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TaxTMI 
TaxTMI 
TaxTMI 
1990 (3) TMI 387
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....cidental thereto. Section 4(2) of the Act, it is alleged, squarely applies to the present case because it provides that no defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by the person claiming to be the real owner of such property. Therefore, by virtue of that provision the defendants cannot be allowed in this case to take any plea or defence based on any right in respect of the property in suit alleged to be held benami by the plaintiff. Therefore, issue Nos. 1, 2, 5, 6, 7 and 9 as framed on 26-11-1982 have become redundant and are liable to be struck off. Since such a defence is not permitted to be taken now, it is further alleged, no evidence on such pleas can be deemed relevant in the suit, and so defendants cannot be allowed to lead such evidence at the trial of suit. Thus, the prayer is for striking off such issues and a direction to the defendants not to lead any evidence on the plea that the plaintiff is only a benamidar. In reply the above averments were controverted mainly on the ground that in view of the pleas al....
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....d in IA No. 1810 of 1989 that no evidence need be recorded on certain issues in view of the Act. It is then alleged that the reliance of the plaintiff on the said Act and by the application moved there under the plaintiff virtually seeks a decree without trial and this fact, therefore, has necessitated the amendment to the written statement. The amendments sought for are as follows: (1) The Act is ultra vires the Constitution inasmuch as it violates articles 14, 31A and 300A of the Constitution. (2) Even assuming, though not admitting the vires of the Act, that under section 4 only remedy of the real owner to file a suit to recover property, subject matter of a benami transaction, from the benamidar and the defence of the real owner in a suit by the benamidar against the real owner is barred, there is no provision in the Act under which the defendants who are in actual physical possession of the property in suit can be deprived of possession. The defendants being in actual physical possession from the very inception of the plot having been purchased in auction and the building having been constructed thereon by them with their own funds as owners thereof to the kn....
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....rnment/Delhi Development Authority then in force as interpreted/understood did not permit the purchase of leasehold plots in their names, the defendants gave the bid in the name of the plaintiff for avoiding the said bar and, therefore, the provisions of the Act did not apply to the present case. (7) In the alternative, the plaintiff holds ostensible title to the property in his name merely as a trustee for the benefit of the defendants. Even the repeal of section 8 of the Indian Trusts Act, 1882 cannot be retrospective by virtue of section 6 of the General Clauses Act, 1897 and the defendants, therefore, continue to be owners in possession of the property. (8) Vide agreement dated 16-5-1975 duly executed between the parties, the plaintiff admitted and acknowledged that the entire construction on the plot was raised by the defendants with their own funds as owners. Assuming that the said plot was given on licence to the defendants with liberty to raise substantial building at their own costs and expenses, the licence was irrevocable and, therefore, the defendants being owners of the building are entitled to continue to remain in possession of the said property. Wi....
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....as the permission was received, he would execute a deed of conveyance in favour of the defendants. Therefore, the defendants claimed possession of the plot in dispute after 16-5-1975 in part performance of the aforesaid agreement and the same is protected by section 53A of the Transfer of Property Act, 1947. Further, elaborating the above plea, it is stated that the aforesaid agreement dated 16-5-1975 was duly acted upon and pursuant to the same the defendants paid the balance amount of loan to Vaish Cooperative Bank, Darya Ganj, Delhi and also released the payment of deposits standing in the name of Smt. Kalawati lying with Hanuman Parsad Shree Nath in favour of the plaintiff who, however, failed to perform his part of the obligation by executing a deed of conveyance of leasehold rights in the plot in question. Deed of relinquishment or transfer of back portion of House No. 3009, Dharampura, Delhi was to be executed by the defendants on or after the plaintiff executing the deed of conveyance in respect of the plot. Defendants have always been ready and willing to perform their part of the obligation but the plaintiff has failed to perform his obligation of executing the deed of co....
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....endments asked for are also alleged to be prolix, argumentative, misconceived and contrary to all principles of pleadings. It is then alleged that the plea that the Act does not bar the legal heirs of Late Shri Harnam Dass from raising the plea of the plaintiff being only a benamidar, is wholly meaningless and cannot be allowed to be taken. If that plea could not have been taken by the real owner himself it is inconceivable that the legal representatives could be allowed to take the same plea. Such a course would be tantamount to making the Act wholly otiose. It is then alleged that the pleas are merely raised in a different way with the only purpose of delaying the trial of the suit. The plaintiff also submitted that there can be no distinction made as regard the plot of land and the building erected thereon so far as the application of section 4 is concerned. Therefore, this application could not be allowed and should be dismissed. 3. I have heard arguments advanced by the learned counsels for the parties. To appreciate whether the decision on the issue referred in IA No. 1810 of 1989 has now become irrelevant by the introduction of the Act, it would be necessary to narrate....
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....er there is none such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid...." (p. 66) In Bhim Singh v. Kan Singh AIR 1980 SC 727, (he Hon'ble Court held: "...Two kinds of benami transactions are generally recognised in India. Where a person buys a property with his own money but in the name of another person without any intention to benefit such other person, the transaction is called benami. In that case, the transferee holds the property for the benefit of the person who has contributed the purchase money, and he is the real owner. The second case which is loosely termed as a benami transaction is a case where a person who is the owner of the property executes a conveyance in ....
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.... Cooperative New Bank Ltd., for raising construction on the aforesaid plot. He started construction in 1969 and the ground floor was ready for occupation in March 1970 when defendant No. 1 (Shri Harnam Dass since expired) and defendant No. 2 approached him saying that they had purchased adjoining plot No. C-II/25 where they wanted to construct building for their residence. At this request to plaintiff gave possession to them of the constructed building on plot No. C-II/24 as lessees for a short period. Therefore, the pleas referred above clearly indicate that the plaintiff nowhere claims that he held the property benami on behalf of the defendants at any stage of the case. 6. On the other hand, the case of the defendants is that in view of their having some residential house in the old city of Delhi, it was doubtful, whether defendant Nos. 1 and 2 could give bid in their name or not. Therefore, they gave bid for the plot in the name of the plaintiff. Although the plaintiff was not the real brother-in-law of defendant No. 1, all the same defendant No. 1 and his wife had great love and affection for him. Plaintiff was alleged to have been born from the womb of Smt. Kalawati (mothe....
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....me of the plaintiff. He also did not spend a single penny on its construction. In short, the plea is that right from the beginning, i.e., from the time of giving the bid till the completion of the construction on the plot, the plaintiff never went into possession of the property. In these circumstances we will have to see whether the Act applies in the circumstances of the present case or not. Sections 3 and 4 of the Act read as follows: "3. Prohibition of benami transactions. - (1) No person shall enter into any benami transaction. (2) Nothing in sub-section (1) shall apply to the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter. (3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence under this section shall be non-cognizable and bailable. 4. Proh....
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....as argued that the Act was very much retrospective in nature and all types of benami transactions were covered within the four comers of the Act, once it was proved that the property was held benami by a person. To appreciate the rival contentions, it will be proper to refer to various recent rulings which have been given by the Hon'ble Supreme Court and some of the High Courts. First of all would refer to the case of Mithilesh Kumari (supra). The facts of that case were that the plaintiff Prem Behari Khare's wife died in 1955 leaving behind two sons aged 2 and 3 years, respectively. He faced hardship in managing the household, looking after his sons and carrying on his duties as an employee of the Allahabad Bank. Under these circumstances he kept with him defendant Mithilesh Kumari whose relationship with her husband was then estranged. Later on the relations between the plaintiff and defendant Mithilesh Kumari came to be such that she bore two children to him. There were efforts to legalise their de facto living as man and wife by obtaining the divorce of Mithilesh Kumari from her husband. There was a decree for judicial separation between her and her husband. Thus, th....
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.... Ghosh AIR 1989 Cal. 283, the real owner had already obtained a decree for possession against the benamidar. He proceeded with the execution of the decree. The benamidar's objections not to execute the decree of possession in the light of the provisions of the Act, were dismissed. They went in revision to the High Court. The High Court held in effect that the words 'claim' or 'action' used in section 4 would also cover a proceeding in execution. It further held in para 8 at page 286 that a proceeding lies not only when it is initially originated but it continues to lie until it is brought to an end and if it is provided that a proceeding 'shall not lie', that would bar not only its commencement, but also its continuance. So the proceeding of the Court below for recovery of possession was quashed. 11. In view of the clear findings by the Hon'ble Supreme Court as also by the Calcutta High Court, it must be held that the Act is retrospective in its operation. 12. However, still the principal question that remains to be considered is as to whether in the circumstances of the present case it can be said that the defence taken up by the defendants is....
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.... 'benami transaction' is inextricably connected with all the provisions of the Act, as the Act is intended 'to prohibit benami transactions and the right to recover property held benami and for matters connected therewith or incidental thereto'." (p. 327) The word 'held' has to be, therefore, understood as 'possessed or occupied'. Therefore, I am of the view that section 4(2) will deprive the real owner of any defence whatsoever against a benami owner who actually holds the property and is in administration of the same. If the possession of the property is with the real owner and that too with any express or implied intention of the parties, as in the present case, it cannot be said that the benamidar holds the property, i.e., he is in possession of the property. 13. Benami transaction, according to section 2(a) of the Act, means any transaction in which the property is transferred to one person for a consideration paid or provided by another person. This definition, therefore, will apply when the following two conditions are satisfied: (1) There is a transfer of property. (2) The consideration is paid or provided not by th....
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.... much prior to coming into force of the Act and finally in execution of a decree in his favour had also gone into possession of the property before coming into force of the Act. In that situation, can it be said that a right will survive to the benamidar to file a suit after coming into force of the Act for recovery of possession against the real owner? I am of the view that such a benamidar will not be able to recover possession of the property from the real owner. If 'benamidar' is unable to recover property from a real owner who has obtained possession from him under a decree before the coming into force of the Act, can it by any stretch of imagination be said that a benamidar who had actually never gone into possession of the property and who is described owner as a mere name-lender by the real owner in the conveyance deed can recover possession from the real owner? I am of the view that there seems to be practically no difference in these two cases and in either of these cases a benamidar will not be able to recover possession from the real owner. The passing of a decree in favour of a real owner and putting him in possession by execution in the former case is not a ri....
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....roperty in question in favour of the defendants, they also released the amounts of the deposits in favour of the plaintiff and also paid the loans of the Vaish Co operative Bank. Ultimately the defendants claim to be in possession of the property in question in part performance of the said agreement also. 17. The learned counsel for the plaintiff in this respect contended that if this plea is allowed to be raised by the defendants, it would amount to changing the original cause of action and substituting it by a new cause of action and, therefore, this plea should not be allowed. I do not agree with this contention for the reason that there is a reference to the agreement dated 16-5-1975 in the original written statement. The defendants by way of the amendment only seek to elaborate their earlier plea by looking at the agreement from a different angle. The agreement is already a part of the pleadings and, therefore, I am of the opinion that if this amendment is allowed, it will not amount to permitting the defendants to substitute a new cause of action. Under sub-section 3(6) of section 4, it is provided that if the person in whose name the property is held as a trustee or other....
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....ase. Therefore, if the defendants are allowed to take up this plea, which in fact, is only a legal plea requiring no evidence, no harm will cause to the plaintiff, as it only seeks to introduce an additional approach to the problem. Therefore, defendants can be allowed to take up this plea. 20. Second amendment sought is really very substantial and, in fact, this is the main defence raised by the defendants. It only seeks to highlight that in view of the defendants being in actual physical possession of the suit property right from its inception, the Act will not confer any ownership rights upon the plaintiff. This amendment also, therefore, has to be allowed. 21. The third amendment is also based on the possession of the defendants over the suit property. This amendment also has to be allowed in order to effectively and conclusively decide whether or not the Act extinguishes the right of the real owner who is already in possession of the property. It is only an extension of the second plea. 22. The fourth amendment asked for in para 19 of the application says that no provision of the Act confers ownership rights on the benamidar, and further that there is no provision in ....
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....te Government in case of acquisition of such property can arise in proceedings which are commenced by the State Government. This question does not arise either directly or indirectly in the present proceedings. This amendment, therefore, cannot be allowed. 26. The amendment sought by para 24 of the application is again about the prospective operation of the Act. In view of the decision of the Hon'ble Supreme Court that the Act has retrospective operation also, the defendants cannot be allowed to raise this plea. 27. The amendment sought by para 25 of the application says that section 3 is prospective in operation. There is no doubt that section 3 prohibits benami transactions in future and rather entering into such a transaction in future is also made punishable. It is only the operation of section 4 which has been held by the Supreme Court to be retrospective in respect of past transactions, proceedings about which are still pending in the Courts. Thus, there is no fun in allowing this amendment. 28. The amendment sought by para 26 of the application cannot be allowed because so far as the constitutional validity of the Act is concerned, the plea is being allowed to b....
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....ks to raise a legal plea to the effect as to whether the repeal of section 82 can be considered retrospective or not in the background of the facts of this case. The plaintiff is not likely to suffer any harm if the defendants are allowed to raise this plea. It is substantially a legal plea. This amendment, therefore, has to be allowed. 35. By para 33 of the application, the defendants want to amend their written statement to the effect that even assuming that they were licences in respect of the plot, by virtue of the agreement dated 16-5-1975 containing such an admission and acknowledgement of the plaintiff, the licence is irrevocable and the same cannot be revoked as falsely and illegally alleged by the plaintiff. Therefore, the defendants cannot be dispossessed as unauthorised occupants as alleged by the plaintiff. The plea is also based upon the interpretation of the alleged agreement dated 16-5-1975 between the parties. Whether in view of that agreement the licence alleged by the plaintiff in favour of the defendants is irrevocable or riot, therefore, originates from the same agreement. Since the agreement is pleaded in the written statement as such, this plea only seeks t....