REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6645 of 2003
Sri Marcel Martins …Appellant
Versus
M. Printer & Ors. …Respondents
J U D G M E N T
T.S. THAKUR, J.
1. This appeal by special leave arises out of a judgment and order
passed by the High Court of Karnataka at Bangalore whereby OS No.3119/90
filed by the respondents for a declaration to the effect that they are co-
owners of the suit property and for an injunction restraining the defendant-
appellant from interfering with their possession has been decreed. The
factual backdrop in which the suit is filed may be summarised as under:
The suit property comprises a residential house bearing Municipal
No.33, A and B Block, Austin Town, Bangalore-47 which was originally owned
by the Corporation of the city of Bangalore. The said property was leased
by the Corporation to late Smt. Stella Martins-mother of the parties before
us. In the year 1978 the Corporation took a decision to sell the said
property and presumably similar other properties to those in occupation of
the same. The State Government also approved the said proposal with a note
of caution that care should be taken to correctly identify the occupants of
the property being sold. Before a sale could be effected in her favour,
Stella Martins passed away in November, 1982 leaving behind her husband Sri
C.F. Martins, their daughters (respondents in this appeal) and the
appellant who happens to be the only son of his parents. The case of the
plaintiffs-respondents is that the Corporation desired that transfer of the
tenancy rights held by Smt. Stella Martins should be made to only one
individual out of the several legal representatives left behind by the
deceased. It was for that reason that the husband of the deceased-tenant
and the daughters-respondents herein all consented to the transfer of the
tenancy rights in favour of the appellant.
In due course the Corporation raised a demand for a sum of Rs.48,636/-
towards consideration for the sale of the suit property to the appellant
who held the tenancy rights. The case of the plaintiffs-respondents before
us is that in order to satisfy the said demand Sri C.F. Martins-father of
the parties in this appeal, transferred a sum of Rs.35,636/- to an account
jointly held by respondent no.1 and her husband for purchasing a bank draft
in order to satisfy the Corporation’s demand referred to above. A demand
draft for a sum of Rs.48,636/- was eventually purchased on 13th November,
1986 by debit to the saving account of respondent no.1 and her husband and
paid to the Corporation on the 14th November, 1986. A sale deed was on
payment of the sale consideration, executed in favour of the appellant on
26th June, 1987. The plaintiffs-respondents further case was that Sri C.F.
Martins-plaintiff no.1 executed a registered will on 16th August, 1989
whereby he bequeathed his entire estate including the suit schedule
property equally to all his children. An affidavit setting out the
circumstances in which the suit schedule property was transferred in favour
of the appellant was also sworn by the father of the parties on 15th
November, 1989.
A dispute relating to the suit schedule property having arisen between
the parties including Sri C.F. Martins, their father, the latter filed a
criminal complaint in December 1989 followed by OS No.3119 of 1990 in the
Court of VI Additional City Civil Judge, Bangalore, praying for a
declaration to the effect that the plaintiffs were co-owners in the
schedule property to the extent of their contribution and praying for an
injunction restraining the defendant-appellant herein from interfering with
the possession of plaintiff nos.1 and 2 over the same.
In the written statement filed by the defendant-appellant, it was,
inter alia, alleged that the entire sale consideration towards purchase of
the schedule premises was provided by him, which made him the absolute
owner of the suit property. On the pleadings of the parties, the Trial
Court framed the following issues for determination:
1. Whether the plaintiffs prove that plaintiffs and defendant
contributed the purchase money of suit site?
2. Whether the plaintiffs prove that plaintiffs and defendant are
having a right in the schedule premises as co-owners?
3. Do the plaintiffs prove that they are in lawful possession of the
suit property?
4. Do the plaintiffs prove that defendant threatened to throw away them
from the suit property?
5. Whether defendant proves that the entire sale consideration towards
purchase of suit schedule property was contributed by him?
6. What relief or order?
Addl. Issues:
7. Whether the plaintiffs are entitled for a decree of permanent
injunction restraining the defendant from forcibly dispossessing the
plaintiffs other than by due process of law?
The parties led oral and documentary evidence in support of their
respective cases eventually culminating in the judgment and order dated
29th March, 1995 passed by the Trial Court dismissing the suit filed by the
plaintiffs.
Aggrieved by the above judgment and decree the plaintiffs-respondents
filed Regular First Appeal No.402 of 1995 before the High Court which was
allowed by the High Court by its judgment and order dated 26th March, 2001
impugned before us. The High Court reversed the findings recorded by the
Trial Court and decreed the suit filed by the plaintiffs-respondents, as
already noticed above.
The High Court on a re-appraisal of the evidence took the view that
the appellant had not succeeded in proving that he had paid the entire
amount of consideration for the purchase of the suit property. The High
Court held that the deposition of the Bank Manager had clearly established
that the joint account held by the appellant and his father Sri C.F.
Martins had never been operated by the appellant. The High Court further
held that the appellant’s case that he had withdrawn a sum of Rs.23,000/-
towards the sale consideration from the post office savings account was not
borne out by the record of the Post Office the withdrawals having been made
in the year 1982 whereas the sales consideration was deposited five years
later in 1987. The High Court further held that the deposition of plaintiff
no.1 Sri C.F. Martins to the effect that his children had contributed
equally towards the sale consideration had remained unassailed in cross-
examination. The contention urged on behalf of the defendant-appellant
herein that the suit was hit by The Benami Transactions (Prohibition) Act,
1988, was also repelled by the High Court.
2. Appearing for the appellants Mr. Anoop G. Chaudhary strenuously
argued that the findings recorded by the High Court were contrary to the
weight of evidence on record hence legally unsustainable. Mr. Chaudhary
took pains to refer to us the depositions of the witnesses and the
documents on record in an attempt to persuade us to reverse the findings of
fact recorded by the High Court. Mr. Naveen R. Nath, learned counsel
appearing for the respondents, on the other hand, argued that the High
Court being the last Court of facts, in the absence of any perversity in
the approach adopted by the High Court causing miscarriage of justice,
there was no room for a reappraisal of the evidence and reversal of the
findings recorded by the High Court on facts. He contended that the
findings recorded by the High Court were even otherwise fully justified in
the light of the overwhelming evidence on record.
3. The High Court had, on the basis of the rival submissions made before
it, formulated two distinct questions that fell for its consideration. The
first was whether the entire sale consideration required for the purchase
of the suit property was provided by the defendant or contributions in that
regard were made even by the plaintiffs. The second question which the High
Court formulated was whether the plaintiffs and the defendant were co-
owners of the suit property and whether the sale transaction in favour of
the appellant was a benami transaction so as to be hit by the provisions of
the Benami Transactions (Prohibition) Act, 1988.
4. While answering the first question, the High Court referred to the
evidence on record including the deposition of witnesses especially
Respondent No.1 (PW-2) who had played a dominant role in obtaining the sale
deed from the Corporation. This witness had stated that each one of the
children had contributed Rs.5000/- whereas the rest of the amount was paid
by their father Sri. C.F. Martins to make a total of Rs.48,636/- demanded
by the Corporation towards the sale consideration for the premises. She
also stated that the said amount was paid by a demand draft obtained from
her and her husband’s joint account which fact was certified even by the
bank in terms of Ex.P.2, a letter stating that the bank draft in question
had been issued by debit to the account jointly held by her and her
husband. The original sale deed was also in possession of the said witness
as was the possession of the suit property. She had further stated that
the amount of Rs.35,636/- transferred to her account in November, 1986 had
been paid by their father alone and not jointly by the defendant-appellant
and their father as alleged by the former.
5. The High Court also relied upon the deposition of respondent No.2 (PW-
3) who similarly supported the plaintiffs’ version regarding contribution
of Rs.5000/- for the purchase of the suit schedule property and PW-4-the
Bank Manager who was examined to speak about Savings Account No.902
standing in the name of the first plaintiff and the appellant herein. The
Manager had deposed that plaintiff no.1, Sri C.F. Martins, used to get
cheques in pound sterling from the Crown Agents, London and the bank used
to purchase the cheques convert the same into rupees and credit the amount
to the account every month. It was also stated that although the defendant-
appellant was a joint holder of the account, he had never operated the said
account. The High Court upon a careful reappraisal of the evidence
concluded as under:
“From the aforesaid evidence on record what emerges is Rs.48,636.00
is the consideration amount paid to the Corporation for purchase of
the schedule property. The same amount was paid by way of a demand
draft. The said demand draft was obtained from the Savings bank
Account no. 339 of the second plaintiff on 13.11.1986. These facts
are not in dispute. Now it is also not in dispute a sum of Rs.
35,636.00 was paid to the second plaintiff by the first plaintiff
from his Savings Bank Account which amount was utilized by the
second plaintiff to purchase the demand draft towards sale
consideration after making good the balance amount. The defendant
contends in one breath that he sent a cheque for Rs. 48,636.00 from
Bombay where he was working to the plaintiff for the purpose of
sale consideration. The evidence on record clearly falsified this
part of the case of the defendant and the falsity of the said stand
taken by the defendant. The next version given by the defendant
is this cheque for Rs. 35,636.00 issued from Savings Bank Account
No.901 as per Ex.D.5 is a cheque issued by him to the second
plaintiff towards the sale consideration. The evidence of the
manager of the bank discloses that the defendant never operated the
bank account. On the contrary, the evidence of P.W.1 and the other
material on record discloses that it is a cheque issued by P.W.1 in
favour of PW.2 which again exposes the falsity of the case of the
defendant.”
6. The High Court noticed the reasons given by the Trial Court in
support of its findings and found the same to be untenable. The High Court
observed:
“Therefore, in view of my discussion as aforesaid, I am of the
opinion that the defendant has miserably failed to establish that
the entire sale consideration of Rs.48,636.00 was paid by him. On
the contrary the plaintiffs have established their case that
plaintiffs 2, 3 and 4 and defendant have contributed Rs. 5000.00
towards the sale consideration and the balance amount has been
contributed by the first plaintiff. As such it cannot be said that
the defendant is the absolute owner of the suit schedule property.”
7. We do not find any error much less any perversity in the view taken
by the High Court nor do we see any miscarriage of justice to warrant
interference with the finding that the sale consideration for the purchase
of the suit property was contributed by the plaintiffs and the defendant
and not provided by the defendant alone as claimed by him. We have,
therefore, no hesitation in upholding the said findings which is at any
rate a pure finding of fact.
8. On the second question the High Court relied upon the principles
underlying Section 45 of the Transfer of Property Act, 1882, apart from
holding that the purchase of the suit property in the name of the appellant
by contributions made by the remaining legal representatives and the
original owner did not amount to a benami transaction. The High Court held
that if a part of the consideration paid for the property in dispute had
been provided by the appellant in whose name the property was purchased,
the transaction could not be said to be a benami transaction. The High
Court was of the view that since the appellant had raised the contention
that the entire sale consideration had been provided by him, he was
according to the High Court estopped from contending that the transaction
was a benami transaction hit by the provisions of Section 4 of Benami
Transactions (Prohibition) Act, 1988.
9. Mr. Chaudhary, learned counsel for the appellant submitted that the
High Court was in error in holding that the Benami Transactions
(Prohibition) Act, 1988 was not applicable. The transaction in question
argued the learned counsel was benami to the extent the title to the
property was transferred in the name of the appellant while consideration
for such transfer was provided by the plaintiffs. He submitted that Section
3 prohibited any benami transaction while Section 4 prohibited recovery of
property held benami from a person in whose name the same is held. He
contended that the suit filed by the respondents fell within the mischief
of Section 4 and was, therefore, liable to be dismissed.
10. Mr. Nath, learned counsel for the respondents, on the other hand,
submitted that not only on the principle of estoppel which the High Court
had invoked but even in the light of the provisions of Section 5 of the Act
the appellant was not entitled to plead the prohibition under Section 4 of
the Act. He further argued that sub-section (3) (b) of Section 4
specifically saved a transaction where the property is held by the person
who stands in a fiduciary capacity for the benefit of the person towards
whom he stands in such capacity.
11. Section 2 of the Benami Transactions (Prohibition) Act, 1988 defines
a benami transaction as under:
“Section 2 (a) "benami transaction" means any transaction in which
property is transferred to one person for a consideration paid or
provided by another person;”
12. Section 3 forbids benami transaction while sub-section (2) thereof
excludes such a transaction enumerated therein from the said provision.
Section 4 of the Act, upon which heavy reliance was placed by Mr.
Chaudhary, may be extracted in extenso:
Section 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.
(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.”
13. A plain reading of the above will 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 a person claiming to be the real owner of such property.
It is common ground that although the sale deed by which the property was
transferred in the name of the appellant had been executed before the
enactment of above legislation yet the suit out of which this appeal arises
had been filed after the year 1988. The prohibition contained 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 (2) are held to be inapplicable by reason of
anything contained in sub-section (3) thereof the suit filed by plaintiffs-
respondents herein would fall within the mischief of Section 4.
14. The critical question then is whether sub-section (3) of Section 4
saves a transaction like the one with which we are concerned. Sub-section
(3) to Section 4 extracted above is in two distinct parts. The first part
comprises clause (a) to Section 4(3) which deals with acquisitions by and
in the name of a coparcener in a Hindu undivided family for the benefit of
such coparceners in the family. There is no dispute that the said
provision has no application in the instant case nor was any reliance
placed upon the same by learned counsel for the plaintiffs-respondents.
What was invoked by Mr. Naveen R. Nath, learned counsel appearing for the
respondents was Section 4(3)(b) of the Act which too is in two parts viz.
one that deals with trustees and the beneficiaries thereof and the other
that deals with persons standing in a fiduciary capacity and those towards
whom he stands in such capacity. It was argued by Mr. Nath that the
circumstances in which the purchase in question was made in the name of the
appellant assumes great importance while determining whether the appellant
in whose name the property was acquired stood in a fiduciary capacity
towards the plaintiffs-respondents.
(15) The expression “fiduciary capacity” has not been defined in the 1988
Act or any other Statute for that matter. And yet there is no gainsaying
that the same is an expression of known legal significance, the import
whereof may be briefly examined at this stage.
(16) The term “Fiduciary” has been explained by Corpus Juris Secundum as
under:
“A general definition of the word which is sufficiently
comprehensive to embrace all cases cannot well be given. The term
is derived from the civil, or Roman Law. It connotes the idea of
trust or confidence, contemplates good faith, rather than legal
obligation, as the basis of the transaction, refers to the
integrity, the fidelity, of the party trusted, rather than his
credit or ability, and has been held to apply to all persons who
occupy a position of peculiar confidence toward others, and to
include those informal relations which exist whenever one party
trusts and relies on another, as well as technical fiduciary
relations.
The word ‘fiduciary’, as a noun, means one who holds a thing in
trust for another, a trustee, a person holding the character of a
trustee, or a character analogous to that of a trustee with respect
to the trust and confidence involved in it and the scrupulous good
faith and condor which it requires; a person having the duty,
created by his undertaking, to act primarily for another’s benefit
in matters connected with such undertaking. Also more
specifically, in a statute, a guardian, trustee, executor,
administrator, receiver, conservator or any person acting in any
fiduciary capacity for any person, trust or estate.”
17. Words and Phrases, Permanent Edition (Vol. 16-A p. 41) defines
“Fiducial Relation” as under:
“There is a technical distinction between a ‘fiducial relation’
which is more correctly applicable to legal relationships between
parties, such as guardian and ward, administrator and heirs, and
other similar relationships, and ‘confidential relation’ which
includes the legal relationships, and also every other relationship
wherein confidence is rightly reposed and is exercised.
Generally, the term ‘fiduciary’ applies to any person who
occupies a position of peculiar confidence towards another. It
refers to integrity and fidelity. It contemplates fair dealing and
good faith, rather than legal obligation, as the basis of the
transaction. The term includes those informal relations which
exist whenever one party trusts and relies upon another, a well as
technical fiduciary relations.”
18. Black’s Law Dictionary (7th Edn. Page 640) defines “fiduciary
relationship” thus:
“Fiduciary relationship- A relationship in which one person is
under a duty to act for the benefit of the other on matters within
the scope of the relationship. Fiduciary relationships- such as
trustee-beneficiary, guardian-ward, agent-principal, and attorney-
client – require the highest duty of care. Fiduciary relationship
usually arise in one of four situations: (1) when one person places
trust in the faithful integrity of another, who as a result gains
superiority or influence over the first, (2) when one person
assumes control and responsibility over another, (3) when one
person ha a duty to act for give advice to another on matters
falling within the scope of the relationship, or (4) when there is
a specific relationship that has traditionally been recognised as
involving fiduciary duties, as with a lawyer and a clinet or a
stockbroker and a customer.”
19. Stroud’s Judicial Dictionary explains the expression “fiduciary
capacity” as under:
“Fiduciary Capacity – An administrator who had received money under
letters of administration and who is ordered to pay it over in a
suit for the recall of the grant, holds it “in a fiduciary
capacity” within Debtors Act 1869 so, of the debt due from an
executor who is indebted to his testator’s estate which he is able
to pay but will not, so of moneys in the hands of a receiver, or
agent, or Manager, or moneys due to an account from the London
agent of a country solicitor, or proceeds of sale in the hands of
an auctioneer, or moneys which in the compromise of an action have
been ordered to be held on certain trusts or partnership moneys
received by a partner.”
20. Bouvier’s Law Dictionary defines “fiduciary capacity” as under:
“What constitutes a fiduciary relationship is often a subject of
controversy. It has been held to apply to all persons who occupy a
position of peculiar confidence towards others, such as a trustee,
executor, or administrator, director of a corporation of society.
Medical or religious adviser, husband and wife, an agent who
appropriates money put into his hands for a specific purpose of
investment, collector of city taxes who retains money officially
collected, one who receives a note or other security for
collection. In the following cases debt has been held not a
fiduciary one; a factor who retains the money of his principal, an
agent under an agreement to account and pay over monthly, one with
whom a general deposit of money is made.”
21. We may at this stage refer to a recent decision of this Court in
Central Board of Secondary Education and Anr. v. Adiya Bandopadhyay and
Ors. (2011) 8 SCC 497, where Ravindeeran, J. speaking for the Court in that
case explained the term ‘fiduciary’ and ‘fiduciary relationship’ in the
following words:
“39. The term “fiduciary” refers to a person having a duty to act
for the benefit of another, showing good faith and candour, where
such other person reposes trust and special confidence in the
person owing or discharging the duty. The term “fiduciary
relationship” is used to describe a situation or transaction where
one person (beneficiary) places complete confidence in another
person (fiduciary) in regard to his affairs, business or
transaction(s). The term also refers to a person who holds a thing
in trust for another (beneficiary). The fiduciary is expected to
act in confidence and for the benefit and advantage of the
beneficiary, and use good faith and fairness in dealing with the
beneficiary or the things belonging to the beneficiary. If the
beneficiary has entrusted anything to the fiduciary, to hold the
thing in trust or to execute certain acts in regard to or with
reference to the entrusted thing, the fiduciary has to act in
confidence and is expected not to disclose the thing or information
to any third party.”
22. It is manifest that while the expression “fiduciary capacity” may not
be capable of a precise definition, it implies a relationship that is
analogous to the relationship between a trustee and the beneficiaries of
the trust. The expression is in fact wider in its import for it extends to
all such situations as place the parties in positions that are founded on
confidence and trust on the one part and good faith on the other.
23. In determining whether a relationship is based on trust or
confidence, relevant to determining whether they stand in a fiduciary
capacity, the Court shall have to take into consideration the factual
context in which the question arises for it is only in the factual backdrop
that the existence or otherwise of a fiduciary relationship can be deduced
in a given case. Having said that, let us turn to the facts of the present
case once more to determine whether the appellant stood in a fiduciary
capacity vis-à-vis the plaintiffs-respondents.
24. The first and foremost of the circumstance relevant to the question
at hand is the fact that the property in question was tenanted by Smt.
Stella Martins-mother of the parties before us. It is common ground that
at the time of her demise she had not left behind any Will nor is there any
other material to suggest that she intended that the tenancy right held by
her in the suit property should be transferred to the appellant to the
exclusion of her husband, C.F. Martins or her daughters, respondents in
this appeal, or both. In the ordinary course, upon the demise of the
tenant, the tenancy rights should have as a matter of course devolved upon
her legal heirs that would include the husband of the deceased and her
children (parties to this appeal). Even so, the reason why the property was
transferred in the name of the appellant was the fact that the Corporation
desired such transfer to be made in the name of one individual rather than
several individuals who may have succeeded to the tenancy rights. A
specific averment to that effect was made by plaintiffs-respondents in para
7 of the plaint which was not disputed by the appellant in the written
statement filed by him. It is, therefore, reasonable to assume that
transfer of rights in favour of the appellant was not because the others
had abandoned their rights but because the Corporation required the
transfer to be in favour of individual presumably to avoid procedural
complications in enforcing rights and duties qua in property at a later
stage. It is on that touchstone equally reasonable to assume that the
other legal representatives of the deceased-tenant neither gave up their
tenancy rights in the property nor did they give up the benefits that would
flow to them as legal heirs of the deceased tenant consequent upon the
decision of the Corporation to sell the property to the occupants. That
conclusion gets strengthened by the fact that the parties had made
contributions towards the sale consideration paid for the acquisition of
the suit property which they would not have done if the intention was to
concede the property in favour of the appellant. Superadded to the above is
the fact that the parties were closely related to each other which too
lends considerable support to the case of the plaintiffs that the defendant-
appellant held the tenancy rights and the ostensible title to the suit
property in a fiduciary capacity vis-à-vis his siblings who had by reason
of their contribution and the contribution made by their father continued
to evince interest in the property and its ownership. Reposing confidence
and faith in the appellant was in the facts and circumstances of the case
not unusual or unnatural especially when possession over the suit property
continued to be enjoyed by the plaintiffs who would in law and on a parity
of reasoning be deemed to be holding the same for the benefit of the
appellant as much as the appellant was holding the title to the property
for the benefit of the plaintiffs.
25. The cumulative effect of the above circumstances when seen in the
light of the substantial amount paid by late Shri C.F. Martins, the father
of the parties, thus puts the appellant in a fiduciary capacity vis-à-vis
the said four persons. Such being the case the transaction is completely
saved from the mischief of Section 4 of the Act by reason of the same
falling under Sub-section 3(b) of Section 4. The suit filed by the
respondents was not, therefore, barred by the Act as contended by the
learned counsel for the appellant. The view taken by the High Court to
that effect is affirmed though for slightly different reasons.
26. We may while parting say that we have not been impressed by the
contentions urged on behalf of the appellant that the plea of a fiduciary
relationship existing between the parties and saving the suit from the
mischief of Section 4 of the Act, was not available to the respondents, as
the same had not been raised before the Courts below. The question whether
the suit was hit by Section 4 of the Act was argued before the High Court
and found against the appellant. The plea was not, therefore, new nor did
it spring a surprise upon the appellant, especially when it was the
appellant who was relying upon Section 4 of the Act and the respondents
were simply defending the maintainability of their suit. That apart no
question of fact beyond what has been found by the High Court was or is
essential for answering the plea raised by the appellant nor is there any
failure of justice to call for our interference at this stage.
27. In the result, this appeal fails and is hereby dismissed but in the
circumstances without any orders as to costs.
……………………..……………..…J.
(T.S. THAKUR)
……………………………….………J.
(GYAN SUDHA MISRA)
New Delhi
April 27, 2012
