The main legal point established in the judgment is that the Benami Act is intended to apply only to the first category of benami transactions, excluding the second category or bipartite transactions.

Thomas, J.

The nub of the dispute, shorn of all its ramifications, is whether" S.4 of the Benami Transactions (Prohibition) Act, 1988 (for short 'the Benami act) applies to "sham transactions". Bhaskaran Nambiar, J. has held in Ouseph Chacko v. Ramon Nair (1989(1) K.L.T 767) that it does not. But one of the observations made by Balakrishnan, J. in Mohanan v. Yesoda (1989 (1) KLT 867) is treated as expression of contrary view. Though the decision of Balakrishnan, J. was rendered earlier in point of time, we don't think that Bhaskaran Nambiar, J. was not aware of the said decision. Varghese Kalliath, J. while hearing arguments in G.R.P. No. 1446/89 noticed the aforesaid conflict in views of two learned judges mentioned above and hence through a fairly lengthy reference order referred the question to a Bench which in turn the Division Bench has referred to the Full Bench.

2. Shri. Thottathil B. Radhakrishnan, advocate, has raised a contention that Balakrishnan, J. has not in fact adopted a contrary view in Mohanan v. Yesoda (1989(1) K.L.T 867) in conflict with the ratio involved in Ouseph Chacko v Raman Nair (1989(1) KLT 767). Be that as it may, we will now examine the question whether sham transactions are included within the purview of the Benami Act at least partially.

3. For the sake of convenience we will set out the facts in C.R.P.No.1446/89 in which Varghese Kalliath, J. has passed the reference order. That revision arose out of a suit filed for a declaration that title of the suit property is that of the plaintiff inspite of a document executed by the plaintiff in favour of his wife purporting to a transfer the property to the transferee. According to the plaintiff, it was a sham transaction and the property ever remained with him. Hence the suit for declaration of title. But the wife contended that it was a genuine transaction. She resisted the suit, inter alia, on the ground that the suit is not maintainable in view of S.4 of the Benami Act. The contention was repelled by the trial court on the strength of the decision in Ouseph Chacko 's case. So, the defendant filed the revision against the said order by which the objection regarding maintainability was repelled.

4. Before the Benami Act was passed, there existed an ordinance called "the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988 "(for convenience, we shall refer to it as the Ordinance'). It came into force on 19-5-1988. It was replaced by the Benami Act on 5-9-1988. In between the two, there was deliberation at the instance of the Law Commission of India which submitted its 130th Report which eventually paved the way for passing the Benami Act.

5. Before the Benami Act and even before the promulgation of the Ordinance, courts in India have, by and large, recognised two distinct classes of transactions as Benami. The first type or class of Benami transaction was called the real benami transaction. A typical instance of it is when 'A' sells a property to 'B', but the sale deed mentions 'C' as the purchaser. Here the real purchaser is 'B' and 'C' is only the benamidar. Such a transaction is described as the real benami transaction. The second class or category of benami transaction is the sham transaction in which one person purports to transfer his property to another without intending to pass the title to the transferee. This second type of transaction was "loosely" called benami transaction. (For convenience, the first type of transaction can be referred to hereinafter as tripartite benami transaction - as three persons are involved in it - or the first category of benami transaction. The second class of transaction can be referred to either as bipartite benami transaction - since only two persons are involved in it - or the second category of benami transaction).

6. The fundamental difference between the two categories of transactions is this: In the former, there is an operative transfer resulting in vesting of title in