TaxTMI 
TaxTMI 
2026 (5) TMI 593
X X X X Extracts X X X X
X X X X Extracts X X X X
.... DISCUSSION AND ANALYSIS 18 A LEGAL PRINCIPLES GOVERNING REJECTION OF PLAINT 18 B ROLE OF THE COURT IN CONDUCTING SUITS AS CONTEMPLATED UNDER THE CPC 28 C INTERPLAY BETWEEN ORDER VII RULE 11 AND ORDER XIV RULE 2 CPC 44 D WHETHER SUIT IS BARRED BY LAW 52 D1 THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988 53 D2 THE BENAMI TRANSACTIONS (PROHIBITION) AMENDMENT ACT, 2016 74 E PROSPECTIVE OR RETROSPECTIVE OPERATION OF THE 2016 AMENDMENT 103 F "FIDUCIARY CAPACTIY" UNDER THE AMENDED ACT 114 G EXEMPTION UNDER THE ACT ON ACCOUNT OF FIDUCIARY RELATIONSHIP 120 H BAR TO SUCCESSION TO THE ESTATE OF THE DECEASED 127 I WHETEHR THE OBJECT OF THE CONTRACT IS LAWFUL 137 J RELIEFS TO WHICH THE APPELLANTS ARE ENTITLED 139 V FINDINGS 140 VI CONCLUSION 145 I. RELIEF SOUGHT 2. The instant Civil Appeal is directed against the Judgment and Final Order dated 22.02.2024 passed by the High Court of Karnataka at Bengaluru ["the Hi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dated 05.03.2020 and Crime No.0148/2020 dated 15.09.2020, came to be registered against the Respondent and other accused persons. 4.2. During the pendency of the suit, the Appellants / Defendant Nos. 1 to 3 filed an Application under Order VII Rule 11 (a) and (d) CPC seeking rejection of the plaint on the grounds that it disclosed no cause of action and that the suit was barred by Sections 4 and 6 of the Benami Act. According to the Appellants, the averments contained in the plaint themselves rendered it liable to be rejected at the threshold. 4.3. The trial Court, after hearing the parties and upon a detailed consideration of the plaint averments as well as the legal principles governing benami transactions, allowed the application under Order VII Rule 11(a) and (d) CPC and by order dated 30.10.2023, rejected the plaint. 4.4. Aggrieved thereby, the Respondent / Plaintiff preferred Regular First Appeal No.2216 of 2023 before the High Court. By the impugned judgment dated 22.02.2024, the High Court allowed the appeal holding that the pleadings in the plaint did not attract the provisions of the Benami Act and that the plaint, therefore, could not have been rejected at the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he real nature of the relief claimed. Even if the plaint does not expressly use the expression "benami", a holistic reading thereof clearly reveals that the Plaintiff asserts that the consideration flowed from him, the purchase was made at his instance, and the properties were held by the deceased merely as a name-lender. The High Court, by confining itself to the absence of express terminology, failed to discern the true character of the transaction pleaded by the Plaintiff. 5.3. It was further submitted that while considering an application under Order VII Rule 11 CPC, the Court is entitled to look not only into the plaint averments but also the documents annexed thereto. The sale deeds relied upon by the Plaintiff themselves show that the consideration was paid by late K. Raghunath, thereby reinforcing the statutory presumption against the Plaintiff's claim. On a cumulative reading of the plaint and the accompanying documents, it becomes evident that the suit is barred under the provisions of the Benami Act. The mere attempt to camouflage the claim as one arising under a Will cannot salvage the Plaintiff's case, particularly when the genuineness of the Will itself is under se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....leadings. 5.8. The learned Senior Counsel further submitted that the 2016 Amendment, which introduced the fiduciary exception in its present form, came into effect on 01.11.2016, whereas the sale deeds in respect of the suit properties were executed during the years 2006 and 2011. Relying upon the decision of this Court in Union of India and another v. Ganpati Dealcom Private Limited (2023) 3 SCC 315, it was contended that the 2016 Amendment is not retrospective in operation. Therefore, the subsequently introduced exception cannot govern transactions that had taken place much prior thereto. 5.9. It was then submitted that during the pendency of the present proceedings, the Respondent / Plaintiff caused mutation of revenue records in his favour and executed various sale deeds on the strength of the disputed Will. According to the learned Senior Counsel, the Will itself is under investigation by the CBI on allegations of forgery, including the use of fabricated stamp papers purportedly printed after the death of the testator. The Plaintiff is stated to have been arrested in connection therewith and to remain in custody since 22.12.2025. Despite these serious allegations, the Pl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... manner. The Court held that clever drafting or selective pleadings cannot obscure the real nature of the claim, and if upon a holistic reading the suit appears barred by any law, the plaint is liable to be rejected at the threshold. The substance of the pleadings, and not the form in which relief is couched, is determinative. 5.14. Further reliance was placed on Sree Surya Developers & Promoters v. N. Sailesh Prasad and others (2022) 5 SCC 736, wherein, this Court held that a cause barred in law cannot be revived or rendered maintainable by astute or artful pleading. The Court emphasised that litigants cannot circumvent statutory prohibitions or limitations by merely drafting the plaint in a manner that conceals the true legal impediment. Where the foundational averments themselves disclose a legal bar, the court must exercise powers under Order VII Rule 11 CPC. 5.15. Reference was also made to Ramisetty Venkatanna and another v. Nasyam Jamal Saheb and others (2024) 18 SCC 426, wherein this Court once again stressed that while deciding an application for rejection of plaint, the court must look beyond clear phraseology and superficial drafting. If a meaningful reading of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....further submitted that the scope of Order VII Rule 11 CPC is well settled and narrowly circumscribed. The Court is required to confine itself strictly to the averments made in the plaint and must assume them to be true in their entirety. The defence taken in the written statement or the allegations made by the Defendants are wholly irrelevant at this stage. This position stands authoritatively settled in the decisions in Liverpool & London S.P. & I Association Ltd. v. M.V.Sea Success I and another (2004) 9 SCC 512, Popat and Kotecha Property v. State Bank of India Staff Association (2005) 7 SCC 510, P.V. Guru Raj Reddy v. P. Neeradha Reddy and others (2015) 8 SCC 331, and Vinod Infra Developers Ltd. v. Mahaveer Lunia and others 2025 INSC 772. The test is whether, on a demurrer, the plaint discloses a cause of action or a right to sue. If, on a meaningful reading of the plaint, the answer is in the affirmative, the plaint cannot be rejected under Order VII Rule 11 CPC. 6.3. The learned Senior Counsel contended that the trial Court gravely erred in invoking Order VII Rule 11(d) CPC by inferring that the suit is barred under the Benami Act. A plain reading of the plaint does not di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of property within the meaning of the Transfer of Property Act, 1882, and, therefore, the prohibitions contained in Sections 4 and 6 of the Benami Act, which deal with recovery or re-transfer of benami property, have no application to testamentary dispositions. 6.7. It was further submitted that the trial Court exceeded its jurisdiction by relying upon the written statement, the application filed by the defendants, and even pending criminal proceedings to draw adverse inferences against the Plaintiff. Such an approach is directly contrary to the settled law laid down in P.V. Guru Raj Reddy (supra) and Hardesh Ores (P) Ltd v. Hede and Company (2007) 5 SCC 614 which categorically held that at the stage of Order VII Rule 11, the Court cannot travel beyond the plaint or undertake an evaluation of disputed facts or evidence. 6.8. The learned Senior Counsel submitted that the reliance placed by the trial Court on pending criminal proceedings to doubt the validity of the Will or to reject the plaint is equally misconceived. Civil and criminal proceedings operate in distinct spheres, and the pendency of a criminal investigation cannot extinguish civil rights or render a civil suit no....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appears from the statement in the plaint to be barred by any law; (e) where it is not filed in duplicate; (f) where the plaintiff fails to comply with the provisions of rule 9: Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature from correcting the valuation or supplying the requisite stamp-paper, as the case may be, within the time fixed by the Court and that refusal to extend such time would cause grave injustice to the plaintiff." 8.2. Rules 12 and 13 of Order VII, deal respectively with the procedure and effect of rejection of plaint. They read as under: "12. Procedure on rejecting plaint.-Where a plaint is rejected the Judge shall record an order to that effect with the reasons for such order. 13. Where rejection of plaint does not preclude presentation of fresh plaint.-The rejection of the plaint on any of the grounds hereinbefore mentioned shall not of its own force preclude the plaintiff from presenting a fres....
X X X X Extracts X X X X
X X X X Extracts X X X X
....permit the Plaintiff to unnecessarily protract the proceedings in the suit. In such a case, it would be necessary to put an end to the sham litigation, so that further judicial time is not wasted. 23.4. In Azhar Hussain v. Rajiv Gandhi MANU/SC/0284/1986 : [1986] 2 SCR 782, this Court held that the whole purpose of conferment of powers under this provision is to ensure that a litigation which is meaningless, and bound to prove abortive, should not be permitted to waste judicial time of the court, in the following words: "12. The whole purpose of conferment of such power is to ensure that a litigation which is meaningless, and bound to prove abortive should not be permitted to occupy the time of the Court, and exercise the mind of the Respondent. The sword of Damocles need not be kept hanging over his head unnecessarily without point or purpose. Even in an ordinary civil litigation, the Court readily exercises the power to reject a plaint, if it does not disclose any cause of action." 23.5. The power conferred on the court to terminate a civil action is, however, a drastic one, and the conditions enumerated in Order VII Rule 11 are required to be strictly a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... subtraction of words. If the allegations in the plaint prima facie show a cause of action, the court cannot embark upon an enquiry whether the allegations are true in fact. D. Ramachandran v. R.V. Janakiraman(MANU/SC/0154/1999: 1999:INSC:97 : (1999) 3 SCC 267). 23.13. If on a meaningful reading of the plaint, it is found that the suit is manifestly vexatious and without any merit, and does not disclose a right to sue, the court would be justified in exercising the power Under Order VII Rule 11 Code of Civil Procedure. 23.14. The power Under Order VII Rule 11 Code of Civil Procedure may be exercised by the Court at any stage of the suit, either before registering the plaint, or after issuing summons to the Defendant, or before conclusion of the trial, as held by this Court in the judgment of Saleem Bhai v. State of Maharashtra (MANU/SC/1185/2002 : 2002:INSC:554 : (2003) 1 SCC 557). The plea that once issues are framed, the matter must necessarily go to trial was repelled by this Court in Azhar Hussain (supra). 23.15. The provision of Order VII Rule 11 is mandatory in nature. It states that the plaint "shall" be rejected if any of the grounds spec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wever, by clever drafting of the plaint, it has created the illusion of a cause of action, this Court in Madanuri Sri Ramachandra Murthy v. Syed Jalal (MANU/SC/0485/2017 : 2017:INSC:366 : (2017) 13 SCC 174) held that it should be nipped in the bud, so that bogus litigation will end at the earliest stage. The Court must be vigilant against any camouflage or suppression, and determine whether the litigation is utterly vexatious, and an abuse of the process of the court. ..... 28. A three-Judge Bench of this Court in State of Punjab v. Gurdev Singh (MANU/SC/0612/1991 : 1991:INSC:200 : (1991) 4 SCC 1: 1991 SCC (L&S) 1082) held that the Court must examine the plaint and determine when the right to sue first accrued to the Plaintiff, and whether on the assumed facts, the plaint is within time. The words "right to sue" means the right to seek relief by means of legal proceedings. The right to sue accrues only when the cause of action arises. The suit must be instituted when the right asserted in the suit is infringed, or when there is a clear and unequivocal threat to infringe such right by the Defendant against whom the suit is instituted. Order VII Rule 11 (d) provides....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... action is not sufficient but rather, on a meaningful reading of the plaint and the documents, it must disclose a cause of action. The plaint should contain such cause of action that discloses all the necessary facts required in law to sustain the suit and not mere statements of fact which fail to disclose a legal right of the Plaintiff to sue and breach or violation by the Defendant(s). It is pertinent to note here that even if a right is found, unless there is a violation or breach of that right by the Defendant, the cause of action should be deemed to be unreal. This is where the substantive laws like Specific Relief Act, 1963, Contract Act, 1872, and Transfer of Property Act, 1882, come into operation. A pure question of law that can be decided at the early stage of litigation, ought to be decided at the earliest stage........." 8.5. A careful reading of the above provisions and decision makes it clear that rejection of a plaint under the grounds mentioned under Order VII Rule 11 is essentially determinable on the basis of the averments contained in the plaint. The plaint must disclose a cause of action; the relief claimed must be properly valued; requisite court fee must be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e circumstances and the prejudice likely to be caused to the other side are also to be considered. In matters relating to payment of court fee or filing of requisite copies, it is essentially a matter between the Court and the plaintiff, and ordinarily no prejudice would be caused to the opposite party. 8.8. In this regard, reference can be had to the decision in D.V. Paul v. Manisha Lalwani (2010) 8 SCC 546, wherein after analysing the various earlier judgments of this Court, it was held as follows: "26. Insofar as the first aspect is concerned Section 148 CPC, in our opinion, clearly reserves in favour of the court the power to enlarge the time required for doing an act prescribed or allowed by the Code of Civil Procedure. Section 148 of the Code may at this stage be extracted: "148. Enlargement of time.-Where any period is fixed or granted by the court for the doing of any act prescribed or allowed by this Code, the court may, in its discretion, from time to time, enlarge such period not exceeding thirty days in total, even though the period originally fixed or granted may have expired.". A plain reading of the above would show that when any period ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d) are stand-alone provisions. Yet, depending upon the facts of each case, they may also overlap. Similarly, if by clever drafting a fictional cause of action is created to veil a bar under law, it is imperative for the Court to reject the plaint. (B) ROLE OF THE COURT IN CONDUCTING SUITS AS CONTEMPLATED UNDER THE CPC 9. Let us now examine a few other provisions of the CPC to ascertain the role of the Court in dealing with suits. They are as follows: SECTION 26. Institution of Suits- (1) Every suit shall be instituted by the presentation of a plaint or in such other manner as may be prescribed. (2) In every plaint, facts shall be proved by affidavit. SECTION 27. Summons to Defendants- Where a suit has been duly instituted, a summons may be issued to the defendant to appear and answer the claim and may be served in manner prescribed on such day not beyond thirty days from the date of the institution of the suit. SECTION 35A. Compensatory costs in respect of false or vexatious claims or defences- (1) If in any suit or other proceedings including an execution proceedings but excluding an appeal or a revision any part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tain a direction accordingly: Provided that, in every suit heard by a Court of Small Causes, the summons shall be for the final disposal of the suit. By the Karnataka Amendment, with effect from 30.03.1967, Rule 5 of Order V was substituted with the following rule: 5. The Court shall determine, at the time of issuing the summons, whether it shall be - (1) for the settlement of issues only, or (2) for the defendant to appear and state whether he contests to or does not contest the claim and directing him if he contests to receive directions as to the date on which he has to file his written statement, the date of trial and other matters, and if he does not contest for final disposal of the suit at once; or (3) for the final disposal of the suit; and the summons shall contain a direction accordingly: Provided that in every suit heard by the Court of Small Causes, the summons shall be for final disposal of the suit. ORDER VI - PLEADINGS Rule 2 : Pleading to state material facts and not evidence- (1) Every pleading shall contain, and contain only, a statement in a concise form of the material f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....journed to a future day fixed by the Court. ORDER XIV - SETTLEMENT OF ISSUES AND DETERMINATION OF SUIT ON ISSUES OF LAW OR ON ISSUES AGREED UPON Rule 2 : Court to pronounce judgment on all issues.- (1) Notwithstanding that a case may be disposed of on a preliminary issue, the Court shall, subject to the provisions of sub-rule (2), pronounce judgment on all issues. (2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to- (a) the jurisdiction of the Court, or (b) a bar to the suit created by any law for the time being in force; and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue. 9.1. A careful reading of the above provisions would exemplify the following: Section 26 CPC stipulates that a suit shall be instituted by presenting a plaint. As per Section 27, where a suit has been duly instituted, summons ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plaint. It is not necessary for the trial Court to wait for the defendant to enter appearance and seek rejection of the plaint. Once the Court finds that the suit is frivolous, without jurisdiction, instituted without compliance with prerequisites, fails to disclose a real cause of action, suppresses material facts, or is barred by law but couched in clever drafting to create an illusion of a cause of action, it must reject the plaint with costs. [See T. Arivandandam v. T.V. Satyapal (supra)]. In this context, it would be useful to refer to the following judgments of this Court and the observations made therein: (i) Samar Singh v. Kedar Nath @ K.N. Singh and Others 1987 SCC OnLine SC 638 "7. ...Normally, when a suit is instituted, the Court is to satisfy itself that the suit is maintainable and it disclosed cause of action and only thereafter the Court may issue summons to the defendants but merely because the summons are issued, the defendants right to raise preliminary objection for rejection of the plaint on the ground that it disclosed no cause of action is not affected. If a plaint or an election petition does not disclose any cause of action, it does not sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Similarly, all material facts have to be stated in the plaint. Material facts are those facts which create a complete cause of action; those facts which directly bear upon the maintainability or sustainability of the suit; and those facts upon adjudication of which may bring an end to the lis. Any suppression of a material fact, which has the effect of creating an illusory cause of action and eclipsing the legal bar, ought to be dealt with firmly, and the plaint would be liable to be summarily rejected. It is also settled law that a person who has suppressed a material fact is not entitled to any relief. Suppression of a material fact within the knowledge of the party amounts to fraud upon the Court. The relevancy or otherwise of a fact is to be decided by the Court, and parties cannot contend that they omitted a material fact on the assumption that it was not relevant. It is not only the duty of the Court to summarily reject the claim of a party suppressing a material fact, but also to ensure that any benefit obtained by such party is undone and status quo ante restored in its fairness and equity. The consistent view of this Court, irrespective of whether it is a petition under Ar....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court in Samant N. Balkrishna v. George Fernandez [(1969) 3 SCC 238] and the distinction between "material facts" and "particulars" was brought out in the following terms: (SCC p. 250, para 29) "The word 'material' shows that the facts necessary to formulate a complete cause of action must be stated. Omission of a single material fact leads to an incomplete cause of action and the statement of claim becomes bad. The function of particulars is to present as full a picture of the cause of action with such further information in detail as to make the opposite party understand the case he will have to meet." Rule 11 of Order 7 lays down an independent remedy made available to the defendant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The law ostensibly does not contemplate at any stage when the objections can be raised, and also does not say in express terms about the filing of a written statement. Instead, the word "shall" is used, clearly implying thereby that it casts a duty on the court to perform its obligations in rejecting the plaint when the same is hit by any of the infirmities provided in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e will not listen to your application because of what you have done." The rule has been evolved in the larger public interest to deter unscrupulous litigants from abusing the process of court by deceiving it. .... 38. The above principles have been accepted in our legal system also. As per settled law, the party who invokes the extraordinary jurisdiction of this Court under Article 32 or of a High Court under Article 226 of the Constitution is supposed to be truthful, frank and open. He must disclose all material facts without any reservation even if they are against him. He cannot be allowed to play "hide and seek" or to "pick and choose" the facts he likes to disclose and to suppress (keep back) or not to disclose (conceal) other facts. The very basis of the writ jurisdiction rests in disclosure of true and complete (correct) facts. If material facts are suppressed or distorted, the very functioning of writ courts and exercise would become impossible. The petitioner must disclose all the facts having a bearing on the relief sought without any qualification. This is because "the court knows law but not facts". 39. If the primary object as highlighted in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ance of petitions being filed by different associations in order to discharge satisfactorily their responsibilities towards their respective members. We are not quite able to appreciate such necessity where there is no diversity but only a commonness of interest. All that they had to do was to join forces and demonstrate their unity by filing a petition in a single court. It seems the object here in filing different petitions in different courts was a totally different and not very laudable one." (emphasis supplied) 51. Yet in another case in Vijay Syal v. State of Punjab [(2003) 9 SCC 401 : 2003 SCC (L&S) 1112] this Court stated: (SCC p. 420, para 24) "24. In order to sustain and maintain the sanctity and solemnity of the proceedings in law courts it is necessary that parties should not make false or knowingly, inaccurate statements or misrepresentation and/or should not conceal material facts with a design to gain some advantage or benefit at the hands of the court, when a court is considered as a place where truth and justice are the solemn pursuits. If any party attempts to pollute such a place by adopting recourse to make misrepresentation and is con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acterises as misrepresentations of facts contained in the petition for special leave, the Supreme Court may come to the conclusion that in such a case special leave granted to the appellant ought to be revoked." ..... 5. In G. Narayanaswamy Reddy v. Govt. of Karnataka [(1991) 3 SCC 261 : AIR 1991 SC 1726] the Court denied relief to the appellant who had concealed the fact that the award was not made by the Land Acquisition Officer within the time specified in Section 11-A of the Land Acquisition Act because of the stay order passed by the High Court. While dismissing the special leave petition, the Court observed: (SCC p. 263, para 2) "2. ... Curiously enough, there is no reference in the special leave petitions to any of the stay orders and we came to know about these orders only when the respondents appeared in response to the notice and filed their counter-affidavit. In our view, the said interim orders have a direct bearing on the question raised and the non-disclosure of the same certainly amounts to suppression of material facts. On this ground alone, the special leave petitions are liable to be rejected. It is well settled in law that the relief un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n appropriate cases. In other words, the Constitution has not made the Supreme Court a regular court of appeal or a court of error. This Court only intervenes where justice, equity and good conscience require such intervention. .... 10. In K.D. Sharma v. SAIL [(2008) 12 SCC 481] the Court held that the jurisdiction of the Supreme Court under Article 32 and of the High Court under Article 226 of the Constitution is extraordinary, equitable and discretionary and it is imperative that the petitioner approaching the writ court must come with clean hands and put forward all the facts before the Court without concealing or suppressing anything and seek an appropriate relief. If there is no candid disclosure of relevant and material facts or the petitioner is guilty of misleading the Court, his petition may be dismissed at the threshold without considering the merits of the claim. The same rule was reiterated in G. Jayashree v. Bhagwandas S. Patel [(2009) 3 SCC 141]." (iv) Ram Kumar v. State of Uttar Pradesh and others (2023) 16 SCC 691 "28. This Court, in S.P. Chengalvaraya Naidu (Dead) By LRs. v. Jagannath (Dead) by LRs and others [(1994) 1 SCC 1 : JT....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... stage of the suit - before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial." The only restriction is that the consideration of the application for rejection should not be on the basis of the allegations made by the defendant in his written statement or on the basis of the allegations in the application for rejection of the plaint. The court has to consider only the plaint as a whole, and in case, the entire plaint comes under the situations covered by Order 7 Rules 11(a) to (f) CPC, the same has to be rejected. 5. Once an application is filed under Order 7 Rule 11 CPC, the court has to dispose of the same before proceeding with the trial. There is no point or sense in proceeding with the trial of the case, in case the plaint (election petition in the present case) is only to be rejected at the threshold. Therefore, the defendant is entitled to file the application for rejection before filing his written statement. In case the application is rejected, the defendant is entitled to file his written statement thereafter (see Saleem Bhai v. State of Maharashtra [(2003) 1 SCC 557]). But once an ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taken up first before proceeding with the suit, presupposing the legal position that the grounds raised therein are to be treated as preliminary objections. However, as held in R.K. Roja's case (supra), an application to reject the plaint cannot be used as a ruse to retrieve the lost opportunity to file the written statement, implying thereby that the right to seek rejection of the plaint must be exercised at the earliest stage, when the right to file the written statement subsists. The filing of an application to reject the plaint does not stop the clock for filing the written statement. If the defendant is set ex-parte, he cannot, as of right, participate further in the proceedings, unless he exercises his option to file a written statement along with an application to set aside the ex-parte order under Order IX Rule 7 CPC. It may be noted, that even when set ex-parte, the defendant does not forfeit his right to contest the plaintiff's case through cross-examination. The plaintiff must still prove his case in order to obtain a decree, even in the absence of the defendant. 10.2. On the other hand, a preliminary objection as to the jurisdiction of the trial Court or the maintain....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ostpone settlement of other issues and dispose of the suit in accordance with the decision on limitation. The following paragraphs are relevant: "16. Now, we will consider the first question: 'whether the issue of limitation can be determined as a preliminary issue under Order XIV, Rule 2, CPC'. It is no longer res integra. In the decision in Mongin Realty and Build Well Private Limited v. Manik Sethi [2022 SCC OnLine SC 156], even while holding that the course of action followed by the learned Trial Judge of directing the parties to address arguments on the issue of limitation as irregular since it being a case where adduction of evidence was required, a two-Judge Bench of this Court referred to a three-Judge Bench decision of this Court in Nusli Neville Wadia v. Ivory Properties observing that the issue therein was whether the issue of limitation could be determined as a preliminary issue under Order XIV, Rule 2, CPC. After taking note of the fact that going by the decision in Nusli Neville Wadia's case, in a case where question of limitation could be decided based on admitted facts it could be decided as a preliminary issue under Order XIV, Rule 2(2)(b), CPC., the t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of limitation and in accordance with the decision on that preliminary issue the suit was dismissed. As held by the three-judge Bench in the decision in Nusli Neville Wadia's case (supra) the provisions under Order XIV Rule 2(1) and Rule 2(2)(b) permit to deal with and dispose of a suit in accordance with the decision on the preliminary issue. In the case on hand in view of the nature of the finding on the preliminary issue and the consequential consideration of the suit in terms of Order XIV Rule 2(2)(b) and taking note of the fact that the suit do not survive after such consideration we find no reason to consider the contention of the appellants with reference to Order VII Rule 11 based on the decisions relied on by them and referred hereinbefore. So also, the contentions of the appellants based on Articles 17 and 65 also would pale into insignificance and warrant no consideration at all, in the circumstances." 10.5. A conjoint reading of Order VII Rule 11 and Order XIV Rule 2 CPC would show that both provisions enable the Court to examine the maintainability of a suit at the earliest possible stage, though they operate in distinct procedural spheres. Order VII Rule 11 is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the suit property. A separate suit in O.S No. 103 of 2007 had already been filed by the auction purchaser, which was decreed on 26.02.2009 and affirmed by the High Court thereafter on 11.08.2017. The purchaser from the Corporation filed an application under Order VII Rule 11 seeking rejection of the plaint. The said application was dismissed by the trial Court. The order was affirmed in revision by the High Court on the ground that the plea of res judicata could not be decided merely by looking at the averments in the plaint. This Court held that a plea of res judicata ordinarily requires examination of the pleadings, issues, and decision in the previous suit, and would therefore, generally travel beyond the scope of Order VII Rule 11 CPC. Nevertheless, liberty was granted to raise the question of maintainability before the trial Court, which was directed to consider whether a preliminary issue under Order XIV Rule 2 CPC should be framed and decided expeditiously. The operative portion is extracted below for better appreciation: "28. For the above reasons, we hold that the plaint was not liable to be rejected under Order 7 Rule 11(d) and affirm the findings of the trial c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the transaction between the Plaintiff and K. Raghunath is a benami transaction barred under the provisions of the Benami Act; that the Will dated 20.04.2018 is a forged document; and further that there is a bar under Section 25 of the Hindu Succession Act, 1956 since K. Raghunath was allegedly murdered by the Plaintiff, who has been arrayed as an accused in the criminal case. 11.2. On the other hand, the Respondent / Plaintiff contended that the suit is founded solely on the Will; that while considering an application for rejection of plaint, only the averments in the plaint are to be examined; that there existed a fiduciary relationship between him and K. Raghunath who was employed in the company of the Plaintiff's father, and therefore the transaction cannot be termed benami; that no transfer of property takes place under a Will; and that each of the grounds raised cannot be summarily decided, but can be adjudicated only at trial. (D1) THE PROHIBITION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988 12. Before proceeding to analyse the facts of the case and juxtapose them with the legal position, we deem it necessary to ascertain the history, object, provisions and applicab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isions expressly employed the term "benami", nor were they sufficiently deterrent to prevent such transactions. 13.3. The 57th Report of the Law Commission of India dated August 1973 also did not treat benami transactions as inherently illegal. Instead, it recognised that such transactions were generally legal, except in specified situations, and considered several alternatives for reform. Ultimately, the Commission preferred the second alternative, namely, refusal of the law to recognise the benami character of transactions rather than criminalising them. It recommended that where property is transferred benami, the benamidar should be treated as the real owner, thereby abolishing judicial recognition of benami claims. The Commission further observed that this would be the simplest and most effective course and that the doctrine of benami would, under such reform, cease to form part of Indian law. The relevant paragraphs of the Report of the Law Commission are usefully extracted below: "5.2. Summary of present position - in general - A few basis points concerning benami transactions may be stated, as follows: (a) Benami transfer or transaction means the transf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erred to above, namely, the imposition of a criminal prohibition against benami transactions, is the most drastic alternative, but it is not likely to be more effective than the others. A prohibition backed by criminal sanctions would not, moreover, be desirable, unless the mens rea is also included in the provision to be enacted. If this alternative is to be adopted, a provision could be enacted on the following lines:- "Where property is transferred to one person for a consideration paid or provided by another person, and it appears that such person did not intend to pay or provide such consideration for the benefit of the transferee, the person paying or providing the consideration shall be guilty of an offence punishable with imprisonment upto three years, or with fine, or both. Provided that this section shall not apply where the transferee is a co-parcener in a Hindu undivided family in which such other person is also a co-parcener, and it is proved that such other person intended to pay or provide such consideration for the benefit of the co-parceners in the family. Exception-Nothing in this section shall be deemed to affect section 66 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d alternative. The law should refuse to recognise the Benami character of transactions, without making them an offence. The law should, in effect, provide that where property is transferred benami, the benamidar will become the real owner. The result of such a provision will be that the fact that the benamidar did not provide the consideration, or that the consideration was provided by a third person, will not be a ground for recognising a person other than the benamidar as owner. To put the matter in broad terms, the doctrine of benami will, under the proposed amendment, cease to be a part of the Indian law. It may be observed that in enacting the proposed provision, the legislature will carry, to its logical conclusion, the trend illustrated by provisions, such as, section 66 of the Code of Civil Procedure. The section in the Code is applicable to involuntary alienations, while the proposed provision will extend the same principle to voluntary transfers as well. We think that this will be the simplest and most effective course, and is, therefore, preferable to others. The amendment will bring out a change in the legal position in some of the situations ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d reply of the Minister of Law and Justice and the Minister of Water Resources on 1 September, 1988 "That the Bill to prohibit benami transactions and the right to recover property held benami and for matters connected therewith or incidental thereto, be taken into consideration. As the House is aware, the President promulgated the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988, on 19th May 1988. The Bill seeks to implement the recommendations of the Law Commission contained in its 57th report. Although the Government has taken some time to implement the recommendations of the Law Commission, the Government felt that this was the most opportune time for bringing out such a legislation. The Ordinance evoked mixed response from the press, public and the Bar. While some sections congratulated the Government on making a beginning in the law of benami transactions, there was some criticism that the Ordinance had not gone very far to achieve the object, that is to say, prevention of proliferation of black money. There was also criticism that the Ordinance was not and touched many of the important aspects of benami transactions. It was....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... commencement of the Ordinance for no consideration thus resulting in circumventing the provisions of the law. The Law Commission has, however, made two more recommendations, to check the entering into of benami transactions by authorising voluntary agencies to file complaints before tribunals designated for the purpose and to appoint an authority like the Charity Commissioner for supervising private trusts. It is proposed to accept all the recommendation of the Law Commission. The Bill, apart from including the provisions of the Ordinance, includes the recommendations of the Law Commission for prohibiting the benami transactions and for providing for acquisition of properties held benami. The only exception to the entering into of benami transactions is the purchase of a property by the father or the husband for the benefit of an unmarried daughter or wife, And a presumption has also been included that in respect of such transactions, it should be presumed that the transactions had been entered into for the benefit of the unmarried daughter or wife. As mentioned by the Law Commission and in the Statement of Objects and Reasons attached to the Bill, the doctrine of acquisition as p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l agree, this Bill attempts to provide for a comprehensive law on Benami and it has touched all aspects. We also feel that this will be very effective in achieving the objective of preventing benami transactions. Much of the criticisms levelled against the ordinance will be met by the provisions of the Bill and the intention of the Government cannot be doubted. Further, we have brought forward this Bill after a detailed examination by an expert authority like the Law Commission and I am sure that the Bill will go a long way in achieving the objective and will have the unanimous approval of all sections of the House. .... Mr. Vice-Chairman, I need not tell the House as to who indulge in these benami transactions, why they indulge in benami transactions and how they indulge in benami transactions. I need not the Honorable House that it is the man who earns and enriches himself to such an extent with all the black deeds and black deals which are reprehensible in the society and it is he who tries to invest such money at the cost of the nation and the entire society loses, the entire country loses. He defeats the various laws that control property dealings in this cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1) To implement the recommendations of the Fifty-seventh Report of the Law Commission on Benami Transactions, the President promulgated the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988, on the 19th May, 1988. (2) The Ordinance provided that no suit, claim or action to enforce any right in respect of any property held benami shall lie and no defence based on any right in respect of any property held benami shall be allowed in any suit, claim or action. It, however, made two exceptions regarding property held by a coparcener in a Hindu undivided family for the benefit of the Coparceners and property held by a trustee or other person standing in a fiduciary capacity for the benefit of another person. It also repealed section 82 of the Indian Trusts Act, 1882, section 66 of the Code of Civil Procedure and section 281A of the Income-tax Act, 1961. (3) The provisions of the Ordinance received a mixed response from the press and the public. There had been criticism also that the Ordinance was a half-hearted measure and had not tackled the problem effectively and completely. It was, therefore, felt that the Bill to replace the Ordinan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before Tribunals and the appointment of an authority, like the Charity Commissioner, for supervising private trusts, may be specifically provided in the Bill, and the other two recommendations would, it is felt, come into effect automatically as a result of the prohibition of benami transactions and the provision for acquisition of all properties held benami. The Bill accordingly provides for the following, among other things. namely- (a) entering into benami transactions after the commencement of the new law will be an offence, with an exception for the transfer of properties by the husband or father for the benefit of the wife or unmarried daughters; (b) all the properties held benami will be subject to acquisition by such authority, in such mariner and after following such procedure, as may be prescribed by rules under the proposed legislation. As a result of the provisions of the Ordinance and the prohibition of entering into benami transactions, the benamidar would be acquiring the rights to the property by the mere lending of his name and without investing any money for the purchase of such property. Accordingly, it is provided that no amount shall be payabl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nership, laundering unaccounted wealth, and defeating fiscal or social welfare laws. 14.5. The Bill was thereafter passed, and the Benami Transactions (Prohibition) Act, 1988 came into force on 19.05.1988, except Sections 3, 5 and 8, which came into force on 05.09.1988. As already stated, the object of the Act as discernible from its Preamble, was to prohibit benami transactions and the right to recover the property held in benami. Provisions of the Benami Act, 1988 15. The Act originally contained nine sections. Section 2(a) defined a "benami transaction" to mean any transaction in which property is transferred to one person for a consideration paid or provided by another person. Section 2(c) defined "property" to mean property of any kind, whether movable or immovable, tangible or intangible, and included any right or interest in such property. 15.1. Section 3(1) provided that no person shall enter into any benami transaction. Sub-section (2) carved out exceptions by excluding purchases made by a person in the name of his wife or unmarried daughter, in which case it would be presumed that the property had been purchased for their benefit. It also excluded securities h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y, whether the property was intended to be held for himself or to be conveyed to the person who funded the consideration, or to another nominated person at a later stage. The Act, in effect, extinguished the right of the real owner to recover the property from the person in whose name it stood. Scope of the Benami Act 16. Reference may be made to the judgment in Mithilesh Kumari and another v. Prem Behari Khare (1989) 2 SCC 95, wherein this Court considered the scope of the provisions of the Benami Act. The following paragraphs are pertinent: "22. As defined in Section 2(a) of the Act "'benami transaction' means any transaction in which property is transferred to one person for a consideration paid or provided by another person". A transaction must, therefore, be benami irrespective of its date or duration. Section 3, subject to the exceptions, states that no person shall enter into any benami transaction. This section obviously cannot have retrospective operation. However, Section 4 clearly provides that no suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other pers....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 23. When the law nullifies the defences available to the real owner in recovering the benami property from the benamidar the law must apply irrespective of the time of the benami transactions. The expression "shall lie" in Section 4(1) and "shall be allowed" in Section 4(2) are prospective and shall apply to present (future stages) and future suits, claims or actions only. .." 16.1. The above judgment was partially overruled by this Court in R. Rajagopal Reddy (Dead) by LRs and others v. Padmini Chandrasekharan (Dead) by LRs (1995) 2 SCC 630 with respect to retrospective applicability of the provision and it was held as under: "11. ... Thus it was enacted to efface the then existing right of the real owners of properties held by others benami. Such an Act was not given any retrospective effect by the legislature. Even when we come to Section 4, it is easy to visualise that sub-section (1) of Section 4 states that no suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other shall lie by or on behalf of a person claiming to be the real owner of such property. As per Secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and hence after Section 4(1) applied no suit can lie in respect to such a past benami transaction. To that extent the section may be retroactive. To highlight this aspect we may take an illustration. If a benami transaction has taken place in 1980 and a suit is filed in June 1988 by the plaintiff claiming that he is the real owner of the property and defendant is merely a benamidar and the consideration has flown from him, then such a suit would not lie on account of the provisions of Section 4(1). Bar against filing, entertaining and admission of such suits would have become operative by June 1988 and to that extent Section 4(1) would take in its sweep even past benami transactions which are sought to be litigated upon after coming into force of the prohibitory provision of Section 4(1); but that is the only effect of the retroactivity of Section 4(1) and nothing more than that. From the conclusion that Section 4(1) shall apply even to past benami transactions to the aforesaid extent, the next step taken by the Division Bench that therefore, the then existing rights got destroyed and even though suits by real owners were filed prior to coming into operation of Section 4(1) they wo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the relevant time when such defence was allowed Section 4(2) was out of the picture. Section 4(2) nowhere uses the words: "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 to be raised or continued to be raised in any suit." With respect, it was wrongly assumed by the Division Bench that such an already allowed defence in a pending suit would also get destroyed after coming into operation of Section 4(2)... 13. According to us this difficulty is inbuilt in Section 4(2) and does not provide the rationale to hold that this section applies retrospectively. The legislature itself thought it fit to do so and there is no challenge to the vires on the ground of violation of Article 14 of the Constitution. It is not open to us to rewrite the section also. Even otherwise, in the operation of Section 4(1) and (2), no discrimination can be said to have been made amongst different real owners of property, as tried to be pointed out in the written objections. In fact, those cases in which suits are filed by real owners or defences are allowed prior to coming ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bject of Parliament in bringing about the amendment, but also the clear intent to cure the existing deficiencies by enabling action in respect of benami transactions undertaken prior to the amendment. The relevant paragraphs are extracted below for ready reference: "Sir, I would like to say just a few words of introduction to explain the Bill. The original Act was passed in the year 1988, and when it was passed in the year 1988, in substance, the Act was that if a person pays for a particular property, and the property is held in some other person's name, it shall be deemed to be a benami property. There is a prohibition. The property can get confiscated by the State Government, and further, there would be a penal provision for that. Now, this Bill comprises nine Sections. Under this Bill, rules have to be framed as to the manner to the confiscation, for confiscation, compensation was payable or not payable, how it had to be operated, the competent authority that would undertake these functions, the appeal provisions under the Act, so that the power could be exercised in a reasonable manner. Now, when the matter went to the Law Ministry, the Law Ministry was o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ney; in Delhi, for instance, this practice is prevalent. These properties are effectively transferred to some other persons and possession also is given and the possession is protected under Section 53(A) of the Transfer of Property Act. Therefore, it should not apply to these transactions because there would be lakhs and lakhs of transactions of this kind. The Government has accepted that suggestion. There is one more suggestion, that the Standing Committee had made, which is related to known sources of income. That is the phrase used in the original Act itself; in the Amendments that we have proposed, whatever you buy must be from your known sources of income. Now, the Standing Committee felt that the words 'of income' itself are superfluous because there could be cases where somebody has purchased a property not from his income but by taking a loan from a bank or by some other family member contributing to it. And, therefore, the words itself should be, 'known sources' and not 'known sources of income'. We have accepted those suggestions and with these amendments, the Bill has already been approved by the Lok Sabha. I commend it....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership; (D) a transaction or an arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious." (10) "benamidar" means a person or a fictitious person, as the case may be, in whose name the benami property is transferred or held and includes a person who lends his name;" (12) "beneficial owner" means a person, whether his identity is known or not, for whose benefit the benami property is held by a benamidar;" (26) "property" means assets of any kind, whether movable or immovable, tangible or intangible, corporeal or incorporeal and includes any right or interest or legal documents or instruments evidencing title to or interest in the property and where the property is capable of conversion into some other form, then the property in the converted form and also includes the proceeds from the property; (29) "transfer" includes sale, purchase or any other form of transfer of right, title, possession or lien; 3. Prohibition of benami t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the prohibition. It no longer confined itself merely to the property directly involved in a benami transaction, but also extended to assets or properties derived from the income or proceeds of such property. Section 3 categorises consequences based on the date of transaction. Benami transactions entered into during the period from 05.09.1988 to 31.10.2016 fell under Section 3(2), whereas transactions entered into after commencement of the 2016 amendment are governed by Section 3(3) read with Chapter VII. 18.3. Section 4 substantially continued in force, though the earlier exceptions under Section 4(3) were relocated into the definitional structure under Section 2(9). Thus, the bar against asserting claims or defences based on benami ownership continued even after the amendment. Section 5 reaffirmed that any property forming the subject matter of a benami transaction is liable to confiscation by the Central Government. Section 6 introduced a fresh prohibition against re-transfer of property by the benamidar. 18.4. Most significantly, Chapter IV introduced a complete machinery for attachment, adjudication and confiscation, while Chapter VII created a separate code dealing w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he authorities specified in Section 18 to call for information from any person responsible for maintaining books of account or records relating to transactions concerning any property, or from any other person whose information may be useful or relevant for the purposes of the Act. Such person is under a statutory obligation to furnish the information sought. 19.2. Section 22 authorises the authority to impound documents where it has reason to believe that such documents are required for inquiry under the Act. The documents may be retained for a period not exceeding three months from the date of the order of attachment made by the Adjudicating Authority under Section 26(3). The proviso permits further retention for reasons to be recorded in writing. The succeeding sub-sections require approval of the Approving Authority for extension of retention, prescribe that retention shall not exceed thirty days from conclusion of all proceedings, entitle the person concerned to obtain copies, and mandate return of the retained material upon expiry of the prescribed period unless release to another person is permitted by the competent authority. 19.3. Though Section 23 empowers the Initi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tice and provides that notice under Section 24(1) may be served by post or in the same manner as summons issued under the Code of Civil Procedure, 1908. 19.5. Section 26 concerns adjudication of benami property. Notice is to be issued to the beneficial owner, interested parties, and any person claiming rights in the property. The Adjudicating Authority, after considering replies, relevant materials, and after granting personal hearing to the parties as well as the Initiating Officer, shall pass an order either holding the property to be benami or otherwise, thereby confirming or revoking the attachment under Section 26(3). Sub-section (5) empowers the Adjudicating Authority to provisionally attach another property if, during proceedings, it has reason to believe that such property is also benami, and such action is deemed part of the original reference. The order under Section 26(3) is required to be passed within one year from the end of the month in which the reference under Section 24(5) was made. 19.6. Once an order under Section 26(3) declares the property to be benami, the Adjudicating Authority may, after affording opportunity of hearing, order confiscation of the prop....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay condone delay on sufficient cause being shown. Sub-section (1A) permits an aggrieved person to appeal against an order under Section 54A as well. Sub-section (4) vests the Tribunal with all powers of the Adjudicating Authority. 19.10. Section 49 provides for appeal to the High Court against an order of the Appellate Tribunal on any question of law arising therefrom within sixty days. Sub-section (8) states that provisions of the Code of Civil Procedure, 1908 relating to appeals to the High Court shall, as far as may be, apply. This indicates that the High Court exercises civil appellate jurisdiction in such matters. These provisions once again demonstrate that proceedings relating to attachment, adjudication and confiscation are civil in nature and cannot be equated with prosecution so as to attract Article 20(2) of the Constitution of India. The entire process from issuance of notice, provisional attachment, adjudication, confiscation, appeal to the Tribunal, and further appeal to the High Court, is a statutory civil action addressing a civil wrong, the proof of which is to be tested on the principle of preponderance of probabilities. Offences and Prosecution under the Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... he is entitled to release a person on bail, and for that purpose has the same powers and is subject to the same provisions as the officer-in-charge of a police station is. But these additional powers with which the Customs Officer is invested under the Act of 1962 do not, in our judgment, make him a police officer within the meaning of Section 25 of the Evidence Act. He is, it is true, invested with the powers of an officer-in-charge of a police station for the purpose of re leasing any person on bail or otherwise. The expression "or otherwise" does not confer upon him the power to lodge a report before a Magistrate under Section 173 of the Code of Criminal Procedure. Power to grant bail, power to collect evidence, and power to search premises or conveyances without recourse to a Magistrate, do not make him an officer-in-charge of a police station, Proceedings taken by him are for the purpose of holding an enquiry into suspected cases of smuggling. His orders are appeal able and are subject also to the revisional jurisdiction of the Central Board of Revenue and may be carried to the Central Government. Powers are conferred upon him primarily for collection of duty and prevention o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cused of an offence under Section 135." 20.3. Likewise, in Illias v. Collector of Customs, Madras 1968 SCC OnLine SC 117 : AIR 1970 SC 1065, it was reiterated that even if an officer under a special statute possesses several powers analogous to those of the police, he is not a police officer for purposes of Section 25 of the Evidence Act unless empowered to file a charge-sheet under Section 173 Cr.P.C. The following observation is pertinent: "12. Adverting to Raja Ram Jaiswal's case [Raja Ram Jaiswal v. State of Bihar, (1964) 2 SCR 752] it is significant that by virtue of Section 77(2) read with Section 78(3) of the Bihar & Orissa Excise Act, 1915, an Inspector or Sub Inspector was deemed to be an officer-in-charge of a police station and was entitled to investigate any offence under the Excise Act. He could exercise all the powers which an officer-in-charge of a police station could exercise under Chapter XIV of the Code. It was, therefore, held by the majority that a confession recorded by an Excise Officer during an investigation into an excise offence could not reasonably be regarded as anything different from a confession to a police officer. Barkat Ram's c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ustoms and Excise was admissible in evidence. The contention raised was that the Central Excise Officer under the Central Excises & Salt Act (Act 1 of 1944), hereinafter called the "Central Excise Act", was a police officer within the meaning of those words in Section 25 of the Evidence Act. Therefore even though the Deputy Superintendent of Customs and Central Excise had acted under the power conferred on him by the Sea Customs Act, he was still a police officer and the statement made to him which was in the nature of a confession was inadmissible in evidence. This Court referred to the difference of opinion among the High Courts as to the meaning of the words "police officer" used in Section 25 of the Evidence Act. One view was that those words must be construed in a broad way and all officers would be police officers within the meaning of those words if they had powers of the police officer with respect to investigating of offences with which they were concerned even if they were police officers properly so called or not. The narrow view was that these words in Section 25 meant a police officer properly so called and did not include officers of other departments of Government wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fficer-in-charge of a police station exercises when investigating a cognizable offence he does not thereby become a police officer within the meaning of Section 25 of the Evidence Act unless he is empowered to file a charge sheet under Section 173 of the Code of Criminal Procedure. 15. Learned counsel for the appellant when faced with the above difficulty has gone to the extent of suggesting that by necessary implication the power to file a charge sheet flows from some of the powers which have already been discussed under the new Act and that a customs officer is entitled to exercise even this power. It is difficult and indeed it would be contrary to all rules of interpretation to spell out any such special power from any of the provisions contained in the new Act. In this view of the matter even though under the new Act a customs officer has been invested with many powers which were not to be found in the provisions of the old Act, he cannot be regarded as a police officer within the meaning of Section 25 of the Evidence Act. In two recent decisions of this Court in which the judgments were delivered only on October 18, 1968 i.e. Ramesh Chandra Mehta v. State of West Beng....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not less than six months, extendable up to five years, along with fine which may extend to ten per cent of the fair market value of the property, against any person who knowingly furnishes false information or false documents in any proceeding under the Act. Section 55 mandates previous sanction of the competent authority before prosecution can be instituted under Sections 3, 53 or 54. The competent authorities are specified in the Explanation thereto. Section 55A grants immunity from prosecution to persons referred to in Section 53, other than the beneficial owner, in appropriate circumstances. Thus, under the Scheme of the Act, only three provisions namely, Sections 3, 53, and 54, deal with prosecution. Section 3, as already noticed, imposes a general prohibition and also renders the prohibited transaction punishable. The statutory design is such that the effect of a benami transaction is nullified through confiscation of the property by civil action, while criminal punishment follows only where the requisite mental element is established. 20.6. The grounds for prosecution are materially wider and qualitatively distinct from the standard required to determine whether a transa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st be at least a prima facie determination that the dispute concerns a benami transaction. It is at this stage that the principles underlying Order VII Rule 11 and Order XIV Rule 2 CPC may assume relevance. Independent nature of Confiscation and Prosecution under the Benami Law 21. Further, both before and after the amendment, the Act contemplates two distinct deterrent measures to prohibit benami transactions, namely, confiscation and punishment. Confiscation is a civil action directed against the property itself and not against the individuals participating in the benami transaction. Personal action against such individuals is by way of prosecution contemplated under Chapter VII. The consequence of adjudication and confiscation is that the property vests in the Central Government, as the rights of both the benamidar and the beneficial owner stand extinguished. Such action is in the nature of forfeiture of property, which is a civil consequence flowing from violation of the statute with recovery as its object. Penal action imposing punishment stands on a different footing. The burden of proof and presumptions applicable to the two proceedings are independent, and one does no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder Section 236 or for which he might have been convicted under Section 237. It has been repeatedly held by this Court that adjudication before a Collector of Customs is not a "prosecution" nor the Collector of Customs a "Court". In Maqbool Hussain v. The State of Bombay, MANU/SC/0062/1953 : 1983ECR1598D(SC) this Court held that the wording of Article 20 of the Constitution and the words used therein show that the proceedings therein contemplated are proceedings of the nature of criminal proceedings before a court of law or a judicial tribunal and "prosecution" in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which creates the offence and regulates the procedure. This Court further held that where a person against whom proceedings had been taken by the Sea Customs authorities under Section 167 of the Sea Customs Act and an order for confiscation of goods had been passed, was subsequently prosecuted before a criminal court for an offence under Section 23 of the Foreign Exchange Regulation Act in respect of the same act, the proceeding befor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act, the Magistrate could not have any jurisdiction to pass an order under Section 457 of the Code for the disposal of such property. A discordant note was, however, struck by a Division Bench consisting of Sambasiva Rao, C.J. and Raghuvir, J. in Smt. Haji Begum v. State of Andhra Pradesh and Ors. (1978) 2 A.P.L.J. 191. The learned Judges held that the power of the Authorized officer to direct confiscation under Sub-section (2A) of Section 44 of the Act and that of the Magistrate under Section 45 were mutually exclusive and, therefore, there could not be simultaneous proceedings for confiscation before the Authorized Officer under Sub-section (2A) of Section 44 and also the trial of the accused for commission of a forest offence under Section 20 or 29 of the Act. Their conclusion was based on the use of the words 'either' and 'or' in Sub-section (2) of Section 44 of the Act and they held that the Forest Department had an option to adopt either of the two courses. The judgment of the High Court in Sot. Haji Begum's case was clearly wrong and was reversed by this Court in State of Andhra Pradesh v. Smt. Haji Began (supra), where it was observed: "In our o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd Others v. Kallo Bai (2017) 14 SCC 502, while construing confiscation provisions under the M.P Van Upaj (Vyapar Viniyaman) Adhiniyam, this Court held as follows: "22. In view of the foregoing discussions, it is apparent that Section 15 gives independent power to the concerned authority to confiscate the articles, as mentioned there under, even before the guilt is completely established. This power can be exercised by the concerned officer if he is satisfied that the said objects were utilized during the commission of a forest offence. A protection is provided for the owners of the vehicles/articles, if they are able to prove that they took all reasonable care and precautions as envisaged under Sub-section (5) of Section 15 of the Adhiniyam and the said offence was committed without their knowledge or connivance. 23. Criminal prosecution is distinct from confiscation proceedings. The two proceedings are different and parallel, each having a distinct purpose. The object of confiscation proceeding is to enable speedy and effective adjudication with regard to confiscation of the produce and the means used for committing the offence while the object of the prosecutio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Dealcom Private Limited (2023) 3 SCC 315 to contend that the erstwhile provisions under Sections 3(2) and 5 of the Benami Act, stood struck down, and that the 2016 amendment must therefore operate prospectively. However, the judgment dated 23.08.2022 was subsequently recalled in Review Petition (Civil) No 359 of 2023 in Civil Appeal No. 5783 of 2022 vide order dated 18.10.2024, on the ground that the constitutional validity of those provisions had never been specifically challenged. The Court held that no declaration of invalidity could have been made in the absence of a proper lis and contest on constitutionality. Consequently, the earlier judgment was recalled and the appeal restored for adjudication. The relevant passage of the order dated 18.10.2024 is extracted below for ready reference: "4. The Court has declared Section 3(2) of the unamended provisions of the Prohibition of Benami Property Transactions Act, 1988 as unconstitutional for being manifestly arbitrary and as violative of Article 20(1) of the Constitution. The provisions of Section 5 of the unamended Act, prior to the Amendment of 2016, have been declared to be unconstitutional on the ground that they are ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iginal enactment, which had failed to curb benami transactions in the manner expected, and effective steps could not be taken for want of adequate procedural provisions. 22.1. It is also noteworthy that certain provisions under the unamended Act were omitted and substituted by new provisions, while several fresh provisions were inserted prescribing the procedure to be followed before confiscation of property and establishing mechanisms of appeal against orders declaring property as benami. At the same time, the foundational provisions prohibiting benami transactions, rendering them offences, extinguishing the right to enforce or defend claims based on benami arrangements, enabling confiscation of benami property, and prohibiting re-transfer, continued substantially in force. 22.2. Ordinarily, every statute is presumed to be prospective unless the statute itself expressly or by necessary implication provides otherwise. Equally, it is well settled that the mere fact that a law is brought into force from a particular date does not necessarily mean that it operates only prospectively. To determine the true temporal operation of a statute, the object of the enactment must be consi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico." 22.5. The Constitution Bench in Shyam Sunder and others v. Ram Kumar and another (2001) 8 SCC 24 held that where an enactment declares or explains the previous law, such declaratory legislation ordinarily operates retrospectively, since its purpose is to remove omissions or clarify the earlier statute. The following paragraph is apposite: (SCC p. 49, para 39) "39.... Ordinarily when an enactment declares the previous law, it requires to be given retroactive effect. The function of a declaratory statute is to supply an omission or to explain a previous statute and when such an Act is passed, it comes into effect when the previous enactment was passed. The legislative power to enact law includes the power to declare what was the previous law and when such a declaratory Act is passed, invariably it has been held to be retrospective. Mere absence of use of the word "declaration" in an Act explaining what was the law before may not appear to be a declaratory Act but if the court finds an Act as declaratory or explanatory, it has to be construe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not to be presumed and rather there is presumption against retrospectivity, according to Craies (Statute Law, 7th Edn.), it is open for the legislature to enact laws having retrospective operation. This can be achieved by express enactment or by necessary implication from the language employed. If it is a necessary implication from the language employed that the legislature intended a particular section to have a retrospective operation, the courts will give it such an operation. In the absence of a retrospective operation having been expressly given, the courts may be called upon to construe the provisions and answer the question whether the legislature had sufficiently expressed that intention giving the statute retrospectivity. Four factors are suggested as relevant: (i) general scope and purview of the statute; (ii) the remedy sought to be applied; (iii) the former state of the law; and (iv) what it was the legislature contemplated. (p. 388) The rule against retrospectivity does not extend to protect from the effect of a repeal, a privilege which did not amount to accrued right. (p. 392) 16. Where a statute is passed for the purpos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....intent to give retrospectivity to an enactment. Every legislation whether prospective or retrospective has to be subjected to the question of legislative competence. The retrospectivity is liable to be decided on a few touchstones such as: (i) the words used must expressly provide or clearly imply retrospective operation; (ii) the retrospectivity must be reasonable and not excessive or harsh, otherwise it runs the risk of being struck down as unconstitutional; (iii) where the legislation is introduced to overcome a judicial decision, the power cannot be used to subvert the decision without removing the statutory basis of the decision. There is no fixed formula for the expression of legislative intent to give retrospectivity to an enactment. A validating clause coupled with a substantive statutory change is only one of the methods to leave actions unsustainable under the unamended statute, undisturbed. Consequently, the absence of a validating clause would not by itself affect the retrospective operation of the statutory provision, if such retrospectivity is otherwise apparent." 22.7. In Commissioner of Income Tax I, Ahmedabad v. Gold Coin Health Food P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ia v. Workmen [Central Bank of India v. Workmen, MANU/SC/0142/1959 : AIR 1960 SC 12, p. 27, para 29]):"For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a Preamble, and also the word "declared" as well as the word "enacted"." But the use of the words "it is declared" is not conclusive that the Act is declaratory for these words may, at times, be used to introduced new rules of law and the Act in the latter case will only be amending the law and will not necessarily be retrospective. In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is "to explain" an earlier Act, it would be without object unless construed retrospective. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e [MANU/ENRP/0018/1584 : (1584) 3 Co Rep 7a: 76 ER 637] which has now attained the status of a classic (Kanai Lal Sur v. Paramnidhi Sadhukhan [MANU/SC/0097/1957 : AIR 1957 SC 907]). The rule which is also known as "purposive construction" or "mischief rule" (Anderton v. Ryan [MANU/UKHL/0021/1985 : 1985 AC 560: (1985) 2 WLR 968: (1985) 2 All ER 355 (HL)]), enables consideration of four matters in construing an Act: (i) What was the law before the making of the Act; (ii) What was the mischief or defect for which the law did not provide; (iii) What is the remedy that the Act has provided; and (iv) What is the reason of the remedy. The rule then directs that the courts must adopt that construction which "shall suppress the mischief and advance the remedy". The rule was explained in Bengal Immunity Co. Ltd. v. State of Bihar [MANU/SC/0083/1955 :AIR 1955 SC 661] by S.R. Das, C.J...." 22.10. In State Bank of India v. V. Ramakrishnan and another (2018) 17 SCC 394: (2019) 2 SCC (Civ) 458, this court held that where an amendment is intended to clarify and set at rest an overbroad interpretation of an earlier provision, such amendment is clarificatory an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess and avoid arbitrary action before confiscation. Unless the amendment is given retroactive operation, the very object of making the legislation workable would be defeated. 22.14. The appellate remedies introduced are beneficial safeguards providing checks against arbitrary exercise of power, and beneficial procedural provisions ordinarily operate retrospectively. So far as penal consequences are concerned, enhanced punishment cannot be retrospectively imposed; however, the machinery provisions enabling adjudication, confiscation and enforcement, being curative and procedural, can apply retrospectively. 22.15. Accordingly, we hold that the 2016 amendments, insofar as they are declaratory, procedural, curative and machinery-oriented, operate retrospectively / retroactively, while penal provisions creating new offences or enhancing punishment can operate only prospectively. (F) "FIDUCIARY CAPACITY" UNDER THE AMENDED ACT 23. Before proceeding to the facts, another aspect that requires consideration is the scope of the exception contained in Section 4(3) of the unamended Act viz-a-vis Section 2(9) of the Act post-amendment. Section 4(3) as it stood prior to amendment, exe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....use of the word 'include' in interpretation clauses to extend the meaning of words and phrases occurring in the body of the statute, Mr. Patel submits that the Explanation, when it says that potteries industry 'includes' the nine named objects, what is meant is that it includes not only these objects but other articles of pottery as well. It is true that 'includes' is generally used as a word of extension, but the meaning of a word or phrase is extended when it is said to include things that would not properly fall within its ordinary connotation. We may refer to the often-quoted observation of Lord Watson in Dilworth v. Commissioner of Stamps (1899) A.C. 105, that when the word 'include' is used in interpretation clauses to enlarge the meaning of words or phrases in the statute "these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include". Thus where 'includes' has an extending force it adds to the word or phrase a meaning which does not naturally belong to it. It is difficult t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s follows : Employment in any tobacco processing establishment, not covered under entry No. 3. Explanation.-For the purpose of this entry, the expression "processing" includes packing or unpacking, breaking up, sieving, thrishing, mixing, grading, drying, curing or Otherwise treating the tobacco (including tobacco leaves and stems) in any manner. Entry 3 to which entry 19 refers reads: Employment in any tobacco (including bidi making) manufactory. It is clear from the Explanation to entry 19 that there could be no other way or manner of "processing" besides what is stated as included in that expression. Though 'include' is generally used in interpretation clauses' as a word of enlargement, in some cases the context might suggest a different intention. Pottery is an expression of very wide import, embracing all objects made of clay and hardened by heat. If it had been the legislature's intention to bring within the entry all possible articles of pottery, it was quite unnecessary to add an Explanation. We have found that the Explanation could not possibly have been introduced to extend the meaning of potteries industry or t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a room, as the case may be...." 23.5. In N.D.P. Namboodripad (Dead) by LRs. v. Union of India and Others (2007) 4 SCC 502 this Court held that although "includes" is generally a word of enlargement, in certain contexts, it may also signify "means and includes", "comprises" or "consists of". The following paragraph is pertinent: "18. The word "includes" has different meanings in different contexts. Standard dictionaries assign more than one meaning to the word "include". Webster's Dictionary defines the word "include" as synonymous with "comprise" or "contain". Illustrated Oxford Dictionary defines the word "include" as: (i) comprise or reckon in as a part of a whole; (ii) treat or regard as so included. Collins Dictionary of English Language defines the word "includes" as: (i) to have as contents or part of the contents; be made up of or contain; (ii) to add as part of something else; put in as part of a set, group or a category; (iii) to contain as a secondary or minor ingredient or element. It is no doubt true that generally when the word "include" is used in a definition clause, it is used as a word of enlargement, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 28.4. However, when a statutory definition incorporates the 'means and includes' approach, the intent is to make the definition exhaustive. Further, a definition may be in the form of 'means and includes', where again the definition is exhaustive." [See in this context the decisions in Jagir Singh v. State of Bihar; MANU/SC/0689/1975 : AIR 1976 SC 997, pp. 999, 1001 :1976 SCC (Tax) 204 : (1976) 2 SCC 942; Kasilingam v. P.S.G. College of Technology, supra, Bharat Coop. Bank (Mumbai) Ltd. v. Coop. Bank Employees Union, MANU/SC/1574/2007 : (2007) 4 SCC 685 (para 23) : (2007) 4 JT 573 : (2007) 2 LLJ 825 : AIR 2007 SC 2320; Paul Enterprise v. Rajib Chatterjee and Co., MANU/SC/0031/2009 : (2009) 3 SCC 709 para 28 : (2009) 1 JT 632]". 23.7. In the present case, while explaining the category of persons standing in a fiduciary capacity, the legislature has specified identifiable classes such as trustee, executor, partner, director, depository participant, and has further expressly reserved power to the Central Government to notify additional categories. The conferment of such specific delegated power is a significant indicator that enlargement beyond the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding so as to determine whether it discloses a real cause of action and whether any statutory bar is attracted. In the present case, though the plaint does not expressly employ the phrase "fiduciary relationship", the plaintiff seeks to infer such relationship on the basis that the deceased K. Raghunath was a loyal employee in the group of companies run by the plaintiff's father and therefore, the relationship between the plaintiff and the deceased was fiduciary in character. We are unable to agree with the said contention. 24.4. Firstly, an employer-employee relationship does not, by itself, fall within the recognized categories of fiduciary relationship for the purpose of exemption under the Benami legislation. Secondly, the law does not ordinarily recognize a fiduciary relationship between a company and its employee, or between a director and an employee of the company, in the sense sought to be projected here. Rather, the recognized fiduciary duty is that of a director towards the company since a director is bound to act in the interests of the company. 24.5. A company is a distinct juristic entity, separate from its directors, though it necessarily acts through them. Lik....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th the approval of the Board of Directors. The shares did not carry any market price and were not to be quoted at the stock exchange. The plaintiffs therein intended to dispose of certain shares where for they offered 12 / 5 s. per share purported to be based on a valuation which they had obtained from independent valuers a few months prior thereto. The said offer was accepted. The transaction pertaining to the said agreement was entered into but it was later on discovered by the plaintiffs that prior to and during their own negotiations for sale the Chairman and the Board were approached by one Holden with a view to purchase the entire undertaking of the company with a view to resell the same at a profit to a new company. The question of fiduciary obligation on the part of the Directors arose therein when the plaintiff brought an action against the Chairman and the two other purchasing Directors asking for setting aside the sale on the ground that the defendants as Directors ought to have disclosed the feature of negotiations with Holden when negotiating purchase of their shares. The question therein posed was: Assuming that directors are, in a sense, trustees for the company, are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ders. Thus, a director may accept a shareholder's offer to sell shares in the company although he may have information which is not available to that other, and the contract cannot be upset even if the director knew of some fact which made the offer an attractive proposition.... 49. In Pennington's Company Law 6th Edn. at page 608-09, it is stated : "Directors owe no fiduciary or other duties to individual members of their company in directing and managing the company's affairs, acquiring or disposing of assets on the company's behalf, entering into transactions on its behalf, or in recommending the adoption by members of proposals made to them collectively. If directors mis-manage the company's affairs, they incur liability to pay damages or compensation to the company or to make restitution to it, but individual members cannot recover compensation for the loss they have respectively suffered by the consequential fall in value of their shares, and they cannot achieve this indirectly by suing the directors for conspiracy to breach the duties which they owed the company. However, there may be certain situations where directors do owe a fiduciary duty and....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... were noticed by the Court of Appeal including the judgment of the Court of Appeal in New Zealand in Coleman v. Myers as also Court of Appeal of New South Wales in Brunninghausen v. Glavanics,(1999) 46 NSWLR and held that the directors had no fiduciary duty to the shareholders in the facts and circumstances obtaining therein. However, observations were made therein that such duties may arise in special circumstances demonstrating the salient features and well-established categories of fiduciary relationship such as agency which involves duties of trust, confidence and loyalty. 24.8. Further, the pleadings and the documents filed along with the plaint disclose that the alleged transfer of funds for purchase of property was based on contractual arrangements embodied in the MOUs. The transaction is commercial in nature. A fixed consideration of Rs. 2,50,000/- per acre was allegedly agreed upon. Such an arrangement, involving consideration and reciprocal commercial obligations, cannot be equated with property being held in trust for the benefit of another so as to constitute a fiduciary holding. A commercial arrangement, breach of which may entitle remedies in contract or common law....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dispose of by will or other testamentary disposition any property, which is capable of being so disposed of by him or by her, in accordance with the provisions of the Indian Succession Act, 1925 (39 of 1925), or any other law for the time being in force and applicable to Hindus." 25.2. As per Section 5 of the Hindu Succession Act, the provisions of the Act do not apply only to the categories expressly excluded therein. Apart from the said exceptions, there is nothing in the Act which excludes the application of its provisions to a Hindu, who succeeds to the estate of a deceased by testamentary succession. 25.3. It is trite law that disposition by Will is contemplated under Section 30 of the Hindu Succession Act, 1956 and Part VI of Indian Succession Act, 1925. In N.P. Saseendran v. N.P.Ponnamma and others 2025 Livelaw SC 345, while considering whether a document was a Will or a settlement, this Court held that a Will is a testamentary instrument intended to take effect after the death of the testator and remains revocable during his lifetime. The relevant paragraphs read as under: "11.2. Will is a testamentary document dealt under the Indian Succession Act, 1925. Pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted or abetted the commission of murder. Section 27 further declares that where a person is so disqualified, the property shall devolve as if such person had predeceased the intestate. Section 30 recognises testamentary succession and enables any Hindu to dispose of property by Will or other testamentary disposition in accordance with the Indian Succession Act, 1925 or any other applicable law. Thus, the Hindu Succession Act contemplates both intestate and testamentary succession. Consequently, the bar under Section 25 applies equally to a person who seeks to inherit the estate of the deceased through testamentary succession. 25.6. The principle underlying Section 25 is founded upon public policy, justice, equity and good conscience, namely, that no person can be permitted to profit from his own wrong. The statutory provision merely incorporates a long-settled equitable doctrine. The bar against a murder inheriting the estate of the deceased existed even prior to the coming into force of the Hindu Succession Act, 1956. A person must not be permitted to profit from or take advantage of his own wrong. This principle is reflected in the maxim ex turpi causa non oritur actio and the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "it is moreover a sound principle that he who prevents a thing from being done shall not avail himself of the non-performance he has occasioned". At p. 195, it is further stated that "a wrong doer ought not to be permitted to make a profit out of his own wrong". At p. 199 it is observed that "the rule applies to the extent of undoing the advantage gained where that can be done and not to the extent of taking away a right previously possessed". 25.8. The aforesaid principle was reiterated in Municipal Committee Katra and others v. Ashwani Kumar 2024 SCC OnLine SC 840, as follows: "18. The situation at hand is squarely covered by the latin maxim 'nullus commodum capere potest de injuria sua propria', which means that no man can take advantage of his own wrong. This principle was applied by this Court in the case of Union of India v. Maj. Gen. Madan Lal Yadav... 19. It is beyond cavil of doubt that no one can be permitted to take undue and unfair advantage of his own wrong to gain favourable interpretation of law. It is a sound principle that he who prevents a thing from being done shall not avail himself of the non-performance he has occasioned. To put it differ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ternative formulation is Ius ex iniuria non oritur. Compare with Nullus commodum capere (potest) de sua iniuria propria." 48. A perusal of the aforesaid makes it abundantly clear, that while the maxim 'ex injuria ius non oritur' is a principle governing the general spirit of the jurisprudence of "rights", that a right cannot emanate or emerge from a wrongful act, the maxim 'nullus commodum capere potest de injuria sua propria', on the other hand, confirms the general rule of equity and prudence that no one can benefit from their own wrongdoing. The scope of the latter is wider than the former. The first maxim explains that the legitimacy of a right stands vitiated if such right, which otherwise would have been legitimately exercisable, accrues from a wrongdoing of the person claiming under or exercising such right. Although, under the law, a right may arise even if from a wrongdoing, yet if exercise of such right is allowed, it would malign the very jurisprudential underpinning of 'right' and 'duty'. A right has a legal sanctity and backing to it, in order for it to have a legitimising effect, since the jural correlative of a right is duty. More particularly, the term "rig....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or appeal. ....... 53. We would like to remind the High Court of this very important legal maxim of 'nullus commodum capere potest de inuria sua propria'. It is the duty of the court to ensure that dishonesty or any attempt to abuse the legal process must be effectively curbed and the court must ensure that there is no wrongful, unauthorised or unjust gain for anyone by abusing of the process of the court. No one should be permitted to use the judicial process for earning undeserved gains for unjust profits. The courts' constant endeavour should be to ensure that everyone gets just and fair treatment. 54. We may clarify with a view to obviate any possibility of confusion that the maxim 'ex injuria ius non oritur' is different from the maxim 'nullus commodum capere potest de inuria sua propria' for the reason that the former pertains to a 'right' that may become available to a wrongdoer due to the wrongful act and the latter relates to an 'advantage' or 'benefit' that a wrongdoer may derive from his wrongful conduct. Although both are in essence a byproduct of the doctrine of equity and share a common genealogy under the doctrine of clean hands, the field ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....king a higher standard of fairness that guards against the instrumentalization of legal rights as vehicles of injustice." 25.10. Further, Section 25 does not envisage a situation where the person claiming inheritance must necessarily stand convicted in a criminal case. The disqualification operates against a person who commits murder or abets the commission of murder. The provision does not make conviction a condition precedent. The provision imposes a civil consequence against a wrongdoer and the issue may be examined on the standard of preponderance of probabilities, independent of the strict standard of proof applicable to criminal prosecution. 25.11. We take judicial notice of the judgments by various High Courts following the law laid down by this Court, holding that the expression "murder" occurring in Section 25 would include culpable homicide. Reference may be made to Anil Behari Ghosh v. Latika Bala Dassi and others (1955) 1 SCC 638, Nannepuneni Seetharamaiah and others v. Nannepuneni Ramakrishnaiah AIR 1970 AP 407, Chaman Lal v. Mohan Lall and others AIR 1977 DELHI 97, Minoti v. Sushil Mohan Singh Malik and another AIR 1982 BOMBAY 68 and M. Nagarajan v. V.M. Nagamma....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... object of an agreement is lawful, unless- it is forbidden by law; or is of such a nature that if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void." 26.1. In the present case, the averments in the plaint, read conjointly with the documents filed therewith, disclose that the object of entering into the four MOUs was to circumvent the provisions of the Karnataka Land Reforms Act, 1961, particularly Sections 79A and 79B thereof, which imposed financial restrictions on persons or families seeking to purchase agricultural lands. The provisions also required that the holder personally cultivate the lands. 26.2. The pleadings further disclose that since the Plaintiff or his company was disentitled from directly purchasing the lands, a mechanism was devised whereby the Plaintiff allegedly funded the purchase in the name of another, c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....independent funds of the deceased. V. FINDINGS 28. We are of the considered view that experience shows property is often acquired in the name of another, not out of necessity, but to circumvent statutory restrictions, defeat creditors, conceal beneficial ownership or avoid the rigours of law. Such arrangements, though outwardly innocuous, are designed to separate ostensible title from real control, enabling persons to enjoy benefits while evading corresponding legal obligations. The Prohibition of Benami Property Transactions Act, 1988, as amended, was enacted precisely to dismantle such structures and to ensure that substance prevails over form. 28.1. Courts, in the discharge of their adjudicatory function, must therefore remain vigilant against attempts to secure judicial recognition of what the law expressly prohibits. The judicial process cannot be employed as an instrument to enforce rights founded upon transactions forbidden by statute. Courts are duty-bound to pierce the veil of form and ascertain the real nature of the transaction, for what cannot be done directly cannot be permitted to be achieved indirectly through the medium of legal proceedings. 28.2. At the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ken up along with a preliminary objection and decided together by the trial Court; (ii) Admission of a plaint is not automatic; trial Courts shall verify whether the plaint satisfies the requirements of Order VII Rule 11 CPC before issuing summons. However, merely because the plaint has been admitted and summons issued, the defendants are not precluded from seeking rejection of the plaint or raising a preliminary objection; (iii) A disputed question of fact requiring the adducing and appreciation of evidence cannot ordinarily be decided as a preliminary objection or while considering an application for rejection of plaint. However, this does not preclude the Court from examining whether the very basis of such question is legally sustainable before relegating the parties to the ordeal of trial; (iv) There is no fiduciary relationship between a director of a company and an employee of the company. Rather, the relationship between the company and its director is fiduciary in nature. Contractual relationships supported by valid consideration also stand outside the fiduciary exception, being commercial transactions and not arrangements founded merely on trust;....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... it is not uncommon in legal history that whenever the law seeks to prohibit, human ingenuity seeks to disguise. From the use of proxies in earlier times to modern layered transactions, the separation of real ownership from ostensible title has long been employed as a device to evade legal restraints. Benami transactions are but a contemporary manifestation of that tendency, where legality is outwardly simulated though never truly intended. Courts, however, are concerned not with the façade, but with the substance that lies beneath it. The judicial process cannot be invoked to validate, protect, or perfect that which the law itself declares impermissible. 30.1. It is this interplay between form and reality that falls for consideration in the present case, where a claim ostensibly founded upon a testamentary instrument was, in substance, an attempt to secure judicial recognition of a transaction prohibited by law. Such an approach cannot be countenanced by this Court. Where the statute not only prohibits such transactions but also provides for stringent consequences, the Court would be failing in its duty if it were to remain a silent spectator. 30.2. The power of confi....