Case: M/S FAIR COMMUNICATION AND CONSULTANT Vs. SURENDER KARDILE

is held for the immediate or future benefit, direct or indirect, of the person who has provided the consideration.Benami transactions are forbidden by reason of Section 3; no action lies, nor can any defense in a suit be taken, based on any benami transaction: in terms of Section 4 of the Act. 18. In the opinion of this court, the argument that the plaintiffs plea regarding the real consideration being barred, has no merit. The plaintiff did not claim return of any amount from the buyer; the suit is not based on any plea involving examination of a benami transaction. Besides, the plaintiff is not asserting any claim as benami owner, nor urging a defense that any property or the amount claimed by him is a benami transaction. Therefore, the defendant appellants argument is clearly insubstantial. 19. The relevant provisions of law, i.e. Sections 3 and 4 of the Benami Act, read as follows: Prohibition of benami transactions. 3. (1) No person shall enter into any benami transaction. (2)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. (3) Whoever enters into any benami transaction on and after the date of commencement of the Benami Transactions (Prohibition) Amendment Act, 2016, shall, notwithstanding anything contained in sub-section (2), be punishable in accordance with the provisions contained in Chapter VII.] (4) [***] Prohibition of the right to recover property held benami. 4. (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… 20. In Valliammal (D.) by L.Rs v Subramaniam & Ors. (2004) 7 SCC 233 , this Court held that the onus of establishing that a transaction is benami is upon one who asserts it: 13. This Court in a number of judgments has held that it is well established that burden of proving that a particular sale is benami lies on the person who alleges the transaction to be a benami. The essence of a benami transaction is the intention of the party or parties concerned and often, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him, nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. Refer to Jaydayal Poddar v. Bibi Hazra, Krishnanand Agnihotri v. State of M. P ., Thakur Bhim Singh v. Thakur Kan Singh, Pratap Singh v. Sarojini Devi and Heirs of Vrajlal J. Ganatra v. Heirs of Parshottam S. Shah. It has been held in the judgments referred to above that the question whether a particular sale is a benami or not, is largely one of fact, and for determining the question no absolute formulas or acid test, uniformly applicable in all situations can be laid. After saying so, this Court spelt out the following six circumstances which can be taken as a guide to determine the nature of the transaction : (1) the source from which the purchase money came ; (2) the nature and possession of the property, after the purchase ; (3) motive, if any, for giving the transaction a benami colour ; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar ; (5) the custody of the title deeds after the sale ; and (6) the conduct of the parties concerned in dealing with the property after the sale. (Jaydayal Poddar v. Bibi Hazra1, SCC p 7, para 6). 14. The above indicia are not exhaustive and their efficacy varies according to the facts of each case. Nevertheless, the source from where the purchase money came and the motive why the property was purchased benami are by far the most important tests for determining whether the sale standing in the name of one person, is in reality for the benefit of another. We would examine the present transaction on the touchstone of the above two indicia. *** *** *** 18. It is well-settled that intention of the parties is the essence of the benami transaction and the money must have been provided by the party invoking the doctrine of benami. The evidence shows clearly that the original Plaintiff did not have any justification for purchasing the property in the name of Ramayee Ammal. The reason given by him is not at all acceptable. The source of money is not at all traceable to the Plaintiff. No person named in the plaint or anyone else was examined as a witness. The failure of the Plaintiff to examine the relevant witnesses completely demolishes his case. These observations were reiterated in Binapani Paul vs. Pratima Ghosh & Ors. 2007 (6) SCC 100. 21. In the present case, the appellants did not prove that the transaction (to which they were not parties) was benami; on the contrary, the appellants argument was merely that the transaction could not be said to be for a consideration in excess of Rs 1,30,000/-: in the context of a defense in a suit for money decree. The defendant/appellants never said that the plaintiff or someone other than the purchaser was the real owner; nor was the interest in the property, the subject matter of the recovery suit. Therefore, in the opinion of this court, the conclusions and the findings in the impugned judgment are justified.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]14. What can be gleaned from the above narrative and submissions is that the plaintiff wished to dispose of his property at Indore, where the second defendant, nephew resided and carried on business. Since the parties were related, the plaintiff relied on the defendant and constituted him as his attorney. An agreement to sell was entered into for the sale of the said property (a flat) on 03.07.1989: this fact is not disputed; equally, it is undisputed that the consideration for the flat in terms of this agreement was Rs 2,30,000/-. This was admitted by Sanjay, the defendant in his deposition. It is also not disputed that the original agreement with the purchaser (who ultimately finalized the transaction), is dated i.e. 03.07.1989. A second agreement was entered into on 30.11.1989. However, this showed a lesser consideration of Rs 1,30,000/-. It is also not disputed that Sanjay, the second appellant received Rs 50,000/- from the buyer and handed over that amount to Surendra. Furthermore, on 29.01.1990, Surendra went to Indore at Sanjays behest to conclude the transaction directly with the purchaser, Niranjan Singh Nagra. He also received the amount agreed. Also, there is no dispute that Sanjay wanted Rs 80,000/- and was given it, by his uncle, the plaintiff, Surendra, for the purpose of expansion of his business. This is where the version of the two parties diverges: Sanjay alleged that the amount was returned the next day and that Surendra did not return the post dated cheques issued by him; Surendra alleges that Sanjay in fact never returned the amount. The trial court was persuaded by arguments on behalf of Sanjay and the circumstance that the sum of Rs 80,000/- was deposited in Surendras account on the same day. The High Court, however, took note of the plaintiffs stand, with respect to the real consideration, which was Rs 2,30,000/- as against what was shown in the document, to say that the amount deposited in Surendras account had nothing to do with the money lent to Sanjay15. The defendant/appellants arguments are two-fold: one, that the document on which the High Court returned its findings was a photocopy and was therefore, inadmissible; and two, that the question whether thesale consideration was Rs 2,30,000/- or Rs 1,30,000/- could not have been gone into, since that argument was based on a prohibited transaction, outlawed by the Benami Act16. As far as the first question goes, this court notices that the plaintiff had put the matter, during the course of cross examination, to the appellant/defendant. The latter, unsurprisingly, admitted the document, despite the fact that it was a photocopy. The plaintiff had argued that the original of that document was with the purchaser: this was not denied. Once these were admitted, the plaintiff could not be faulted for seeking a consequential amendment, that was purely formal, to back his argument that there was sufficient money, after lending Rs 80,000/- to the defendant, which was deposited in his account. The appellants argument, in the opinion of this court, is insubstantial: the impugned judgment cannot be faulted on this aspect17. Now as to the second argument by the appellant, which is that the plaintiffs plea that the real consideration for the sale was Rs 2,30,000/- entails returning findings that would uphold a plea based on a benami transaction, this court is of the opinion that the argument is unmerited. Benami is defined by the Act as a transaction(a) where a property is transferred to, or is held by, a person, and the consideration for such property has been provided, or paid by, another person; and(b) the property is held for the immediate or future benefit, direct or indirect, of the person who has provided the considerationBenami transactions are forbidden by reason of Section 3; no action lies, nor can any defense in a suit be taken, based on any benami transaction: in terms of Section 4 of the Act18. In the opinion of this court, the argument that the plaintiffs plea regarding the real consideration being barred, has no merit. The plaintiff did not claim return of any amount from the buyer; the suit is not based on any plea involving examination of a benami transaction. Besides, the plaintiff is not asserting any claim as benami owner, nor urging a defense that any property or the amount claimed by him is a benami transaction. Therefore, the defendant appellants argument is clearly insubstantial21. In the present case, the appellants did not prove that the transaction (to which they were not parties) was benami; on the contrary, the appellants argument was merely that the transaction could not be said to be for a consideration in excess of Rs 1,30,000/-: in the context of a defense in a suit for money decree. The defendant/appellants never said that the plaintiff or someone other than the purchaser was the real owner; nor was the interest in the property, the subject matter of the recovery suit. Therefore, in the opinion of this court, the conclusions and the findings in the impugned judgment are justified.