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Report No. 57

6.19. General Observations.-

A few general observations may be in order, before the merits of the various possible alternatives are stated. At the outset, it may be stated that one of the important causes1 which accounted for the origin of benami transactions has now ceased to exist. Thus, the importance of the joint Hindu (Mitakshara) Family has been reduced, after the enactment of the Hindu Succession Act. The joint family, in the strict sense of the co-parcenary, hardly existed among the Hindus governed by the Dayabhaga.

Experience shows that benami transactions are a highly fruitful source of bitter litigations. Benami transactions also lead to acrimony. Thus, when a benami transaction is resorted to for defrauding creditors, the true owner may be guided by the consideration that if the property can be saved from the clutches of the creditor, that by itself would be a gain, even if the benamidar, being the son or any other near relative, may ultimately succeed in effectively keeping the property as his own property. This leads to acrimony among the parties concerned when a controversy arises. There is, therefore, a case for refusing legal recognition to the benami character of such transactions.

1. Para. 1.7, supra.

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