1989 (2) TMI 111 - SC - Benami Property

Supreme Court: Benami Act applies retroactively, nullifying plaintiff's recovery right

The Supreme Court allowed the appeal, holding that the Benami Transactions (Prohibition) Act, 1988, applies retroactively to past benami transactions, ... Appeal By Special Leave, Benami Transaction, Law Commission Report, Retrospective Operation, Statute For Prohibition, Supreme Court Issues Involved:1. Whether the suit house was held benami or was a genuine gift.2. Applicability of the Benami Transactions (Prohibition) Act, 1988, to the plaintiff's suit.3. Whether the concurrent findings of fact by the lower courts should be interfered with.4. The effect of subsequent legislation on the plaintiff's established rights to the benami property.Issue-wise Detailed Analysis:1. Whether the suit house was held benami or was a genuine gift:The plaintiff-respondent instituted a suit in 1971 seeking a declaration that he was the sole and real owner of the suit house and to restrain the defendant-appellant from transferring it. The Civil Judge, Lucknow, decreed the suit in favor of the plaintiff on March 13, 1974, declaring the plaintiff as the sole owner and restraining the defendant from transferring the suit house. The Additional District Judge, Lucknow, dismissed the defendant's first appeal on December 23, 1974, agreeing with the trial court's finding that the plaintiff paid the consideration and purchased the house benami in the defendant's name. The High Court of Judicature at Allahabad dismissed the second appeal on March 27, 1978, upholding the lower courts' findings. The Supreme Court noted that the concurrent findings were based on a reasonable appreciation of evidence and were not perverse or unreasonable.2. Applicability of the Benami Transactions (Prohibition) Act, 1988, to the plaintiff's suit:The Supreme Court examined whether the Benami Transactions (Prohibition) Act, 1988, would affect the plaintiff's suit. The Act, which received the President's assent on September 5, 1988, prohibits benami transactions and the right to recover property held benami. Section 3 of the Act prohibits benami transactions, and Section 4 bars suits to enforce any right in respect of property held benami. The Court noted that the Act is both a penal and a disqualifying statute and applies to past benami transactions as well. The expression 'any property held benami' in Section 4 is not limited to any particular time, date, or duration, thereby making the Act retroactive.3. Whether the concurrent findings of fact by the lower courts should be interfered with:The Supreme Court reiterated that it ordinarily does not interfere with concurrent findings of fact unless there are material irregularities or the findings are perverse. The Court found no reason to interfere with the concurrent findings of the lower courts that the suit house was purchased benami by the plaintiff in the defendant's name. The Court held that the findings were based on reasonable appreciation of evidence and were not perverse or unreasonable.4. The effect of subsequent legislation on the plaintiff's established rights to the benami property:The Supreme Court considered whether the plaintiff's established rights to the benami property would be affected by the Benami Transactions (Prohibition) Act, 1988. The Court held that the Act applies retroactively to past benami transactions and nullifies the real owner's right to recover the property from the benamidar. The Court noted that the Act does not contain a specific provision making its operation retrospective, but its language and legislative intent indicate that it applies to past transactions. The Court held that the plaintiff's suit could not be decreed under the law, and the decree passed by the lower courts was annulled, resulting in the dismissal of the suit.Conclusion:The Supreme Court allowed the appeal, holding that the Benami Transactions (Prohibition) Act, 1988, applies retroactively to past benami transactions, thereby nullifying the plaintiff's right to recover the suit house. The concurrent findings of the lower courts that the suit house was held benami were upheld, but the plaintiff's suit was dismissed due to the subsequent legislation. The appeal was allowed without any order as to costs.