2021 (12) TMI 1162 - HC - Benami Property

Benami transaction - suit property is ancestral property - Suit property was purchased in the name of grandmother of the plaintiff by grandfather - what was the reason for the defendant to purchase the property in the name of mother and not in his own name? - HELD THAT - Whether the transaction in question was a Benami and whether the defence of the defendant that in fact he is the exclusive owner and not his mother, though the property was standing in her name, could have been allowed to be raised in view of Section 4 of Benami Transactions (Prohibition) Act, 1988, was not considered by both the Courts below. But, definitely, that point which is the law point, which can be framed here, will have to be gone into because if the defendant could not have been allowed to raise that defence, then his entire defence fails. Here, we are concerned with whether defendant can take such defence and to that extent, the observations in paragraph No.13 would be required to be considered. However, since the categories have been made, we will have to consider its interpretation. Further, the real intention whether was brought on record is also a question. Another fact to be appreciated on the basis of the same is, if the property was in the name of mother, then whether defendant could have raised any loan from any institution/bank/ Patsanstha is also required to be considered. On this point, in fact, the Courts below have considered that the said construction would have been made by the defendant as per his choice and will. It does not deprive the plaintiff of his right. The documents on record were considered by both the Courts below and it was observed that those documents appear to be fabricated. The defendant was the Secretary of the Patpedhi, from whom it was shown that he had raised loan. Therefore, as regards factual aspect is concerned, it is not giving any rise to a substantial question of law, however, the nature of the property and whether the defendant could have raised defence of exclusive ownership, though the property stood in the name of his mother, deserve to be resolved/adjudicated in this case. Hence, the second appeal stands admitted. Following are the substantial questions of law - I) What was the nature of the suit property i.e. as to whether ancestral or of exclusive ownership of defendant No.1? II) Whether the defendant could have been allowed to take defence that though the suit property was purchased in the name of his mother but he was in fact the real owner (Benami Transactions) in view of Bar under Section 4 of the Benami Transactions (Prohibition) Act, 1988? Issue notice to the respondents. Mr. M. S. Kulkarni waives notice for respondent Nos.1 to 3.

Summary

Issues:
1. Challenge to concurrent judgment and decree by original defendant in partition suit.
2. Dispute over ancestral property ownership and Benami transaction defense.

Analysis:
The appeal filed challenges the judgment and decree passed by lower courts in a partition suit. The plaintiff claimed the suit property as ancestral, while the defendant asserted exclusive ownership, alleging the property was purchased in his mother's name. The defendant's defense was based on financial aid received from his father-in-law for the property purchase and subsequent construction. The plaintiff argued the defendant failed to prove the source of funds for the property acquisition. The key issue revolved around whether the property was ancestral or exclusively owned by the defendant.

The appellant contended that both lower courts erred in disregarding evidence supporting the defendant's claim of exclusive ownership. The defendant's financial transactions, including loans and construction expenses, were presented as proof of ownership. The appellant raised the question of the property's nature and whether the defendant's defense of exclusive ownership, despite being in his mother's name, could be upheld under the Benami Transactions Act. The appellant cited legal precedents to support the argument that transactions involving fiduciary relationships are exempt from the Act's provisions.

On the other hand, the respondent argued that the lower courts correctly analyzed the evidence and concluded that the defendant failed to substantiate his claim of exclusive ownership. The respondent cited a legal precedent emphasizing the importance of determining the intention behind property transactions to ascertain their nature. The respondent highlighted the need to consider surrounding circumstances, parties' relationships, and motives to determine the true nature of the transaction.

The court acknowledged the need to address whether the property was ancestral or exclusively owned by the defendant. Additionally, the court needed to determine if the defendant's defense of exclusive ownership, despite the property being in his mother's name, could be accepted under the Benami Transactions Act. The court emphasized the importance of interpreting the Act's provisions in light of the specific circumstances of the case. The court admitted the appeal for further consideration and identified two substantial legal questions for resolution.

In conclusion, the court issued notices to the respondents, expedited the appeal process, and granted a stay on the lower court's decrees pending the final disposal of the appeal. The court dispensed with the printing of the paper book and allowed the respondents to apply for early hearing. The civil applications related to stay were disposed of accordingly.