TaxTMI 
TaxTMI 
1987 (8) TMI 4
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.... employment. The eldest brother, Narayanan, who is the defendant in O. S. No. 349 of 1983, is a teacher working in his native place. The plaintiff had been sending all the money saved by him to Narayanan by cheque and money orders and also had paid cash when he came to his native place occasionally. The plaintiff requested him to accumulate the money sent by him and to invest it in landed properties in his name. Narayanan agreed to do it and a sum of Rs. 8,000 was entrusted to Narayanan for the purpose of acquiring landed properties. Narayanan had deposited the money in the Koduvayoor Service Co-operative Bank. Thereafter, Narayanan entered into an agreement with the widow and children of one Gopala Iyer for purchasing the suit properties. Pursuant to this, Narayanan purchased the properties by separate documents in his name and in the names of his brothers including the plaintiff. Narayanan had paid the amounts of consideration out of the funds sent by the plaintiff for the purpose of acquiring landed property in his name. The expenses for execution of the documents and registration were also met out of the funds sent by the plaintiff. However, Narayanan and the other brothers did....
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....es. Narayanan, the eldest brother and the defendant in O. S. No. 349 of 1983 further contended that he spent a sum of Rs. 9,051 for purchasing the property in his name. In his written statement, he admitted that an amount of Rs. 58,000 was received by him from the plaintiff. He also stated in his written statement that the plaintiff came to India for his marriage in April, 1979, and an amount of Rs. 22,000 was spent by him for his marriage. He purchased a property for the plaintiff by registered assignment deed No. 950 of 1979 for a sum of Rs. 12,000. According to him, the plaintiff is liable to pay to him a sum of Rs. 9,000 and he reserved his right to institute appropriate proceedings for recovery of the said amount. The defendants also contended that there was no trust or constructive trust created as averred in the plaint. The bone of contention raised by the plaintiff in all the suits was that he entrusted money to Narayanan, the defendant in O. S. No. 349 of 1983 and the first defendant in the other suits, for the specific purpose of purchasing landed property in the name of the plaintiff but his brother, Narayanan, betrayed the trust reposed in him and purchased propertie....
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....the plaintiff could not have sought for any relief against the second defendant in the other suits. Learned counsel contended that there is no evidence to show that money was entrusted to Narayanan for the specific purpose of purchasing landed properties in the name of the plaintiff and that, therefore, there cannot be any inference of trust, constructive or otherwise. As indicated earlier, O. S. No. 349 of 1983 is filed against Narayanan, the elder brother of the plaintiff, who is the first defendant in all the suits. The second defendant in O. S. No. 353 of 1983 did not contest the matter and was set ex parte, and the documents of purchase in his favour were not produced before the court. However, an appeal has been filed against the judgment and decree in O. S. No. 353 also. The plaintiff has given evidence as PW 1, He deposed that before he left for Saudi Arabia to take employment, his cousins, PWs 2 and 3, also came to his house to see him and they had occasion to discuss his prospects of earning money in the presence of his brother, Narayanan, and he suggested that his brother, Narayanan, would accumulate money sent by him for the purpose of purchasing landed property in h....
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.... the plaintiff would also support the evidence of PW 1 that the properties were purchased by the defendants with the amounts sent by the plaintiff to Narayanan. Exhibit A-22 clearly recites that the consideration was provided from the amounts sent by the plaintiff to Narayanan. It is also significant to note that the second defendant in O. S. No. 353 of 1983 has remained absent and was set ex parte. One would expect him to contest the matter if really he had paid Rs. 12,000 towards the purchased property., The second defendant, in O. S. No. 347 of 1983 had not gone to the witness box to prove that it was he, who paid the consideration for the purchase made by him. The evidence of DW 2 would show that he had no money for purchase and his case that he had borrowed the money from others cannot be believed. The second defendant in O. S. No. 347 of 1983 stated in his written statement that he borrowed Rs. 110,000 from his brother-in-law, Madhavan, and that that was utilised for the purpose of purchasing the property. But DW 1 deposed that Rs. 5,000 was with Chandran and the balance was obtained from his brother-in-law. But, according to the written statement of the second defendant in O....
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.... is a teacher. But it is clear from the way in which the documents came into existence and the admissions made by DW 1 regarding the receipt of amounts that really the consideration was paid out of the amounts sent by the plaintiff to DW 1, Narayanan for the purpose of purchasing landed property in the name of the plaintiff. The next question to be considered is whether the plaintiff is entitled to recover the properties from the defendants. It has been held in number of cases that where the property is acquired in the name of one person but the purchase price is paid by another, a presumption arises that the transaction is one for the benefit of the person providing the money. In Harihar Prasad Singh v. Maharaja Kesho Prasad Singh, AIR 1925 Patna 68 [FB], the question of presumption that the transaction is for the benefit of the person who pays consideration came up for the consideration of a Full Bench of the Patna High Court. In that case, the plaintiff claimed possession of an estate in Burma and a house and a garden in Dumraon together with an account of the income and other subsidiary reliefs. The court held that where the property is acquired in the name of one person, bu....
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....tion did intend to provide the consideration for his or her benefit. The question that will have to be considered after finding that the consideration was provided not by the transferee but by the other person, is as to whether such other-person did intend to provide the consideration for the benefit of the transferee and not whether such person did not intend to benefit the transferee. This could be arrived at both from the language of section 82 itself and from the general principles of evidence and onus of proof. It is now well-settled that in Indian law the English rule as to presumption of advancement has not been adopted. Therefore, once it is found that the consideration has been provided by the husband, there being no presumption of advancement, it will have to be proved by the person claiming to be the transferee that the consideration was provided for her benefit. . ." The benami nature of transactions was considered by the Supreme Court in CED v. Aloke Mitra [1980] 126 ITR 599. The court said : "The law in this matter is not in doubt and is authoritatively stated by a long line of decisions of the Privy Council starting from the well known case of Gopeekrist Gosain....
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....40 ; 49 IC 1, the Judicial Committee referred to the judgment of Sir George Farwell in Bilas Kunwar v. Desraj Ranjit Singh [1915] LR 42 IA 202 : 30 IC 299 (PC), where it was, observed that a benami transaction had a curious resemblance to the doctrine of English law that the trust of the legal estate results to the man who pays the purchase money, and went on to say (49 IC at p. 5, col. 1): "...the benamidar has no beneficial interest in the property or business that stands in his own name; he represents, in fact, the real owner, and so far as their relative legal position is concerned he is a mere trustee for him.' In Guran Ditta v. Ram Ditta [1927] LR 55 IA 235 ; AIR 1928 PC 172, the Judicial Committee reiterated the principle laid down in Gopeekrist Gosain's case [1854] 6 MIA 53 (PC), and observed that in the case of a benami transaction, there is a resulting trust in favour of the person providing the purchase-money. A benamidar has no interest at all in the property standing in his name. Where the transaction is once made out to be benami, the court must give effect to the real and not to the nominal title subject to certain exceptions..." In the above case, the Su....