CONFISCATION AND VESTING OF BENAMI PROPERTY

[DR.MARIAPPAN GOVINDARAJAN]

Adjudicationg

Section 26 of the Prohibition of Benami Properties Act, 1988 (‘Act’ for short) provides for the adjudication of a benami property.  The Adjudicating Authority shall issued a notice to the persons concerned to give reply within such time as may be prescribed in the notice.  After the receipt of the reply from the noticee, the Adjudicating Authority pass an order holding the impugned property not a benami property or to be a benami property confirming the provisional attachment order.

Confiscation

Section 27 of the Act provides the Adjudicating Authority, after passing an order under Section 26 declaring the impugned property as benami, shall, after giving a reasonable opportunity to the person concerned, make an order confiscating the benami property.

The aggrieved party, against the order of Adjudicating Authority under Section 26, may file an appeal before the Appellate Tribunal.  The order of confiscation by the Adjudicating Authority shall be subject to the outcome of the order of Tribunal on the appeal filed by the party concerned.

Procedure

Rule 6 provides that the Adjudicating Authority shall send a copy of its order to the Authorised Officer, who is an Income Tax Officer, authorised by the Adjudicating Authority.  The Authorised Officer on receipt of the confiscation order shall send a notice to the authority of the Central Government or a State Government, as case may be, having jurisdiction for the purposes of registration of such immovable property, intimating about the confiscation of the property. 

The Authorised Officer shall arrange to place copy of the notice at some conspicuous part of the immovable property for the benefit of general public mentioning clearly therein, in English and in vernacular language, that the property has been confiscated under the Act and vests absolutely in the Central Government.

The Authorised Officer shall arrange to make a proclamation for the confiscation of immovable property at some place on or near such property by beat of drum or other customary mode.

The Authorised Officer, then, in respect of any movable property shall issue a notice to the authority or person having the custody of such movable property informing him about the confiscation of such property.  The Authorised Officer may sell the property, if the property is liable to speedy and natural decay or the expenses for maintenance is likely to exceed its value, with the leave of the concerned Adjudicating Authority, and deposit the sale proceeds in the nearest Government Treasury or branch of the State Bank of India or its subsidiaries or in any nationalised bank in fixed deposit and retain the receipt thereof. 

If the owner of the property furnishes the fixed deposit receipt of State Bank of India or its subsidiaries or a nationalised bank equivalent to the value of property in the name of Administrator, the authorised officer may accept and retain such fixed deposit receipt as security.  If the movable property is a mode of conveyance of any description, the authorised officer, after obtaining its valuation report from the Motor Licensing Authority or any other authority, may accept and retain the fixed deposit receipt of State Bank of India or its subsidiaries or a nationalised bank, equivalent to the value of the movable property as security in the name of Administrator, an Income Tax Officer.

The Authorised Officer shall also to deposit the property consisting of cash, Government or other securities or bullion or jewellery or other valuables in a locker in the name of the Administrator or in the form of fixed deposit, as the case may be, in State Bank of India or its subsidiaries or in any nationalised bank and retain the receipt thereof. 

The Authorised Officer shall cause to get the property in the form of shares, debentures, units of Mutual Fund or instruments to be transferred in favour of Administrator. 

The Authorised Officer shall issue a direction to the bank or financial institution, to transfer and credit the money to the account of the Administrator, where the property is in the form of money lying in a bank or a financial institution.

Non-applicability of Section 27

Section 27 of the Act shall not apply to a property held or acquired by a person from the benamidar for adequate consideration, prior to the issue of notice under  section 24(1) without his having knowledge of the benami transaction.

Vesting of property

 Where an order of confiscation has been made, all the rights and title in such property shall vest absolutely in the Central Government free of all encumbrances and no compensation shall be payable in respect of such confiscation.

Management of the confiscated property

If the confiscated properties could not be removed or such removal shall cause much expenditure, then the Administrator arrange for the proper maintenance and custody of the property at the place of its attachment.

If the property confiscated consists of cash, Government or other securities, bullion, jewellery or other valuables, the Administrator shall cause to deposit them for safe custody in the nearest Government Treasury or a branch of the Reserve Bank of India or the State Bank of India or its subsidiaries or in any authorised bank.  The Administrator shall obtain a receipt from the Treasury or the bank, against the deposit of moveable properties.

The Administrator shall maintain a register containing the details in Form No. 1 for recording entries in respect of moveable property, such as cash, Government or other securities, bullion, jewellery or other valuables.  The following are the details to be entered in the register in Form No. 1-

• Order number confiscating the property;
• Date of receipt of properties;
• Description of property (quantity, amount, estimated value);
• Name(s) and address(es) of the benamidar and beneficial owner, if his identity is known;
• Name and address of the Treasury or bank where the properties are deposited for safe custody;
• Date and time of deposit of confiscated properties in the Treasury or bank;
• Receipt number with date of the receipt obtained from the Treasury or bank;
• Remarks of the Administrator.

The Administrator shall also maintain a register in Form No. 2 for recording entries in respect of property other than cash, securities etc., as detailed below-

• Order Number;
• Date of receipt of properties;
• Description of properties -  (In case of land:- area, survey number, plot number, location and complete address. In case of building: house number, location and complete address);
• Name(s) and address(es) of the benamidar and beneficial owner, if his identity is known;
• Remarks of the Administrator.

Disposal of confiscated property

Where the Central Government directs that the property vested in it be disposed of, then, the administrator shall arrange to dispose of the property in the manner provided in the Second Schedule to the Income-tax Act, 1961.