Benami fiduciary exception and SARFAESI intervention justified where the true owners funded the property and objections were ignored.

Property purchased with funds traced to the petitioner and his wife was treated as held by the 5th respondent only as ostensible owner, because the facts brought the arrangement within the fiduciary exception under the unamended Benami Transactions (Prohibition) Act, 1988. The Court also held that the secured creditor's SARFAESI measures could be interfered with where the petitioner's objections were ignored and coercive steps were taken arbitrarily. In the circumstances, writ relief was justified and the property could be transferred to the petitioner by private treaty on terms safeguarding repayment of the outstanding loan.

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Issues: (i) Whether the flat standing in the 5th respondent's name was a benami holding or was protected by the fiduciary exception, so that the petitioner and his wife were the owners; (ii) whether the Bank's measures under the SARFAESI Act could be interfered with and the property transferred by private treaty in favour of the petitioner.

Issue (i): Whether the flat standing in the 5th respondent's name was a benami holding or was protected by the fiduciary exception, so that the petitioner and his wife were the real owners.

Analysis: The transaction had to be tested under the unamended Benami Transactions (Prohibition) Act, 1988, since the transfer and sale deed were completed before the 2016 amendment. The materials showed that substantial consideration for the purchase was provided by the petitioner and his wife, that payments to the builder and the loan account were traced to their funds, and that the 5th respondent's contrary version was not credible. The relationship between the parties, the manner in which the purchase was financed, and the petitioner's possession of the property established confidence and trust, bringing the case within the fiduciary exception under Section 4(3)(b). The ostensible title in the 5th respondent's name did not reflect the real beneficial ownership.

Conclusion: The 5th respondent was only the ostensible owner and the petitioner and his wife were the real owners of the property.

Issue (ii): Whether the Bank's measures under the SARFAESI Act could be interfered with and the property transferred by private treaty in favour of the petitioner.

Analysis: The petitioner's grievance was directly connected with the Bank's action under the SARFAESI regime, and the existence of an alternative remedy did not bar writ jurisdiction in the circumstances. The Bank's action in ignoring the petitioner's objections, proceeding to classify the account and pursue coercive steps, and invoking the Magistrate's assistance without impleading him was found arbitrary. In the facts, the Bank could have considered a private sale under Rule 8(5)(d), particularly since the 5th respondent himself had requested sale of the property and the petitioner had offered to service the loan. The Court therefore found interference justified.

Conclusion: The Bank's coercive action was liable to be interfered with and the property could be transferred to the petitioner by private treaty on the terms directed.

Final Conclusion: The writ petition succeeded to the extent of recognising the petitioner's beneficial ownership and directing the secured creditor to regularise the arrangement through private treaty while safeguarding repayment of the outstanding loan.

Ratio Decidendi: Where the real consideration for a property is furnished by one person, the ostensible title-holder holds it in a fiduciary capacity and the transaction is saved by the benami law's fiduciary exception; in such a case, writ relief may be granted against arbitrary SARFAESI measures when the secured creditor ignores the true owner's objections.

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