2019 (10) TMI 1567 - HC - Indian Laws

Benami transaction - relationship of the parties in the Suit - Family Arrangement - Whether the property mentioned in 'A' Schedule to the Plaint has been purchased by the 1st Plaintiff from and out of the funds of the First Plaintiff and income from the 'B' Schedule property? - HELD THAT - A reading of the Family Arrangement shows that it is not a mere Partition between the heirs of Late C.M. Sundararaj. It records certain obligation which are in effect relinquishments of rights over the properties by the heirs of C.M. Sundararaj. While the First Defendant relinquishes his share in the Besant Nagar Property, the Plaintiffs 1 2 relinquished their right over the Industrial land namely, the B Schedule property. The very fact that the Family Arrangement is in writing, under which the parties, who are the members of the family relinquish their interest in the property the same requires registration and proper stamping in accordance with law. In the absence of such registration and proper stamping, the document cannot be construed as valid. It is seen from the instrument itself that it was executed on 1.6.1994 and the Second Plaintiff has not signed it, though she figured as a party to the instrument. There are no Attestors also. As already concluded that the explanation offered by the Defendant for non-production of the original is unconvincing. Therefore, considered opinion that the Family Arrangement, dated 1.6.1994 cannot said to be a full fledged Family Arrangement brought about in the presence of the elders of the family in order to settle the disputes between the members of the family. The instrument, which results in relinquishment of share in a particular item of property by one of the members is not valid without being registered and duly stamped under law. Hence, thus issue is answered in favour of the Plaintiffs and against the First Defendant. It is not a case, where the Plaintiffs seek a Declaration of the title to the property or recovery of possession of the property alleging that a document, which confess title is invalid. It is a settled position of law that the relief of setting aside the document would arise only in a case where the Plaintiffs seek to invalidate the Title, which had vested in a person, who is shown as Purchaser under the document. That is not the case on hand. The Plaintiffs seek partition on the ground that the Defendant holds the property in trust on their behalf also. Therefore, prayer for setting aside the document is not required. If the document is set aside, neither the Defendant nor the Plaintiffs would get title. The property will revert back to the Owner namely, Tamil Nadu Small Industries Development Corporation. Therefore, the plea that a Decree for Partition cannot be passed unless the document is set aside is liable to be rejected. Hence, Issue is also answered in favour of the Plaintiffs and against the First Defendant. First Plaintiff had sent several Letters and Telegrams to the First Defendant either seeking Maintenance or complaining about his inaction in non-payment of the Loan. The First Defendant has not denied the contents of any of these Letters. These Letters would show that the First Plaintiff had paid the monthly instalments for purchase of the 'A' Schedule property from and out of the income from the 'B' Schedule property. It is therefore, clear that the 'A' Schedule property also has to be treated as part of the estate of C.M. Sundararaj. Accordingly, the Issue No. 1 is decided in favour of the Plaintiff and against the First Defendant to the effect that the funds for the purchase of 'A' Schedule property were provided by the First Plaintiff and income from the 'B' Schedule property, therefore, it also forms part of the estate of the deceased C.M. Sundararaj. Prohibition created by the Section 4 of the Prohibition of Benami Property Transactions Act, 1988 - Once it is concluded that the property was purchased from and out of the income from the estate of C.M. Sundararaj and monies that belonged to the First Plaintiff in the name of the First Defendant, the transaction may not take the colour of a Benami Transaction as defined u/s 2(9) of Prohibition of Benami Property Transaction Act, 1988 as amended by 43 of 2016. As already seen Section 2(9)-A(b)(i), exempts a transaction between persons, who stand in a fiduciary capacity towards the other from being termed as a Benami Transaction. Here, the transaction is between the mother and the son. Therefore, the fact that the mother had contributed funds for the purchase of the property in the name of her son having been proved, we do not think that the claim of the First Plaintiff with reference to 'A' property could be said to barred by the provisions of the Prohibition of Benami Properties Transaction Act, 1988. Hence, this issue is answered in favour of the Plaintiff and against the First Defendant. Contention of the First Plaintiff that the said property was purchased in her name from and out of the Sale proceeds of the property of C.M. Sundararaj situate at Besant Nagar - As it is clear that though the property stands in the name of the First Plaintiff she was not the absolute Owner of the said property. Since the entire consideration for purchase of the said property came out of the estate of C.M. Sundararaj and therefore the Plaintiffs and the First Defendant would have an equal share in the Suit property. Therefore, Issue is answered in favour of the Plaintiffs and against the First Defendant. As regards the 'D' Schedule property - A perusal of the Plaint would show that the Plaintiff has sought for a Decree for Partition of the entire 'A' to 'D' Schedule properties. The Plaintiff, who is the owner of the property as per the Settlement Deed, dated 3.6.1994 namely Ex. P17 has come forward seeking partition of the property and also acknowledging that the said property was also purchased from and out of the income from the estate of Late C.M. Sundararaj, I do not see any difficulty in concluding that the 'D' Schedule property is also liable for Partition. This issue is also answered in favour of the Plaintiffs concluding that they are entitled to relief of Partition and separate possession of Schedule 'A' to 'D' properties. Limitation - As already concluded that the Family Arrangement, dated 1.6.1994 has been brought about by undue influence and coercion. It is contended by the learned Counsel appearing for the First Defendant that the relief of setting aside the Family Arrangement, dated 1.6.1994 is barred by limitation. He would also draw my attention to the Article 58 of the Limitation Act, to contend that the period of limitation being 3 years and once it is claimed that the document was brought about by coercion and undue influence, the Suit should have been filed within 3 years from the date of the document as the right to sue first accrues on the date of the document and not later. Suit will stand decreed declaring the Family Arrangement,as void, ab initio and non-est in the eye of law, declaring the sales made by the First Defendant in favour of the 3rd 4th Defendants would not bind on the Plaintiff share in the Suit 'B' Schedule property. The property sold by the First Defendant to the 3rd Defendant would be allotted to the share of the First Defendant. There will be Preliminary Decree declaring the 1/3rd each share of the Plaintiffs 1 2 in the Suit 'A' to 'D' Schedule properties. As regards the sales made in favour of the 3rd Defendant by the First Defendant, the first sale, dated 7.3.2001 is prior to the filing of the Suit hence, the said property sold under Sale Deed, dated 7.3.2001 namely, Ex. P42 would be allotted to the share of the First Defendant while working out equities at the time of Final Decree. Considering the relationship between the parties, the parties are directed to bear their own Cost. The Suit in other respects will stand dismissed.

Summary

Issues Involved:
1. Validity of Family Arrangement dated 1.6.1994.
2. Ownership and partition of 'A' Schedule property.
3. Ownership and partition of 'B' Schedule property.
4. Ownership and partition of 'C' Schedule property.
5. Ownership and partition of 'D' Schedule property.
6. Bar of limitation under Article 58 of the Limitation Act.
7. Applicability of Section 4 of the Benami Transactions (Prohibition) Act, 1988.
8. Representation of the deceased Plaintiff by the Second Plaintiff.
9. Validity of the Will dated 19.4.2004.

Detailed Analysis:

1. Validity of Family Arrangement dated 1.6.1994:
The Plaintiff contended that the Family Arrangement dated 1.6.1994 was obtained by undue influence and coercion. It was argued that the document was invalid as it was neither stamped nor registered and was executed under duress. The Plaintiff also claimed that the First Defendant did not fulfill his obligations under the arrangement. The court found that the Family Arrangement was not signed by all parties, lacked attestation, and was not registered, making it void and unenforceable. The court also noted that the First Defendant had disowned the arrangement in his written statement, further weakening its validity. Therefore, the Family Arrangement dated 1.6.1994 was declared void, ab initio, and non-est in law.

2. Ownership and Partition of 'A' Schedule Property:
The Plaintiff claimed that the 'A' Schedule property, though in the name of the First Defendant, was purchased using her funds and income from the 'B' Schedule property. The First Defendant contended that he paid for the property from his own earnings. The court found that the Plaintiff had provided the initial deposit and monthly installments from the income of the 'B' Schedule property. Therefore, the 'A' Schedule property was considered part of the estate of C.M. Sundararaj, entitling the Plaintiffs to a share.

3. Ownership and Partition of 'B' Schedule Property:
The 'B' Schedule property was originally assigned to Late C.M. Sundararaj, and its sale deed was executed in favor of the First Defendant based on consent affidavits from the Plaintiffs. The court held that the property was part of C.M. Sundararaj's estate and that the First Defendant held it in trust for the Plaintiffs. The sale of portions of the 'B' Schedule property by the First Defendant was not binding on the Plaintiffs.

4. Ownership and Partition of 'C' Schedule Property:
The Plaintiff argued that the 'C' Schedule property was purchased using the proceeds from the sale of the Besant Nagar property, which was part of C.M. Sundararaj's estate. The court found that the 'C' Schedule property was indeed purchased from the estate's funds, making it part of the estate and subject to partition among the Plaintiffs and the First Defendant.

5. Ownership and Partition of 'D' Schedule Property:
The 'D' Schedule property was initially in the name of the First Defendant, who later executed a settlement deed in favor of the Plaintiff. The court noted that the property was purchased using income from the 'B' Schedule property, making it part of C.M. Sundararaj's estate. Therefore, the 'D' Schedule property was also subject to partition.

6. Bar of Limitation under Article 58 of the Limitation Act:
The First Defendant argued that the suit for setting aside the Family Arrangement was barred by limitation. The court concluded that the right to sue accrued when the Plaintiff became aware of the coercion and undue influence, which was within the limitation period. Additionally, the Second Plaintiff, not being a signatory to the arrangement, was not bound by it, rendering the limitation argument insignificant.

7. Applicability of Section 4 of the Benami Transactions (Prohibition) Act, 1988:
The First Defendant claimed that the Plaintiff's claim was barred under Section 4 of the Benami Transactions Act. The court found that the transactions were between family members in a fiduciary capacity, exempting them from being considered benami transactions. Therefore, the Plaintiff's claim was not barred by the Act.

8. Representation of the Deceased Plaintiff by the Second Plaintiff:
The First Defendant contended that only the Executor appointed by the deceased Plaintiff's Will could maintain the suit. The court held that the Second Plaintiff, as a Class-I heir of C.M. Sundararaj, was entitled to continue the suit for partition of his estate, independent of the Executor's role.

9. Validity of the Will dated 19.4.2004:
The Will was contested by the First Defendant on grounds of suspicious circumstances. The court found that the Will was proved in accordance with Section 68 of the Evidence Act, with the attesting witness confirming its execution. The court dismissed the allegations of suspicious circumstances and granted probate of the Will dated 19.4.2004 to the Executor.

Conclusion:
The court decreed the suit in favor of the Plaintiffs, declaring the Family Arrangement void and non-est, and granted a preliminary decree for partition of the 'A' to 'D' Schedule properties, allotting 1/3rd share to each Plaintiff. The sales made by the First Defendant were not binding on the Plaintiffs' share in the 'B' Schedule property. The Testamentary Original Suit was also decreed, granting probate of the Will dated 19.4.2004. Each party was directed to bear their own costs.