TaxTMI 
TaxTMI 
1995 (7) TMI 64
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....rson in the name of his wife or unmarried daughter, is the question requiring our answer in deciding this appeal by special leave filed by the plaintiff in a suit against an order of the Division Bench of the High Court of Delhi allowing an appeal filed by the defendant against an order in the suit made by a learned single judge of the same court, refusing to reject the plaint under Order 7, rule 11, of the Code of Civil Procedure, 1908 ("the Code"), as one barred by section 4 of the Act. A three-judge Bench of this court presided over by one of us (Kuldip Singh J.), which dealt with the prohibition to file a suit or to take up a defence in respect of a benami transaction imposed by section 4 of the Act in the case of R. Rajagopal Reddy ....
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.... property is held is a coparcener in a Hindu undivided family and the property is held for the benefit of the coparceners in the family; or (b) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity." It was undisputed that a suit could be filed or a defence could be taken up in respect of properties held benami, i.e., covered by benami transactions if the properties are held by persons covered by clauses (a) and (b) of sub-section (3) of section 4 since that sub-section makes the provisions by sub-sections (1) and (2) thereof inapplicable. But, the q....
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.... the matter of filing of a suit or taking up a defence would become inapplicable. It was also argued by him that sub-sections (1) and (2) of section 5, if they are inapplicable to benami transactions covered by sub-section (2) of section 3 of the Act, there could be no good reason to make applicable the prohibition in sub-sections (1) and (2) of section 4 to a transaction which has taken place before the coming into force of the Act. On the other hand, it was vehemently argued for the defendant-wife that non-applicability of sub-section (1) to benami transactions covered by sub-section (2) of section 3 being intended merely to save the person purchasing the property in the name of his wife or unmarried daughter from liability for punishment....
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.... as seen, prohibits a person from entering into any benami transaction. Sub-section (3) of section 3, as seen, makes a person who enters into a benami transaction liable for punishment. Section 5 makes properties held benami liable for acquisition without payment of any amount. But, when sub-section (2) of section 3 permits a person to enter into a benami transaction of purchase of property in the name of his wife or unmarried daughter by declaring that the prohibition contained against a person in entering into a benami transaction in sub-section (1) of section 3, does not apply to him, the question of punishing the person concerned in the transaction under sub-section (3) thereof or the question of acquiring the property concerned in the ....
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....f such benami transaction involving purchase of property by any person in the name of his wife or unmarried daughter, he cannot succeed in such suit or defence unless he proves that the property although purchased in the name of his wife or unmarried daughter, the same had not been purchased for the benefit of either the wife or the unmarried daughter, as the case may be, because of the statutory presumption contained in sub-section (2) of section 3 that unless the contrary is proved, the purchase of property by the person in the name of his wife or his unmarried daughter, as the case may be, was for her benefit. Therefore, our answer to the question under consideration is that neither the filing of a suit nor the taking of a defence in ....