engrafted in any of the provisions of the Code or the Statute concerned (under which the proceedings is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the code or in the statute concerned, providing efficacious redress for the grievance of the aggrieved party.
  7. Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused with a view to spite him due to private and personal vengeance.

The Hon’ble Supreme Court in Madhu Limaye v. Maharshtra[7] has held that the following principles would govern the exercise of inherent jurisdiction of the High Court:-

  1. That the power is not to be resorted to it, if there is a specific provision in the Code itself for the redress of the grievance of the aggrieved party;
  2. That it should be exercised very sparingly to prevent abuse of process of any court or otherwise to secure the ends of justice.
  3. That it should to be exercised as against the express bar of law engrafted in any other provision of the Code.

In Pepsi Foods Ltd. v. Judicial Magistrate[8] it was held that

“The power conferred on the High Court under Articles 226 and of the Constitution and under Section 482 of the Code have no limits but more the power more due care and caution is to be exercised while invoking these powers. When the exercise of powers could be under Article 227 or Section 482 of the Code it may not always be necessary to invoke the provisions of Article 226. Some of the decisions of this court laying down principles for the exercise of powers by the High Court under Articles 226 and 227 may be referred to.”

In most of the cases decided during several decades the inherent power of the High Court has been invoked for the quashing of a criminal proceeding on one ground or another.

Therefore, while applying Section. 482 of the CrPC the Court has to keep in mind that it should not ordinary embark upon an enquiry whether the evidence in question is reliable or not or whether on a reasonable appreciation of it accusation would not be sustained because it is a function of  a Trial Court and if it is not used wisely then it will become an instrument in the hands of accused persons and it will lead to differential treatment which will in furtherance of it give a chance to the accused to use it as an instrument and as a matter of time it will short circuit a prosecution and bring about its sudden death.

[1] R.V. Kelkar’s Criminal Procedure, Sixth Edition

[2] Dhirendra Kumar Banerjee v. State of Bihar, 2005 Cri LJ 4791 (Jhar)

[3] P.O Thomas v. Union of India, 1990 Cri Lj 1028 (Ker)

[4] State of Orissa v. Saroj Kumar Sahoo, 2005 13 SCC 540: (2006) 2 SCC (Cri) 272

[5] Talab Haji Hussain v. Madhukar Purshottam Mondkar, 1958 Cri LJ 701, 706-07 : AIR 1958 SC 376

[6] State of Haryana v. Bhajan Lal, 1992 Supp (I) SCC 335: 1992 SCC Cri) 426: 1992 Cri LJ 527

[7] (1977) 4 SCC 551: 1978 SCC (cri) 10, 14; 1978 Cri LJ 165

[8] (1998) 5 SCC 749, 758: 1998 SCC (Cri) 1400

Posted in Constitutional Law, Law Basics

Relevance of fundamental duties in constitutional law

For duty, duty must be done; the rule applies to everyone.

W.S. GILBERT

The concept of duty is not a new one, especially, when it comes to Indian society. Since time immemorial there has been a stress on performing one’s “kartavya“, an obligation recognised and effected by law, to conform to a particular standard of conduct towards the society, parents and the country. However, no such duties for the citizens were incorporated in the original Constitution of India at the time of its commencement in 1950, but it was only by way of the Forty-Second Constitutional Amendment that a new pattern of national conduct was introduced in accordance with the recommendations of the Swaran Singh Committee, injecting the fundamental duties into the Constitution of India. From a myopic view, these duties, broadly, require the citizens to respect the ideals of the Constitution and the institutions it establishes, to promote harmony and the spirit of common brotherhood amongst all the people of India professing different religions, speaking different languages, practicing different customs and inhabiting different parts of the country and to safeguard the public property and to abjure violence. The duties described here, embody some of the highest ideals preached by our great saints, philosophers, social reformers and political leaders. In other words, these duties are somewhat like a prayer and a pledge in the forum of his conscience. Since, the approach of the Article as it stands today is not to criminalize or to intimidate the citizen, but to remind him of his basic duties, its strength lies not in its enforceability by the police and the courts of law, but in its appeal to the nature of man in respect of his conduct as an Indian citizen.

Even then, the fundamental duties are vital in their own way, as they may be used as a tool of judicial interpretation of statutes. In this regard, the apex Court has at multiple stances, interpreted the provisions of the Indian Constitution in the light of the fundamental duties adumbrated in Part IVA.[1] Furthermore, the Courts may also issue directions to the States, in view of giving effect to and deriving support from the Fundamental Duties, as was done in M.C. Mehta case, where under Article 51-A, the Central government was obliged to introduce compulsory teaching of lessons on protection and improvement of environment in all the educational institutions across the country.

Hence, the ‘relevance and importance’ concern is substantially addressed and settled by the Supreme Court, where it has been made clear that fundamental duties, though not enforceable by a writ of the court, provide valuable guidance and aid to interpretation and resolution of constitutional and legal issues in case of any doubt.

However, the question of implementation of Fundamental Duties has been smouldering since their inception as it is not the individual so much as the society, which is affected by the non-observation of the same. This is because, identification of violation of duties by individuals is difficult and enforcement even more difficult in practice, simply because who is going to identify and take note of such violation by various individuals. In this direction, nevertheless, some of the fundamental duties enshrined in article 51A have been incorporated in separate laws and statutes; they should, the author believes, be mandatorily discharged by all who enjoy the corresponding Fundamental Rights under Part III of the Constitution of India. Further, a comprehensive list of fundamental duties, including ones like duty to cast vote after attaining majority, duty not to indulge in corruption, duty to respect humanity and human values, etc should be prepared and be included and added in the Constitution of India. Last but not the least adequate steps should be taken to sensitise the people and spread general awareness among them relating to fundamental duties.

Therefore it can be clearly derived that duties are not self-executing and therefore just as person with an injured leg needs a shoulder to walk similarly fundamental duties need the support of the State for its proper implementation by enacting laws for the same. Hence, even if the fundamental duties have no sanction attached, the citizen must introspect and endeavour to perform these duties and the sanction should be self-imposed.

[1] Javed v. State of Haryana, (2003) 8 SCC 369

 

AUTHOR

Yuvina Goyal

 

Posted in Law Basics

Statutory Law – A basic insight

“Law is reason free from passion!”

-Aristotle

Talking about the big Law in its primitive stage in around 16th or 17th century, it was basically a set of rules and regulations. Law then, as accurately quoted by Aristotle, was strictly reason free from passion.

However, gradually in the wake of the spirit of constitutionalism in the recently setting up democratic republics, the law has come to be perceived as more of an integrated social instrument, rather than dead rules and regulations.

The law can broadly be of three types: statutory law, precedents, and other authoritative documents. Statutory law is the law passed by the legislature, whereas precedents are often referred to as the judge-made law. Other authoritative documents include circulars by the government, letters of order by the executive etc. Each and every law of a land must be within the boundaries set by the constitution of that land.

However, our discussion here is restricted only to the statutory law. Statutory law includes the vast number of legislations passed by the legislature. All such legislations may be divided into two sub-categories: Civil law, and Criminal law.

Civil law and criminal law have separate jurisdictions, separate procedures, and are tried in separate courts by separate judges. The procedures regarding civil matters in India are governed by the Code of Civil Procedures, 1908; and the procedures regarding criminal matters are governed by its criminal counterpart, the Code of Criminal Procedures, 1973.

To have a general idea, let’s just know that civil law deals with matters relating to property (both moveable and immoveable), contracts, torts etc. Criminal law, on the other hand, deals with matters relating to murder, theft, robbery, counterfeiting of coins, sedition, rape etc.

When a matter is relating to your land, house, or any other property, or when you’re suing your employer or organisation for something, it comes under civil law. However, when the matter is a crime, it comes under the criminal law.

Criminal cases have accused, and victims in it. These also have the police involved in it. However, civil cases have no accused and rarely involve police. Civil cases generally have one party as the plaintiff (the one having a complaint) and the other as the defendant (the one against whom the complaint is directed).

The greatest difference between civil and criminal cases, from a layman’s perspective, is that criminal cases involve jails and other physical punishments. However, civil cases have no such consequences. Civil cases only result in payment of some money or any other property.

In case of a civil matter, the person filing the suit has to bear all the costs of litigation by himself. However, in criminal matters, the victim is provided with prosecutors from the state to represent the victim in the court of law. Also, if the accused is incapable of appointing an advocate, the state provides free legal aid to the accused.

Having discussed all this, we observe that civil matters are more person-centred. They’re more like ‘handle your own problems by yourself’. But, criminal matters have a social interest involved in them, and the government is involved in such matters.

 

AUTHOR

Anshuman Sahoo.