Narayanasamy Gounder v. K.Sekar

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 19.09.2008Coram:THE HONOURABLE MR.JUSTICE G.RAJASURIAA.S.NO.1069 Of 19951.Narayanasamy Gounder2.Krishnan.. Appellants/Defendantsvs.K.Sekar.. Respondent/Plaintiff Appeal filed u/s 96 of CPC preferred against the judgment anddecree dated 27.4.1995 passed in O.S.No.182 of 1989 by theSubordinate Judge, Tiruvannamalai.For Appellants : Mr.V.RaghavachariFor Respondent : Mrs.Suganya Duraichamy for Mr.N.VenkatachalapathyJUDGMENTThis appeal is focussed as against the judgment and decree dated27.4.1995 passed by the Subordinate Judge, Tiruvannamalai inO.S.No.182 of 1989, which is a suit for declaration of title and forrecovery of possession of house property. For convenience sake, theparties are referred to here under according to their ligitativestatus before the trial Court. 2. Niggard and bereft of details, the case of the plaintiff asstood exposited from the plaint could be portrayed thus:(a) Plaintiff is the D1's daughter's son, so to say he is thematernal grant-son of D1. D2 is the son of D1. The plaintiff and D1were doing jointly grocery business at Santhavasal Village fromAugust 1982 till January 1988. Consequent upon the misunderstanding,which erupted between them, in conducting the business, the plaintiffstopped attending the joint business and the accounts between themare yet to be settled relating to it.(b) the plaintiff started his own independent business andearned money sufficiently and purchased from one K.Krishnamurthy,S/o.Konda Reddy vide Sale Deed dated 6.11.1996, the vacant site, https://hcservices.ecourts.gov.in/hcservices/ which constituted the Eastern portion of the vendors larger extent ofland. The Western portion was purchased by D1 from the very sameKrishnamurthy.(c) The plaintiff and D1 bore the expenditure involved in makingconstruction over the vacant site and it was constructed in such amanner that the Eastern portion of the building would constitute oneUnit and the Western portion would constitute another unit. Theplaintiff has been paying tax for the Eastern portion and enjoying itas full owner, in all aspects. (d) Since the plaintiff refused to marry the daughter of D2, badblood started running in the relationship between the plaintiff andthe defendants and the latter unlawfully occupied the Eastern portionalso, which necessitated the plaintiff to file the suit fordeclaration of title over the suit property and for delivery ofpossession, in addition to praying for mesne profits.3. Remonstrating and refuting, gainsaying and contradicting theallegations/averments in the plaint, D2 filed the written statement,which was adopted by D1, the pith and marrow of it would run thus:-The relationship among the parties is an admitted one. Theplaintiff did not have had the financial wherewithal to purchase thesuit property as claimed by him and he had no business of his own.The plaintiff never spent any money for constructing thesuperstructure as claimed in the plaint. Barefaced lie as it is,that the plaintiff and D1 were doing joint family business. Eventhough the sale deed stands in the name of the plaintiff,nonetheless, the entire sale consideration was paid by the seconddefendant only and the plaintiff had not contributed anything forraising the construction over the suit property. D2 stood as suretyfor the grant of loan by the State Bank in the name of the plaintiff,which is indicative of the fact that D2 only raised money.Accordingly, the defendants prayed for the dismissal of the suit.4. The trial Court framed the relevant issues. During trial theplaintiff examined himself as P.W.1 apart from examining P.W.2-GanesaGounder and P.W.3-Gopal Mudaliar and Ex.A1 to Ex.A29 were marked onthe plaintiff's side. On the side of the defendants, the seconddefendant was examined as D.W.1 apart from examining D.W.2 to D.W.6and Ex.B1 to Ex.B7 were marked.5. Ultimately, the trial Court decreed the suit. Beingaggrieved by and dissatisfied with the judgment and decree of thetrial Court the defendants filed this appeal on various grounds, thewarp and woof of them would run thus:-(a) Ignoring the fact that the plaintiff had not proved his https://hcservices.ecourts.gov.in/hcservices/ financial ability and capability to purchase the plot andraise construction, the trial Court simply decreed the suit.(b) Absolutely there is no evidence before the trial Courtto arrive at the conclusion that the plaintiff, from out ofhis own income, purchased the plot and raised constructionthereon.(c) the trial Court should have considered the evidence ofP.W.1 that he offered to receive Rs.70,000/- in full andfinal quit of his claim before the panchayatdars and(d) without any valid reasons, the trial Court rejected theevidence of the defendants.6. The points for consideration are as to:(i) Whether the suit vacant site was purchased in the nameof the plaintiff from out of the funds of D2 and whether thesuperstructure also was raised at the cost of D2?(ii) Whether Section 4(1) of the Benami Transactions(Prohibition) Act, 1988 would operate as against the plea ofthe defendants?(iii) Whether there is any infirmity in the judgment anddecree of the trial Court.7.Points (i) and (ii): These two points are taken together fordiscussion as they are inter-woven and inter-linked with each other.8. At the outset I would like to refer to Section 4(1) of theBenami Transactions(prohibition) Act, 1988(hereinafter referred to asthe 'Act') and the same is extracted here under:- "4.Prohibition of the right to recover property heldbenami:- (1) No suit, claim or action to enforce any rightin respect of any property held benami against the person inwhose name the property is held or against any other personshall lie by or on behalf of a person claiming to be thereal owner of such property."9. By way of interpreting the said provision, the HonourableApex Court in the judgment reported in (1995) 2 Supreme Court Cases630 – R.RAJAGOPAL REDDY(DEAD) BY LRs. AND OTHERS VS. PADMINICHANDRASEKHARAN(DEAD) BY LRs, held that Section 4(1) is notretrospective but it is retroactive in operation.10. The learned counsel for the defendants would try tointerpret Section 4(1) as though it will not operate as against pastbenami transactions which emerged anterior to the coming into vogueof the said Act. Such an argument is found torpedoed and bore downby the verdict in the cited decision itself. Certain excerpts fromit would run thus:- https://hcservices.ecourts.gov.in/hcservices/ "5. Learned counsel appearing for the plaintiffs concernedsubmitted before us that Section 3,5 and 8 of the Act cameinto force on 5.9.1988 when the Act received the President'sassent and the remaining sections were deemed to have comeinto force on 19.5.1988 and that prior to the coming intoforce of the Act and the relevant provisions thereof,litigations were already filed by the parties and they hadto be governed by the then existing law which held the fieldat the time of initiation of these proceedings and thatthere is nothing in the Act to indicate that any of theprovisions of the Act including Section 4(1) has anyretrospective effect. They further contended that even theDivision Bench of this Court in Mithilesh Kumari case hastaken the view that Section 3(1) of the Act is prospectivein operation. Under these circumstances, they submittedthat it would be inconsistent to hold that though the Act isnot retrospective it would apply to all pending proceedingsat whatever stage they might be and such proceedings wouldincur dismissal under Section 4(1). They submitted thatthere was a substantive right in the plaintiff under theexisting laws which had sanction of more than a century,under which consistently such benami transactions wererecognised and could be enforced by courts of law. Thatthis substantive right is sought to be taken away by Section4(1) and unless there is anything to suggest that it isretrospective in operation, it could not be treated to beretrospective.6. Learned counsel appearing for therespondents/defendants on the other hand submitted that eventhough the Act may not be retrospective, at least toproperties and when rights arising therefrom are sought tobe put to an end by Section 4(1) which covers any or everyproperty held benami, there is no reason why the saidsection cannot apply to such proceedings at any stage tillthey get finally decided by the highest court in thehierarchy. If there is any change in law by which anypending litigation becomes incompetent, such change in lawcan be applied to such pending proceedings at whatever stagethey might be pending before higher courts. In short theysubmitted that the decision rendered by Saikia, J. inMithilesh Kumari case lays down correct law and requires noreconsideration.7. Having given our anxious consideration to theserival contentions, we have reached the conclusion that thequestion has to be answered in the negative and it must beheld that the decision of the Division Bench taking acontrary view does not lay down correct law. https://hcservices.ecourts.gov.in/hcservices/

13. According to us this difficulty in inbuilt inSection 4(2) and does not provide the rationable to holdthat this section applies retrospectively. The legislatureitself thought it fit to do so and there is no challenge tothe vires on the ground of violation of Article 14 of theConstitution. It is not open to us to rewrite the sectionalso. Even otherwise, in the operation of Section 4(1) and(2), no discrimination can be said to have been made amongstdifferent real owners of property, as tried to be pointedout i the written objections. In fact, those cases in whichsuits are filed by real owners or defences are allowed priorto coming into operation of Section 4(2), would form aseparate class as compared to those cases where a stage forfiling such suits or defences has still not reached by thetime Section 4(1) and (2) starts operating. Consequently,latter type of cases would form a distinct category ofcases. There is no question of discrimination being metedout while dealing with these two classes of casesdifferently. A real owner who has already been alloweddefence on that ground prior to coming into operation ofSection 4(2) cannot be said to have been given a bettertreatment as compared to the real owner who has still totake up such a defence and in the meantime he is hit by theprohibition of Section 4(2). Equally, there cannot be anycomparison between a real owner who has filed such suitearlier and one who does not file such suit till Section 4(1) comes into operation. All real owners who stake theirclaims regarding benami transactions after Section 4(1) and(2) came into operation are given uniform treatment by theseprovisions, whether they come as plaintiffs or asdefendants. Consequently, the grievances raised in thisconnection cannot be sustained." 11. At this juncture I am of the opinion that the otherdecisions of the Honourable Apex Court also could be recollectedfruitfully:(i) AIR 1974 SC 171 (Jaydayal Poddar (deceased through Lrsand another vs. Bibi Hazra and others)(ii) MLJ (11) 1976 470 (Kistappa Naicker and others vs.Elumalai Naicker)It is therefore clear that production of original document relatingto the property concerned is also one of the factors to be consideredin respect of Benami pleas. Here the original sale deed-Ex.A.3 hasbeen produced by the plaintiff and not by the D2 and that also wouldgo to show that D1 and D2 treated the plaintiff as the owner of theplot purchased by him. https://hcservices.ecourts.gov.in/hcservices/

12. Decisions relating to Benami transaction:An excerpt from (1974) 1 SCC 3(Jaydayal Poddar (deceased)through L.Rs.and another vs. Mst.Bibi Hazra and others) would runthus:-"6. It is well settled that the burden of provingthat a particular sale is benami and the apparentpurchaser is not the real owner, always rests on theperson asserting it to be so. This burden has to bestrictly discharged by adducing legal evidence of adefinite character which would either directly provethe fact of benami or establish circumstancesunerringly and reasonably raising an inference of thatfact. The essence of a benami is the intention of theparty or parties concerned; and not unoften, suchintention is shrouded in a thick veil which cannot beeasily pierced through. But such difficulties do notrelieve the person asserting the transaction to bebenami of any part of the serious onus that rests onhim; nor justify the acceptance of mere conjectures orsurmises, as a substitute for proof. The reason is thata deed is a solemn document prepared and executed afterconsiderable deliberation, and the person expresslyshown as the purchaser or transferee in the deed,starts with the initial presumption in his favour thatthe apparent state of affairs is the real state ofaffairs. Though the question, whether a particular saleis benami or not, is largely one of fact, and fordetermining this question, no absolute formulae or acidtest, uniformly applicable in all situations, can belaid down; yet in weighing the probabilities and forgathering the relevant indicia, the Courts are usuallyguided by these circumstances: (1) the source fromwhich the purchase money came; (2) the nature andpossession of the property, after the purchase; (3)motive, if any, for giving the transaction a benamicolour; (4) the position of the parties and therelationship, it any, between the claimant and thealleged benamidar; (5) the custody of the title-deedsafter the sale and (6) the conduct of the partiesconcerned in dealing with the property after the sale.7. The above indicia are not exhaustive and theirefficacy varies according to the facts of each case.Nevertheless No. 1 viz. the source, whence the purchasemoney came, is by far the most important test fordetermining whether the sale standing in the name ofone person, is in reality for the benefit of another." https://hcservices.ecourts.gov.in/hcservices/ (i) 1980 (2) SCC 327 (Gapadibai vs. State of Madhya Pradesh) "3. .......In order to prove the benami nature ofthe transaction the State could have led evidence toshow (1) that Defendant 5 paid the consideration,(2) that he had the custody of the sale deed, (3)that he was in possession of the property and (4)the motive for the transaction. None of thesefactors has been proved by the State.........."(ii) 2004 (7) SCC 233 (Valliammal (D) by LRs. vs. Subramaniamand others)"13. This Court in a number of judgments has held thatit is well established that burden of proving that aparticular sale is benami lies on the person who alleges thetransaction to be a benami. The essence of a benamitransaction is the intention of the party or partiesconcerned and often, such intention is shrouded in a thickveil which cannot be easily pierced through. But suchdifficulties do not relieve the person asserting thetransaction to be benami of any part of the serious onusthat rests on him, nor justify the acceptance of mereconjectures or surmises, as a substitute for proof. Refer toJaydayal Poddar v. Bibi Hazra, Krishnanand Agnihotri v.State of M.P., Thakur Bhim Singh v. Thakur Kan Singh, PratapSingh v. Sarojini Devi and Heirs of Vrajlal J. Ganatra v.Heirs of Parshottam S. Shah. It has been held in thejudgments referred to above that the question whether aparticular sale is a benami or not, is largely one of fact,and for determining the question no absolute formulas oracid test, uniformly applicable in all situations can belaid. After saying so, this Court spelt out the followingsix circumstances which can be taken as a guide to determinethe nature of the transaction:“(1) the source from which the purchase money came;(2) the nature and possession of the property, afterthe purchase;(3) motive, if any, for giving the transaction a benamicolour; https://hcservices.ecourts.gov.in/hcservices/ (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 dealingwith the property after the sale.” (Jaydayal Poddar v. BibiHazra1, SCC p.7, para 6)(iii) (2007) 6 SCC 100 (Binapani Paul vs. Pratima Ghosh andothers)In this judgment, the earlier judgment reported in 2004 (7) SCC 233has been referred to. 13. As such, the Hon'ble Apex Court consistently held that theburden of proof is on the person, who put forth the plea on benami toprove the benami transaction by clearly pointing out that the moneywas not paid by the person, who purported to have purchased it but bythe person who pleads benami. Here there is no reliable evidenceadduced by the defendants to prove benami transaction also.14. As such it is quite obvious that the suit has been filed inthe year 1989 long after the coming into vogue of the provisions ofthe said Act and accordingly, the defendants' plea cannot becountenanced and upheld as sustainable in the eye of the Act. Onthis basis itself the appeal could be dismissed.15. However, for the purpose of comprehensively deciding theappeal, I would like to discuss the evidence available on record, onmerits.16. Indubitably and indisputably the suit property stands in thename of the plaintiff as per the sale deed-Ex.A3 dated 6.11.1986. Insuch a case, the onus of proof is on the defendants to prove thatfrom out of the funds of D2, the suit property was purchased as perEx.A3. At this juncture I would also like to highlight that therecould be no coparcenary or joint family in this factual matrix amongthe plaintiff, D1 and D2, as the plaintiff happened to be thematernal grand son of D1 and there is also nothing to indicate thatthere was joint family nucleus and from out of the income generatedfrom it, the suit property was purchased and that the constructionwas put up. As such, the onus probandi is on the defendants to provethat from out of the income of the defendants the suit plot waspurchased as per Ex.A3, in the name of the plaintiff, and over andabove that they should also prove that the construction was put upfrom out of the defendants' income. Absolutely there is noconvincing or clinching evidence in support of the plea of the https://hcservices.ecourts.gov.in/hcservices/ defendants. Whereas the documentary evidence available on theplaintiff's side would conclusively demonstrate and establish that itwas the plaintiff, who purchased the suit plot and raisedconstruction. 17. Ex.A5, Ex.A6, Ex.A21, Ex.A22 and Ex.A.23 are all taxreceipts in the name of the plaintiff relating to the suit house andEx.A5 which emerged anterior to the filing of the suit would speakvolumes that the suit property was allowed to be in the name of theplaintiff even in the Property Tax Register. 18. Ex.A7 to Ex.A16 are all electricity fee receipts evidencingthat the electricity connection available in the suit property standsin the name of the plaintiff only. This is an additional factor toshow that the plaintiff is the real owner of the suit property andenjoying the electricity connection in his own name.19. Ex.A24 to Ex.A26 are the electricity cards, which would alsostand in the name of the plaintiff and thereby buttress theplaintiff's plea that he is the owner of the suit property.20. Ex.A.28 is the statement of accounts issued by the StateBank of India to the plaintiff relating to his Bank account andEx.A.29 is the pass-book concerned showing that the plaintiff hadfinancial dealings with the Bank.21. It is an admitted fact that the loan, for raisingconstruction of the superstructure in the suit property, was raisedby the plaintiff, for which D2 stood as surety.22. The learned counsel for the defendants would try to expoundand explain away by his argument that since Ex.A3-the sale deed stoodin the name of the plaintiff, naturally for constructingsuperstructure, loan was borrowed in the name of the plaintiff.23. Such an explanation fails to carry conviction with thisCourt for the reason that the subsequent conduct of the defendants inallowing the plaintiff to have the superstructure in his own name inthe register of civic body, namely, the Municipality concerned, andthe electricity connection also in his name would speak volumes thatthe defendants never intended that the said property should be theirproperty and not the property of the plaintiff. There is also noindication that the loan was re-paid by the defendants.24. Ex.A19 is the patta relating to various items of propertiesstanding in the name of Kanna Gounder-the father of the plaintiff,which is relied on to demonstrate that the plaintiff also had thefinancial background and that he contributed money for theconstruction of the superstructure. https://hcservices.ecourts.gov.in/hcservices/

25. Ex.A18 dated 21.6.1991- is the certificate of registrationissued by the Deputy Commercial Tax Officer, North Arcot District, inthe name of the plaintiff relating to his shop, namely, 'SekarStore'. However, this emerged during the pendency of the suit. 26. Ex.A27 is the certificate dated 19.9.1994 issued by theRegulated Market, Arni, North Arcot, to the effect that forconducting business the plaintiff got licence from the RegulatedMarket. This also emerged during the pendency of the suit. However,the documents filed on the plaintiff's side would demonstrate thatthe plaintiff started business independently and he was havingfinancial background.27. Ex.B1-the Pass Book issued by the State Bank of India wasrelied on by the defendants to prove that even though the SavingsBank Account was in the name of the plaintiff, yet D2 alone washaving control over the financial dealings. D2 is the close relativeof D1 and in such a case merely by producing the Pass Book of theplaintiff, no adverse inference could be drawn as against theplaintiff that the money contemplated in the Pass-Book all belongedto D2.28. Ex.B2 is the Sale Deed in favour of D1 relating to theWestern portion as already referred to supra, which is having noprobative force in the facts and circumstances of this case. 29. Ex.B3 is the patta in the name of D2, which was issued on30.11.1992 during the pendency of the suit relating to the suitproperty. 30. It is a common or garden principle that patta alone wouldnot constitute title and the fact remains that for the house in thesuit property, the plaintiff has been paying tax as held supra, basedon the house tax receipts filed by him, ever sine 1988. There is nodirect evidence to indicate that D2 gave financial assistance to theplaintiff so as to purchase the plot and also for raising thesuperstructure. 31. The deposition of P.W.2 and P.W.3 are in support of the caseof the plaintiff. P.W.3 would speak about the Panchayat held inconnection with the apple of discard, which emerged between theplaintiff and the defendants. Whereas on the side of the defendantsD.W.2-Kandasamy-the mason was examined to speak about the fact thatit was D2, who gave money for purchase of building materials etc. Ina case of this nature, such sort of evidence is far fromsatisfactory and it is quite obvious that a building mastry cannotspeak about the ownership of the building and even for argument sakeit is taken that D2 gave money to the plaintiff for the purchase ofbuilding materials, there is no presumption that D2 is the owner ofthe building. https://hcservices.ecourts.gov.in/hcservices/

32. D.W.3 Arumugam would speak about the dispute that eruptedbetween the plaintiff and D2 relating to the business and there is nospecificity about it and no head or tail could be made out of it. 33. D.W.4-Krishnamurthy is the Manager of the State Bank, whowould speak with reference to Ex.B6-IRDP loan pass-book to the effectthat in connection with starting of the business by the plaintiff, aloan of Rs.6000/- was given. This evidence in no way would of any usefor deciding this case.34. D.W.5 -Krishnamurthy the scribe of Ex.B5 and Ex.B6 wouldspeak to the effect that only D2 paid the sale consideration.However, during cross-examination he would candidly admit that he didnot know whose money was actually paid as consideration. Hence, insuch a case from the scribe's evidence the Court cannot holdconclusively that only D2 paid the sale consideration under Ex.A3.35. D.W.6-Gopal a former shop owner near the shop of D2 wouldspeak as though Sekar-the plaintiff was working in the shop of D2. 36. Here the case is not relating to the partition of D2's shop,but it is relating to the immovable house property and as such,D.W.6's simple utterance that the plaintiff worked in D2's shop wouldin no way enure to the benefit of the defendants and that too in thewake of clinching documentary and oral evidence available on theside of the plaintiff. Accordingly, points (i) & (ii) are decided infavour of the plaintiff and as against the defendants.37.Point No.(iii): In view of the ratiocination adhered to indeciding the above issues, I could see no infirmity in the judgmentand decree of the lower Court. Accordingly, the same are confirmedand the appeal is dismissed. However, there is no order as to costs.sd/-Asst.Registrar/true copy/Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ MskTo1.The Subordinate Judge, Tiruvannamalai.2.The Section Officer,V.R.Section, High Court, Madras+1 cc To Mr.V.Raghavachari, Advocate, SR.53816 A.S.NO.1069 of 1995 ksk [co]gkg/29.10