2021 (10) TMI 125 - HC - Benami Property

Suit maintainable under the provisions of Benami Transactions (Prohibition) Act, 1988 - Whether suit barred under Section 4(1) of the Benami Act, 1988?- HELD THAT - The suit property was in possession of late Hariprasad Agrawal until his death, therefore, Savitri Devi was a benami holder of the property. There is no such pleading in the plaint that the suit property was purchased for the benefit and improvement of Joint Hindu family property. In fact, there is no mention of the Joint Hindu family property in the whole plaint. Neither there is any mention of Hindu undivided family nor the joint property of such undivided family. In this circumstance, the absence of such pleadings, which are the requirement under sub-section (3) of Section 4 of the Act, 1988, for the maintainability of the suit as an exception to the provision under Section 4(1) of the Act, 1988, is totally missing. The prayer under Order VII Rule 11 of the CPC for rejection of plaint has to be considered only on the basis of the plaint averments and nothing else. The plaint averments as disclosed herein-above clearly shows that nothing has been pleaded to show that the suit property was held by Savitri Devi as coparcener of a Hindu undivided family and the same was for the benefit of all the coparceners of the Joint Hindu family. This being the position on the basis of the facts and pleadings in the plaint, there is no material to draw conclusion that the suit filed by the respondents is covered under the exception as provided under Section 4 (3) of the Act, 1988. This being the conclusion, the suit filed by the respondents appears to be clearly barred under Section 4(1) of the Benami Act, 1988 and in such a case the plaint of the respondents is liable to be rejected under Order VII Rule 11(d) of the CPC. As held that the impugned order passed by the learned trial Court is erroneous and unsustainable, therefore, the same is set aside. The application of the petitioners under Order VII Rule 11 of the CPC is allowed.

Summary

Issues:
Challenge to maintainability of civil suit under Benami Transactions (Prohibition) Act, 1988.

Analysis:
1. The revision was filed challenging the trial court's order dismissing the petitioners' application under Order VII Rule 11 of the CPC. The respondents had filed a civil suit seeking declaration of title and permanent injunction over a property claimed to be purchased benami. The petitioners contended that the suit was not maintainable under the Benami Transactions (Prohibition) Act, 1988.

2. The petitioners argued that the respondents claimed title based on the property being purchased benami, but the petitioners contested this claim. They highlighted that an exception under Section 4(3) of the Act, 1988, applicable to undivided families, was not pleaded in the suit. The petitioners claimed right to the property based on a will executed by Savitri Devi in their favor.

3. Citing the Supreme Court's interpretation of the term "fiduciary," the petitioners emphasized that the suit property was not held in a fiduciary capacity as required by the Act. They relied on previous judgments, including one by the High Court, which held that suits for declaration of title on benami property were barred under Section 4(1) of the Act, 1988.

4. The respondents argued that the property was purchased benami for the joint family and Savitri Devi held it as a trustee. They referred to a sale deed indicating payment by Savitri Devi's father, supporting the contention that she held the property for the joint family.

5. The respondents cited a Supreme Court judgment emphasizing that questions regarding fiduciary capacity should be decided based on evidence, not at the stage of Order VII Rule 11 application. They maintained that the trial court rightly dismissed the application, as the suit fell under the Act's exception.

6. Upon review, the court found that the plaint lacked crucial pleadings required for the suit to qualify under the Act's exception. The absence of references to joint family property or Hindu undivided family precluded the suit from being covered under Section 4(3) of the Act, 1988.

7. Consequently, the court held that the trial court's order was erroneous and unsustainable. The petitioners' application under Order VII Rule 11 was allowed, and the respondents' plaint was rejected under the CPC. The civil suit proceedings were terminated accordingly.

8. The revision was disposed of in favor of the petitioners, setting aside the impugned order and rejecting the respondents' plaint under Order VII Rule 11(d) of the CPC.