IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.854 OF 2009

(Arising out of S.L.P.(C) No.20192 Of 2006)

VIJAY KUMAR & ANR.   …    Appellants

Vs.

DHARAM PAL & ORS.     … Respondents

J U D G M E N T  

ALTAMAS KABIR,J.

1. Leave granted.

2. This  appeal has been listed after  notice had

been  served  on  the  Respondent  No.1  and  learned

counsel has entered appearance and has filed counter

affidavit on his behalf.   

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3. One Dharam Pal, Respondent No.1 herein, filed a

suit  for  possession  by  claiming  that  he  had

purchased two properties situated at Nakodar by two

conveyances  dated  24th April,  1959  and  12th June,

1959.  It is his further case that having raised

constructions in the said properties after obtaining

sanction from the Municipality and having recorded

his name in the House Tax Records as an assessee of

the local body, he proceeded to the United Kingdom

in 1964 and at the time of leaving, he had handed

over  possession  of  the  said  properties  to  his

father, who was living along with his other son, Mr.

Ram  Aggarwal.   Subsequently,  the  father  of  the

Respondent No.1 also left for England and died there

in  1970.   The  brother  of  the  Respondent

No.1/plaintiff, Mr. Ram Aggarwal, thereafter started

a business in the said premises under the name and

style of Vijay Agencies and remained in possession

thereof as licencees of the Respondent No.1.  On

being  asked  to  hand  over  possession  of  the  suit

properties by the Respondent No.1, Mr. Ram Aggarwal,

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refused to do so, which resulted in the filing of

the civil suit, after revocation of the licence.

4. The claim of the Respondent No.1 was denied by

the  defendant/appellant,  Mr.  Ram  Aggarwal,  who

claimed that an old shop had been purchased by a

sale deed dated 24th April, 1959 in the name of the

Respondent  No.1  on  account  of  their  love  and

affection for him.  Similarly, a second shop was

also purchased by them on 12th June, 1959, in the

name of the Respondent No.1 on the same ground.  The

claim  of  the  appellants  is  that  they  had

subsequently demolished the old structure and had

raised  the  new  structure,  of  which  they  were  in

possession  and  were,  in  fact,  the  real  and

ostensible  owners.   It  was  also  asserted  by  the

appellants that a large sum of money had been spent

by them on the new constructions and that they had

been  depositing  local  taxes  in  respect  thereof,

though  the  bills  were  issued  in  the  name  of  the

Respondent No.l whose name was recorded in the local

records as the owner thereof.  It was also admitted

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by the appellants that the electric connection and

water connection were in the name of the Respondent

No.1.  In this context a plea of benami was raised

by the appellants which was negated by the trial

Court on the ground that such plea was not available

after  the  enactment  of  the  Benami  Transactions

(Prevention) Act, 1988, which had been held to have

retrospective effect.

5. Considering the case made out by the respective

parties  and  the  evidence  led  by  them,  the  Trial

Court upon holding that the Respondent No.1 was the

owner of the suit properties, decreed the suit in

favour  of  the  Respondent  No.1  by  a  judgment  and

decree dated 9th August, 1991.  The appeal preferred

by the appellants from the said judgment and decree

was dismissed by the lower Appellate Court by its

judgment dated 5th September, 1997, confirming the

reasoning of the trial Court, which gave rise to a

second appeal filed before the High Court.  Having

regard to the fact that both the sale deeds were in

the name of the Respondent No.1, but the appellants

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claimed  that  the  properties  had  been  purchased

benami in the name of the Respondent No.1 and the

appellants  were  the  real  owners  thereof,  the

question  of  ownership  was  remanded  to  the  First

Appellate  Court.  Upon  reconsideration  of  the

evidence, the First Appellate Court re-affirmed its

earlier decision holding the Respondent No.1 to be

the owner of the property.

6. The  appellants  filed  a  fresh  Second  Appeal

against the order of the First Appellate Court which

was again dismissed by the High Court upon holding

that in view of the specific bar under Section 4 of

the Benami Transactions (Prohibition) Act, 1988, the

appellants  could  not  take  up  the  plea  of  the

properties being benami.

7. The  present  appeal  is  directed  against  the

judgment  of  the  High  Court  dismissing  the

appellants’ Second Appeal.

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8. The Second Appeal was once again dismissed by

the High Court on the ground that the defence taken

in the suit by the defendants was barred in view of

Section 4 of the Benami Transactions (Prohibition)

Act, 1988 which had come into force.  The High Court

held that since the aforesaid Act and its provisions

were retrospective, the appellants were not entitled

to take the plea that the properties were benami in

character in view of such specific bar.   

9. The High Court also took notice of Exhibit PW3/3

which  was  signed  by  Mr.  Ram  Aggarwal  and  the

Respondent  No.1.  In  the  said  document,  the

appellants  had  admitted  the  ownership  of  the

Respondent No.1 over the disputed properties and had

agreed to transfer some properties in Chandigarh to

the  Respondent  No.1  in  lieu  of  the  shops  in

question.  In the course of his deposition in the

Trial  Court,  Mr.  Ram  Aggarwal  admitted  his

signatures  on  Exhibit  PW3/3  and  it  was  further

observed that the said agreement was presumably as a

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consequence of the notice issued by the Respondent

No.1 on 30th August, 1986 (Exhibit PW3).

10. The  High  Court  came  to  a  finding  that  there

could  be  no  escape  from  the  conclusion  that  the

Respondent No.1 was the owner of the suit properties

and that the appellants had been permitted to use

the same as licencees when the Respondent No.1 had

gone abroad.

11. In view of the aforesaid finding, the High Court

dismissed the Second appeal, which had been filed by

the defendants who are the appellants herein.   

12. Mr. R.K. Dhawan, learned Counsel, who appeared

for the appellants, submitted that the High Court

had  erroneously  held  that  the  provisions  of  the

Benami  Transactions  (Prohibition)  Act,  1988,  had

been  given  retrospective  effect  and  would,

therefore, apply to the instant case.  He urged that

since the suit had been filed on 5.1.87 and the Act

had come into force thereafter on 5.9.1988, the same

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would  have  no  application  to  the  suit  and  the

parties were entitled to prove their ownership of

the  suit  properties  on  leading  evidence,  such  as

payment of rates and taxes, in support thereof.  Mr.

Dhawan  submitted  that  the  very  fact  that  the

Respondent No.1 herein had not taken any steps to

claim  title  over  the  properties  in  question  for

about 30 years, clearly indicated that the suit had

been  filed  as  an  after-thought  and  with  the

intention of taking a chance to take possession of

the suit properties.

13. In support of his submission that the bar of

Section 4 of the Benami Transactions Act would not

apply retrospectively, Mr. Dhawan referred to and

relied on the decision of a Three Judge Bench of

this Court in the case of R. Rajagopal Reddy (dead)

by L.Rs. & Ors. Vs.  Padmini Chandrasekharan (dead)

by  L.Rs. [AIR  1996  SC  238],  wherein  the  same

proposition was considered and accepted. Mr. Dhawan

submitted  that  the  High  Court  had  committed  a

serious  error  in  applying  the  provisions  of  the

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above Act and also relying on the Agreement (Exhibit

PW 3/3), which was said to have been executed by Mr.

Ram Aggarwal and Dharam Pal.  It was submitted that

the judgment and order of the High Court was not

sustainable and was liable to be set aside.  

14. On behalf of Respondent No.1, it was conceded by

Mr. Dhruv Mehta, learned Advocate, that since the

suit had been filed on 5th January, 1987 and the

Benami  Transactions  (Prohibition)  Act,  1988,  came

into force subsequently on 5th September, 1988, the

provisions of the Act would have no application to

the suit.   

15. Mr. Mehta urged that even if the bar of Section

4 of the 1988 Act was not available in the instant

case, the Respondent No.1 had been able to prove his

ownership of the suit properties on the basis of the

evidence adduced by him.  Mr. Mehta submitted that

once Exhibit PW3/3, which contained an admission of

Ram  Aggarwal  acknowledging  the  ownership  of  the

Respondent No.1 in the suit premises, was accepted,

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the  courts  below  had  rightly  relied  on  the  same

along  with  other  documents  such  as  Municipal

records, the receipts, electric and water connection

in support thereof in holding that the Respondent

No.1  was  the  owner  of  the  suit  properties  and

decreeing  the  suit  of  the  Respondent  No.1  and

dismissing the appeal preferred by the appellants.  

16. Of the two points urged by Mr. Dhawan, since the

first  point  regarding  the  applicability  of  the

Benami Transactions (Prohibition) Act, 1988, to the

suit has been conceded on behalf of the Respondent

No.1 in favour of the appellants, the same need not

detain us, except to state that the trial Court, the

first appellate Court and the High Court had erred

in applying the provisions of the Act to the suit,

since it had been filed prior to the coming into

effect of the Act.  

17. However, on the second question, we are inclined

to agree with Mr. Mehta that de hors the question of

the  applicability  of  the  Benami  Transactions

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(Prohibition)  Act,  1988,  the  Courts  below  had

rightly held that the Respondent No.1 was the owner

of the suit properties relying on the documentary

and oral evidence adduced by him, including Exhibit

PW3/3 executed by the appellants and the Respondent

No.1  which  was  proved  by  Audhiya  Parshad  as

mentioned in the judgment of the trial Court.    

18. Consequently, even while holding that the Courts

below,  including  the  High  Court,  had  erred  in

applying the provisions of the Benami Transactions

(Prohibition)  Act,  1988,  to  the  suit  of  the

Respondent No.1, the Appeal must fail on the ground

that in addition to the above, the Courts had found

the  Respondent  No.1  to  be  the  owner  of  the  suit

properties on the basis of the evidence adduced by

him, which finding was not disturbed by any of the

Courts below.

19. The appeal is, therefore, dismissed.     

20. There will be no order as to costs.    

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                             ________________J. (ALTAMAS KABIR)

   ________________J. (CYRIAC JOSEPH)

New Delhi Dated: 10.2.2009

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