@JUDGMENTTAG-ORDER
R.L. Gupta, J.@mdashThis order will dispose of IA Nos. 1810 and 7587 of 1989. IA No. 1810 of 1989 is filed by the plaintiff under Order 14, rule 5, read with section 151 of the Code of Civil Procedure, 1908 (''the Code'') It is alleged that the principal defence raised by the defendants is that the real owner of the property was late Shri Harnam Dass and that the plaintiff is only a benamidar. Most of the issues framed on 26-11 -1982 showed that they arose out of pleadings by the defendants that plaintiff is not the real owner of the property in suit. During the pendency of the suit, the Benami Transactions (Prohibition) Act, 1988(''the Act'') was enacted by the Parliament with the object of prohibiting benami transactions and the right to recover property held benami and for matters connected therewith or incidental thereto. Section 4(2) of the Act, it is alleged, squarely applies to the present case because it provides that 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 the person claiming to be the real owner of such property. Therefore, by virtue of that provision the defendants cannot be allowed in this case to take any plea or defence based on any right in respect of the property in suit alleged to be held benami by the plaintiff. Therefore, issue Nos. 1, 2, 5, 6, 7 and 9 as framed on 26-11-1982 have become redundant and are liable to be struck off. Since such a defence is not permitted to be taken now, it is further alleged, no evidence on such pleas can be deemed relevant in the suit, and so defendants cannot be allowed to lead such evidence at the trial of suit. Thus, the prayer is for striking off such issues and a direction to the defendants not to lead any evidence on the plea that the plaintiff is only a benamidar.
In reply the above averments were controverted mainly on the ground that in view of the pleas already taken in the written statement, this application could not be allowed. Moreover, the defendants were moving an application for amendment of the written statement by which, besides other things, the legality and constitutional validity of the Act is being challenged and the contents of the amended written statement would also raise issues which would require adjudication by this Court. It was also denied that most of the issues in this case arise only out of the plea raised by the defendants that the plaintiff is not a real owner of the property. It was also denied that issue Nos. 1, 2, 5, 6, 7 and 9 fell in this category. Then most of the pleas taken up in the application for amendment by the defendants are narrated in this reply. At the most, it is further alleged, the Act prevents the defendants from taking advantage of the plea of the benami but still it was duty of the Court to determine whether the property, in fact, is held benami or not. It is also denied that plea of benami is irrelevant and the evidence in that respect cannot be led in view of section 4(2). It is further submitted in this reply that even when the plea of benami ownership of the property is raised, the Court is obligated to record the findings so that the same may be acquired, if deemed necessary, by the Government u/s 5 of the Act. Since the defendants are also challenging the constitutional validity of the Act and in case the Act is so held, this Court will have to try the issues regarding benami ownership of the plot. Then issues regarding ownership and the source of funds for the construction of the building and superstructure as well as the validity and effect of the agreement dated 16-5-1975 have to be gone into by this Court and for all such purposes evidence has to be led. In short, it is alleged that the decision on all the issues already framed by this Court is relevant and necessary.
The second application is filed on behalf of defendant Nos. 2 to 5 under Order 6, rule 17 read with section 151 for amendment of their written statement filed on or about 24-10-1980. It is alleged that during the pendency of the suit the Act came into force on 5-9-1988. It prohibited the benami transactions. Based on that plaintiff moved IA No. 1810 of 1989 under Order 14, rule 5 read with section 151 by which he sought the striking out of certain issues. It is further stated in IA No. 1810 of 1989 that no evidence need be recorded on certain issues in view of the Act. It is then alleged that the reliance of the plaintiff on the said Act and by the application moved there under the plaintiff virtually seeks a decree without trial and this fact, therefore, has necessitated the amendment to the written statement. The amendments sought for are as follows:
(1) The Act is ultra vires the Constitution inasmuch as it violates articles 14, 31A and 300A of the Constitution.
(2) Even assuming, though not admitting the vires of the Act, that u/s 4 only remedy of the real owner to file a suit to recover property, subject matter of a benami transaction, from the benamidar and the defence of the real owner in a suit by the benamidar against the real owner is barred, there is no provision in the Act under which the defendants who are in actual physical possession of the property in suit can be deprived of possession. The defendants being in actual physical possession from the very inception of the plot having been purchased in auction and the building having been constructed thereon by them with their own funds as owners thereof to the knowledge of the plaintiff, cannot be deprived of their possession under any provision of the Act. The defendants had purchased the plot with their own funds and raised the building also thereon with their own funds while the plaintiff was merely a name-lender and had not spent even a single paisa either towards the purchase of the plot or the construction of the building thereon. Therefore, the plaintiff had no right or interest of any nature whatsoever in the suit property up to the date of the enforcement of the Act. Moreover, the defendants could not be deprived of their possession by divesting them of their ownership title to the property and simultaneously vesting the same in the plaintiff without having spent a single paisa.
(3) In the light of section 5 any property which is held benami by the benamidar shall be acquired by the prescribed authority and if the Court finds the t the property is being held benami, the plaintiff can neither be permitted nor he shall have any right to obtain possession of the property because the possession of such property is to be taken by the State Government. Hence, in any event the plaintiff cannot claim ownership to the property.
(4) Section 4 cannot be construed so as to include within its purview suits which were already pending on the date the Act came into force. In that case section 4 being highly inequitable, discriminatory and arbitrary, violates the mandate of the Constitution. Therefore, the impugned Act is prospective and not retrospective in its operation and it does not affect or annul benami transactions entered into and made prior to the enactment of the impugned Act. Even the making of the operation of the Act retrospective, it is alleged, will be beyond the legislative competence of the Parliament.
(5) Defendants have always been openly and continuously claiming the suit property as owners thereof to the knowledge of the plaintiff. The suit in substance being for declaration of title and consequential relief is, therefore, patently barred by time.
(6) Since the defendants held a share in an ancestral property bearing No. 2217, Dharampura, Delhi at the time of the purchase of the plot in 1964 which portion was too small and insufficient for their suitable residence and they were in dire need of purchasing a plot in Delhi for their residence, but the policy of the Government/Delhi Development Authority then in force as interpreted/understood did not permit the purchase of leasehold plots in their names, the defendants gave the bid in the name of the plaintiff for avoiding the said bar and, therefore, the provisions of the Act did not apply to the present case.
(7) In the alternative, the plaintiff holds ostensible title to the property in his name merely as a trustee for the benefit of the defendants. Even the repeal of section 8 of the Indian Trusts Act, 1882 cannot be retrospective by virtue of section 6 of the General Clauses Act, 1897 and the defendants, therefore, continue to be owners in possession of the property.
(8) Vide agreement dated 16-5-1975 duly executed between the parties, the plaintiff admitted and acknowledged that the entire construction on the plot was raised by the defendants with their own funds as owners. Assuming that the said plot was given on licence to the defendants with liberty to raise substantial building at their own costs and expenses, the licence was irrevocable and, therefore, the defendants being owners of the building are entitled to continue to remain in possession of the said property. Without prejudice to the aforesaid contentions and in the alternative, it is stated that section 4 does not bar the heirs and legal representatives of the real owner from putting up defence of the benami nature of the transaction. Since the real owner Shri Harnam Dass who was defendant No. 1 died on 20-11-1986 before the coming into force of the Act, defendant Nos. 2 and 3 as the legal representatives of the deceased could validly put up the plea of plaintiff being only a name-lender and they being the real owners in defence in spite of section 4.
(9) In the alternative, it is claimed further that vide agreement dated 16-5-1975, it was agreed between the parties that the plaintiff would transfer the plot to the defendants after obtaining permission of Delhi Development Authority (DDA) in any manner as may be required by the defendants to their entire satisfaction and as such, the plaintiff would be bound to execute a deed of conveyance and get the same duly registered, while the defendants in consideration thereof could transfer or relinquish their rights, interest and title to the half back portion of House No. 3009, Gali Dharmpura, Chandni Chowk. Delhi with common use of courtyard on the ground floor and would also pay balance amount of the loan taken from Vaish Co-operative Bank in the name of the plaintiff and also release and give up their claims, rights and interest in the deposits with Hanuman Parsad Shree Nath, Cloth Commission Agents, Dharmpura lying in the name of Smt. Kalawati, etc., which, in fact, belonged to the defendants and would allow the plaintiff to receive and withdraw the same. Pursuant to the said agreement the plaintiff applied to DDA for granting permission to make a gift of the property in favour of the defendants. On some technical grounds gift was not permitted but the other mode of transfer was permitted. Plaintiff, accordingly, applied for grant of permission to transfer the said leasehold plot in the name of the defendants. It was also agreed, expressly or impliedly, that the possession of the property in suit can, therefore, be treated as possession in part performance of the said agreement. Plaintiff intentionally is alleged not to have taken permission from DDA and was, in fact, representing to the defendants that the permission was not being received from DDA in spite of his efforts and further assuring that as soon as the permission was received, he would execute a deed of conveyance in favour of the defendants. Therefore, the defendants claimed possession of the plot in dispute after 16-5-1975 in part performance of the aforesaid agreement and the same is protected by section 53A of the Transfer of Property Act, 1947. Further, elaborating the above plea, it is stated that the aforesaid agreement dated 16-5-1975 was duly acted upon and pursuant to the same the defendants paid the balance amount of loan to Vaish Cooperative Bank, Darya Ganj, Delhi and also released the payment of deposits standing in the name of Smt. Kalawati lying with Hanuman Parsad Shree Nath in favour of the plaintiff who, however, failed to perform his part of the obligation by executing a deed of conveyance of leasehold rights in the plot in question. Deed of relinquishment or transfer of back portion of House No. 3009, Dharampura, Delhi was to be executed by the defendants on or after the plaintiff executing the deed of conveyance in respect of the plot. Defendants have always been ready and willing to perform their part of the obligation but the plaintiff has failed to perform his obligation of executing the deed of conveyance. For this reason also, therefore, plaintiff was not entitled to the possession of the property in suit. As such the plaintiff having committed gross breach of the terms of the agreement is not entitled to claim the recovery of possession from the defendants.
(10) The Act does not apply to the present case because the plaintiff has at all material times accepted, acknowledged and admitted that the defendants have been or are owners at all material times of the plot as well as the building constructed thereon. He was, therefore, estopped from resiling from those admissions and as such could not claim the ownership and possession of the property.
(11) In any case only the leasehold rights of the plot underneath the property stand in plaintiff''s name and at the most section 4 may be a bar to the defence of the defendants regarding the plot, but so far as the building on the said plot is concerned, it has been raised admittedly by the defendants at their own costs as owners. Plaintiff cannot claim ownership rights in the building and the defendants can also not be evicted from the building which belongs to them, particularly when it was raised/constructed by the defendants with the knowledge of the plaintiff.
(12) The defendants, and for that matter the plaintiff, are entitled to lead evidence in respect of their respective claims to the building and the Court will have to give a finding as to who raised the building and at whose cost since the plaintiff falsely claimed to have raised the building at his own cost in spite of his clear admission in the agreement dated 16-5-1975.
In view of the aforesaid facts, circumstances and in the interest of justice, therefore, the defendants prayed that they may be allowed to amend the written statement.
2. In reply to the above application it is stated that the amendment sought in the written statement is only a device to postpone and delay the trial of the suit. The amendments asked for are not necessary for determining the real questions in controversy and the defendants cannot take the plea that the Act is ultra vires the Constitution as the same has been accepted as valid and acted upon by the Hon''ble Supreme Court in
3. I have heard arguments advanced by the learned counsels for the parties.
To appreciate whether the decision on the issue referred in IA No. 1810 of 1989 has now become irrelevant by the introduction of the Act, it would be necessary to narrate those issues and also the corresponding provisions in the Act. Those issues are as follows:
1. Is plaintiff lessee of the plot in dispute/benami on behalf of defendant No. 1?
2. Did plaintiff construct the property on plot in dispute?
3 and 4 ****
5. Was the agreement dated 16-5-1975 in which the plaintiff acknowledged defendants as the owners of the property in dispute, brought about by coercion, undue influence, misrepresentation and fraud?
6. Is the agreement dated 16-5-1975 otherwise not admissible in evidence, and was it executed in the circumstances and understanding that it would not be used in evidence against the plaintiff?
7. Is the plaintiff estopped from challenging the title of the defendants on the property in dispute? If so, to what effect?
9. Are the defendants not competent to raise the plea as made the subject matter of issue No. 1?
A perusal of issue Nos. 1, 7 and 9 shows that the emphasis of these issues is on the fact as to whether the plaintiff lessee of the plot in dispute holds the lessee rights benami on behalf of defendant No. 1 and whether the defendants are not competent to raise this plea of the plaintiff being a benamidar.
4. The exact nature and connotation of the benami transaction has been the subject matter of two major decisions of the Hon''ble Supreme Court. In
"...In this connection, it is necessary to note that the word ''benami'' is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real, as for example, when A sells properties to B but the sale deed mentions X as the purchaser. Here the sale itself is genuine, but the real purchaser is B, X being his benamidar. This is the class of transactions which is usually termed as benami. But the word ''benami'' is also occasionally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid...." (p. 66)
In
"...Two kinds of benami transactions are generally recognised in India. Where a person buys a property with his own money but in the name of another person without any intention to benefit such other person, the transaction is called benami. In that case, the transferee holds the property for the benefit of the person who has contributed the purchase money, and he is the real owner. The second case which is loosely termed as a benami transaction is a case where a person who is the owner of the property executes a conveyance in favour of another without the intention of transferring the title to the property there under. In this case, the transferor continues to be the real owner. The difference between the two kinds of benami transactions referred to above lies in the fact that whereas in the former case there is an operative transfer from the transferor to the transferee though the transferee holds the property for the benefit of the person who has contributed the purchase money, in the latter case, there is no operative transfer at all and the title rests with the transferor notwithstanding the execution of the conveyance. One common feature, however, in both these cases is that the real title is divorced from the ostensible title and they are vested in different persons. The question whether a transaction is a benami transaction or not mainly depends upon the intention of the person who has contributed the purchase money in the former case and upon the intention of the person who has executed the conveyance in the latter case. The principle underlying the former case is also statutorily recognised in section 82 of the Indian Trusts Act, 1882 which provides that where property is transferred to one person for a consideration paid or provided by another person and it appears that such other person did not intend to pay or provide such consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or providing the consideration...." (p. 732)
5. It is basically in the light of the judgments given above that we should try to appreciate the respective pleadings of the parties in this case. In this case the plea of the plaintiff basically in the plaint is that it was he who had given the bid for plot No. C-II/24 for a particular amount which was accepted by the DDA at the spot. In pursuance to that he deposited one-fourth amount of the bid as earnest money and deposited the balance later on for the preparation of the lease deed and site plan in his favour. It is further his case in para 18 of the plaint that he was given actual physical possession of the said plot by DDA on 5-3-1968. It is his further case that in or about December 1968, he entered into a contract with an architect for the construction of the building on the said plot. Thereafter the plans were sanctioned by DDA. He also took loan of Rs. 25,000 from Vaish Cooperative New Bank Ltd., for raising construction on the aforesaid plot. He started construction in 1969 and the ground floor was ready for occupation in March 1970 when defendant No. 1 (Shri Harnam Dass since expired) and defendant No. 2 approached him saying that they had purchased adjoining plot No. C-II/25 where they wanted to construct building for their residence. At this request to plaintiff gave possession to them of the constructed building on plot No. C-II/24 as lessees for a short period. Therefore, the pleas referred above clearly indicate that the plaintiff nowhere claims that he held the property benami on behalf of the defendants at any stage of the case.
6. On the other hand, the case of the defendants is that in view of their having some residential house in the old city of Delhi, it was doubtful, whether defendant Nos. 1 and 2 could give bid in their name or not. Therefore, they gave bid for the plot in the name of the plaintiff. Although the plaintiff was not the real brother-in-law of defendant No. 1, all the same defendant No. 1 and his wife had great love and affection for him. Plaintiff was alleged to have been born from the womb of Smt. Kalawati (mother-in-law of defendant No. 1) after about 10 years of the death of her husband. Defendant No. 1 and his wife reposed full faith and confidence in the plaintiff and, therefore, gave his name as the bidder. It was actually defendant No. 1 who deposited one-fourth amount of the bid, i.e., Rs. 7,750, but the bid being in the name of plaintiff, the receipt was issued by DDA in the name of plaintiff. Even the address of the plaintiff was given to the DDA as C/o Harnam Dass, advocate (deceased defendant No. 1) 2217, Dharampura, Delhi which was the residence of Shri Harnam Dass before he shifted to the property in dispute after construction on the plot. It is further the case of the defendants that when the plot was actually demarcated it was defendant No. 1 who took the possession of the plot at the spot and not the plaintiff. Even the contract with the architect was entered into by defendant No. 1, although in the name of the plaintiff because the agreement with the architect had to Designed in the name of the person who was shown in the records of the DDA. Controverting the raising of loan by the plaintiff from the Vaish Co-operative New Bank, it is stated in the written statement that much before the sanction of the loan also, defendants had already spent more than Rs. 30,000 on the construction of the plot from their own resources. The loan was raised because the plaintiff told defendant Nos. 1 and 2 to take loan from that bank as the plaintiff at that time was employed in the bank and, therefore, he suggested that the loan would be available on cheaper terms from that bank in the name of the plaintiff. It were the defendants who actually squared off that loan later on. Plaintiff is alleged to have not spent even a single penny on the construction of the house. What to speak of spending on construction, it is alleged that plaintiff even never visited the site during the construction and even thereafter because he had no interest in it. It is further the case of the defendants that stone slab with the name of ''Shanti Deep'' is engraved at the main entrance of the house. Smt. Shanti is the name of the wife of deceased defendant No. 1.
7. I have referred in brief to the pleadings of the parties to show that according to the case of the defendants the plaintiff never went into possession of the property, although it was purchased by the defendants in the name of the plaintiff. He also did not spend a single penny on its construction. In short, the plea is that right from the beginning, i.e., from the time of giving the bid till the completion of the construction on the plot, the plaintiff never went into possession of the property. In these circumstances we will have to see whether the Act applies in the circumstances of the present case or not. Sections 3 and 4 of the Act read as follows:
"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.
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 for the benefit of the coparceners in the family; or
(b) whether 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."
8. So far as section 3 is concerned, it merely prohibits all persons to enter into benami transactions. Therefore, according to the mandate of this section, henceforth no person will enter into a benami transaction. Sub-section (1) does not apply when a property is purchased by any person in the name of his wife or unmarried daughter. When the property is so purchased by a person in the name of his wife or unmarried daughter, the Court will have to presume that the said property had been purchased for the benefit of the wife or the unmarried daughter. However, in such a case, a person is entitled to lead evidence to prove a contrary result, i.e., that he never intended to purchase the property for the benefit of his wife or unmarried daughter. Sub-section (3) of section 3 prescribes punishment to a person who enters into a benami transaction.
9. The learned counsel for the defendants argued that the plaintiff''s name only was used for purchasing the property and it was never intended by defendants that the property will ever belong to the plaintiff. In fact, it was actually a sham transaction so far as plaintiff was concerned because the defendants never intended to pass any title to the plaintiff. On the other hand, the learned counsel for the plaintiff has argued that the Act was very much retrospective in nature and all types of benami transactions were covered within the four comers of the Act, once it was proved that the property was held benami by a person.
To appreciate the rival contentions, it will be proper to refer to various recent rulings which have been given by the Hon''ble Supreme Court and some of the High Courts. First of all would refer to the case of Mithilesh Kumari (supra). The facts of that case were that the plaintiff Prem Behari Khare''s wife died in 1955 leaving behind two sons aged 2 and 3 years, respectively. He faced hardship in managing the household, looking after his sons and carrying on his duties as an employee of the Allahabad Bank. Under these circumstances he kept with him defendant Mithilesh Kumari whose relationship with her husband was then estranged. Later on the relations between the plaintiff and defendant Mithilesh Kumari came to be such that she bore two children to him. There were efforts to legalise their de facto living as man and wife by obtaining the divorce of Mithilesh Kumari from her husband. There was a decree for judicial separation between her and her husband. Thus, the plaintiff had full confidence in and affection towards Mithilesh Kumari. He purchased the house in dispute in her name and in the Court could not give any reason why he purchased the house in her name for Rs. 8,000. A decree was passed in favour of Prem Behari Khari declaring him to be the sole and real owner of the house and Mithilesh Kumari defendant-appellant was permanently restrained from transferring the suit house. It also appears from the facts of the case that both Prem Behari Khari and Mithilesh Kumari were living in the house in dispute as man and wife and so the custody of the sale deed was not considered to be very material.
The question, therefore, that arose for decision before the Hon''ble Supreme Court was as to whether at the time of the pendency of the appeal in the Supreme Court, the Act which came into force during the pendency of the appeal, could be applied to hold as to whether the Act was retrospective in its operation. The Supreme Court after taking into consideration various contentions raised on behalf of the parties held as under:
"...Consequently, the Appellate Court is competent to take into account legislative changes since the decision under appeal was given and its powers are not confined only to see whether the lower Court''s decision was correct according to the law as it stood at the time when its decision was given. Once the decree of the High Court has been appealed against, the matter became sub judice again and thereafter this Court had seisin of the whole case, though for certain purposes, e.g., execution, the decree was regarded as final and the Courts below retained jurisdiction in that regard...." (p. 1255)
Therefore, even if a decision has been given in favour of a party prior to the coming into force of the Act and appeal against such a decision is filed in the Apex Court, the filing of the appeal shall be deemed to be a continuation of the original suit because the word ''suit'' includes an appeal from the judgment in the suit. Thus, the appeal is only a rehearing and in moulding the relief to be granted. In a case on appeal, the Appellate Court is entitled to take into account even facts and events which have come into existence after the passing of the decree appealed against -
10. In the case of
11. In view of the clear findings by the Hon''ble Supreme Court as also by the Calcutta High Court, it must be held that the Act is retrospective in its operation.
12. However, still the principal question that remains to be considered is as to whether in the circumstances of the present case it can be said that the defence taken up by the defendants is covered by any of the provisions of the Act or not. The defence raised by the defendants is that the plaintiff was simply a name- lender and because of the relationship of mutual trust and confidence, the defendants only used his name for giving a bid and they never intended to confer any title on the plaintiff. Their further case is that the plaintiff even never went into possession of the property at any point of time. They also constructed a house on the plot and since then have been in possession. In section 4(1) the title is ''Prohibition of the right to recover property held benami''. The very title suggests that this section will apply to a so-called real owner who seeks to recover property held benami by the benamidar and the real owner is debarred from filing any suit, claim or action to enforce his right of real ownership. Similarly, u/s 4(1) the defence of a real owner is negatived in respect of any property which is held benami. In almost a similar situation sections 3 and 4 were interpreted by the Kerala High Court in
"Sections 3 and 4 of the Act have to be read and understood together. They are not disjunctive provisions in a comprehensive legislation intended to prohibit benami transactions. Both sections 3 and 4 are complementary to each other to achieve the same object. While section 3 prohibits the creation of any ''benami transaction'', section 4 prevents any suit, claim or action to enforce any right in respect of any property ''held benami''. It is only when any right in respect of a property ''held benami'' is sought to be enforced, in any suit or claim that section 4 is attracted. ''Hold'', according to Black''s Dictionary means'' to possess in virtue of a lawful title as in the expression, common in grants, "to have and to hold"; to possess; to occupy; to be in possession and administration of. In the context and setting of section 4, the word ''held'' has to be understood as ''possessed or occupied''. If the possession or occupation is not benami, section 4 can have no application. An intended benami does not confer even pretended rights. A benami transaction where the property is so held as benami is the subject of the statutory prohibition under sections 3 and 4. The definition of ''benami transaction'' is inextricably connected with all the provisions of the Act, as the Act is intended ''to prohibit benami transactions and the right to recover property held benami and for matters connected therewith or incidental thereto''." (p. 327)
The word ''held'' has to be, therefore, understood as ''possessed or occupied''.
Therefore, I am of the view that section 4(2) will deprive the real owner of any defence whatsoever against a benami owner who actually holds the property and is in administration of the same. If the possession of the property is with the real owner and that too with any express or implied intention of the parties, as in the present case, it cannot be said that the benamidar holds the property, i.e., he is in possession of the property.
13. Benami transaction, according to section 2(a) of the Act, means any transaction in which the property is transferred to one person for a consideration paid or provided by another person. This definition, therefore, will apply when the following two conditions are satisfied:
(1) There is a transfer of property.
(2) The consideration is paid or provided not by the transferee, but by another person.
If, therefore, either of these two conditions is not satisfied, the transaction cannot be called a benami transaction. In a benami transaction it must be established that the property is held or possessed by the benamidar and that consideration was paid by another person. If possession is not transferred to the benamidar and actually the consideration is paid by another person and the possession of the property is also taken by such other person, the transfer deed by which the property is shown to have been sold to the benamidar would be merely a sham document. It will go to show that the real intention of the parties was not to confer any right, title or interest on the benamidar. The Act will apply only when both the conditions, i.e., the transfer of possession to the benamidar as well as the payment of consideration by a person other than the benamidar, are proved and it will not extend to a case where actually the possession of the property has not been transferred to the benamidar. In such a case, if a party pleads that there never was any intention to create any right in the named transferee and he was simply used as a name-lender, and is able to prove that fact by some cogent and convincing evidence, the Court is obligated to return a finding that the deed was sham and did not affect the rights of such a person. Rather the real and ostensible title merge in one and the same person and the person in whose name the property is mentioned in the deed is a mere name-lender.
14. It is also pertinent to note that in their written statement the defendants have nowhere used the word ''benami''. The gist of their pleadings is that actually the defendants had given the bid at the spot, had paid consideration after the acceptance of the bid, had taken the possession of the plot and, after raising construction thereon, had gone into possession. Nowhere in their written statement they have used the word ''benami''. Throughout they had stated that the plaintiff was only a name-lender and that was also because of the relationship of mutual trust and confidence. The plaintiff happened to be the real brother-in-law of the deceased defendant Shri Harnam Dass, i.e., the maternal uncle of defendant Nos. 2 and 3.
15. Let us take a converse case. Suppose, for example, a real owner had filed a suit against a benamidar much prior to coming into force of the Act and finally in execution of a decree in his favour had also gone into possession of the property before coming into force of the Act. In that situation, can it be said that a right will survive to the benamidar to file a suit after coming into force of the Act for recovery of possession against the real owner? I am of the view that such a benamidar will not be able to recover possession of the property from the real owner. If ''benamidar'' is unable to recover property from a real owner who has obtained possession from him under a decree before the coming into force of the Act, can it by any stretch of imagination be said that a benamidar who had actually never gone into possession of the property and who is described owner as a mere name-lender by the real owner in the conveyance deed can recover possession from the real owner? I am of the view that there seems to be practically no difference in these two cases and in either of these cases a benamidar will not be able to recover possession from the real owner. The passing of a decree in favour of a real owner and putting him in possession by execution in the former case is not a right which is recognised for the first time by the decree but it is only the recognition of a pre-existing right in the real owner. Similarly, if, as per the case of the defendants in this case, it was never the intention of the parties that the plaintiff will ever get possession of the property and will be only a name-lender and in pursuance to such expression of intention of the parties the plaintiff never went into possession of the property, I think the Act will not apply. Therefore, at this stage it is not possible to hold that the defendants should not be permitted to lead evidence on their pleas.
16. There is another reason for not shutting the defence of the defendants in this case. They have already pleaded the existence of an agreement dated 16-5-1975 between the parties in para 33 at internal page 20. It is stated therein that the plaintiff had admitted the true position in that agreement that it were the defendants who had paid the loans taken in the name of the plaintiff from Vaish Co-operative Bank. The defendants now seek an amendment on the basis of the same agreement to the effect that the plaintiff admitted and acknowledged in that agreement that the entire construction on the plot was raised by the defendants with their own funds as owners thereof. It was further agreed between them that the plaintiff would transfer the plot in dispute to the defendants after obtaining permission of the DDA in any manner as may be required by the ''defendants to their entire satisfaction and the plaintiff would be bound to execute deed of conveyance and get the same duly registered in favour of the defendants. In consideration thereof the defendants agreed that they would transferor relinquish their rights, interest and title in or to the half back portion of House No. 3009, Gali Dharampura, Chandni Chowk, Delhi, pay balance amount of the loan taken from Vaish Co-operative Bank in the name of the plaintiff and also release, give up their claims, rights and interest in the deposits with Hanuman Prasad Shree Nath Cloth Commission Agents, Dharampura, Delhi lying in the name of Smt. Kalawati which in fact, belonged to the defendants and also allow the plaintiff to receive and withdraw the same. The defendants further say in this application that pursuant to the said agreement the plaintiff applied to the DDA for grant of permission to make a gift of the property in question in favour of the defendants, they also released the amounts of the deposits in favour of the plaintiff and also paid the loans of the Vaish Co operative Bank. Ultimately the defendants claim to be in possession of the property in question in part performance of the said agreement also.
17. The learned counsel for the plaintiff in this respect contended that if this plea is allowed to be raised by the defendants, it would amount to changing the original cause of action and substituting it by a new cause of action and, therefore, this plea should not be allowed. I do not agree with this contention for the reason that there is a reference to the agreement dated 16-5-1975 in the original written statement. The defendants by way of the amendment only seek to elaborate their earlier plea by looking at the agreement from a different angle. The agreement is already a part of the pleadings and, therefore, I am of the opinion that if this amendment is allowed, it will not amount to permitting the defendants to substitute a new cause of action. Under sub-section 3(6) of section 4, it is provided that if the person in whose name the property is held as 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, the main provisions of section 4 will not be attracted. The defendants have also pleaded in para 2 of their written statement that defendant No. 1 (since expired) and his wife reposed full faith and confidence and trust in the plaintiff and gave his name as a bidder when the plot was knocked down to the highest bidder with a view to avoid any difficulty or complication in giving the bid in the name of defendant No. 1 or his sons. In view of the above plea, it will also have to be seen whether the plaintiff stood in the relationship of a trustee or one having a fiduciary capacity towards the defendants. If the relationship between the parties is so held, it may then be possible to say that the main provisions of section 4 will not be applicable in the case of the parties. The principle of allowing an additional approach by way of amendment was recognised by the Supreme Court in
"...The general rule, no doubt, is that a party is not allowed by amendment to set up a new case or a new cause of action particularly when a suit on new case or cause of action is barred:... where, the amendment does not constitute the addition of a new cause of action or raise a different case, but amounts to no more than a different or additional approach to the same facts, the amendment will be allowed even after the expiry of the statutory period of the limitation" (p. 97)
In the case of
"...the provisions of amendment are intended for promoting the ends of justice and not for defeating them."
18. In the light of principles laid down above let us now see which of the amendments can be allowed in this case.
19. The first amendment seeks to challenge the constitutional validity of the Act vis-a-vis articles 14,31A and 300A of the Constitution. No authority has been brought to my notice which might have considered the constitutional validity of this Act. Although the decision in the case of Mithilesh Kumari (supra) held that the Act is retrospective in nature yet the constitutional validity of the Act as such was not in dispute in that case. Therefore, if the defendants are allowed to take up this plea, which in fact, is only a legal plea requiring no evidence, no harm will cause to the plaintiff, as it only seeks to introduce an additional approach to the problem. Therefore, defendants can be allowed to take up this plea.
20. Second amendment sought is really very substantial and, in fact, this is the main defence raised by the defendants. It only seeks to highlight that in view of the defendants being in actual physical possession of the suit property right from its inception, the Act will not confer any ownership rights upon the plaintiff. This amendment also, therefore, has to be allowed.
21. The third amendment is also based on the possession of the defendants over the suit property. This amendment also has to be allowed in order to effectively and conclusively decide whether or not the Act extinguishes the right of the real owner who is already in possession of the property. It is only an extension of the second plea.
22. The fourth amendment asked for in para 19 of the application says that no provision of the Act confers ownership rights on the benamidar, and further that there is no provision in the Act like section 27 of the Limitation Act, which on the completion of 12 years'' period of adverse possession extinguishes the ownership of owner and simultaneously vests the ownership rights in the trespasser/unauthorised occupant in adverse possession of the property, and the consequence would be that the suit has to be dismissed. So far as the earlier part is concerned, it is against the very basic concept of the Act because the Act vests ownership rights in respect of a property held benami. The later part does not seem to take up the plea of adverse possession of the defendants. In fact, it is not clear what plea is sought to be taken up by the defendants. It is absolutely vague and as such, cannot be allowed.
23. The next amendment contained in para 20 of the application also cannot be allowed. I do not find that there is any contradiction between the provisions of sections 4 and 5. They are independent of each other. Section 4 prohibits the right to recover property held benami by a real owner and also debars him from raising any defence in respect of any property held benami. Section 5 says that all the properties held benami shall be subject to acquisition by such authority in such manner and after following such procedure as may be prescribed. I, therefore, do not find that the provisions of these two sections are in any way mutually exclusive. Moreover, in the present proceedings this Court is not called upon to decide the scope of section 5. This amendment, therefore, cannot be allowed.
24. The amendment sought in para 21 is dependent on the earlier para. It also cannot be allowed for the same reason. The amendment asked for in para 22 of the application cannot be allowed. The retrospective operation of the Act is sought to be challenged by this amendment. In the case of Mithilesh Kumari (supra) the Hon''ble Supreme Court has already held that provisions of the Act are also retrospective in nature. This amendment, therefore, cannot be allowed.
25. The amendment sought by para 23 of the application deals with all the incidents of section 5.1 do not find any interaction between this section and other sections of the Act. This section contemplates the acquisition of benami properties by the Government whereas section 4 prohibits a real owner from recovering properties held benami. The question of payment of compensation by the State Government in case of acquisition of such property can arise in proceedings which are commenced by the State Government. This question does not arise either directly or indirectly in the present proceedings. This amendment, therefore, cannot be allowed.
26. The amendment sought by para 24 of the application is again about the prospective operation of the Act. In view of the decision of the Hon''ble Supreme Court that the Act has retrospective operation also, the defendants cannot be allowed to raise this plea.
27. The amendment sought by para 25 of the application says that section 3 is prospective in operation. There is no doubt that section 3 prohibits benami transactions in future and rather entering into such a transaction in future is also made punishable. It is only the operation of section 4 which has been held by the Supreme Court to be retrospective in respect of past transactions, proceedings about which are still pending in the Courts. Thus, there is no fun in allowing this amendment.
28. The amendment sought by para 26 of the application cannot be allowed because so far as the constitutional validity of the Act is concerned, the plea is being allowed to be raised by the very first amendment. The plea that sections 4 and 5 are bad because they are retrospective in nature cannot be allowed to be raised for the same reason.
29. The amendment sought by para 27 is again regarding prospective operation of sections 4 and 5 and so cannot be allowed.
30. The amendment sought by para 28 of the application says that no procedure is laid down in section 5 for declaring a property as benami and acquiring it. Therefore, section 5 suffers from vice of excessive delegation. In my opinion the interpretation of section 5 is not at all involved in this case and this amendment also, therefore, has to be disallowed.
31. Amendment sought by para 29 of the application again challenges the retrospective nature of the Act. For the same reason this is to be disallowed. Regarding other portion of this para challenging the constitutional validity of the Act, the amendment is already allowed. I must say that allegations in many paras are overlapping and the application is not happily drafted.
32. By para 30, the defendants want to take up a plea that suit is patently barred by time. Certain facts are pleaded in this para to show how the suit is barred by time. Allowing of such plea does not in any way change the nature of controversy between the parties and also does not amount to substitution of a new cause of action. The facts necessary for determination of this plea are pleaded in the written statement earlier also. Therefore, in the circumstances this plea is allowed.
33. By para 31 of the application, the defendants pray that the provisions of the Act are not applicable to the facts of the present case. This plea has to be allowed because this Court should come to its own conclusion whether in the facts and circumstances of the case, the provisions of the Act would be attracted or not.
34. By para 32 of the application, defendants seek to amend their written statement by incorporating the plea that the plaintiff is holding ostensible title of the property in his name merely as a trustee for the benefit of the defendants. It is stated further that even the repeal of section 82 of the Indian Trusts Act cannot be retrospective by virtue of section 6 of the General Clauses Act and, therefore, the defendants continue to be the owners in possession of the property in suit. The amendment asked for in this para simply seeks to raise a legal plea to the effect as to whether the repeal of section 82 can be considered retrospective or not in the background of the facts of this case. The plaintiff is not likely to suffer any harm if the defendants are allowed to raise this plea. It is substantially a legal plea. This amendment, therefore, has to be allowed.
35. By para 33 of the application, the defendants want to amend their written statement to the effect that even assuming that they were licences in respect of the plot, by virtue of the agreement dated 16-5-1975 containing such an admission and acknowledgement of the plaintiff, the licence is irrevocable and the same cannot be revoked as falsely and illegally alleged by the plaintiff. Therefore, the defendants cannot be dispossessed as unauthorised occupants as alleged by the plaintiff. The plea is also based upon the interpretation of the alleged agreement dated 16-5-1975 between the parties. Whether in view of that agreement the licence alleged by the plaintiff in favour of the defendants is irrevocable or riot, therefore, originates from the same agreement. Since the agreement is pleaded in the written statement as such, this plea only seeks to raise the legal effects of the agreement between the parties. It does not raise any new cause of action or does not even substitute the original cause of action between the parties. It only seeks to incorporate an additional approach to the problem. Therefore, the same is allowed.
36. By paras 34 and 35 of the application, the defendants seek to incorporate the effect of the agreement dated 16-5-1975 to prove that they should be treated in possession of the property in dispute in part performance of the agreement and that their possession is protected u/s 53A of the Transfer of Property Act. This is also as a matter of fact another way of looking at the agreement dated 16-5-1975 between the parties. The amendments contained in paras 34 and 35, therefore, are also allowed.
37. By para 36 of the application, the defendants seek to incorporate that the aforesaid agreement was duly acted upon and pursuant to the same, defendants paid balance loan amount to the Vaish Co-operative Bank, Darya Ganj. Delhi and, therefore, the plaintiff was not entitled to the possession of the suit property. For the same reasons this amendment is also allowed.
38. By para 37 of this application, defendants seek to incorporate in the written statement an amendment to the effect that the agreement dated 16-5-1975 is binding between the parties for various reasons given in this para and since the plaintiff is in gross breach of the terms of the agreement, he is not entitled to claim recovery of possession or any other relief in respect of the property in suit. This also, therefore, seeks to bring out the effect of the agreement between the parties and defendants are, therefore, allowed the amendment contained in this para also for the same reasons.
39. By para 38, the defendants say that the Act does not apply to the present case for the reasons that the plaintiff has at all material times accepted, acknowledged and admitted the defendants to be the owners of the plot as well as the building constructed thereon. As I have held earlier that in the facts and circumstances of this case, this Act will not apply if the defendants are able to lead some cogent and convincing evidence on their pleas. By the amendment contained in this para, the defendants only are highlighting the effect of the acknowledgement and admission of the plaintiff in order to show that the Act does not apply. This amendment is, accordingly, allowed. The amendment asked for in para 39 cannot be allowed. It is nowhere admitted by the plaintiff that the building on the plot in dispute was raised by the defendants at their own cost as owners. Even otherwise the main ingredients of the amendment sought for by this para are contained in other paras. The amendment asked for in this para, therefore, should not be allowed except to the extent allowed under other paras.
40. The amendment sought for in para 40 of the application is only argumentative in nature. It is lo the effect that the parties are entitled to lead evidence in respect of their respective claims to the building and the Court will have to necessarily give a finding as to who raised the building. In fact, this plea has already been allowed earlier and, therefore, it being merely a repetition is considered superfluous and as such, is disallowed.
41. The amendment asked for in para 41 of the application is also a repetition of the pleas already allowed. Therefore, this amendment need not be allowed. In the light of the discussion made above IA No. 1810 of 1989 of the plaintiff is hereby dismissed while the IA No. 7587 of 1989 of the defendants is allowed to the extent indicated above but this will be subject to payment of Rs. 2,000 as conditional costs. The defendants shall file their amended written statement in the light of the directions contained in this judgment within four weeks with advance copy to the counsel for plaintiff who may file replication, if any, within three weeks thereafter. To be listed on 10-5-1990 before the Deputy Registrar.
