Vijay Kumar vs Dharam Pal & Ors

DHARAM PAL & ORS. ... Respondents

J U D G M E N T

ALTAMAS KABIR,J.

1. Leave granted.

2. This appeal has been listed after notice had

been served on the Respondent No.1 and learned

counsel has entered appearance and has filed counter

affidavit on his behalf.

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3. One Dharam Pal, Respondent No.1 herein, filed a

suit for possession by claiming that he had

purchased two properties situated at Nakodar by two

conveyances dated 24th April, 1959 and 12th June,

1959. It is his further case that having raised

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

father, who was living along with his other son, 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 Agencies 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, 3

refused to do so, which resulted in the filing of

the civil suit, after revocation of the licence.

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 purchased by them on 12th June, 1959, in the

name of the Respondent 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 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.l whose name was recorded in the local

records as the owner thereof. It was also admitted 4

by the appellants that the electric connection and

water connection were in the name of the Respondent

No.1. In this 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

retrospective effect.

5. Considering the case made out by the respective

parties and the evidence led by them, the Trial

Court upon holding that the Respondent No.1 was the

owner of the suit properties, decreed the suit in

favour of the Respondent No.1 by a judgment and

decree dated 9th August, 1991. The appeal preferred

by the appellants from the said judgment and decree

was dismissed by the lower Appellate Court by its

judgment dated 5th September, 1997, confirming the

reasoning of the trial Court, 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 Respondent No.1, but the appellants 5

claimed that the properties had been purchased

benami in the name of the Respondent No.1 and the

appellants were the real owners thereof, the

question of ownership was remanded to the First

Appellate Court. Upon reconsideration of the

evidence, the First Appellate Court re-affirmed its

earlier decision holding the Respondent 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 by the High Court upon holding

that 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

properties being benami.

7. The present appeal is directed against the

judgment of the High Court dismissing the

appellants' Second Appeal.

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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 Transactions (Prohibition)

Act, 1988 which had come into force. The High Court

held that since the aforesaid Act and its provisions

were retrospective, the appellants were not entitled

to take the plea that the properties were benami in

character in view of such specific bar.

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 Respondent 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 7

consequence of the notice issued by the Respondent

No.1 on 30th August, 1986 (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 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

dismissed the Second appeal, which had been filed by

the defendants who are the appellants herein.

12. Mr. R.K. Dhawan, learned Counsel, who appeared

for the appellants, submitted that the High Court

had erroneously held that the provisions of the

Benami Transactions (Prohibition) Act, 1988, had

been given retrospective effect and would,

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 thereafter on 5.9.1988, the same 8

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 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 in question for

about 30 years, clearly indicated that the suit had

been filed as an after-thought and with the

intention of taking a chance to take possession 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 (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 9

above Act and also relying on the Agreement (Exhibit

PW 3/3), which 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.

14. On behalf of Respondent No.1, it was conceded by

Mr. Dhruv Mehta, learned Advocate, that since the

suit had been filed on 5th January, 1987 and the

Benami Transactions (Prohibition) Act, 1988, came

into force subsequently on 5th September, 1988, the

provisions of the Act would have no application to

the suit.

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 properties on the basis of the

evidence adduced by him. Mr. Mehta submitted that

once Exhibit PW3/3, which contained an admission of

Ram Aggarwal acknowledging the ownership of the

Respondent No.1 in the suit premises, was accepted, 10

the courts below had rightly relied on the same

along with other documents such as Municipal

records, the receipts, electric and water connection

in support thereof in holding that the Respondent

No.1 was the owner of the suit properties and

decreeing the suit of 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 (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

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 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 applicability of the Benami Transactions 11 (Prohibition) Act, 1988, the Courts below had

rightly held that the Respondent No.1 was the 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.

18. Consequently, even while holding that the Courts

below, including the High Court, had erred in

applying the provisions 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 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.

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________________J.

(ALTAMAS KABIR)

________________J.

(CYRIAC JOSEPH) New Delhi Dated: 10.2.2009