2020 (3) TMI 1107 - HC - Benami Property

Benami Transactions - Whether the sale consideration was paid by the respondent alone? - respondent was father-in-law of the applicant. Applicant and son of the respondent namely Neeraj Kumar were husband and wife. Due to some dispute between them, decree of divorce has been granted in favour of the applicant. Before passing of the decree of divorce a sale deed was executed in favour of the applicant and respondent by which they purchased suit property - HELD THAT - Since issue whether the property in dispute was purchased as benami transactions and at the time of said purchase what was intention of buyers actual or name lender, can be decided only after considering merits of respective claims of parties on the basis of their evidence. Hence only on basis of Section 4 of Act, entire suit cannot be allowed to fall at preliminary stage. See also Mridula Singh vs. Brahmdeo Pd. Singh 2005 (9) TMI 684 - PATNA HIGH COURT Whether the provisions of Section 4(3)(a) of the Benami Transactions (Prohibition Act), 1988 would be applicable to daughter-in-law, since she is not coparcener in Hindu undivided family? - As observed that while considering exemption under Section 4 in respect of Benami Transactions, the existence of fiduciary capacity has to be determined in circumstances of individual cases. In the aforesaid case, it has also been observed that since the daughter-in-law was not holding the property in fiduciary capacity, the prohibition enshrined under Section 4 would apply and the suit for possession at the instance of daughter-in-law would be maintainable. In juxtaposition with the law laid down in the case of Mridula Singh (Supra), there cannot be any iota of doubt that issue regarding maintainability of the counter claim can be well adjudicated by the trial Court by framing an issue on the basis of the evidence led by the parties in respect of Benami Transactions. Thus, this Court comes to the conclusion that there is no illegality or perversity in the impugned order warranting interference of this Court in exercise of its revisional jurisdiction.

Summary

Issues:
- Dismissal of application under Order 7 Rule 11 of C.P.C.
- Allegation of Benami transaction in property purchase
- Counter claim under Benami Transactions Act
- Consideration of Benami Transactions Act in civil suit

Analysis:

The civil revision was filed under Section 115 of the C.P.C. against the order dismissing the application under Order 7 Rule 11 of C.P.C. The applicant, who obtained a divorce decree, claimed a share in a property purchased jointly with the respondent, her former father-in-law. The respondent denied her claim, asserting the property was purchased with his own funds out of love for her. The applicant alleged dispossession and unauthorized construction by the respondent and his son, leading to a civil suit for partition and injunction. The respondent filed a counter claim, contending the property was not benami and he was the sole owner in possession.

The applicant sought dismissal of the counter claim under Order 7 Rule 11(d) of C.P.C., citing the Benami Transactions (Prohibition) Act, 1988. The trial court dismissed the application, stating the issue required evidence. The applicant challenged this decision, arguing that the trial court failed to consider the Benami Transactions Act, leading to a flawed dismissal. The applicant emphasized precedents stating that suits involving benami transactions should not proceed to trial.

The court analyzed the provisions of Order 7 Rule 11(d) of C.P.C. and noted that issues involving mixed questions of law and fact necessitate evidence examination. The court highlighted the factual questions of whether the transaction was benami and if the consideration was solely paid by the respondent. Citing case law, the court emphasized that deciding benami transactions requires a thorough review of parties' claims based on evidence. The court referenced a case where a transaction was not deemed benami due to lack of evidence to show intent to defeat creditors.

The court considered the applicant's reliance on a case involving the applicability of the Benami Transactions Act to a daughter-in-law. It was noted that the Act's provisions must be assessed based on individual circumstances, such as fiduciary capacity. The court concluded that the trial court's decision was legally sound, as the issue of counter claim maintainability under the Benami Transactions Act required evidence examination. Therefore, the civil revision was dismissed, finding no legal infirmity justifying intervention.

In conclusion, the judgment addressed the dismissal of the application under Order 7 Rule 11 of C.P.C., the alleged benami transaction in property purchase, the counter claim under the Benami Transactions Act, and the consideration of the Act in the civil suit. The court emphasized the need for evidence to decide benami transactions, cited relevant case law, and upheld the trial court's decision as legally sound.