Holding

The burden of proving a benami transaction rests on the party asserting it, and although a rebuttable presumption arises when purchase money is supplied by another, the appellants failed to establish title or possession, leading to dismissal of the appeal.

Summary

The heirs of Vrajlal J. Ganatra filed a suit seeking a declaration that they were the real owners of a property despite a sale deed showing Parshottam S. Shah as the vendee, alleging the deed was a security for a loan and that the land would be reconveyed upon repayment. The trial court dismissed the suit for lack of proof of title and possession, and the Gujarat High Court affirmed the dismissal, also holding the suit barred by limitation and not addressing possession. On appeal, the Supreme Court examined whether the transaction was benami, the burden of proof for such a claim, and the relevance of possession when title is not established. It held that the burden of proving a benami transaction lies on the party asserting it, and that a factual presumption arises when purchase money comes from someone other than the ostensible owner, though this presumption is rebuttable. Finding that the appellants failed to prove their title and possession, the Court dismissed the appeal, confirming the lower courts' findings.

Issues considered

The burden of proof in establishing a benami transaction
Whether a factual presumption of benami arises when purchase money is supplied by a person other than the recorded owner
The applicability of Section 4(1) of the Benami Transactions (Prohibition) Act, 1988 to the suit
The necessity of deciding the question of possession when title is not upheld
Whether the suit is barred by limitation

Legislation cited

Benami Transactions (Prohibition) Act, 1988s. 4(1)

Subjects

benami transactionburden of proofpresumptiontitle to propertypossessionlimitation periodCivil Procedure Codereal ownersale deed

Judgment

HEIRS OF VRAJLAL J. GANATRA A
v.
HEIRS OF PARSHOTTAM S. SHAH

APRIL 30, 1996

[MADAN MOHAN PUNCHHI AND K.T. THOMAS, JJ.] B

Civil Procedure Code, 1908-Suit for possession-By real owner from
an ostensible owner-On the basis of benami transaction-Held, the burden
of proof is 011 the person who asserts it.

The Appellants filed a suit in the Civil Court for a declaration that
c
the suit property, belonged to them and not to the defendants though the
name of defendant was shown in the sale deed. That suit was for a
declaration and consequential injunction restraining the defendants from
disturbing the possession. The Plaintiffs contended that he was the real
owner though the defendant's name was show in the sale deed, that the D
plaintiff was a dealer in land transactions and the defendant was a money
lender,. that the plaintiff borrowed money from the defendant for purchase
or prQ:i>erties on an understanding that on clearance of loan the property
woul.d be reconveyed. The Plaintiff also contended that on earlier occasion
the defendant had taken the property in this name and reconveyed the E
same after clearance of loan by the plaintiff. The suit was filed in 1981.
The trial court dismissed the suit and held that the plaintiff has failed to
prove that he was the real owner and that he had failed to establish that
he was in possession of the suit property.

The Appeal preferred by the Plaintiff was dismissed by the High F
Court and the findings of the trial court were affirmed. The High Court
held that the suit was time barred and that the intention when the sale
deed was taken was nothing other than making the defendant owner of the
property although it might have been thought that that if the plaintiff
would pay the amount which defendant had shelled out,.the property would G
be reconveyed to the plaintiff. The High Court did not go into the question
of possession.

Before this court it was contended by the heirs of the plaintiff that
on earlier occasion there were similar dealings between the parties and it
. has an impact on the crucial question relating to the present transaction; H
67
68 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A that the High Court failed to decide the question of possession of land;
and that in fact the land was in the possession of the plaintiff and
continues to be in the possession of the appellants.

Dismissing the Appeal tlh Court

B HELD: 1. The burden of proof on a question whether the transaction
is a benami transaction depends on the person who asserts it. If it is
proved that the purchase money came from a person other than the
ostensible owner there can be a factual presumption that the purchase was
for the benefit of the person who supplied purchase money. This is of
C course a rebuttable presumption. [70-E-G]

=
Mithilesh Kumari v. Prem Bihari Khare, [1989] SCR 621 JT (1989)
l SC 275; R. Rajagopal Reddy (D) by Lrs. & Ors. v. Padmini Chandra
Sekaran (D) by Lrs., JT (1995) 2 SC 667; Bhim Singh (D) by Lrs. and another
v. Kan Singh, AIR (1980) SC, 727; Controller of Estate Duties, Lucknow v.
D Alike Mitra, AIR (1981) SC 102 and His Highness Maharaja Pratap Singh v.
Her Highness Maharani Sarojini Devi, [1994] Suppl. (1) SCC 734, referred
to.

2. The document riled upon by the appellants contains a clear recital
that the land would remain with the defendant as security for the amount
E advanced by him and when plaintiff paid back all the amounts outstanding
from him, the defendants would give back the property and execute a
registered deed for that purpose. If this was the safeguard adopted by the
the plaintiff relating the another sale transaction which took took place
just one year prior to the relevant transaction, the fact that such a
F safeguard was not adopted in the present case is sufficient to suggest that
the intention was otherwise. [71-D-E]

3. As the plaintiff claim possession only as the true owner of the land,
it is not necessary to consider the question of possession separately unless
his title was upheld by the court. The presumption is that the possession
G would follow title. That presumption is stronger in this case as it is noted
that the property remained as a bare land. No particular act of possession
could normally be pointed to establish possessio.1. Non-consideration of
the question of possession in such a situation is inconsequential though it
is agreed that the plaintiff had failed to establish his possession on the
H land. [72-B-D]
VRAJLALJ. GANA1RA v. PARSHOTIAMS.SHAH[THOMAS,J.] 69

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9884 of A
-,• 1995.
::ic:t
From the Judgment and Order dated 2.8.95 of the Gujarat High
Court in P.A. No. 838 of 1990.

Vinod Bobde, Ranjit Kumar, P.M. Karia and H.A. Raichura for the B
Appellants.

P.S. Poti, Manoj Pillai and Ms. Malini Poduval for the Respondent
No. 1/1, 1!2 and 1}3.

P.H. Parekh and Arvind K. Sharma for the Respondent No. 2. c
The Judgment of the Court was delivered by

THOMAS, J. Legal heirs of a plaintiff (Vrajlal J. Ganatra) who
suffered defeat both at the original side as well as at the appellate stage
(High Court of Gujarat) have filed this appeal by special leave. Defendant D
in th_e suit (Parshottam S. Shah) is now being substituted by his legal heirs.
The suit relates to a property covered by Ext. 66 sale-deed dated December
16, 1963. It was claimed to be the property of the plaintiff even though the
defendant was shown in the document as the vendee. Suit was filed in 1981
for declaration of plaintiffs title to the suit property and also for an
E
injunction for restraining the defendant from disturbing the possession of
the plaintiff. Trial court while dismissing the suit held that plaintiff failed
to prove his title that he was the real owner of the property and that
plaintiff failed to establish that he was in possession of it on the date of
suit. High Court concurred with the finding of the trial court regarding title
but did not proceed to consider the other issue regarding possession. F
However, the High Court further held that suit had been barred by
limitation.

The case of the plaintiff, in short, in this : Defendant was a money-
lender and plaintiff was a dealer in land transactions. Plaintiff had bar-
rowed money from the defendant for purchasing lands and he had taken G
,.,.,. sale-deed in the name of the defendant as security to the loan amounts
advanced and that on clearance of loan amount defendant would reconvey
the land concerned. In the case of Ext. 66 sale-deed also, according to the
plaintiff, the same pattern was followed as defendant advanced a sum of
Rs. 13,000 (Rupees thirteen thousand only) to the plaintiff for buying the H
70 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A land and so it was incumbent on the defendant to reconvey the property.
As the expression "real owner" used in the case tends to create some
confusion, we would prefer to refer to the plaintiff as claimant and the
defendant as "the recorded owner" (or ostensible owner). The High Court
held that the intention when the sale-deed was taken, was nothing other
B than making the defendant owner of the property although it might have
been thotight that if plaintiff would pay the amount which defendant had
shelled out the property would be reconveyed to the plaintiff.

We may mention here itself that no contention has been advanced
C before the High Court that the suit is not maintainable in view of Section
4(1) of the Benami Transactions (Prohibition) Act, 1988. By the time the
High Court delivered the impugned judgment, the legal position which
emerged by virtue of the decision of this Court in Mithilesh Kumari v. Prem
Bihari Khare, [1989] 1 SCR 621 : JT 1989 (1) SC 275, to the effect that
Section 4(1) of the said Act can apply to the suit filed even prior to the
D coming into force of the said Act stood over-ruled by the decision of a
larger Bench of this Court in R. Rajagoapl Reddy (D) by Lrs. and Others v.
Padmini Chandrasekharan (D) by Lrs., JT (1995) 2 SC 667, as provisions
of the Act have been held to be prospective only the sale-deed in this case
being of the year 1963 remains unaffected by the said Act.
E The question whether a particular sale is benami or not is largely one
of fact. Though there is no formula or acid test uniformly applicable it is
well neigh settled that the question depends predominantly upon the
intention of the person who paid the purchase money. For this, the burden
of proof is on the person who asserts that it is a benami transaction.
F However, if it is proved that the purchase money came from a person other
than the recorded owner (ostensible owner) there can be a factual
presumption at least in certain cases, depending on facts, that the purchase
was for the benefit of the person who supplied purchase money. This is,
of course, a rebuttable presumption Bhim Singh (D) by Lrs. and Another
G v. Kan Singh, AlR (1980) SC 727; Controller of Estate Duties, Lucknow v.
Aloke Mitra, AIR (1981) SC 102, His Highness Maharaja Pratap Singh v.
Her Highness Maharani Sarojini Devi, [1994] Supple. 1 SCC 734.

In this case, as it is admitted that defendant is the recorded owner
and when purchase money had not admittedly gone from the appellant for
H execution of the sale-deed of 1963, it is an uphill task for the appellant to
VRAJLALJ.GANATRA v. PARSHOTIAMS.SHAH[THOMAS,J.] 71

-
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establish that the sale-deed was taken benami for him. Of course, appellant A
had projected certain circumstances to show that he was dealing in lands
for which defendant had advanced money to him.

Learned counsel for the appellant tried to draw support from Ext.
79 sale-deed dated 22.2.1962, which is a deed executed by another person
in favour of the defendant. There is no dispute that the purchase money B
for that transaction was advanced by the defendant and the deed was
executed in the name of the defendant. It was an admitted case that
defendant in that transaction was a benamidar. Learned counsel for the
· appellants, therefore, contended that Ext. 79 n"t only shows that there were
similar dealings between the parties even earlier but it has a perceptible c
impact on the crucial question relating to the transaction involved in Ext.
66 sale-deed.

But Ext. 79, far from helping the appellants, would help the respon-
dents because the document contained a clear recital that the land would
remain with the defendant as security for the advanced by him and when D
plaintiff paid back all the amount outstanding from him, the defendant
would give back the property and execute a registered deed for that
purpose. If this was the safeguard adopted by the plaintiff relating to
another sale transaction which took place just one year prior to Ext. 66,
the fact that such a safeguard was not adopted in the case of Ext. 66 is E
sufficient to suggest that the intention was otherwise.

Ext. 163 is a letter sent by the plaintiff to the defendant on 8.6.1968.
It mentioned about certain dealings as between them and plaintiff had
acknowledged a balance of Rs 17,000 as remaining outstanding with the
defendant. Plaintiff then said in the letter that since the suit property was F
sold to the defendant plaintiff had no more concern about it. The following
sentences in the letter are important. 11 From now onwards nothing remains
outstanding between us and the account between us stands cleared off. This
decision is agreed upon by both of us and it is finally settled by mutual
consent." Of Course, plaintiff had disowned the said document but the trial
G
~,
court and the High Court have found it proved. Further, plaintiff had
admitted his signature therein.

Though reliance was sought to be placed on Ext. 160 letter sent by
defendant to the plaintiff on 23.12.1975, it is of no avail to the appellants.
It is unnecessary for us to go into the other documents referred to by the H
72 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A counsel as none of them helps the appellants to establish that defendant
ever entertained the idea that property should belong lo the plaintiff.

Learned counsel pointed out that the High Court has failed to decide
lhe question of possession of land and contended that in fact the land was
-
in the possession of the plaintiff and continues to be in the possession of
B the appellants. Trial court found that plaintiff had failed to prove that the
;:iroperty was in his possession. High Court would have considered it
superfluous to go into the question of possession. As the plaintiff claimed
possession only as the true owner of the land, it is not nl!c.:e.ssary to consider
the question of possession separately unless his title was upheld by the
C Court. The resumption is that possession would follow title. That presump-
tion is stronger in this c.:ast; as we noted that the property remained as a
bare land. No particular act of possession could normally be pointed to
establish possessiou. Non-consideration of the question of possession in
such a situation is inconsequential though we are in agreement with the
finding that plaintiff had failed to establish his possession on the land.
D
We, therefore, dismiss this appeal. No costs

V.M. Appeal dismissed.