2023 (2) TMI 219 - HC - Benami Property

Benami properties purchased - Whether the respondent had established that the properties were purchased in the name of the appellant from his funds? - HELD THAT - Respondent negotiated the transaction and paid the sale consideration. P.W.6 is the lessee in the agricultural land bought in the name of the appellant and he would also state that he had been paying rents to the respondent. Though the appellant had claimed that the properties were purchased from the funds given by the father, she had not filed documents to substantiate the said claim. Further, the evidence of the appellant and D.W.2-her father appear to be improbable for one more reason. The details of the properties and the nature of expenses and the amount of expenses incurred for purchase of the property, paying stamp papers and for construction, could not be stated by both the appellant and her father. Further, the appellant's father has three daughters. There is nothing to suggest as to why he chose only the appellant to purchase the properties in her favour. Therefore, we are of the view that the respondent had established that he had purchased the property from his funds in her name. Hence, for the above said reasons, we hold Point No.1 in favour of the respondent. If the properties were purchased from the funds of the respondent, whether the respondent had rebutted the statutory presumption u/s 3(2) of the Benami Transactions (Prohibition) Act, 1988 that the purchase of properties in the name of the wife is presumed to be for her beneficial interest? - It is the case of the appellant that merely because the respondent was managing properties and paying taxes, it cannot be inferred that the properties were not purchased for the beneficial interest of the appellant. We are in agreement with the said proposition. It is the matter of common knowledge that in an Indian family, the husband normally looks after the property which is in the name of the wife. This alone cannot determine that the husband bought the property for his interest benami in the name of his wife. The Hon'ble Apex Court in 2015 (10) TMI 2780 - SUPREME COURT and 1963 (12) TMI 31 - SUPREME COURT had held that merely because the husband is managing the property, it cannot be held that the properties were purchased for his benefit. We are of the view that the reason given by the respondent for purchase of the property in the name of the wife was to avoid wealth tax, cannot be countenanced. An illegality cannot be endorsed by the Court. Evasion of the tax is an illegality and that reason cited by the respondent cannot be accepted. We agree with the view taken by this Court in 2003 (3) TMI 777 - MADRAS HIGH COURT (cited supra) on this aspect. Whether the respondent has proved that the property was purchased by him for his interest in the name of the appellant and not for the beneficial interest of the appellant? - It is well established that the statutory presumption can be rebutted either by adducing independent evidence or by showing inherent improbabilities in the case of the person who is claiming benefit of presumption. It is not the case of the appellant that the property was purchased by the respondent for her beneficial interest. On the other hand, it is her case that she purchased the property with the use of funds provided by her father. As we have held already, the said version of the appellant is improbable. On the other hand, the respondent has clearly established that he had bought the property in the name of the appellant. While that being the case, the plea of the appellant that the respondent bought the property only for her beneficial interest, is a contrary stand. She herself has taken a stand which is contrary to the statutory presumption. We may also refer to the judgment cited by the appellant to impress upon us the guidelines issued by the Hon'ble Apex Court to determine whether particular transaction is benami or not. These are the principles laid down not only for purchase of the property in the name of the wife but for determining whether the transaction is benami bought in the name of the third parties as well. But the real issue in this case, as stated earlier, is whether the presumption under Section 3(2) of the said Act has been rebutted by the respondent. We find that once the appellant herself has taken a stand that it was her own property purchased from the funds given by her father, which is now held to be improbable by us, the presumption under Section 3(2) of the Act cannot enure in her favour. We also accept the stand taken by the respondent that the properties were purchased in the appellant's name only because he felt that it would bring luck to him as admittedly 'Felshia' means luck. Therefore, we hold Point No.2 in favour of the respondent. We find no reasons to interfere with the Judgment of the Trial Court. Accordingly, the Appeal Suit is dismissed.

Summary

Issues Involved:
1. Whether the respondent had established that the properties were purchased in the name of the appellant from his funds?
2. If the properties were purchased from the funds of the respondent, whether the respondent had rebutted the statutory presumption under Section 3(2) of the Benami Transactions (Prohibition) Act, 1988 that the purchase of properties in the name of the wife is presumed to be for her beneficial interest?

Issue-wise Detailed Analysis:

Point No.1:
The facts admitted include the marriage of the respondent and the appellant in 1990, the purchase of suit schedule properties in the appellant's name, the birth of their child in 2000, and their separation since 2003. The respondent has been managing the properties and has possession of the title documents.

The respondent produced evidence, including income tax receipts (Ex.P.13), account books (Exs.P.14 to P.17), and details of agricultural income (Ex.P.20), to substantiate his claim that he funded the property purchases and constructions. Additionally, house tax receipts, water charges receipts, and kist receipts (Exs.P.21 to P.23) were presented to show his financial contributions. Witnesses, including vendors (P.W.3 and P.W.5), a builder (P.W.4), and a lessee (P.W.6), supported the respondent's claim that he purchased the properties for his benefit, citing reasons such as advice from an astrologer and the name "Felshia" meaning luck.

The appellant's claim that the properties were funded by her father was not substantiated with documents, and the testimonies of the appellant and her father lacked specific details and appeared improbable. The court concluded that the respondent had established that he purchased the properties from his funds, thus holding Point No.1 in favor of the respondent.

Point No.2:
The court acknowledged that merely managing the properties and paying taxes does not imply that the properties were not purchased for the appellant's beneficial interest. The respondent's reason for purchasing the properties to avoid wealth tax was deemed unacceptable as it constitutes an illegality.

The court examined whether the respondent rebutted the statutory presumption under Section 3(2) of the Benami Transactions (Prohibition) Act, 1988, which presumes that properties purchased in the wife's name are for her benefit unless proven otherwise. The appellant's claim that the properties were purchased with her father's funds was found improbable. The respondent's consistent management of the properties and the reasons provided (such as the name "Felshia" meaning luck) were accepted as sufficient to rebut the presumption.

The court referred to relevant judgments, including those of the Hon'ble Apex Court, which outline the principles for determining whether a transaction is benami. The court found that the respondent had successfully rebutted the presumption under Section 3(2) of the Act, thus holding Point No.2 in favor of the respondent.

Conclusion:
The court dismissed the appeal and confirmed the Judgment and Decree dated 06.12.2010 made in O.S.No.20 of 2004 by the Family Court, Madurai, declaring the suit schedule properties as benami properties purchased by the respondent in the appellant's name for his benefit. No costs were awarded.