2015 (3) TMI 1405 - HC - Benami Property

Benami transaction - Real owner of property purchased - title of the first respondent/first defendant in respect of the suit property - appellants/surviving defendants contend that even if it is assumed that the suit property was purchased by the respondent/plaintiff with his own funds, since it was purchased in the name of the first appellant/first defendant, in view of the bar provided under Section 4 of the Benami Transaction (Prohibition) Act - Whether the Courts below erred in law in relying upon Exs. A13, A14, A15, A17 and A18 to reject the case of the appellants? - HELD THAT - The Courts below did not rely on Exs. A13, A15, A17 and A18 for the purpose of making a decision as to whether the funds for the purchase of the suit property under Ex. B1 was provided by the respondent/plaintiff; that on the other hand, the Courts below relied on Ex. A14 alone for the above said purpose and that the reliance made on Ex. A14 is not erroneous in law. The first substantial question of law is answered accordingly Whether the Courts below have rendered a perverse finding that the purchase of the suit property in the name of the first appellant was made entirely out of the funds provided by the respondent? - The respondent/plaintiff was able to prove that it was he who provided the funds for the purchase of the house site under Ex. B1 in the name of his wife, namely the first respondent/first defendant. The concurrent findings of the courts below to the above said effect cannot be said to be defective or erroneous, much less perverse warranting an interference by this Court in exercise of its power in this second appeal. The second substantial question of law is answered accordingly. There was a settlement between the respondent/plaintiff and his wife, the first appellant/first defendant on 25.09.1990 and the said settlement was arrived at in the presence of Panchayatdhars and the Inspector of Police, Ayakudi Police Station - The document referred to in Paragraph 6 of the written statement of the first appellant/first defendant as containing the acknowledgment made by the respondent/plaintiff has not seen the light of the day. In the absence of any witness and in the absence of any document, based on the mere averment made in the written statement alone, the Court cannot hold that the said averment stands substantiated by the first appellant/first defendant. As the above said contention of the first appellant/first defendant has not been substantiated either by oral or documentary evidence, there shall be no question of holding the respondent/plaintiff to be estopped from denying the title of the first appellant/first defendant in respect of the suit property on the basis of the alleged acknowledgment of title. Hence, the fourth substantial question of law is answered accordingly, holding that the appellants have not proved that the respondent/plaintiff had acknowledged the title of the first appellant/first defendant and hence he was estopped from denying her title to the suit property. The Courts below have not committed any error in not rendering a finding that the respondent herein/plaintiff was estopped from disputing the title of the first respondent/first defendant in respect of the suit property in the light of the averments contained in paragraph 6 of the written statement of the first appellant/first defendant. The fourth substantial question of law is answered accordingly. Whether the Courts below failed to properly construe the scope of Section 3(2) and Section 4 of the Benami Transaction Prohibition Act, 1988 in coming to the conclusion that the respondent/plaintiff was entitled to maintain his claim against the appellants? - In the case on hand there is no pleading and no evidence to show that the purchase made under Ex. B1 was not for the benefit of the first appellant/first defendant and on the other hand it was for the benefit of the respondent/plaintiff. On the other hand, there is a clear and categorical admission made by the respondent/plaintiff both in his pleadings and evidence that the purchase was made for the benefit of his wife and also his son in the name of his wife, namely the first appellant/first defendant. The courts below have committed an error in holding that the respondent herein/plaintiff was entitled to succeed in the suit filed by him on the basis of his contention that the suit property had been purchased by him with his own funds in the name of his wife for her benefit and that still he was entitled to the declaration of his title in respect of the suit property as well as for the recovery of possession of the same from the appellants/surviving defendants. The third substantial question of law, accordingly decided in favour of the appellants/surviving defendants holding that the first appellant/first defendant shall be entitled to the suit property purchased in her name. In view of the foregoing discussions, especially the answer given to the third substantial question of law, the appellants are bound to succeed in the second appeal and the decree passed by the lower appellate court confirming the decree passed by the trial court is liable to be set aside, with the result that the suit itself is liable to be dismissed.

Summary

Issues Involved:
1. Reliance on specific exhibits by the lower courts.
2. Determination of the source of funds for the property purchase.
3. Interpretation of Sections 3(2) and 4 of the Benami Transaction (Prohibition) Act, 1988.
4. Alleged settlement and estoppel claim.

Issue-wise Detailed Analysis:

1. Reliance on Specific Exhibits by the Lower Courts:
The appellants contended that the lower courts erroneously relied on certain exhibits (Exs. A13, A14, A15, A17, and A18) to reject their case. However, the court clarified that the lower courts did not rely on Exs. A13, A15, A17, and A18 for determining whether the funds for the property purchase were provided by the respondent. Instead, the lower courts relied on Ex. A14, which was relevant to assess the financial capacity of the first appellant. Ex. A14, a maintenance petition filed by the first appellant, indicated that she had no independent income, thereby supporting the respondent's claim that he provided the funds for the property purchase.

2. Determination of the Source of Funds for the Property Purchase:
The respondent claimed that he purchased the property with his own funds in the name of his wife (the first appellant). To support this claim, he provided several documents (Exs. A4, A5, A14, A20, and A21) and witness testimonies. The evidence included official communications and service register entries indicating the respondent's intention and action to purchase the property in his wife's name. Additionally, a receipt (Ex. A21) showed a payment made by the respondent to the vendor. The first appellant did not provide any evidence to counter the respondent's claim. Consequently, the court found that the respondent had successfully proven that he provided the funds for the property purchase.

3. Interpretation of Sections 3(2) and 4 of the Benami Transaction (Prohibition) Act, 1988:
The appellants argued that even if the respondent provided the funds, Section 4 of the Benami Transaction (Prohibition) Act barred him from claiming the property. The respondent countered that Section 3(2) exempts transactions where a person purchases property in the name of his wife or unmarried daughter. The court referred to the Supreme Court's decision in Nand Kishore Mehra vs. Sushila Mehra, which held that Section 3(2) allows such transactions and exempts them from being classified as benami. Therefore, the respondent's claim was not barred by Section 4. However, the court noted that the respondent admitted that the purchase was made for the benefit of his wife and son, which, according to the Supreme Court's interpretation, means he cannot claim the property against his wife.

4. Alleged Settlement and Estoppel Claim:
The appellants claimed that a settlement was reached in 1990, where the respondent acknowledged the property as belonging to his wife. The respondent denied this claim. The court found inconsistencies in the appellants' account of the settlement, including contradictory dates and the absence of corroborating witnesses or documents. Consequently, the court held that the appellants failed to prove the alleged settlement and estoppel claim.

Conclusion:
The court concluded that the respondent, having admitted that the property was purchased for the benefit of his wife, could not claim ownership against her. The lower courts' decrees were set aside, and the suit was dismissed. Each party was directed to bear their respective costs.