1992 (2) TMI 379 - HC - Indian Laws

Summary

Issues Involved:
1. Insolvency of V. Natarajan and his discharge.
2. Ownership and title of the disputed property.
3. Allegations of benami transaction.
4. Evidence and burden of proof regarding the benami transaction.
5. Legal principles applicable to benami transactions.

Detailed Analysis:

1. Insolvency of V. Natarajan and his discharge:
The fourth respondent, V. Natarajan, was declared an insolvent. The Official Assignee filed an application under Section 7 of the Presidency Towns Insolvency Act, 1909, seeking a declaration that Natarajan was entitled to a one-sixth share in the property mentioned in the petition. The application was dismissed as the Official Assignee could not establish Natarajan's share. Natarajan applied for discharge, stating he had no property to discharge further credits. The learned Judge found that the insolvent had paid his creditors 0.50 P. in a rupee and had not concealed any assets, thus ordering his discharge.

2. Ownership and title of the disputed property:
The property in question was in the name of Kannammal, the mother of the insolvent. The Official Assignee and the creditor-appellant contended that although the title deed was in Kannammal's name, the property belonged to Vedachala Naicker, Kannammal's husband, who purchased it in her name. Kannammal maintained that she purchased the property with her funds, earned by vending edibles, and that the recitals in the mortgage deeds were incorporated at the instance of the creditor.

3. Allegations of benami transaction:
The learned single Judge noted that the burden of proving the benami transaction was on the Official Assignee. To establish the benami transaction, it had to be proven that Vedachala Naicker paid the sale price, had a motive to take the sale deed in his wife's name, was in possession of the property, and had custody of the title deeds. The Official Assignee failed to provide sufficient evidence to support these claims.

4. Evidence and burden of proof regarding the benami transaction:
The Official Assignee examined a creditor of the insolvent but could not show any knowledge about the acquisition of the property. Kannammal testified that she purchased the property with her funds and produced a license under Section 282 of the City Municipal Act to support her claim. The learned single Judge found no evidence that Vedachala Naicker or his sons paid property tax or were in possession of the property. The recitals in the mortgage deeds were not considered conclusive evidence of a benami transaction as they were incorporated at the instance of the creditor.

5. Legal principles applicable to benami transactions:
The judgment discussed the principles of law regarding benami transactions, emphasizing that the most vital question is the source of the purchase money. The title deed is a solemn document, and its contents cannot be easily ignored. The person asserting the benami transaction must provide clear evidence that the real ownership was different from what the title deed indicated. The court referred to several precedents, including judgments from the Privy Council and the Supreme Court, to support its findings.

Conclusion:
The learned single Judge concluded that the Official Assignee failed to prove the benami transaction and that the property belonged to Kannammal. The creditor's appeal was dismissed, and the order discharging the insolvent was upheld. The court found no merit in the appeals and dismissed them without any order as to costs.