2020 (5) TMI 70 - HC - Benami Property

Benami transaction - Prohibition of the right to recover property held benami - Holding suit premises in a fiduciary capacity - Suit for partition and permanent injunction instituted against the respondents/defendants claiming that they are collectively entitled to 1/10th undivided share in the residential premises - three appellants/plaintiffs are the successors-in-interest (widow and children) of late Shri Anil Kumar Dhir, brother of the respondents No.1 to 7 and the deceased respondents No.8 and 9 - HELD THAT - In the present case, the stage of evidence had not even been arrived at. In fact, only pleadings in the suit were completed. Issues have also not been framed. Therefore, there was no occasion for the court to determine as to whether the respondent No.1 stood in a fiduciary capacity vis-a-vis his deceased brother, Shri Anil Kumar Dhir, predecessor-in-interest of the appellants/plaintiffs. On perusing the averments made in the plaint, it cannot be said at this stage that the suit is barred by Benami Act. On a bare reading of the averments made in the plaint read in conjunction with the documents placed on record, we are of the opinion that sufficient material facts have been disclosed requiring determination only after a proper trial. At the stage of deciding an application moved by the respondents under Order VII Rule 11 CPC, there was no occasion for the court to have taken pains to interpret and analyse the documents filed by the appellants/plaintiffs to hold in favour of the respondents. In the instant case where it has been asserted that the suit premises was purchased in the name of the respondent No.1, but from the exclusive contributions made by late Shri R.P. Dhir and therefore in reality, was meant for the benefit of all the family members, the real test would be the source from which the purchase money came from, the nature and status of possession of the property after its purchase, the motive if any for giving the transaction a Benami colour, the position of the parties and their inter se relationship, between the appellants/plaintiffs and the respondent No.1, the overall conduct of the parties in dealing with the suit premises after it was acquired, etc. Refer Jaydayal Poddar (Deceased) through LRs and Anr. vs. Mst. Bibi Hazra and Ors. 1973 (10) TMI 55 - SUPREME COURT - It would therefore be imperative to weigh the evidence in the instant case for the court to conclusively decide as to whether the appellants/plaintiffs can succeed in their claim that the respondent No.1 is holding the suit premises in a fiduciary capacity, for the benefit of all the family members. Present appeal succeeds. The impugned judgment is quashed and set aside. The suit is restored to its original position for being taken further from the stage at which the impugned judgment was passed.

Summary

Issues Involved:
1. Entitlement to 1/10th undivided share in the property.
2. Existence of a Hindu Undivided Family (HUF).
3. Bar of the suit under the Benami Transactions (Prohibition) Act, 1988.
4. Bar of the suit by limitation.
5. Rejection of the plaint under Order VII Rule 11 CPC.

Issue-wise Detailed Analysis:

1. Entitlement to 1/10th Undivided Share in the Property:
The appellants/plaintiffs claimed a 1/10th undivided share in the residential premises, asserting that the property was purchased by R.P. Dhir for the welfare of the family but was registered in the name of the eldest son, defendant No.1, for convenience. The appellants argued that the property was meant to benefit all family members and that they had been residing and maintaining the property. The respondents contended that the property was purchased and constructed by defendant No.1, who had financial means, and not by R.P. Dhir.

2. Existence of a Hindu Undivided Family (HUF):
The appellants claimed that the family was an HUF and that the property was acquired for the benefit of the family. The respondents denied the existence of an HUF and argued that R.P. Dhir did not have sufficient means to acquire the property. The court noted that the plaintiffs did not provide particulars or documents to substantiate the existence of an HUF.

3. Bar of the Suit under the Benami Transactions (Prohibition) Act, 1988:
The learned Single Judge dismissed the suit, treating the appellants' plea as a Benami transaction under the Benami Act. The appellants argued that the property fell under the exception in Section 4(3) of the unamended Benami Act, which allowed for properties held in a fiduciary capacity or for the benefit of coparceners in an HUF. The court held that the amended Benami Act, effective from 01.11.2016, did not apply retrospectively to the suit filed in February 2016. Therefore, the unamended Act, including Section 4(3), was applicable.

4. Bar of the Suit by Limitation:
The respondents argued that the suit was barred by limitation, as the appellants had knowledge of the property being in the name of defendant No.1 for more than three years before filing the suit. The court, however, did not conclusively address this issue in the judgment.

5. Rejection of the Plaint under Order VII Rule 11 CPC:
The learned Single Judge allowed the respondents' applications under Order VII Rule 11 CPC, rejecting the plaint on the grounds that it was barred by the Benami Act and lacked material particulars. The appellants contended that the plaint disclosed a cause of action and that the court should not have rejected it without a trial. The appellate court agreed, stating that the veracity of the pleas and the fiduciary relationship claimed by the appellants required a full trial to determine.

Conclusion:
The appellate court concluded that the suit should not have been rejected outright under Order VII Rule 11 CPC. The court emphasized that the matter required comprehensive consideration after permitting the parties to lead evidence. The judgment of the learned Single Judge was set aside, and the suit was restored to its original position for further proceedings. The appeal was disposed of with no orders as to costs.