Can a Will Legitimise Illegal Benami Property?

 

What if someone could bypass real estate laws simply by getting creative with legal paperwork? The Supreme Court of India on 08.05.2026 addressed this exact issue in the case of Manjula and Others v. D.A. Srinivas.

It is a legal drama involving land deals, local property restrictions, a mysterious Will, and the strict rules governing "benami" property. In a dramatic twist, both parties ended up losing the land—the Supreme Court declared the transaction illegal and directed the Central Government to appoint an Administrator to take over the properties in accordance with the law.

 Here is a breakdown of what happened:

• D.A. Srinivas asked the court to declare him the rightful owner of a piece of land on the strength of a Will dated 20.04.2018, allegedly executed by late K. Raghunath (who passed away on 04.05.2019). 

• Srinivas could not legally buy agricultural land in his own name due to state restrictions under the Karnataka Land Reforms Act. To circumvent this, he transferred money to Raghunath—a loyal employee in his father’s business—to buy the land under Raghunath's name, convert it to non-agricultural land, and eventually transfer it back. Srinivas claimed they both had a "fiduciary relationship" built on trust and confidence, which is an exception in the Benami Act. 

• After Raghunath died, his family (his wife, Manjula, and their children), who were in possession of the property, challenged the suit. They argued that the entire arrangement was an illegal benami transaction and accused Srinivas of forging the Will.

The conspectus of the Supreme Court’s discussion and findings is summarised thus: 

1)  No Fiduciary Relationship Between Employer and Employee: An employer-employee or commercial arrangement supported by consideration does not create a fiduciary relationship under the Benami Act. While a director owes a fiduciary duty to their company, the reverse—or a basic relationship between an employer and an employee—does not qualify.

2)  Illegal Contracts Cannot Be Enforced: A contract created specifically to circumvent statutory laws (such as land ceiling limits) is illegal and cannot be enforced in a court of law.

3)  Automatic Confiscation: Once a transaction is declared benami in judicial proceedings and that decision becomes final, the property is liable to be confiscated by the government, separate from any criminal prosecution.

4)  Early Action by Trial Courts: Trial courts must treat issues involving benami transactions as preliminary issues and decide them at the earliest possible stage. If a prima facie case is made out, the matter should be referred to the Adjudicating Authority. 

This ruling tells us that simply wrapping an illegal transaction inside a "Will" does not wash away its illegal benami nature. Courts have both the authority and the responsibility to look past superficial legal drafting, uncover hidden legal bars, and reject meritless suits right at the starting line.

[Citation: Manjula & Others v. D.A. Srinivas, Supreme Court, 2026 INSC 465, decided on 08.05.2026]