2016 (4) TMI 1332 - HC - Benami Property

Family settlement - Decree for possession - ownership of the Hauz Khan Enclave property - who is the real owner of the suit property - suit was contested by Sudhir contending that the plaint was liable to be rejected as Satyapal merely claimed that the property was purchased in Sudhir s name which in effect amounts to an assertion of its being benami under the provisions of Benami Transactions (Prohibition) Act 1988. Held that - Quite apart from the procedural impropriety of the impugned judgment this Court is also of the opinion that the learned Single Judge s reasoning is flawed inasmuch as it holds that an antecent claim or right is to exist before a valid and enforceable family settlement can be the basis of a civil action. The possibility of a future dispute is enough precondition for members of one family to arrive at a settlement with a view to avoid it. Existence of real or claimed title is not the basis of the settlement. Whether for a valid settlement to avoid future disputes it is a precondition that all members of a family have to enter into a settlement? - Held that - This Court does not see any condition or barrier in the form a necessity to involve all members of a family. If the disputes are inter se as between two members there is no bar to the designation of their settlement as a family arrangement or settlement. It has the objective of orderliness in the title of each member of the family and crucially ensures peace and harmony amongst all of them. If the law is that those not considered family members can enter into binding family arrangements it cannot be that all members of a family have to be party to a settlement as a precondition for its binding nature. This argument is accordingly rejected. The impugned judgment inasmuch as it dismisses Satyapal s suit is set aside.

Summary

Issues Involved:
1. Decree for possession of property.
2. Dismissal of the suit for declaration and consequential relief.
3. Application of the Benami Transactions (Prohibition) Act, 1988.
4. Validity of family settlement/arrangement.
5. Limitation period for filing a suit for declaration.

Detailed Analysis:

1. Decree for Possession of Property:
The appellant (Satyapal) was aggrieved by a decree for possession granted to the respondent (Sudhir). Sudhir had filed a suit for possession and mesne profits regarding the suit property. The court initially decreed Sudhir's possession suit, asserting that Satyapal had no valid defense against Sudhir's ownership claims. However, the appellate court found that the declaration suit was not entirely rejected and part of the cause of action could proceed. Thus, the decree for possession was set aside, and the case was remanded for trial on merits.

2. Dismissal of the Suit for Declaration and Consequential Relief:
Satyapal's suit for declaration sought to establish his ownership over the suit property based on a family arrangement. The learned Single Judge dismissed the suit, finding that the claim was not maintainable without a registered conveyance deed. However, the appellate court held that the dismissal was procedurally improper as a plaint cannot be rejected in part under Order VII Rule 11 CPC. The appellate court restored Satyapal's suit for further proceedings.

3. Application of the Benami Transactions (Prohibition) Act, 1988:
Sudhir argued that Satyapal's claim was based on a benami transaction, which is unenforceable under the Benami Act. The learned Single Judge initially found that the claim for declaration of title pursuant to release was not hit by the Benami Act. However, the relief for declaration of recitals in the sale deed was deemed to be hit by the Act. The appellate court clarified that the Benami Act did not bar the suit entirely and that the learned Single Judge erred in rejecting part of the plaint based on the Benami Act.

4. Validity of Family Settlement/Arrangement:
The court examined whether a valid family settlement existed between Satyapal and Sudhir. The learned Single Judge held that an antecedent claim or dispute was necessary for a valid family settlement, which was not established in this case. However, the appellate court found that the possibility of a future dispute was sufficient for a family settlement and that all family members need not be parties to such a settlement. The court emphasized the principles laid down in Kale v. Deputy Director of Consolidation and other relevant judgments, which support the validity of family arrangements aimed at avoiding disputes.

5. Limitation Period for Filing a Suit for Declaration:
Sudhir contended that Satyapal's suit was time-barred under Article 58 of the Limitation Act, as the cause of action arose in 1992, but the suit was filed in 2011. The learned Single Judge held that the suit was not time-barred, as the exact time when Sudhir denied Satyapal's title was unclear, and thus, the plaintiff should be given an opportunity to elucidate. The appellate court upheld this reasoning, stating that the cause of action for the suit arose much later when Sudhir started disputing Satyapal's rights.

Conclusion:
The appellate court set aside the impugned judgment dismissing Satyapal's suit and decreeing Sudhir's possession suit. Satyapal's suit was restored for trial on merits, and Sudhir's suit for possession was also remanded for trial. Sudhir's appeal against the judgment holding Satyapal's suit not to be time-barred was dismissed. The parties were directed to appear before the concerned Registrar for further directions.