2019 (3) TMI 336 - HC - Benami Property

Determination of ownership of property - suit barred by virtue of Section 4 of the Benami Transactions (Prohibition) Act, 1988 - operation, control, administration and management as well as the business affairs of proprietary concern opened in the name of the 1st defendant - fiduciary relationship between the plaintiff and defendant - Held that - The plaint when read as a whole, certainly averrs that there was a fiduciary relationship between the plaintiff and the 1st defendant. This is quite clear when one reads the plaint as a whole and more particularly Paragraphs 5, 7, 9,10, 11 and 12 of the plaint. We are not examining whether there is any merit in the factual averments made in the plaint with reference to the fiduciary relationship that the plaintiff had with the 1st defendant. That will, of course, be subject to the plaintiff proving such a relationship by adducing the necessary evidence. If he is unable to prove those facts, his suit would then fail as it would clearly be hit by Section 4 of The Benami Transactions (Prohibition) Act, 1988. Fiduciary relationship - Held that - It is not as if under no circumstances there can be no fiduciary relationship between an employer and an employee. Whether on the facts pleaded, such a relationship is proved is a question that will be decided at the trial after both the parties are allowed to lead their evidence in support of their respective cases - the word fiduciary has not been specifically used in the plaint. However, that makes a little difference. When one reads the plaint as a whole, it is clear that such a relationship is pleaded though the specific word fiduciary has not been used - the learned Judge could not have rejected the plaint under Order VII Rule 11 (d) of the CPC. The impugned order dated 8th February, 2017 is hereby set aside - the suit is restored back to the file of the Trial Court to be decided on merits and in accordance with law - appeal allowed.

Summary

Issues Involved:
1. Rejection of the plaint under Order VII Rule 11 (d) of the Civil Procedure Code, 1908.
2. Applicability of Section 4 of the Benami Transactions (Prohibition) Act, 1988.
3. Alleged fiduciary relationship between the plaintiff and the 1st defendant.

Issue-Wise Detailed Analysis:

1. Rejection of the plaint under Order VII Rule 11 (d) of the Civil Procedure Code, 1908:

The appeal challenges the judgment and order passed by the learned Single Judge on 8th February 2017, which allowed the Notice of Motion for rejection of the plaint under Order VII Rule 11 (d) of the CPC. The learned Single Judge had concluded that the suit was barred by the Benami Transactions (Prohibition) Act, 1988. The appellate court noted that the learned Single Judge's decision was based on an incorrect reading and understanding of the plaint's averments.

2. Applicability of Section 4 of the Benami Transactions (Prohibition) Act, 1988:

The plaintiff's suit sought several reliefs, including the declaration of ownership of a suit flat and the transfer of the suit flat's ownership from the 1st defendant to the plaintiff. The 1st defendant filed a Notice of Motion for rejection of the plaint, arguing that the suit was barred by Section 4 of the Benami Transactions (Prohibition) Act, 1988. The appellate court found that the learned Single Judge had erred in dismissing the suit on this ground without allowing the plaintiff to prove the fiduciary relationship alleged in the plaint.

3. Alleged fiduciary relationship between the plaintiff and the 1st defendant:

The plaintiff contended that the 1st defendant held the property in a fiduciary capacity for the plaintiff's benefit. The appellate court examined the plaint's averments and concluded that the plaintiff had sufficiently pleaded a fiduciary relationship. The court highlighted several paragraphs from the plaint that supported the plaintiff's claim of a fiduciary relationship, including the plaintiff's trust and confidence in the 1st defendant, the use of business funds to purchase the suit property, and the 1st defendant's agreement to transfer the property to the plaintiff.

The appellate court referred to legal precedents, such as Marcel Martins v. M. Printer and Central Board of Secondary Education v. Aditya Bandopadhyay, which recognized that fiduciary relationships could exist between employers and employees under certain circumstances. The court emphasized that whether the fiduciary relationship was proven would be determined at trial after both parties presented their evidence.

Conclusion:

The appellate court allowed the appeal, set aside the impugned order dated 8th February 2017, and restored Suit No. 929 of 2016 to the file of the Trial Court for a decision on merits. The court concluded that the learned Single Judge had prematurely dismissed the suit without allowing the plaintiff to prove the fiduciary relationship. The court also disposed of Notice of Motion (L) No. 511 of 2017 accordingly.