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Monday, April 8, 2013

Benami Transaction (Prohibition) Act, 1988 = whether the facts disclosed would indicate that even after coming into force of the Act the defence under Secion 4 can be available. Admittedly, the transaction in question was registered on 24th August, 1970. The suit was filed on 5th of July 1984 which was long before coming into force of the Act. It is an admitted position that the written statement in the suit taking plea of benami was also filed by the appellant long before the Act had come into force. Therefore, it was not a case where Section 4(2) of the Act will have a limited operation in the pending suit after Section 4(2) of the Act had come into operation. It is true that the judgment of the trial court was delivered after the Act had come into force but that could not fetter the right of the appellant to take the plea of benami in his defence. Since the Act cannot have any retrospective operation in the facts and circumstances of the present case, as held by this Court in the aforesaid decision, we are therefore of the view that the appellant was entitled to raise the plea of benami in the written statement and to show and prove that he was the real owner of the suit property and that the respondent was only his benamidar. ;sub-section (2) of Section 3 clearly says that nothing in sub-section (1) shall apply to purchase of property of any person in the name of his wife, unmarried daughter and it shall be presumed, unless the contrary is proved, that suit property had been purchased for the benefit of the unmarried daughter. = Section 3 deals with Prohibition of benami transaction. Sub-section (1) clearly prohibits that no person shall enter into benami transaction. However, sub-section (2) of Section 3 clearly says that nothing in sub-section (1) shall apply to purchase of property of any person in the name of his wife, unmarried daughter and it shall be presumed, unless the contrary is proved, that suit property had been purchased for the benefit of the unmarried daughter. Section 3(2) makes it abundantly clear that if a property is purchased in the name of an unmarried daughter for her benefit, that would only be a presumption but the presumption can be rebutted by the person who is alleging to be the real owner of the property by production of evidences or other materials before the court. In this case, the trial court as well as the appellate court concurrently found that although the suit property was purchased in the name of the respondent but the same was purchased for the interest of the appellant. We are therefore of the opinion that even if the presumption under section 3(2) of the Act arose because of purchase of the suit property by the father ( in this case appellant ) in the name of his daughter ( in this case respondent ), that presumption got rebutted as the appellant had successfully succeeded by production of cogent evidence to prove that the suit property was purchased in the benami of the respondent for his own benefit. ;whether the concurrent findings of fact could be set aside by the High Court in the second appeal. = From the judgment of the High Court we further find that the concurrent findings of fact were set aside not on consideration of the findings of fact arrived at by the courts below but only on the basis of the arguments of the learned Advocate of the respondent. This was also not permissible to the High Court in Second Appeal to come to a contrary findings of its own only on the basis of the arguments of the learned counsel for the respondent without considering the findings of the trial court as well as the appellate court. (See [2002(9) SCC 735, Gangajal Kunwar (Smt.) and Ors. Vs. Sarju Pandey (Dead) by LRs & Ors.] ). It is equally settled that High Court in second appeal is not entitled to interfere with the concurrent findings of fact arrived at by the courts below until and unless it is found that the concurrent findings of fact were perverse and not based on sound reasoning.


CASE NO.:
Appeal (civil)  2867 of 2000

PETITIONER:
G.Mahalingappa          

RESPONDENT:
G.M. Savitha        

DATE OF JUDGMENT: 09/08/2005

BENCH:
D.M. DHARMADHIKARI & TARUN CHATTERJEE

JUDGMENT:
J U D G M E N T
TARUN CHATTERJEE, J.

This is an unfortunate litigation between a father and his married
daughter on the right of ownership of a house measuring about 40 feet
by 30 feet in Khata No.54 of Garehatty Village in Chitradurga Taluk
in the State of Karnataka (hereinafter referred to as the "suit
property").
The appellant, who suffered defeat in second appeal before the
High Court at Bangalore (Karnataka), filed  a Special Leave Petition
which on admission got registered as a regular appeal being Civil
Appeal No. 2867/2000  in this Court.

The appellant is the father of the respondent.  The suit property
was purchased by the appellant in the name of the respondent by a
registered sale deed dated 24th of August, 1970 when the respondent
was a minor of seven years of age.   Subsequently, her marriage was
settled and at that point of time she was assured that the respondent
shall not be disturbed as she was given to understand that the suit
property was her own property.  She was married to one Shri
C.Thippeswamy on 4th of December, 1980.  Relationship between the
appellant and the  respondent was cordial till 8th of October, 1983, and
only thereafter relationship became strained.  At that stage she asked
for vacation of the suit property not only from the appellant and his
family but also from the tenants who were defendants 2 to 5 in the
suit and for payment of rent to her.  The appellant and the tenants had,
however,  refused to vacate their  respective portions of the suit
property in their possession or to pay rent to her.  Accordingly, the
respondent was constrained to file the suit for declaration of title and
recovery of possession in respect of the suit property on the averment
that since the suit property stood in her name,  and the same was
purchased for the benefit of the respondent and as a security for her
marriage she was entitled to a decree for declaration and possession.
The suit was however filed on 5th of July, 1984.

The appellant resisted the claim of the respondent on various
grounds by filing a written statement.  According to the appellant, the
suit property was purchased by his own funds in the benami of her
daughter.  He also denied the allegation that the suit property was
purchased for and on behalf of the respondent under the sale deed
dated 24th August, 1970 nor it was purchased as a security for her
marriage.  According to him, the respondent was born on 5th
November, 1963 and immediately after the birth an astrologer was
contacted from whom the appellant ascertained that she was born on
an auspicious nakshatra and immediately thereafter he made up his
mind to purchase a site with a view to construct a house for his
residence.  Accordingly, he  purchased the suit property for a sum of
Rs.500/-.  It was not the intention of the appellant to create any
benefit, any right in the suit property to the respondent.   However, in
the year 1984, the suit property was bequeathed by a Will in favour of
the  respondent and two sons. After the suit property was purchased in
the benami of the respondent, he made improvement of the suit
property and in doing so he mortgaged the suit property in favour of
one Srinivasa Setty and obtained a loan of Rs.3,000/- on 15th
September, 1972.  Thereafter, he purchased another site adjacent to
the suit property under a sale deed dated 23rd May, 1972.   That sale
deed was also obtained in the name of the respondent out of love and
affection.  At that time the  respondent was about nine years old.  The
rest of the mortgaged amount  was utilized for construction of the
back portions of the house after spending his own money.  After
improving the same he constructed four portions which were in
occupation of the tenants, and he himself discharged the mortgaged
loan and other loans incurred for construction of the suit property.  He
also obtained permission of the Deputy Commissioner for alienation
of the suit property for non-agricultural purposes.  He paid taxes
levied by the Revenue Authorities in respect of construction of the
house.  He also paid alienation charges and Kandayam of  the suit
property from time to time.  Accordingly, the appellant sought for
dismissal of the suit inter alia on the ground that he was the real
owner and in possession of the suit property and the  respondent was
merely a benamidar in respect of the same.  Parties went into trial
with the  following issues:

1) Does the plaintiff prove that she is the owner of the suit
property?
2) Is she entitled to possession of the suit property as contended
by her?
3) Is she entitled for damages as claimed by her?
4) To what relief the plaintiff was entitled, if any?

An additional issue was framed which is of the following effect:

Does defendant No.1 prove that the suit was purchased
nominally in the name of the plaintiff under the circumstances
pleaded in the written statement, the plaintiff is a benamidar and he is
the real owner of the suit property, as contended?

Parties went to trial after adducing evidence to support their
respective claims as made out in the pleadings.
Both the courts found on consideration of the oral and
documentary evidence on record as well as the pleadings that 

1) the appellant had paid the purchase money.
2) the original title deeds were with the appellant.
3) the appellant had mortgaged the suit property for raising loan
to improve the same.
4) he paid taxes for the suit property.
5) he had let out the suit property to defendant Nos. 2 to 5 and
collecting rents from them.
6) the motive for purchasing the suit property in the name of
plaintiff was that the plaintiff was born on an auspicious
nakshatra and the appellant believed that if the property was
purchased in the name of plaintiff/respondent, the appellant
would prosper.
7) the circumstances surrounding the transaction, relationship of
the parties and subsequent conduct of the appellant tend to
show that the transaction was benami in nature.

                On the aforesaid concurrent findings of fact it was held that
the respondent had failed to prove that she was the real owner of the
suit property and that the appellant was however the real owner of the
same and the respondent  was only a benamidar of the appellant.

                 Accordingly,  the appellate court as well as the trial court
dismissed the suit of the respondent.

Feeling aggrieved by the concurrent decisions of the
appellate court as well as the trial court, a second appeal was filed
before the High Court at Bangalore, which, however, had set aside the
concurrent decisions and decreed the suit of the respondent only on
the ground that the purchase by the appellant in the name of the
respondent was intended for the benefit of the respondent.   While
coming to this conclusion, the High Court had taken into
consideration the fact that since the appellant had already executed a
Will bequeathing his property to the  respondent and two other sons,
which would, according to the High Court, amply show that the
intention of the  appellant to purchase the suit property in the name of
the respondent was to benefit the respondent.  In our view, this
finding on the face of the record is erroneous and perverse.   This
finding, according to us, was arrived at by the High Court in the
second appeal without any material on record to support such finding
nor it was based after considering the oral and documentary evidence
as well as the findings of fact arrived at by the trial court and appellate
court.  On the other hand,  in our view,  the findings of the appellate
court as well as the trial court were based on due consideration of oral
and documentary evidence on record and pleadings of the parties.    
To consider the intention to purchase the suit property for the benefit
of the respondent, in our view,  the  fact of bequeathing the suit
property by executing a Will by the appellant in favour of respondent
and two sons could not at all be a factor for consideration.  The
execution of the Will by the appellant in favour of his sons and the
respondent would only indicate that the suit property was treated as
the property of his own and the respondent was never accepted by him
to be a real owner of the same.  The other ground on which the
concurrent findings of fact were set aside and suit was decreed is to
the following effect:

"Even otherwise, as could be gathered from the
evidence and representation made at the Bar, her father
used to purchase the property in the name of all his sons
and daughters on auspicious days.  It can be clearly
gathered that the intention of the father was to benefit his
children to avoid any possible conflict or dispute that may
arise between them with reference to sharing of the
properties after his life time.  Therefore, taking the view on
equity as well, and the cumulative circumstances, I am
inclined to hold that the plaintiff is entitled to be held as
the owner of the property."

We are unable to agree with this conclusion of the High Court.
It is difficult to rely on the representation from the Bar that the
appellant used to purchase properties in the names of his children on
auspicious days and for that the intention of the appellant to purchase
the suit property for the benefit of the daughter only must be
presumed without having any material to support this conclusion from
the record.  We must not forget that the High Court was dealing with
a second appeal which was filed against the concurrent findings of
fact  based on consideration of oral and documentary evidence
adduced by the parties and such findings were on sound reasoning.
Even otherwise, we are of the view that the presumption that the suit
property was purchased for the benefit of the respondent  only was
amply rebutted by the appellant by adducing evidence that the suit
property, though purchased in the name of the respondent, was so
purchased for the benefit of the appellant and his family.
As noted hereinearlier,  the appellate court as well as the trial
court on consideration of all the materials including oral and
documentary evidence and on a sound reasoning  after considering the
pleadings of the parties came to concurrent findings of fact that  
purchase of the suit property by the appellant in the name of the
respondent was benami in nature.    As noted herein earlier, the
following findings of fact were arrived at by the appellate court and
the trial court  to conclude that the transaction in question was benami
in nature :-

1) the appellant had paid the purchase money.
2) the original title deed was with the appellant. And
3) the appellant had mortgaged the suit property for raising loan to
improve the same.
4) he paid taxes for the suit property.
5) he had let out the suit property to defendant Nos. 2 to 5 and
collecting rents from them.
6) the motive for purchasing the suit property in the name of
plaintiff was that the plaintiff was born on an auspicious
nakshatra and the appellant believed that if the property was
purchased in the name of plaintiff/respondent, the appellant
would prosper.
7) the circumstances surrounding the transaction, relationship of
the parties and subsequent conduct of the appellant tend to show
that the transaction was benami in nature.

Keeping these concurrent findings of fact in our mind
which would conclusively  prove that the transaction in question was
benami in nature, let  us now consider whether the appellant was
entitled to raise the plea of benami in view of introduction of the
Benami Transaction (Prohibition) Act, 1988 (In short "Act") and
whether the Act was retrospective in operation.  If so, in view of
Section 4(2) of the Act, plea of benami in the defence of the appellant
was not available to him.
Before a  two Judges Bench decision of this Court,  in the
case of Mithilesh Kumari  and another Vs. Prem Behari Khare
1989(2) SCC 95 this question had cropped  up.   In that decision, it
was  held that the question of benami cannot be taken as a plea either
in the plaint or in the written statement even when the sale deed was
executed and registered before the introduction of the Act and  when
the suit was filed before the Act had come into force.  Before we
proceed further, we may remind ourselves of certain provisions of the
Act.
Section 2 (a) defines 'benami transactions'  which means any
transaction in which property is transferred to one person for a
consideration paid or provided by another person.  Section 3  (1) and
(2) reads as under:

3(1) "No person shall enter into any benami
transactions.
(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 wife or the unmarried
daughter." (Underlining is ours)

Section 4  of the Act prohibits the right to recover property held 
benami. It reads  as under:

4(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." 
(underlining is ours)

Since in this case, we are concerned with the question whether the 
appellant was entitled to raise the plea of benami in his defence in 
view of the bar imposed in Section 4(2) of the Act,  let us now confine 
ourselves to the bar imposed in Section 4(2) of the Act of taking this 
plea in his defence and to the question of retrospective operation of 
this section or this provision is prospective in operation.
Now, therefore, the question arises is whether under section 4(2) 
of the Act,  defence can be allowed to be raised 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 or on behalf of a person claiming 
to be real owner of such property.  As noted already, this question
cropped up for decision before this Court in the case of Mithilesh
Kumari and Another  Vs.  Prem Behari Khare 1989 (2) SCC 95.   In
fact, the retrospective operation of this provision, as noted herein
earlier, was answered in the affirmative in the aforesaid decision.  
However, the correctness of that decision was doubted and an order
was passed by this Court subsequently referring this question of
retrospectivity for decision to a 3-Judges Bench of this Court.  In the
case of R.Rajagopal Reddy (Dead) by LRs.  And Ors.  Vs.  Padmini
Chandrasekharan (Dead) by LRs.  1995 (2) SCC 630,  S.B.
Majmudar, J. (As His Lordship then was) writing the judgment  for
the Three Judges Bench could not agree with the views expressed in
Mithilesh Kumari's case and held that the Act was prospective in
nature and it has no retrospective operation excepting certain
observations made in respect of some cases which would be
mentioned hereinafter.   In paragraph 10 it was observed as follows:-  
"though the Law Commission recommended retrospective
applicability of the proposed legislation, Parliament did not make the
Act or any of its sections retrospective in its wisdom.".   Thereafter on
a careful consideration of the provisions made under sections 3 and 4
of the Act, it was observed:

"A mere look at the above provisions shows that the
prohibition under Section 3(1) is against persons who are
to enter into benami transactions and it has laid down that
no person shall enter into any benami transaction which
obviously means from the date on which this prohibition
comes into operation i.e. w.e.f. 5/9/1988.  That takes care
of future benami transactions.  We are not concerned with
sub-section (2) but sub-section (3) of Section 3 also throws
light on this aspect.  As seen above, it states that whoever
enters into any benami transaction shall be punishable with
imprisonment for a term which may extend to three years
or with find or with both.  Therefore, the provision creates
a new offence of entering into such benami transaction.  It
is made non-cognizable and bailable as laid down under
sub-section (4)  It is obvious that when a statutory
provision creates new liability and new offence, it would
naturally have prospective operation and would cover only
those offences which take place after Section 3(1) comes
into operation."           (Underlining is ours).

In paragraph 11 of the said decision of this Court, the Supreme
Court further observed "On the contrary, clear legislative intention is
seen from the words "no such claim, suit or action shall lie", meaning
thereby no such suit, claim or action shall be permitted to be filed or
entertained or admitted to the portals of any court for seeking such a
relief after coming into force of Section 4(1)."  (underline is ours).

In the same paragraph the Supreme Court observed:

" With respect, the view taken that Section 4(1) would
apply even to such pending suits which were already filed
and entertained prior to the date when the section came
into force and which has the effect of destroying the then
existing right of plaintiff in connection with the suit
property cannot be sustained in the face of the clear
language of Section 4(1).  It has to be visualized that the
legislature in its wisdom has not expressly made Section 4
retrospective.  Then to imply by necessary implication that
Section 4 would have retrospective effect and would cover
pending litigations filed prior to coming into force of the
section would amount to taking a view which would run
counter to the legislative scheme and intent projected by
various provisions of the Act to which we have referred
earlier.  It is, however, true as held by the Division Bench
that on the express language of Section 4(1) any right
inhering in the real owner in respect of any property held
benami would get effaced once Section 4(1) operated,
even if such transaction had been entered into prior to the
coming into operation of Section 4(1), and henceafter
Section 4(1) applied no suit can lie in respect to such a
past benami transaction.  To that extent the section may be
retroactive."

In our view, similar is the position in law on the question
of retrospectivity  of section 4(2) of the Act.
Finally, this Court in the aforesaid decision held that the
decision in Mithilesh Kumari & Anr. Vs. Prem Behari Khare erred in
taking the view that under Section 4(2),  in all suits filed by persons in
whose names properties are held no defence can be allowed at any
future stage of the proceedings that the properties are held benami
cannot be sustained.  It was also held that Section 4(2) will have a
limited operation even in cases of pending suits after Section 4(2) had
come into force, if such defences are not already allowed.    The
decision in R. Rajagopal Reddy (Dead) by LRs. And Ors.  Vs.
Padmini Chandrasekharan (Dead) by LRs. 1995 (2) SCC 630 which
overruled the decision of two Judges Bench in the case of Mithilesh
Kumari and Anr.  Vs.  Prem Behari Khare 1989 (2) SCC 95 was also
approved by this Court in the  cases  of  Prabodh Chandra Ghosh  Vs.
Urmila Dassi AIR 2000 SC 2534 and  C. Gangacharan  Vs.
C.Narayanan  AIR 2000 SC 589.     In view of the aforesaid, this
question is, therefore, no longer res integra.  
Therefore, we are now to consider in this case
whether the 
facts disclosed would indicate that even after coming into force of the 
Act the defence under Secion 4 can be available.
Admittedly, the 
transaction in question was registered on  24th August, 1970.  
The suit 
was filed on 5th of July 1984 which was long before coming into force 
of the Act.  
It is an admitted position that the written statement in the 
suit taking plea of benami was also filed by the appellant long before 
the Act had come into force.  
Therefore, it was not a case where 
Section 4(2) of the Act will have a limited operation in the pending 
suit after Section 4(2) of the Act had come into operation.   
 It is true 
that the judgment of the trial court was delivered after the Act had 
come into force but that could not fetter the right of the appellant to 
take the plea of benami in his defence.  
Since the Act cannot have any 
retrospective operation in the facts and circumstances of the present 
case, as held by this Court in the aforesaid decision, we are therefore 
of the view that the appellant was entitled to raise the plea of benami 
in the written statement and to show and prove  that he was the real 
owner of the suit property and that the respondent was only his 
benamidar.  

Before parting with this judgment, we may take into
consideration of a short submission of the learned counsel for the
respondent.   The submission is that since the suit property was
purchased by the appellant in the  name of the respondent, the suit
property must be held to have been purchased by him for the benefit
of the respondent.
 Section 3 deals with Prohibition of benami 
transaction. 
 Sub-section (1) clearly prohibits that no person shall 
enter into benami transaction. 
 However,  sub-section (2) of Section 3 
clearly says that nothing in sub-section (1) shall apply to purchase of 
property of any person in the name of his wife, unmarried daughter 
and it shall be presumed, unless the contrary is proved, that suit 
property had been purchased for the benefit of the unmarried 
daughter.  

Section 3(2) makes it abundantly clear that if a property is 
purchased in the name of an unmarried daughter for her benefit, that 
would only be a presumption but the presumption can be rebutted by 
the person who is alleging to be the real owner of the property by 
production of evidences or other materials before the court.  In this 
case,  the trial court as well as the appellate court concurrently found 
that although the suit property was purchased in the name of the 
respondent but the same was purchased for the interest of the 
appellant.    We are therefore of the opinion that even if the 
presumption under section 3(2) of the Act  arose because of purchase 
of the suit  property by the father ( in this case appellant ) in the name 
of his daughter ( in this case respondent ), that presumption got 
rebutted as the appellant had successfully succeeded by production of 
cogent evidence to prove that the suit property was purchased in the 
benami of the respondent for his own benefit.

Let us now consider
whether the  concurrent findings of fact 
could be set aside by the High Court in the second appeal. 
 It is well 
settled by diverse decisions of this Court that the High Court in 
second appeal is entitled to interfere with the concurrent findings of 
fact if the said concurrent findings of fact are based on non-
consideration of an important piece of evidence in the nature of 
admission of one of the party to the suit,  which is overlooked by the 
two courts below ( See [2003 (7) SCC 481, Deva (Dead) Through 
LRs Vs. Sajjan Kumar (Dead) by LRs] ).  
It is equally well settled 
that under section 100 of the Code of Civil Procedure, High Court 
cannot interfere with concurrent findings of facts of the courts below 
without insufficient and just reasons. (See [2003(7)SCC 52, Sayeda 
Akhtar Vs. Abdul Ahad]).  
 In second appeal, High Court is also not 
entitled to set aside concurrent findings of fact by giving its own 
findings contrary to the evidence on record.   
(See  [ 2001 (4) SCC 
694, Saraswathi & Anr.  Vs.  S.Ganapathy & Anr.] ).

As held herein earlier the High Court had set aside the 
concurrent findings of fact not on consideration of the evidence 
adduced by the parties but set aside the concurrent findings of  fact on 
the basis of findings contrary to the evidence on record and without 
considering the findings of fact arrived at by the appellate court and 
the trial court.     
From the judgment of the High Court we further find 
that the concurrent findings of fact were set aside not on consideration 
of the findings of fact arrived at by the courts below but only on the 
basis of the arguments of the  learned Advocate of the respondent.  
This was also not permissible to the High Court in Second Appeal to 
come to a contrary findings of its own only on the basis of the 
arguments of the learned counsel for the respondent without 
considering the findings of the trial court as well as the appellate 
court.
(See [2002(9) SCC 735, Gangajal Kunwar (Smt.) and Ors. Vs. 
Sarju Pandey (Dead) by LRs & Ors.] ). 
 It is equally settled that High 
Court in second appeal is not entitled to interfere with the concurrent 
findings of fact arrived at by the courts below  until and unless it is 
found that the concurrent findings of fact were perverse and not based 
on sound reasoning.  
We ourselves considered the evidence on record 
as well as the findings of fact arrived at by the two courts below.  
From such consideration we do not find that the concurrent findings 
of fact arrived at by the appellate court as well as the trial court were 
either perverse or without any reason or based on non-consideration 
of important piece of evidence or admission of some of the parties.  
We are therefore of the view that the High Court was not justified in 
interfering with the concurrent findings of fact arrived at by the 
appellate court as well as the trial court which findings were rendered 
on consideration of the pleadings as well as the material ( oral and 
documentary )  evidence on record.  
For the reasons aforesaid this appeal is allowed.  The judgment 
of the High Court impugned in this Court is set aside and the 
judgments of the trial court as well as the appellate court are affirmed.  
The suit filed by the respondent shall stand dismissed.
There will be no order as to costs.





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