2017 (3) TMI 1618 - HC - Benami Property

Whether or not the amended provisions apply to the suit transaction, the suit transaction itself having been executed prior to the amendment and the suit also having been filed and defence raised as well as the suit decreed by the courts below before the amended act was introduced? Held that - there is no need to consider the further question as to whether the Defendant, in the present case, has proved the source of his income through which the consideration is paid for the suit property. The whole edifice of the Defendant's argument is based on the retrospective applicability of the Amended Act or the expression daughter even otherwise including a 'step-daughter'. Since this very foundation is untenable, the edifice must fall - it is pertinent to note that it was not the case of the Defendant in his written statement or even in his appeal before the lower appellate court that there was any fiduciary relationship coming within clause (b) of Section 4(3) of the Benami Act between the parties. But more importantly, the averments, such as they were in the written statement, may at the most suggest that it was the Defendant who held such position of trust or fiduciary capacity. It cannot be suggested that the Plaintiff was either a trustee or a person standing in a fiduciary capacity, vis- -vis the Defendant, holding the property for the benefit of the Defendant. There is, accordingly, no merit whatsoever in this contention. Appeal dismissed - decided against appellant.

Issues Involved:
1. Applicability of the Benami Transactions (Prohibition) Act, 1988, and its amendments.
2. Definition and interpretation of "child" and "daughter" under the Benami Act.
3. Retrospective vs. prospective application of the amended Benami Act.
4. Fiduciary relationship between the parties.

Issue-wise Detailed Analysis:

1. Applicability of the Benami Transactions (Prohibition) Act, 1988, and its amendments:
The second appeal challenges the dismissal of a civil appeal by the District Court at Pune, which confirmed the decree of the Civil Judge, Senior Division, Pune. The decree directed the Appellant to hand over possession of the suit property to the Respondent and restrained the Appellant from preventing the Respondent's entry into the property. The Appellant contended that the property was purchased by him with his own money but in the name of the Respondent, invoking the provisions of the Benami Transactions (Prohibition) Act, 1988, as amended in 2016. The Appellant argued that the amended definition of "benami transaction" should apply, which includes exceptions for properties held in the name of a spouse or child, provided the consideration is paid from known sources.

2. Definition and interpretation of "child" and "daughter" under the Benami Act:
The Appellant argued that the Respondent, being his step-daughter, falls within the definition of "child" under the Benami Act. The Appellant referred to the Income Tax Act, 1961, which includes step-children in the definition of "child." However, the court noted that the Benami Act, as it stood before the 2016 amendment, did not explicitly include step-children within the definition of "child" or "daughter." The court concluded that the term "daughter" in the Benami Act, as it stood, referred to a natural or adopted daughter and did not extend to step-daughters.

3. Retrospective vs. prospective application of the amended Benami Act:
The court examined whether the amended provisions of the Benami Act, which came into effect on November 1, 2016, should apply retrospectively to the suit transaction executed before the amendment. The court referred to the Supreme Court's decision in R. Rajagopal Reddy v. Padmini Chandrasekharan, which held that the Benami Act affects substantive rights and cannot be applied retrospectively. The court concluded that the amendments to the Benami Act create substantive rights and must be applied prospectively, not affecting transactions or suits initiated before the amendment.

4. Fiduciary relationship between the parties:
The Appellant alternatively argued that the parent-child relationship between him and the Respondent constituted a fiduciary relationship, bringing the transaction within the exceptions of the Benami Act. The court noted that this argument was not raised in the lower courts and that the written statement did not suggest any fiduciary relationship where the Plaintiff held the property for the benefit of the Defendant. The court found no merit in this contention, as the Plaintiff was neither a trustee nor a person in a fiduciary capacity vis-à-vis the Defendant.

Conclusion:
The court dismissed the second appeal, affirming the lower courts' decisions. The court held that the amended Benami Act does not apply retrospectively and that the Respondent, as a step-daughter, does not fall within the definition of "daughter" under the Benami Act as it stood before the amendment. The court also rejected the argument of a fiduciary relationship between the parties. The ad-interim relief granted to the Appellant was continued for four weeks, and the civil application was disposed of.

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