2023 (4) TMI 882 - HC - Benami Property

Benami Transactions - family arrangement - exception in Section 4(3)(a) of the Benami Act - Jurisdiction of the Court to entertain under Section 9A of the CPC - Suit filed as barred under the provisions of the Benami Transactions (Prohibition) Act, 1988) - Whether the suit is barred by limitation ? - Scope of preliminary issue under Section 9A - requirement of evidence to decide the preliminary issues - The learned Single Judge observed that the issues of limitation and benami were mixed questions of fact and law requiring evidence - whether plaint was ex-facie barred by limitation on the basis of the admissions in the plaint itself? - HELD THAT - The bar of Benami under Benami Act requires examination of factual aspects including the exceptions to Section 2(9) and 4(3). The question whether a transaction is Benami or not is therefore one of fact requiring evidence. There is, therefore, no dispute that limitation and benami transactions being mixed questions of fact and law, require evidence. That being the position, such questions in view of paragraphs 50, 54, 56 of Nusli Neville Wadia vs. Ivory Properties 2019 (10) TMI 1314 - SUPREME COURT cannot be decided under Section 9A. In view of the law settled in the case of Nusli Neville Wadia vs. Ivory Properties (supra), we have no doubt in holding that, in the facts of this case, limitation and benami transactions are not covered within the ambit of jurisdiction of the Court to entertain under Section 9A of the CPC and cannot be decided as preliminary issues under Section 9A of the CPC. Section 9A only deals with issues of whether the Court does or does not have jurisdiction to entertain a suit. Respondent s interpretation is misplaced. A plain reading of the order clearly indicate that although the learned Single Judge kept importuning the Appellant to lead evidence as the same was necessary to decide the issues but the appellant refused to do so. There is a difference between refusing to lead evidence and evidence not being required to be led. In the facts of the case as borne out from the orders, the evidence was necessary to be led to decide the preliminary issues. Just because now that the Appellant can raise a point in the light of the Apex Court decision in the case of Nusli Neville Wadia vs. Ivory Properties (supra), objection cannot be raised to state that decision on preliminary issues on the basis of admission and pleadings ought to be considered without having to lead evidence. It is also evident from the above order that the Plaintiff, the Appellant herein, did not wish to lead evidence on either of the two preliminary issues. Therefore, whether or not the appellant gave consent or elected to have the preliminary issues decided, that cannot come in the way of the law settled in the case of Nusli Neville Wadia vs. Ivory Properties (supra) being applied. The law laid down in Nusli Neville Wadia vs. Ivory Properties (supra) was always the law and the Appeal/ impugned order will have to be tested on that basis. The present Appeal being tested on the touchstone of Section 9A in the light of the decision in the case of Nusli Neville Wadia vs. Ivory Properties (supra), and 2015 (9) TMI 1606 - BOMBAY HIGH COURT clearly holding the requirement of evidence to decide the preliminary issues will have to be set aside and is hereby set aside.

Issues Involved:
1. Whether the suit is barred under the Benami Transactions (Prohibition) Act, 1988 (the "Benami Act").
2. Whether the suit is barred by limitation.

Summary of Judgment:

1. Benami Transactions (Prohibition) Act, 1988:
The learned Single Judge observed that the issue of whether the suit was barred under the Benami Act was a mixed question of fact and law requiring evidence. The Appellant argued that the family arrangement and the signature of the Respondent No. 1 on the document amounted to a judicial admission, making the exception in Section 4(3)(a) of the Benami Act applicable. However, the learned Single Judge noted that the entire case demanded evidence, particularly to establish fiduciary relationships and the intentions behind the family arrangements. The Appellant's refusal to lead evidence was critically noted, and the judge concluded that without evidence, the claims under the Benami Act could not be substantiated.

2. Limitation:
The Appellant contended that the cause of action arose on 28 January 2012, making the suit filed on 1 August 2014 within the limitation period. The learned Single Judge, however, pointed out that the Appellant's own pleadings indicated multiple family arrangements and share transfers dating back to 1996, 2001, 2005, 2006, and 2007. These transfers were claimed to be in derogation of the 1995-96 Family Arrangement, making the suit out of time. The judge emphasized that the Appellant had the opportunity to lead evidence to establish these claims but chose not to, resulting in the conclusion that the suit was barred by limitation.

Appellate Court's Analysis:

Law on Preliminary Issues under Section 9A:
The Appellate Court referred to the Supreme Court's decision in Nusli Neville Wadia vs. Ivory Properties, which clarified that only pure questions of law concerning the inherent jurisdiction of the Court to entertain the suit can be decided as a preliminary issue under Section 9A. Mixed questions of law and fact requiring evidence cannot be decided under Section 9A.

Application to the Present Case:
The Appellate Court found that both issues of limitation and benami transactions were mixed questions of fact and law requiring evidence, as admitted by the learned Single Judge and the Respondents' submissions. Therefore, these issues could not be decided under Section 9A.

Consent and Estoppel:
The Appellate Court rejected the Respondents' argument that the Appellant's consent to frame preliminary issues and not lead evidence converted mixed questions into pure questions of law. It was held that consent cannot confer jurisdiction where none exists, and there cannot be estoppel against law.

Conclusion:
The Appellate Court set aside the impugned order dated 8 and 11 September 2015, holding that the issues of limitation and benami transactions could not be decided as preliminary issues under Section 9A. The suit was restored to file for fresh proceedings, with all contentions on merits expressly kept open. The Appellant was granted liberty to file a similar application for interim relief before the learned Single Judge.

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