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TMI Blog2025 (1) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant was to contravene the provisions of a law. We are of the view that the "agreement"/ "authority letter" placed by the Appellants on record cannot be relied upon. The Ld. AA noted certain discrepancies. Furthermore, it is clearly evident from the facts on record that the two appellants in these two appeals were hand-in-glove with each other in the entire set of transactions. As such, it would not have been difficult for them to create a self-serving document of this nature to justify their actions which were in defiance not only of the Chhattisgarh Land Revenue Code, but also the letter and spirit of the PBPT Act, 1988 (as amended in 2016). In the present case not only was there a transfer of title to the property in the name of the Benamidar, Sh. Onkar Singh but also the same was for the unlawful purpose of circumventing the law regarding purchase of tribal land by non-tribals. On both counts, therefore, the exception under Section 2(9)(A)(ii) is not available to the appellants in the present case. The relevant facts are that the said properties were owned by persons belonging to ST community and Sh. Dwarika Gupta has asked Sh. Onkar Singh to purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rika Gupta (the Appellant in the Appeal No. FPA-PBPT-2584/RP/2023) had conspired for purchase of properties situated in Janjgir Champa and Bilaspur district of Chhattisgarh in the name of Sh. Onkar Singh Gond(FPA- PBPT-2590/RP/2023) who is his employee. Copies of relevant sale deeds were obtained by the I.O. Upon verification from the official CG Bhuiyan website, it was discovered that either the attached immovable properties were in the name of Sh. Onkar Singh Gond or they were transferred in the name of the person acting on behalf of Sh. Dwarika Gupta. The former appeared to be holding the properties benami on behalf of the latter who appeared to be the beneficial owner. 3. On the basis of the above information a summons was issued u/s 19(1) of the PBPT Act, 1988 to Sh. Onkar Singh Gond who was holding the legal title of the property in question and a statement was recorded on oath. It was revealed from the statement of Sh. Onkar Singh Gond that he belongs to a Scheduled Tribe and has been working as the manager in Narmada Phosphate Ltd., Hardi since 2006 and drew monthly salary of Rs. 13,500/-. The director of this company is Sh. Firoz Khan and the promoter is Sh. Dwarika Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dates in the account of Sh. Onkar Singh were called for from the bank and it was revealed that in some instruments, the depositor is a person other than Sh. Onkar Singh. This is corroborated from the signature of the depositor in the instrument as the deposits have been made by person other that Sh. Onkar Singh which cast a doubt as Sh. Onkar Singh had no means to make huge transactions, thereby, indicating that Sh. Dwarika Prasad Gupta was using the said account for his personal benefit. 7. In view of the evidence placed on record by the I.O. and subsequent conclusions drawn, the IO had reasons to believe that the properties mentioned in the Table below were "benami properties" within the meaning of Section 2(8) of the PBPT Act, 1988. Sr. No. Khasra no. Village Tehsil District Area (in Hectare) 1. 807 Akalsara Jaijaipur JanjgirChampa 1.129 2. 816/1 Akalsara Jaijaipur JanjgirChampa 0.324 3. 816/2 Akalsara Jaijaipur JanjgirChampa 0.324 4. 820 Akalsara Jaijaipur JanjgirChampa 0.729 5. 821/2 Akalsara Jaijaipur JanjgirChampa 0.028 6. 821/3 Akalsara Jaijaipur JanjgirChampa 0.049 7. 821/5 Akalsara Jaijaipur JanjgirChampa 0.308 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e confirmed. 11. In course of the proceeding, the Ld. AA considered the facts on record, replies and rejoinders filed by Sh. Onkar Singh and Sh. Dwarika Gupta and the I.O., as well as oral arguments. The analysis of the financial profile of Sh. Onkar Singh, revealed that he is a person having very me ager income and was a lowly paid employee of Sh. Dwarika Gupta and it may safely be concluded that he did not have the financial capacity to purchase the properties in question and that the parcels of land as mentioned above were purchased in the name of Sh. Onkar Singh from the funds provided by Sh. Dwarika Gupta which is a duly admitted fact in the statements as well as the submissions made in response to the show cause notice u/s 24(1) of the Act, and that the purpose behind purchasing the properties in question in the name of Sh. Onkar Singh is to defeat the provisions of Chhattisgarh Land Revenue Code, 1959 which places restrictions on the purchase of land of a tribal person by a nontribal person and that the lands were later transferred from Sh. Onkar Singh to Sh. Divya deep Gupta, son of the Sh. Dwarika Gupta and that this is a clear cut violation of section 6 of the PBPT Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no mention of any renumeration/amount/consideration which have to be received by Sh. Onkar Singh in lieu of lending his name for the purchase of these properties for the sole beneficial use of Sh. Dwarika Gupta. In another agreement dated 02.05.2020 wherein it has been stated that he is purchasing the subject properties in his name from the funds provided by Sh. Dwarika Gupta, there is no signature by Sh. Onkar Singh on the said agreement. Moreover, it is seen from the record that the signatures of Sh. Onkar Singh on the said agreement are poles apart from his signatures on sale deed executed in respect of property at serial no 1. The Ld. AA concluded that such kinds of agreement are not permissible under provision of section 25 of the Indian Contract Act, 1872 and in the clear absence of supporting evidence regarding the authenticity of the agreements, the agreements become dubious and cannot be relied upon. 15. With respect to property sr. no. 4 to 10 mentioned in the table above, the Appellants submitted that the said properties did not belong to Sh. Onkar Singh at any point of time and in order to prove this claim, they provided copy of Form B1 "किश ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale deed dated 02.09.2015 for consideration of Rs. 1, 75,000 from the funds of Sh. Dwarika Gupta and that the lands were transacted prior to introduction of amendment in 2016 in the PBPT Act, 1988 due to which the present proceedings cannot be retrospectively applied to an earlier transaction. The Ld. AA observed that the retrospective application of the amended PBPT Act, 2016 has been decided by the Hon'ble Supreme Court in its decided in case of Union of India & Anr. v. M/s Ganapati Deal com Pvt Ltd. in SLP (C) 2784/2020vide its order dated 23.08.2022 and that the properties at serial no. 16 & 17 were acquired prior to 25.10.2016 (on 02.09.2015) , that is the date of coming into force of the amended PBPT Act, 2016 and that in the view of the Supreme court judgement, the PAO holding the above properties at serial no. 16 & 17 as benami properties cannot be sustained as alleged benami transaction have occurred before the amended PBPT Act of 2016 came into force on 25.10.2016 whose provisions have been held by the Hon'ble Supreme Court as not being applicable retrospectively. In consequence of his findings as above, the Ld. AA confirmed the attachment of the properties at s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in interpretation clauses in order to enlarge the meaning of words or phrases occurring in body of the statute and when it is used, these words or phrases must be construed as comprehending not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include and that exhaustive meaning of "fiduciary capacity" and "includes"makes it evident that an employer is well within his rights under proprietorship concern to authorize his employee to act on behalf for specific purposes due to confidence, trust and good faith posed upon him. It is further clear from the aforesaid authority of the Hon'ble Apex Court that the meaning and context of "fiduciary capacity"and "includes" is well defined and there is no ambiguity at all due to which the principle of "Noscitur a Socii" is not applicable over section 2 (9)(A)(ii) of the PBPT Act, 1988. Further, if erroneous interpretation given by department is accepted, then it will render the entire section 2 (9)(A)(ii) otiose and partially defunct since the first part of section 2 (9)(A)(ii) will have no meaning or interpretation and that fiduciar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of M/s Gupta Stones and Sh. Dwarika Gupta. It is mentioned that these properties were purchased for an amount of Rs. 37,30,000 from Daulatram Singh vide Sale Deed dated 25th February 2019 paid vide cheque no. 002219 dated 14th January 2019 which got debited on 28th February, 2019. It is pertinent to note that the Sh. Dwarika Gupta is interested in getting a quarry lease over a large area in village but properties listed at serial number 1,2&3 were coming in the middle of the area purchased by Sh. Divya deep Gupta and without purchasing the same, it was legally impossible to make continuous and compact area available for quarry lease so as to undertake mining in a systematic and scientific manner. Another problem arising was that the said land belongs to schedule tribe due to which the Sh. Dwarika Gupta and Sh. Divya deep Gupta would not have been able to purchase the land directly due to the bar of section 165 (6) of the Chhattisgarh land Revenue Code for mining purpose. Further, the state government does not entertain any request for transfer of land from scheduled tribe to general Category for the purpose of mining under section 165 (6) of the Chhattisgarh land Revenue Code. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a fiduciary capacity for the benefit of another person towards whom he stands in such capacity'. This is a general part which inter alia means any relationship that exists in a fiduciary capacity. If the said exclusion clause is limited to this part, it will cover all the transactions that fall under this relationship. This can be said so because a Beneficial Owner, in general, buys a property in the name of a trusted person only for example servant/driver/household help. Thus, if all such relationship between master servant, employer-employee, etc falls under the category of the fiduciary capacity, then the very purpose of the introduction of the PBPT Act, 1988 would be defeated which was to prohibit benami transactions. Therefore, considering only the first part would be a very narrow interpretation as to the general meaning of the word 'fiduciary'. Sh. Onkar Singh and Sh. Dwarika Gupta have taken this stand of a narrow interpretation of the statute and have ignored the entire provisions. 27. The second part reads that 'and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions vide section 56(1) of PBPT Act, 1961 is aimed at ensuring that trust relationships, even though property may appear to be held in a fiduciary capacity does not provide an automatic exemption from the provisions concerning the Benami transaction. 30. Further, the Respondent submits, it is pertinent to mention that the PBPT Act,1988 does not explain the term "fiduciary capacity" in any manner. Hence, the meaning and scope of the term "fiduciary capacity" are attempted to be drawn from external sources of interpretation of a statute. Herein, the rule of the Latin maxim Noscitur a Sociis to be applied. The applicability of this rule of interpretation arises when a word or phrase in question cannot be interpreted in isolation. It requires that the words that surround it shall also be understood in order to better grasp the meaning of the word whose meaning is warranted. The respondent has cited Maharashtra University of Health and Others Vs Satchikitsa Prasarak Mandal& Others, [Arising out of SLP(C) No. 15458 of 2007]and C.B.S.E. V. Aditya Bandhopadhyay [(2011) 8 SCC 497] in this context. 31. It is submitted that in the present case, the Benamidar Sh. Onka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered or is a promise to compensate for something done on a promise to pay a debt barred by limitation law." In the present case, the entire transaction to purchase the subject properties in the name of the Benamidar was to facilitate the re-transfer of the properties to the son of the Sh. Dwarika Gupta for using a parcel of land for getting a mining lease. It is crystal clear that the Sh. Onkar Singh was used for the sole purpose of purchasing benami properties, as he is a man of meagre means and it was not possible for him to purchase such expensive pieces of land. Moreover, the statements of the Sh. Onkar Singh clearly suggest that he was just being used as a filer to facilitate the benami properties in question. 33. It is also contended that the object behind incorporating section 165(6) under the Chhattisgarh Land Revenue Code is to provide social justice to the members of the backward tribe and save them from the harsh clutches of the socially and economically well- off persons. Further, section 170A of the Code provides for setting aside transfers made in violation of section 165(6) of the Code, meaning thereby that the sale which is violative of section 165(6) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the contentions raised on behalf of the defendants, the Ld. AA, however, rejected the same. He mainly relied upon the definition of "fiduciary relationship" provided in Advanced Law Lexicon authored by P. RamanathaIyer and held that a fiduciary relationship between the two did not exist as, firstly, no trust was placed in the Benamidar by the Beneficial Owner. Secondly, he noted that there was no question in the present case of the Benamidar, Sh. Onkar Singh gaining any "superiority" or "influence" over Sh. Gupta or assuming control and responsibility over him, or rendering advice to him. What was in existence was an unequal relationship between the two, with the sole intention of defeating the legislative intent of protecting tribal lands from acquisition by non-tribals and business interests. 36. The submissions made from the two sides on the above issue of "fiduciary capacity" before us were also on similar lines. The same have been mentioned as above in detail in paragraphs 18-22 and26-31 (supra) and are not repeated here in the interest of brevity. 37. We have given careful consideration to the rival submissions of parties. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Dwarika Gupta and that the former held the properties in question in a fiduciary capacity on behalf of the latter. The contention is strongly refuted from the side of the respondents. 39. The expression "fiduciary capacity "has not been defined by the PBPT Act, 1988, as amended in 2016. The terms "fiduciary" or the expressions "fiduciary capacity" or "fiduciary relation" have been used under section 55(2) of the Transfer of Property Act, section 51 of the C.P.C. and Section 16(1)(a), Indian Contract Act, but the same have not been defined under those Acts either. However, one common feature that clearly emerges from the existing judicial precedent as well as all authoritative texts which have also been cited by both sides in their respective submissions in the present case, is that fiduciary relationship is a relationship based on confidence, trust and good faith. 40. Having considered the matter in the above light, we are of the view that no fiduciary relationship could be said to have existed in the present case between the alleged Benamidar and the Beneficial Owner. On the contrary, the facts on record clearly reveal that such trust an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat undersigned is interested in getting a Quarry lease, over a large area in Village - Akal sara wherein he had already purchased Khasra No. 800/5Kh, 800/5 Kha, 800/3, 804/1, 804/2, 806, 829 admeasuring 4.703 Hectare in the name of Divya Deep Gupta but Khasra No. 807, 816/1 and 816/2 were coming in the middle of the area purchased by Divya Deep Gupta and without purchasing the same, it is legally impossible to make continuous and compact area available for quarry lease so as to undertake mining in systematic and scientific manner. Another problem arising was that Khasra No. 807, 816/1 and 816/2 belonged to Schedule Tribe due to which undersigned and Mr. Divya Deep Gupta would not have been able to purchase the land directly due to bar of Section 165(6) of Chhattisgarh Land Revenue Code for mining purpose. Further, State Government does not entertain any on of Renan request for transfer of land from Schedule Tribe to General Category for the purpose of Mining under Section 165(6) of Chhattisgarh Land Revenue Code. A copy of Map of the Area and FORM P-II of Mr. Diya deep Gupta is attached herewith as Annexure B. 9. Under the aforesaid precarious situation, undersigned had authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been legally impossible to make continuous and compact area available for quarry lease so as to undertake mining in systematic and scientific manner. It is submitted that Mr. Onkar Singh had purchased the instant land in fiduciary capacity for undersigned as proprietor of M/s Gupta Stones in lieu of which Sale Deeds are in undersigned's office. Further, the Quarry Leases comprises of private lands of other persons also but those owners have given their consent due to which those lands were not purchased. Thus, the aforesaid transaction falls under the exemption category of Section 2(9)(A)(ii) of Benami Transaction under The Prohibition of Benami Property Transactions Act, 1988. A copy of Quarry Lease Deed, Authorization Letter and Consent Letters are attached herewith as Annexure D." With regard to the above contentions of the Appellants which have been reiterated in detail before us, we are in agreement with the submission of the Ld. Counsel for the Respondent that the PBPT Act, 1988 (as amended by the Act of 2016) frowns upon such transactions. Section 53 of the said Act provides that where any person enters into a Benami Transactions in order to defeat the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the very purpose of enactment of the PBPT Act would be defeated because beneficial owners almost invariably buy property in the name of trusted persons such as servants, drivers, household help or other employee etc. 45. Coming to the case laws cited, we find that the facts of the case in P.V. Sankara Kurup v. Leelavathy Nambiar 1994 6 SCC 688(SC), which has been relied upon by the appellant, were entirely different from those of the present case. In that case, the petitioner was an agent and power-of-attorney holder of the respondent. Accordingly, the Hon'ble Supreme Court observed as follows: "Thus the consideration for the purchase as well as the improvements of the property were met with the funds of the respondent for whom the petitioner was acting as an agent and Power-of-Attorney. He, thereby, obviously had acted in a fiduciary capacity as agent of the respondent." [Emphasis added] 46. Thus, the existence of a fiduciary relationship in the capacity of a duly appointed agent, was a pre-existing fact in that case. The substantial questions of law before the Hon'ble Court were whether the title to the suit-property vests in the petitioner or his principal (res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia, attorney-client, agent-principal, doctor-patient, parent-child, trustees beneficiaries, legal guardian-ward, personal representatives, court appointed receivers and between the directors of company and its shareholders." 48. As can be seen from the above, a fiduciary relationship can exist on account of the existence of trust, confidence and good faith, even without being explicitly defined by the law. In the present case, we have already held on facts that such trust and confidence did not exist between the parties. Moreover, it is noteworthy that in the preceding part of the very same paragraph, the Hon'ble Supreme Court has observed as follows: "200. A fiduciary must be entrusted with a degree of discretion (power) and must have freedom to act without resorting to prior approval of the beneficiary. The greater the independent authority to be exercised by the fiduciary, the greater the scope of fiduciary duty. The person so entrusted with power is required to determine how to exercise that power." 49. In the present case, we have already held that the nominal owner Sh. Onkar Singh, had not been entrusted with any degree of discretion or freedom or even trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) applied for allotment of CANCIGO units on behalf of the Respondent No. 2 (Sh. Hiten P. Dalal, a Stockbroker) and not on their own behalf. The Hon'ble Court has categorically observed in para 65 of the judgement, that a disclosure had been made by the Respondents No. 3 and 4 in their applications for allotment of CANCIGO that the same were filed on behalf of the Respondent No. 2. In the said case, the findings of fact which were not in dispute were, that Respondent No. 3 (Andhra Bank) and Respondent No. 4 (Andhra Bank Financial Services Ltd.), at the request of Respondent No. 1 (Sh. Hiten P. Dalal), applied for CANCIGO units of face value of Rs. 11 crores and Rs. 22 crores respectively. The payment of application money for purchase of said CANCIGO units was made out of the monies lying in the bank account of Respondent No. 2. As already mentioned, disclosure had been made by the Respondents No. 3 and 4 in their applications for allotment of CANCIGO that the same were filed on behalf of the Respondent No. 2.Had such a disclosure been made in the present case, the sale transactions would never have materialized as transfer of tribal lands to non-tribals was expressly prohibited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers were recorded under section 132(4) of the Income Tax Act. None of the alleged Benamidars claimed right or ownership over the cash, rather it was stated by them that it belongs to the alleged Beneficial Owners. In the statement of alleged Beneficial Owners, they also did not disown the cash, rather it was stated by them cash belonged to them and was kept in the safe custody of their employees. In that case, the appellants' claim of exception from the definition of benami property on account of existence of a fiduciary relationship between the alleged Benamidar and the alleged Beneficial Owner was upheld. However, while doing so, it was also categorically held as follows: "20. ………… . The fiduciary capacity cannot be used as an exception in all the circumstances which may include transfer of property for or is held for illegal purpose. It cannot be even when there is a concluded contract which pass on the title to others then keeping the property by the person on whose favour title gets transferred would not keep it in "fiduciary capacity" rather with the transfer of the title, the relationship would also change and those cases would not fall in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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