1988 (6) TMI 3 - HC - Income Tax

Appellant's Specific Performance Suit Barred Under Benami Transactions Ordinance

The court held that the appellant's suit for specific performance based on an oral contract of sale was barred under the Benami Transactions Ordinance, as ... Benami Transaction Issues:- Whether the suit for specific performance based on an oral contract of sale can be maintained.- Whether the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988 applies to the case.- Whether the appellant, as a third party claiming rights under a contract of sale, is affected by the Ordinance.- Whether the transaction in question is a benami transaction.- Whether the real owner of the property can be determined in this case.Analysis:The appellant filed a suit for specific performance based on an oral contract of sale, claiming that certain defendants were benamidars for the real owner of the property. The trial court held that the transaction was not benami and refused specific performance, granting only a refund of earnest money. The appellant argued that the Benami Transactions Ordinance does not apply to their case as a third party claiming rights under a contract of sale. The Ordinance prohibits suits to enforce rights in respect of benami property against the person in whose name it is held. The court analyzed the legislative intent of the Ordinance to prohibit recovery of benami property and determined that the suit for specific performance was barred under the Ordinance.The court referred to the definition of 'benami' and emphasized the need to establish the real owner of the property in cases of dispute. The burden of proof lies on the appellant to show that the transaction is benami and that the real owner is different from the defendants. The court highlighted that the saving clauses of the Ordinance do not apply to this case, as they pertain to coparceners in a Hindu undivided family or trustees, which are not relevant here. The court concluded that the suit for specific performance could not be maintained due to the operation of the Ordinance, and upheld the trial court's decision to grant a refund of earnest money.While confirming the decree for refund, the court directed each party to bear its own costs. The judgment clarified that the appellant cannot pursue specific performance under the Ordinance, and the real owner of the property must be determined before such relief can be granted. The court's decision was based on the application of the Ordinance and the absence of evidence establishing the transaction as benami.