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2014 DIGILAW 142 (CHH)

Vidyut Kumar Nath v. D. K. Nath

2014-03-27

SANJAY K.AGRAWAL

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JUDGMENT Sanjay K. Agrawal, J. 1. The substantial question of law formulated and to be answered in this plaintiffs' second appeal states as under: "Whether the Courts below were not justified in rejection of the plaint under Order 7 Rule11 of the C.P.C. on the ground that the suit was barred under Section 4 of the Benami Transactions (Prohibition) Act, 1988?" [For the sake of convenience, the parties will be referred in the instant judgment as were referred in the suit.] The imperative facts required to be noticed for adjudication of this appeal are as under: (1.1) Late Shri Dhananjai Chandra Nath had two sons namely Vidhut Kumar Nath & Vijay Kumar Nath (hereinafter called as "the plaintiffs") and one daughter namely Sapna Rani Nath -defendant No. 2. Smt. Sapna Rani Nath married to defendant No. 1 - D.K. Nath on 11.5.1984 (hereinafter called as 'defendants'). It is pleaded that late Shri Dhananjai Chandra Nath had got allotted on lease the shop No. 17, Moti Complex from Municipal Corporation, Durg and also got the right of occupation therein in the name of defendant No. 2. On 20.8.2001, the plaintiffs filed Civil Suit No. 19-A/2002 against defendant No. 2 Smt. Sapna Rani Nath and her husband defendant No. 1-D.K. Nath seeking relief of declaration that the suit shop was taken on lease by their father late Shri Dhananjai Chandra Nath in the name of defendant No. 2 for their business purpose as they were unemployed; and claimed a decree be passed and defendants be restrained from interfering with their peaceful possession in the suit shop. (1.3) Upon being summoned, the defendants filed their joint written statement taking principal defence that the suit shop was taken on lease by defendant No. 2 from her own income by making payment of 1,51,000/- and the lease agreement has also entered with the Municipal Corporation, Durg on 14.9.1988; and they filed counter claim and prayed for dismissal of the suit and grant of decree of permanent injunction in their favour restraining the plaintiffs from interfering with their possession. (1.4) The defendants also filed an application under Order 7 Rule 11(d) of the Code of Civil Procedure read with Section 4 of the Benami Transactions (Prohibition) Act, 1988 (hereinafter referred to as 'the Act of 1988') stating inter alia that plaintiffs' civil suit No. 19-A/2002 is hit by Order 7 Rule 11 read with Section 4(1) of the Act of 1988, as per plaint allegations, the suit shop was taken on lease by late Shri Dhananjai Chandra Nath in the name of defendant No. 2 on 14.9.1988 and the defendant No. 2 has already married prior to the date of lease of suit shop and The Benami Transactions (Prohibition) Act, 1988 has came into force on 19.5.1988 and, therefore, the suit claiming declaration of title and permanent injunction in respect of the suit shop claiming to be Benami by the plaintiffs against the defendant No. 2 specifically is hit by Section 4(1) of the Act of 1988 and, therefore, the plaintiffs' suit is liable to be rejected in exercise of jurisdiction under Order 7 Rule 11(d) of the CPC. (1.5) The plaintiffs, filed their reply to the said application, stating inter alia that the question whether the suit is hit by Section 4 of the Act; and barred by law has to be examined as a preliminary issue and presently the application under Order 7 Rule 11 of CPC is not maintainable and the same is liable to be rejected. 2. The trial Court, by its order dated 26.07.2002 held that the instant suit filed by the plaintiffs for declaration of title and permanent injunction is hit by Section 4(1) of the Act of 1988 and allowed the application under Order 7 Rule 11(d) of the Code and in consequence thereof dismissed the suit. 3. On appeal preferred by the plaintiffs, the first appellate Court, by it order dated 19.2.2002 concurred with the findings of the trial Court and dismissed the appeal. 4. Feeling aggrieved and dissatisfied with the said order/judgment, the instant second appeal has been filed under Section 100 of the CPC by the plaintiffs, which has been admitted on the substantial question of law formulated as mentioned in opening paragraph of this judgment. 5. Mr. 4. Feeling aggrieved and dissatisfied with the said order/judgment, the instant second appeal has been filed under Section 100 of the CPC by the plaintiffs, which has been admitted on the substantial question of law formulated as mentioned in opening paragraph of this judgment. 5. Mr. Vimlesh Bajpai, learned counsel appearing for the appellants/plaintiffs would submit that both the courts below have committed palpable error of jurisdiction in holding that the plaintiffs' suit is hit by Section 4(1) of the Act of 1988. He would further submit that Section 4(1) of the Act is not attracted as transaction of lease is not a transfer of property within the meaning of Sections 2(a) and 2(d) of the Act and, therefore, judgment and decree passed by both the courts below deserve to be set aside. 6. Mr. Malay Shrivastava, learned counsel appearing for the respondents/defendants would submit that Section 4(1)of the Act bars the institution of suit, making of claim or action to enforce any right in respect of any property held benami claiming to be real owner of such property and, therefore, the instant transaction of lease be transfer of property within the meaning of Section 2(a) and (2) of the Act and provisions of Section 4(1) of the Act is squarely attracted in the instant case with full force. 7. I have heard learned counsel appearing for the parties and perused the records of both the courts below including judgment and decree impugned with utmost circumspection. 8. For proper comprehension of the attack made to the order passed by the two courts below, dismissing the suit invoking Order 7 Rule 11 of the CPC read with Section 4(1) of the Act of 1988, it would be profitable to quote Sections 3(1) (a) & 4 of the Benami Transactions (Prohibition) Act, 1988, which reads as under:-- "3. Prohibition of benami transactions.--(1) No person shall enter into any benami transaction. (2) Nothing in sub-section (1) shall apply to-- (a) 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; (b) xxx xxx xxx 4. (2) Nothing in sub-section (1) shall apply to-- (a) 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; (b) xxx xxx xxx 4. Prohibition of the right to recovery 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. (3) Nothing in this section shall apply,-- (a) where the person in whose name the property is held is a coparcener in a Hindu undivided family and the property is held for the benefit of the coparceners in the family; or (b) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity." 9. A close reading of the afore-stated provision would show that no suit, claim or action to enforce a right in respect of any property held benami shall lie against the person in whose name the property is held or against any other person at the instance of the person claiming to be real owner of the such property and the prohibition enumerated in Section 4 would, therefore, apply to such a suit, subject to the satisfaction of other conditions stipulated therein. In other words, unless the conditions contained in Section 4(1) and 4(2) are held to be inapplicable by reason of anything contained in sub-Section (3) thereof. 10. In other words, unless the conditions contained in Section 4(1) and 4(2) are held to be inapplicable by reason of anything contained in sub-Section (3) thereof. 10. Section 2(a) and Section 2(c) of the Benami Transactions (Prohibition) Act, 1988 defines benami transaction and property as under :-- 2(a) "Benami transaction" means any transaction in which property is transferred to one person for a consideration paid or provided by another person; 2(c) "Property" means property of any kind, whether movable or immovable, tangible or intangible, and includes any right or interest in such property. 11. The short question that falls for consideration is whether "transaction of lease" is a transfer of property within the meaning of Sections 2(a) & 2(c) of the Act as to attract the applicability of Section 4(1) of the Act. 12. In order to appreciate the question raised, it would be proper to notice the definition of lease defined in Transfer of Property Act. 13. "Lease" has been defined in Section 105 of the Transfer of Property Act as under:-- "105. A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasion to the transferor by the transferee, who accepts the transfer on such terms." Thus, the essential elements of a lease are: 1. the parties 2. the subject matter, or immovable property. 3. the demise, or partial transfer 4. the term, or period. 5. the consideration, or rent. 14. The Supreme Court in case of Puran Singh Sahni v. Sundari Bhagwandas Kripalani and others : (1991)2 SCC 180 has considered the nature of lease vis-à-vis the transfer of property and held that lease is a partial transfer, that is a transfer of right of enjoyment for certain time and held as under: "17. The relationship of lessor and lessee is one of the contract. In Bacon's Abridgement, a lease is defined as "a contract between the lessor and the lessee for the possession and profits of land, etc., on the one side and recompense by rent or other consideration on the other". The relationship of lessor and lessee is one of the contract. In Bacon's Abridgement, a lease is defined as "a contract between the lessor and the lessee for the possession and profits of land, etc., on the one side and recompense by rent or other consideration on the other". Hence it has been held that "a mere demand for rent is not sufficient to create the relationship of landlord and tenant which is a matter of contract assented to by both parties". When the agreement vests in the lessee a right of possession for a certain time it operates as a conveyance or transfer and is a lease. The section defines a lease as a partial transfer, i.e., a transfer of a right of enjoyment for a certain time". 15. Again, the Supreme Court in case of Jaswant Singh Mathurasingh and another v. Ahmedabad Municipal Corporation and others : AIR 1991 SC 2130 has held as under:-- "8. The question is whether the tenant or a sub-tenant is a person interest and is entitled to notice. It is obvious that under S. 105 of Transfer of Property Act, a lease creates right or an interest in enjoyment of the demised property and a tenant or a sub-tenant is entitled to remain in possession of the demised property until the lease is duly terminated and eviction takes place in accordance with law. Therefore, a tenant or a sub-tenant in possession of a tenement in the Town Planning Scheme is a person interest within the meaning of Rules 21(3) and (4) of the Rules. But he must be in possession of the property on the crucial date i.e. when the town planning scheme is notified in the official Gazette., Every owner or tenant or a subtenant, in possession on that date alone shall be entitled to a notice and opportunity." 16. Thus, in the light of authoritative pronouncement of the Supreme Court, it is transparently clear that lease is a transfer of interest in the immovable property to enjoy for certain time and, therefore, 'lease' will come within the meaning of Transfer of Property as defined in Section 2(a) as 2(c) of the Act, therefore, the applicability of Section 4(1) of the Act can be considered, if the property is leased out benami. 17. 17. In order to ascertain the applicability of Section 4(1) of the Act, brief survey of plaint would be imperative. 18. The plaintiffs have asserted in the plaint that the defendant No. 2 married to defendant No. 1 on 11.5.1984 and the suit shop was taken on lease from the Municipal Corporation, Durg on 14.9.1988; on the said date i.e. 14.9.1988, the lease agreement was executed between the Municipal Corporation, Durg and defendant No. 2- Sapna Rani Nath with respect to the suit shop No. 17 situated at Moti Complex, Durg on payment of 1,51,000/- and the instant suit has been filed on 20.8.2001 claiming declaration of title and permanent injunction stating that the suit shop has been taken on lease by their father late Shri Dhananjai Chandra Nath for the benefit of plaintiffs as they were unemployed, but the plaintiffs' father being the religious person and considering the business prospect, purchased in the name of defendant No. 2- Sapna Rani Nath, as such after the death of their father, they are real title holder of the suit shop and thus, they are entitled for decree of declaration of their title and permanent injunction. 19. The Supreme Court in case of R. Rajagopal Reddy (dead) by L.Rs. v. Padmini Chandrasekharan (dead) by L.Rs. : AIR 1996 SC 238 has considered the provisions of Section 4(1) of the Act and their Lordships held as under:-- "17. As regards, reason 3, we are of the considered view that the Act cannot be treated to be declaratory in nature. Declaratory enactment declares and clarifies the real intention of the legislature in connection with an earlier existing transaction or enactment, it does not create new rights or obligations. On the express language of Section 3, the Act cannot be said to be declaratory but in substance it is prohibitory in nature and seeks to destroy the rights of the real owner qua properties held benami and in this connection it has taken away the right of the real owner both for filing a suit or for taking such a defence in a suit by benamidar. Such an Act which prohibits benami transactions as existing earlier is really not a declaratory enactment. 18. Such an Act which prohibits benami transactions as existing earlier is really not a declaratory enactment. 18. No exception can be taken to the aforesaid observations of learned author which in our view can certainly be pressed in service for judging whether the impugned section is declaratory in nature or not. Accordingly it must be held that Section 4 or for that matter the Act as a whole is not a piece of declaratory or curative legislation. It creates substantive rights in favour of benamidars and destroys substantive rights of real owners who are parties to such transactions and for whom new liabilities are created by the Act. 19. Qua reason 4, we may refer to our discussion earlier that the words "no suit shall lie" as found in Section 4(1) and "no defence based on rights in respect of property shall be allowed" as found in Section 4(2) have limited scope and operation and consequently this consideration also cannot have any effect on the conclusion which can be reached in this case. As to reason 5, it is observed that even though suit may include appeal and further appeals in the hierarchy, at different stages of the litigation, Section 4(1) and Section 4(2)cannot be made applicable to these subsequent stages as already seen by us earlier. Otherwise, they would cut across the very scheme of the Act.?" 20. Thus, in the light of decision of the Supreme Court in the above referred case, Section 4(1) is prohibitory in nature and seeks to destroy the rights of the real owner qua properties held benami and in view of the finding recorded hereinabove that the transaction of lease is a transfer of property so as to attract the applicability of Section 4(1) of the Act, it is luminously clear that suit filed by the plaintiffs seeking decree of declaration of title in respect of shop No. 17, Moti Complex, Durg claiming that it was held by defendant No. 2 as Benamidar and plaintiffs are real owner of the suit shop is clearly & evidently hit by Section 4(1) of the Act. 21. Thus, the trial Court as well as first appellate Court is absolutely and perfectly justified in allowing the application under Order 7 Rule 11 of the CPC read with Section 4(1) of the Act of 1988 and, consequently, dismissing the suit. 21. Thus, the trial Court as well as first appellate Court is absolutely and perfectly justified in allowing the application under Order 7 Rule 11 of the CPC read with Section 4(1) of the Act of 1988 and, consequently, dismissing the suit. Thus, the said findings recorded by both the courts below are finding of fact based on material available on record and I do not find it either perverse or contrary to record. 22. Accordingly, the appeal fails and is hereby dismissed. No order as to costs. A decree be drawn up accordingly.