R. Rajagopal
Reddy Vs. Padmini Chandrasekharan [1995] INSC 98 (31 January 1995)
Majmudar
S.B. (J) Majmudar S.B. (J) Kuldip Singh (J) Hansaria B.L. (J)
CITATION:
1996 AIR 238 1995 SCC (2) 630 JT 1995 (2) 667 1995 SCALE (1)692
ACT:
HEAD NOTE:
1. In
this group of matters a common question arises for our consideration. It is to
the following effect "whether Section 4(1) of the Benami Transactions
(Prohibition) Act, 1988 (hereinafter referred to 'Act') can be applied to suit,
claim or action to enforce any right in property held benami against person in
whose name such property is held or any other person, in such proceeding is
initiated by or on be- half of a person claiming to be real owner 672 thereof,
prior to the coming into force of Section 4 (1) of the Act. Section 4 with its
relevant sub-sections reads as under:
"Prohibition
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 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 a 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.
2. In
fact the question is answered in the affirmative by Division Bench of this
Court in Mithilesh Kumari & Anr. v.Prem Behari Khare (1989 (1) S.C.R. 621).
In that case two learned judges of this Court constituting the Division Bench
have taken the aforesaid affirmative view. The correctness of that view came up
for consideration before another Division Bench of ------------- this Court.
That, Division Bench by its order dated 10th March, 1992 directed that these matters be
placed for hearing at the bottom of the miscellaneous list for final hearing on
22nd March, 1992 before a three Judge Bench.
Ultimately
this group of matters came to be placed for final hearing before this Bench.
3. We
have heard learned counsel for the respective parties on this question. Learned
advocates were agreeable that though the order of the Division Bench dated 1Oth
March, 1992 has resulted in placing these matters before threeJudge Bench for
final hearing, we may after an swerving the question canvassed before us, sent
back the matters to the Bench of two learned Judges who can dispose of the same
on merits in accordance with law, in the light of answer given by us on the
aforesaid question.
4. In
order to appreciate the nature of the controversy posed for our consideration. we
may note a few relevant facts leading to these proceedings. In most of the
proceedings various suits were filed years back before coming into operation of
Section 4(1) of the Act. These pro- ceedings were pending either at the First
Appeal stage or Second Appeal stage or in revision before the High Court or in
civil appeals before this Court. when Section 4(1) came into operation. The
question is whether these pending proceedings at various stages in the
hierarchy can get encompassed by the sweep of Section 4 (1) laid down by that
section.
5.
Learned counsel appearing for the concerned plaintiffs submitted before us that
Sections 3, 5 and 8 of the Act came into force on 5th September, 1988 when 673
the Act received the President's assent and the remaining Sections were deemed
to have come into force on 19th May, 1988 and that prior to the coming into
force of the Act and the relevant provisions thereof, litigations were already
filed by the parties and they had to be governed by the then existing law which
held the field at the time of initiation of these proceedings and that there is
nothing in the Act to indicate that any of the provisions of the Act including
Section 4 (1) has any retrospective effect. They further contended that even
the Division Bench of this Court in Mithilesh Kumari's case (supra) has taken
the view that Section 3(1) of the Act is prospective in operation. Under these
circumstances, they submitted that it would be inconsistent to hold that though
the Act is not retrospective it would apply to all pending proceedings at
whatever stage they, might be and such proceedings would in- cur dismissal
under Section 4 (1). They submitted that there was a substantive right in the
plaintiff under the existing laws which had sanction of more than a century,
under which consistently such benami transactions were recognised and could be
enforced by courts of law. That this substantive right is sought to be taken
away by Section 4 (1) and unless there is anything to suggest that it is
retrospective in, operation, it could not be treated to be retrospective.
6.
Learned counsel appearing for the respondents/defendants on the other hand
submitted that even though the Act may not be retrospective, at least to the
extent it is roping in all past transactions of benami purchases of properties
and when rights arising therefrom arc sought to be put to an end by Section 4
(1) which covers any or every property held benami, there is no reason why the
said Section cannot apply to such proceedings at any stage till they get
finally decided by the highest court in the hierarchy. If there is any change
in law by which any pending litigation becomes incompetent, such change in law
can be applied to such pending proceedings at whatever stage they might be
pending before higher Courts. In short they submitted that the decision
rendered by Saikia J. in Mithilesh Kumari's case (supra) lays down correct law
and requires no reconsideration.
7.
Having given our anxious consideration to these rival contentions, we have
reached the conclusion that the question has to be answered in the negative,
and it must be held that the decision of the Division Bench taking a contrary
view does not lay down correct law.
8.
These reasons are these. Under various legal provisions holding the field prior
to the coming into operation of this Act, benami transactions were a recognised
specie of legal transactions pertaining to immovable properties. Under the
Indian Trusts Act, 1882 almost 113 years back the then legislature enacting the
law laid down in Section 82 as under:- "Transfer to one for consideration
paid by another where property is transferred to one person for a consideration
paid or provided by another person, and it appears that such other persondid
not intend to pay or provide such consideration for the benefit of the
transferee, the transferee must hold the property for the for the benefit of
the person paying orproviding the consideration.
X X
Nothing in this Section shall be deemed to affect the Code of Civil 674
Procedure, Section 317, or the Act No. XI of 1859 (to improve the law relating
to sales of land for arrears of revenue in the Lower Provinces under the Bengal
Presidency), Section 36."
9.
Therefore, it was legal right of the plaintiff to contend in those days that
even though the transfer of the property had been effected in the name of
defendant benamidar for the plaintiff from whom the consideration had moved the
plaintiff was the real owner and, therefore, the defendant was bound to restore
such property to the real owner. If the benamidar took up a defiant attitude
then the law provided a substantive right to the plaintiff to come to the Court
for getting appropriate declaration and 'relief of possession on that ground.
Various Courts in India over a century used to entertain
such suits and such suits on proof of relevant facts used to be decreed. The
legislature, however, in its wisdom considered the question of enacting an
appropriate legislation for prohibiting such benami transactions. For the
purpose earlier Benami Transactions (Prohibition of the Right to Recover
Property) Ordinance, 1988, was promulgated by the President and it was followed
by the Act, the different sections of which came into force on the respective
dates as mentioned hereinabove. It may also be kept in view that these
exercises were undertaken in the, light of India Law Commission's 57th Report
on benami transaction. This Report was submitted on 7th August, 1973 by the Law Commission after studying benami system as
operating in India and England. He Law Commission also examined implications of the
provisions of the Indian Trusts Act, 1882 and other statutory modifications of
the benami law as contained in the Code of Civil Procedure, the Trans- fer of
Property Act, the Indian Penal Code and the Income Tax Act. In that Report, the
Law Commission suggested retrospective effect to be accorded to the proposed
legislation. 15 years, however, passed by and the Parliament did not take any
steps in this connection. In the meantime, many more suits concerning benami
transactions not only saw the light of day but also got successfully disposed
of.
Some
of them, however, were pending in first appeals or second appeals or revisions.
Then, as not earlier, on 19th
May, 1988 the
President of India promulgated the Ordinance to prohibit the right to recover
property held benami and for matters connected therewith and incidental thereto
based on the suggestion of the Law Commission of India.
Thereafter
the law Commission was requested to take up the question of benami transactions
for detailed examination and to give its considered views as early as possible
so that a Bill to replace the Ordinance could be drafted on the basis of its
recommendations and got passed by the Parliament.
Indian
Law commission by its 130th Report on August 14, 1988 recommended passing of appropriate
legislation and accordingly the Benami Transactions (Prohibition) Bill 1988,
drafted after getting the Report, was introduced in the Rajya Sabha on 31st August, 1988 and the Bill was passed.
In para
3.18 of its Report. the Law Commission made the fol- lowing recommendation in
connection with the retrospective operation of the proposed legislation:-
"3.18. Therefore viewed from either angle, the Law Commission is of the
firm opinion that the legislation replacing the ordinance should be
retrospective in operation and that no locus penitential need be given to the
persons who had entered into benami transactions in the past. They had notice
of one and a half decades to set their house in order No more indulgence is
called for." 675
10. It
is thereafter that the Act came to be passed by both the Houses of Parliament
and came into force as stated above. It might be appreciated that though the
Law Commission recommended retrospective applicability of the proposed
legislation, the Parliament did not make the Act or any of its Sections
expressly retrospective in its wisdom. A bird's eye view of the Act clearly
establishes this position. The Act being Act. No. 45 of 1988 in its preamble
states that it is an act to prohibit benami transactions and the right to
recover property held benami, for matters connected therewith or incidental
thereto.
Section
3 which is the heart of the Act imposes the required prohibition of benami
transactions. It reads as under- "3. Prohibition of benami transactions-
(1)No person shall enter into any benami transaction.
(2)Nothing
in sub-section (1) shall apply to the purchase of property by any person in the
name of his %,*life or unmarried daughter and it shall be presumed, unless the
contrary is proved, that the said property had been purchased for the benefit
of the wife or the unmarried daughter.
(3)Whoever
enters into any benami transaction shall be punishable with imprisonment for a
term which may extend to three years or with fine or with both.
(1)Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an
offence under this section shall be non- congnizable and bailable." 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. with effect
from September 5, 1988. 'Mat 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 fine or with both.
Therefore,
the provision creates a new offence of entering into such benami transactions.
It is made non-congnizable and bailable as laid down under sub-section (4). It
is obvious that when a statutory provision creates new li- ability 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. In
fact Saikia J. speaking for the Court in Mithilesh Kumari's case (supra) has in
terms observed at page 635 of the report 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 19th May, 1988. Saikia J. speaking
for the Division Bench in the case of Mithilesh Kumari (supra). 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 necessarily implication, it appears to be retrospective and
would apply to all pending 676 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) Section 4 clearly provides that 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 real owner of such property. This naturally relates
to past transaction as well. The expression 'any property held benami' is not
limited to any particular time, date or duration. Once the property is found to
have been held benami, no suit, claim, or action to enforce any right in
respect thereof shall lie.
(2)
Similarly sub-section (2) of Section 4 nullifies the defences 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 in any suit, claim
or action by or on behalf of a person claiming to be the real owner of such
property. It means that once a property is found to have been held benami the
real owner is deprived of such a defence against the person in whose name the
property is held or any other person. In other words, in its sweep Section 4
(2) engulfs past benami transactions also.
(3)
When an Act is declaratory in nature, the presumption against retrospectively
is not applicable. A statute declaring the benami transactions to be
unenforceable belongs to this type. The presumption against taking away vested
right will not apply in this case in as much as under 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 ibi remedium. Where the remedy is barred, the right is rendered
unenforceable.
(4)When
the law nullifies the defences available to the real owners in recovering the benami
property from the benamidar, the law must apply irrespective of the time of the
benami transactions. The expression "shall be" under Section 4(1) and
"shall be allowed" in Section 4(2) are prospective and shall apply to
present (future stages) and future suits, claims or action only.
(5)The
word "suits" would include appeals and further appeals as appeals arc
in continuation of the suits. This is an aspect of procedural law and,
therefore, when procedure is changed for deciding any such proceedings between
the parties the provisions of such procedural law can be applied to such
pending proceedings by necessary implication.
(6)Repelling
the contention that rights of the parties to a suit would be determined on the
basis of rights available to them on the date of filling of the suit and
distinguishing the judgment of this Court in Nand Kishore Marwah v. Samundri Devi
(1987 (4) S.C.C. 382), it was observed that the aforesaid case was for eviction
where the rights of the parties on the date of suit were material unlike in
this case where subsequent legislation has nullified for defences of benami
holders.
11.
Before we deal, with these six 677 considerations which weighed with the
Division Bench for taking the view that Section 4 will apply retrospectively in
the sense that it will get telescoped into all pending proceedings, howsoever
earlier they might have been filed, if they were pending at different stages in
the hierarchy of the proceedings even upto this Court, when Section 4 came into
operation, it would be apposite to recapitulate the sailent feature of the Act.
As seen earlier, the preamble of the Act itself states that it is an act to
prohibit benami transactions and the right to recover property held benami, for
matters connected therewith or incidental thereto. Thus it was enacted to
efface the then existing rights of the real owners of properties held by others
benami. Such an act was not given any retrospective effect by the legislature.
Even when we come to Section 4, it is easy to visualise that sub section (1) of
Section 4 states that 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 shall lie by or on behalf of a person claiming to be
real owner of such property As per Section 4 (1) no such suit shall henceforth
lie to recover the possession of the property held benami by the defendant.
Plaintiff's right to that effects sought to be taken away and any suit to
enforce such a right after coming into operation of Section 4(1) that is 19th
May, 1988, shall not lie, The legislature in its wisdom has nowhere provided in
Section 4(1) that no such suit, claim or action pending on the date when
Section 4 came into force shall not be proceeded with and shall stand abated.
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 coining into force of Section
4(1). In Collins English Dictionary, 1979 Edition as reprinted subsequently,
the word 'lie' has been defined in connection with suits and proceedings. At
page 848 of the Dictionary while dealing with topic No.9 under the definition
of term Tie' it is stated as under "For an action, claim appeal etc. to
subsist, be maintainable or admissible".
The
word 'lie' in connection with the suit, claim or action is not defined by the
Act, If we go by the aforesaid dictionary meaning it would mean that such suit
claim or action to get any property declared benami will not be admitted on
behalf of such plaintiff or applicant against the concerned defendant in whose
name the property is held on and from the date on which this prohibition
against entertaining of such suits comes into force. With respect, the view
taken by 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 visualised 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 678 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
hence-after Section 4(1) applied no suit can lie in respect to such a past benami
transaction. To that extent the Section may be retro- spective. 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 filling, 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 were 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 retrospectivity
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 survive, does not logically
follow.
12. So
far as Section 4 (2) is concerned, all that is provided is that if a suit is
filed by a plaintiff who claims to be the owner of the property under the
document in his favour and holds the property in his name, once Section 4(2)
applies, no defence will be permitted or allowed in any such suit, claim or action
by or on behalf of a person claiming to be the real owner of such property held
benami.
The
disallowing of such a defence which earlier was available, itself suggests that
a new liability or restric- tion is imposed by Section 4 (2) on a preexisting
right of the defendant. Such a provision also cannot be said to be
retrospective or retrospective by necessary implication. It is also pertinent,
to note that Section 4(2) does not expressly seek to apply retrospectively. So
far as such a suit which is covered by the sweep of Section 4(2) is concerned,
the prohibition of Section 4 (2) cannot apply to it as it is not a claim or
action filed by the plaintiff to enforce right in respect of any property held benami.
On the contrary, it is a suit, claim or action flowing from the sale deed or
title deed in the name of the plaintiff. Even though such a suit might have
been filed prior to 19.5.1988, if before the stage of filling of defence by the
real owner is reached, Section 4(2) becomes operative from 19th May.
1988,
then such a defence, as laid down by Section 4(2) will not be allowed to such a
defendant. However, that would not mean that Section 4(1) and 4 (2) only on
that score can be treated to be impliedly retrospective so as to cover all the
pending litigations in connection with enforcement of such rights of real
owners who are parties to benami transactions entered into prior to the coming
into operation of the Act and specially Section 4 thereof. It is also pertinent
to note that Section 4(2) enjoins that no such defence 'shall be allowed' in
any claim, suit or action by or on behalf of a person claiming to be the real
owner of such property.
That
is to say no such defence shall be allowed for the first time after coming into
679 operation of Section 4(2). If such a defence is already allowed in a
pending suit prior to the coming into operation of Section 4(2), enabling an
issue to be raised on such a defence, then the Court is bound to decide the
issue arising from such an already allowed defence as at the relevant time when
such defence was allowed Section 4(2) was out of 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). We may at this stage refer to one
difficulty projected by learned advocate for the respondents in his written
submissions, on the applicability of Section 4 (2). These submissions read as
under "Section 4(1) places a bar on a plaintiff pleading 'benami', while
Section 4 (2) places a bar on a defendant pleading 'benami' after the coming
into force of the Act. In this context, it would be anamolous if the bar in
Section 4 is not applicable if a suit pleading 'benami' is already filed prior
to the prescribed date, and it is treated as applicable only to suit which he
filed thereafter. It would have the effect of classifying the so-called'real'
owners into two classes those who stand in the position of plaintiffs and those
who stand in the position of defendants. This may be clarified by means of an
illustration. A and B are 'real' owners who have both purchased properties in
say 1970, in the names of C and D respectively who, are ostensible owners viz.
benamidars.
A files a suit in February 1988 i.e. before the coming into force of the Act
against C, for declaration of his title saying that C is actually holding it as
his benamidar. According to the petitioner's argument, such a plea would be
open to A even after coming into force of the Act, since the suit has already
been laid. On the other hand, if D file a suit against B at the same for
declaration and injunction, claiming himself to be the owner but B's
opportunity to file a written statement comes in say November 1988 when the Act
has already come into force, he in his written statement pleaded that D is a benamidar
and that he, B is the real owner.
Thus A
and B, both 'real' owners, would stand on a different footing, depending upon
whether they would stand in the position of plaintiff or defendant. It is
respectively submitted that such a differential treatment would not be rational
or logical."
13.
According to us this difficulty is inbuilt in Section 4(2) and does not provide
the rationale to hold that this Section applies retrospectively. The
legislature itself thought it fit to do so and there is no challenge to the vires
on the ground of violation of Article 14 of the Constitution. It is not open to
us to re-write the section also. Even otherwise, in the operation of Section 4
(1) and (2), no discrimination can be said to have been made amongst different
real owners of property, as tried to be pointed out in the written objections.
In fact, those cases in which suits are filed by real owners or defences are
allowed prior to coming into operation of Section 4(2), would form a separate
class as compared to those cases where a state for filling such suits or defences
has still not reached by the time Section 4(1) and (2) starts operating.
Consequently,
latter type of cases would form a distinct category of cases There is no
question of discrimina 680 tion being meted out while dealing with these two
classes of cases differently. A real owner who has already been allowed defence
on that ground prior to coming into operation of Section 4(2) cannot be said to
have been given a better treatment as compared to the real owner who has still
to take up such a defence and in the meantime he is hit by the prohibition of
Section 4(2). Equally there cannot be any comparison between a real owner who
has filed such suit earlier and one who does not file such suit till Section 4
(1) comes into operation. All real owners who stake their claims regarding benami
transactions after Section 4(1) and (2) came into operation are given uniform
treatment by these provisions, whether they come as plaintiffs or as
defendants. Consequently, the grievances raised in this connection cannot be
sustained.
14. At
this stage, we may also usefully refer to Section 7(1) of the Act which lays
down that Sections 81, 82 and 94 of the Indian Trusts Act, 1882 (2 of 1882),
Section 66 of the, Code of Civil Procedure, 1908 (5 of 1908), and Section 281-A
of the Income Tax Act, 1961 (43 of 1961,), are thereby revealed. We have
already seen Section 82 if the Indian Trusts Act which gave almost for a period
of a century or more a legal right to the real owner to claim against the
purported owner that the consideration paid was by the real owner and the
transferee held the property for the benefit of the person paying consideration
for supporting the transaction It is this right which got destroyed by section
7 of the Act with effect from 19th May, 1988. If any suits or proceedings were
pending prior to that date, invoking, Section 82 of, the Indian in Trusts Act,
what is to happen to such suits is not answered by Section 4(1) of the Act or
by any other provisions of the Act. We have, therefore, to turn the General
Clauses Act, 1897 for finding out an answer, Section 6 of the General Clauses
Act lays down. "Where this Act, or any (Central Act) or Regulation made
after the commencement of this Act, repeals any enactment hitherto made or
hereafter to be made, then, unless a different intention appears the repeal
shall not-
(a) revive
anything not in force or existing at the time at which the repeal takes effect;
or
(b) affect
the previous operation of any enactment so repealed or anything duly done or
suffered there under; or
(c) affect
any right, privileges obligation or liability acquired, accrued, or incurred
under any enactment so repealed' or
(d) affect
any penalty, forfeiture or punishment incurred in respect of any offence
committed against any enactment so repealed; or
(e) affect
any investigation, legal proceeding or remedy in respect of any such right,
privilege, obligation, liability, penalty, forfeiture or punishment as
aforesaid and any such investigation, legal proceeding or remedy may be
instituted, continued or enforced, and any such penalty, for feature or
punishment may be imposed as if the repealing Act or Regulation had not been
passed".
It
becomes, therefore, obvious that the Act by Section 7 has effected a repeal of
681 Section 82 of the Indian Trusts Act and while repealing this provision no
different intention appears from the Act to affect any right privilege or liability
acquired under Section 82 by either side or any pending proceedings regarding
such obligation or liability. Therefore, such pending proceedings will have to
be continued or enforced as if the repealing Act had not been passed. A
conjoint reading of Section 82 of the Indian Trusts Act and Section 6(b), (d)
and (e) of the General Clauses Act clearly enjoins that if suits are pending
wherein the plaintiff have put forward claims under the then existing Section
82 of the Indian Trusts Act such proceedings are to be continued by assuming
that the repealing of Section 82 of the Indian Trusts Act has not been effected
in connection with such pending proceedings. Unfortunately, this aspect was not
pressed for consideration before the Division Bench and, therefore, the view
taken by Division Bench is likely to result in an incongruous situation. If a
view is to taken that a pending suit wherein plaintiff might have contended
that the real consideration flowed from him and the defendant was not the real
owner and held the property benami as per Section 82 of the Indian Trusts Act,
1882, has to be continued by ignoring the present Act, it will be inconsistent
with the conclusion reached by the Division Bench; As per the Division Bench,
such suits must necessarily be dismissed at whatever stage they might be
pending between the parties. Therefore, interpretation of Section 4(1) by the
Division Bench would directly conflict, with the legislative scheme emanating
from Section 82 of the Indian Trusts Act, 1882 read with Section 6 of the
General Clauses Act discussed above. Even otherwise, it is now well-settled
that where a statutory provision which is not expressly made retrospective by
the legislature seeks to affect vested rights and corresponding obligations of
parties, such provision cannot be said to have any retro- spective effect by
necessary implication. In Maxwell on the Interpretation of Statutes 12 the
Edition (1969), the learned. auther has made the following observations based
on various decisions of different Court, specially in Re Athlumney
(1898)2Q.B.551,at pp.551,552 "Perhaps no rule of construction is more
firmly established than this that a retrospective operation is not to be given
to a statute so as to impair an casting right or obligation, otherwise than as
regards matters of procedure, unless that effect cannot be avoided without
doing violence to the languag e of the enactment. If the enactment is expressed
in language which is fairly capable of either interpretation, it ought to be
construed as prospective, only." The rule has, infact, two aspects, for
it, "involves another and subordinate rule, to the effect that a statute
is not to be construed so as to have a greater retrospective operation than its
language renders necessary."
15. In
the case of Garikapati v. N. Sibbiah Choudhary (A.I.R. 1957 SC 540, P.553) in para
25 of the report Chief Justice S.R. Das speaking for this Court has made the
following pertinent observations in this connection "The golden rule of
construction is that, in the absence of anything in the enactment to show that
it is to have retrospective operation, it cannot be so construed as to have the
effect of altering the law applicable to a claim in litigation at the time when
the Act was passed."
16. We
have already discussed earlier 682 that there is nothing in the Act to show
that Section 4(1) and 4(2) have to apply retrospectively to all pending
proceedings wherein such a right is sought to be exercised by the plaintiff or
such a defence has already got allowed to the concerned defendant. As a result
of the aforesaid discussion, it must be held that reasons nos. 1 and 2 which
weighed with the Division Bench are not well sustained.
17. As
regards, reason no.3, we are of the considered view that the Act cannot be
treated to be declaratory in nature.
Declaratory
enactment declares and clarifies the real intention of the legislature in
connection with an earlier existing transaction or enactment, it does not
create new rights or obligations. On the express language of Section 3, the Act
cannot be said to be declaratory but in substance it is prohibitory in nature
and seeks to destroy the rights of the real owner qua properties held benami
and in this connection it has taken away the right of the real owner both for
filing a suit or for taking such a defence in a suit by benamidar. Such an Act
which prohibites benami transactions and destroys rights flowing from such
transactions as existing earlier is really not a declaratory enactment. With
respect, we disagree with the line of reasoning which commanded to the Division
Bench. In this connection, we may refer to the following observations in
'Principles of Statutory Interpretation', 5th Edition 1992, by Shri G.P.Singh,
at page 315 under the caption 'Declara- tory statutes' The presumption against
retrospective operation is not applicable to declaratory statues. As states in
CRAIES and approved b y the Supreme Court: "For modern purposes a
declaratory Act may be defined as an Act to remove doubts existing as to the
common law, or the meaning or effect of any statute. Such Acts are usually held
to be retrospective. The usual reason for passing a declaratory Act is to set
aside what Parliament deems to have been a judicial error whether in the
Statement of common law or in the interpretation of the statutes. Usually, if
not invariably, such an Act contains a preamble, and also the word declared' as
well as the word enacted". But the use of the words 'it is declared' is
not conclusive that the Act is declaratory for these words may, at times be
used to introduce new rules of law and the Act in the later case will only be
amending the law and will not necessarily be retrospective. hi determining,
therefore, the nature of the Act, regard must be had to the substance rather
the to the form. If a new Act is to explain an earlier Act, it would be without
object unless construed retrospective. An explanatory Act is generally passed
to supply an obvious omission or to clear up doubts as to the meaning of the
previous Act. It is well settled that if a statute is curative or merely
declaratory of the previous law retrospective operation is generally intended.
The language shall be deemed always to have meant' is declaratory , and is in
plain terms retrospective. In the absence of clear words indicating that the
amending Act is declaratory, it would not be so when the pre-amended provision
was clear and unambiguous. And amending Act may be purely clarificatory to
clear a meaning of a provision of the principal Act which was already implicit.
A clarificatory amendment of this nature will have retrospective effect are
therefore if the principal Act was existing law when the constitution came into
force the amending Act also will be part of the law.In Mithilesh Kumari v. Prem
Bihari Khare, Section 4 of the Benami Transactions (Prohibition) Act, 1988 was
it is submitted wrongly held to be an Act declaratory in nature for it was not
passed 683 to clear any doubt existing as to the common law or the meaning or
effect of any statute. The conclusion however that Section 4 applied also to
past benami transactions may be supportable on the language used in the
Section.
18. No
exception can be taken to the aforesaid observations of learned author which in
our view can certainly be pressed in service for judging whether the impugned
section is declaratory in nature or not. Accordingly it must be held that
Section 4 or for that matter the Act as a whole is not a piece of declaratory
or curative legislation. It creates substantive rights in favour of benamidars
and destroys sub- stantive rights of real owners who are parties to such
transactions and for whom new liabilities are created by the Act.
19.
Qua reason No.4, we may refer to our discussion earlier that the words 'no suit
shall lie' as found in Section 4(1) and ` no defence based on rights in respect
of property shall be allowed' as found in Section 4(2) have limited scope and
operation and consequently this consideration also cannot have any effect on
the conclusion which can be reached in this case. As to reason No.5, it is
observed that even though suit may include appeal and further appeals in the
hierarchy, at different stages of the litigation, Section 4(1) and 4(2) cannot
be made applicable to these subsequent stages as already seen by us earlier.
Otherwise, they would cut across the very scheme of the Act.
20. As
to reason No.6 relating to nullification of all the defences of benami holders,
we say with respect that according to us, as already discussed future defences
of real owners against benamidars holders have been nullified as are covered by
the sweep of Section 4(2) and not others.
21.As
a result of the aforesaid discussion it must be held, with respect, that the
Division Bench erred in taking the view that Section 4(1) of the Act could be
pressed in service in connection with suits filed prior to coming into
operation of that Section. Similarly 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. As discussed earlier Section 4(2) will have a limited
operation even in cases of pending suits after Section 4(2) came into force if
such defences are not already allowed earlier. It must, therefore, be held,
with respect, that the decision of this Court in Mithilesh Kumari's case does
not lay down correct law so far as the applicability of Section 4(1) and
Section 4(2) to the extent hereinabove indicated, to pending proceedings when
these Sections came into force, is concerned. Accordingly, the question for
consideration is answered in the negative.
Registry
will now place all these matters before an appropriate Division Bench for
disposing them of on merits in the light of the answer given by us.
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