1997 (11) TMI 99 - SC - Benami Property

Supreme Court affirms benami property purchase; Benami Transactions Act not retrospective

The Supreme Court dismissed both the civil appeal and the special leave petition, upholding the findings of the lower courts that the property was ... Benami Transactions - Held that:- It is true that the respondents-defendants who have raised a defence of benami in their written statement have to discharge the initial burden of proof and establish the plea of benami. The parties adduced oral and documentary evidence. The lower appellate court had considered the evidence adduced by both the sides and arrived at a conclusion that the defendants had discharged the said burden. When both the sides had adduced evidence, the question of burden of proof pales into insignificance. The High Court was, therefore, right in not interfering with the said finding. The said finding of fact cannot be canvassed in this civil appeal by the plaintiff or her legal representative. The decision in R. Rajagopal Reddy's case [1995 (1) TMI 67 - SUPREME Court] is not in any manner shaken by anything said in Nand Kishore Mehra's case [1995 (7) TMI 64 - SUPREME Court] and that both the cases deal with different aspects of the Act as stated above and each of the cases continues to govern different provisions of the Act. Appeal dismissed. Issues Involved:1. Benami Transaction: Whether the property in question was purchased benami by Ujagar Lal in the name of Rebti Devi.2. Burden of Proof: Who bears the burden of proof in establishing the benami nature of the transaction.3. Applicability of the Benami Transactions (Prohibition) Act, 1988: Whether the Act applies retrospectively to the case.4. Judicial Precedents: Interpretation and applicability of the judgments in R. Rajagopal Reddy v. Padmini Chandrasekharan and Nand Kishore Mehra v. Sushila Mehra.Detailed Analysis:1. Benami Transaction:The core issue in the case was whether the property purchased on June 1, 1955, in the name of Rebti Devi was actually bought by her husband, Ujagar Lal, as a benami transaction. The plaintiff, Rebti Devi, claimed that she purchased the property with her own funds, while the defendants, Ram Dutt Gupta and his son, contended that Ujagar Lal was the real owner, and the property was bought benami in Rebti Devi's name.2. Burden of Proof:The court held that the burden of proof to establish the benami nature of the transaction lay on the defendants. The trial court initially accepted the plaintiff's claim, but the appellate court reversed this decision, concluding that the defendants had successfully discharged their burden of proof. The High Court upheld this finding, and the Supreme Court agreed that the question of burden of proof became insignificant once both sides had adduced evidence.3. Applicability of the Benami Transactions (Prohibition) Act, 1988:The plaintiff's counsel argued that the Benami Transactions (Prohibition) Act, 1988, barred the defendants from raising the benami plea. The court referred to the judgment in R. Rajagopal Reddy v. Padmini Chandrasekharan, which clarified that sections 4(1) and 4(2) of the Act did not apply retrospectively to cases where the plea of benami was already raised before May 19, 1988. As the plea in this case was raised before that date, the Act did not preclude the defendants from raising the benami defense.4. Judicial Precedents:The court analyzed the implications of the judgments in R. Rajagopal Reddy v. Padmini Chandrasekharan and Nand Kishore Mehra v. Sushila Mehra. It was noted that:- R. Rajagopal Reddy's Case: Established that sections 4(1) and 4(2) of the Act did not bar benami pleas raised before May 19, 1988.- Nand Kishore Mehra's Case: Dealt with a different factual situation where the suit was filed after May 19, 1988, and involved exceptions under section 3(2) of the Act, specifically regarding purchases in the name of a wife or unmarried daughter.The court concluded that the principles from both cases were applicable to different provisions of the Act and did not conflict with each other. The decision in R. Rajagopal Reddy's case remained authoritative for the present case, affirming that the benami plea raised before May 19, 1988, was valid.Conclusion:The Supreme Court dismissed both the civil appeal and the special leave petition, upholding the findings of the lower courts that the property was purchased benami by Ujagar Lal in the name of Rebti Devi. The court also clarified the applicability of the Benami Transactions (Prohibition) Act, 1988, confirming that it did not retrospectively bar the benami plea raised before May 19, 1988.