BY Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High Court
Email id: vpdalmia@vaishlaw.com
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And Aditya Dhar, Advocate
Email: Aditya.dhar@vaishlaw.com
Mobile: +91 9971873110

The Hon'ble Supreme Court of India in a recent judgment dated 9th April 2019, passed in the case of P. Leelavathi (D) by L.R.s vs. V. Shankarnarayana Rao (D) by L.R.s bearing Civil Appeal No. 1099 of 2008, has once again reiterated the requirement of fulfilling the following ingredients to constitute a benami transaction:

  1. the burden of showing that a transfer is a benami transaction lies on the person who asserts that it is such a transaction;
  2. it is proved that the purchase money came from a person other than the person in whose favor the property is transferred, the purchase is prima facie assumed to be for the benefit of the person who supplied the purchase money, unless there is evidence to the contrary;
  3. the true character of the transaction is governed by the intention of the person who has contributed the purchase money and
  4. the question as to what his intention was has to be decided on the basis of the surrounding circumstances, the relationship of the parties, the motives governing their action in bringing about the transaction and their subsequent conduct, etc.

The above mentioned principles were set by the Hon'ble Supreme Court in the case of Jaydayal Poddar v. Bibi Hazra (1974) 1 SCC 3.

The facts leading to the present appeal were that Smt. P. Leelavathi instituted Original Suit No. 1248 of 1980 in the Court of the XIV Additional City Civil Judge at Bangalore against the original Defendants - V. Shankaranarayan Rao and two others for partition and recovery of 1/4th share of the Plaintiff in the plaint scheduled properties. That the original Plaintiff, Smt. P. Leelavathi, and the original Defendants are the sister and brothers and the daughter and sons of Late G. Venkata Rao, who died on 08.10.1974.

One of the issues which was framed by the trial court was

"whether Smt. P. Leelavathi, the original plaintiff, proves that the suit Schedule immovable and movable properties are the self-acquired properties?"

  • The learned trial Court dismissed the suit by holding that the suit Schedule properties are not the self-acquired properties of Late G. Venkata Rao.
  • The original plaintiff preferred an appeal before the Hon'ble High Court of Karnataka at Bangalore against the judgement and decree passed by the learned trial court wherein, the trial court dismissed the suit holding that the suit Schedule properties were not the self-acquired properties of Late G. Venkata Rao, and they were the properties of Defendant Nos. 1 to 3. The Hon'ble High Court vide judgment and order dated 26.02.1999 set aside the judgment and decree passed by the learned trial Court holding that although the properties were in the names of the original Defendants, the transactions, in question, were benami in nature and in that view of the matter, the Plaintiff had inherited 1/4th share therein.
  • Thereafter, the legal representatives of original defendants filed a civil appeal before the Hon'ble Supreme Court against the order of the Hon'ble High Court. The Hon'ble Supreme Court allowed the appeal and remitted the matter back to the Hon'ble High Court and observed that the High Court has not properly appreciated and/or considered whether the transaction in question is benami or not.
  • On remand, the Hon'ble High Court dismissed the appeal confirming the judgment and decree passed by the learned trial Court, by specifically observing that the purchase/transaction in favour of Defendant Nos. 1 to 3 with respect to the suit Schedule properties were not benami transactions and they were the self-acquired properties of Defendant Nos. 1 to 3 and, therefore, the Plaintiff is not entitled to any share in the suit Schedule properties.
  • Thereafter, the original plaintiff preferred a civil appeal against the order of the Hon'ble High Court which is the subject matter of this article. The short question, as observed by the Hon'ble Supreme Court, in the said civil appeal was:
    • "whether in the facts and circumstances of the case and merely because some financial assistance has been given by the father to the sons to purchase the properties, can the transactions be said to be benami in nature?"

While considering the aforementioned question the Hon'ble Supreme Court referred to the following cases:

  1. Thakur Bhim Singh vs. Thakur Kan Singh (1980)3 SCC 72
    (it was observed and held by the Hon'ble Supreme Court that while considering a particular transaction as benami, the intention of the person who contributed the purchase money is determinative of the nature of transaction. It was further observed by the Hon'ble Supreme Court as to what the intention of the person who contributed the purchase money, has to be decided on the basis of the surrounding circumstance; the relationship of the parties; the motives governing their action in bringing about the transaction and their subsequent conduct etc.)
  2. Jaydayal Poddar v. Bibi Hazra (1974) 1 SCC 3
    (the principles already discussed above)
  3. Binapani Paul v. Pratima Ghosh (2007) 6 SCC 100
    (source of money had never been the sole consideration)

After applying the law laid down by this Court in the aforesaid decisions, the Hon'ble Supreme Court observed that:

  1. the Hon'ble High Court has rightly come to the conclusion that the Plaintiff has failed to prove that the purchase of the suit properties in the names of Defendant Nos. 1 to 3 were benami in nature.
  2. merely because at the time of purchase of the suit properties, some financial assistance was given by Late G. Venkata Rao, father of the plaintiff, the same cannot be the sole determinative factor/circumstance to hold the transaction as benami in nature.
  3. plaintiff has miserably failed to establish and prove the intention of the father to purchase the suit properties for and on behalf of the family, which were purchased in the names of Defendant Nos. 1 to 3.
  4. financial assistance was also given to the Plaintiff and her husband to purchase the residential house at Bangalore. Late G. Venkata Rao, therefore, provided a shelter to his daughter and, as observed herein above, also gave the financial assistance to purchase the residential house at Bangalore. Late G. Venkata Rao even purchased the share certificates and his daughter-original Plaintiff was also given certain number of shares.
  5. considering the aforesaid facts and circumstances of the case, Late G. Venkata Rao also must have given financial assistance to Defendant Nos. 1 to 3 - sons and helped them in purchase of the properties.

Conclusion:

  1. The Hon'ble Supreme Court observed that the intention of Late G. Venkata Rao to give financial assistance to purchase the properties in the names of Defendant Nos. 1 to 3 cannot be said to be to purchase the properties for himself and/or his family members and, therefore, as rightly observed by the High Court, the transactions of purchase of the suit properties in the names of the Defendant Nos. 1 to 3 cannot be said to be benami in nature.
  2. The intention of Late G. Venkata Rao was to provide financial assistance for the welfare of his sons and not beyond that.
  3. None of the other ingredients to establish the transactions as benami transactions, as held by this Court in the aforesaid decisions, are satisfied, except that some financial assistance was provided by Late G. Venkata Rao.
  4. The purchase of the suit properties in the names of Defendant Nos. 1 to 3 cannot be said to be benami transactions.
  5. The Plaintiff has no right to claim 1/4th share in the suit properties which were purchased by the sons in their names by separate sale deeds.

In view of above, the Hon'ble Supreme Court dismissed the said appeal filed by the plaintiff.

The judgment can be accessed from:

https://sci.gov.in/supremecourt/2008/1432/1432_2008_Judgement_09-Apr-2019.pdf

The above mentioned judgment has also been referred in the case of Mangathai Ammal (Died) through L.Rs. and Ors. vs. Rajeswari and Ors. by the Hon'ble Supreme Court in the judgment dated 9th May 2019. The said judgment can be accessed from:

https://sci.gov.in/supremecourt/2016/23345/23345_2016_Judgement_09-May-2019.pdf

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