2020 (5) TMI 104 - HC - Benami Property

Benami transaction - Whether the plaintiff is a fictitious person? - Agreement to sale on fictitious - whether plaintiff with ulterior motive described himself differently to act as a front man / name lender? - HELD THAT - There is no document, muchless; official document on record to indicate that plaintiff Satish Kumar Khandelwal is resident of 78A Parshanand Nagar, R.T.O.Road, Indore. For the first time, opened bank account in the Bank of Rajasthan Limited on 27/03/2006 (exhibit P/30) in the name of Satish Shankarlal Khandelwal. Besides, in his affidavit dated 24/04/2007, he has used the surname Satish Sharma (Khandelwal). Non-production of PAN card, school record or marks sheet, driving licence despite notice issued under Order 12 rule 3 CPC upon the plaintiff certainly shall lead to adverse inference against him in view of section 114(g) of the Evidence Act. The aforesaid unnatural conduct of the plaintiff points needle of suspicion towards him and his bona fides are questionable. For want of explanation of genesis of cash flow, preparation of pay orders and bank drafts from the accounts of persons / companies, i.e., Arun Dagariya, A.R. Infrastructure Ansal Housing and Construction Ltd., with whom there was no agreement by the plaintiff to provide consideration amount. Those persons were not examined in the Court. Such sequence of facts suggest that the plaintiff with ulterior motive described himself differently to act as a front man / name lender for the collateral purpose to benefit them. Finding of the trial Court that only for the purpose of agreement to sell (exhibit P/9), the plaintiff used the name of Satish Kumar Khandelwal, resident of 216, Banshi Trade Centre, Indore as prior thereto the documents placed on record admitted by plaintiff himself describe him as Satish Sharma resident of 78A Parshanand Nagar, RTO Road, Indore M.P., cannot be faulted. Whether, the agreement to sell dated 27/04/2005 is vague, uncertain and not capable of execution? - The land falling in survey no.219/2 total area 1.40 acres of land has been jointly recorded in the names of Rajendra Jain, Rachna Jain, Palak and Subham Jain (exhibit P/94). Land falling in survey Nos.221/2 208/12 are recorded in the name of Shantilal (exhibit P/96 P/99). Land falling in survey no.213/1 is recorded in the name of Surendra Dilliwal and Rajendra Jain (exhibit P/98) Land falling in survey No.216/4 is recorded in the name of Surendra Dilliwal, Sudha Dilliwal, Rajendra Jain Rachna Jain (exhibit P/101). Therefore, the same lands were in the names of the aforesaid persons. There is no evidence that at any point of time, partition has taken place for apportionment of shares of defendants No.1, 2 and their heirs and rights conferred upon the defendants No.1 and 2 to deal with the lands of joint ownership. Finding of the trial Court cannot be faulted that the agreement was uncertain and not enforceable. The specific performance of a contract is the actual execution of the contract according to its stipulations and terms, the Courts direct the party in default to do the very thing which he contracted to do. Therefore, unless; the stipulations and terms of the contract are certain and parties must have been consensus ad idem, the specific performance cannot be ordered. The burden that the stipulations and terms of contract and the minds of parties ad idem is always on the plaintiff. If such burden is not discharged and the stipulations and terms are uncertain, and the parties are not ad idem, there can be no specific performance, for there was no contract at all. Smt. Mayawanti Vs. Smt. Kaushlyadevi, 1990 (4) TMI 304 - SUPREME COURT . This Court is of the view that the agreement to sale (exhibit P/9) is vague, uncertain and is not capable for execution under law. Whether the agreement to sell is hit by the prohibition under section 3 of the Benami Transactions (Prohibition) Act, 1988 and, therefore, not enforceable under law? - The facts in hand as discussed unambiguously and unequivocally lead to a conclusion that the plaintiff was not a bona fide purchaser with no financial capacity whatsoever. Plaintiff also failed to prove genuineness of the transaction for preparation of pay orders and bank drafts from the accounts of such persons with whom plaintiff had no privity in terms of the agreement for providing the consideration and unexplained cash flow. None of the persons providing consideration amount were examined in the Court. Under such circumstances, the transaction in question in the considered opinion of this Court tantamount to benami transaction prohibited within the meaning of section 2(a) of the Act, the same cannot be termed genuine transaction. Benami transaction defined in section 2(a) of the Act shall not only include transaction in which property is transferred to one person but, also agreement to transfer the property to one person as the intendment of the legislature is to prohibit benami transaction. Sale and agreement to sale defined under section 54 of the Transfer of Property Act being part of the Indian Contract Act, as contemplated under section 4 of the Transfer of Property Act are subject to prohibition contained thereunder. If an agreement to sale suffers from the vice of benami transaction within the meaning of section 2(a) of the Act, the same falls in the category of contracts forbidden by law as contemplated under section 23 of the Indian Contract Act, the object whereof is unlawful. Hence, inexecutable in an action for specific performance. Whether the plaintiff was ready and willing to perform his part of the agreement? - Plaintiff could not be said to be ready and willing to perform his part of the contract. Due to default of payment schedule as agreed to, the agreement stands rescinded on its own. The subsequent conduct of the plaintiff is also unnatural. He sent two telegraphs for taking the remaining amount and presence of defendants No.1 and 2 on 27/03/2006 for registration of sale deed whereas neither he had purchased the stamp paper nor handed over the draft sale deed to defendants No.1 and 2. Plaintiff found to have not made the payment of consideration as agreed to between the parties and on the contrary, has made a factual incorrect statement discussed above regarding cash payment of ₹ 35.00 lakhs before 05/11/2005. Law is well settled that the plaintiff has to plead and prove each and every condition of the agreement right from the date of the agreement upto the date of decree (See N.P.Thirugnanam Vs. Dr. R.Jagan 1995 (7) TMI 437 - SUPREME COURT ). Whether defendants No.4 and 4 are entitled for cost? - Defendants No.4 and 5 found to have been unjustifiably dragged into the instant litigation. Therefore, they are entitled for cost of ₹ 50,000/- (Rupees fifty thousand only) payable by the plaintiff within four weeks from the date of pronouncement of this judgment.

Summary

Issues Involved:
1. Whether the plaintiff is a fictitious person.
2. Whether the agreement to sell dated 27/04/2005 is vague, uncertain, and not capable of execution.
3. Whether the agreement to sell is hit by the prohibition under section 3 of the Benami Transactions (Prohibition) Act, 1988, and therefore not enforceable under law.
4. Whether the plaintiff was ready and willing to perform his part of the agreement.
5. Whether defendants No.4 and 5 are entitled to costs.

Detailed Analysis:

1. Whether the plaintiff is a fictitious person:
The plaintiff, Satish Kumar Khandelwal, was described differently in the agreement and the plaint. The address in the agreement was a commercial place, while the address in the plaint was residential. The plaintiff admitted to using different names and addresses in various documents, leading to the conclusion that he acted as a front man for A.R. Infrastructure. The court found no plausible explanation for these discrepancies, thus affirming the trial court's finding that the plaintiff was a fictitious person.

2. Whether the agreement to sell dated 27/04/2005 is vague, uncertain, and not capable of execution:
The agreement lacked specific details such as the exact dimensions, location, and boundaries of the land. Moreover, the agreement did not include a map or detailed description of the land to be sold. The trial court found the agreement to be ambiguous and not enforceable. The court cited several judgments, including Vimlesh Kumari Kulshrestha vs. Sambhajirao and Laxman Singh vs. Jagannath, to support the finding that the agreement was uncertain and not capable of execution.

3. Whether the agreement to sell is hit by the prohibition under section 3 of the Benami Transactions (Prohibition) Act, 1988, and therefore not enforceable under law:
The plaintiff failed to prove the source of funds for the transaction, with the consideration being provided by third parties like A.R. Infrastructure and Ansal Housing and Construction Ltd. The court concluded that the transaction was a benami transaction, as defined under section 2(a) of the Benami Transactions (Prohibition) Act, 1988, and therefore prohibited under section 3(1) of the said Act. The court cited Pawan Kumar Gupta vs. Rochiram Nagdeo to emphasize that the source of consideration is crucial in determining a benami transaction.

4. Whether the plaintiff was ready and willing to perform his part of the agreement:
The plaintiff failed to adhere to the payment schedule outlined in the agreement. The court found that the plaintiff did not make the required payments on time and provided false statements regarding cash availability. The court cited N.P. Thirugnanam vs. Dr. R. Jagan to highlight the necessity of continuous readiness and willingness to perform contractual obligations. The court concluded that the plaintiff was not ready and willing to perform his part of the agreement.

5. Whether defendants No.4 and 5 are entitled to costs:
Defendants No.4 and 5 were unjustifiably dragged into the litigation, as they were not originally parties to the agreement. The court found that the plaintiff did not fulfill the condition precedent of paying ?35.00 lakhs to defendants No.1 and 2 for purchasing land from defendants No.4 and 5. Therefore, the court awarded costs of ?50,000/- to defendants No.4 and 5, payable by the plaintiff within four weeks.

Conclusion:
The appeal was dismissed, affirming the trial court's findings on all issues. The court directed the plaintiff to refund ?66.00 lakhs to defendants No.1 and 2 and awarded costs of ?50,000/- to defendants No.4 and 5.