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" BENAMI TRANSACTION BENAMI TRANSACTION   By   Ch. Muhammad Bashir, Advocate, Faisalabad & Member Punjab Bar Council   A lot of confusion exists as to the true nature of a Benami Transaction. This article is an effort to make it clear and also deal with other questions relating thereto.   Nature of Benami Transaction:   The person who is Benamidar has nominal title to the property, the person who purchases the property in the name of Benamidar has the real title to the property. The law imposes an obligation in the nature of trust on the Benamidar. He is a constructive trustee. He holds the property for the benefit of the person who has the real title to it. When a transaction of purchase is proved to be Benami, Courts give effect to the real title and not to the nominal title.   In Sri Minakshi Mills Limited, Madurai v. Commissioner of Income Tax, Madras (AIR 1957 SC 49) the word "Benami" is stated to be used to denote two class of transactions which differ from each other in their legal character and incidents. In one sense it signifies a transaction which is real, as for example, when A sells property to B, but the sale deed mentions X as the purchaser. Here the sale is genuine but the real purchaser is "B", X being the Benamidar. This is the class of transaction which is usually termed as Benami. But the word Benami is also occasionally used, perhaps not quite accurately, to refer to a sham transaction as for example, when A purports to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter…