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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.