TaxTMI 
TaxTMI 
2015 (7) TMI 1307
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....the father, late Sh. Jai Gopal Gugnani. 2. In this suit on 11.08.2008 issues were framed and issue no.1 reads as under:- "Whether the claim in the suit is barred by the provisions of Benami Transactions Prohibition Act, 1988? OPD" 3. Issues, if they are legal issues, and result in bar of any law to the filing of the suit, then such issues under Order XIV Rule 2 of the Code of Civil Procedure, 1908 (CPC) can be treated as preliminary issues. Also, under Order VII Rule 11 CPC if the plaint is shown to have been barred by any such law, the suit plaint can be rejected at any stage. Order XII Rule 6 CPC also entitles a court to decree the suit finally at any stage. 4. In the present case evidence of the plaintiff commenced way back i.e around six years back on 22.09.2009, when the plaintiff filed his evidence by way of affidavit, thereafter now even after around six years and around 25 dates of hearings, plaintiff/PW1 has not completed his evidence, and not only that the evidence of the plaintiff has not been completed,plaintiff as PW1 has stepped into the witness box for his cross-examination for three times and his cross-examination is still not complete. The cross-e....
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....to the relevant averments in the plaint which have been made by the plaintiff and which show that the suit is barred by the Benami Act. The relevant paras of the plaint read as under:- "1. The plaintiff and Defendant are brothers. The plaintiff is presently residing in USA at the address given above. The Defendant who is the Plaintiff's younger brother is presently residing in the ground floor of the Plaintiff's house at 33, Uday Park, New Delhi as a licencee of the Plaintiff alongwith the Plaintiff's mother. Prior to 1962, the Plaintiff was living with his father Shri Jai Gopal Gujnani, mother Smt. Raj Kumari and younger brother Amar Nath as well as sisters in a rented house at 7/23 Darya Ganj, Old Delhi. xxxxx 3. That in February/March 1969, the Plaintiff visited India and gave substantial funds to his father Shri Jai Gopal Gugnani to keep it by way of deposit in India for the benefit of the Plaintiff. Again in the year September 1970, the Plaintiff came to India for marriage of his sister brought funds from abroad and extended financial help in solemnization of her marriage. Once again, the Plaintiff handed over substantial funds to his father to keep in dep....
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.... been throughout and still continues to be exclusive real owner in possession of the plot and the name of his father Late Shri Jai Gopal Gugnani was benami. 9. That the Plaintiff entrusted the title deed of the land in question to his father for safe custody in his capacity, as a benami and the real ownership always vested in the Plaintiff." (emphasis added) 7. There are other similar averments made by the plaintiff in the plaint but the aforesaid paras are representative of the essence of the plaint. 8. It is on the basis of these averments that the reliefs are claimed in the suit by pleading essentially that the plaintiff is the exclusive owner of the suit premises no.33, Uday Park, New Delhi and his father in whose name the title deeds are is only a benamidar trustee. A reading of the aforesaid paras of the plaint which have been reproduced above shows that no doubt the plaintiff has used the expression of the property being purchased in the name of the father of the parties because of a fiduciary relationship and that the father was a trustee, however, simultaneously a reading of the last lines of paras 8 and 9 of the suit plaint shows that the plaintiff has admi....
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.... the case of J M Kohli Vs. Madan Mohan Sahni & Anr in RFA No.207/2012 decided on 07.05.2012. In this judgment this Court has had an occasion to consider the intendment of the passing of the Benami Act as reflected from Section 7 of the Benami Act. Section 7 of the Benami Act repealed the provisions of Sections 81, 82 and 94 of the Indian Trusts Act, 1882 (in short 'the Trusts Act') and which provisions of the Trusts Act gave statutory recognition and protection to the benami transactions by calling such transactions protected by a relationship of a trust. It bears note that benami transactions were very much legal within this country before the passing of the Benami Act and the relationship of a benamidar to the owner was in the nature of a trust/fiduciary relationship because it was the Trusts Act which contained the provisions of Sections 81, 82 and 94 giving statutory recognition to the benami ownership of the properties being in the nature of trust. In J M Kohli's case (supra), this Court has held that the expression "fiduciary relationship" and a relationship of a trustee cannot be so interpreted so as to in fact negate the Benami Act itself because all benami transactions act....
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.... 8. In a way, therefore, there may be some ostensible conflict between the provision of Section 4(3)(b) of the Benami Act and Section 7 of the same Act which repeals the provisions of the Indian Trusts Act, 1882, however, one has to read and interpret Section 4(3)(b) in a manner which is in accord with the legislative intention to bar claims against properties held as benami. The concept of trust was always inbuilt once a transaction was a benami transaction as the benamidar was the trustee for the real owner. But in spite of the concept of trust being inbuilt in benami transactions, the Benami Act provided that no rights could be asserted in a benami property by the actual/de jure owner. Putting it differently, once Sections 81, 82 and 94 of the India Trusts Act, 1882 have been repealed, they cannot be brought in from the back door, so to say, by giving the same content contained in the repealed provisions of Sections 81, 82 and 94 of the Indian Trusts Act, 1882 to Section 4(3)(b) of the Benami Act. If we give such an interpretation, the entire Benami Act will fall and it will be as if the same has not been enacted. Therefore, Section 4(3)(b) which provides that the pr....
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....purchased under his name, however, the moneys were in fraud utilized to get the property purchased in the name of defendants in that suit. In the case of P.V. Sankara Kurup (supra) also the obvious fraud which was perpetrated was that the property was to be purchased in the name of the plaintiff by his attorney holder and which the defendants did not do and instead got the property purchased directly in their name. In the case of P.V. Sankara Kurup (supra), the Supreme Court was dealing with Section 66 of CPC as it existed before its repeal by Section 7 of the Benami Act and in the facts of the case as stated above it was held that the purchaser had acted in fiduciary capacity as an agent and consequently the bar of the Benami Act would not apply. In the said judgment, the Supreme Court held that when the agent was employed to purchase the property on behalf of his principal, however does so in his own name, i.e. the agent's name then upon conveyance or transfer of the property to the agent, he stands as a trustee for the principal. 10. Therefore, in certain cases where there is obvious breach of trust in purchasing the property in the name of a person, whereas it ought to....
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....of the Benami Act, and which is an exception, cannot have an effect of in fact repealing the entire Benami Act. 15. The facts in the judgment in the case of Marcel Martins (supra) are that the suit property was in the tenancy of one Smt. Stella Martins. The landlord of the property was the Corporation and the Corporation took a decision to sell the tenanted properties to the occupants of the same. Smt. Stella Martins therefore was to be given the ownership rights in the property subject to her paying a certain amount/consideration to the Corporation. Before the property could be transferred to Smt. Stella Martins, Smt. Stella Martins died and therefore the right to own the property by payment of consideration devolved upon all the legal heirs of Smt. Stella Martins i.e her husband Sh C.F. Martins and the other children. In the facts of the case, when all the legal heirs of Smt. Stella Martins went to the Corporation for getting the property transferred in their joint names, Corporation as per its policy desired that property will not be transferred in the name of all the legal heirs of Smt. Stella Martins but will only be transferred in the name of one person. Consequently thoug....
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....In other words unless the conditions contained in Section 4(1) and (2) are held to be inapplicable by reason of anything contained in Sub-section (3) thereof the suit filed by plaintiffs-respondents herein would fall within the mischief of Section 4. 28. The critical question then is whether sub-section (3) of Section 4 saves a transaction like the one with which we are concerned. 29. Sub-section (3) to Section 4 extracted above is in two distinct parts. The first part comprises clause (a) to Section 4(3) which deals with acquisitions by and in the name of a coparcener in a Hindu Undivided Family for the benefit of such coparceners in the family. There is no dispute that the said provision has no application in the instant case nor was any reliance placed upon the same by learned counsel for the respondent-plaintiffs. 30. What was invoked by Mr. Naveen R. Nath, learned counsel appearing for the respondents was Section 4(3)(b) of the Act which too is in two parts viz. one that deals with trustees and the beneficiaries thereof and the other that deals with persons standing in a fiduciary capacity and those towards whom he stands in such capacity. It was arg....
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....s rightly reposed and is exercised. Generally, the term 'fiduciary' applies to any person who occupies a position of peculiar confidence towards another. It refers to integrity and fidelity. It contemplates fair dealing and good faith, rather than legal obligation, as the basis of the transaction. The term includes those informal relations which exist whenever one party trusts and relies upon another, a well as technical fiduciary relations." 34. Black's Law Dictionary (7th Edn. p. 640) defines "fiduciary relationship" thus: "Fiduciary relationship-A relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship. Fiduciary relationships-such as trustee-beneficiary, guardian-ward, agent-principal, and attorney-client - require the highest duty of care. Fiduciary relationship usually arise in one of four situations: (1) when one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first, (2) when one person assumes control and responsibility over another, (3) when one person ha a duty to act for give advice to another on matt....
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....y. The term "fiduciary relationship" is used to describe a situation or transaction where one person (beneficiary) places complete confidence in another person (fiduciary) in regard to his affairs, business or transaction(s). The term also refers to a person who holds a thing in trust for another (beneficiary). The fiduciary is expected to act in confidence and for the benefit and advantage of the beneficiary, and use good faith and fairness in dealing with the beneficiary or the things belonging to the beneficiary. If the beneficiary has entrusted anything to the fiduciary, to hold the thing in trust or to execute certain acts in regard to or with reference to the entrusted thing, the fiduciary has to act in confidence and is expected not to disclose the thing or information to any third party." It is manifest that while the expression "fiduciary capacity" may not be capable of a precise definition, it implies a relationship that is analogous to the relationship between a trustee and the beneficiaries of the trust. The expression is in fact wider in its import for it extends to all such situations as place the parties in positions that are founded on confidence and trust ....
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....ld flow to them as legal heirs of the deceased tenant consequent upon the decision of the Corporation to sell the property to the occupants. That conclusion gets strengthened by the fact that the parties had made contributions towards the sale consideration paid for the acquisition of the suit property which they would not have done if the intention was to concede the property in favour of the appellant. 43. Superadded to the above is the fact that the parties were closely related to each other which too lends considerable support to the case of the plaintiffs that the defendant-appellant held the tenancy rights and the ostensible title to the suit property in a fiduciary capacity vis-à-vis his siblings who had by reason of their contribution and the contribution made by their father continued to evince interest in the property and its ownership. Reposing confidence and faith in the appellant was in the facts and circumstances of the case not unusual or unnatural especially when possession over the suit property continued to be enjoyed by the plaintiffs who would in law and on a parity of reasoning be deemed to be holding the same for the benefit of the appellant as....
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.... Sections 81, 82 and 94 of the Trusts Act, then on these Sections being repealed, hence trust/fiduciary relationships covered under such Sections were those transactions which were benami transactions which stood prohibited by the promulgation of the Benami Act. As held in J M Kohli's case (supra), surely intendment of Section 4(3)(b) of the Benami Act is not to bring through the back door, relationships of trust/fiduciary character falling in the provisions of Sections 81, 82 and 94 of the Trusts Act which were specifically repealed by Section 7 of the Benami Act. Putting it in other words, once transactions were in the nature of trust, and such transactions in the nature of trust were encompassed within the meaning of trust as comprised in Sections 81, 82 and 94 of the Trusts Act, though such transactions were transactions in trust and fiduciary in nature, such transactions were held to be illegal after passing of the Benami Act by repeal of these provisions of the Trusts Act. Obviously, it cannot be otherwise held that the transactions which fall within the meaning of Sections 81, 82 and 94 of the Trusts Act, though these Sections stand repealed, yet the transactions falling in ....