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PETITIONER:

NAND KISHORE MEHRA

Vs.

RESPONDENT:

SUSHILA MEHRA

DATE OF JUDGMENT02/07/1995

BENCH:

VENKATACHALA N. (J)

BENCH:

VENKATACHALA N. (J)

KULDIP SINGH (J)

AHMAD SAGHIR S. (J)

CITATION:

1995 AIR 2145 1995 SCC (4) 572

JT 1995 (5) 130 1995 SCALE (4)254

ACT:

HEADNOTE:

JUDGMENT:

J U D G M E N T

VENKATACHALA. J.

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 :

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"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

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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

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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.