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TMI Blog2023 (8) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... e permitted or allowed in any such suit, claim or action by or on behalf of the person claiming to be the real owner of such property held benami. Section 4(2) restricts the defence of a pre-existing right. Such a provision the Hon ble Supreme Court has held in the case of R. Rajagopal Reddy (supra), cannot be retrospective or retroactive by necessary implication. However, what is prohibited is the defence to be taken on that day when the act came into force. Thus, even if the transaction is prior in point of time, defence based by the owner of the property who holds the property benami in the name of some other person is not permissible under section 4(2) of the Benami Transactions (Prohibition) Act after the Act comes into force. In the instant case, the defence is taken much prior to the coming into force of the Benami Transactions (Prohibition) Act and the defence once allowed cannot be subsequently taken away. The defence was taken in the year 1982 much before the act came into force. In the instant case, the defence of benami transaction by defendant no.2 in favour of plaintiff is taken by the person (defendant no.1), who has purchased the property before the act cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laintiff be declared owner and possessor of the suit land and further for perpetual injunction restraining the defendants from causing obstruction to the plaintiff s possession permanently. 3. While the second appeal was admitted no substantial questions of law were formulated. Thus, this court by order dated 04.02.2022, at paragraph no.2, observed as under:- 2. However, conspicuously, the second appeal has been admitted without formulating substantial questions of law as is contemplated under Section 100 of the Code of Civil Procedure by passing one more order admit . The parties to be heard on the point of such formulation of points on 14.02.2022. The appellant shall furnish substantial questions of law. 4. The appellant, accordingly, with advance notice to the other side has formulated following substantial questions of law:- A. Preponderating circumstances if not considered amounts to substantial question of law as held in the case of Madanlal Vs. State of J. K. . It aptly apply in the instant second appeal. B. Application and scope of Benami Transactions (Prohibition) Act is not considered in this case. It ousts the defence of the defendants. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est in the suit land. The suit land is not purchased from the ancestral nucleus or joint hindu family property. It was the self acquired property of defendant no.2 and he is competent to alienate it. Therefore, no question arises as to the legal necessity of the joint family for purchase of suit property as contended by the plaintiff. E. It is further contended by the defendant no.1 that the defendant no.1 is a bonafide purchaser. The possession of the suit land was also delivered to defendant no.1 and that defendant no.2 does business of purchasing and selling the lands and that in order to escape from liability from loss, intentionally got the sale deed nominally in the name of the plaintiff and the suit is filed in collusion with wife of defendant no.2. On the basis of the pleadings of the parties, the trial court formulated following issues and answered accordingly:- Issues (1) Does Plaintiff prove his title to the suit land as well as possession over it ? (2) Does he prove the alleged obstruction into his possession by Defendants ? (3) Does he prove that the alienation of the suit land by Defendant No.2 to Defendant No.1 is without legal necessit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) No H. The appellate court on examination of the material on record held that the suit land was the self acquired property of defendant no.2 and that there was no question to get permission from the District Court under the Guardianship Act to alienate the suit property. The appellate court held that defendant no.2 has business of selling and purchasing of land. That the plaintiff does not become the owner of the land on the basis of his name being shown in the sale deed. I. The appellate court held that the plaintiff is neither the owner nor in possession of the suit land and, therefore, it is held that the sale deed cannot be cancelled and dismissed the suit with costs . 6. The appellant has preferred the second appeal and contends that the second appeal involves substantial question of law as regards violation of the Prohibition of Benami Property Transactions Act, 1988 [hereinafter referred as Benami Transactions (Prohibition) Act ] and submits that the defence of defendant no.1 is oust. He relies upon the judgment of Mithilesh Kumari and another Vs. Prem Behari Khare, AIR 1989 SC 1247 (1) and contends that the Benami Transactions (Prohibition) Act has retrosp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h take place after Section 3(1) comes into operation. In fact Saikia, J. speaking for the Court in Mithilesh Kumari case has in terms observed at page 635 of the report (SCC p. 107, para 22) that Section 3 obviously cannot have retrospective operation. We respectfully concur with this part of the learned Judge s view. The real problem centres round the effect of Section 4(1) on pending proceedings wherein claim to any property on account of it being held benami by other side is on the anvil and such proceeding had not been finally disposed of by the time Section 4(1) came into operation, namely, on 19-5-1988. Saikia, J. speaking for the Division Bench in the case of Mithilesh Kumari gave the following reasons for taking the view that though Section 3 is prospective and though Section 4(1) is also not expressly made retrospective, by the legislature, by necessary implication, it appears to be retrospective and would apply to all pending proceedings wherein right to property allegedly held benami is in dispute between parties and that Section 4(1) will apply at whatever stage the litigation might be pending in the hierarchy of the proceedings : (1) ... (2) ... (3) ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 4(1) applied no suit can lie in respect to such a past benami transaction. To that extent the section may be retroactive. To highlight this aspect we may take an illustration. If a benami transaction has taken place in 1980 and a suit is filed in June 1988 by the plaintiff claiming that he is the real owner of the property and defendant is merely a benamidar and the consideration has flown from him, then such a suit would not lie on account of the provisions of Section 4(1). Bar against filing, entertaining and admission of such suits would have become operative by June 1988 and to that extent Section 4(1) would take in its sweep even past benami transactions which are sought to be litigated upon after coming into force of the prohibitory provision of Section 4(1); but that is the only effect of the retroactivity of Section 4(1) and nothing more than that. From the conclusion that Section 4(1) shall apply even to past benami transactions to the aforesaid extent, the next step taken by the Division Bench that therefore, the then existing rights got destroyed and even though suits by real owners were filed prior to coming into operation of Section 4(1) they would not surviv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e when such defence was allowed Section 4(2) was out of the picture. Section 4(2) nowhere uses the words: 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 to be raised or continued to be raised in any suit. With respect, it was wrongly assumed by the Division Bench that such an already allowed defence in a pending suit would also get destroyed after coming into operation of Section 4(2)... 8. The Hon ble Supreme Court in the case of R. Rajagopal Reeddy, has held that the plaint would not lie under section 4(1) of the Benami Transactions (Prohibition) Act for a claim to enforce any right in respect of any property held benami, against the person in whose name the property is held after coming into effect of the Act, even if the transactions were prior in point of time. Also under section 4(2) of the Act if a suit is filed by plaintiff who claims to be owner of the property on the basis of ownership document and claims ownership on the basis that the property is in his name, after the coming in force of the Act no defence would be permitted or allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into a full discussion on this issue as the same is not required to be considered. Suffice to say that the defence was taken by defendant no.1 of benami transaction by defendant no.2 in favour of the plaintiff and that the defendant no.2 being the real owner of the property was entitled to sell the suit property to the defendant no.1 was taken much prior to the coming into force of the Benami Transactions (Prohibition) Act and in view of the judgment of the 3 Judges bench of R. Rajagopal Reddy (supra), the defence of benami transaction taken prior to the coming into the act is available and the Benami Transactions (Prohibition) Act is not retroactive to that extent. The Prohibition of Benami Property Transactions Act, 1988 is not applicable to the instant case. Question of Law raised at paragraph no.4(B) is answered accordingly. 12. The next Question of Law raised by the learned counsel for the appellant that the permission was required to be taken under section 8 of the Guardianship Act from the mother of the appellant is also not tenable in view of the fact that the property is the self acquired property of defendant no.2 and the appellant plaintiff had no right in the sui ..... X X X X Extracts X X X X X X X X Extracts X X X X
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