Back
SUPREME COURT OF INDIA
M.H. BEG AND P.N. SHINGHAL, JJ.
Union of India, Appellant
Versus
Moksh Builders and financiers Ltd. And others etc., Respondents.
Civil Appeals Nos. 1739-1740 of 1968,
D/- 27-10-1976.
Advocates appeared
Mr. V. S. Desai, Sr. Advocate (Mr. Girish Chandra Advocate with him), for Appellant; Mr. Sachin Chaudhary, Sr. Advocate (M/s. B. P. Maheshwari and Suresh Sethi, Advocates with him), for Respondent No. 1: (In C. A. No. 1739 of l968 and for Respondent NO. 2 in C. A. No. 1740 of 1968; Mr. A. K. Sen, Sr. Advocate (Mr. D. Goburdhan, Advocate with him) for Respondent No. 2 in C. A. No. in C. A. No. 1740 of 1968.
Evidence Act - Section 33 – Claim of compensation – Dishonor of cheque – Condo nation of delay - Whether house was purchased by defendant No. 3 in name of defendant No. 2 - Whether title on sale of house in December was transferred to defendant No. 3 who was real purchaser and not to defendant No. 2 who was only te ostensible transferee and was no more than a benamidar – Whether even if it were assumed that there was no conclusive evidence to establish or rebut benami allegation what would on a careful assessment of evidence be a reasonable probability and a legal inference from relevant and admissible evidence - Facts giving rise to appeals are quite simple - Defendant No. 3 is father defendant No. 3 to Income-tax and super-tax for the assessment year was fixed at Rupees in March – A demand was made for its payment but he neglected to meet it land a certificate was issued on October to Collector of Delhi for its recovery as arrears of land revenue - Collector was asked to attach house Keeling Road and House of defendant No. 3 - Both the houses were attached on October - Meanwhile defendant No. 3 appealed against order of assessment - Appellate Assistant Commissioner allowed appeal on May set aside the assessment and directed a fresh assessment - Order of fresh assessment was made on November and the income-tax demand was reduced - Assessments were completed on March respectively raising a tax demand for recovery certificate was issued to Collector for the same on May and the house Keeling Road was again attached on August - Court are not concerned with house Hailey Road for controversy before us relates to house Keeling Road hereinafter referred to as house - That house had been ostensibly purchased by defendant No. 2 in December - He filed an application objecting to attachment on the ground that the house belonged to him but Collector dismissed the objection holding that the house belonged to defendant No. 3 - Defendant No. 2 did not appeal against that order and did not appeal against that order and did not question it by a suit – Held, It would thus appear that finding of the trial Court on issue which dealt with the question whether the house was purchased by defendant No. 3 benami in name of defendant No. 3 was correct and should be restored as High Court’s finding to the contrary has been vitiated by the substantial errors of law mentioned above - Other important question is whether the sale of the house in favor of the Company was a sham transaction and was effected to defeat and delay the creditors of defendant No. 3 - This was the subject matter of issue No. 2 and trial Courts finding in affirmative has not even been examined by the High Court - Court find that admitted facts of case are by themselves sufficient to show that the finding of the trial Court is justified and does not call for any interference. Defendant No. 3 was assessed to income-tax for a sum for assessment year in March - Defendant No. 3 failed to pay that amount on demand and a recovery certificate was issued on October - Defendant No. 2 raised an objection and prayed for the release of the house - Collector rejected the objections on March No appeal, or other remedy was sought against that order - Appellate Assistant Commissioner however allowed appeal of defendant No. 3 against the assessment of Income-tax and ordered a fresh attachment by his order dated May - In the meantime Company was incorporated in February - Assessment of Income-tax for years was completed in March raising the tax demand and a recovery certificate was issued on May - It was in these circumstances that defendant No. 2 who had failed to obtain an order for the release of the house as aforesaid hastened to sell it to the Company on May - As has been stated a fresh recovery certificate was issued to the Collector on May and the house was again attached on August - These facts speak for themselves and are quite sufficient to justify the trial Courts finding that sale of house to the Company was a sham transaction and arose out of anxiety to save house somehow from sale for realization of the Income-tax - Company was in fact dominated by defendant No. 2 and his close relations and did not even pay the sale price in cash - It is also significant that the shares of the other relations were insignificant - Moreover Company could not lead evidence to show that it was able to transact any substantial business whatsoever - Court have therefore no reason to disagree with the trial Courts finding that Company was formed just to transfer house to in an effort to save it from attachment and sale for realization of Income-tax arrears of defendant No. 3 - Finding of the trial Court on the issue is quite correct and High Court committed a serious error of law in not examining this aspect of matter at all even though it had a great bearing on the controversy - Appeals allowed
Judgment
P. N. SHINGHAL. J.:- These two appeals by certificate have been consolidated by an order of this Court dated April 15, 1969. They are directed against a common judgment of the Delhi High Court dated February 14, 1967, in Regular First Appeals Nos. 5-D and 54-D of 1958,* by which the judgment and decree of the trial court dated January 13, 1958 have been set aside with costs throughout. As this has resulted in the dismissal of the suit raised by the Union of India, it has filed the present appeals.
* (1968) 70 Pun LR (D) 71.
2. The facts giving rise to the appeals are quite simple. Harjas Rai Malhotra, defendant No. 3, is the father of Krishan Lal Malhotra, defendant No. 3 to Income-tax and super-tax for the assessment year 1947-48, was fixed at Rupees 1,25,090/11/- in March, 1952. A demand was made for its payment, but he neglected to meet it land a certificate was issued on October 8, 1952 to the, Collector of Delhi for its recovery as arrears of land revenue. The Collector was asked to attach house No. 15, Keeling Road and House No. 9, Haily Road in New Delhi, of defendant No. 3. Both the houses were attached on October 13, 1952. Meanwhile defendant No. 3 appealed against the order of assessment. The Appellate Assistant Commissioner allowed the appeal on May 12, 1953, set aside the assessment. and directed a fresh assessment. The order of fresh assessment was made on November 30, 1953 and the income-tax demand was reduced to Rs. . 1,05,769.13. The assessments for 1944-45 and 1948-49 were completed on March 28 and 31, 1953, respectively, raising a tax demand for Rs. 1,94,738.15. A recovery certificate was issued to the Collector for the same on May 4, 1953 and the house at No. 15, Keeling Road was again attached on August 6, 1953.
3. We are not concerned with the house at No. 9, Hailey Road, for the controversy before us relates to house No. 15, Keeling Road, hereinafter referred to as the house. That house had been ostensibly purchased by defendant No. 2 in December, 1946 for Rs. 60,000/-. He filed an application objecting to the attachment on the ground that the house belonged to him, but the Collector dismissed the objection holding that the house belonged to defendant No. 3. Defendant No. 2 did not appeal against that order and did not appeal against that order and did not question it by a suit.
4. Thus far, the facts are not in dispute.
5. It was alleged in the plaint that the house was purchased by defendant No. 3, "benami", in the name of his son defendant No. 2, out of his "own funds drawn from his bank account" and that the "full beneficial ownership, right, title and interest in the said property has always belonged and continues to this day to belong to the 3rd defendant." The plaintiff alleged further that during the pendency of his appeal to the Appellate Assistant Commissioner against the assessment which had been made in March 1952 for 1947-48 and the assessment proceedings for 1944-45 and 1948-49 defendant No. 3" in collusion and conspiracy with the 2nd defendant and certain other persons, and with the view, intent and purpose of defeating and delaying his creditors including the plaintiff, had recourse to diverse ways and means" as detailed in the plaint. It was thus alleged that, in February 1953, defendants Nos. 2 and 3 and five other persons purported to form a limited company known as Moksh Builders and Financiers Ltd., hereinafter referred to as the Company, which was arrayed as defendant No. 1 in the suit, with an authorised capital of Rs. 5,00,000/- divided into 5000 shares of Rs. 100/- each. There were 7 subscribers to the Memorandum and the Articles of Association of the Company and each of them took 10 shares. Soon after the Appellate Assistant Commissioner made his aforesaid order dated May 12, 1953 for fresh assessment of the income -tax liability of defendant No. 3, a sale deed dated May 25, 1953 was brought into existence whereby defendant No. 2 "purported to convey" the house to defendant No
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
