Smt. Priti Agarwal & Shri Sameer Agarwal vs The Initiating Officer BPU Kanpur

Headnote:(A) Prohibition of Benami Property Transactions Act, 1988 - Sections 2(9)(A), 2(9)

(D), 26(5) - Benami transaction - Essential ingredients: (i) consideration paid by one person but property transferred in name of another; (ii) beneficial owner takes future benefit - In the instant case, appellant paid consideration directly to sellers for land registered in name of benamidar, who was a domestic servant of little means; after conversion and sub-division, sale proceeds were received by appellant - Held, case of benami transaction made out. (Paras 13-17)

(B) Natural justice - Right of cross-examination - Not an integral part of natural justice - Opportunity to cross-examine may be provided depending on circumstances, not as a matter of right - Where ample opportunities were given but not availed, denial of further cross-examination does not vitiate proceedings. (Paras 18-20)

(C) Attachment of property - Section 26(5) of the Act - Adjudicating Authority can provisionally attach property other than that referred by Initiating Officer - No requirement of separate show-cause notice for such attachment - Deeming provision does not reverse proceedings to earlier stage. (Paras 21-23)

Facts of the case:
The appellant (beneficial owner) arranged to purchase two immovable properties in the name of a domestic servant (benamidar) who had little means. Consideration was paid directly by the appellant to the sellers. After purchase, the agricultural land was converted to non-agricultural, sub-divided, and sold. Sale proceeds were largely credited to the appellant's account, with minor part to the benamidar. The benamidar transferred part of the proceeds to the co-appellant (husband). The Adjudicating Authority confirmed the Provisional Attachment Order. The appellants challenged on grounds that no benami transaction was made out, denial of cross-examination, and attachment of a sum without show-cause notice.

Findings of Court:
The Tribunal found that both limbs of Section 2(9)(A) were satisfied: consideration was paid by the appellant and future benefit was taken by her. The right to cross-examination was not violated as multiple opportunities were given but not availed. Attachment under Section 26(5) did not require separate show-cause notice. For the co-appellant, he was a recipient of proceeds from the benami transaction, hence attachment was justified.

Issues: (i) Whether the transaction fell within the definition of benami transaction under Section 2(9)(A); (ii) Whether denial of cross-examination violated principles of natural justice; (iii) Whether attachment of Rs.97.36 lakhs without show-cause notice was valid; (iv) Whether the co-appellant was liable as recipient of benami proceeds.

Ratio Decidendi: The court held that the ingredients of benami transaction were established by direct payment of consideration by the beneficial owner and receipt of sale proceeds. Cross-examination is not an absolute right; failure to avail opportunities justifies denial. Section 26(5) permits attachment of additional property without fresh show-cause notice. Recipients of proceeds from benami property are liable to attachment.

Result: Both appeals dismissed.

Legal Category Hierarchy

1. Appeal challenging confirmation of provisional attachment order under the Prohibition of Benami Property Transactions Act concerning property purchased in another's name. (Para 1 , 2 , 3 )

2. Appellant argued transaction not benami, denial of cross-examination, and attachment without notice; respondent supported attachment. (Para 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 )

3. Both appeals dismissed; provisional attachment confirmed. (Para 25 , 29 )

4. What constitutes a benami transaction under Section 2(9)(A) of the Prohibition of Benami Property Transactions Act?

A transaction is benami when property is held by one person but consideration is paid by another, and the beneficial owner enjoys future benefits. (Para 14 , 15 , 16 , 17 )

5. Is the right to cross-examine a witness an integral part of natural justice in benami proceedings?

No, the right to cross-examine is not absolute; it may be denied if ample opportunities were given and no serious prejudice caused. (Para 18 , 19 , 20 )

6. Does Section 26(5) of the Act require a show-cause notice before attaching additional property?

No, Section 26(5) allows provisional attachment of other benami property without a separate show-cause notice. (Para 21 , 22 , 23 )

FINAL ORDER

10.12.2025

Case of Priti Agarwal:

This appeal has been preferred by the appellant to challenge the order dated 29.11.2023 passed by the Adjudicating Authority confirming the Provisional Attachment Order.

Brief facts of the case:

2. The respondent received an information that one Shri Shiv Shankar is a person of little means, however, purchased substantial land parcels in his name. This led to an inquiry to find out whether he is actual beneficial owner of the agriculture land purchased in his name. The inquiry conducted by the Initiating Officer revealed that Smt. Priti Agarwal in connivance with her husband, Shri Sameer Agarwal has made arrangement to acquire two immovable properties in one single deed in the name of Shri Shiv Shankar. The entire consideration was paid by Smt. Priti Agarwal directly from her bank account to sellers, Shri Ram Prasad, Smt. Ganesha Devi, Shri Mool Chand and Shri Kishan Lal. It was also noticed that Shri Shiv Shankar has not made any investment rather not a single penny was routed through his bank account. The transaction between Smt. Priti Agarwal and the sellers took place between May 2019 to July 2019 whereas the bank account in the name of Shri Shiv Shankar was opened in the year 2020. At the time of purchase of the property, Shri Shiv Shankar was domestic servant of Shri Sameer Agarwal and Smt. Priti Agarwal.

3. After purchase of agriculture land, it was got converted to make it non-agriculture lands. It was thereupon sub-plotted and sold directly by Smt. Priti Agarwal using the Power of Attorney of Shri Shiv Shankar. She had even purchased 920 sq. meter land from Shri Shiv Shankar for a consideration of Rs.60 lakhs said to have been paid through 11 cheques. It was, however, found that the cheques mentioned in the Deed were for the namesake only and were never encashed. It was found surprising that the cheques referred in the purchase document dated 07.12.2020 were the same as was given in the Sale Deed dated 12.04.2019 to purchase the property in dispute. A case of benami transaction was found looking to the further fact that the sale proceeds out of the plotting of the agriculture land after conversion was directly credited in the bank account of Smt. Priti Agarwal maintained with the Central Bank of India and minor part of the sale proceeds was credited to the bank account of Shri Shiv Shankar opened in the year 2020. Finding a case of benami transaction, the PAO was caused and has been confirmed by the Adjudicating Authority, thus, the appeal was preferred by Smt. Priti Agarwal for challenge to the order.

Arguments of the Ld. Counsel for the appellant:

4. Ld. Counsel for the appellant made a reference of two land parcels along with the details of the transaction for purchase of the property. It is by dividing in three parts, out of which first part was regarding the properties sold by the alleged benamidar to third parties consist of 0.1316 hectares, second part was about the property acquired by the appellant for valuable consideration involving area of 0.092 hectare and third part of the property with the alleged benamidar consists of 0.1243 hectare. The challenge to the impugned order was made mainly on the ground that the transaction in the case in hand was not falling under Section 2(9)(A) of the Prohibition of Benami Property Transactions Act, 1988 (hereinafter referred to as “the Act of 1988”). The other argument was about the denial of the opportunity of cross-examination despite the statement of witness relied against the appellant. It was in violation of the principles of the natural justice and otherwise to be provided whenever a statement of witness is relied. In the instant case, the appellant made a prayer before the Initiating Officer to allow cross-examination of the witness but was not accepted. Thus, the impugned order vitiates on the aforesaid ground itself.

5. Ld. Counsel for the appellant further argued that a sum of Rs.97.36 lakhs has been provisionally attached

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2025 Supreme(Online)(ATFP) 13058

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman, G. C. Mishra, Member
Smt. Priti Agarwal & Shri Sameer Agarwal – Appellant
Versus
The Initiating Officer BPU Kanpur – Respondent
FPA-PBPT-01/KNP/2024 & FPA-PBPT-02/KNP/2024

Benami transaction under Section 2(9)(A) requires consideration by one person and property in another's name with beneficial owner receiving future benefits. Right to cross-examination is not absolute; failure to avail opportunities justifies denial.

Legal Category Hierarchy

Table of Contents

4. What constitutes a benami transaction under Section 2(9)(A) of the Prohibition of Benami Property Transactions Act?

5. Is the right to cross-examine a witness an integral part of natural justice in benami proceedings?

6. Does Section 26(5) of the Act require a show-cause notice before attaching additional property?

2025 Supreme(Online)(ATFP) 13058

APPELLATE TRIBUNAL FOR FORFEITED PROPERTYMunishwar Nath Bhandari, Chairman, G. C. Mishra, MemberSmt. Priti Agarwal & Shri Sameer Agarwal – AppellantVersusThe Initiating Officer BPU Kanpur – RespondentFPA-PBPT-01/KNP/2024 & FPA-PBPT-02/KNP/2024

Benami transaction under Section 2(9)(A) requires consideration by one person and property in another's name with beneficial owner receiving future benefits. Right to cross-examination is not absolute; failure to avail opportunities justifies denial.

Legal Category Hierarchy

Table of Contents

4. What constitutes a benami transaction under Section 2(9)(A) of the Prohibition of Benami Property Transactions Act?

5. Is the right to cross-examine a witness an integral part of natural justice in benami proceedings?

6. Does Section 26(5) of the Act require a show-cause notice before attaching additional property?

Cases Referred (1)

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman, G. C. Mishra, Member
Smt. Priti Agarwal & Shri Sameer Agarwal – Appellant
Versus
The Initiating Officer BPU Kanpur – Respondent
FPA-PBPT-01/KNP/2024 & FPA-PBPT-02/KNP/2024