IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 11.08.2011 CORAM: THE HONOURABLE MR.JUSTICE S.NAGAMUTHU Second Appeal No.1573 of 2002 1. R.Rathnappa 2. Ramasami .... Appellants/Defendants Vs V.Lakshmma ... Respondent /Plaintiff Prayer:- Second Appeal filed under Section 100 of C.P.C against the judgment and decree of the learned III Additional District Judge, Dharmapuri at Krishnagiri dated 09.08.2002 in A.S.No.102 of 1998 confirming the judgment and decree of the learned Subordinate Judge, Hosur dated 10.11.1998 in O.S.No.433 of 1996. . . . For Appellants : Mr.V.Raghavachari For Respondent : Mr.D.Shivakumaran . . . J U D G M E N T The defendants in O.S. No.433 of 1996 on the file of the learned Subordinate Judge, Hosur are the appellants. The respondent herein is the plaintiff in the suit. The said suit was filed for declaration of title and for consequential relief of injunction to restrain the defendants from in any manner interfering with his peaceful possession and enjoyment of the suit property. Subsequently, the suit was amended to include the prayer for recovery of possession and for mesne profits instead of permanent injunction. 2. The suit was dismissed by the trial court. As against the same, an appeal was preferred by the defendants in A.S.No.102 of 1998 on the file of the III Additional District Judge, Dharmapuri District at Krishnagiri. The appeal was dismissed thereby confirming the decree and judgment of the trial court . As against the same, the defendants are before this Court with this appeal. 3. The case of the plaintiff in brief is as follows: The suit property was originally owned by one Uchappa. According to the plaintiff, she purchased the same by means of a Registered Sale Deed dated 20.11.1978 for a valuable consideration of Rs.1000/- under https://hcservices.ecourts.gov.in/hcservices/ Ex.A.1. From the date of purchase she was in possession and enjoyment of the property. The defendants have got no title whatsoever over the suit property. Since the defendants made attempts to trespass into the suit property, the suit was filed for declaration of title and for permanent injunction. However, during the pendency of the suit, according to the plaintiff, the defendants trespassed into the suit property and dispossessed him. Therefore, the suit was amended suitably so as to include the prayer for recovery of possession and for mesne profits instead of permanent injunction. 4. In the written statement filed by the defendants, it is contended as follows: It is true that the suit was originally owned by Uchappa. The plaintiff is the younger sister of the first defendant. She has been all along living with her husband at Karnataka. She never resided in the suit village. On 20.11.1978 for a valuable consideration of Rs.1000/- the suit property was purchased only by the first defendant from Mr.Uchappa. Since the brother of the first defendant was likely to claim title, the first defendant arranged for the execution of the Sale Deed in the name of the plaintiff. Thus, the entire consideration for the purpose was paid only by the first respondent. In other words, the property was purchased by the first defendant benami in the name of the plaintiff. Subsequently, by spending huge amounts, he constructed a house on the same and he has been in occupation of the same continuously. The plaintiff was never in possession of the property and she never enjoyed the same. He further contended that the allegation that he trespassed into the suit property is absolutely false, as according to him, he has been in possession and enjoyment of the suit property from the date of purchase on 20.11.1978. Therefore, the suit is liable to be dismissed, he contended. 5. Based on the above pleadings, the trial Court framed appropriate issues. The main issue was regarding the maintainability of the plea of benami by the first defendant. On the side of the plaintiff, three witnesses were examined and as many as 16 documents were exhibited. On the side of the defendants four witnesses including the first defendant were examined and as many as 18 documents were exhibited. 6. The trial Court held that in view of Section 4 of The Benami Transactions (Prohibition) Act, 1988, such plea raised on the part of the first defendant is not maintainable. Therefore, the trial Court held that as per the Sale Deed dated 20.11.1978 under Ex.A.1, the plaintiff is the absolute owner. Accordingly, the trial Court decreed the suit both for declaration of title as well as for recovery of possession. The lower appellate Court also concurred with the same. That is how, the appellants are before this Court with this appeal. 7. When the Second Appeal was admitted, this Court framed the following substantial questions of law: "1. Whether the Courts below are right in applying the https://hcservices.ecourts.gov.in/hcservices/ Benami Prohibition Act when the Act does not apply to those transactions that had taken place earlier to its promulgation? 2. Whether the Courts below are right in not rejecting the plaint when the plaintiff had admittedly added new relief and fresh allegations without securing the leave of the Court?" 8. I have heard the learned counsel on either side and also perused the records carefully. 9. The learned counsel for the appellants would submit that the provisions of the Benami Transactions (Prohibition) Act,1988 (Hereinafter referred to as "Act" ) is prospective in operation and the same shall not void the past transactions. In this case, according to him, the benami pleaded by the appellants is of the year 1978, much prior to the coming into force of the Act. Therefore, according to the learned counsel, the Courts below were not right in holding that the plea of benami as raised by the first defendant is not sustainable. 10. The learned counsel appearing for the respondent would submit that the Act is retroactive and so, the plea of benami raised by the defendants cannot be allowed to sustain. 11. Before referring to the judgments of the Hon'ble Supreme Court as well as this Court on the subject, let us first extract the relevant provisions of the Act, namely, Sections 3 and 4 of the Act. "3. Probhition of Benami Transactions: (1) No person shall enter into any benami transaction. (2) nothing in sub-section (1) shall apply to:- (a) 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; (b) the securities held by a :- (i) Depository as registered owner under sub- section (1) of Section 10 of the Depositories Act,1996; (ii) participant as an agent of a depository. Explanation: The expressy assigned to them in clauses (e) and (g) of sub-Section (1) of Section 2 of the Depositories Act,1996. 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 https://hcservices.ecourts.gov.in/hcservices/ 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 nu 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 co-parcener in Hindu undivided family and the property is held for the benefit of the co- parceners in the family'; (b) Where the person in whose name the property is held in 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 stand in such capacity. 12. A plain reading of Section 3 would make it manifestly clear that the said provision is prospective since it only prohibits future benami transactions. To that extent, there is no contra opinion among the counsel. So far as Section 4 of the Act is concerned, according to the learned counsel for the appellant, it is only prospective, which will govern only the benami transactions, which have taken place after the coming into force of the Act. 13. Admittedly, the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance 1988 (ordinance 2 of 1988) came into b eing on 19.05.1985 and the Benami Transaction (Prohibition) Act 1988 came into being with effect from 05.09.1988 which has repealed the said Ordinance. 14. The question whether Section 4 of the Act is prospective or retrospective came up for consideration on several occasions before the Hon'ble Supreme Court. The earliest one is the case of Mithilelsh Kumari VS Prem Behari reported in (1989) 2 SCC 95 wherein the Hon'ble Supreme Court held that the defence could not be decided after 19.05.1988 even though the plea of benami was raised before 19.05.1988, since Section 4 is retrospective in operation. This view was not found to be correct in another case in R.Rajagopal Reddy (Dead) by Lrs. And others VS Padmini Chandrasekharan (Dead) by L.Rs reported in (1995) 2 Supreme Court Cases 630. This case was decided on 31.1.1995. A Bench of three Hon'ble Judges of the Supreme Court in Rajagopal Reddy's case, while over-ruling the view taken in Mithilelsh Kumari case, held as follows: https://hcservices.ecourts.gov.in/hcservices/ "Before we deal with these six considerations which weighed with the Division Bench for taking the view that Section 4 will apply retrospectively in the sense that it will get telescoped into all pending proceedings, howsoever earlier they might have been filed, if they were pending at different stages in the hierarchy of the proceedings even upto this Court, when Section 4 came into operation, it would be apposite to recapitulate the salient feature of the Act. As seen earlier, the preamble of the Act itself states that it is an Act to prohibit benami transactions and the right to recover property held benami, for matters connected therewith or incidental thereto. Thus, it was enacted to efface the then existing right of the real owners of properties held by others benami. Such an Act was not given any retrospective effect by the legislature. Even when we come to Section4, it is easy to visualise that Sub- Section (1) of Section 4 states that 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 shall lie by or on behalf of a person claiming to be the real owner of such property. As per Section 4(1) no such suit shall thenceforth lie to recover the possession of the property held benami by the defendant. Plaintiff's right to that effect is sought to be taken away and any suit to enforce such a right after coming into operation of Section 4(1) that is 19.5.1988, shall not lie. The legislature in its wisdom has nowhere provided in Section 4(1) that no such suit,claim or action pending on the date when Section 4 came into force shall not be proceeded with and shall stand abated. On the contrary, clear legislative intention is seen from the words "no such claim, suit or action shall lie" meaning thereby no such suit, claim or action shall be permitted to be filed or entertained or admitted to the portals of any court for seeking such a relief after coming into force of Section 4(1). In Collins English Dictionary, 1979 Edition as reprinted subsequently, the word 'lie' has been defined in connection with suits and proceedings. At page 848 of the Dictionary while dealing with Topic No.9 under the definition of term 'lie' it is stated as under: " for an action, claim appeal etc. to subsist; be maintainable or admissible" The word 'lie' in connection with the suit, claim or action is not defined by the Act. If we go by the aforesaid dictionary meaning it would mean that such suit, claim or action to get any property declared benami will not be admitted on behalf of such plaintiff or applicant against the defendant concerned in whose name the property is held on and from the date on which this prohibition against entertaining of such suits comes into force. With respect, the view taken that Section 4 (1) would apply even to such pending suits which were https://hcservices.ecourts.gov.in/hcservices/ already filed and entertained prior to the date when the Section came into force and which has the effect of destroying the then existing right of plaintiff in connection with the suit property cannot be sustained in the face of the clear language of Section 4(1). It has to be visualised that the legislature in its wisdom has not expressly made Section 4 retrospective." 15. Subsequently, the same question arose again for consideration before another Full Bench of three Hon'ble Judges of the Supreme Court in Sankara Hali & Sankara Institute of Philosophy and Culture VS Kishori Lal Goenka and another reported in (1996) 7 Supreme Court Cases 55. This case was decided by the Hon'ble Supreme Court on 06.12.1994. This was reported after reporting of Rajagopal Reddy's case. In Sankara Hali's case, the Hon'ble Supreme Court in paragraph 5 held as follows: "A reading of Section 4 of the Act shows that the real owner is precluded from claiming title to the property against the person holding the same benami either by way of assertion or defence. Under the Act, any transaction entered into prior to the coming into force of the Act, between the ostensible owner and the real owner is not voided by any provision, whatsoever." 16. At this juncture, I may also refer to Section 7 of the Act, which has repealed Sections 81, 82 and 94 of the Indian Trusts Act, 1882. Section 7 of the Act reads as follows: "Repeal of provisions of certain Acts: (1) Sections 81, 82 and 94 of the Indian Trusts Act, 1882 (2 of 1882) Section 66 of the Code of Civil Procedure 1908 (5 of 1908) and Section 281-A of the Income Tax Act 1961 (433 of 1961) are hereby repealed. 2)For the removal of doubts, it is hereby declared that nothing in sub-section (1) shall affect the continued operation of section 281-A of the Income Tax Act, 1961 ( 43 of 1961) in the State of Jammu and Kashmir." 17. Section 82 of the Indian Trusts Act 1982 reads as follows: "Transfer to one for consideration paid by another: 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." 18. As per Section 82 of the Indian Trusts Act, before repealing, transfer to one for consideration paid by another was declared as a valid transaction. Thus, a Benami Transaction was recognised as legal under Section 82 of the Indian Trusts Act. In view https://hcservices.ecourts.gov.in/hcservices/ of the repealing of the said provision with effect from 19.05.1988 by the Benami Transactions (Prohibition) Act 1988 and because of Section 3 of the said Act, there can be no more benami transaction. But, at the same time, Benami transactions which had already taken place before 19.05.1988, have not been declared as void by any of the provisions of the Benami Transactions (Prohibition) Act 1988 Transactions (Prohibition) Act 1988. But a close reading of Section 4 of the Benami Transactions (Prohibition) Act 1988 would only say that after coming into force of the Act, no claim can be made to enforce any right in respect of any property held benami against the person in whose name the property is held. A plain reading of Section 4 would make one to clearly understand that any claim or action alone has been prohibited from being taken on the basis of benami in respect of any property held as benami. Therefore, after coming into force of the Act, either by way of suit, or by way of any claim or by means of written statement, a plea of benami can not be taken. 19. Having analysed such position, the Hon'ble Supreme Court in Rajagopal Reddy's case held that a claim made in respect of the property held in benami already i.e. Prior to coming into force of Section 4 of the Act, can be continued. This is because the benami transactions held already have not been declared as void by any of the provisions of the Act. In a suit where a claim on the basis of benami is made in the written statement filed subsequent to the crucial date i.e.19.05.1988, the same shall not be allowed to sustain. That is what has been made abundantly clear in Rajagopal Reddy's case. In Sankara Hali's case, the facts are distinguishable. In my considered opinion, the said case does not reflect any conflicting view. That was a case where the benami transaction took place in the year 1950. But subsequently, Declaration-cum-Release Deed was executed in the year 1967 by the person who was holding the property in benami, thereby releasing his title in favour of the real owner. In the suit, the main issue was whether the real owner had acquired title and interest under the document of declaration-cum-release deed dated 24.12.1964. The said document was executed long before the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance 1988 came into force. In those circumstances, the Hon'ble Supreme Court held that it was not open to the partnership firm (real owner) to contend that Surender Kumar (binamidar) was merely the ostensible owner and the real owner was the partnership firm. In paragraph 5 of the Judgment, the Hon'ble Supreme Court has held that under the Act, any transaction entered before coming into force of the Act, between the Ostensible owner and the real owner is not void by any provision whatsoever. It is on this principle, the Hon'ble Supreme Court held that the release deed dated 27.04.1967 is not void. Thus, the Hon'ble Supreme Court held that the release of property held benami by the holder in favour of real owner is valid. Thus, the question as to whether Section 4 is prospective or retrospective, came up for consideration only in Rajagopal Reddy case and not in Shanara Hali's case. 20. Shankara Hali's case as well as Rajagopal Reddy's case https://hcservices.ecourts.gov.in/hcservices/ came to be considered by a Division Bench of the Hon'ble Supreme Court in Rebti Devi (Smt) VS Ram Dutt and another reported in (1997) 11 Supreme Court Cases 714. After having analysed both the cases, the Division Bench, in paragraph 13 and 14 has held as follows: " Sankara Hali& Sankara Institute of Philosophy and Culture V Kishori Lal Goenka is by a three-Judge Bench. It was decided before R.Rajagopal Reddy case but is reported later. In a way it took the same view as in Rajagopal Reddy case. It noticed that Sections 3,5 and 8 of the Act came into force at once i.e. On 05.09.1988 and the remaining provisions came into force from 19.05.1988. It was held that the plea of benami was raised before 19.05.1988 and that the objection that the deed of release dated 24.02.1964 by the benamidar in favour of the firm was invalid because of the Act, could not be permitted to be raised after 19.05.1988. In that case, the rent control proceedings started around 1970 and the plea of benami was raised and was also proved by the firm, the real owner, by relying on the release deed dated 24.12.1964 executed by the benamidaar in favour of the firm. The objection that the deed was invalid because of the provisions of the Act was raised after 19.05.1988, relying upon Mithilesh Kumari case which held that the Act was retrospective. That judgment has since been reversed in R.Rajagopal Reddy case. It is clear that the conclusion arrived at in Sankara Hali case can now be easily justified by R.Rajagopal Reddy case overruling Mithilesh Kumari case and on the basis of the principles laid down in the said case. For the aforesaid reasons we hold that the decision in R.Rajagopal Reddy case is not in any manner shaken by anything said in Nand Kishore Mehra Case and that both cases deal with different aspects of the Act as stated above and each of the cases continues to govern different provisions of the Act." (Emphasis applied) 21. Thus the Hon'ble Supreme Court has made it very clear that both the cases deal with different aspects of the Act as stated above, and each of the cases continues to govern different provisions of the Act. Thus, there is no conflict in these two judgments and as held by the Hon'ble Supreme Court in Rebti Devi case, the law laid down in R.Rajagopal Reddy case holds good. Very recently, a Division Bench of the Hon'ble Supreme Court had an occasion to consider the judgment in R.Rajagopal Reddy case in Samittri Devi and another VS Sampuran Singh and another reported in (2011) 3 Supreme Court Cases 556, wherein, it has again followed the law laid down in R.Rajagopal Reddy case. Similar view has been taken by a learned single Judge of this Court in Narayanasamy Gounder and another Vs.K.Sekar reported in 2009(1) CTC 452. Therefore, as has been emphatically held by the Hon'ble Supreme Court, even in respect of a pending suit, the defendant cannot make a claim for suit property on the basis of a https://hcservices.ecourts.gov.in/hcservices/ benami transaction, if he has not already filed a written statement claiming title under a benami transaction before coming into force of Section 4 of the Act. In the case on hand, admittedly, the written statement was filed by the defendants only on 25.03.1992 i.e. long after the coming into force of the Act. In view of the law laid down by the Hon'ble Supreme Court, such claim cannot be allowed. Thus, in my considered opinion, the Courts below were right in dismissing the claim of the defendants and to decree the suit as prayed for. 22. In view of the above conclusion, the other contentious issues as to whether any sale consideration was paid by the plaintiff for the first defendant need not be gone into. 23. In the result, the appeal fails and the same is, accordingly, dismissed. Considering the facts and circumstances of the case, there shall be no order as to costs. Sd/ Deputy Registrar /true copy/ Sub Asst.Registrar pal To 1. The III Additional District Judge, Krishnagiri 2. The Subordinate Judge, Hosur. +1cc to Mr.V.Raghavachari, Advocate Sr 50113 +1cc to Mr.D.Shivakumaran, Advocate Sr 49597 KJI(CO) km/19.9. S.A.No.1573 of 2002 https://hcservices.ecourts.gov.in/hcservices/