1978 (11) TMI 16 - HC - Income Tax

Real owner impleaded in pre-emption suit despite Income Tax Act argument

The court upheld the trial court's decision to implead the real owner as a party in a pre-emption suit, despite arguments based on Section 281A of the ... Impleading the real owner - Pre-emption suit - Benami property - Section 281A of the Incometax Act - restriction on suits by real owner of benami property - Right of ostensible owner to deny title and compel impleading of real ownerImpleading the real owner - Pre-emption suit - Section 281A of the Incometax Act - restriction on suits by real owner of benami property - Whether the trial court was justified in impleading Ranjit Singh, who claimed to be the real owner, as a defendant in the pre-emption suit and whether s.281A of the Incometax Act barred such impleading. - HELD THAT: - Section 281A prevents a person claiming to be the real owner of benami property from instituting a suit to enforce rights in such property unless specified conditions are satisfied. That prohibition, however, applies to the institution of a suit by the claimant; it does not preclude impleading a person who asserts that he is the real owner when the ostensible owner disclaims title. In a pre-emption suit, the ostensible owner may plead that he is not the real owner; once that plea is raised, the proper course is to implead the real owner so that the pre-emption claim can be effectively adjudicated visavis the true owner. The trial court examined the application and, applying this principle (as followed in Jagdish Khattar v. Ram Kishan and earlier authorities), correctly impleaded Ranjit Singh to enable the suit to be determined against the person asserting beneficial ownership. Therefore the statutory bar in s.281A does not operate to prevent impleading the real owner as a party in these circumstances.The trial court was justified in impleading Ranjit Singh as a defendant and s.281A of the Incometax Act does not bar such impleading in a preemption suit where the ostensible owner disclaims being the real owner.Final Conclusion: The revision petition is dismissed; the order impleading Ranjit Singh as a party is upheld and s.281A of the Incometax Act is held not to bar impleading the real owner in the facts of this preemption suit. Issues:- Application for impleading a party in a pre-emption suit under CPC- Interpretation of Section 281A of the Income Tax Act regarding benami property- Justifiability of impleading the real owner in a pre-emption suitAnalysis:The judgment pertains to a pre-emption suit where an application was made under section 151 of the CPC to implead the real purchaser of a property claimed to be benamidar. The trial court allowed the application and impleaded the real purchaser as a defendant. The petitioner, feeling aggrieved, filed a revision petition challenging the trial court's decision. The petitioner's counsel relied on Section 281A of the Income Tax Act to argue that the real owner could not be impleaded as a party in such cases. However, the court found no merit in this contention after considering the provisions of Section 281A. It was noted that Section 281A does not bar the impleading of the real owner as a party in a pre-emption suit, especially when the benamidar does not claim to be the real owner.The court emphasized that the real owner, in this case, sought to contest the suit filed by the pre-emptor for possession and did not claim to enforce any right against the benamidar. Referring to previous judgments, the court held that it is appropriate to implead the real owner when the ostensible owner denies being the actual owner. The court cited various cases to support the view that impleading the real owner is essential for effectively adjudicating a pre-emption suit. Therefore, the court upheld the trial court's decision to implead the real owner as a party in the suit, stating that Section 281A of the Income Tax Act does not prevent such impleadment.In conclusion, the court dismissed the petition, noting that no other points were raised. The parties were directed to appear before the trial court, and no costs were awarded. The judgment clarifies the applicability of Section 281A in cases involving benami properties and affirms the right to implead the real owner in pre-emption suits for effective adjudication.