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TMI Blog1991 (6) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer made in, favour of the 1st defendant was valid without recording a finding in terms of the provisions contained in section 41 of the Transfer of Property Act ? (2) Whether the finding of the lower appellate court that the transfer made by the 1st defendant in favour of the 5th defendant was a valid transfer is justified in law ?" When the matter came up for hearing as the provisions of the Benami Transactions (Prohibition) Act, 1988, had come into force, the learned judge B. P. Singh J., on consideration of the respective contentions of the parties, felt that the case involves important questions of law which are required to be considered by the Division Bench. They are as follows : "(a) Whether section 3 of the Act which is prospective in operation and which prohibits any person from entering into a benami transaction and makes the breach punishable is a punitive provision which does not, in any manner, control the scope and operation of section 4 which extinguishes the civil rights of those who may claim to be the real owners any right or interest in the property held benami and applies to pending proceedings as well ? (b) Whether the extinguishment of the rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ? 5. Whether the plaintiff proves that the decision in O. S. No. 2317 of 1964, on the file of this court operates as res judicata against defendants Nos. 1 and 5 ? 6. Whether the fifth defendant proves that the plaintiff is estopped from claiming any interest in the suit property ? Additional issues : 1. Whether defendants Nos. 3 and 4 prove that the suit property is the joint family property belonging to the plaintiff and defendants Nos. 3 and 4 ? 2. Whether the third defendant is entitled to one-fourth share in the suit property ? 3. Whether defendant No. 3 proves that the suit property was purchased by his father, Gangappa, in his mother's name and it is benami transaction ? On consideration of the evidence as well as the materials on record and the respective contentions of the parties, the learned Munsiff, Bangalore, negatived issues 1, 3, 4 and 5 ; answered issues 2 and 6 in the affirmative and passed a decree dismissing the suit, with costs of defendant No. 5. Being aggrieved by the judgment and decree of the learned Munsiff, the appellant-plaintiff filed an appeal before the Eighth Additional Civil judge, Bangalore City, in R. A. No. 92 of 1976. In the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty after reasonable care to ascertain that the transferee had the power to make the transfer and that he had acted in good faith. Learned counsel appearing for defendant No. 5 strenuously contended that the provisions of the Benami Transactions (Prohibition) Act, 1988, had come into force, which has put a complete bar to the plaintiff's suit against the defendant in respect of the suit schedule property. He submitted that, as the lower appellate court had come to the conclusion on point No. 1 that the purchase made under exhibit P-13 dated July 19, 1928, was a benami transaction, in view of the prohibition incorporated in section 4 of the Act, the suit was liable to be dismissed on that ground itself. In this appeal, the finding of the first appellate court that the transaction was one of benami has not been seriously questioned by the respondent. The appellant-plaintiff, relying on the finding of the first appellate court that the transaction was one of benami, has argued that the lower court had erred in holding that the first defendant-respondent could not have had notice of the benami nature of exhibit P-13 at the time he purchased the property. Elaborating his argumen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oomarkoondoo v. MC Queen 18 Suth WR 166, a decision of the Privy Council, it was observed as follows (see AIR 1961 Patna 314, 316) : "It is a principle of natural equity, which must be universally applicable, that where one man allows another to hold himself out as the owner of the estate, and the third person purchased it, for value, from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out shall not be permitted to recover upon his secret title, unless he can overthrow that of the purchaser by showing either that he had direct notice, or something which amounts to constructive notice of the real title, or that there existed circumstances which ought to have put him upon an enquiry, that, if prosecuted, would have led to a discovery of it." In this case, the appellant-plaintiff has not established that respondent No. 1/defendant No. 1 had actual or constructive notice of the benami nature of the transaction. It is relevant to note that the deceased defendant No. 2's husband, Gangappa, always represented that the suit property was the absolute property of his wife. After his death, his heirs would be as much bound by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohibition of the right to recover property held benami.-(1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property. (2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property. (3) Nothing in this section shall apply, (a) where the person in whose name the property is held is coparcener in a Hindu undivided family and the property is held for the benefit of the coparceners in the family ; or (b) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity." This is an important piece of legislation which not only seeks to abolish the age old concept of benami transaction and the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of the enactment. Before applying a statute retrospectively, the court has to be satisfied that the statute is in fact retrospective. The presumption against retrospective operation is strong in cases in which the statute, if operated retrospectively, would prejudicially affect vested rights or the illegality of the past transactions, or impair contracts, or impose a new duty or attach a new disability in respect of past transactions or consideration already passed. However, a statute is not properly called a retrospective statute because a part of the requisites for its action is drawn from a time antecedent to its passing. We must look at the general scope and purview of the statute and at the remedy sought to be applied, and consider what was the former state of law and what the legislation contemplated. Every law that takes away or impairs rights vested agreeably to existing laws is retrospective, and is generally unjust and may be oppressive. But laws made justly and for the benefit of individuals and the community as whole, as in this case, may relate to a time antecedent to their commencement. The presumption against retrospectivity may in such cases be rebutted by necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resumption against its retrospectivity is not applicable. Acts of this kind only declare. A statute in effect declaring the benami transactions to be unenforceable belongs to this type. The presumption against taking away a vested right will not apply in this case inasmuch as under the law it is the benamidar in whose name the property stands, and law only enabled the real owner to recover the property from him which right has now been ceased by the Act. In one sense, there was a right to recover or resist in the real owner against the benamidar. Ubi jus ibi remedium. Where there is a right, there is a remedy. Where the remedy is barred, the right is rendered unenforceable. In this sense, it is a disabling statute. All the real owners are equally affected by the disability provision, irrespective of the time of creation of the right. right is a legally protected interest. The real owner's right was hitherto protected and the Act has resulted in removal of that protection. When the law nullifies the defences available to the real owner in recovering the benami property from the benamidar the law must apply irrespective of the time of the benami transactions" (at pages 108, 109). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the coparceners in the family ; and (ii) where the person in whose name the property is held is trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity. In our opinion, the case does not fall under either of the two exceptions. It does not fall at all under the first exception, for the reason that the property was in the name of Gangamma and not a coparcener. The second exception is also not attracted to the case for the reason that the only plea in the plaint was that the suit property was really that of the father and that the second defendant was only a benamidar. There was no alternative plea to the effect that the property was held by the second defendant-mother as a trustee for the benefit of the plaintiff and her other children, or being a mother who stood in a fiduciary capacity to the plaintiff and her other children held the suit property for the benefit of the plaintiff and other children of hers, on the other hand, the attestation of the sale deed, exhibit D-4, by the appellant and defendants Nos. 3 and 4, in which there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidual to pay the entire consideration for the purchase of the property and purchase the property in the name of his wife or unmarried daughter, and doing so does not fall within the prohibition incorporated in section 3(1) and does not constitute an offence under section 3(3) of the Act, but, when so done, the property so purchased becomes the absolute property of the wife or the unmarried daughter, as the case may be, and it will not be deemed to be a benami transaction. Therefore, it is clear that sub-section (2) which is in the nature of an exception to sub-section (1), which is prospective in operation, is also prospective in operation. As far as past transactions, namely, purchase of properties by a person in the name of any other person, including the purchase in the name of wife or unmarried daughter, prior to the commencement of the Act are concerned, section 4 would apply and, therefore, no suit would lie by anyone on the plea that such person in whose name the property was purchased was only a benamidar. To sum up, our answer to the questions of law arising for consideration in this appeal are: (1) Sub-section (1) of section 3 of the Act which prohibits the entering ..... X X X X Extracts X X X X X X X X Extracts X X X X
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