2018 (10) TMI 1823 - HC - Benami Property

Benami Transactions - whether mother is a trustee of her major son ? - appellant / defendant contends that the present case falls under Section 4(3)(b) of the Act because the respondent / plaintiff, in whose name the property is held, is a trustee or other person standing in a fiduciary capacity vis--vis the appellant / defendant and the property is held by the respondent / plaintiff for the benefit of another person for whom she is a trustee or towards whom she stands in such fiduciary capacity i.e. the appellant / defendant - HELD THAT - A mother is not a trustee of her major son and does not stand in a fiduciary capacity to her major son. Such notions, held by the appellant / defendant or his counsel, are not supported by any law. Merely because a major son chooses to purchase the property in the name of his mother would not allow him to seek exemption from the societal malice which was sought to be curbed by enactment of the Benami Law and Section 4 whereof was intended to curb such litigation which consumes a lot of time of the Courts. Section 4(3)(b) of the Benami Act provides that nothing contained in Sections 4(1) and 4(2) shall apply where the person, in whose name the property is held, is a trustee or other person standing in a fiduciary capacity. The question, whether mother is a trustee of her major son or stands in a fiduciary capacity to her son, is no longer res integra. It has been held in Anil Bhasin Vs. Vijay Kumar Bhasin . 2002 (8) TMI 878 - DELHI HIGH COURT that property purchased by a parent in the name of a son does not fall under the category of a fiduciary relationship and is clearly hit by the prohibition contained in the Benami Act. Similarly, a property, even if purchased by a son in the name of mother, as is claimed here, would not fall in the category of fiduciary relationship and is clearly hit by the prohibition contained in the Benami Law. Section 4(3)(b) which provides that the property which is held as a trustee or in a fiduciary capacity must be interpreted in the sense that the trustee or a person who is holding the property in a fiduciary capacity has either committed a fraud and got the property title in his name or is in furtherance of law holding property in his name however in the capacity of a trustee or in fiduciary capacity, although the real owner is somebody else. and contends that the First Appellate Court has misconstrued the aforesaid paragraph to be meaning that a fraud has to be necessarily pleaded. It is contended that the said judgment nowhere lays down the same. When I asked the counsel for the appellant / defendant whether the advocate is in a fiduciary capacity vis--vis his client, the counsel for the appellant / defendant answers in the negative. If such notions as are being applied were to be applied, a client reposes trust and faith in the advocate by entrusting his/her life or property to the advocate and if the notions of trusteeship as are urged vis--vis the mother were to be applied, the answer qua the advocate also should have been in the affirmative. The position of law in this context does not admit of any ambiguity and is clear. The appeal thus does not raise any substantial question of law.

Summary

Issues Involved:

1. Validity of the First Appellate Court's judgment and decree allowing the suit for mandatory and permanent injunction.
2. Applicability of Section 4(3)(b) of the Benami Transactions (Prohibition) Act, 1988.
3. Whether a mother stands in a fiduciary capacity to her major son.
4. Interpretation of fiduciary relationships under the Benami Transactions (Prohibition) Act, 1988.
5. Substantial question of law raised by the appellant.

Detailed Analysis:

1. Validity of the First Appellate Court's Judgment and Decree:
The Regular Second Appeal under Section 100 of the Code of Civil Procedure, 1908, impugned the judgment and decree dated 29th April 2016, which allowed the First Appeal filed by the respondent/plaintiff. The First Appellate Court passed the decree in favor of the respondent/plaintiff, directing the appellant/defendant to vacate the room and restraining the appellant/defendant from interfering with the peaceful possession of the remaining property. The trial court had initially dismissed the suit filed by the respondent/plaintiff, but this decision was overturned by the First Appellate Court.

2. Applicability of Section 4(3)(b) of the Benami Transactions (Prohibition) Act, 1988:
The appellant/defendant contended that the property was purchased with his own money but registered in the name of his mother (respondent/plaintiff) and claimed that this arrangement fell under Section 4(3)(b) of the Benami Transactions (Prohibition) Act, 1988. Section 4(3)(b) exempts transactions where the person in whose name the property is held is a trustee or stands in a fiduciary capacity. The court examined whether this exemption applied to the case at hand.

3. Whether a Mother Stands in a Fiduciary Capacity to Her Major Son:
The court questioned the appellant/defendant's claim that a mother is a trustee or stands in a fiduciary capacity to her 30-year-old son. The appellant/defendant argued that a fiduciary relationship exists where one person places complete confidence in another. However, the court found no legal basis to support the notion that a mother is a trustee or stands in a fiduciary capacity to her major son. The court referenced previous judgments, including Anil Bhasin Vs. Vijay Kumar Bhasin and Peeyush Aggarwal Vs. Sanjeev Bhavnani, which held that such relationships do not fall under the category of fiduciary relationships exempted by the Benami Act.

4. Interpretation of Fiduciary Relationships Under the Benami Transactions (Prohibition) Act, 1988:
The court emphasized that merely using the term "trust" in pleadings does not exempt a transaction from the Benami Act. The prohibition under the Benami Law was intended to curb litigation and prevent the misuse of legal provisions to claim ownership of properties purchased in the name of another person. The court cited multiple precedents, including Pushpa Kanwar Vs. Urmil Wadhawan and D.N. Kalia Vs. R.N. Kalia, to support its interpretation that the purchase of property by a major son in the name of his mother does not constitute a fiduciary relationship exempted by the Benami Act.

5. Substantial Question of Law Raised by the Appellant:
The court examined whether the appeal raised any substantial question of law. The appellant/defendant's counsel failed to provide precedents or substantial legal arguments to support the claim that the mother-son relationship constituted a fiduciary relationship under the Benami Act. The court concluded that the appeal did not raise any substantial question of law and dismissed it.

Conclusion:
The appeal was dismissed, and the interim order was vacated. The court found no requirement to balance the equities as the appellant/defendant had already vacated the property. The judgment reinforced the prohibition of benami transactions and clarified the interpretation of fiduciary relationships under the Benami Transactions (Prohibition) Act, 1988.