Benami defence barred unless fiduciary exception applies; property in wife's name was treated as held in trust-like capacity.

A benami defence is generally barred under the Benami Transactions (Prohibition) Act, 1988, but the statutory prohibition does not apply where the transaction falls within the fiduciary-capacity exception. On the facts, the property stood in the wife's name while consideration was traced to the husband or his companies, and the marital relationship and surrounding circumstances supported a finding of fiduciary holding. The absence of a specific pleading on fiduciary capacity did not defeat the legal issue. Concurrent findings on source of consideration were not shown to be perverse, so the benami challenge failed and the decrees below were left undisturbed.

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Issues: (i) whether the plea of benami in respect of the suit property was barred by the Benami Transactions (Prohibition) Act, 1988; (ii) whether the wife held the property in a fiduciary capacity so as to attract the exception under the Act.

Issue (i): whether the plea of benami in respect of the suit property was barred by the Benami Transactions (Prohibition) Act, 1988.

Analysis: The pleadings and evidence showed that the defendant asserted title in the property through a benami claim after the Act had come into force. The Court held that a defence based on benami is generally prohibited by Section 4(2) of the Benami Transactions (Prohibition) Act, 1988, but the statutory bar does not operate where the case falls within the recognised exception. The Court also held that the earlier courts had not committed perversity merely because they accepted the benami nature of the transaction on the evidence and that the concurrent findings on source of consideration did not call for interference in second appeal.

Conclusion: The benami defence was not accepted as a ground to disturb the decree, and the challenge to the concurrent findings failed.

Issue (ii): whether the wife held the property in a fiduciary capacity so as to attract the exception under the Act.

Analysis: The Court found that at the time of purchase the marital relationship was intact and there was confidence and trust between the spouses. On the facts, the consideration was paid by the husband or his companies, while the property stood in the wife's name, and the arrangement was treated as one where the wife held the property in a fiduciary capacity. The Court applied the exception contained in Section 4(3)(b) of the Benami Transactions (Prohibition) Act, 1988 and held that the plea of benami was not barred on that footing. The absence of a specific pleading on fiduciary capacity was held not to defeat the legal question.

Conclusion: The wife was held to have held the property in a fiduciary capacity, and the transaction fell within the statutory exception.

Final Conclusion: The second appeal failed, the concurrent decrees below were affirmed, and the respondent's title and possession-based relief remained undisturbed.

Ratio Decidendi: A benami defence is barred by Section 4 of the Benami Transactions (Prohibition) Act, 1988 unless the transaction falls within the statutory exception for property held by a person in a fiduciary capacity, and such capacity may be inferred from the factual relationship and surrounding circumstances.

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