2018 (3) TMI 1391 - HC - Benami Property

Whether the transfer of property is hit by the provisions of Benami Transactions (Prohibition) Act, 1988 - title of the property - fiduciary capacity - Whether the court below was justified in rejecting the application filed on behalf of defendant No.1 seeking rejection of plaint under Order 7 Rule 11 (d) of the Code of Civil Procedure? Held that - The property was held in fiduciary capacity - Whether the provisions of the Benami Transactions (Prohibition) Act, 1988, would apply to a transaction of the year 1972 is another matter, but, in view of pleadings in the suit filed by respondent No.1, it cannot be said that this could be a ground for rejection of the plaint at the threshold. It would certainly be a matter requiring evidence, particularly when the defendant No.1 would dispute the claim made by the respondent No.1 in the plaint. Thus, this ground also does not hold good and the court below was justified in holding in favour of the respondent in that regard. The court below committed a grave error in holding that since the defendant No.1 had not filed a suit for declaration of title, it could not be said that cause of action for the respondent No.1 herein had arisen. The suit filed on 21.12.1994 was on the basis that the plaintiff therein was the absolute owner of the suit property and in exclusive possession thereof. There was no question of seeking declaration of title at that point in time. The court below has also erred in holding in the impugned order that the question of limitation in the facts of the present case would require evidence and that therefore, it could be decided only at the time of trial of the suit. As stated above, on an interpretation of the law pertaining to the accrual of the cause of action in the context of Article 58 of schedule to the Limitation Act, 1963, in the present case, on the face of record, it is evident that the suit filed on 20.11.2011 by the respondent No.1 was barred by limitation and that therefore, the application for rejection of plaint filed on behalf of the defendant No.1 (vendor of the applicants) deserved to be allowed on this count. The suit filed by respondent No.1 is barred by limitation and hence the plaint deserves to be rejected under Order 7 Rule 11 (d) of the C.P.C. and accordingly it is rejected - petition dismissed.

Summary

Issues Involved:
1. Whether the suit was barred by the provisions of the Benami Transactions (Prohibition) Act, 1988.
2. Whether the suit was barred by Section 34 of the Specific Relief Act, 1963.
3. Whether the suit was barred by limitation under Article 58 of the Limitation Act, 1963.

Issue-wise Detailed Analysis:

1. Benami Transactions (Prohibition) Act, 1988:
The defendant No.1 argued that the suit was hit by the Benami Transactions (Prohibition) Act, 1988, as the respondent No.1 admitted that the property was purchased in the name of defendant No.1. The court held that the plaint indicated that the respondent No.1 stood in a fiduciary capacity regarding the defendant No.1. The Supreme Court judgment in Marcel Martins v. M. Printer and others was cited, which emphasized that determining a fiduciary relationship requires examining factual context. Hence, this issue required evidence and could not be decided at the threshold.

2. Section 34 of the Specific Relief Act, 1963:
The defendant No.1 contended that the suit was barred by Section 34 of the Specific Relief Act, 1963, as the plaintiff did not seek the consequential relief of possession. The court found that the plaint contained detailed pleadings about the respondent No.1's possession of the property since 1972. If the possession claim was disputed, it would be a matter for trial. Therefore, the court concluded that the plaint could not be rejected on this ground.

3. Limitation under Article 58 of the Limitation Act, 1963:
The defendant No.1 argued that the suit was barred by limitation, emphasizing the phrase "when the right to sue first accrues" from Article 58 of the Limitation Act, 1963. The defendant No.1 claimed that the cause of action first arose when she filed a suit on 21.12.1994, asserting her ownership, and the respondent No.1 should have filed his suit within three years from that date. The court examined the legal principles regarding the accrual of the cause of action and the interpretation of Article 58. It was determined that the cause of action first accrued in clear and unequivocal terms when the defendant No.1 filed her suit in 1994, claiming absolute ownership. The respondent No.1 did not file a counterclaim or a separate suit at that time. The court concluded that the suit filed by respondent No.1 in 2011 was barred by limitation.

Judgment:
The court allowed the application, set aside the impugned order, and held that the suit filed by respondent No.1 was barred by limitation. Consequently, the plaint was rejected under Order 7 Rule 11(d) of the Code of Civil Procedure. There was no order as to costs.