2008 (8) TMI 1019 - HC - Benami Property

Summary

Issues Involved:
1. Whether the property was acquired out of the funds of the firm M/s. Bhagmal Satyapal.
2. Whether the defendants have any right, title, or interest in the property.
3. Whether defendant No. 1 is a tenant in respect of the first floor of the suit property.
4. Relief.

Issue-wise Detailed Analysis:

Issue Nos. 1 and 2:
The plaintiff, Ms. Padmavati Mahajan, is the owner of the property in question, having acquired leasehold rights through a perpetual Sub-Lease Deed dated 29th May 1968 and later converting it to freehold via a Conveyance Deed dated 12th November 2001. Defendant No. 1, her son, claimed that the property was purchased and constructed using funds from a Partnership Firm, M/s. Bhagmal Satyapal, where he held a 29% share. He argued that he is a benami owner of the property, asserting that the funds were provided by the Partnership Firm.

The court noted that for a benami transaction to be established, the person claiming it must prove the consideration was paid by someone other than the purported owner and that the intention was for the owner to act as a facade. The Benami Transactions (Prohibition) Act, 1988, prohibits such claims unless specific conditions are met under Section 4(3). The court found that the defendant failed to provide sufficient evidence, such as documents or reliable testimony, to support his claim. The defendant's assertion that the funds were treated as a loan to the plaintiff further weakened his case. Consequently, the court held that the plaintiff is the rightful owner of the property and the defendant's claim of benami ownership was rejected.

Issue No. 3:
Defendant No. 1 also claimed to be a tenant of the first floor of the property, paying a monthly rent of Rs. 2000. The court found this claim contradictory and vague, as he also claimed to be a benami owner. There was no written agreement or evidence in house tax or income tax returns to support the tenancy claim. Letters presented by the defendant, allegedly indicating tenancy, were found to be inconclusive. The court rejected the claim of tenancy, concluding that the defendant was not a tenant but possibly a gratuitous licensee.

Relief:
The court decreed in favor of the plaintiff, granting a permanent injunction restraining the defendants from parting with possession or creating third-party rights in the property. A mandatory injunction was also issued, directing the defendants to remove themselves from the property. The plaintiff was awarded costs.

In conclusion, the court found that the plaintiff is the rightful owner of the property, the defendant's claims of benami ownership and tenancy were unsubstantiated, and the plaintiff is entitled to the reliefs sought.