Benami transanctions (prohibition) act
sridhar pasumarthy
(Querist) 10 December 2011
This query is : Resolved
Respected Experts,
As per Section 3 of the BT(P)Act, property purchased in the name of wife and unmarried daughter is deemed to have been purchased for their benefit unless contrary is proved and such transaction is saved.
As per Section 4 of the said Act, if a property is purchased in the name of a coparcener of Hindu Undivided family for the benefit of all coparceners, such a transaction is also protected.
According to law, wife is not a coparcener of Hindu Undivided Family
My query is :-
1. Suppose in a Hindu Undivided Family, if husband purchases an immovable property in the name of wife with the joint family funds/nucleus, can the said transaction be challenged on the ground of benami?
Raj Kumar Makkad
(Expert) 10 December 2011
Benami Transaction Act has abolished all such presumptions and now the person whose name is shown in the title deed is its true and exclusive owner so there is no question of treating it as a coparcenary property or part of Hindu Undivided Property.
Devajyoti Barman
(Expert) 11 December 2011
The wife and children are still exempted from the Benami Transaction Act.
So transfer in the name of the wife can still be challenged before the court of law.
Raj Kumar Makkad
(Expert) 11 December 2011
barman! Can you please provide me the citation in favour of your reply?
Guest
(Expert) 11 December 2011
I go with the opinion of Shri Devajyoti Barman.
Legal Fighter
(Expert) 11 December 2011
Yes, it can be challenged but the burden of proof that it was not for the benefit of wife but due to some other reason lies on the person who challenges such transaction. By default, it is presumed that it was for benefit of wife.
Legal Fighter
(Expert) 11 December 2011
no.:
appeal (civil) 2867 of 2000
petitioner:
g.mahalingappa
respondent:
g.m. savitha
date of judgment: 09/08/2005
bench:
d.m. dharmadhikari & tarun chatterjee
judgment:
j u d g m e n t
tarun chatterjee, j.
this is an unfortunate litigation between a father and his married
daughter on the right of ownership of a house measuring about 40 feet
by 30 feet in khata no.54 of garehatty village in chitradurga taluk
in the state of karnataka (hereinafter referred to as the "suit
property").
the appellant, who suffered defeat in second appeal before the
high court at bangalore (karnataka), filed a special leave petition
which on admission got registered as a regular appeal being civil
appeal no. 2867/2000 in this court.
the appellant is the father of the respondent. the suit property
was purchased by the appellant in the name of the respondent by a
registered sale deed dated 24th of august, 1970 when the respondent
was a minor of seven years of age. subsequently, her marriage was
settled and at that point of time she was assured that the respondent
shall not be disturbed as she was given to understand that the suit
property was her own property. she was married to one shri
c.thippeswamy on 4th of december, 1980. relationship between the
appellant and the respondent was cordial till 8th of october, 1983, and
only thereafter relationship became strained. at that stage she asked
for vacation of the suit property not only from the appellant and his
family but also from the tenants who were defendants 2 to 5 in the
suit and for payment of rent to her. the appellant and the tenants had,
however, refused to vacate their respective portions of the suit
property in their possession or to pay rent to her. accordingly, the
respondent was constrained to file the suit for declaration of title and
recovery of possession in respect of the suit property on the averment
that since the suit property stood in her name, and the same was
purchased for the benefit of the respondent and as a security for her
marriage she was entitled to a decree for declaration and possession.
the suit was however filed on 5th of july, 1984.
the appellant resisted the claim of the respondent on various
grounds by filing a written statement. according to the appellant, the
suit property was purchased by his own funds in the benami of her
daughter. he also denied the allegation that the suit property was
purchased for and on behalf of the respondent under the sale deed
dated 24th august, 1970 nor it was purchased as a security for her
marriage. according to him, the respondent was born on 5th
november, 1963 and immediately after the birth an astrologer was
contacted from whom the appellant ascertained that she was born on
an auspicious nakshatra and immediately thereafter he made up his
mind to purchase a site with a view to construct a house for his
residence. accordingly, he purchased the suit property for a sum of
rs.500/-. it was not the intention of the appellant to create any
benefit, any right in the suit property to the respondent. however, in
the year 1984, the suit property was bequeathed by a will in favour of
the respondent and two sons. after the suit property was purchased in
the benami of the respondent, he made improvement of the suit
property and in doing so he mortgaged the suit property in favour of
one srinivasa setty and obtained a loan of rs.3,000/- on 15th
september, 1972. thereafter, he purchased another site adjacent to
the suit property under a sale deed dated 23rd may, 1972. that sale
deed was also obtained in the name of the respondent out of love and
affection. at that time the respondent was about nine years old. the
rest of the mortgaged amount was utilized for construction of the
back portions of the house after spending his own money. after
improving the same he constructed four portions which were in
occupation of the tenants, and he himself discharged the mortgaged
loan and other loans incurred for construction of the suit property. he
also obtained permission of the deputy commissioner for alienation
of the suit property for non-agricultural purposes. he paid taxes
levied by the revenue authorities in respect of construction of the
house. he also paid alienation charges and kandayam of the suit
property from time to time. accordingly, the appellant sought for
dismissal of the suit inter alia on the ground that he was the real
owner and in possession of the suit property and the respondent was
merely a benamidar in respect of the same. parties went into trial
with the following issues:
1) does the plaintiff prove that she is the owner of the suit
property?
2) is she entitled to possession of the suit property as contended
by her?
3) is she entitled for damages as claimed by her?
4) to what relief the plaintiff was entitled, if any?
an additional issue was framed which is of the following effect:
does defendant no.1 prove that the suit was purchased
nominally in the name of the plaintiff under the circumstances
pleaded in the written statement, the plaintiff is a benamidar and he is
the real owner of the suit property, as contended?
parties went to trial after adducing evidence to support their
respective claims as made out in the pleadings.
both the courts found on consideration of the oral and
documentary evidence on record as well as the pleadings that
1) the appellant had paid the purchase money.
2) the original title deeds were with the appellant.
3) the appellant had mortgaged the suit property for raising loan
to improve the same.
4) he paid taxes for the suit property.
5) he had let out the suit property to defendant nos. 2 to 5 and
collecting rents from them.
6) the motive for purchasing the suit property in the name of
plaintiff was that the plaintiff was born on an auspicious
nakshatra and the appellant believed that if the property was
purchased in the name of plaintiff/respondent, the appellant
would prosper.
7) the circumstances surrounding the transaction, relationship of
the parties and subsequent conduct of the appellant tend to
show that the transaction was benami in nature.
on the aforesaid concurrent findings of fact it was held that
the respondent had failed to prove that she was the real owner of the
suit property and that the appellant was however the real owner of the
same and the respondent was only a benamidar of the appellant.
accordingly, the appellate court as well as the trial court
dismissed the suit of the respondent.
feeling aggrieved by the concurrent decisions of the
appellate court as well as the trial court, a second appeal was filed
before the high court at bangalore, which, however, had set aside the
concurrent decisions and decreed the suit of the respondent only on
the ground that the purchase by the appellant in the name of the
respondent was intended for the benefit of the respondent. while
coming to this conclusion, the high court had taken into
consideration the fact that since the appellant had already executed a
will bequeathing his property to the respondent and two other sons,
which would, according to the high court, amply show that the
intention of the appellant to purchase the suit property in the name of
the respondent was to benefit the respondent. in our view, this
finding on the face of the record is erroneous and perverse. this
finding, according to us, was arrived at by the high court in the
second appeal without any material on record to support such finding
nor it was based after considering the oral and documentary evidence
as well as the findings of fact arrived at by the trial court and appellate
court. on the other hand, in our view, the findings of the appellate
court as well as the trial court were based on due consideration of oral
and documentary evidence on record and pleadings of the parties.
to consider the intention to purchase the suit property for the benefit
of the respondent, in our view, the fact of bequeathing the suit
property by executing a will by the appellant in favour of respondent
and two sons could not at all be a factor for consideration. the
execution of the will by the appellant in favour of his sons and the
respondent would only indicate that the suit property was treated as
the property of his own and the respondent was never accepted by him
to be a real owner of the same. the other ground on which the
concurrent findings of fact were set aside and suit was decreed is to
the following effect:
"even otherwise, as could be gathered from the
evidence and representation made at the bar, her father
used to purchase the property in the name of all his sons
and daughters on auspicious days. it can be clearly
gathered that the intention of the father was to benefit his
children to avoid any possible conflict or dispute that may
arise between them with reference to sharing of the
properties after his life time. therefore, taking the view on
equity as well, and the cumulative circumstances, i am
inclined to hold that the plaintiff is entitled to be held as
the owner of the property."
we are unable to agree with this conclusion of the high court.
it is difficult to rely on the representation from the bar that the
appellant used to purchase properties in the names of his children on
auspicious days and for that the intention of the appellant to purchase
the suit property for the benefit of the daughter only must be
presumed without having any material to support this conclusion from
the record. we must not forget that the high court was dealing with
a second appeal which was filed against the concurrent findings of
fact based on consideration of oral and documentary evidence
adduced by the parties and such findings were on sound reasoning.
even otherwise, we are of the view that the presumption that the suit
property was purchased for the benefit of the respondent only was
amply rebutted by the appellant by adducing evidence that the suit
property, though purchased in the name of the respondent, was so
purchased for the benefit of the appellant and his family.
as noted hereinearlier, the appellate court as well as the trial
court on consideration of all the materials including oral and
documentary evidence and on a sound reasoning after considering the
pleadings of the parties came to concurrent findings of fact that
purchase of the suit property by the appellant in the name of the
respondent was benami in nature. as noted herein earlier, the
following findings of fact were arrived at by the appellate court and
the trial court to conclude that the transaction in question was benami
in nature :-
1) the appellant had paid the purchase money.
2) the original title deed was with the appellant. and
3) the appellant had mortgaged the suit property for raising loan to
improve the same.
4) he paid taxes for the suit property.
5) he had let out the suit property to defendant nos. 2 to 5 and
collecting rents from them.
6) the motive for purchasing the suit property in the name of
plaintiff was that the plaintiff was born on an auspicious
nakshatra and the appellant believed that if the property was
purchased in the name of plaintiff/respondent, the appellant
would prosper.
7) the circumstances surrounding the transaction, relationship of
the parties and subsequent conduct of the appellant tend to show
that the transaction was benami in nature.
keeping these concurrent findings of fact in our mind
which would conclusively prove that the transaction in question was
benami in nature, let us now consider whether the appellant was
entitled to raise the plea of benami in view of introduction of the
benami transaction (prohibition) act, 1988 (in short "act") and
whether the act was retrospective in operation. if so, in view of
section 4(2) of the act, plea of benami in the defence of the appellant
was not available to him.
before a two judges bench decision of this court, in the
case of mithilesh kumari and another vs. prem behari khare
1989(2) scc 95 this question had cropped up. in that decision, it
was held that the question of benami cannot be taken as a plea either
in the plaint or in the written statement even when the sale deed was
executed and registered before the introduction of the act and when
the suit was filed before the act had come into force. before we
proceed further, we may remind ourselves of certain provisions of the
act. section 2 (a) defines 'benami transactions' which means any
transaction in which property is transferred to one person for a
consideration paid or provided by another person. section 3 (1) and
(2) reads as under:
3(1) "no person shall enter into any benami
transactions.
(2) nothing in sub-section(1) shall apply to the
purchase of property by any person in the name of his wife
or unmarried daughter and it shall be presumed, unless the
contrary is proved, that the said property had been
purchased for the benefit of wife or the unmarried
daughter." (underlining is ours)
section 4 of the act prohibits the right to recover property held
benami. it reads as under:
4(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."
(underlining is ours)
since in this case, we are concerned with the question whether the
appellant was entitled to raise the plea of benami in his defence in
view of the bar imposed in section 4(2) of the act, let us now confine
ourselves to the bar imposed in section 4(2) of the act of taking this
plea in his defence and to the question of retrospective operation of
this section or this provision is prospective in operation.
now, therefore, the question arises is whether under section 4(2)
of the act, defence can be allowed to be raised 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 or on behalf of a person claiming
to be real owner of such property. as noted already, this question
cropped up for decision before this court in the case of mithilesh
kumari and another vs. prem behari khare 1989 (2) scc 95. in
fact, the retrospective operation of this provision, as noted herein
earlier, was answered in the affirmative in the aforesaid decision.
however, the correctness of that decision was doubted and an order
was passed by this court subsequently referring this question of
retrospectivity for decision to a 3-judges bench of this court. in the
case of r.rajagopal reddy (dead) by lrs. and ors. vs. padmini
chandrasekharan (dead) by lrs. 1995 (2) scc 630, s.b.
majmudar, j. (as his lordship then was) writing the judgment for
the three judges bench could not agree with the views expressed in
mithilesh kumari's case and held that the act was prospective in
nature and it has no retrospective operation excepting certain
observations made in respect of some cases which would be
mentioned hereinafter. in paragraph 10 it was observed as follows:-
"though the law commission recommended retrospective
applicability of the proposed legislation, parliament did not make the
act or any of its sections retrospective in its wisdom.". thereafter on
a careful consideration of the provisions made under sections 3 and 4
of the act, it was observed:
"a mere look at the above provisions shows that the
prohibition under section 3(1) is against persons who are
to enter into benami transactions and it has laid down that
no person shall enter into any benami transaction which
obviously means from the date on which this prohibition
comes into operation i.e. w.e.f. 5/9/1988. that takes care
of future benami transactions. we are not concerned with
sub-section (2) but sub-section (3) of section 3 also throws
light on this aspect. as seen above, it states that whoever
enters into any benami transaction shall be punishable with
imprisonment for a term which may extend to three years
or with find or with both. therefore, the provision creates
a new offence of entering into such benami transaction. it
is made non-cognizable and bailable as laid down under
sub-section (4) it is obvious that when a statutory
provision creates new liability and new offence, it would
naturally have prospective operation and would cover only
those offences which take place after section 3(1) comes
into operation." (underlining is ours).
in paragraph 11 of the said decision of this court, the supreme
court further observed "on the contrary, clear legislative intention is
seen from the words "no such claim, suit or action shall lie", meaning
thereby no such suit, claim or action shall be permitted to be filed or
entertained or admitted to the portals of any court for seeking such a
relief after coming into force of section 4(1)." (underline is ours).
in the same paragraph the supreme court observed:
" with respect, the view taken that section 4(1) would
apply even to such pending suits which were already filed
and entertained prior to the date when the section came
into force and which has the effect of destroying the then
existing right of plaintiff in connection with the suit
property cannot be sustained in the face of the clear
language of section 4(1). it has to be visualized that the
legislature in its wisdom has not expressly made section 4
retrospective. then to imply by necessary implication that
section 4 would have retrospective effect and would cover
pending litigations filed prior to coming into force of the
section would amount to taking a view which would run
counter to the legislative scheme and intent projected by
various provisions of the act to which we have referred
earlier. it is, however, true as held by the division bench
that on the express language of section 4(1) any right
inhering in the real owner in respect of any property held
benami would get effaced once section 4(1) operated,
even if such transaction had been entered into prior to the
coming into operation of section 4(1), and henceafter
section 4(1) applied no suit can lie in respect to such a
past benami transaction. to that extent the section may be
retroactive."
in our view, similar is the position in law on the question
of retrospectivity of section 4(2) of the act.
finally, this court in the aforesaid decision held that the
decision in mithilesh kumari & anr. vs. prem behari khare erred in
taking the view that under section 4(2), in all suits filed by persons in
whose names properties are held no defence can be allowed at any
future stage of the proceedings that the properties are held benami
cannot be sustained. it was also held that section 4(2) will have a
limited operation even in cases of pending suits after section 4(2) had
come into force, if such defences are not already allowed. the
decision in r. rajagopal reddy (dead) by lrs. and ors. vs.
padmini chandrasekharan (dead) by lrs. 1995 (2) scc 630 which
overruled the decision of two judges bench in the case of mithilesh
kumari and anr. vs. prem behari khare 1989 (2) scc 95 was also
approved by this court in the cases of prabodh chandra ghosh vs.
urmila dassi air 2000 sc 2534 and c. gangacharan vs.
c.narayanan air 2000 sc 589. in view of the aforesaid, this
question is, therefore, no longer res integra.
therefore, we are now to consider in this case whether the
facts disclosed would indicate that even after coming into force of the
act the defence under secion 4 can be available. admittedly, the
transaction in question was registered on 24th august, 1970. the suit
was filed on 5th of july 1984 which was long before coming into force
of the act. it is an admitted position that the written statement in the
suit taking plea of benami was also filed by the appellant long before
the act had come into force. therefore, it was not a case where
section 4(2) of the act will have a limited operation in the pending
suit after section 4(2) of the act had come into operation. it is true
that the judgment of the trial court was delivered after the act had
come into force but that could not fetter the right of the appellant to
take the plea of benami in his defence. since the act cannot have any
retrospective operation in the facts and circumstances of the present
case, as held by this court in the aforesaid decision, we are therefore
of the view that the appellant was entitled to raise the plea of benami
in the written statement and to show and prove that he was the real
owner of the suit property and that the respondent was only his
benamidar.
before parting with this judgment, we may take into
consideration of a short submission of the learned counsel for the
respondent. the submission is that since the suit property was
purchased by the appellant in the name of the respondent, the suit
property must be held to have been purchased by him for the benefit
of the respondent. section 3 deals with prohibition of benami
transaction. sub-section (1) clearly prohibits that no person shall
enter into benami transaction. however, sub-section (2) of section 3
clearly says that nothing in sub-section (1) shall apply to purchase of
property of any person in the name of his wife, unmarried daughter
and it shall be presumed, unless the contrary is proved, that suit
property had been purchased for the benefit of the unmarried
daughter.
section 3(2) makes it abundantly clear that if a property is
purchased in the name of an unmarried daughter for her benefit, that
would only be a presumption but the presumption can be rebutted by
the person who is alleging to be the real owner of the property by
production of evidences or other materials before the court. in this
case, the trial court as well as the appellate court concurrently found
that although the suit property was purchased in the name of the
respondent but the same was purchased for the interest of the
appellant. we are therefore of the opinion that even if the
presumption under section 3(2) of the act arose because of purchase
of the suit property by the father ( in this case appellant ) in the name
of his daughter ( in this case respondent ), that presumption got
rebutted as the appellant had successfully succeeded by production of
cogent evidence to prove that the suit property was purchased in the
benami of the respondent for his own benefit.
let us now consider whether the concurrent findings of fact
could be set aside by the high court in the second appeal. it is well
settled by diverse decisions of this court that the high court in
second appeal is entitled to interfere with the concurrent findings of
fact if the said concurrent findings of fact are based on non-
consideration of an important piece of evidence in the nature of
admission of one of the party to the suit, which is overlooked by the
two courts below ( see [2003 (7) scc 481, deva (dead) through
lrs vs. sajjan kumar (dead) by lrs] ). it is equally well settled
that under section 100 of the code of civil procedure, high court
cannot interfere with concurrent findings of facts of the courts below
without insufficient and just reasons. (see [2003(7)scc 52, sayeda
akhtar vs. abdul ahad]). in second appeal, high court is also not
entitled to set aside concurrent findings of fact by giving its own
findings contrary to the evidence on record. (see [ 2001 (4) scc
694, saraswathi & anr. vs. s.ganapathy & anr.] ).
as held herein earlier the high court had set aside the
concurrent findings of fact not on consideration of the evidence
adduced by the parties but set aside the concurrent findings of fact on
the basis of findings contrary to the evidence on record and without
considering the findings of fact arrived at by the appellate court and
the trial court. from the judgment of the high court we further find
that the concurrent findings of fact were set aside not on consideration
of the findings of fact arrived at by the courts below but only on the
basis of the arguments of the learned advocate of the respondent.
this was also not permissible to the high court in second appeal to
come to a contrary findings of its own only on the basis of the
arguments of the learned counsel for the respondent without
considering the findings of the trial court as well as the appellate
court. (see [2002(9) scc 735, gangajal kunwar (smt.) and ors. vs.
sarju pandey (dead) by lrs & ors.] ). it is equally settled that high
court in second appeal is not entitled to interfere with the concurrent
findings of fact arrived at by the courts below until and unless it is
found that the concurrent findings of fact were perverse and not based
on sound reasoning. we ourselves considered the evidence on record
as well as the findings of fact arrived at by the two courts below.
from such consideration we do not find that the concurrent findings
of fact arrived at by the appellate court as well as the trial court were
either perverse or without any reason or based on non-consideration
of important piece of evidence or admission of some of the parties.
we are therefore of the view that the high court was not justified in
interfering with the concurrent findings of fact arrived at by the
appellate court as well as the trial court which findings were rendered
on consideration of the pleadings as well as the material ( oral and
documentary ) evidence on record.
for the reasons aforesaid this appeal is allowed. the judgment
of the high court impugned in this court is set aside and the
judgments of the trial court as well as the appellate court are affirmed.
the suit filed by the respondent shall stand dismissed.
there will be no order as to costs.
Sadashiv Rupchand Gaikwad
(Expert) 11 December 2011
Sources of consideration and intention of separate purchase in the name of co-parcerners is also to be checked.
prabhakar singh
(Expert) 11 December 2011
Section 3(2)was the answer to query and that was given by Mr. Barman but with use of a loose word"children"instead of "unmarrieddaughter"
Mr.Makkad was swept away by section3(1)hence he asked for judgement.Interestingly the two views stood contrary and one was not to concur both of these opinions.It looks hard then to call a spade a spade.
However judgement sought for has been provided by legal fighter with a right answer to query.Then also the short advise of Mr. Sadashiv Rupchand Gaikwad is also a valuable addition.
And I agree with experts with these aforesaid understandings.
Dr J C Vashista
(Expert) 11 December 2011
Appreciating effort of Mr. Burman. I agree
prabhakar singh
(Expert) 11 December 2011
i missed to copy an opinion here which has stood dishonestly changed without any regret.????????????????????? Immorality gets proved.
