2023 (2) TMI 385 - HC - Benami Property

Prohibition of Benami Property Transactions - Period of limitation - Petitioner, has filed an application for proposed amendment in the counter claim as rejected on ground of limitation - HELD THAT - Once a suit is filed only then Court can examine whether pleadings made in the suit is barred by law or not and suit is to be dismissed or not. A person cannot be stopped from filing the suit. Bar is to be examined subsequently. In view of aforesaid facts and circumstances of the case, it is found that trial Court has committed an error in dismissing the application filed under Order 6 Rule 17 of CPC on grounds of delay and on merits of the contents of application, therefore, order dated 20.09.2021 is quashed. Trial Court is directed to permit the petitioner to incorporate the said amendment in the counter claim.

Summary

Issues:
Challenge to order rejecting amendment application on grounds of limitation and examining the merits of the application. Interpretation of Section 4(1) of Prohibition of Benami Property Transactions Act, 1988 regarding suits based on benami property.

Analysis:
The petitioner, a defendant before the trial Court, filed an application for proposed amendment in the counter claim, which was rejected due to limitation. The petitioner argued that as the trial had not commenced and the plaintiff's evidence had not been presented, the trial Court erred in dismissing the application based on delay. The petitioner contended that the trial Court should not have delved into the merits of the application at that stage, as the contents should be examined during the case hearing. The petitioner sought to quash the order dated 20.09.2021 on the grounds of illegality and lack of jurisdiction.

The respondents, on the other hand, argued that the trial Court did not err in rejecting the amendment application. Citing Section 4(1) of the Prohibition of Benami Property Transactions Act, 1988, they contended that no suit or claim can be brought to enforce any right in respect of benami property. They emphasized that allowing amendments based on facts barred by law would lead to unnecessary delays in the legal process, contrary to legislative intent. Therefore, they supported the trial Court's decision to dismiss the application for amendment.

The Court analyzed the provisions of the Prohibition of Benami Property Transactions Act, 1988, particularly Section 4, which prohibits suits or claims related to benami property. It held that the Court should examine the legality of pleadings only after a suit is filed, not before. Considering the circumstances, the Court found that the trial Court erred in dismissing the amendment application based on delay and content merits. Consequently, the order dated 20.09.2021 was quashed, directing the trial Court to allow the petitioner to incorporate the proposed amendment in the counter claim. The respondents were given the liberty to file an application under Order 7, Rule 11 of the Civil Procedure Code (C.P.C.). The writ petition was disposed of with these directions.