High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE SRINIVASAN & THE HONOURABLE MR. JUSTICE THANGAMANI
O.R. Abdul Hamid
Versus
O.R. Abdul Rahim & Another
Appeal No. 483 of 1986
Decided On :Decided On : 14-07-1993
BENAMI TRANSACTION (PROHIBITION) ACT, 1988 - SECTION 4 - APPLICABILITY - CO-OWNERSHIP - RESULTING TRUST - FIDUCIARY CAPACITY - DIVISION OF PROPERTY - VALUATION - ALLOTMENT.
Fact of the Case:
Plaintiff filed a suit for partition of properties alleging that the properties were held jointly by the parties and that there was an agreement to divide the properties later. The first defendant contested the suit, claiming that the properties described in 'C' schedule were his personal acquisitions and that he had been enjoying the properties exclusively. The trial court held that the 'C' schedule properties were partible and granted a preliminary decree in favor of the plaintiff. The first defendant appealed the decree, but the appeal was dismissed by the High Court. The plaintiff filed an application for passing a final decree. The first defendant objected, arguing that the Benami Transaction (Prohibition) Act, 1988 (the Act) barred the plaintiff from obtaining a final decree.
Finding of the Court:
The High Court held that the Act did not apply to the case because the first defendant was not holding the properties benami for the benefit of the plaintiff or other members of the family. The Court found that the properties were purchased with the joint funds of the family and that the first defendant was a co-owner of the properties. The Court also held that the first defendant stood in a fiduciary capacity with regard to the other co-owners and that S. 4(3)(b) of the Act applied to the case.
Issues: 1. Whether the Benami Transaction (Prohibition) Act, 1988 applies to a case where properties are purchased with joint funds and held in the name of one co-owner? 2. Whether a co-owner who has gained an advantage with the aid of co-owners' common funds stands in a fiduciary capacity vis-a-vis the other co-owners? 3. Whether the valuation of properties by the Commissioner and the allotment of properties by the trial court were proper?
Ratio Decidendi: 1. The Benami Transaction (Prohibition) Act, 1988 does not apply to a case where properties are purchased with joint funds and held in the name of one co-owner because the properties are not transferred to one person for a consideration paid or provided by "another person." The Act defines "benami transaction" as any transaction in which property is transferred to one person for a consideration paid or provided by "another person." 2. A co-owner who has gained an advantage with the aid of co-owners' common funds stands in a fiduciary capacity vis-a-vis the other co-owners with respect to that property. This is because the co-owner has a duty to act in the best interests of the other co-owners and to not use the common funds for his or her own personal benefit. 3. The valuation of properties by the Commissioner and the allotment of properties by the trial court were proper because there was no evidence to show that the valuation was erroneous or that the allotment was unfair.
Final Decision: The High Court dismissed the appeal and confirmed the final decree passed by the trial court, with the exception of the allotment of three items of property which were not included in the final decree. The Court allotted the three items of property to the parties by casting lots.
SRINIVASAN, J.
1. This appeal arises out of final decree proceedings. First defendant in the suit is the appellant. Plaintiff and the second defendant are respondents herein. When the suit was filed in 1967 the sister of the parties was the third defendant. The case of the plaintiff was that their mother Hathija Bivi died in 1939 leaving certain properties and their father who was also entitled to a share therein, agreed that all the properties of the mother could be taken by the children thereby relinquishing his own share. With the money borrowed on the security of the said properties as well as the income from the properties, certain purchases were made in the names of defendants 1 and 3 and also in the joint names of the parties. There was a registered agreement dated 19.4.1951 under which all the parties agreed that the properties shall be enjoyed jointly and they will be divided later. By that agreement, it was decided by the parties that the properties are divisible among the parties. It was also stated in the plaint that there was a separate living from 1957 and the parties had agreed that any acquisition of properties thereafter would belong to the acquirer exclusively. The plaintiff claimed division of properties which were held jointly.
2. First defendant was the only person who contested the suit. Defendants 2 and 3 remained ex parte. The defence put forward by the first defendant was that the properties described in ‘C’ schedule to the plaint were his personal acquisitions acquired with the aid of his own funds, and in any event, he had been enjoying the properties exclusively and had prescribed title by ouster The registered agreement dated 19.4.1951 was not disputed by the, first defendant.
3. Issue No. 3 framed by the trial court was, whether ‘C’ schedule properties are the separate properties of the first defendant and not liable for partition. The Court answered the issue in paragraph 11 of the judgment in the following words:
“Having regard to the fact that the ‘C’ schedule properties have been purchased with the family funds and to the fact that Exhibit A1 has come into existence after the said purchase, ‘C’ schedule properties come directly under the said agreement and they are partible. For the foregoing reasons. I hold that the ‘C’ schedule properties arc not the separate properties of the 1st defendant and answer issue No. 3 accordingly.”
The document referred to as Ex. A1 is the registered agreement dated 19.4.1951.
4. Ultimately the suit was decreed on 2.5.1970 and a preliminary decree was passed granting 2/3rd snare to the plaintiff. The decree was challenged by the first defendant in A.S. No. 671 of 1970 in this Court. When the appeal was argued, the only contention advanced by learned counsel for the appellant related to the oral agreement of the year 1957 and the acquisitions made thereafter. In fact, the contention pertained to the properties which were not included in the suit. Learned counsel contended that the finding of the trial court that those properties were not divisible was given behind the back of the parties concerned and was not sustainable. This Court has stated in the judgment very clearly that no other finding of the Court below was canvassed by the counsel for the appellant. The relevant observation of the Division Bench reads thus:
“We prefaced our observations by saying that the area of controversy has become considerably limited. This is so, because Mr. G. Ramaswami, the learned counsel for the appellant, does not challenge the findings of the court below either in the matter of reckoning of the share of the plaintiff in the suit schedule properties or in the matter of the accounting of the income from the properties, as asked for and as directed against defendants 1 and 2.”
Again the Bench said:
“We have already stated that the learned counsel for the appellant did not canvass the correctness of the conclusions of the court below as regards the findings on the issues rend
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