Case: Canbank Financial Services Vs. Custodian


Decision reasoning: 1[ds]Furthermore, the doctrine of resulting trust was applicable in India even before the Indian Trusts Act came into force. (See Mussumat Ameeronnissa Khanum and Mussumat Parbutty (supra). We, therefore, are of the opinion that the Respondent No.2 had a transferable interest in the CANCIGOs.We have noticed hereinbefore that in a case of this nature a beneficial interest is created within the meaning of the provisions of Section 88 of the Indian Trusts Act in view of the fact that the Respondent Nos. 3 and 4 have applied the money of the Respondent No.2 for allotment of CANCIGO in their own names and applied for allotment of the certificates on behalf of the Respondent No.2 and not on their own behalves. It is, therefore, not a case where the transaction was benami in nature. It does not appear also to be a case where the parties entered into a transaction with a view to contravene any law. It is also not a case where any amount belonging to a bank has been utilized by a customer. The Respondent Nos. 3 and 4 have not claimed any right, title and interest in CANCIGOs. In view of the aforementioned circumstances, provisions of the Benami Transactions Act would have no any applicationNos. 3 and 4 by reason of the said transaction held themselves to be the trustees of Respondent No.2 in relation to the securities in question. They applied for allotment for the benefit of Respondent No.2. They never enforced any claim in relation to the said securities in a court of law and, in fact, disclaimed any right, title or interest therein. Possession of the securities which are movable properties has been handed over to them. No statutory provision has been brought to our notice forbidding such transfer. The Respondent Nos. 3 and 4, therefore, were not statutorily prevented from entering into such a transaction.The Appellant, in our opinion, had also the requisite locus to maintain its application before the Special Court with a view to show that it having an interest in the CANCIGOS, the same is beyond the purview of purported automatic attachment, under Section 3(3) of the Act and consequently neither the custodian derived any right to deal therewith nor the special court could issue any direction in relation thereto. In any event having regard to the provision contained in Section 9A of the Act, all claims relating to the properties which are claimed to have been statutorily attached must be adjudicated by the Special Court only. The claim petition of the Appellant was, thus,stand of the custodian, in this behalf, is inconsistent and self-contradictory. If by reason of the embargo placed on transfer of any CANCIGO, the right remains vested in the Respondent Nos. 3 and 4, the question of the same being subject to attachment would not arise. However, if, according to the custodian, right, title and interest in the CANCIGOS vested in the Respondent No.2, he being a third party can transfer his interest, as he was not bound by the rules for allotment. On the one hand, it is contended that the Respondent Nos. 3 and 4 were bound by the conditions imposed by Canbank Mutual Fund and on the other a contention was raised that they were benamidars. Both cannot stand together. Similarly, a contention has been raised that the condition contained in Note No.4 of the Credit Sheet is an absolute restraint on alienation, but at the same time it is contended that even the third party cannot transfer his interest (if he has any) in favour of another although a transfer can be given effect to after the expiry of the lock-in period.94. Furthermore, in a case of this nature, the Respondent No.2 did not hold any personal interest which would come within the purview of Section 6(d) of the Act. In interest in the CANCIGOS was not created in the Respondent No.2 for enjoyment in his personal capacity. Section 6(d) of the Transfer of Property Act would apply when a transfer is in violation of such stipulation which would defeat the object thereof. The learned Special Judge, therefore, committed an error in invoking Section 6(d) of the Transfer of PropertyAppellant having paid a consideration of Rs.33 crores in relation to the CANCIGOS in question had a just right to possess the same to the exclusion of the Respondent No.2 and in that view of the matter too the Special Court could not have directed the Appellant to hand over the same to the Custodian. The said direction in unsustainable inare here not concerned with the right of a party to take recourse to a remedy but are concerned with a right of a party to possess the property over which it has a lawful title. In such a situation, Benami Transactions Act will have no application in allocation of shares as the same would not come within the purview of transaction relating to a transfer of property. Transfer of CANCIGO in favour of the Appellant was, thus, valid and legal as by reason of the transfer of possession of the CANCIGOS by respondent No.2. in favour of the Appellant, a valid right has been created therein, the same could not have been attached in terms of Section 3(3) of the said Act.100. The Custodian thought it expedient not to invoke the provisions of Sub-section (2) of Section 4 of the said Act. He was at liberty to do so. Even now he is free to do so, if so advised.Conclusion:101. For the reasons aforementioned, the impugned judgment cannot be sustained which is set aside accordingly. These appeals are allowed. In the facts and circumstances of this case, however, there shall be no order as to