2022 (10) TMI 531 - HC - Benami Property

Benami Transaction - application under Order VII Rule 11 of the CPC rejected - whether the suit property was actually purchased from the funds of the HUF or whether the suit property was treated as an individual property of the father of the parties or as an HUF property? - defendant no.1 submits that there is a discrepancy in the name of the HUF occurring in various documents - HELD THAT - Under Section 4(1) of the unamended Benami Act, a suit cannot be filed on the ground that the property was held benami against a person in whose name the property is held. An exception to Section 4(1) of the unamended Benami Act is provided in Sub-Section (3) of Section 4 which states that provisions of Section 4 would not apply in cases where the property is held in the name of a coparcener in an HUF and the property is held for the benefit of the coparceners in the family. As clearly been averred that the HUF received a sum of Rs.19.90 lacs on 21st June, 1991 from the redemption of the HUDCO Tax Saving Bonds held by the HUF. A reference has also been made to various documents with regard to the same and they have been filed along with the plaint. It has clearly been averred that late Shri Surinder Singh Chowdhary, as the karta of the HUF, purchased the suit property from the funds of the HUF. The suit property was purchased for a consideration of Rs.5,40,000/- vide sale deed dated 18th August, 1992, soon after a sum of Rs.19.90 lacs was received by the HUF from the sale of HUDCO Bonds. It has also been specifically pleaded that the late Shri Surinder Singh Chowdhary, being the karta of the HUF was holding the suit property on behalf of HUF for the benefit of all the coparceners. Along with the plaint, the plaintiff has also filed TDS certificates issued by the tenant in the suit property in favour of the HUF. The plaintiff has made the necessary averments in the plaint and filed documents along with the plaint in support of his case that the suit property was purchased from the funds of the HUF. Further, the plaintiff has also pleaded that the suit property was held by the father of the parties in his capacity as the karta for the benefit of the coparceners. The plaintiff has made the necessary averments in the plaint so as to fall within the exception provided under Section 4 (3) (a) of the unamended Benami Act. Therefore, the plaint cannot be outrightly rejected under the provisions of under Order VII Rule 11 of the CPC. At the stage of Order VII Rule 11 of the CPC, the Court cannot go into the veracity of the pleas taken in the plaint or its truthfulness. The same can only be tested in a trial. The scope of an application under Order VII Rule 11 of the CPC is limited only to the extent whether or not in terms of averments made in the plaint and the documents filed along with the plaint, the suit is maintainable. Needless to state that the plaintiff would have to prove in the trial, whether the suit property was actually purchased from the funds of the HUF or whether the suit property was treated as an individual property of the father of the parties or as an HUF property. At this stage, the Court cannot prejudge whether the plaintiff would be in a position to prove the same or not. The issues can only be determined after a proper trial. At this stage, it cannot be said that the present suit is vexatious or the plaint is barred by any law. Thus no grounds have been made out for rejection of the plaint under the provisions of Order VII Rule 11 of the CPC. There is no merit in the application and the same is dismissed.

Issues Involved:
1. Application under Order VII Rule 11 of the Civil Procedure Code, 1908 (CPC) seeking rejection of plaint.
2. Determination of whether the suit property is an HUF property or self-acquired property.
3. Applicability of Section 4 of the Benami Transactions (Prohibition) Act, 1988.

Issue-Wise Detailed Analysis:

1. Application under Order VII Rule 11 of CPC:
The defendant no.1 filed an application under Order VII Rule 11 of the CPC seeking rejection of the plaint. The court emphasized that in deciding such an application, reference must be made solely to the averments in the plaint and the documents filed with it. The court held that the plaintiff had made necessary averments and filed supporting documents to establish that the suit property was purchased from HUF funds. Therefore, the plaint could not be outrightly rejected under Order VII Rule 11 of the CPC, and the veracity of the claims could only be tested through a trial.

2. Determination of Whether the Suit Property is an HUF Property or Self-Acquired Property:
The plaintiff claimed that the suit property was purchased from HUF funds and was held by the father as the Karta of the HUF. The plaintiff provided documents such as HUDCO Tax Saving Bonds, Income Tax Assessment orders, and TDS certificates to support the existence of the HUF and the purchase of the property from HUF funds. The defendant no.1 argued that the property was purchased in the individual name of late Shri Surinder Singh Chowdhary and not in the name of the HUF. The court noted that the plaintiff had made clear pleadings regarding the HUF and the purchase of the property from HUF funds, which needed to be tested in a trial.

3. Applicability of Section 4 of the Benami Transactions (Prohibition) Act, 1988:
Both parties extensively relied on Section 4 of the Benami Transactions (Prohibition) Act, 1988. The court referred to Section 4(3)(a) of the unamended Benami Act, which provides an exception for properties held by a coparcener in an HUF for the benefit of the family. The court cited the Supreme Court judgment in Pawan Kumar, which held that whether a matter falls within the purview of Section 4(3) of the unamended Benami Act must be decided after trial and not at the stage of Order VII Rule 11 of the CPC. The court concluded that the plaintiff had made necessary averments to fall within the exception provided under Section 4(3)(a) of the unamended Benami Act, and thus, the plaint could not be rejected outright.

Observations and Findings:
The court observed that the plaintiff had made necessary averments and filed supporting documents to establish the existence of the HUF and the purchase of the suit property from HUF funds. The court held that the issues raised by the defendant no.1 could not be decided at the stage of Order VII Rule 11 of the CPC and required a full trial. The court also noted that the judgments relied upon by the defendant no.1 were distinguishable and did not apply to the facts of the present case. Consequently, the court dismissed the application under Order VII Rule 11 of the CPC, stating that the plaint disclosed a cause of action that required determination through a trial.

Conclusion:
The application for rejection of the plaint under Order VII Rule 11 of the CPC was dismissed. The court directed that the case be listed before the Joint Registrar for fixing the dates of trial. The observations made in the judgment were noted to have no bearing on the final adjudication of the suit.

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