CAUSE TITLE:
C.C Joy Vs C.D Mini & Anr.
DATE OF ORDER:
13 June, 2022
JUDGE(S):
The Honourable Mr. Justice A. Muhamed Mustaque
The HonourableMrs. Justice Justice Sophy Thomas
PARTIES:
Petitioner(s): C.C Joy
Respondent(s): C.D Mini &Anr.
SUBJECT
The matrimonial appeal was filed by the husband challenging the decree of divorce and, the relief granted to the wife by the Family Court.
IMPORTANT PROVISIONS
The Benami Transactions (Prohibition) Act, 1988
Section 2(a): A "benami transaction" is defined as any transaction in which property is transferred to one person for a consideration paid or furnished by another person.
Nothing in Section 3(2) (a) stops a person from purchasing property in the name of his wife/unmarried daughter, and it is considered that the property was purchased for the benefit of the wife/unmarried daughter unless the reverse is proven.
OVERVIEW
- The man had an affair with his employee and fathered a child with her. He later brought the infant home to his wife, claiming that the child had been abandoned and was available for adoption.
- Because the couple had no children of their own, the wife agreed and kept the child as their own for five years, later discovering that her husband was his biological father.
- The distressed wife, however, returned to her home after learning about the affair. The wife filed for divorce when the husband refused to end his relationship with the employee.
- The couple had been living together for almost 16 years, running many enterprises and accumulating a large number of properties in jointly and severally. Both parties sought a declaration that they were the beneficial owners of the property and that the other party was simply a name lender in the transaction, as well as an injunction against each other.
- The Family Court dissolved their marriage, dismissed the husband's request for declaration of beneficial ownership, and partially granted the wife's request. The husband filed an appeal with the High Court, challenging the order.
ISSUE
- Whether the transactions involved in the case was benami transactions or not, and if it is benami, who is the real owner?
ARGUMENT ADVANCED BY THE PETITIONER
- Sri.Joy claimed that the entire properties listed belonged to him, that he paid money to buy them, that he was occupying and upgrading them, and that the title documents for those properties were still in his possession.
- He said that he bought the properties for his own advantage, not for the benefit of his wife. So, even if some properties were registered in his wife’s name, he claimed that she had no right, title, or interest in any of them, and she was merely a name lender in the relevant agreements.
ARGUMENTS ADVANCED BY THE RESPONDENT
- Smt.Mini claimed that she was the only owner of all of the properties listed, while Sri.Joy was just included as a name lender on the documents.
- He didn't have a business or a source of income, so she used the money from her phone booth, beauty parlour, and share business to buy those properties. She didn't buy those properties for Sri’s benefit; she bought them for herself.
- As a result, their argument was that the properties were purchased 'benami' in their spouse's name, and that because the spouse was simply a name lender and trustee, he or she would have no right, title, or interest in the properties.
JUDGEMENT ANALYSIS
- The parties' intent is a key factor in determining the nature of the transaction, which can be deduced from the parties' relationship, their behaviour prior to and after the transaction, the source of money for the purchase, possession of the property, possession of the title documents, loan repayment, and so on.
- The Court first considered the definition of "benami" before deciding that a Benami transaction is defined as a transfer by/to a person who only functions as an ostensible owner in place of the real owner, whose identity is not revealed. The Bench also established that whether a transaction was real or benami is determined by the beneficiary's purpose.
- In Java DayalPeddar vs. Bibi Hazra (AIR 1974 SC 171), the six factors to assess whether a transaction is benami or not were established. It was also recognized that the transactions in this case took place between 1998-2005, implying that the Act was applicable.
- The Bench used the six tests in each transaction to determine if the purported transaction was a benami and who was the benamidar and beneficiary.
- If it is discovered that the person whose name the property is registered was only a name lender and that the property was actually purchased for the benefit of the beneficial owner with his own money, the benamidar will, of course, have no right, title, or interest in the properties registered in his name.
CONCLUSION
- When a husband purchases property as part of his real estate business and names his wife as a name lender in the title document, even taking out bank loans in her name to pay the consideration, it cannot be said that the purchase was for the benefit of the wife, especially when there is clear evidence of the transaction's benami nature. However, unless the reverse is proven, when there is evidence that the husband purchased the property or executed the paperwork in favour of his wife, it will be treated as the wife's property purchased for her benefit.
- As a result, the Court determined the nature of each transaction and dismissed the plea.
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