The main legal point established in the judgment is that the Benami Transactions (Prohibition) Act, 1988 applies only to transactions where property is transferred for consideration paid by another person, and not to sham transactions. The Act applies only when a right in respect of a property 'held benami' is sought to be enforced, and the word 'held' implies possession or occupation.

1. Is sham transaction "benami"? Does S.4 of the Benami Transactions (Prohibition) Act, 1988 apply to sham transactions? These questions arise for determination in this second appeal.

2. The dispute in this case is in respect of small extent of property measuring 40 cents. The suit was for declaration of title and possession of the plaint property and for consequential reliefs. The suit has been decreed on concurrent findings of fact and defendants 1 and 2, have therefore filed this second appeal under S.100 of the Code of Civil Procedure. The learned judge, who admitted the second appeal and issued notice formulated the following question of law "whether the sale deed by the plaintiff to Pw.2 and further transactions, Exts.Bl and B6 are sham and nominal?". The brief facts are these.

3. The plaintiff, as owner of the land executed a sale deed in the year, 1963 in favour of one Gopalan Nair, examined in court as Pw.2. The original of the sale deed has not been produced and a copy is not available. But, referring to this deed, Pw.2 Gopalan Nair executed an assignment in favour of the 3rd defendant on 20-6-1968 (Ext.Bl). About six years thereafter, on 29-4-1974, the 3rd defendant purported to assign his rights in favour of defendants 1 and 2 under Ext.B6. The plaintiff averred that the original assignment in favour of Gopalan Nair was sham and nominal, not acted upon, that no possession was transferred and that he had no intention to transfer the property in favour of Pw.2 Gopalan Nair or anybody else. He filed the suit, when defendants 1 and 2 attempted to trespass on the property armed with the sale deed in their favour executed in April, 1974. The suit was therefore filed in May, 1974 for declaration of title, injunction and for other reliefs.

4. The defendants contended that the transactions were real and genuine, and that the title actually vested in them. They also contended that just prior to the assignment deed, Ext.B6 on 29-4-1974, under an agreement executed by the plaintiff, Ext.B2 dated 10-4-1973, possession was given to the first defendant and it was thereafter that the sale deed was executed in 1974 in favour of both defendants 1 and 2. The defendants thus claimed title and possession on the basis of the assignment deeds, Exts.Bl and B6 and resisted the plaintiffs suit. .

5. In the trial court, Gopalan Nair, the assignee under the 1963 deed was examined as Pw.2. He admitted that the assignment was sham and nominal, that there was no consideration, that he did not obtain possession and that the possession continued with the plaintiff. It is thus the accepted case of both the parties to the 1963 document, the plaintiff and Pw.2, that the plaintiff never intended to transfer any right in favour of Pw.2. If Pw.2 did not acquire any rights in 1963, there was nothing he could transfer in 1968 under Ext.Bl. The Trial Court, on an elaborate consideration of the evidence found that Ext.Bl of the year 1968 purporting to assign the rights of Pw.2 to the third defendant was not a "genuine transaction" that it was not supported by consideration and that the plaintiff continued to retain possession. Regarding Ext.B2, the agreement set up by the first defendant, the trial court held that it was a fabricated document and it did not contain the signature of the plaintiff as alleged. The court noted that the subsequent assignment deed (Ext.B6) did not curiously refer to the prior agreement, Ext.B2 and did not state that the first defendant had obtained possession earlier. Regarding the assignment Ext.B6, also, the trial court held that there was no transfer of possession or title under Ext.B6, and the plaintiff was himself in enjoyment of the property. Finding, therefore, "when the title and possession of the property did not pass on to the alienees, the plaintiff is entitled to the declaration and injunction as prayed for", the suit was decreed.

6. The matter was taken in appeal before the Subordinate Judge's Court as AS.No.1