2020 (3) TMI 588 - HC - Benami Property

Benami Property Transactions - Prohibition of the right to recover property held benami - trial Court while rejecting the alleged application filed under Order 7 Rule 11 of CPC has held that the suit as framed is not barred by the provision prescribed under Section 4 of the Act, 1988 - Whether the property in question has been purchased by the Plaintiff from her Stridhan, i.e., known source of income, or not ? - HELD THAT - What has been observed by the trial Court by rejecting the application filed under Order 7 Rule 11 of CPC that the suit property appears to have been purchased by the Plaintiff for the benefit of the family members, and therefore, the suit as framed is not barred by virtue of Section 4 of the Act, 1988. The trial Court has, thus, virtually given his finding that the alleged transaction does not come within the purview of benami transaction. It, however, appears that such an observation has been made without considering the fact as to whether it was purchased by the Plaintiff from her known source of income, i.e., Stridhan in order to arrive at such a conclusion. It is, therefore, rather premature to hold that the suit is not barred by the provision prescribed under Section 4 of the Act, 1988. Question whether a particular sale is a benami or not is largely one of fact and that cannot be decided in absence of evidence and in order to get the exclusive ownership, the Plaintiff has to establish the said fact by way of cogent and reliable evidence that it was acquired from her Stridhan and the alleged transaction does not fall within the ambit of benami transaction defined under Section 2(9) of the Act, 1988 and only after its establishment, it could be held that the suit is not barred under Section 4 (1) of the Act, 1988. However, without considering all these facts, the trial Court in a cursory manner has opined that the suit is not barred by the said provision. The finding of the trial Court, therefore, in so far as the suit cannot be held to be hit or barred by Section 4 of the Act, 1988 in such a pre-matured stage, is liable to be and is hereby set aside. From perusal of the aforesaid provision, it is clear that the Court is vested with the discretion under this Order to deal with an issue of law, which it may try as a preliminary issue if it relates to the jurisdiction of the Court, or is a bar to the suit created for the time being in force. Obviously, this provision would apply after issues are struck, i.e., after written statement is filed and this is the principle which has been laid down by the Supreme Court in the matter of Kuldeep Singh Pathania vs. Bikram Singh Jaryal 2017 (1) TMI 1708 - SUPREME COURT whereby while dealing with the aforesaid provision - Revision petition is disposed of with the aforesaid observations

Summary

Issues Involved:
1. Legality and propriety of the order rejecting the application under Order 7 Rule 11 of CPC.
2. Whether the suit is barred under Section 4(1) of the Prohibition of Benami Property Transactions Act, 1988.
3. Determination of whether the transaction in question is a benami transaction.
4. Applicability of Order 14 Rule 2 of CPC regarding preliminary issues.

Detailed Analysis:

1. Legality and Propriety of the Order Rejecting the Application under Order 7 Rule 11 of CPC:
The Defendants filed a revision petition under Section 115 of the CPC challenging the order dated 11.10.2018 by the Civil Judge Class-I, Bhatapara, which rejected their application under Order 7 Rule 11 of CPC. The Defendants argued that the suit should be dismissed as it was barred by the provisions of the Prohibition of Benami Property Transactions Act, 1988.

2. Whether the Suit is Barred under Section 4(1) of the Prohibition of Benami Property Transactions Act, 1988:
The Plaintiff claimed exclusive ownership of the property, asserting it was purchased from her Stridhan. The Defendants contended that this claim constituted a benami transaction, thus barred by Section 4(1) of the Act, 1988. The trial court, however, held that the transaction appeared to benefit family members, thus not falling under the benami transaction prohibition. The High Court noted that the applicability of Section 4 hinges on whether the transaction is indeed benami, which requires factual determination.

3. Determination of Whether the Transaction in Question is a Benami Transaction:
The High Court emphasized that the definition of a "benami transaction" under Section 2(9) of the Act, 1988 includes transactions where the property is held by one person but paid for by another, except in specific family-related scenarios. The Plaintiff must prove that the property was purchased with her Stridhan to claim it is not a benami transaction. The trial court prematurely concluded the transaction was not benami without sufficient evidence, which should be determined at trial.

4. Applicability of Order 14 Rule 2 of CPC Regarding Preliminary Issues:
Order 14 Rule 2 allows courts to decide on preliminary issues of law, such as jurisdiction or legal bars to the suit. The High Court noted that the trial court should have reserved the determination of whether the suit is barred under Section 4 of the Act, 1988, for trial. The trial court's decision to reject the application under Order 7 Rule 11 was deemed premature and was set aside.

Conclusion:
The High Court set aside the trial court's finding that the suit was not barred by Section 4 of the Act, 1988, emphasizing the need for a factual determination at trial. The revision petition was disposed of with these observations, and no costs were awarded.