TaxTMI 
TaxTMI 
2015 (9) TMI 1606
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....yer for Sabita for a little over an hour, I asked her to take instructions, she was only able to say that Sabita would even then not step into the witness box. Sabita has been in Court throughout the day today. Ms. Iyer twice sought and was granted leave including over the lunch recess to consult with her client. I indicated that I was even now, at any time before I began dictating judgment in Court, prepared to allow Sabita to lead such evidence as she thought necessary for the purposes of these two preliminary issues. I did so because I was disinclined to decide a matter such as this without affording Sabita the fullest opportunity to bring all her material before me. I went so far as to say that I would permit even an oral application for leave to give that evidence, and that I would not countenance any opposition from the Defendants in that regard. About this much I was very clear: that disallowing Sabita an opportunity to lead evidence, with possibly fatal results, was a course of action that would certainly determine her rights. Allowing her to lead evidence, on the other hand, would not in itself be a 8 of 27 determination of any rights at all. It would only enable Sabita to....
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.... a convenient means or mechanism for the management and administration of the undivided family holdings and interests which comprise the Gopal Raheja Group properties, assets and businesses." She claims that there was an understanding by which Gopal Raheja as the head of this group was at all material times the ultimate authority in all matters of decision making in relation to this group and its assets. Ms. Iyer speaks of the group as some sort of distinct legal entity, a use that I do not believe is entirely accurate. Sabita says that from the time of a separation in 1995-1996 between Gopal Raheja and his brother Chandru Raheja all the assets and properties that 'came to the Gopal Raheja Group' were the undivided property of all members of this Group, i.e., that all of them had an equal undivided share, right, title and interest in the entirety of those assets, holdings and properties. The fact that these assets were held in the names of one or the other of the members, or in joint names, is, she says, entirely immaterial. This was only 10 of 27 'for convenience'. Consequently, Sabita claims to be entitled to a partition and to her one-fourth share in all these as....
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....95-1996 arrangement. Between them, these writings provide for a separation of the various assets and businesses that were till then held in an interlocking fashion between Chandru Raheja and his family on the one hand and Gopal Raheja and his family on the other. Ms. Iyer stresses that these documents speak of a 'vesting' of assets in the 'Gopal Raheja Group'. She commends an interpretation that this must mean, and mean only, that the assets vested jointly in all members of the Gopal Raheja Group, each of them having an equal undivided share in every one of these assets, properties and holdings. She also says that it matters not that the actual assets were held by individual members of the Gopal Raheja family. According to her, the family arrangements required the assets to be placed in the names of 'a nominee' or 'nominees' on behalf of each group. For completeness, she points out that the separation was to be effected in three phases and that the second and third of these remained undone, and that this resulted in a later Suit No. 232 of 2014 by the Chandru Raheja Group against the Gopal Raheja Group. According to Ms. Iyer, the 1995-1996 Family Arr....
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....he others, and so on. 10. There then follows Ms. Iyer's delineation of the events of 2004. At that time it seems that Sonali was diagnosed with a grave medical condition. Sandeep, or so says Sabita, expressed certain apprehensions and insecurities to their father Gopal Raheja. For the purposes of limitation, it is important to note that Sabita in her Plaint now speaks of a 'common understanding' said to have been arrived at about this time in 2005-2006. Sabita says that in order to allay Sandeep's fears and insecurities, Gopal Raheja agreed to what is described as a 'temporary change' in the shareholding and asset holding patterns so that Sandeep, Durga and their minor daughters took about 58% of the shareholding, Gopal Raheja himself retained 42%, and the relatively negligible remainder was distributed between Sabita and Sonali. Sabita insists that these transfers were merely ostensible: innocuous in execution, placatory in intent and 14 of 27 ineffective of purpose. She insists that they were not in defeasance of her claim of undivided interest and co-ownership. She claims that the consideration for these transfers was illusory and deceptive, and attemp....
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....t to finish, demands evidence. She says that after the 1995-96 Family Arrangement, the family business continued to be closely-held, and run as a joint family quasi-partnership. This needs evidence. She says that "no member of the Gopal Raheja Group ever asserted any rights independently as shareholder and/or Director but always acted in a fiduciary capacity and in trust for each other". That needs evidence. She claims that "all properties, assets and business that came to the share of the Gopal Raheja Group are vested in the Group as a whole; and since then there has been no inter se partition/division or distribution between the members of the Group" and that "all the properties, assets and businesses continued to vest collectively in the members of the Group with each member entitled to/holding an equal and undivided share, right, title and interest in the properties, assets 16 of 27 and businesses and management and control thereof." Given that the Plaint says that in the interregnum there was a change in the share and asset holding pattern, this 'continuance' is a matter of evidence. She alleges, as a matter of established fact that no member of the Gopal Raheja Group ....
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....nt writings are holdings as 'nominee' in a fiduciary capacity and in trust for the benefit of the Group as a whole. vi) The Plaint repeatedly sets out that none of the parties acquired and/or exercised any beneficial rights independently. 17. "The Plaint throughout states"; "the Plaint repeatedly sets out"; what is to be made of this? Am I to assume today the correctness of any of this merely because "the Plaint throughout states" this or that or "the Plaint repeatedly sets out" a very great many things? This is not an application under Order VII Rule 11 of the CPC. This is a test of jurisdiction under Section 9A. I understand that the question of whether or not limitation can be 18 of 27 tried as a preliminary issue is pending before a larger Bench of the Supreme Court, but the two assertions I have set out above do not relate to limitation. They relate principally if not exclusively to the question under the Benami Act. Is the Plaintiff not required to prove the correctness of what her "Plaint throughout states" or "repeatedly sets out"? If so, this is an exception to the law that, at least as of today, is not to be found in the statute. 18. These allegations and....
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....vidence. No such admission is shown or proved. 22. Given this, Ms. Iyer's citing of several authorities seems to me to quite considerably beg the question. At least three of these seem to me to be against the propositions she advances. Marcel Martins v M. Printer & Ors. AIR 2012 SC 1987 speaks of determining the existence of a fiduciary capacity for the Benami Act "in a factual backdrop". That is a clear indicator of the need for evidence. SM Wahi v Ms. Reeta Wahi 2006 ILR 1 Delhi 774 was in relation to a fiduciary relationship in the context of the Benami Act, and the decision was under Order VII Rule 11 of the CPC, a provision that is materially different from Section 9A. Inescapably, that decision proceeded as on a demurrer, on the basis of the pleadings in the plaint. That plaint referenced a written admission of the defendant accepting the fact that the property was being held by him as a trustee. That is a very different matter from the case at hand. Incidentally, Wahi also holds that 'every nominee may not be a fiduciary'. Similarly, Binapani Paul v Pratima Ghosh & Ors. AIR 2008 SC 543 is not an authority for the proposition that no evidence is required to pro....
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....ming to be the 'real' owner of that property. Section 7 of the Benami Act repeals Sections 81 and 82 of the Trusts Act, which deal with resulting or implied trusts, and Section 94, which deals with constructive trusts. Consequently, in order to fit within the exception of Section 4(3)(b) of the Benami Act, the 'trust' spoken of must be one that is outside Sections 81, 82 and 94 of the Trusts Act; and this leaves only an express trust within the meaning of Sections 5, 6 and 10 of the Trusts Act. Those provisions demand the formality of an express declaration of trust, its objects and purposes, its property, beneficiaries and, importantly, an acceptance of trusteeship by the named trustee. None of these requirements are met. There is no pleading of an express trust at all, as indeed there could not have been. The only pleading, and that is clear even from the written submissions, is of an implied trust, i.e., of the 'impress' of a trust. At most, Sabita might have been able to claim the existence of a resulting trust; but even that is now barred. However, Section 4(3)(b) also speaks of a property being held by some other person standing in a 'fiduciary'....
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....96. The transfer of assets between the Chandru Raheja Group and the Gopal Raheja Group does not by itself demonstrate any fiduciary capacity within the Gopal Raheja Group itself. 26. In my view, the first preliminary issue must be answered in the affirmative. The suit is barred under the provisions of the Benami Transactions (Prohibition) Act, 1988. 27. Mr. Khambata and Mr. Kamdar say that there is a reason that Sabita has repeatedly declined to enter the witness box or lead evidence. Had she done so, she would no doubt have been confronted with her own inconsistencies. In her response to Gopal 24 of 27 Raheja's suit, Sabita said that Gopal Raheja's three children held shares and assets in trust for Gopal Raheja. This is a remarkable departure from the case that is now propounded. In his suit, Gopal Raheja claimed that there was a 'GL Raheja Family Arrangement' of June 2012. He sought its enforcement. Sabita in her affidavits filed in the Notice of Motion in that suit, supported this stand; and did not controvert Gopal Raheja's case that between 2005 and 2007, Sabita voluntarily transferred some shareholdings to Sandeep and his family. This is directly con....