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Om Prakash And Another v. Jai Prakash .
Factual and Procedural Background
The plaintiff-respondent, Jai Prakash, filed a suit asserting that land purchased under four sale deeds dated 10 June 1968, 21 June 1968, 17 January 1976 and 23 June 1977 was acquired exclusively with his funds; the names of his brother, Om Prakash (defendant-appellant 1), and Om Prakash’s wife, Smt. Satyawati (defendant-appellant 2), were allegedly inserted only as benamidars. The defendants countered that they had contributed to the consideration and that the property was jointly purchased.
Om Prakash had been in government service since 1953 while the plaintiff managed the agricultural holdings. During village consolidation proceedings, separate chaks were allotted on the basis of joint ownership, and no objection was raised by the plaintiff at that time.
Procedurally, the suit was dismissed by the trial court on 24 January 1987. The first appellate court reversed that decision and decreed the suit for the plaintiff. The defendants’ second appeal was dismissed by the Allahabad High Court on 24 November 1987. Challenging that decree, the defendants filed a Special Leave Petition (SLP) in the Supreme Court on 15 March 1988. While the SLP was pending, the Benami Transactions (Prohibition) Ordinance, 1988 (later replaced by the Benami Transactions (Prohibition) Act, 1988) came into force. The defendants sought to raise additional grounds based on the new Act. Special leave was granted on 21 August 1989, converting the SLP into a civil appeal. Pending disposal, the parties were ordered to maintain status quo.
Legal Issues Presented
- Whether the plaintiff’s suit was barred by Section 49 of the U.P. Consolidation of Holdings Act, 1954 because no benami objection was raised during consolidation proceedings.
- Whether, after the commencement of the Benami Transactions (Prohibition) Act, 1988, any suit or appeal seeking to enforce rights in property alleged to be held benami could be decreed.
- Whether Section 4 of the Benami Act applies when, at the date of its commencement, only an SLP (and not a formally admitted appeal) was pending before the Supreme Court.
Arguments of the Parties
Defendant-Appellants’ Arguments
- The suit was barred by Section 49 of the U.P. Consolidation of Holdings Act because the plaintiff failed to raise the benami claim during consolidation.
- After the enactment of the Benami Transactions (Prohibition) Act, 1988, Section 4 barred any suit, claim, or defence based on benami ownership; hence the decree in favour of the plaintiff could not be sustained.
Plaintiff-Respondent’s Arguments
- Section 49 of the U.P. Consolidation of Holdings Act was inapplicable as no foundational plea or issue had been framed in the written statement.
- Even if the Benami Act applied prospectively, the bar in Section 4 could not affect this case because, when the Act came into force (19 May 1988 / 5 September 1988), no “appeal” was pending—only an SLP. Since special leave was granted later (21 August 1989), Section 4 should not operate retrospectively to defeat the already-decreed suit.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Mithilesh Kumari v. Prem Behari Khare, (1989) 2 SCC 95 | Held that the expressions “shall lie” (s. 4 (1)) and “shall allow” (s. 4 (2)) in the Benami Act operate prospectively and apply to pending and future proceedings; an appellate court must give effect to Section 4 even at a later stage of the same suit. | The Supreme Court relied on this decision to conclude that Section 4 is a “total prohibition” which applies to the present appeal, notwithstanding that only an SLP was pending when the Act came into force. |
Court's Reasoning and Analysis
On Section 49 of the U.P. Consolidation of Holdings Act: The Court affirmed the High Court’s view that the defendants had laid no factual foundation in their pleadings for invoking Section 49; since no issue was framed, the bar could not be raised for the first time in the Supreme Court.
On the Benami Transactions (Prohibition) Act, 1988: The Court noted that Section 4 imposes an absolute bar on any suit, claim, or defence based on benami ownership. Relying on Mithilesh Kumari, the Court held that this prohibition extends to “present (future stages)” of already instituted suits and appeals.
Effect of Pending SLP: Addressing the respondent’s contention that no “appeal” was pending when the Act commenced, the Court reasoned that an SLP challenging the High Court decree constituted a continuation of the suit. Although special leave was granted later, the challenge to the decree was already before the Supreme Court; therefore, Section 4 applied.
Because the plaintiff’s entire claim was premised on asserting real ownership of property allegedly held benami, Section 4 extinguished the cause of action. Consequently, the earlier decrees favouring the plaintiff could not stand.
Holding and Implications
Appeal Allowed; Suit Dismissed. The Supreme Court set aside the judgments of the first appellate court and the High Court and restored the trial court’s dismissal of the suit. No order as to costs was made.
Implications: The judgment reiterates that Section 4 of the Benami Transactions (Prohibition) Act, 1988 is an absolute bar that applies even where only a Special Leave Petition is pending. It underscores that litigants cannot obtain or sustain decrees based on benami claims once the Act has come into force, thereby reinforcing the retrospective effect recognised in Mithilesh Kumari. No new precedent was set beyond this reaffirmation of existing law.
N.M Kasliwal, J.— This appeal by special leave is directed against the judgment of Allahabad High Court dated November 24, 1987. The plaintiff-respondent filed a suit on the ground that the land purchased through four sale deeds dated June 10, 1968, June 21, 1968, January 17, 1976 and June 23, 1977 were purchased by him alone and he was the real owner of said land. The name of the defendant-appellants were included in the said sale deeds only as benamidar. The defendant-appellants took the plea that they had paid their part of the sale consideration and the land was jointly purchased in the name of both the parties. It may be noted that the defendant-appellant Om Prakash and plaintiff-respondent Jai Prakash are brothers and defendant-appellant 2 Smt Satyawati is the wife of appellant Om Prakash. It has come on record that appellant 1 Om Prakash was in government service ever since 1953 and the plaintiff-respondent was looking after the entire agricultural property in the village. Consolidation proceedings also took place in the village and during the consolidation operation partition had been effected in the revenue records and chaks had been carved out in accordance with the share of the parties. At that time no dispute was raised by the plaintiff-respondent that he was owner of the entire property and the names of defendant-appellants were wrongly mentioned as benami.
2. The learned trial court arrived at the conclusion that the names of the defendant-appellants in the sale deeds were not mentioned as benamidars and further held that the claim of the plaintiff-respondent could not be accepted as no objection had been taken by him even during the consolidation proceedings. The suit as such was dismissed by the trial court by judgment dated January 24, 1987. The plaintiff aggrieved against the judgment of the trial court, filed an appeal. The first appellate court reversed the judgment and decree of the trial court and decreed the suit in favour of the plaintiff. The second appeal filed by the defendants was dismissed by the High Court. The defendants aggrieved against the judgment and decree of the High Court filed special leave petition before this Court on March 15, 1988. During the pendency of the special leave petition, the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988 was promulgated by the President of India on May 19, 1988. The said Ordinance was replaced by the Benami Transactions (Prohibition) Act, 1988 (hereinafter called the ‘Benami Act’). The Act received the assent of the President of India on September 5, 1988. The defendants filed an application on May 1, 1989 for allowing them to take additional grounds made available on the basis of the aforesaid ‘Benami Act’. Thereafter special leave was granted by this Court by order dated August 21, 1989 and it was directed that printing of record is dispensed with and appeal will be heard on the special leave petition paper books. The parties were given liberty to file additional documents if any within four weeks and the appeal was directed to be listed on December 13, 1989 for hearing. Pending disposal of the appeal, the parties were directed to maintain status quo as existing on that day.
3. In the above circumstances, the matter came up for hearing before us.
4. Though there is no specific order of this Court allowing the application dated May 1, 1989 filed by the appellants for raising additional grounds, the same shall be deemed to have been allowed as the special leave petition was granted subsequently on August 21, 1989 after hearing both the parties. In any case, we further make it clear that we had permitted the defendant/appellants to argue additional grounds made available to them under the ‘Benami Act’, which admittedly came into force after the filing of the special leave petition in this Court.
5. Learned counsel appearing on behalf of the defendant-appellants had contended that the suit filed by the plaintiff-respondent was not maintainable and barred under Section 49 of the U.P Consolidation of Holdings Act, 1954 as the point regarding the land in question being benami was never raised by the plaintiff-respondent during consolidation proceedings and the chaks were allowed to be recorded in the name of the defendant-appellants. So far as this objection under Section 49 of the U.P Consolidation of Holdings Act is concerned, no foundations were laid in the written statement nor any issue was raised. The High Court was thus right in holding that in the facts of this case, no foundation had been laid for the applicability of Section 49 of the U.P Consolidation of Holdings Act. We see no error in the order of the High Court in taking the aforesaid view and we also hold that the defendant-appellants cannot be allowed to take such plea for which no foundation was laid in the pleadings.
6. The next important and formidable question which arises for consideration is whether any suit relating to benami transactions can be decreed after the coming into force of the Benami Act. This Court in Mithilesh Kumari v. Prem Behari Khare (1989) 2 SCC 95 has already held that the expressions “shall lie” in Section 4(1) and “shall allow” in Section 4(2) of the Benami Act are prospective and shall apply to present (future stages) and future suits, claims or actions only. The expression “any property held benami” is not limited to any particular time, date or duration. In a suit for recovery of benami property if any appeal is pending on the date of coming into force of Section 4, the appellate court can take into account the subsequent legislative changes. Section 4 of the Benami Act reads as under:
“4.(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 an 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.”
7. In the case of Mithilesh Kumari (1989) 2 SCC 95 this Court considered the 130th report of the Law Commission submitted to the government on August 14, 1988. Benami Transactions (Prohibition) Bill, 1988 was drafted after getting the report and the Bill was introduced in the Rajya Sabha on August 31, 1988 and then the Bill was passed. The Law Commission devoted several pages to justify retrospective legislation and its view was that the legislation replacing the Ordinance should be retrospective in operation and that no locus penitentia need be given to the persons who had entered in the benami transaction in the past. Learned counsel appearing for the respondent was unable to convince us to take a different view from that already taken by this Court in Mithilesh Kumari case (1989) 2 SCC 95.
8. It was vehemently contended by the learned counsel for the plaintiff-respondent that even if the ratio of Mithilesh Kumari case (1989) 2 SCC 95 is applied, it can be made available only in a case where appeal was pending before the higher court. It was contended that in the present case, only special leave petition filed on March 15, 1988 was pending at the time when the Benami Act came into force. It was pointed out that the Ordinance was promulgated on May 19, 1988 and the Benami Act received the assent of the President on September 5, 1988. It was thus contended that no appeal was pending on May 19, 1988 or September 5, 1988 as the special leave was granted much after on August 21, 1989 and thus no advantage can be taken by the defendant-appellants of Section 4 of the Benami Act as no appeal was pending on the date when the Benami Act came into force.
9. We find no force in the above contention of the learned counsel for the plaintiff-respondent. Special leave petition was filed against the judgment of the High Court on March 15, 1988 and special leave was granted on August 21, 1989 after hearing both the parties. In the present case the defendants having lost in High Court could have approached this Court only through a special leave petition under Article 136 of the Constitution and it is only after the grant of such special leave that the appeal could be heard. Though the special leave might have been granted subsequently on August 21, 1989 but it is a fact that the judgment and decree of the High Court had already been challenged by the defendant-appellants and it cannot be said that no appeal was pending before this Court simply on the ground that only special leave petition was pending when the Benami Act came into force. There is a clear prohibition under Section 4 of the Benami Act that 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. It is well settled that an appeal is a continuation of suit and in the present case the appeal was pending before this Court. There is no manner of dispute that the present suit had been filed by the plaintiff-respondent claiming that he was the real owner of the property and the names of the defendant-appellants were mentioned in the sale deeds as benami. In our view, Section 4 of the Benami Act is a total prohibition against any suit based on benami transaction and the plaintiff-respondent is not entitled to get any decree in such suit or in appeal.
10. As a result of the above discussion, we allow this appeal, set aside the judgment and decree of the High Court and dismiss the suit. In view of the fact that the suit is dismissed on account of legislative change brought about during the pendency of the appeal in this Court, there would be no order as to costs.
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