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2020 (11) TMI 761 - HC - Benami PropertyBenami transaction - jurisdiction of civil Courts under Section 45 - Whether a civil Court can consider an application when its jurisdiction is alleged to be barred by operation of law - question agitated for the second time before this Court. - HELD THAT - Substance of the respondent s case is that he had paid the entire sale consideration for the purchase of plaint B schedule property in the name of his sister Mary and that the document happened to be nominally taken in the name of the Mary only due to the fact that the respondent was working in the Merchant Navy. The Benami Transactions (Prohibition) Act, 1988 came into force on 5.9.1988. The Act was enacted with the objective to prohibit benami transactions and the right to recover property held benami. The Act was extensively amended by Act 43 of 2016, which came into force with effect from 1.11.2016, except Sections 3, 5 and 8 which are deemed to have come into force w.e.f 19.05.1988 (read Section 1 (3) of the Act). Once it is established in Court that the claim put forth in the suit is a benami transaction not falling within the exceptions under Section 2 (9) of the Act, then no suit will lie in view of Section 4 of the Act; that there is a clear bar of jurisdiction of civil Courts under Section 45 of the Act and that pending cases have to be transferred to the Adjudicating Authority or Appellate Authority. Exhibit P-9 order is erroneous and unsustainable in law and is liable to be interfered with because when the petitioners have raised a specific plea that the suit is hit by the prohibitions under Sections 4 and 45 of the Act, the Trial Court ought to have considered the said question as a preliminary issue as laid down in T.M.Bagasarwalla v. H.R.Industries 1997 (2) TMI 563 - SUPREME COURT before making an endeavor to decide on Exhibit P-5 application, otherwise as it is commonly said in the idiom it would be like putting the cart before the horse. Thus remit the matter back to the Trial Court for de novo consideration, to decide on the maintainability of the suit in view of Sections 4 and 45 of the Act, as contemplated under Order VII Rule 11 (d) of the Code or decide whether the suit has to be transferred in light of Section 65 of the Act, in which case the Trial Court shall try the question as a preliminary issue, as provided under Order XIV Rule 2 (2) of the Code. Only if the Trial Court finds it has jurisdiction, it shall decide Exhibit P-5 application.
Issues Involved: Jurisdiction of the civil court, applicability of the Benami Transactions (Prohibition) Act, 1988, amendment of the plaint, and maintainability of the suit.
Issue-wise Detailed Analysis: 1. Jurisdiction of the Civil Court: The primary issue was whether a civil court can consider an application when its jurisdiction is alleged to be barred by operation of the Benami Transactions (Prohibition) Act, 1988. The petitioners contended that the trial court's jurisdiction was ousted under Sections 4 and 45 of the Act, which prohibit suits to enforce rights in respect of benami property and bar civil courts from entertaining such suits. The court highlighted the necessity to address jurisdictional objections at the earliest, as per precedents like T.M.Bagasarwalla v. H.R.Industries and Hiralal Vallabbram v. Sheth Kasturbhai Lalbhai and others. 2. Applicability of the Benami Transactions (Prohibition) Act, 1988: The respondent's claim was that the property transaction fell within the exceptions of the amended Act, specifically Section 2(9)(A)(b)(iv), which exempts transactions where the consideration is paid by a brother or sister. The petitioners argued that the transaction was a benami transaction and thus barred by the Act. The court noted that the Act, effective from 1988 and extensively amended in 2016, aims to prohibit benami transactions and the right to recover property held benami. The court emphasized that if the suit is found to be a benami transaction not falling within the exceptions, it would be barred under Section 4 of the Act. 3. Amendment of the Plaint: The respondent sought to amend the plaint to fit within the exceptions of the amended Act. The trial court initially dismissed this application, but upon remand, allowed it. The petitioners challenged this, arguing that the amendment aimed to circumvent the Act’s prohibitions. The court underscored that the trial court should have first resolved the jurisdictional issue before considering the amendment application. The court referenced the Supreme Court's rulings in Church of Christ Charitable Trust & Education Charitable Society v. M/s.Ponniamman Educational Trust and Central Provident Fund Commissioner, New Delhi v. Lal.J.R. Education Society, which stress that the trial court must decide on jurisdictional objections as a preliminary issue. 4. Maintainability of the Suit: The court directed the trial court to re-evaluate the maintainability of the suit in light of Sections 4 and 45 of the Act and determine whether the suit should be transferred to the Adjudicating Authority under Section 65 of the Act. The court instructed the trial court to treat the jurisdictional issue as a preliminary one, as per Order XIV Rule 2(2) of the Code of Civil Procedure, and only if it finds it has jurisdiction, to then decide on the amendment application. Conclusion: The High Court set aside the trial court's order allowing the amendment of the plaint and remitted the matter back for fresh consideration. The trial court was directed to first determine the maintainability of the suit and its jurisdiction under the Benami Transactions (Prohibition) Act before addressing the amendment application. The entire process was to be expedited and completed by 31.03.2021.
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