2021 (3) TMI 697 - HC - Benami Property

Benami Transactions - right to recover property held benami - real owners over the suit property - Plaintiffs' case is that their predecessor-in-interest namely Padma Charan Bahinipati and one Lingaraj Bahinipati i.e. the Defendant are two brothers being son of Raghunath Bahinipati. Upon the death of their father when the Defendant was 9 years old boy, Padma Charan is said to have taken all his care in every front who having obtained MBBS degree ultimately went to United Kingdom for higher study. Plaintiffs that in the year 1971, Padma Charan purchased the suit property on his own by spending his earning without the help from any quarter and constructed a house over there for his living with family and reason for the same as given is that since Padma Charan was then a Govt. employee in the Forest Department by spending his own funds instead of purchasing the property in his name standing as the vendee under said transaction; he preferred to purchase the property in the name of his brother i.e. the Defendant. aAter purchase, Padma Charan Bahinipati possessed the property as its owner and on his death, the Plaintiffs as the legal heirs and successors are in possession of the same. Having got some information that the Defendant is attempting to alienate the suit property, the Plaintiffs with the apprehension of losing their property have filed the suit for declaration of title, possession and injunction. HELD THAT - Even without giving any precise definition of the expression fiduciary capacity , it springs out of the relationship which is analogous to the relationship between a trustee and beneficiaries of the trust founded on confidence and trust on the one part and good faith on the other. Adverting to the case in hand, it is seen that it has been pleaded that Padma Charan being a Govt. servant in his anxiety was desirous of avoiding to purchase the property in suit in his name and so he, wished to purchase the property in the name of the brother i.e. Defendant and he did so. Mere mention of the relationship that the Defendant is the brother of Padma Charan would however not suffice the purpose and basing upon that it is not permissible to record the finding that the transaction in question would not come within the prohibition contained in section 4 (1) of the Act being so excepted under clause (b) of sub-section 3 of the Act as it stood on the date of institution of the suit. The legislative intent behind the insertion of that clause (b) to sub-section 3 of the Act which was there till 31.10.2016 is clear that normal relationship through blood or akin relationship as such have no play therein and the party in order to have his case within that saving fold has to plead all those facts and circumstances including their inter se dealings stretching over a period and also prove those by leading clear, cogent and acceptable evidence of such nature that the court would record the finding that the person in whose name the property is held stood in a fiduciary capacity. In the absence of any foundation in the pleadings as to all such facts and circumstances and their proof by clear, cogent and acceptable evidence so as to bring the transaction within the fold of the exception as it was there in clause (b) of sub-section 3 of section 4 of the Act; the courts below in my considered view found to have committed no error in recording the concurrent finding that the Plaintiffs have failed to establish their case so as to be entitled to the reliefs claimed in the suit. The very case of the Plaintiffs that the suit property had then been purchased by Padma Charan in the name of the Defendant is in order to show that he had nothing to do with said purchase sine it is said to be for the reason of avoidance of any such problem in his service career. This even taken as such and accepted; the case that the property held in the name of the Defendant standing in fiduciary capacity and that the property was held not for the benefit of Defendant but for that of Padma Charan towards whom the Defendant stands in such capacity falls flat. No substantial question of law

Summary

Issues:
1. Ownership of property under Benami Transactions Act.
2. Interpretation of fiduciary relationship under Benami Transactions Act.

Issue 1: Ownership of property under Benami Transactions Act
The appeal challenged the judgments and decrees passed by the lower courts, which dismissed the suit filed by the Plaintiffs for declaration of title, possession, and injunction. The Plaintiffs claimed that the property in question was purchased by Padma Charan in the name of the Defendant, his younger brother, in 1971. The Plaintiffs argued that the transaction fell within the exception provided in section 4(3)(b) of the Benami Transactions Act, as Padma Charan had full faith and confidence in the Defendant and intended to benefit himself and his family members. However, the trial court held that the Act prohibited the enforcement of any right as real owners over property held benami against the person in whose name the property is held. The court negated the Plaintiffs' contention that the transaction was covered by the exception in the Act, based on the evidence presented.

Issue 2: Interpretation of fiduciary relationship under Benami Transactions Act
The Plaintiffs contended that Padma Charan purchased the property in the Defendant's name due to a fiduciary relationship and trust between them. The Plaintiffs argued that the Defendant stood in a fiduciary capacity vis-à-vis Padma Charan, and the property was held for the benefit of Padma Charan. The Plaintiffs sought to establish that the transaction was exempted under section 4(3)(b) of the Act. However, the court found that the mere relationship of being brothers was insufficient to prove a fiduciary relationship. The court emphasized that to fall within the exception provided in the Act, the party must plead and prove all relevant facts and circumstances demonstrating a fiduciary capacity. As the Plaintiffs failed to provide a foundation in the pleadings and clear evidence supporting a fiduciary relationship, the courts below correctly concluded that the Plaintiffs did not establish their case to be entitled to the reliefs claimed in the suit.

In conclusion, the High Court dismissed the appeal, stating that the case did not involve a substantial question of law. The court upheld the lower courts' decisions, emphasizing the importance of proving a fiduciary relationship and complying with the provisions of the Benami Transactions Act for claims related to property ownership held benami.