S.A.No.358 of 1998 (A)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.BHAVADASAN** ## **MONDAY, THE 2ND DAY OF APRIL 2012/13TH CHAITHRA 1934** ## **SA.No. 358 of 1998 (A)** **---------------------AS.91/1996 of SUB COURT, NEDUMANGAD O.S.NO.239/87 OF PRL.MUNSIFF COURT, NEDUMANGAD** **......** ## **APPELLANT(S):RESPONDENTS/DEFENDANTS:** **----------------------------------------------------------------------** - ***1. B.JANAKI, JANAKIVILASOM BUNGLOW, PARACHAL MURI, KULATHUMMAL VILLAGE, NEDUMANGAD TALUK. ( D I E D) - RECORDED.** **2. GANGADHARAN NAIR SUDARSANAN OF ..DO....** **3. GANGADHARAN NAIR VIDYADHARAN OF ..DO...** **4. GANGADHARAN NAIR MOHANAN OF...DO.....** ***APPELLANTS 2 TO 4 ARE RECORDED AS THE LEGAL HEIRS OF DECASED FIRST APPELLANT AND SHE HAS NO OTHER LEGAL HEIRS AS PER THE ORDER DTD. 26/08/2011 VIDE MEMO C.F.429/2009 DTD. 21/01/2009.** **BY ADVS.SRI.L.MOHANAN SRI.D.SAJEEV** ## **RESPONDENT(S):APPELLANT/PLAINTIFF:** **---------------------------------------------------------------** **P.K.SARADAMMA, POWER OF ATTORNEY HOLDER OF SUKUMARAN NARAYANAN NAIR, KRISHNAVILASOM BUNGLOW, PALUVALLY, VILAVOOR DESOM, THAKKALA VILLAGE, KALKULAM TALUK, KANYAKUMARI DISTRICT.** **BY ADV. SRI.R.S.KALKURA SRI.P.C.HARIDAS** **THIS SECOND APPEAL HAVING BEEN FINALLY HEARD ON 02-04-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Kss** ## P.BHAVADASAN, J. - - - - - - - - - - - - - - - - - - - - S.A.No.358 of 1998 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 2[nd ] day of April, 2012 ## J U D G M E N T This appeal arises out of O.S.No.239 of 1987 before the Principle Munsiff's Court, Nedumangad. The suit was partly decreed. The plaintiff carried the matter in appeal. The lower appellate court granted all the reliefs to the plaintiffs as sought for and thus the defendants suffered decree in the suit as well as in the appeal. They therefore have come up in appeal. 2. The plaint schedule consists of two items of properties namely plaint A schedule which consists of 16 cents of property obtained by one Sukumaran Nair Narayanan Nair as per Ext.A2 dated 04.10.1954 and the plaint B schedule is the building therein. The acquirer of the property is abroad and the suit was laid by the power of attorney holder, his wife. According to the plaint, ever since the purchase as per Ext.A2, the plaintiff has been in absolute possession and enjoyment of the property 1[st] ## -:2:- ## S.A.No.358 of 1998 defendant is the sister of the title holder and defendants 2 and 4 are children of the 1[st] defendant. Since the plaintiff was working abroad as per the plaint allegation the defendants trespassed into the plaint A schedule property and occupied B schedule building. In order to resist the act of the defendants initially O.S.No.390 of 1986 was filed which was withdrawn by the plaintiff with liberty to institute a fresh suit. The defendants have instituted the proceedings with ill motive of usurping the property and building from the plaintiff. Pointing out that the defendants had no manner of rights over the property and the building therein a suit for recovery of possession on the strength of title was laid. 3. The defendants resisted the suit. Genuineness of the power of attorney is disputed. It is contended on behalf of the defendants that plaint schedule property originally belonged to the Ashyar Nadar Upadessi from whom a lease was obtained by the 1[st] defendant in the year 1948. The husband of the 1[st] defendant had led a wayward life and had ## -:3:- ## S.A.No.358 of 1998 incurred lot of debts and even had an extra marital relationship. Seeing the sad plight of the 1[st] defendant, the original owner of the property agreed to assign it to her and she has therefore put up a building therein. In order to save the property from possible distress sale for the debts of husband of the 1[st] defendant, it is alleged that the 1[st] defendant using her own funds purchased the plaint schedule property in the name of the plaintiff. She had put up a building therein utilising her own funds. The allegations contrary to the plaint are incorrect. The plaint schedule property as well as the building exclusively belonged to the defendants and the plaintiff has no manner of right. The allegation of alleged trespass etc. are false and have been put up for the purpose of the case. On the basis of these contentions, they prayed for a dismissal of the suit. 4. The following issues were raised by the trial court. 1. Is the suit maintainable? 2. Is the suit properly valued and has proper court fee been paid? -:4:- ## S.A.No.358 of 1998 3. Whether the sale deed No.2802/54 is one created by the 1[st] defendant denami in the Sri. Sukumaran Nair Narayanan Nair? 4. Has the plaintiff title to the plaint A schedule property and has he possession over A schedule excluding B schedule? 5. Is the plaintiff entitled to the declarations prayed for? 6. Is the plaintiff entitled to the recovery prayed for? 7. Reliefs and costs? 5. The evidence consists of testimony of PWs 1 to 3 and Exts. marked as Exts.A1 to A4 from the side of the plaintiff. The contesting defendants had Exts.DWs 1 to DWs4 examined and had Exts.B1 to B8 marked. On an appreciation of the evidence in the case, the trial court found that title to plaint A schedule property belonged to the plaintiff but declined to grant recovery of possession on the strength of title of the building shown as plaint B schedule, as the court found it was put up by the defendants who are entitled to continue their residence in the same. 6. Aggrieved plaintiff took up the matter in appeal as A.S.No.91 of 1996. The lower appellate court mainly based on the provisions under The Benami Transactions ## -:5:- ## S.A.No.358 of 1998 (Prohibition Act),1988 (hereinafter refers to as 'Act' for short) held that defence set up by the 1[st] defendant and others cannot be countenanced in view of the Section 4 of the Act and therefore the issue whether the purchase of the Benami need not be considered and confirmed the finding of title as found by the trial court. As regards the building also, the lower appellate court found that the plaintiff is entitled to recover the property but directed the defendants to remove the building from plaint B schedule property within three months. Confirming that finding of title and allowing the mandatory injunction the appeal was allowed. 7. Notice is seen issued on the following questions of law:- - (a) Is the findings of the court below that the plea of benami is not maintainable and has to be thrown out and not at all sustainable in view of the Benami Transactions Prohibition Act 1988 is correct as the law stands today? - (b) Is not the rights of the parties to a suit would be determined on the basis of the rights available to them on the date of filing the suit. - (c) Has not the court below gone wrong in deciding the legal dictum “possession follows title” in this case and is not the same requires reconsideration as far as the facts -:6:- ## S.A.No.358 of 1998 and circumstances of the case in hand. - (d) Is not the court below went wrong in holding that the contention of benami is not sustainable in view of the fact that Section 4(i) of the Act operates only prospectively. 8. The learned counsel appearing for the appellant raised mainly one contention for consideration. The learned counsel went on to point out that reliance is placed on by the trial court on the decision reported in **Velayudhan v.Rajeev (1988(2) KLT 369)** to hold that the provisions of the Act have retrospective effect and the said view cannot be accepted in the light of the decision reported in **R.Rajagopal Reddy By Lrs. v. Padmini Chandrasekharan (1995) 2 SCC 630)** where in the provisions of the Act are held to be prospective. The learned counsel went on to point out that even though the lower appellate court rendered the judgment much after the decision reported in **R.Rajagopal Reddy By Lrs. v. Padmini Chandrasekharan** **((1995) 2 SCC 630)** it failed to notice the plea raised by the defendants though in the nature of benami. The lower ## -:7:- ## S.A.No.358 of 1998 appellate court was of the view that the said plea cannot be countenanced at all, without considering the issue on the basis of evidence available in the case. The learned counsel therefore went on to contend that the finding regarding title is solely on the ground that the provisions of the Act prohibited the defendants from taking such contention, cannot be accepted in law. At any rate, the lower appellate court should have independently considered the plea of benami and has also not considered the plea of adverse possession and limitation. 9. The learned counsel appearing for the respondent on the other hand pointed out that the trial court in fact has considered the question dehors the provisions of the Act whether the 1[st] defendant acquired the property using her own funds. The trial court has come to the conclusion that apart from the provisions of the Act, the evidence clearly shows that the property has been acquired utilising the funds provided by the plaintiff. In the light of the finding by the trial court which has been accepted by the lower ## -:8:- ## S.A.No.358 of 1998 appellate court, the learned counsel appearing for the respondent went on to point out that there is no infirmity or illegality in the order of the lower appellate court. 10. After having gone through the records and heard the counsel on both sides, this Court finds it difficult to accept the plea raised by the learned counsel for the respondent in this appeal. True, the main contention taken by the 1[st] defendant in the suit was the acquisition as per Ext.A2 dated 04.10.1954 in the name of plaintiff was utilising her own funds and it was in fact for her benefit that she had put up the buildings. There can be no doubt that the plea is one of Benami. 11. The trial court is justified in rejecting the plea on the basis of the Act and the light of decision reported in **Velayudhan v.Rajeev (1988(2) KLT 369).** However in the appeal, the appellate court ought to have considered the decision reported in **R.Rajagopal Reddy v. Padmini Chandrasekharan (1995) 2 SCC 630)** to ascertain if the plea of Benami is barred in law. ## -:9:- ## S.A.No.358 of 1998 12. Coming to the facts of the case, as already noticed the defence is that the acquisition by the 1[st] defendant was utilising her own funds for her benefit in the name of the plaintiff for reasons stated in the written statement. There can be no manner of doubt that the transaction falls within the definition of Section 2(a) of the Act. ## 13. Section 4 of the Act reads as follows:- 4. Prohibition of the right to recover property held benami.- (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. (3) Nothing in this section shall apply,-- - (a) Where the person in whose name the property is held is a coparcener in a Hindu undivided family and the property is held for the benefit of the coparceners in the family;, or - (b) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, nd the property is held for the benefit of another person for whom he is a trustee ## -:10:- ## S.A.No.358 of 1998 or towards whom he stands in such capacity. 14. It is true that in the decision reported in **Mithilesh Kumari and another v. Prem Behari Khader AIR (1989 SC 1247)** it was held that provision being declaratory in nature has retrospective effect and any claim based on benami transaction cannot be entertained. But that decision came up for consideration before the Apex Court later and the Apex Court had occasion to consider whether the act was retrospective as declared in the decisions reported in **Mithilesh Kumari and another v. Prem Behari Khader (AIR 1989 SC 1247).** In **R.Rajagopal Reddy v. Padmini Chandrasekharan ((1995) 2 SCC 630),** after elaborately considering the provisions of the Act, it was held as follows:- 13. So far as Section 4(2) is concerned, all that is provided is that if a suit is filed by a plaintiff who claims to be the owner of the property under the document in his favour and holds the property in his name, once Section 4(2) applies, no defence will be permitted or allowed in any such suit, claim or action by or on behalf of a person claiming to be the real owner of such property held benami. The disallowing of such a defence which earlier was available, itself suggests that a new ## -:11:- ## S.A.No.358 of 1998 liability or restriction is imposed by Section 4(2) on a preexisting right of the defendant. Such a provision also cannot be said to be retrospective or retroactive by necessary implication. It is also pertinent to note that Section 4(2) does not expressly seek to apply retrospectively. So far as such a suit which is covered by the sweep of Section 4(2) is concerned, the prohibition of Section 4(1) cannot apply to it as it is not a claim or action filed by the plaintiff to enforce right in respect of any property held benami. On the contrary, it is a suit, claim or action flowing from the sale deed or title deed in the name of the plaintiff. Even though such a suit might have been filed prior to 19-5-1988, if before the stage of filing of defence by the real owner is reached. Section 4(2) becomes operative from 19th May, 1988, then such a defence, as laid down by Section 4 (2) will not be allowed to such a defendant. However, that would not mean that Section 4(1) and 4(2) only on that score can be treated to be impliedly retrospective so as to cover all the pending litigations in connection with enforcement of such rights of real owners who are parties to benami transactions entered into prior to the coming into operation of the Act and specially Section 4 thereof. It is also pertinent to note that Section 4(2) enjoins that no such defence 'shall be allowed' in any claim, suit or action by or on behalf of a person claiming to be the real owner of such property. That is to say no such defence shall be allowed for the first time after coming into operation of Section 4(2). If such a defence is already allowed in a pending suit prior to the coming into operation of Section 4 (2), enabling an issue to be raised on such a defence, then the court is bound to decide the issue arising from such an already allowed defence as at the relevant time when such defence was allowed, Section 4(2) was out of picture. Section 4(2) nowhere uses the words "No defence based on any right in respect of ## -:12:- ## S.A.No.358 of 1998 any property held benami whether against the person in whose name the property is held or against any other person, shall be allowed to be raised or continued to be raised in any suit". With respect, it was wrongly assumed by the Division Bench that such an already allowed defence in a pending suit would also get destroyed after coming into operation of S.4(2). We may at this stage refer to one difficulty projected by learned advocate for the respondents in his written submissions, on the applicability of S.4(2). These submissions read as under :- "Section 4(1) places a bar on a plaintiff pleading 'benami', while section 4(2) places a bar on a defendant pleading 'benami', after the coming into force of the Act. In this context it would be anomalous if the bar in Section 4 is not applicable if a suit pleading 'benami' is already filed prior to the prescribed date, and it is treated as applicable only to suit which he filed thereafter. It would have the effect of classifying the so-called 'real' owners into two classes - those who stand in the position of plaintiffs and those who stand in the position of defendants. This may be clarified by means of an illustration. A and B are 'real' owners who have both purchased properties in say 1970, in the names of C and D respectively who are ostensible owners viz. benamidars. A files a suit in February 1988 i.e. before the coming into force of the Act against C, for a declaration of his title saying that C is actually holding it as his benamidar. According to the petitioner's argument, such a plea would be open to A even after coming into force of the Act, since the suit has already been laid. On the other hand, if D files a suit against B at the same for declaration and injunction, claiming himself to be the owner but B's opportunity to file a written statement comes in say November 1988 when the Act has already come into force, he in his written statement cannot plead that D is a benamidar and that he, B is the real owner. ## -:13:- ## S.A.No.358 of 1998 Thus A and B, both 'real' owners, would stand on a different footing, depending upon whether they would stand in the position of plaintiff or defendant. It is respectfully submitted that such a differential treatment would not be rational or logical". 15. No decision other than the decision reported in **R.Rajagopal Reddy v. Padmini Chandrasekharan ((1995) 2 SCC 630).** regarding the retrospectivity and prospectivity of the Act was brought to the notice of this Court by either side. Therefore the issue that arises for consideration is whether on the basis of decision reported in **R.Rajagopal Reddy v. Padmini Chandrasekharan ((1995) 2 SCC 630)** relevant portion of which has already been extracted that the findings of the lower appellate court can be justified. 16. It is significant to notice that issues were raised on 21.03.1988 as seen from the records. Issues have already been extracted and issue No.3 relates to the benami nature of the transaction. The Act admittedly came to force on 19.05.1988. It means that the defence regarding benami -:14:- ## S.A.No.358 of 1998 nature of transaction was already allowed, since the issues have been framed on 21.03.1988 before the commencement of Act. If that be so, going by the principles relates to the decision reported in **R.Rajagopal Reddy v. Padmini Chandrasekharan((1995) 2 SCC 630)** the court was bound to adjudicate that issue. 17. The trial court had considered the matter and has come to the conclusion that the benami claim cannot be accepted. The lower appellate did not venture into that area for the simple reason that the court felt that the defence cannot be considered at all as there is a specific plea bar in the Act. However the lower appellate court reached such a conclusion, overlooking the principles laid down in the decision reported in **R.Rajagopal Reddy v. Padmini Chandrasekharan ((1995) 2 SCC 630.** The plea is considered in Paragraph 9 of the lower appellate court judgment which reads as follows. Though the defendant has adduced evidence and attempted to prove that the plaintiff was only a name lender in Ext.B2 and the consideration has been paid by the 1[st] -:15:- ## S.A.No.358 of 1998 defendant. But such a contention is not all sustainable in view of the prohibition contained in section 2 of the Binami Transactions Prohibition Act 1988. Admittedly the document is in the name of the plaintiff. Plaintiff has produced Ext.A3 series tax receipts for the payment of basis tax in respect of the plaint schedule property. The above documents will prove that plaintiff obtained ownership and possession of plaint A schedule property. Except plea of Binami and plea of adverse possession there is no other contention against the plaintiff's title over the plaint A schedule property. Hence I find that plaintiff has title and possession over the plaint A schedule property. 17. The lower appellate court being the final court on facts ought to have considered the evidence in detail and ought to have been dealt with the contentions of the defendants elaborately. As already noticed, it is difficult to accept the finding of the lower appellate court that the plea of benami raised by the 1[st] defendant cannot be entertained in view of the provisions of the Act. That means that issue has to be considered afresh. So also the lower appellate court has only mentioned about the plea of adverse possession and limitation without considering or deciding the same. It has therefore become necessary to direct the -:16:- ## S.A.No.358 of 1998 lower appellate court to reconsider the issues. For the above reasons, this appeal is allowed, the impugned judgment and decree are set aside and the matter is remanded to lower appellate court to reconsider the defence plea of benami on the basis of evidence available in the case and decisions cited above and the plea of adverse possession. Parties shall appear before the lower appellate Court on 25.05.2012. The lower appellate court may make every endeavour to dispose of the matter, as expeditiously as possible, at any rate within a period of three months from the date of appearance of parties. P.BHAVADASAN, JUDGE kkj