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Vijay Kumar And Another v. Dharam Pal And Others
Factual and Procedural Background
Dharam Pal (Respondent 1) purchased two properties in Nakodar by conveyances dated 24-4-1959 and 12-6-1959. After constructing buildings thereon, he left for the United Kingdom in 1964, leaving possession with his father. When the father later moved abroad and died in 1970, Dharam Pal’s brother, Ram Aggarwal (the appellant), remained in occupation and ran a business named “Vijay Agencies” as a licensee. Upon revocation of the licence, Ram Aggarwal refused to surrender possession, prompting Dharam Pal to file a suit for possession on 5-1-1987.
The trial court (9-8-1991) decreed the suit in favour of Dharam Pal. The first appellate court dismissed the appellants’ appeal on 5-9-1997. During a second appeal, the High Court initially remanded the matter on ownership; after reconsideration the first appellate court again upheld Dharam Pal’s ownership, and a fresh second appeal was dismissed. The High Court relied on the Benami Transactions (Prohibition) Act, 1988 to bar the defence. The present appeal challenges that dismissal before the Supreme Court.
Legal Issues Presented
- Whether the bar contained in Section 4 of the Benami Transactions (Prohibition) Act, 1988 applies retrospectively to a suit instituted prior to the Act’s commencement.
- Irrespective of the Act, whether Dharam Pal proved ownership of the suit properties entitling him to a decree for possession.
Arguments of the Parties
Appellants’ Arguments
- The Benami Transactions (Prohibition) Act, 1988 is not retrospective; hence Section 4 cannot bar their defence in a suit filed on 5-1-1987.
- Reliance on R. Rajagopal Reddy v. Padmini Chandrasekharan (1995) 2 SCC 630 for the proposition that Section 4 is prospective.
- A 30-year delay by Dharam Pal in asserting title indicates the suit is an afterthought.
- The High Court erred in basing its decision on the Act and on Exhibit PW 3/3 (an alleged admission) to dismiss their appeal.
Respondent’s Arguments
- Conceded that Section 4 of the 1988 Act is inapplicable to the present suit.
- Even without the statutory bar, ownership was proved through documentary and oral evidence, including:
- Exhibit PW 3/3, signed by Ram Aggarwal, admitting Dharam Pal’s ownership.
- Municipal records, house-tax receipts, and electric and water connections in Dharam Pal’s name.
- Courts below rightly decreed possession on the strength of this evidence.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| R. Rajagopal Reddy v. Padmini Chandrasekharan (1995) 2 SCC 630 | Section 4 of the Benami Transactions (Prohibition) Act, 1988 is prospective and does not apply to suits filed before 5-9-1988. | Cited by the appellants; ultimately accepted by the Court in holding that the High Court erred in applying the Act retrospectively. |
Court's Reasoning and Analysis
The Supreme Court first accepted the parties’ consensus, reinforced by Rajagopal Reddy, that Section 4 of the Benami Act could not apply to a suit instituted before the Act came into force. Accordingly, it held that the lower courts were wrong in invoking the statutory bar.
The Court then examined the merits independent of the Act. It noted the concurrent factual findings of the trial court and the first appellate court—affirmed twice—that Dharam Pal was the owner. Key evidentiary factors included:
- Admitted sale deeds of 1959 standing in Dharam Pal’s name.
- Exhibit PW 3/3 containing Ram Aggarwal’s written acknowledgment of Dharam Pal’s ownership and agreement to transfer alternative property in exchange.
- Municipal assessments and utility connections registered to Dharam Pal.
No material was produced to overturn these findings. The Supreme Court held that, even without recourse to the Benami Act, the evidence established Dharam Pal’s title and the appellant’s status as a licensee whose licence had been revoked.
Holding and Implications
APPEAL DISMISSED.
While the Court clarified that Section 4 of the Benami Transactions (Prohibition) Act, 1988 is inapplicable to pre-Act suits, the dismissal leaves undisturbed the lower courts’ decrees granting possession to Dharam Pal. No broader precedent beyond reaffirming the prospective application of Section 4 is set. The parties are left to abide by the decree, and there is no order as to costs.
Altamas Kabir, J.— Leave granted.
2. This appeal has been listed after notice had been served on Respondent 1 and learned counsel has entered appearance and has filed counter-affidavit on his behalf.
3. One Dharam Pal, Respondent 1 herein, filed a suit for possession by claiming that he had purchased two properties situated at Nakodar by two conveyances dated 24-4-1959 and 12-6-1959. 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 Respondent 1 also left for England and died there in 1970.
4. The brother of Respondent 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 the licensee of Respondent 1. On being asked to hand over possession of the suit properties by Respondent 1, Mr Ram Aggarwal refused to do so, which resulted in the filing of the civil suit, after revocation of the licence.
5. The claim of Respondent 1 was denied by the appellant-defendant Mr Ram Aggarwal, who claimed that an old shop had been purchased by a sale deed dated 24-4-1959 in the name of Respondent 1 on account of their love and affection for him. Similarly, a second shop was also purchased by them on 12-6-1959 in the name of Respondent 1 on the same ground.
6. 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 Respondent 1 whose name was recorded in the local records as the owner thereof. It was also admitted by the appellants that the electric connection and water connection were in the name of Respondent 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 (Prohibition) Act Act, 1988, which had been held to have retrospective effect.
7. Considering the case made out by the respective parties and the evidence led by them, the trial court upon holding that Respondent 1 was the owner of the suit properties, decreed the suit in favour of Respondent 1 by a judgment and decree dated 9-8-1991. The appeal preferred by the appellants from the said judgment and decree was dismissed by the lower appellate court by its judgment dated 5-9-1997, confirming the reasoning of the trial court, which gave rise to a second appeal filed before the High Court.
8. Having regard to the fact that both the sale deeds were in the name of Respondent 1, but the appellants claimed that the properties had been purchased benami in the name of Respondent 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 reaffirmed its earlier decision holding Respondent 1 to be the owner of the property.
9. 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. The present appeal is directed against the judgment of the High Court dismissing the appellants' second appeal.
10. 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.
11. The High Court also took notice of Exhibit PW 3/3 which was signed by Mr Ram Aggarwal and Respondent 1. In the said document, the appellants had admitted the ownership of Respondent 1 over the disputed properties and had agreed to transfer some properties in Chandigarh to Respondent 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 PW 3/3 and it was further observed that the said agreement was presumably as a consequence of the notice issued by Respondent 1 on 30-8-1986 (Exhibit PW 3).
12. The High Court came to a finding that there could be no escape from the conclusion that Respondent 1 was the owner of the suit properties and that the appellants had been permitted to use the same as licensees when Respondent 1 had gone abroad. 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.
13. 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 5-1-1987 and the Act had come into force thereafter 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 and taxes, in support thereof.
14. Mr Dhawan submitted that the very fact that Respondent 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 afterthought and with the intention of taking a chance to take possession of the suit properties.
15. 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 R. Rajagopal Reddy v. Padmini Chandrasekharan (1995) 2 SCC 630, AIR 1996 SC 238 wherein the same proposition was considered and accepted.
16. 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 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.
17. On behalf of Respondent 1, it was conceded by Mr Dhruv Mehta, learned advocate, that since the suit had been filed on 5-1-1987 and the Benami Transactions (Prohibition) Act, 1988 came into force subsequently on 5-9-1988, the provisions of the Act would have no application to the suit.
18. Mr Mehta urged that even if the bar of Section 4 of the 1988 Act was not available in the instant case, Respondent 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 PW 3/3, which contained an admission of Ram Aggarwal acknowledging the ownership of Respondent 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 connection in support thereof in holding that Respondent 1 was the owner of the suit properties and decreeing the suit of Respondent 1 and dismissing the appeal preferred by the appellants.
19. 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 Respondent 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.
20. However, on the second question, we are inclined to agree with Mr Mehta that dehors the question of the applicability of the Benami Transactions (Prohibition) Act, 1988, the courts below had rightly held that Respondent 1 was the owner of the suit properties relying on the documentary and oral evidence adduced by him, including Exhibit PW 3/3 executed by the appellants and Respondent 1 which was proved by Audhiya Parshad as mentioned in the judgment of the trial court.
21. 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 Respondent 1, the appeal must fail on the ground that in addition to the above, the courts had found Respondent 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.
22. The appeal is, therefore, dismissed. There will be no order as to costs.
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