Subhash Chandra Gupta v. Gyanchand — 1993 DIGILAW 626 (MP)

ORDER R.C. Lahoti, J.--1. Not a dismissal of the suit at the end of a civil trial but the rejection of plaint at the very threshold of the civil jurisdiction of the trial Court, holding the suit to be barred by law of the land, has left the plaintiff with no other choice but to prefer this First Appeal under section 96 of the Civil Procedure Code. The contesting defendant pleaded the bar enacted by section 4 of the Benami Transactions (Prohibition) Act, 1988 (hereinafter referred to as the 'Benami Act', for short) to the maintainability of the suit and the plea has found favour with the trial Court entailing exclusion of trial of plaintiff's case on merits. 2. The facts in brief and only to the extent necessary for the decision in this appeal may be noticed. The parties, except Balkrishan, the defendant No.6, are members of the same family. The following family tree explains their relationship inter se; Ramgopal Gupta Gyanchand-defendant Wife- Bhagirathi-defendant Subhash Chandra No 1. No 1 -plaintiff. Wife-Sushila –defendant Santosh Kumar-defendant Wife-Vma-defendant No.2 No.3 No.5. Smt. Uma, the defendant No. 5, is the wife of the plaintiff-appellant. Smt. Sushila, the defendant No.2, is the wife of Gyanchand, the defendant No. 1. Smt. Bhagirathi, the defendant No.4, is the wife of Santosh Kumar, the defendant No. 3. Gyanchand and Santosh Kumar, the defendants-respondents Nos. 1 and 3 are the real elder brothers of the plaintiff-appellant. Thus, the plaintiff and the defendants 1 to 5 - the six-are three real brothers and their respective wives. The three brothers are the sons of Late Ramgopal Gupta and Smt. Sarvati Bai, the father and mother, who have expired respectively in the years 1943 and 1965. 3. According to the plaintiff the family of the parties was a Hindu undivided family possessed of substantial property at Bahadurgarh, near Delhi and at Indore. The suit property bearing land survey No. 1321/2 situated at village Khajrana, Tahsil Indore admeasuring O. 26 acres was purchased through a registered deed of sale dated 16.2.1973 for a consideration of Rs. 6,000/- in the name of Smt. Sushila, the defendant No.2, in her capacity as a member of HUF. The price was paid out of joint family funds. The property was invariably treated as HUF property ever since the date of purchase and was enjoyed as such. 6,000/- in the name of Smt. Sushila, the defendant No.2, in her capacity as a member of HUF. The price was paid out of joint family funds. The property was invariably treated as HUF property ever since the date of purchase and was enjoyed as such. On 6.10.1982, there was an oral family settlement, reduced into writing at Jabalpur on 11.11.83, under which the suit property came to the share of the plaintiff and he alone became absolute owner thereof. At the instance of the plaintiff, on 14.6.1985, the defendant No. 2 executed a deed of release in favour of defendant No.5, the wife of the plaintiff. Balkrishna, the defendant No.6 has filed civil original suit No. 19-N85 in the Court of IVth Additional District Judge, Indore seeking specific performance of an agreement to sell in respect of the suit property allegedly executed by the defendant No.5 in favour of defendant No. 1. Differences amongst the members of the family and other litigations having been initiated, the plaintiff has been compelled to file the present suit for a declaration that the plaintiff as the Karta of his branch of family was the owner of the suit land bearing survey No. 1321/2 village Khajrana and a consequent injunction restraining alienation. 4. According to the defendant No.6, the plaintiff wants the suit property standing in the name of defendant No.5 to be adjudged Benami, a claim incapable of being canvassed before and adjudicated upon by a civil Court in view of the provisions contained in the Benami Act. On 9.4.1990, the defendant No.6 moved an application under Order 7 Rule 11 CPC seeking rejection of the plaint submitting that the transaction dated 16.2.1973 describing purchase of the suit property in the name of Smt. Sushila the defendant No.2, as a member of HUF amounted to pleading a case of Benami as the plaintiff had intended to suggest that the property though standing in the name of Smt. Sushila Gupta was in reality belonging to the HUF, a plea statutorily excluded by section 4 of the Benami Act, rendering the suit barred by law from the statement in the plaint. 5. The Benami Act came into force on 19.5.1988, excepting the provisions contained in sections 3, 5 and 8 which came into force on 5.9.1988. 5. The Benami Act came into force on 19.5.1988, excepting the provisions contained in sections 3, 5 and 8 which came into force on 5.9.1988. With the pronouncement of their Lordships of the Supreme Court in Mithilesh Kumar v. Prem Bihari Khare ( AIR 1989 SC 1247 ), there is no doubt left in holding that the Benami Act is not retrospective in operation but it is a declaratory piece of legislation having retroactive operation and embracing within its scope of applicability all properties held Benami at the moment of the Act coming into force irrespective of their beginning, duration and origin. Needless to say, if the pleadings contained in the plaint setup a benami transaction as its foundation, the suit would be barred by the Benami Act rendering the plaint liable to rejection under Order 7 Rule 11 (d) of the CPC. The real question arising for decision is the determination of the nature of the case of the plaintiff as regards the transaction dated 16.2.1973. 6. Let us now notice the provisions of the Benami Act relevant for the decision of this appeal: "An Act to prohibit benami transactions and the right to recover property held benami and for matters connected therewith or incidental thereto. 2. Definitions -- In this Act, unless the context otherwise requires. – (a) "benami transaction" means any transaction in which property is transferred to one person for a consideration paid or provided by another person; 3. Prohibition of benami transactions. – (1) No person shall enter into any benami transaction. (2) Nothing in sub-section (1) shall apply to the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter. (3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence under this section shall be non-cognizable and bailable. 4. (3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, an offence under this section shall be non-cognizable and bailable. 4. Prohibition of the right to recover property held benami -- (1) 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 person shall lie by or on behalf of a person claiming to be the real owner of such property. (2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property." Let us be clear in our minds that the Benami Act contemplates applicability to "benami transactions" as well as to "the property held Benami". While it prohibits Benami transactions being entered into under pain of penalty, it also prohibits enforcement of right to recover property held Benami. While it defines 'Benami transaction', it does not define 'property held Benami'. To understand and appreciate the meaning and concept of the 'property held Benami' we proceed to take assistance from two leading authorities of the Supreme Court. 7. In Bhimsingh v. Kansingh ( AIR 1980 SC 727 ), their Lordships have held: "Two kinds of benami transactions are generally recognized in India. Where a person buys a property with his own money but in the name of another person without any intention to benefit such other person, transaction is called benami. In that case, the transferee holds the property for the benefit of the person who has contributed the purchase money, and he is the real owner. The second case which is loosely termed as a benami transaction is a case where a person who is the owner of the property executes a conveyance in favour of another without the intention of transferring the title to the property there under. In this case, the transferor continues to be 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 there under. In this case, the transferor continues to be the real owner. 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 person who has executed the conveyance in the latter case. The principle underlying the former case is also statutorily recognized in section 82 of the Indian Trusts Act, 1882. The principle governing the determination of the question whether a transfer is a benami transaction or not may be summed up thus; (1) The burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction; (2) if it is proved that the purchase money came from a person other than the person in whose favour the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary; (3) the true character of the transaction is governed by the intention of the person who has contributed the purchase money and (4) the question as to what his intention was has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the motive governing their action in bringing about the transaction and their subsequent conduct, etc." 8. In Jaydayal Poddar and another v. Mst. Bibi Hazra and others ( AIR 1974 SC 171 ), their Lordships have held: "The essence of a Benami is the intention of the party or parties concerned, and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. In Jaydayal Poddar and another v. Mst. Bibi Hazra and others ( AIR 1974 SC 171 ), their Lordships have held: "The essence of a Benami is the intention of the party or parties concerned, and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. Though the question, whether a particular sale is Benami or not, is largely one of fact, and for determining this question, no absolute formula or acid test, uniform ally applicable in all situations, can be laid down, yet in weighing the probabilities and for gathering the relevant indicia, the Courts are usually guided by these circumstances: (1) the source from which the purchase money came; (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; (5) the custody of the title-deeds after the sale and (6) the conduct of the parties concerned in dealing with the property after the sale. The above indicia are not exhaustive and their efficacy varies according to the facts of each case. Nevertheless No.1, viz. the source whence the purchase money came, is by far the most important test for determining whether the sale standing in the name of one person, is in reality for the benefit of another." 9. Mulla in his celebrated work on Hindu Law (Sixteenth Edition, 1990) states (at page 589, para 604): "604. Benami transactions -- Where a person buys property with his own money, but in the name of another person or buys property in his own name, but subsequently transfers it into the name of another person, without any intention in either case to benefit such other person, the transaction is called "benami", and the person in whose name the transaction is effected is called "benamidar". 10. The definition of "benami transaction" under the Benami Act gives statutory recognition to the first category of Benami transactions referred to in Bhimsingh's case (supra). A case of nominal sale where the transferor continues to be the real owner in spite of the purported alienation, would not be covered by the said definition of 'benami transaction'. 10. The definition of "benami transaction" under the Benami Act gives statutory recognition to the first category of Benami transactions referred to in Bhimsingh's case (supra). A case of nominal sale where the transferor continues to be the real owner in spite of the purported alienation, would not be covered by the said definition of 'benami transaction'. Now, no person can set-up a plea that the is the real owner of the property, he having paid the consideration, though the property stands in the name of someone else consequent to the transfer having been effected in his name for namesake. On and from 5.9.1988, entering into benami transaction is an offence punishable though non-cognizable and bailable. With effect from 19.5.1988 jurisdiction of Court to recognise a claim based on benami is taken away, whatever be the stage at which the claim be pending and whatever be the date of transaction. The distinction between Sec. 3 and 4 of the Benami Act is: while section 3 would apply only to first kind of Benami transaction, section 4 would embrace within its scope, both the categories of benami transactions. 11. A property held benami has to be distinguished from a property held by a joint Hindu family as joint Hindu family property though standing in the name of a member of joint Hindu family. A joint Hindu family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. Joint family property may be ancestral property or separate property of any coparcener thrown into common hotchpot. Property jointly acquired by the members of a joint family with the aid of ancestral property or with the aid of joint family property, becomes joint family property. (See paras 212, 220 and 228 (2) of Hindu Law by Mulla, Sixteenth edition, 1990). When the joint family funds are utilised for acquiring a property in the name of any member of the joint Hindu family, it is not the case of one person acquiring property for a consideration paid or provided by another person. Each member of joint family has an undivided undefined fluctuating interest in the joint family funds which interest comes to be determined and defined only on disruption of joint ness. Each member of joint family has an undivided undefined fluctuating interest in the joint family funds which interest comes to be determined and defined only on disruption of joint ness. It is presumed that a joint family continues to be joint but there is no presumption that a family, though joint, possesses joint property or any property. Yet where it is established or admitted that the family possessed some joint property which from its nature and relative value may have formed the nudeus from which the property in question may have been acquired, the presumption arises that it was joint property and the burden shifts to the party alleging self-acquisition to establish affirmatively that the property was acquired without the aid of the joint family property. Where the existence of nucleus is shown and no other source of income is disclosed, the presumption may be made that the nude us was sufficient to enable the property being acquired. Such being the presumption, if any member of the family claims any property as his separate property, the burden lies upon him to show acquisition by him in circumstances which would constitute it his separate property. (See para 233, Hindu Law by Mulla, supra). In view of such clear distinction between 'property held benami' and joint Hindu Family Property standing in name of a member of such family, it will be a misnomer to say that the property standing in the name of a member of the Joint Hindu family alleged to have been acquired by the joint Hindu family with the aid of joint family property or funds amounts to pleading a case of benami. 12. A suit for declaration that a property standing in the name of a member thereof is not suit to recover property held benami within the meaning of section 4 of the Benami Act. 13. Order 7 Rule 11 (d) CPC provides: R. 11. Rejection of plaint. "The plaint shall be rejected in the following cases: (a) xxxx xxxx xxxx (b) xxxx xxxx xxxx (c) xxxx xxxx xxxx (d) Where the suit appears from the statement in the plaint to be barred by any law." To enable rejection of the plaint at its threshold, it is only the statement in the plaint which can be looked into. The documents filed with the plaint may also be looked into. The documents filed with the plaint may also be looked into. The pleas taken in the written statement or any application filed by the defendant or the documents relied on by him cannot be looked into by the Court for forming an opinion on rejection of plaint within the meaning of clause (d) above said. The Court has to accept the statement of facts as made in the plaint to be correct and then determine whether it would be disabled from granting any relief to the plaintiff on account of bar created by any law for the time being in force. 14. Applying the law to the facts of the case, it is clear that the suit property though standing in the name of the defendant No.2 under the deed of sale dated 16.2.73, has been specifically alleged by the plaintiff to have been purchased by the joint Hindu family with the aid of joint Family funds. The plaintiff would fail in the suit if he succeeds not in substantiating his averments at the trial. The pleadings raised by the plaintiff can by no stretch be said to be pleading a case of benami. Neither what has been stated in the plaint is a case of "benami transaction" nor a right to recover "property held benami" is being sought to be enforced. The learned trial Court did err in holding the case pleaded by the plaintiff attracting the wrath of section 4 of the Benami Act and hence barred "thereby. 15. The plaint could not have been rejected at its threshold. It should have been and must be tried on merits. 16. For the foregoing reasons, the appeal is allowed. The order of the trial Court directing rejection of the plaint and the consequent decree dismissing the suit are set-aside. The trial Court is directed to restore the suit to file and proceed to try and dispose of the same in accordance with law. In view of the purely legal controversy arising for decision in the appeal, the parties are left to bear the costs as incurred. 17. The parties represented before this Court are directed through their respective counsel to appear before the trial Court on 16.12.1993.