2017 (4) TMI 1569 - HC - Benami Property

Benami transaction - Property purchased the suit property in the name of the wife/second respondent, for the benefit of the second respondent and children - whether suit is hit by the provisions of Sections 3 4 of the Benami Transactions (Prohibition) Act, 1988? - HELD THAT - In the plaint, the first respondent has stated that he had purchased the suit property out of his income in the name of his wife, the second respondent herein, out of love affection and for their benefit as well as for the benefit of their children to construct the residential building after obtaining loan from a Nationalised Bank. The first respondent has also stated that after purchase, he was in possession of the suit property and all the original documents of title were with him. Due to misunderstanding, the second respondent left the matrimonial home taking all the original documents of title of the suit property. When the first respondent came to know about the intending sale of the suit property in favour of the petitioner by the second respondent, he issued a legal notice to the petitioner. Even after receipt of such notice, the petitioner had purchased the suit property. When a property is purchased in the name of wife or unmarried daughter, there is a presumption that the said purchase is for their benefit. At the same time, a person who purchases the property in the name of his wife or unmarried daughter can prove that the same is not for their benefit. In the present case, the purchase in the name of second respondent/wife, according to the first respondent is not for her exclusive benefit but for the benefit of the children as well as for the construction of a residential house, after obtaining loan from a Nationalised Bank. Considering Section 3 (2) (a) of the Act, the first respondent has a right to let in evidence to rebut the presumption that the property was purchased for the exclusive benefit of second respondent. This issue is not a pure question of law but mixed question of fact and law. In view of the same, the judgment relied upon by the learned counsel for the petitioner, do not advance the petitioner's case at this stage. The learned Judge has rightly held that the issue raised by the petitioner can be decided only after detailed trial by appreciating the oral and documentary evidence let in by the parties and it cannot be decided at this stage. In the above circumstances no illegality or irregularity in the order passed by the trial court warranting interference by this Court.

Summary

Issues:
- Application for rejection of plaint under Benami Transactions (Prohibition) Act, 1988

Analysis:
1. The Civil Revision Petition challenged an order in a suit where the plaintiff sought to declare a sale deed null and void, alleging it was made in violation of the Benami Transactions (Prohibition) Act, 1988.

2. The plaintiff contended that the property was purchased in his wife's name for the benefit of the family, and the defendant's purchase was invalid. The defendant argued that the suit was an abuse of process and barred by the Act.

3. The Trial Judge dismissed the application, stating that the determination of whether the transaction was benami required a detailed trial to examine the facts and evidence presented.

4. The petitioner claimed that the suit was barred by the Act based on the plaintiff's admission in the plaint. However, the Court held that this was a mixed question of fact and law, necessitating a full trial for a comprehensive decision.

5. The Court emphasized that the Act permits property purchases in the name of a spouse or unmarried daughter, with a presumption of benefit, but this presumption can be rebutted with evidence, making it a factual inquiry.

6. The judgments cited by the petitioner were deemed irrelevant at this stage, as the issue required a complete trial for a factual determination.

7. Ultimately, the Court upheld the Trial Judge's decision, stating that the issue of benami transactions could only be resolved after a detailed trial, and no interference was warranted based on the facts presented.

This detailed analysis illustrates the complexities involved in determining the validity of transactions under the Benami Transactions (Prohibition) Act, emphasizing the need for a thorough examination of evidence in a trial setting to establish the true nature of property ownership and transactions.