| Principle 'Benami' transaction means a transaction in which property is transferred to one person, for a consideration paid by another. This law does not apply, if purchase is made by a person in favour of his wife or unmarried daughter. Any person who enters into a Benami transaction shall be punished with imprisonment for 3 years. |
| Facts Mahendra, a rich industrialist list buys a plot of land in the name of his concubine. Decision is Mahendra liable for imprisonment? |
A) No, because the exception applies to his case
B) Yes, because he has entered into a Benami Transaction
C) Yes, because exception does not apply to his case
D) Both 'b' and 'c'
Correct Answer: C
Solution :
According to the Transfer of Property Act, 1882 and the principle given here, Benami transaction means a transaction in which property is transferred to one person, for a consideration paid by another, but this law is not applicable if purchase is made by a person in favour of his wife or unmarried daughter. In this case, Mahendra is liable for punishment because he purchased a plot of land in the name of his concubine.
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