2012 (5) TMI 78 - SC - Benami Property

Benami Transactions - Scope of the term fiduciary capacity - 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 - Held that - Defendant failed to establish that the entire sale consideration was paid by him - On the contrary plaintiffs established they contributed towards sale consideration and the balance amount has been contributed by the first plaintiff - Cannot be said that the defendant is the absolute owner of the suit schedule property Against assesse. Whether the plaintiffs and the defendant were co-owners of the suit property Held that - By reason of their contribution and the contribution made by their father continued to evince interest in the property and its ownership. 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 - Held that - HC 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 under section 4 of Benami Transactions (Prohibition) Act, 1988. Scope of the term fiduciary capacity - Benami Transactions (Prohibition) Act, 1988 - held that - 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. - 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.

Summary

Issues Involved:
1. Contribution towards the purchase money of the suit property.
2. Co-ownership rights in the suit property.
3. Lawful possession of the suit property.
4. Threat of dispossession by the defendant.
5. Defendant's claim of contributing the entire sale consideration.
6. Entitlement to a decree of permanent injunction.
7. Applicability of the Benami Transactions (Prohibition) Act, 1988.

Detailed Analysis:

1. Contribution Towards the Purchase Money of the Suit Property:
The High Court examined whether the entire sale consideration for the suit property was provided by the defendant or if contributions were made by the plaintiffs as well. Evidence from witnesses, particularly Respondent No.1 (PW-2), indicated that each child contributed Rs. 5000/- and the balance was paid by their father, Sri C.F. Martins. The High Court found that the demand draft for Rs. 48,636/- was obtained from the joint account of Respondent No.1 and her husband, debunking the defendant's claim that he alone financed the purchase.

2. Co-ownership Rights in the Suit Property:
The High Court concluded that the plaintiffs and the defendant were co-owners of the suit property. The evidence showed that the sale consideration was a collective effort, and the property was not solely financed by the defendant. The High Court held that the plaintiffs had established their case of co-ownership by proving their financial contributions towards the purchase.

3. Lawful Possession of the Suit Property:
The High Court's findings supported the plaintiffs' claim of lawful possession. The original sale deed and possession of the property were with Respondent No.1, who had also contributed to the purchase money. This lawful possession was further corroborated by the testimonies of the plaintiffs and the bank manager.

4. Threat of Dispossession by the Defendant:
The High Court acknowledged the plaintiffs' apprehension of being dispossessed by the defendant. Given the established co-ownership and lawful possession, the High Court found the plaintiffs' claim credible and justified their request for an injunction against the defendant.

5. Defendant's Claim of Contributing the Entire Sale Consideration:
The High Court rejected the defendant's claim of having contributed the entire sale consideration. The evidence, including bank records and witness testimonies, demonstrated that the plaintiffs and their father had significantly contributed to the purchase money. The High Court found the defendant's assertions to be unsubstantiated and false.

6. Entitlement to a Decree of Permanent Injunction:
The High Court ruled in favor of the plaintiffs, granting a decree of permanent injunction. The plaintiffs were entitled to protection against forcible dispossession by the defendant, given their established co-ownership and lawful possession of the suit property.

7. Applicability of the Benami Transactions (Prohibition) Act, 1988:
The High Court addressed whether the suit was hit by the Benami Transactions (Prohibition) Act, 1988. The High Court held that the transaction was not a benami transaction as defined under the Act. It was concluded that the contributions made by the plaintiffs and their father towards the purchase money did not constitute a benami transaction. The High Court also noted that the defendant was estopped from claiming the transaction as benami, given his initial assertion of having provided the entire sale consideration.

Conclusion:
The High Court's judgment was upheld, affirming the plaintiffs' co-ownership and lawful possession of the suit property. The defendant's claims were found to be false, and the suit was not barred by the Benami Transactions (Prohibition) Act, 1988. The appeal was dismissed, maintaining the decree of permanent injunction in favor of the plaintiffs.