Benami conveyance and limitation: inoperative fraud-based transfer did not bar recovery of possession or time-bar the suit.

A benami conveyance intended to defeat a proposed creditor's claim did not prevent the transferor from recovering possession where the fraudulent purpose was never carried out and no creditor was actually defrauded. The instrument was treated as inoperative, so the defendant could not retain title on the basis of the failed fraud. On limitation, the transferor was not first required to seek cancellation of the deed; Article 144, not Article 91, governed the suit for possession, and the claim was within time. The note therefore states that recovery of possession was available and the decree for the plaintiff was affirmed.

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Issues: (i) Whether a plaintiff who participated in a benami conveyance intended to defeat a creditor could recover possession of the property when the fraudulent purpose was never accomplished; (ii) whether the suit was barred by limitation under Article 91 of Schedule II to the Indian Limitation Act, 1877.

Issue (i): The conveyance was found to be a mere benami transaction and therefore not an operative transfer of title. Where the fraudulent purpose was not carried into effect and no creditor was in fact defrauded, the plaintiff was entitled to repudiate the arrangement and recover the property. The defendant could not rely on the failed fraud to retain title.

Conclusion: The plaintiff was entitled to recover possession of the lands despite his participation in the attempted fraud.

Issue (ii): Since the conveyance was inoperative, the plaintiff was not required first to have it set aside before suing for possession. In such a case the applicable provision was Article 144, not Article 91, of Schedule II to the Indian Limitation Act, 1877, and the suit was within time.

Conclusion: The suit was not barred by limitation.

Final Conclusion: The appeal failed on both issues, and the decree in favour of the plaintiff for possession was affirmed.

Ratio Decidendi: A benami conveyance made to defeat a proposed fraud does not bar recovery by the transferor if the fraudulent purpose was never accomplished; in such a case the instrument is inoperative and the suit for possession is governed by the residuary article applicable to possession, not by the article for cancellation.

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