1990 (12) TMI 25 - HC - Benami Property

Summary

Issues:
- Interpretation of the Benami Transactions (Prohibition) Act, 1988
- Applicability of Section 4 of the Act to pending suits
- Exception under Section 3(2) of the Act for property purchased in the name of wife or unmarried daughter
- Retroactive nature of Section 4 of the Act

Interpretation of the Benami Transactions (Prohibition) Act, 1988:
The case involved a dispute over a property purchased by the father of the plaintiff-respondent in the name of his wife, alleged to be a benami transaction. The defendant-appellant purchased the property from the wife. The trial court decreed the suit in favor of the plaintiff, declaring him the sole owner. The appellant appealed, citing the Benami Transactions (Prohibition) Act, 1988, which prohibits suits to recover benami property. The appellant relied on a Supreme Court decision stating that the Act applies retroactively to past transactions, rendering suits to recover benami property unenforceable.

Applicability of Section 4 of the Act to pending suits:
The judgment analyzed the retroactive nature of Section 4 of the Act, which nullifies suits to enforce rights in benami property. The court considered the pendency of the appeal at the time the Act came into force and concluded that the suit by the plaintiff-respondent was not maintainable under Section 4. The court emphasized that the Act applies to pending suits and appeals arising from such suits, as per the Supreme Court's interpretation.

Exception under Section 3(2) of the Act for property purchased in the name of wife or unmarried daughter:
The respondent argued that an exception under Section 3(2) of the Act allows property purchase in the name of the wife or unmarried daughter. However, the court dismissed this argument, stating that even if the property is purchased in the wife's name, it remains a benami transaction as defined by the Act. The court clarified that this exception does not negate the prohibition under Section 4(1) of the Act, which bars suits to recover such property.

Retroactive nature of Section 4 of the Act:
The judgment highlighted the retrospective operation of Section 4 of the Act, which disqualifies the right to recover benami property. The court emphasized that this section eliminates the real owner's right to recover the property from the benamidar, as established by the Supreme Court. The court concluded that the Act is a disabling statute affecting all real owners equally, rendering their rights unenforceable.

In conclusion, the court allowed the appeal, set aside the trial court's judgment, and dismissed the suit filed by the plaintiff-respondent based on the application of the Benami Transactions (Prohibition) Act, 1988.