Supreme Court restores lower court's decree in favor of appellants, Benami Transaction Act applies

The Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the decree of the lower appellate court in favor of the appellants. The Court clarified that the provisions of the Benami Transaction Act, including Section 4(2), apply to pending proceedings, prohibiting the defense raised by the contesting parties regarding the benami nature of the sale transaction.

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Issues:
Appeal arising from suit under Order 21, Rule 58, C.P.C. regarding property claimed by son and daughter of judgment-debtor as per sale deed. Contest on benami nature of transaction. Interpretation of Benami Transaction (Prohibition) Act, 1988, Section 4(2) in pending proceedings.

Analysis:
The appeal before the Supreme Court stemmed from a suit filed under Order 21, Rule 58, C.P.C. by the son and daughter of the judgment-debtor, claiming a property based on a sale deed executed in their favor in 1957. The property had been attached and sold in execution of a decree against the judgment-debtor. The contesting parties alleged the sale to be a benami transaction. The trial court dismissed the suit, but the lower appellate court decreed it in favor of the appellants. However, the High Court, in a Second Appeal, reversed the lower appellate court's decision and upheld the trial court's judgment, leading to the current appeal.

During the pendency of the matter in the Supreme Court, the Benami Transaction (Prohibition) Act of 1988 came into force. The appellants sought to rely on this Act, specifically Section 4(2), which prohibits the defense based on a right in respect of any property held benami in any suit. The Supreme Court allowed the appellants to raise this additional ground, as it involved a pure question of law.

Citing the decision in Mithilesh Kumari v. Prem Behari Khare, the Supreme Court clarified that the provisions of the Benami Transaction Act, including Section 4(2), apply to pending proceedings. Therefore, the defense raised by the contesting parties regarding the benami nature of the sale transaction was prohibited under the Act. As the High Court had dismissed the suit based on the benami transaction argument, the Supreme Court set aside the High Court's judgment and restored the lower appellate court's decree in favor of the appellants.

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court's judgment and restoring the decree of the lower appellate court in favor of the appellants. No costs were awarded in this matter.

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