2020 (3) TMI 931 - HC - Benami Property

Benami transaction - right of the plaintiff to sue - Whether a registered Kobala executed by one Kusum Kumari Gupta, original plaintiff No.3, since deceased in favour of one Maya Gupta is a Benami transaction or not? - even assuming that the said transaction was a Benami transaction, whether a suit for declaration to such effect is barred under Section 4(1) of the Benami Transactions (Prohibition) Act, 1988 - HELD THAT - In the instant case, it is specifically pleaded by the plaintiffs/appellants that the original defendant Smt. Maya Gupta made an application in the local Municipality in the year 1970 to mutate her name in respect of the suit property. The said application was rejected by the Municipality on 22nd January, 1970. Immediately thereafter, the plaintiffs filed the suit. Thus, the Trial Court correctly held that right of the plaintiff to sue accrued only when the defendant tried to infringe the plaintiffs title over the suit property on the basis of the said two deeds. As already held that this Court cannot re-appreciate the evidence on the factual aspect of motive of the parties to execute such deeds, accumulation of consideration price and payment of the same and other relevant factors necessary to hold a transaction Benami or not. Suffice it to say that the learned Trial Judge in great detail held that though the purported deeds of sale were executed on 11th June, 1957, all along the said deeds were in custody of the vendor. The suit property was recorded in the record of Kanchrapara Municipality in the name of the vendor. The vendor used to collect rent from the tenants. The electricity in the suit property stood in the name of the vendor. The vendor performed all acts incidental to ownership of the suit property in spite of execution of the said two deeds of sale dated 11th June, 1957. All such factual circumstances are recorded by me only to show that the learned Trial Judge had dealt with the issues of fact raised by the respondents and again such finding, the respondents have not filed any cross-objection before the learned First Appellate Court. The plaintiffs filed the suit for declaration that the deeds of sale dated 11th June, 1957 are Benami transaction. They pleaded in the plaint that they are in possession of the suit property. The defendant No.1 Smt. Maya Gupta is in possession of one room of the suit property as a licensee. It is, of course, an executive decision of the appellants as to whether they would allow the respondents to occupy one room in the suit property as a licensee or they would recover possession of the suit property by revocation of license. Under such circumstances, the suit cannot be said to be barred under the Proviso of Section 34 of the Specific Relief Act. Moreover, no such question was raised as the substantial question of law by the respondents in the instant appeal. So this Court has no scope to decide such question in the instant appeal. On the question of law formulated in the instant appeal, have no other alternative but to hold that the Hon ble Supreme court in R. Rajagopal Reddy 1995 (1) TMI 67 - SUPREME COURT held that Section 4(1) of the Benami Transactions (Prohibition) Act, 1988 is not retrospective in operation and does not apply to pending suits already filed and entertained prior to coming into force in Section 4. Substantial question of law is necessary in favour of the appellants. Accordingly, the appeal is allowed on contest without costs.

Summary

Issues Involved:
1. Whether the registered Kobala dated 11th June 1957 executed by Kusum Kumari Gupta in favor of Maya Gupta is a Benami transaction.
2. Whether a suit for declaration under Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, is barred.
3. Whether the suit is barred by limitation under Article 58 of the Limitation Act.
4. Whether the suit is barred under the Proviso to Section 34 of the Specific Relief Act.

Issue-wise Detailed Analysis:

1. Benami Transaction:
The plaintiffs argued that the deeds of sale executed by Kusum Kumari Gupta in favor of Maya Gupta were Benami transactions with no consideration paid, and Kusum Kumari continued to maintain control over the property. The trial court decreed in favor of the plaintiffs, declaring the Kobalas as sham Benami documents. The defendant contested, claiming full consideration was paid, and the deeds were genuine, not Benami.

2. Section 4(1) of the Benami Transactions (Prohibition) Act, 1988:
The First Appellate Court held that the suit was not maintainable under Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, based on the Division Bench decision in Urmila Bala Dasi vs. Probodh Chandra Ghosh & Ors., which stated that Section 4 has retrospective effect. However, the Supreme Court in R. Rajagopal Reddy vs. Padmini Chandrasekharan clarified that Section 4(1) is prospective and does not affect pending suits filed before the Act came into force. Thus, the High Court reversed the First Appellate Court's decision, aligning with the Supreme Court's ruling.

3. Limitation under Article 58 of the Limitation Act:
The respondents argued that the suit was barred by limitation as it was filed 13 years after the execution of the deeds. The court found that the right to sue accrued when Maya Gupta attempted to mutate her name in 1970, and the suit was promptly filed thereafter. Thus, the suit was within the limitation period.

4. Proviso to Section 34 of the Specific Relief Act:
The respondents contended that the suit was barred under the Proviso to Section 34 of the Specific Relief Act because the plaintiffs did not seek recovery of possession. The court held that the plaintiffs were in possession of the property, with the defendant occupying one room as a licensee, and thus, the suit was not barred under this provision.

Conclusion:
The High Court allowed the appeal, setting aside the First Appellate Court's judgment and restoring the trial court's decree. The court held that Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, is not retrospective and does not apply to the pending suit. The suit was not barred by limitation or under the Proviso to Section 34 of the Specific Relief Act. The plaintiffs were declared the real owners of the suit property, and the Kobalas dated 11th June 1957 were declared as sham Benami documents.