2018 (11) TMI 365 - HC - Benami Property

Trustee - Transfer of property - trustee or a person standing in a fiduciary capacity - daughter in law holding property for the benefit of her mother-in-law as per Section 4(3)(b) of the Prohibition of Benami Transactions (Prohibition) Act, 1988 - whether the relationship between mother-in-law and daughter-in-law can be held to be fiduciary in nature, and whether the daughter-in-law can be held to be a trustee of the mother-in-law? Held that - In Indian society, it is not unusual for a daughter-in-law being treated as a trustee of mother-in-law. In fact, in most large families the daughter-in-law plays an extremely important role in nurturing and bringing up the family. Enormous amount of faith and trust is reposed in the daughter-in-law. In fact, the relationship between the two is one of confidence, trust and belief and not unusual to see in society. A mother-in-law confiding in daughter-in-law and vice-versa to the exclusion of the other family members and enjoying strong bonding is a part of our ethos and culture - Admittedly, Smt. Shakuntala Devi belonged to a wealthy family. In her cross-examination, she states that her father used to deal in shares, had rental income and was a very wealthy man. She had five brothers, who looked after her even after the demise of her father. She was married to Mr. Maheshwar Dayal in 1939, and they were living together in 1876, Haveli Jugal Kishore, Chandni Chowk, Delhi. The transfer letter written by Shri Balbir Singh Goel to the DDA in the name of Smt. Sudha Dayal gives her address as the address of the mother-in-law. The said letter, in original, which bears the extract mentioned above, as receipt of part sale consideration, is clear evidence of the fact that Smt. Shakuntala Devi had paid money to purchase the plot. Smt. Sudha Dayal had authorised her father-in-law Mr. Maheshwar Dayal to deal with the municipal authorities. The evidence is overwhelming and pointing to the fact that Smt. Sudha Dayal always had trust in her mother in law. Thus, Smt. Shakuntala Devi is entitled to seek a declaration that the property actually belongs to her. Going by the letters written by Smt. Sudha Dayal, which are on record, it cannot be held that she did not trust her mother-in-law or that she could not have been in a fiduciary relationship. Since it is stated that there was a legal impediment in the transfer of her brother s property, in the name of anyone except the blood relations, it is not unimaginable for an understanding to be arrived at that though the money is being paid by the mother-in-law, the property would remain in the daughter-in-law s name. The bar under Section 4(1) of the Benami Transaction Act, which is the basis of the application under Order VII Rule 11 CPC would, therefore, not apply in the present case, as it is protected by Section 4 (3)(b) of the Benami Transaction Act. Whether the suit is barred by time limitation? - Held that - All along when Smt. Sudha Dayal was alive, no dispute had arisen between the parties. She passed away in 1987 but the property had continued to remain in her name. No occasion had arisen for Smt. Shakuntala Devi to seek cancellation of the mutation in the name of Smt. Sudha Dayal as she had passed away and Smt. Shakuntala Devi remained all along under the presumption that the property is for the benefit of the whole family. It was only when the family of Smt. Sudha Dayal, after her demise, challenged this position in 2014, that the cause of action arose for her to assert her rights. Thus, the suit is not barred by limitation - The second suit by Smt. Shakuntala Devi seeks cancellation of the conveyance deed in favour of Mr. Mayank Dayal, which was executed in 2014 itself. This suit is also not barred by limitation. Petitions disposed off.

Summary

Issues Involved:
1. Whether the daughter-in-law could be considered a trustee or a person standing in a fiduciary capacity under Section 4(3)(b) of the Prohibition of Benami Transactions (Prohibition) Act, 1988.
2. Whether the suit is barred by limitation.
3. Whether the property was actually purchased by the mother-in-law in the name of the daughter-in-law.
4. Whether the daughter-in-law held the property in trust for the mother-in-law.
5. Whether the daughter-in-law's family had any rights to the property.

Issue-wise Detailed Analysis:

1. Fiduciary Capacity and Trustee Relationship:
The primary issue was whether the daughter-in-law (Smt. Sudha Dayal) could be considered a trustee or a person standing in a fiduciary capacity for her mother-in-law (Smt. Shakuntala Devi) under Section 4(3)(b) of the Benami Transaction Act. The court held that in Indian society, it is not unusual for a daughter-in-law to be treated as a trustee of the mother-in-law. The relationship between mother-in-law and daughter-in-law can be one of confidence, trust, and belief, which fits within the definition of fiduciary capacity. The court cited the Supreme Court's decision in Vinod Kumar Dhall v. Dharampal Dhall, which recognized that properties held in fiduciary capacities are exceptions to the prohibition under the Benami Transaction Act.

2. Limitation:
The court addressed whether the suit was barred by limitation. It was observed that no dispute arose while Smt. Sudha Dayal was alive, and the property continued to remain in her name after her death in 1987. The cause of action for Smt. Shakuntala Devi arose only when the family of Smt. Sudha Dayal challenged her position in 2014. Therefore, the suit was not barred by limitation.

3. Actual Purchase of Property:
The court examined whether the property was actually purchased by Smt. Shakuntala Devi in the name of her daughter-in-law. The evidence included bank passbooks, letters, and various financial documents showing that Smt. Shakuntala Devi had sufficient resources and had made payments towards the property. The court concluded that the property was indeed purchased by Smt. Shakuntala Devi, although it was registered in the name of Smt. Sudha Dayal.

4. Trust and Beneficiary Relationship:
The court found that Smt. Sudha Dayal held the property in trust for her mother-in-law, Smt. Shakuntala Devi, for the benefit of the entire family. This conclusion was supported by various documents, including a letter from Smt. Sudha Dayal expressing her intention to gift the property to her mother-in-law, and the fact that the family had been residing in the property for over 40 years without any disruption.

5. Rights of Daughter-in-law’s Family:
The court addressed the rights of Smt. Sudha Dayal's family, particularly Mr. Mayank Dayal, who sought possession and mesne profits. The court held that Smt. Shakuntala Devi was the sole owner of the property, but the declaration would enure to all her legal heirs, not just Mr. Vinay Dayal. The court rejected the relief of possession and mesne profits, as both families were in occupation of different portions of the property and the validity of a will dated 9th September 2015 had to be independently proved.

Separate Judgments Delivered:
The court delivered separate judgments for each suit:

Suit No. 2441/14:
- Issue No.4 was decided against the Plaintiff, Mr. Mayank Dayal.
- The suit was dismissed, and the relief of possession sought in I.A. 6501/17 was rejected.

Suit No. 1640/14:
- Smt. Shakuntala Devi was declared the sole owner of the property.
- A permanent injunction was granted restraining all parties from alienating or transferring any part of the suit property.
- The relief of mesne profits was rejected.

Suit No. 3631/14:
- The mutation and conveyance deed in favor of Mr. Mayank Dayal were canceled.
- Smt. Shakuntala Devi was held to be the sole owner of the property.
- The suit was decreed in terms of Prayer clause 1(b) and (c), while Prayer 1(a) was rejected.

The court's decision comprehensively addressed all the issues involved, providing a detailed analysis of the fiduciary relationship, the actual purchase of the property, and the rights of the involved parties.