On 8 May 2026, a Supreme Court bench of Justice J.B. Pardiwala and Justice R. Mahadevan decided Manjula & Ors. v. D.A. Srinivas (2026 LiveLaw (SC) 478). It held that a person who funded a purchase in another’s name cannot claim the property as owner through a will executed by the ostensible owner, where the underlying arrangement is benami.
What was decided
The plaintiff said he had funded agricultural land bought in the name of his employee, because land reform law in Karnataka barred him from buying in his own name. He claimed title under a 2018 will said to have been executed by the employee. The employee’s heirs claimed by succession. The trial court rejected the plaint under Order VII Rule 11 CPC; the High Court reversed; the Supreme Court restored the rejection.
The Court read “fiduciary capacity” under Section 2(9) of the Prohibition of Benami Property Transactions Act, 1988 narrowly, holding that an employer-employee relationship is not within it. The arrangement, recorded in MoUs, had an unlawful object and was void, and no exception applied. A plaint must be read with the documents relied on, and drafting cannot avoid a statutory bar. As the benami finding had become final, the Court directed the Central Government to appoint an administrator and take over the properties within eight weeks.
Why it matters
Holding land in the name of an employee, relative or associate to get around ceiling, agricultural-land or other restrictions is not unusual in NCR land markets. This ruling shows that later paperwork, such as a will or an MoU, does not convert such an arrangement into lawful ownership. It may instead lead to the property being treated as benami and confiscated.
For land investors, the decision is a reminder that structure matters at the purchase stage. Arrangements that depend on someone else’s name carry both civil and statutory risk.
Practical points
- Review any holding where the recorded owner did not provide the consideration, and take advice on regularisation options.
- Do not rely on wills, MoUs or powers of attorney from a name-lender as proof of title.
- Check whether UP ceiling or agricultural-land restrictions apply before purchase rather than structuring around them.
- Where a benami notice is received, respond within time and keep records of the source of funds.
Sources: LiveLaw, 9 May 2026; Deccan Herald, May 2026.
For a confidential discussion on property title and benami risk, see Due Diligence Services.
General legal information only; not legal advice or solicitation.
