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Report No. 57

2.11. Views that section 82 attend burden of proof.-

According to another view1 "section 82, Trusts Act, though it may not have really altered the burden of proof, has made it much clearer than it was before that the burden of proof of establishing all the facts necessary to lead to the inference that a transfer was benami lies upon the person asserting it to be so."

1. Sardar Jahan v. Afzal Began!, AIR 1941 Oudh 288 (292) (Yorks & Aggarwal 33).

2.12. In a Bombay case, Shelat J. made the following observations1:-

"Now, it is true that under sections 80 and 82 of the Trusts Act a benamidar holds the property for and on behalf of the real owner in consequence of which there would be a resulting trusts in respect of the property in favour of "the real owner". But then, it would be fallacious to urge from those sections that the legal ownership in such property vests in the benamidar as it does in the case of trustee. What those sections really mean is that a benamidar is in a fiduciary relationship with the real owner and therefore has all the obligations of a person in such fiduciary position towards the real owner. A benamidar is no more than an ostensible owner of the property he holds benami, though his acts in certain circumstances would be binding upon the real owner.

That is because the real owner holds him out to third parties as an owner of the property. It is, however, impossible to say as in the case of a trustee that any right in the property either vests in him or that under section 13 and the sections following thereafter of the Trusts Act any obligations therein set out fall on him. In Gur Narayan v. Sheolal Singh, ILR 46 Cal 566: AIR 1918 PC 140(C), their Lordships of the Privy Council stated that so long as a benami transaction did not contravene the provisions of the law the Courts were bound to give effect to it but they made it clear also that the benamidar has no beneficial interest in the property that stands in his name; he represents in fact the real owner and so far as their relative legal position is concerned, he is a mere trustee for him."

1. Radhakrishnan v. Union of India, AIR 1959 Born 102 (104, 105) (Shelat J.).

2.13. There is an exhaustive discussion of the position in a Federal Court judgment.1 We quote only the important portion:-

"It is true that the Indian law does not recognise an equitable ownership in the sense known to the English law, because we here do not, as in England, have two kinds of law or jurisdiction, viz., common law and equity; but on an analysis of the legal incidents involved, it will be found that for all practical purposes there is little or no difference between a beneficiary under the English law and a beneficiary under the Indian Trusts Act, so far as the substance of their rights is concerned. I may first point out that so far as the "rights and privileges are concerned, there is little or no difference between a beneficiary under an express trust and a beneficiary under a resulting or constructive trust, if we leave alone questions arising under the Limitation Act.

Section 82, Trusts Act, which deals with benami transfers, occurs in the chapter beginning with section 80, which provides that an obligation in the nature of a trust is created in certain specified cases and section 82 enacts that the transferee must hold that property for the benefit of the person paying or providing the consideration. Section 95 re┬Čaffirms the provision implied in section 80. In the case of express trusts, the Act describes the beneficiary's rights against the trustee as "beneficial interest or interest of the beneficiary."

Under section 55, the beneficiary has, subject to the provisions of the instrument of trust, a right to the rent and profits of trust property and under section 56 the beneficiary, if there is only one and he is competent to contract, may require the trustee to hand over possession of the trust property to himself. This is almost a matter of course where, as in benami transactions, the holder of the legal title is only a bare trustee. Under section 58, the beneficiary, if competent to contract, may transfer his interest, and under section 69, every person to whom a beneficiary transfers his interest has the rights of the beneficiary in respect of such interest at the date of the transfer."

1. Punjab Province v. Daulat Singh, AIR 1942 FC 38 (39-43) (Varadachariar J.).

2.14. The following statement of the law is from a Madras case1:-

"When a person acquires an interest in property with his funds in the name of another for his own benefit, the latter is called a benamidar. A benamidar is not a trustee in the strict sense of the term. He has the ostensible title to the property standing in his name but the property does not vest in him but is vested in the real owner. He is only a name lender or an alias for the real owner. The cardinal distinction between a trustee as known to English law and a benamidar lies in the fact that a trustee is the legal owner of the property standing in his name and the cestui que trust is only a beneficial owner, whereas, in the case of a benami transaction, the real owner has got the legal title though the property is in the name of the benamidar.

If a mortgage stands in the name of a benamidar, the person for whom the mortgage was obtained could sue on the mortgage, and the same rule applies to other transactions except those forbidden by law. The benamidar has some of the liabilities of a trustee but not all his rights. When the benamidar is in possession of the property standing in his name, he is in a sense the trustee for the real owner."

1. Pitchayya v. Rattamma, AIR 1929 Mad 268 (269) (Devadoss and Walsh JJ.).

2.15. In an Oudh, case1, however, it was observed-

"A benamidar holds the property as a trustee for the beneficiary2. The legal title in the property vests in him and not in the beneficiaries. As a legal owner, a benamidar has the right to sue for possession against a trespasser. In 58 IA 2793, the Privy Council remarked that Indian law does not recognise legal and equitable estates. According to that law there can be but one owner, and where the property is vested in a trustee, the owner must be the trustee."

1. Gur Prasad v. Hansraj, AIR 1946 Oudh 144 (145) (Ghulam Hasan C.J.).

2. Emphasis supplied.

3. Chhatra Kumari Devi v. Mohan 8i/cram Shah, AIR 1931 PC 196: 58 IA 279.

2.16. These decisions1 show that the legal position is somewhat obscure as to the vesting of the title. They show the misconception that is likely to arise, so long as benami is recognised.

1. Para. 2.15, supra.



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