Nand Kishore
Mehra Vs. Sushila Mehra [1995] INSC 294 (2 July 1995)
Venkatachala
N. (J) Venkatachala N. (J) Kuldip Singh (J) Ahmad Saghir S. (J) Venkatachala.
J.
CITATION:
1995 AIR 2145 1995 SCC (4) 572 JT 1995 (5) 130 1995 SCALE (4)254
ACT:
HEAD NOTE:
Whether
the prohibition to file a suit or to take up a defence in respect of a benami
transaction imposed by Section 4 of the Benami Transactions (Prohibition) Act,
1988- `the Act' applies to a benami transaction of purchase of property by a
person in the name of his wife or unmarried daughter, is the question requiring
our answer in deciding this appeal by special leave filed by the plaintiff in a
suit against an order of the Division Bench of the High Court of Delhi allowing
an appeal filed by the defendant against an order in the suit made by a learned
single judge of the same court, refusing to reject the plaint under Order -
Rule 11 of the Code of Civil Procedudre, 1908 - `the Code' as that barred by
Section 4 of the Act.
A
three judge Bench or this Court presided over by one of us (kuldip Singh. J.)
which dealt with the prohibition to file a suit or to take up a defence in
respect of a benami transaction imposed by Section 4 of the Act in the case of
R. Rajagopal Reddy V. F. Chandrasekharan reported in 1995 (1) SCALE 692, has
expressed its view that that prohibition imposed by sub-sections (1) and (2) of
Section 4 applies only to suits to be filed or defences to be taken, in respect
of property held benami, i.e., benami transactions, after the coming into force
of the Act and not to those suits filed and defences taken in respect of such benami
transactions and pending final decision at the time of coming into force of the
Act as had been held earlier by a Division Bench of this Court in Mithilesh Kumari
& Anr. V. Prem Behari Khare, 1989 (1) S.C.R. 621.
Section
4 of the Act which imposes prohibition in the matter of filing of suits or
taking of defences in respect of property held benami i.e., covered by benami trarsections
reads, thus :
"4.
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 to 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 is a copancener in Hindu undivided family and the proerty 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 capcity."
It was
undisouted that a suit could be filed or a defence could be taken up in respect
of properties held benami, i.e., covered by benami transactions if the
properties are held by persons covered by clauses (a) and (b) of sub-section
(3) of Section 4 since that sub-section makes the provisions by sub-sections
(1) and (2) thereof inapplicable. But, the question is, a property if held benami
by a wife for her husband or by an unmarried daughter for her father envisaged
by sub-section (2) of Section 3 of the Act even though is not the property
covered by clauses (a) or (b) of sub-section (3) of Section 4 could it be that
respecting which no suit can be filed or no defence can be taken under
sub-sections (1) and (2) of Section 4 of the Act. It is true that the benami transction
as defined in clause (a) of Section 2 of the Act since means -- any transaction
in which property is transferred to one person for a consideration paid or
provided by another person, any purchase of property made by a person in the
name of his wife of unmarried daughter envisaged in sub-section (2) of Section
3 of the Act, would be a "benami transaction". It is also true that
the same cannot be a benami transaction envisaged by clauses (a) and (b) of
sub-section (3) of Section 4 of the Act falling outside the purview of sub-
sections (1) and (2) of Section 4 thereof. But, what was argued before us by Shri
Harish Salve for the plaintiff- husband was, that the benami transaction by
which a property is purchased by a person in the name of his wife or unmarried
daughter by reason of the provision in sub-section (2) of Section 3 of the Act
not being a benami transaction into which such person could not have entered
under sub- section (1) of Section 3 it must be regarded as that respecting
which prohibition imposed by sub-sections (1) and (2) of Section 4 in the
matter of filing of a suit thereto op taking up a defence thereto would become
inapplicable. It was also argued by him that sub-sections (1) and (2) of
Section 5, if are inapplicable to benami transaction covered by sub-section (2)
of Section 3 of the Act, there could be no good reason to make applicable the
prohibition in sub- sections (1) and (2) of Section 4 to a transaction taken
place before the coming into force of the Act. On the other hand, it was
vehemently argued for the defendant-wife that non-applicability of sub-section
(1) to the benami transactions covered by sub-section (2) of Section 3 being
intended merely to save the person purchasing the property in the name of his
wife or unmarried daughter from liability for punishment under sub-section (3)
of Section 3 and acquisition of such property under Section 5 of the Act by prescribed
authority without payment of any amount, the non- application of the
prohibition in Section 4, cannot be implied.
Since
the provisions in Sections 3 and 5 could be of assistance in a proper
appreciation of the said arguments of learned counsel, they are excerpted:
Section-3
"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 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 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.
(4)
Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), an offence under this section shall be non-cognizable and bailable.
Section-5
"5. Property held benami liable to acquisition.--(1) All properties held benami
shall be subject to acquisition by such authority, in such manner and after
following such procedure, as may be prescribed.
(2) For
the removal of doubts, it is hereby declared that no amount shall be payable
for the acquisition of any property under sub-section (1)." Sub-section
(1) of Section 3, as seen, prohibits a person from entering into any benami
transaction. Sub- section (3) of Section 3, as seen, makes a person who enters
into a benami transaction liable for punishment. Section 5 makes properties
held benami liable for acquisition without payment of any amount. But, when
sub-section (2) of Section 3 permits a person to enter into a benami
transaction of purchase of property in the name of his wife or unmarried
daughter by declaring that the prohibition contained against a person in
entering into a benami transaction in sub- section (1) of Section 3, does not
apply to him, question of punishing the person concerned in the transaction
under sub- section (3) thereof or the question of acquiring the property
concerned in the transaction under Section 5, can never arise, as otherwise the
exemption granted under Section 3(2) would become redundant. What we have said
of the person and the property concerned in sub-section (2) of Section 3 in
relation to non-applicability of the provisions of sub-sections (1) and (2) of
Section 4 in the matter of filing of the suit or taking up the defence for the
self same reason. Further, we find it difficult to hold that a person permitted
to purchase a property in the name of his wife or unmarried daughter under
sub-section (2) of Section 3 notwithstanding the prohibition to enter into a benami
transaction contained in sub-section (1) of Section 3 cannot enforce his rights
arising therefrom, for to hold so would amount to holding that the Statute
which allows creation of rights by a benami transaction also prohibits the
enforcement of such rights, a contradiction which can never be attributed to a
Statute. If that be so, there can be no valid reason to deny to a person,
enforcement of his rights validly acquired even in the cast by purchase of
property in the name of his wife or unmarried daughter, by making applicable
the prohibition contained in respect of filing of suits or taking up of defences
imposed in respect of benami transactions in general by sub-sections (1) and
(2) of Section 4 of the Act. But, it has to be made clear that when a suit is
filed or defence is taken in respect of such benami transaction involving purchase
of property by any person in the name of his wife or unmarried daughter, he
cannot succeed in such suit or defence unless he proves that the property
although purchased in the name of his wife or unmarried daughter, the same had
not been purchased for the benefit of either the wife or the unmarried
daughter, as the case may be, because of the statutory presumption contained in
sub-section (2) of Section 3 that unless a contrary is proved that the purchase
of property by the person in the name of his wife or his unmarried daughter, as
the case may be, was for her benefit.
Therefore,
our answer to the question under consideration is that neither the filing of a
suit nor taking of a defence in respect of either the present or past benami
transaction involving the purchase of property by a person in the name of his
wife or unmarried daughter is prohibited under sub-sections (1) and (2) of
Section 4 of the Act.
Coming
to the facts of the case on hand, the plaintiff had filed the suit in the High
Court seeking relief in respect of properties alleged to have been purchased benami
in the name of the defendant-his wife. 4 learned single Judge rejected the
application filed by the defendant in that suit seeking rejection of the plaint
on the ground that the suit was barred under Section 4 of the Act. The order of
rejection of that application was appealed against by the defendant in a First
Appeal filed in the same court. A Division Bench of the High Court reversed the
order of the learned Single Judge and granted the application of the defendant
made in the suit seeking rejection of the plaint.
It is
that order which is now questioned by the plaintiff- husband in this appeal.
Since the plaintiff is the husband who had the right to enter into a benami
transaction in the matter of purchase of property in the name of his wife or
unmarried daughter, as we have held earlier, he is entitled to enforce his
rights in the properties concerned if he can succeed in showing that he had
purchased them benami in the name of his wife. But in view of the statutory
presumption incorporated in sub-section (2) of section 3 of the Act, he can get
relief sought in the suit only if he can prove that the properties concerned
had not been purchased for the benefit of the wife, even if he succeeds in
showing that the consideration for the purchases of the properties had been
paid by him.
In the
result, we allow this appeal, set aside the order of the Division Bench of the
High Court. Uphold the order of the learned Single Judge rejecting the
application of the defendant-wife for rejection of the plaint, and remit the
suit to Delhi High Court for disposal according to law and in the light of this
judgment.
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