1986 (11) TMI 5 - HC - Benami Property

Summary

Issues:
1. Declaration of title and confirmation of possession of schedule C property
2. Temporary injunction application
3. Prima facie case in a benami transaction
4. Compliance with Section 281A of the Income-tax Act, 1961

Detailed Analysis:

1. The respondent filed a suit for the declaration of title and confirmation of possession of schedule C property, seeking to restrain the appellant from disturbing their possession. The respondent claimed to have purchased the property and exercised acts of possession. The appellant, in response, asserted ownership and possession, claiming consideration was paid by him. The court granted a temporary injunction in favor of the respondent based on prima facie findings, which was challenged by the appellant.

2. The court considered documents presented by both parties during the injunction hearing. The appellant argued that the court did not adequately assess the effect of the documents supporting his case. The respondent provided evidence such as mutation orders, rent receipts, and a newspaper cutting asserting ownership. The court noted the importance of the original sale deed in a benami transaction but failed to evaluate all documents comprehensively, leading to a flawed prima facie finding in favor of the respondent.

3. In a benami transaction, factors such as the source of consideration, custody of the sale deed, motive, possession, and relationship between parties are crucial. The court emphasized the significance of Section 281A of the Income-tax Act, 1961, which mandates compliance before instituting a suit related to benami properties. As the respondent failed to show compliance with Section 281A, the court ruled that the suit was not maintainable, overturning the injunction order in favor of the respondent.

4. The judgment allowed the respondent an opportunity to file an application for amending the plaint to address the lack of compliance with Section 281A. If the respondent fails to make such an application within a reasonable time, the suit will be dismissed. However, if compliance is demonstrated, the court will allow the amendment and reconsider the injunction matter, taking into account the observations made in the judgment and the provisions of Section 52 of the Transfer of Property Act.