Madhya Pradesh HC: buying property in your minor child's name isn't a 'benami' transaction

The Madhya Pradesh High Court, Jabalpur, refused to throw out a family's suit over ancestral property, holding that a purchase made in a child's name by a parent falls outside the Benami Transactions (Prohibition) Act, 1988. A father had bought property in 1977 in the name of his then-minor son, for the family's benefit, and a 1989 family arrangement had since divided it among relatives. After the son died in 2023, his legal heirs turned hostile and denied the rest of the family's shares, prompting a suit for declaration and injunction.

The heirs sought rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, arguing the 1977 purchase was benami and barred by Section 4 of the 1988 Act, and that the suit was time-barred. Justice Deepak Khot held that Section 2(9)(iii) of the Act excludes exactly this situation, property bought by a person in the name of their child, paid for from known sources, from the definition of a benami transaction, so Section 4's bar never applied. Applying the Supreme Court's established multi-factor test for benami claims, covering source of funds, possession, motive, custody of title deeds and subsequent conduct, and holding that limitation on these facts raised disputed questions of fact that could not be decided at the plaint-rejection stage, the Court dismissed the heirs' application and let the suit proceed.