Holding

The Benami Transactions (Prohibition) Act, 1988 does not apply to a suit filed before its commencement, but the lower courts were correct in finding the respondent as the owner of the properties on the basis of the evidence, so the appeal is dismissed.

Summary

The suit for possession was filed by Dharam Pal (Respondent No.1) asserting ownership of two properties. The defendants, Vijay Kumar & Anr., contended that the properties were bought benami in Dharam Pal's name and that Section 4 of the Benami Transactions (Prohibition) Act, 1988 barred their defence. The trial court, the first appellate court and the High Court held that Dharam Pal was the owner based on sale deeds, municipal records, tax receipts and an agreement (Exhibit PW3/3), and dismissed the benami plea, applying the Act retrospectively. The Supreme Court held that the Act could not be applied to a suit filed on 5 January 1987 because it came into force on 5 September 1988, but nonetheless affirmed the lower courts' finding of ownership on the strength of the evidence. Accordingly, the appeal was dismissed with no order as to costs.

Issues considered

Whether the Benami Transactions (Prohibition) Act, 1988 applies retrospectively to a suit filed before its commencement.
Whether the defendants' benami plea is maintainable under Section 4 of the Act.
Whether the respondent No.1 is the rightful owner of the suit properties based on documentary and oral evidence.

Legislation cited

Benami Transactions (Prohibition) Act, 1988s. 4

Subjects

possessionbenami transactionretrospective legislationproperty ownershipcivil suitevidenceIndian property law

Judgment

[2009) 2 S.C.R. 1

VIJAY KUMAR & ANR. A
v
DHARAM PAL & ORS.
Civil Appeal No. 854 Of 2009
FEBRUARY 10, 2009
B
[ALTAMAS KABIR AND CYRIAC JOSEPH, JJ.]
Possession - Suit for possession - Plea of defendants
that the property in question was purchased benami in the
+ name of plaintiff and the defendants themselves were the real
owners - Trial Court negated the plea of benami on ground . C
that such plea was not available after enactment of the Act,
and upon considering the evidence led by the parties, came
to a finding that the plaintiff owned the suit property and de-
creed the suit - Order upheld by First Appellate Court and 1 1
High Court - Held: The Courts below erred in applying the D
provisions of the Act to the suit, since it had been filed prior to
coming into effect of the Act - Howev,.er, de hors the question
of applicability of the Act, the Courts below were right in hold-
ing that the plaintiff was owner of the suit property in view of the
evidence adduced by him - Appeal accordingly dismissed .:. :. E
Benami Transactions (Prohibition) Act, 1988 - s.4 - Applica-
bility of.,

Respondent no.1 filed suit for possession contend-
ing that he had purchased the property in question and
owned it. Appellants claimed that .the property was pur- F
chased benami in the name of respondent no.1 and the
appellants themselves were the real owners. Trial Court
negated the plea of benami on the ground that such plea
was not available after enactment of the Benami Transac-
tions (Prevention) Act, 1988, and upon considering the G
evidence led by the parties, came to a finding that respon-
dent no.1 owned the suit property and decreed the suit.
The order was upheld by both the First Appellate Court.
and the High C<?urt. Hence the present appeal.
1 H
2 SUPREME COURT REPORTS [2009] 2 S.C.R.

A Dismissing the appeal, the Court
HELD:1.1. Since the point regarding the applicabil- t- '

ity of the Benami Transactions (Prohibition~ Act, 1988, to
the suit has been conceded on behalf of the respondent
No.1 in favour of the appellants, the same need not de-
B
tain this Court, except to state that the trial Court, the first
appellate Court and the High Court had erred in applying
the provisions of the Act to the suit, since it had been filed
prior to the coming into effect of the Act. [Para 16] [ 7- E]
-+
c 1.2. However, de hors the question of the applicabil-
ity of the Benami Transactions (Prohibition) Act, 1988, the
Courts below had rightly held that the- respondent No.1
)
was the owner of the suit properties relying on the docu-
mentary and oral evidepce adduced by him, including an
D agreement (Exhibit PW3/3) executed by the appellants and
th.e respondent no.1 which was proved as mentioned in
t
the judgment of the trial Court. [Para 17] [ 7-G, H]
1.3. Consequently, even while holding that the Courts
below, including the High Court, had erred in applying the
E
provisions of the Act to the suit of the respondent No.1,
the appeal must fail on the ground that in addition to the ·-·
above, the Courts had found the respondent No.1 to be
the owner of the suit properties on the basis of the evi-
i
dence adduced by him, which finding was not disturbed
F
by any. of the Courts below. [Para 18] [ 8-A, B ]
R. Rajagopal Reddy (dead) by L.Rs. & Ors. v. Padmini
Chandrasekharan (dead) by L.Rs. AIR (1996) SC 238 - re-
ferred to.
G
Case Law Reference
~
AIR (1996) SC 238 referred to Para 13
....
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 854
of 2009
H
VIJAY KUMAR & ANR. V DHARAM PAL & ORS. 3
~

-'I From the final Judgement and Order dated 3.5.2006 of A
the High Court of Punjab and Haryana at Chandigarh in R.S.A.
No. 244 of 1998

R.K. Dhawan, Rahul Gaur, M.A. Chinnasamy, Preetam
Shah and Kishan Kumar, for the Appellant.
B
Dhruv Mehta, Yashraj Singh Deora, Mohit Abraham and
T.S. Sataush (for M/s. K.L. Mehta & Co.}, for the Respondent.
+ The Judgement of the Court was delivered by

ALTAMAS KABIR,J. c
1. Leave granted.

2. This appeal has been listed after notice had been served
on the Respondent No.1 and learned counsel has entered ap-
pearance and has filed counter affidavit on his behalf. D
1
3. One Dharam Pal, Respondent No.1 herein, filed a suit
for possession by claiming that he had purchased two proper-
ties situated at Nakodar by two conveyances dated 24th April,
1
1959 and 12 h June, 1959. It is his further case that having raised
E
constructions in the said properties after obtaining sanction from
the Municipality and having recorded his name in the House
Tax Records as an assessee of the local body, he proceeded
to the United Kingdom in 1964 and at the time of leaving, he
had handed over possession of the said properties to his fa-
F
ther, who was living along with his other sori, Mr. Ram Aggarwal.
Subsequently, the father of the Respondent No.1 also left for
England and died there in 1970. The brother of the Respondent
No.1/plaintiff, Mr. Ram Aggarwal, thereafter started a business
in the said premises under the name and style of Vijay Agen-
,l
G
cies and remained in possession thereof as licencees of the
Respondent No.1. On being asked to hand over possession of
the suit properties by the Respondent No.1, Mr. Ram Aggarwal,
refused to do so, which resulted in the filing of the civil suit, after
revocation of the licence. H
4 SUPREME COURT REPORTS [2009] 2 S.C.R.

A 4. The claim of the Respondent No.1 was denied by the
·-
·-- defendant/appellant, Mr. Ram Aggarwal, who claimed that an
old shop had been purchased by a sale deed dated 24th April,
1959 in the name of the Respondent No.1 on account of their
love and affection for him. Similarly, a second shop was also
' . th
B purchased by them on 12 June, 1959, in the name of the Re-
spondent No.1 on the same ground. The claim of the appellants
is that they had subsequently demolished the old structure and
had raised the new structure, of which they were in possession
and were, in fact, the real and ostensible owners. It was also
c ·asserted by the appellants that a large sum of money had been
spent by them on the new constructions and that they had been
depositing local taxes in respect thereof, though the bills were
issued in the name of the Respondent No.I whose name was
recorded in the local records as the owner thereof. It was also
admitted by the appellants that the electric connection and wa-: ·
0
ter connection were in the name of the Respondent No.1. In thi.s
context a plea of benami was raised by the appellants which
was negated by the trial Court on the ground that such plea was
not available after the enactment of the Benami Transactions
(Prevention) Act, 1988, which had been held to have retrospec-
E ·· tive effect.
5. Considering the case made out by the respective par-
ties and the evidence led by them, the Trial Court upon holding
that the Respondent No.1 was the owner of the suit properties,
F decreed the suit in favour of the Respondent No.1 by a judg-
th
ment and decree dated 9 August; 1991. The appeal preferred
by the appellants from the said judgment and dec~ee was dis-
missed by the lower Appellate Court by its judgment dated 5th
September, 1997, confirming the reasoning of the trial Court,
G which gave rise to a second appeal filed before the High Court.
Having regard to the fact that both the sale deeds were in the
· name of the Respon_9ent No.1, but the appellants claimed that
the properties had been purchased benami in the name of the
Respondent No.1 and the appellants were the real owners
H 'thereof, the question of ownership was remanded to the First
VIJAY KUMAR & ANR. \/; DHARAM PAL & ORS. 5
[ALTAMAS KABIR,J.]

Appellate Court. Upon reconsideration of the evidence, the First A
-1,
Appellate Court re-affirmed its earlier decision holding the Re-
spondent No. 1 to be the owner of the property.
6. The appellants filed a fresh Second Appeal against the
order of the First Appellate Court which was again dismissed
B
by the High Court upon holding tha,t in view of the specific bar
· under Section 4 of the Benami Transactions (Prohibition) Act,
1988, the appellants could not take up the plea of the proper-
~ ties being benami.
~ 7. The present appeal is directed against the judgment of c
the High Court dismissing the appellants' Second Appeal.
8. The Second Appeal was once again dismissed by the
High Court on the ground that the defence taken in the suit by
the defendants was barred in view of Section 4 of the Benami
D
Transactions (Prohibition) Act, 1988 which had come into force.
i
The High Court held that since the aforesaid Act and its provi-
sions were retrospective, the appellants were not entitled to take
the plea that the properties were benami in character in view q.f
such specific bar.
E
9. The High Court also took notice of Exhibit PW3/3 which
was signed by Mr. Ram Aggarwal and the Respondent No.1. In
the said document, the appellants had admitted the ownership
of the Respondent No.1 over the disputed properties and had
agreed to transfer some properties in Chandigarh to the Re"'" F
spondent No.1 in lieu of the shops in question. In the course of
his deposition in the Trial Court, Mr. Ram Aggarwal admitted
his signatures on Exhibit PW3/3 and it was further observed
that the said agreement was presumably as a consequence of
the notice issued by the Respondent No.1 on 30th August, 1986 G
/I
(Exhibit PW3).

10. The High Court came to a finding that there could be
no escape from the conclusion that the Respondent No.1 was
the owner of the suit properties and that the appellants had been
H
6 SUPREME COURT REPORTS [2009] 2 S.C.R.

A permitted to use the same as licencees when the Respondent
No.1 had gone abroad.
11. In view of the aforesaid finding, the High Court dis- .
missed the Second appeal, which had been filed by the defen-
B dants who are the appellants herein.
, 12. Mr. R.K. Dhawan, learned Counsel, who appeared for
the appellants, submitted that the High Court had erroneou~ly
held that the provisions of the Benami Transactions (Prohibi-
tion) Act, 1988, had been given retrospective effect and would,
c therefore, apply to the instant case. He urged that since the suit
had been filed on 5.1.87 and the Act had come into force .there-
after on 5.9.1988, the same would have no application to the
suit and the parties were entitled to prove their ownership of the
suit properties on leading evidence, such as payment of rates
o and taxes, in support thereof. Mr. Dhawan submitted that the
very fact that the Respondent No.1 herein had not taken any
steps to claim title over the properties iri question for about 30
years, clearly indicated that the suit had been filed as an after-
thought and with the intention of tR,king a chance to take pos-
E . session of the suit properties.
13. In support of his submission that the bar of Section 4
of the Benami Transactions Act would not apply retrospectively,
Mr. Dhawan referred to and relied on the decision of a Three
Judge Bench of this Court in the case of R. Rajagopal Reddy
F - (dead) by L.Rs. & Ors. Vs. Padmini Chandrasekharan (dead)
by L.Rs. [AIR 1996 SC 238], wherein the same proposition was
considered.and accepted. Mr. Dhawan submitted that the High
· Court had committed a serious error in applying the provisions
of the above Act and also relying on the Agreement (Exhibit PW
G 3/3), whi.ch was said to have been executed by Mr. Ram
Aggarwal and Dharam Pal. It was submitted that the judgment
and order of the High Court was not sustainable and was liable
to be set aside.

H · 14. On behalf of Respondent No.1, it was conceded by
-- ....
VIJAYKUMAR & ANR. V. DHARAM PAL & ORS. 7
[AlTAMAS KABIR,J.]

Mr. Dhruv Mehta, learned Advocate, that since the suit had been A
filed on 5th January, 1987 and the Benami Trarn~actions (Prohi-
bition) Act, 1988, came into force subsequently on 5th Septem-
ber, 1988, the provisions of the Act would have no application
to the suit.
B
15. Mr. Mehta urged that even if the bar of Section 4 of the
1988 Act was not available in the instant case, the Respondent
No.1 had been able to prove his ownership of the suit proper-
+ ties on the basis of the evidence-adduced by him. Mr. Mehta
submitted that once Exhibit PW3/3, which contained an ad mis-
sion of Ram Aggarwal acknowledging the ownership of the
c
Respondent No.1 in the suit premises, was accepted, the courts
below had rightly relied on the same along with other documents
such as Municipal records, the receipts, electric and water con-
nection in support thereof in holding that the Respondent No.1
was the owner of the suit properties and decreeing the suit of D
i
\
the Respondent No.1 and dismissing the appeal preferred by
the appellants.
16. Of the two points urged by Mr, Dhawan, since the first
'-
point regarding the applicability of the Benami Transactions E
.... (Prohibition) Act, 1988, to the suit has been conceded on be-
half of the Respondent No.1 in favour of the-appellants, the same
need not detain us, except to state that the trial Court, the first
appellate Court and the High Court had erred in applying the
provisions of the Act to the suit, since it had been filed prior to F
the coming into effect of the Act.

17. However, on the second question, we are inclined to
agree with Mr. Mehta that de hors the question of the applica-
bility of the Benami Transactions (Prohibition) Act, 1988, the
Courts below had rightly held that the Respondent No.1 was the G
----( ~

, owner of the suit properties relying on the documentary and oral
' evidence adduced by him, including Exhibit PW3/3 executed
by the appellants and the Respondent No.1 which was proved
~
by Audhiya Parshad as mentioned in the judgment of the trial
Court. H
8 SUPREME COURT REPORTS [2009] 2 S.C.R.

A 18. Consequently, even while holding that the Courts be-
low, including the High Court, had erred in applying the provi-
sions of the Benami Transactions (Prohibition) Act, 1988, to
- the suit of the Respondent No.1, the Appeal must fail on the
ground that in addition to the above, the Courts had found the
B Respondent No.1 to be the owner of the suit properties on the
basis of the evidence adduced by him, which finding was not
disturbed by any of the Courts below.
19. The appeal is, therefore, dismissed.
20. There will be no order as to costs.

B.B.B. Appeal dismissed.