Judgment :- RATNAM, J. 1. Whether the Benami Transactions (prohibition) Act, 1988 (Act No. 45 of 1988) prohibits sham and nominal transactions also and it is not open to contend that a transaction is sham and nominal and no title passed under if, is the question that has been referred to us for decision. 2. Inasmuch as the reference has arisen in the course of the hearing of an appeal, which still awaits consideration and disposal at the hands of the learned single Judge who made the reference, we have refrained from referring to the factual background giving rise to the pending appeal with a view to enable the learned Judge to further deal with the matter in the light of the answer to the reference and on the facts as may be found on the evidence. 3. The answer to the question referred would depend upon the types of transactions comprehended within the expression “benami transactions” and the scope of the impact of the provision of the Benami Transactions (Prohibition) Act, 1988 (Act No. 45 of 1988) (hereinafter referred to as the Act) and its fore-runner the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988 (Ordinance No. 2 of 1988) (hereinafter referred to as ‘the ordinance’) on such transaction. Whatever views might have been earlier entertained with regard to the types of transactions, which could be called “benami transactions”, considerable light had been thrown on the types of transactions, which can be appropriately comprehended within the expression “benami by two decisions of the Supreme Court in Meenakshi Mills Ltd. v. Commissioner of Income-tax. Madras 1 and Bhim Singh v. KanSingh AIR 1980 Supreme Court 727. In the first decision, Viz., Meenakshi Mills Ltd. v. Commissioner of Income-tax. Madras 1957 I MLJ I AIR 1957 Supreme Court 49, though arising under the provisions of the Income-Tax Act, 1922, the Supreme Court had to deal with question, whether certain intermediaries of the assessee-company, were benamidars for the assessee. In that connection, Venkatarama Ayyar, J,. speaking for the Court, clearly set out the types of the transaction comprehended by the word ‘benami’, in the following terms. “. It is necessary to note that the word ‘benami’ is used to denote two classes of transactions, which differ from each other in their legal character and incidents. In that connection, Venkatarama Ayyar, J,. speaking for the Court, clearly set out the types of the transaction comprehended by the word ‘benami’, in the following terms. “. It is necessary to note that the word ‘benami’ is used to denote two classes of transactions, which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real, as for example, when A sells properties to B, but the sale deed mentions x as the purchaser. Here the sale itself is genuine, but the real purchaser is B, x being his benamidar. This is the class of transactions which is usually termed as benami. But the word ‘benami’ is also occasion ally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purpose to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transaction is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter, there is none such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration, but whether any consideration was paid Again, in Bhim Singh v. Kan singh AIR 1980 Supreme Court 727, the Supreme Court dealt with the kinds of benami transactions generally recognized in this country. In that context, the Supreme Court observed at page732 as follows: “Two kinds of benami transactions are generally recognized in India. Where a persons buys a property with his own money but in the name of another persons, without any intention to benefit such other person, the transaction is called benami. In that case, the transfree holds the property for the benefit of the person who has attributed the purchase money, and he is the real owner. Where a persons buys a property with his own money but in the name of another persons, without any intention to benefit such other person, the transaction is called benami. In that case, the transfree holds the property for the benefit of the person who has attributed the purchase money, and he is the real owner. The second case, which is loosely termed as a benami transaction, is a case, where a person who is the owner of the property, executes a conveyance in favour of another, without the intention of transferring the title to the property thereunder. In this case, the transferor continues to be real the owner. The difference between the two kinds of benami transactions referred to above lies in the fact that whereas in the former case there is an operative transfer from the transferor to the transferee though the transferee holds the property for the benefit of the person who has contributed the purchase money, in the latter case, there is no operative transfer at all and the title rests with the transferor, notwithstanding the execution of the conveyance. One common feature, however, in both these cases is that the real title is divorced from the ostensible title and they are vested in different persons. The question whether a transaction is a benami transaction or not mainly depends upon the intention of the person, who has contributed the purchase money in the former case and upon the intention of the one person, who has executed the conveyance in the latter case. The question whether a transaction is a benami transaction or not mainly depends upon the intention of the person, who has contributed the purchase money in the former case and upon the intention of the one person, who has executed the conveyance in the latter case. The principle underlying the former case is also statutorily recognized in S. 82 of the Indian Trusts Act, 1882, which provides that where property is transferred to person, for a consideration paid or provided by another person and it appears that such other person did not intend to pay or provide such consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or providing the consideration.” From the aforesaid decisions of the Supreme Court, it is clear that the two types of transactions, which can be regarded as ‘benami’ are (i) where a person buys property with his own funds or money, but in the name of another without any intention to benefit such other person, and (ii) where a person executes a conveyance in favour of another, without any intention to transfer the beneficial interest in the property to that person. The first type of transaction, according to the Supreme Court, is, without doubt, a benami transaction. However, the second type of transaction which is only a transaction as such in name and not in reality, is do in a loose and erroneous sense, called a benami. 4. It is in the aforesaid conceptual background relating to benami transactions, the provisions of the ordinance and the Act, have to be examined to ascertain whether benami transactions, strictly so called or even otherwise loosely called so, had been dealt with, under its respective provisions. The provisions of the ordinance may first be taken up for consideration. The object of the ordinance was to prohibit the right to recover property held benami and for matters connected therewith or incidental thereto. S. 2(1) of the ordinance prohibited the enforcement of any right in respect of any property held benami, in a suit claim or action at the instance of a real owner or on his behalf, against the benamidar or any other person. S. 2(1) of the ordinance prohibited the enforcement of any right in respect of any property held benami, in a suit claim or action at the instance of a real owner or on his behalf, against the benamidar or any other person. Under S. 2(2) of the ordinance, in a suit, claim or action, by or on behalf of a person claiming to be the owner of property, though held benami, no defence based on benami, could be raised by the real owner, against the person in whose name the property, is held or any other person. S. 2(3) of the Ordinance provided for exceptions in relation to the applicability of S. 2(1) and 2 of the ordinance in the two specified cases enumerated thereunder. S. 3 of the ordinance contained a provision to the effect that nothing therein shall affect the provisions of S. 53 of the Transfer of property Act, 1882 (Act No. 4 of 1882) or any law relating to transfers for an illegal purpose. Under S. 4(1) of the ordinance, S. 82 of the Indian Trusts Act, 1882 (Act No. 2 of 1882), S. 66 of the code of civil procedure, 1908 (Act No. 5 of 1908) and S. 281-A of the Income-Tax Act, 1961 (Act No. 43 of 1961) were repealed. S. 4(2) of the ordinance declared that nothing in subsection (1) of S. 4 of the Ordinance, shall affect the continued operation of S. 281-A of the Income-tax Act, 1961, in so far as the State of Jammu and Kashmir is concerned. Though the provisions of the ordinance, under S. 1(3) thereof, came into force on 19-5-1988, the Law Commission was requested to take up the provisions of the ordinance for detailed examination and give its considered views, so that on the basis of the recommendations of the law Commission, the ordinance could be replaced by an appropriate Act. In its one Hundred Thirtieth Report on Benami Transactions, the Law commission had made some recommendations and purporting to incorporate those recommendations, as could be seen from the Statement of objects and reasons, the Benami Transactions (Prohibition) Act, 1988 came to be passed repealing the ordinance. The objects of the Act are wider than the objects of the ordinance and are two fold, viz., (i) to prohibit benami transactions; and (ii) to prohibit the right to recover property held benami. Ss. The objects of the Act are wider than the objects of the ordinance and are two fold, viz., (i) to prohibit benami transactions; and (ii) to prohibit the right to recover property held benami. Ss. 3, 5 and 8 of the Act came into force on 6-9-1988 and its other provisions were deemed to have come into force on 19-5-1988, when the repealed ordinance was pro mulgated. Consistent with one of the objects of the Act, viz., prohibition of benami transaction, it became necessary in the Act, to define a ‘benami’ transaction. S. 2(a) of the Act defined a ‘benami transaction’ as meaning any transaction, in which property is transferred to one person, for a consideration paid or provided by another person, ‘property’ has been defined under S. 2(c) of the Act, as meaning property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property. S. 3(1) of the Act prohibited a person from entering into any ‘benami” transaction. Under S. 3(2) of the Act, the purchase of property by a person in the name of his wife or unmarried daughter was taken outside the operation of S. 3(1) of the Act and a presumption had also been enacted in that such property so purchased shall be presumed, unless the contrary is proved, to be for the benefit of the wife or the unmarried daughter. S. 3(3) of the Act makes the entering into benami transaction, a punishable offence with imprisonment for a term, which may extend to three years or with fine or with both and under S. 3(4) of the Act, such an offence, notwithstanding anything contained in the Code of criminal procedure, 1973, is declared to be non-cognizable and bailable. S. 4 of the Act prohibited the right to recover property held a benami and this is couched in language identical to that found in S. 2 of the ordinance. S. 5 of the Act provides for acquisition of properties held benami by such authority, and in such manner and after following such procedure, as may be prescribed, and no amount shall be payable for the acquisition of any property. S. 6 of the Act corresponds to S. 3 of the ordinance. S. 7 (1) of the Act provides for repeal of Ss. S. 6 of the Act corresponds to S. 3 of the ordinance. S. 7 (1) of the Act provides for repeal of Ss. 81, 82 and 94 of the Indian Trusts Act, 1882, S. 66 of the Code of Civil procedure, 1908 and S. 281-A of the Income-tax Act, 1961. S. 7(2) of the Act corresponds to S. 4(2) of the ordinance. S. 8 of the Act provides for the making of the Rules for carrying out the objects and purposes of the object and purposes of the Act. Under S. 9(1) of the Act, the ordinance has been repealed and S. 9(2) of the Act saves the acts done or action taken under the ordinance, as having been done or taken under the corresponding provision of the Act. 5. On a close scrutiny and comparison of the provisions of the ordinance and the Act, it is at once seen that the object of the Act is wider, viz., to prohibit benami transactions and also to interdict the right to recover property held benami. The prohibition of ‘ benami’ transaction was not in contemplation of the ordinance at all. The provision for prohibition of benami transaction under S. 3 of the Act necessitated a definition of a benami transaction and S. 2(a) of the Act provided that unless the context otherwise requires, ‘benami transaction’ means a transaction in which property is transferred to one Eerson for a consideration paid or provided y another person. The definition of ‘benami transaction under S. 2(a) of the Act, is nothing but a re-production of the opening part of S. 82 of the Indian Trusts Act, 1882. There is no indication in the definition under S. 2(a) of the Act that the other type of benami transaction, loosely so called, according to the Supreme Court, was even contemplated. Besides, in furtherance of the objects of the Act, S. 3(1) of the Act prohibited the entering into of a benami transaction as defined in the Act, subject to the exception contained in S. 3 (2) of the Act and had made it a non-cognizable and bailable offence punishable with imprisonment for three years or with fine or with both. Likewise, consistent with the other object of the Act to interdict the right to recover property held benami, the osteifsible title has been declared to be indivisible either by way of action or even defence. Likewise, consistent with the other object of the Act to interdict the right to recover property held benami, the osteifsible title has been declared to be indivisible either by way of action or even defence. This prohibition under S. 4 of the Act has been made applicable with reference to property held benami. The expression ‘held benami’ connotes the state of holding property as a result of and referable to a benami transaction as defined in S. 2(a) of the Act. The repeal of Ss. 82 and 94 of the Indian Trusts Act, 1882, would appear to indicate that such a repeal was called for, in view of the provisions made in the Act, with reference to matters, which fell under those provisions of the Indian Trusts act, 1882. The definition of a ‘benami transaction’ based on the opening words of S. 82 of the Indian Trusts Act, 1882, has been, already referred to Regarding the latter part of S. 82 of the Indian Trusts Act, 1882, in view of the interdict on the right to recover property provided under S. 4 or the Act and the enactment of a presumption, though rebuttable under S. 3(2) of the Act, the retention of that part of S. 82 of the Indian Trusts Act, 1882, had become unnecessary. Thus, by the combined operation of Ss. 2(a) and 4 of the Act, S. 82 of the Indian Trusts Act, 1882 has been rendered wholly unnecessary and that is the reason why, under S. 7(1) of the Act, S. 82 of the Indian Trusts Act, 1882. has been repealed. Likewise even as regards S. 94 of the Indian Trusts Act, 1882, in view of S. 4 of the Act, that section has been rendered unnecessary and that accounts for the repeal of S. 94 of the Indian Trusts Act, 1882. In other words, the repeal of Ss. 82 and 94 of the Indian Trusts Act, 1882 had been done under S. 7(1) of the Act, as provision has been made already in the Act, to deal with matters, which had already been dealt with under Ss. 82 and 94 of the Indian Trusts Act, 1882. In other words, the repeal of Ss. 82 and 94 of the Indian Trusts Act, 1882 had been done under S. 7(1) of the Act, as provision has been made already in the Act, to deal with matters, which had already been dealt with under Ss. 82 and 94 of the Indian Trusts Act, 1882. However, with reference to S. 81 occurring in Chapter 9 of the Indian Trusts Act, 1882, relating to certain obligations in the nature of trust, it appears to us that a situation contemplated by that provision, is not covered by the definition in S. 2(a) of the Act and it is, therefore, not possible to infer from the repeal of S. 81 of the Indian Trusts Act, 1882, provided under S. 7(1) of the Act, that even transfers not at all intended to dispose of the beneficial interest, were also contemplated, as cases falling under the provisions of the Act. At best, the repeal of S. 81 of the Indian Trusts Act, 1882 by S. 7(1) of the Act, may discharge the transferee or the legatee from the obligations of holding the property for the benefit of the owner, but that cannot be pressed into service to include transactions, only in name and not in reality, also, as falling within the provisions of the act. Thus, released from an obligations in the nature of a trust under S. 81 of the Indian Trusts Act, 1882, it may be still open to a person to contend that notwithstanding the execution of a document, it is only a transaction in name and not in reality and in fact not acted upon and remained only as a transaction on paper without divesting any right of the transferor and without in any manner being affected by the provisions of the Act. 6. 6. Learned counsel for the appellants first contended that the avowed object of the Act is to do away with benami transactions, inclusive of sham and nominal transactions, which have also been understood as belonging to the category of benami transactions though in a loose sense, on the other hand, learned counsel for the respondent submitted that the definition of ‘benami transaction’ in the Act does not purport to cover sham and nominal transaction, as ordinarily understood and, therefore, the definition cannot be extended or expanded to include other types of transactions, not at all contemplated by the definition, as transactions dealt with by the Act. The definition of ‘benami transaction’ has already been referred to and it takes in only one kind of transactions, in which the property is transferred to one person, for consideration paid or provided by another person. In other words, the only transaction recognized as a ‘benami transaction’ under the definition in the Act is the first category of t ransactions referred to by the Supreme Court in the decisions already noticed. The definition contemplates only a real transactions when A sells property to B, who pays considerations but the document mentions X as the purchaser, while, the real purchaser in this genuine sale is only B, X being the benamidar. There is an operative transfer resulting in the vesting of title in the transferee, though the consideration is provided by another and it is only this kind of transaction, which has been contempla ted and also included in the definition of ‘benami transaction’ under S. 2 (a) of the Act. Thus in Ss. 2, 3 and 4 of the Act, there is absolutely no indication that sham and nominal transactions also were intended to be included within the definition of ‘benami transaction’ and dealt with under the provisions of the Act. This contention of learned counsel for the appellants has, therefore, to be rejected. 7. Learned counsel for the appellants next contended that the words ‘benami’ and ‘held benami’ occurring in Ss. This contention of learned counsel for the appellants has, therefore, to be rejected. 7. Learned counsel for the appellants next contended that the words ‘benami’ and ‘held benami’ occurring in Ss. 3 and 4 of the Act have to be read differently and that while it may be that the definition of ‘benami transaction’ occurring in S. 2(a) of the Act may apply to S. 3 of the Act, it may not apply to S. 4 of the Act, as the expression ‘benami transaction’ does not occur therein, but only the words held benami have been used. It has earlier been noticed that the twin objects of the Act are to proh ibit benami transactions and also the establishment of rights over property held benami, either on a cause of action or defence, based on benami. The prohibition of benami transactions is sought to be achieved by preventing persons from entering into such transactions and making it a punishable offence, except in cases provided for under S. 3(2) of the Act. The prohibition contained in S. 4 of the Act is aimed at securing the other object of the Act, viz., to put an end to the right to recover property held benami and to vest the title to the property in the benamidar or the ostensible owner. In other words, in order to accomplish the twin objects earlier referred, provision has been made in the Act to prohibit the entering into of benami transactions and also to put an end to the right of a person claiming to be the real owner, either on a cause or action or by way of defence, and it is with reference to the latter class of cases, the words used are ‘held benami. Those words would mean the state of holding property, as a result of entering into a benami transaction or pursuant to such a transaction and necessarily, the definition of a ‘benami transaction’ found in S. 2(a) of the Act, has to be read into and applied in interpreting the words ‘property held benami’ occurring in S. 4 of the Act. In view of that, this argument of learned counsel for the appellants also cannot be accepted. 8. In view of that, this argument of learned counsel for the appellants also cannot be accepted. 8. Learned counsel for the appellants next contended that there was no reason to confine the operation of the provisions of the Act only to those transactions falling under S. 2(a) of the Act and further that the repeal of S. 81 of the Indian Trusts Act, 1882, also indicated that sham and nominal transactions, were also intended to be brought under the operation of the provisions of the Act. Reference was also made in this connection to the decision in Kathoon Bivi v. Mohammed alias Sheik Mohammed 1990-I-L.W. 284 on the other hand, learned counsel for the respondent submitted that the provisions of the Act, as they are found, have to be interpreted and given effect to and in view of the definition under S. 2(a) of the Act relating to ‘benami transaction’, its scope cannot be widened to include sham and nominal transactions also and that the repeal of S. 81 of the Indian Trusts Act, 1882, would not in any manner affect the position at all, as the effect of such repeal, would only be to release the sham and nominal transaction from the scope of the obligation arising under S. 81 of the Indian Trusts Act, 1882, but nevertheless leaving it open to the parties to contend that the tra nsaction is a sham and a nominal one and has been entered into only in name and not in reality. Strong reliance in this connection was also placed by learned counsel for the respondent upon the decision reported in Ouseph Chacko v. Raman Nair AIR 1989 KERALA 317. In addition, learned counsel for the respondent also attempted to characterise certain observations occurring in Kathoon Bivi Ammal v. S. Mohammed alias Shaik Mohammed 1990-1-L.W. 284: (1990) II M.L.J. 42 as obiter. 9. On a careful consideration of the rival submission, we find difficult to accept the contention of learned counsel for the appellants. In addition, learned counsel for the respondent also attempted to characterise certain observations occurring in Kathoon Bivi Ammal v. S. Mohammed alias Shaik Mohammed 1990-1-L.W. 284: (1990) II M.L.J. 42 as obiter. 9. On a careful consideration of the rival submission, we find difficult to accept the contention of learned counsel for the appellants. When the expression ‘benami transaction’ has been defined in the Act, and the expression ‘property held benami has to be interpreted in the light of the definition occurring in the Act relating to a benami transaction and also as referable to property held, as a result of or attributable to, such a transaction, in the absence of a ‘benami transaction’ preceding, it is difficult to conceive the holding of any property benami. Necessarily, therefore, the definition of ‘benami transactionin S. 2(a) of the Act has to be read into S. 4 of the Act also, while interpreting the words ‘property held benami’ and so read, only transactions answering the definition of a ‘benami transaction’ under S. 2(a) of the Act, pursuant to which property is held benami, would be affected by S. 4 of the Act. S. 4 of the Act cannot be so interpreted as to include sham and nominal transactions , which are outside the scope of abenami transaction as defined in S. 2(a) of the Act. Similarly, the repeal of S. 81 of the Indian Trusts Act, 1882, does not in any manner assist the appellants, as pointed out earlier. A situation contemplated under S. 81 of the Indian Trusts Act, 1882, in so far as we have been able to ascertain from provisions of the Act, has not been provided for, while provision has been made, as pointed out earlier, with reference to matters falling under Ss. 82 and 94 of the Indian Trusts Act, 1882. In other words, it looks as though S. 81 of the Indian Trusts Act, 1882 has been repealed, but that would have only the effect of releasing the property from the obligations of being held in accordance with S. 81 of the Indian Trusts Act, 1882. The decision in Kathoon Beevi v. S. Mohamed alias Shaik Mohamed 1990-1-L.W. 284: (1990) II M.L.J. 42 proceeded to, hold that the repeal of S. 81 of the Indian Trusts Act, would suffice to include sham and nominal transactions also within the scope of the provisions of the Act. The decision in Kathoon Beevi v. S. Mohamed alias Shaik Mohamed 1990-1-L.W. 284: (1990) II M.L.J. 42 proceeded to, hold that the repeal of S. 81 of the Indian Trusts Act, would suffice to include sham and nominal transactions also within the scope of the provisions of the Act. It is difficult to persuade ourselves to the line of reasoning adopted in that decision. Further, it is seen that apart from the repeal of Ss. 81 and 82 of the Indian Trusts Act, 1982, no other aspect has been adverted to and examined and on a careful consideration of the scope and ambit of the provisions of the Ordinance and the Act, we have earlier pointed out that the repeal of of S. 81 of the Indian Trusts Act, 1982 by itself would be of ho avail to bring within the provisions of the Act sham, and nominal transactions. We therefore, hold that the decision in Kathoon Beevi Ammal v. Mohamed alias Shaik Mohammed 1990-1-L.W. 284: (1990) II M.L.J. 42, in so far as it held that sham and nominal transactions are also covered by the provisions of the Act, is not correct. It is seen that in Ouseph Chacko v. Raman Nair AIR 1989 KERALA 317 the view has been expressed that a sham and nominal transaction is not a benami transaction and S. 4 of the Act would not apply. We find on a careful consideration of the reasoning in that decision that it accords generally with the view we have earlier expressed on all the aspects relating to the exclusion of sham and nominal transactions from the scope of the provisions of the Act and we hold that decision has laid down the law correctly. Though learned counsel for the respondent submitted that the provisions of the Act would be inapplicable to the decree-holder/respondent, who had attached the property in execution of the decree. adverse to the interest of the judgment-debtor, we do not express any opinion thereon, as that aspect of the matter would be totally outside the scope of the reference. We, therefore, hold that sham and nominal transactions would not be covered by the provisions of the Act and that it is open to the parties to contend that a transaction is sham and nominal and no title passed under it. We answer the referepce made to us accordingly.