1996 JTR(SC) 876
1996 2 AllCJ 1043 ; 1997 1 AWC 66 ; 1996 2 CLT(SC) 322 ; 1996 2 CTC 95 ; 1997 137 CTR 103 ; 1996 2 CurLJ 214 ; 1996 1 GLH 910 ; 1996 2 ICC 772 ; 1996 222 ITR 391 ; 1996 4 JT 725 ; 1996 2 MLJ 76 ; 1996 2 OLR 225 ; 1996 2 PLR(SC) 334 ; 1996 2 RRR 369 ; 1996 4 Scale 53 ; 1996 4 SCC 490 ; 1996 2 SCJ 591 ; 1996 Supp2 SCR 67 ; 1996 86 Taxman 247 ; 1996 KHC 1495 ; 1996 5 Supreme 4
1996(5) Supreme 4
SUPREME COURT OF INDIA
Madan Mohan Punchhi and K.T. Thomas, JJ.
Heirs of Vrajlal J. Ganatra -Appellant
versus
Heirs of Parshottam S. Shah-Respondent
Civil Appeal No. 9884 of 1995
Decided on 30-4-1996
IMPORTANT POINT
The question whether a particular sale is benami or not is largely one of fact and the question depends predominantly upon the intention of the person who paid the purchase money and for this, the burden of proof is on the person who asserts that it is a benami transaction.
Act
Referred
:BENAMI TRANSACTIONS PROHIBITION ACT : S.2(a)
CONSTITUTION OF INDIA : Art.136
SPECIFIC RELIEF ACT : S.34
A) The Benami Transactions Prohibition Act, 1988, Section 2(a), read with Article 136 of the Constitution of India and Section 34 of the Specific Relief Act, governs this case. Section 2(a) defines benami transactions and provides for their prohibition, while Article 136 grants the Supreme Court discretionary power to grant special leave to appeal. Section 34 of the Specific Relief Act relates to decrees for specific performance and possession. The applicability of the Benami Act to a 1963 transaction was determined by prior precedent, ultimately holding that the Act is prospective only and does not affect older deeds. (B) Key legal principles include that the question of a benami transaction depends predominantly on the intention of the person who paid the purchase money, with the burden of proof on the claimant. A presumption may arise if purchase money comes from a source other than the recorded owner, but this is rebuttable. The presumption of title following possession is stronger in cases of bare land where specific acts of possession are hard to demonstrate. (Facts of the case:
The claimant alleged he was the real owner of a property covered by an 1963 sale deed, borrowing money from the defendant and executing the deed as security, with an obligation to reconvey upon loan repayment. The defendant, now represented by legal heirs, was the recorded owner. The trial and appellate courts found the claimant failed to prove title or possession, and that the suit was barred by limitation.) (Findings of Court:
The High Court found in favor of the defendant on title and dismissed the suit for limitation, while noting it was unnecessary to decide the possession issue as it would follow title. The Supreme Court agreed that the claimant failed to prove his title, and that prior benami transactions between the parties did not rebut the presumption that the 1963 deed was executed for the defendant's own benefit.) (Issues:
Whether the suit was maintainable under the Benami Transactions Prohibition Act, whether the claimant proved his title, whether the transaction was benami, and whether the suit was barred by limitation.) (Ratio Decidendi:
As the purchase money for the 1963 deed did not come from the claimant, and he could not rebut the presumption that the deed was for the defendant's benefit, the claimant failed to establish title. The prior benami dealings did not alter this inference, and the suit was time-barred.) (Result:
The appeal is dismissed with no costs awarded.
A) The Benami Transactions Prohibition Act, 1988, Section 2(a), read with Article 136 of the Constitution of India and Section 34 of the Specific Relief Act, governs this case. Section 2(a) defines benami transactions and provides for their prohibition, while Article 136 grants the Supreme Court discretionary power to grant special leave to appeal. Section 34 of the Specific Relief Act relates to decrees for specific performance and possession. The applicability of the Benami Act to a 1963 transaction was determined by prior precedent, ultimately holding that the Act is prospective only and does not affect older deeds. (B) Key legal principles include that the question of a benami transaction depends predominantly on the intention of the person who paid the purchase money, with the burden of proof on the claimant. A presumption may arise if purchase money comes from a source other than the recorded owner, but this is rebuttable. The presumption of title following possession is stronger in cases of bare land where specific acts of possession are hard to demonstrate. (Facts of the case:
The claimant alleged he was the real owner of a property covered by an 1963 sale deed, borrowing money from the defendant and executing the deed as security, with an obligation to reconvey upon loan repayment. The defendant, now represented by legal heirs, was the recorded owner. The trial and appellate courts found the claimant failed to prove title or possession, and that the suit was barred by limitation.) (Findings of Court:
The High Court found in favor of the defendant on title and dismissed the suit for limitation, while noting it was unnecessary to decide the possession issue as it would follow title. The Supreme Court agreed that the claimant failed to prove his title, and that prior benami transactions between the parties did not rebut the presumption that the 1963 deed was executed for the defendant's own benefit.) (Issues:
Whether the suit was maintainable under the Benami Transactions Prohibition Act, whether the claimant proved his title, whether the transaction was benami, and whether the suit was barred by limitation.) (Ratio Decidendi:
As the purchase money for the 1963 deed did not come from the claimant, and he could not rebut the presumption that the deed was for the defendant's benefit, the claimant failed to establish title. The prior benami dealings did not alter this inference, and the suit was time-barred.) (Result:
The appeal is dismissed with no costs awarded.
Presumption - The case is cited to support the principle that a rebuttable factual presumption may exist that a purchase was for the benefit of the person who supplied the purchase money if it is proved the money came from someone other than the recorded owner.
JUDGMENT
Thomas, J.-Legal heirs of a plaintiff (Vrajlal J. Ganatra) who suffered defeat both at the original side as well as at the appellate stage (High Court of Gujarat) have filed this appeal by special leave. Defendant in the suit (Parshottam S. Shah) is now being substituted by his legal heirs. The suit relates to a property covered by Ext.66 sale-deed dated December 16, 1963. It was claimed to be the property of the plaintiff even though the defendant was shown in the document as the vendee. Suit was filed in 1981 for declaration of plaintiff s title to the suit property and also for an injunction for restraining the defendant from disturbing the possession of the plaintiff. Trial court while dismissing the suit held that plaintiff failed to prove his title that he was the real owner of the property and that plaintiff failed to establish that he was in possession of it on the date of suit. High Court concurred with the finding of the trial court regarding title but did not proceed to consider the other issue regarding possession. However, the High Court further held that suit had been barred by limitation.
2. The case of the plaintiff, in short, is this: Defendant was a money-lender and plaintiff was a dealer in land transactions. Plaintiff had borrowed money from the defendant for purchasing lands and he had taken sale-deeds in the name of the defendant as security to the loan amounts advanced and that on clearance of loan amount defendant would reconvey the land concerned. In the case of Ext. 66 sale-deed also, according to the plaintiff, the same pattern was followed as defendant advanced a sum of Rs. 13,000/- (Rupees thirteen thousand only) to the plaintiff for buying the land and so it was incumbent on the defendant to reconvey the property.
3. As the expression "real owner" used in the case tends to create some confusion, we would prefer to refer to the plaintiff as claimant and the defendant as "the recorded owner" (or ostensible owner). The High Court held that the intention when the sale-deed was taken, was nothing other than making the defendant owner of the property although it might have been thought that if plaintiff would pay the amount which defendant had shelled out the property would be reconveyed to the plaintiff.
4. We may mention here itself that no contention has been advanced before the High Court that the suit is not maintainable in view of Section 4(1) of the Benami Transactions (Prohibition) Act, 1988. By the time the High Court delivered the impugned judgment, the legal position which emerged by virtue of the decision of this Court in Mithilesh Kumari v. Prem Bihari Khare1, to the effect that Section 4(1) of the said Act can apply to the suit filed even prior to the coming into force of the said Act stood over-ruled by the decision of a larger Bench of this Court in R. Rajagopal Reddy (D) by Lrs. and others v. Padmini Chandrasekharan (D) by LRs.2, as provisions of the Act have been held to be prospective only the sale-deed in this case being of the year 1963 remains unaffected by the said Act.
5. The question whether a particular sale is benami or not is largely one of fact. Though there is no formula or acid test uniformly applicable it is well neigh settled that the question depends predominantly upon the intention of the person who paid the purchase money. For this, the burden of proof is on the person who asserts that it is a benami transaction. However, if it is proved that the purchase money came from a person other than the recorded owner (ostensible owner) there can be a factual presumption at least in certain cases, depending on facts, that the purchase was for the benefit of the person who supplied purchase money. This is, of course, a rebuttable presumption (Bhim Singh (D) by Lrs. and another v. Kan Singh3, Controller of Estate Duties, Lucknow v. Aloke Mitra4, His Highness Maharaja Pratap Singh v. Her Highness Maharani Sarojini Devi5.
6. In this case, as it is admitted that defendant is the recorded owner and when purchase money had not admittedly gone from the appellant for execution of the sale-deed of 1963, it is an uphill task for the appellant to establish that the sale-deed was taken benami for him. Of course, appellant had projected certain circumstances to show that he was dealing in lands for which defendant had advanced money to him.
7. Learned counsel for the appellant tried to draw support from Ext.79 sale-deed dated 22.2.1962, which is a deed executed by another person in favour of the defendant. There is no dispute that the purchase money for that transaction was advanced by the defendant and the deed was executed in the name of the defendant. It was an admitted case that defendant in that transaction was a benamidar. Learned counsel for the appellants, therefore, contended that Ext.79 not only shows that there were similar dealings between the parties even earlier but it has a perceptible impact on the crucial question relating to the transaction involved in Ext.66 sale-deed.
8. But Ext.79, far from helping the appellants, would help the respondents because the document contained a clear recital that the land would remain with the defendant as security for the amount advanced by him and when plaintiff paid back all the amount outstanding from him, the defendant would give back the property and execute a registered deed for that purpose. If this was the safeguard adopted by the plaintiff relating to another sale transaction which took place just one year prior to Ext.66, the fact that such a safeguard was not adopted in the case of Ext.66 is sufficient to suggest that the intention was otherwise.
Ext.163 is a letter sent by the plaintiff to the defendant on 8.6.1968. It mentioned about certain dealings as between them and plaintiff had acknowledged a balance of Rs.17,000/- as remaining outstanding with the defendant. Plaintiff then said in the letter that since the suit property was sold to the defendant plaintiff had no more concern about it. The following sentences in the letter are important. "From now onwards nothing remains outstanding between us and the account between us stands cleared off. This decision is agreed upon by both of us and it is finally settled by mutual consent." Of course, plaintiff had disowned the said document but the trial court and the High Court have found it proved. Further, plaintiff had admitted his signature therein.
Though reliance was sought to be placed on Ext.160 letter sent by defendant to the plaintiff on 23.12.1975, it is of no avail to the appellants. It is unnecessary for us to do into the other documents referred to by the counsel as none of them helps the appellants to establish that defendant ever entertained the idea that property should belong to the plaintiff.
9. Learned counsel pointed out that the High Court has failed to decide the question of possession of land and contended that in fact the land was in the possession of the plaintiff and continues to be in the possession of the appellants. Trial court found that plaintiff had failed to prove that the property was in his possession. High Court would have considered it superfluous to go into the question of possession. As the plaintiff claimed possession only as the true owner of the land, it is not necessary to consider the question of possession separately unless his title was upheld by the Court. The presumption is that possession would follow title. That presumption is stronger in this case as we noted that the property remained as a bare land. No particular act of possession could normally be pointed to establish possession. Non-consideration of the question of possession in such a situation is inconsequential though we are in agreement with the finding that plaintiff had failed to establish his possession on the land.
10. We, therefore, dismiss this appeal. No costs.
Appeal dismissed.
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