2018 (11) TMI 1871 - HC - Benami Property

Benami Transaction - Scope of Section 4(1) of the Benami Transaction Act, 1988 - civil revision invoking jurisdiction of this court under section 115 of CPC has been preferred by the petitioners, who are defendants before trial Court - HELD THAT - The question as to whether bar would be applicable in suits which are filed after coming into force of the Act of 1988 has been considered by the Supreme Court in the matter of Duvuru Jaya Mohana Reddy and another v. Alluru Nagi Reddy and others 1993 (4) TMI 335 - SUPREME COURT and it has been held that Section 4(1) of the Act of 1988 would apply to proceedings pending on the date of the commencement of the Act and the provisions were held applicable to an appeal that was pending. In the matter of R. Rajagopal Reddy (Dead) by LRs and others v. Padmini Chandrasekharan (Dead) by LRs 1995 (1) TMI 67 - SUPREME COURT the Supreme Court in paragraph 11 of its judgment has clearly held that no such suit, claim or action shall be permitted to be filed or entertained or admitted to the portals of any court for seeking such a relief after coming into force of Section 4(1) of the Act of 1988. Undisputedly, the instant suit has been filed on 28.03.2017 after coming into force of the Act of 1988 and plaintiff is claiming title on the basis of Transaction which is said to have been taken place on 13.03.1981 and 09.06.1988. This being so, the prohibition imposed under Section 4(1) of the Act of 1988 is squarely attracted as the plaintiff has filed the suit after coming into force of Act of 1988 in order to enforce his right under Benami Transaction which is specifically barred under Section 4(1) of the Act of 1988 and as such the plaint is barred by virtue of Order 7, Rule 11(d) of CPC, therefore, the trial Court is absolutely unjustified in holding that the said question is mixed question of law and fact, as it is pure question of law. Accordingly, the impugned order is set aside and it is held that the suit is barred by Section 4(1) of the Benami Transaction Act, 1988 and therefore, it is liable to be rejected under Order 7, Rule 11(d) of CPC. The civil revision is allowed as indicated hereinabove with no order as to costs. The order passed by the trial Court is hereby set aside and the suit is held barred by Section 4(1) of the Act of 1988 and the plaint filed by the plaintiff stands rejected.

Summary

Issues Involved:
Interpretation of Section 4(1) of the Benami Transactions (Prohibition) Act, 1988 in relation to the maintainability of a suit filed after the Act came into force.

Analysis:
The primary issue in this case revolved around the interpretation and application of Section 4(1) of the Benami Transactions (Prohibition) Act, 1988. The petitioners, who were defendants before the trial court, challenged the trial court's decision on issue No. 14, which related to the suit being hit by the provisions of the Act. The petitioners argued that the trial court was unjustified in treating the issue as a mixed question of law and fact, contending that it was purely a question of law. On the other hand, the respondents supported the trial court's decision, maintaining that the issue required consideration of both law and facts.

Upon considering the arguments presented by both parties, the court delved into the interpretation of Section 4(1) of the Act. Section 4(1) explicitly prohibits the enforcement of any right in respect of property held benami through a suit, claim, or action. The court emphasized that the bar imposed by Section 4(1) pertains to the institution of a suit to make a claim based on a benami transaction, regardless of when the transaction occurred. Citing precedents, including judgments by the Supreme Court, the court highlighted that the Act applies prospectively, except in certain circumstances, and clarified that the bar under Section 4(1) extends to suits filed after the Act came into force.

In applying the legal principles to the facts of the case, the court found that the plaintiff had filed a suit for declaration of title and possession after the Act had already come into effect. The plaintiff's claim was based on transactions that took place prior to the Act but were being enforced through the suit filed post the Act's enactment. Consequently, the court concluded that the suit was barred by Section 4(1) of the Act, rendering it liable for rejection under Order 7, Rule 11(d) of the Civil Procedure Code. Therefore, the court set aside the trial court's decision, rejecting the plaintiff's claim and allowing the civil revision filed by the defendants.

In conclusion, the court held that the suit was indeed barred by Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, and ordered the rejection of the plaintiff's plaint. The court directed the trial court to comply with the order and communicated the decision to the concerned authorities for necessary action.