Husband Can Retain Ownership Of Property Bought In Wife's Name

Could a property bought by a husband in the name of his wife using entirely his fiancés be classified as benami property? Not so, the Delhi High Court has recently ruled.

According to the ruling, a man has ownership of the purchased property even if it is in the name of the wife. The decision was taken keeping into account the fact that it was the husband who had put in his money and the source of these funds were known and legal. Earlier, a trial court had ruled that a husband cannot claim ownership of property that is in the name of his wife because it would be looked upon as a benami property.

The HC said that it was “unfortunate” and a “grave and fundamental error” on the part of the trial court and set the previous ruling aside.

The trial court had not taken cognizance of the fact that The Benami Transactions (Prohibition) Act, 1988, had been amended and renamed as Prohibition of Benami Property Transactions Act, 1988, and was in effect from November 2016.

The court also noted that this case falls under Section 2(9)(A)(b) which states that if a person buyers an asset in the name of his spouse or his children, it cannot be termed a benami transaction.

The HC ruled: “It is legally permissible for a person to purchase an immovable property in the name of his spouse from his known sources ... This property will not be a benami property… the property will be of the de jure and not of the de facto owner (in whose name title deeds exist).”

Besides, the following are also not categorised as facilitating a benami transaction:

*When a member of a Hindu Undivided Family (HUF) holds the property for his benefit or for other members of his family and the funds are paid through non-circuitous source of income.

*In case a person is in a fiduciary capacity which includes being a trustee, executor, partner, director of a company or a depository or as a participant agent of a depository under the Depositories Act, 1996.

*A person who registers a property in the names of his brother or sister or lineal ascendant or descendant and the consideration for such property has been provided out of the known sources of the individual.