Judgment

S. B. MAJMUDAR

( 1 ) IN this group of matters a common question arises for our consideration. It is to the following effect "whether Section 4 (1) of the Benami Transactions (Prohibition) Act, 1988 (hereinafter referred to act) can be applied to suit, claim or action to enforce any right in property held benami against person in whose name such property is held or any other person. If such proceeding is initiated by or on behalf of a person claiming to be real owner thereof, prior to the coming into force of Section 4 (1) of the Act. Section 4 with its relevant sub-sections reads as under :-

"prohibition of the right to recover property held benami - (1) No suits, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.

(2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming be the real owner of such property.

(3) Nothing in this section shall apply:-

(A) Where the person in whose name the property is held is a coparcener in a Hindu undivided family and the property is held for the benefit of the coparceners in the family; or

(B) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity".

( 2 ) IN fact the question is answered in the affirmative by a Division Bench of this Court in Mithilesh Kumari v. Prem Behari Khare (1989) 1 SCR 621 : (AIR 1989 SC 1247 ). In that case two learned Judges of this Court constituting the Division Bench have taken the aforesaid affirmative view. The correctness of that view came up for consideration before another Division Bench of this Court. That Division Bench by its order dated 10/03/1992 directed that these matters be placed for hearing at the bottom of the miscellaneous list for final hearing on 22/03/1992 before a three Judge Bench. Ultimately this group of matters came to be placed for final hearing before this Bench.

( 3 ) WE have heard learned counsel for the respective parties on this question. Learned advocates were agreeable that though the order of the Division Bench dated 10/03/1992 has resulted in placing these mattes before three-Judge Bench for final hearing, we may after answering the question canvassed before us, sent back the matters to the Bench of two learned Judges who can dispose of the same on merits in accordance with law, in the light of answer given by us on the aforesaid question.

( 4 ) IN order to appreciate the nature of the controversy posed for our consideration, we may note a few relevant facts leading to these proceedings. In most of the proceedings various suits were filed years back before coming into operation of Section 4 (1) of the Act. These proceedings were pending either at the First Appeal stage or Second Appeal stage or in revision before the High Court or in civil appeals before this Court when Section 4 (1) came into operation. The question is whether these pending proceedings at various stages in the hierarchy can get encompassed by the sweep of Section 4 (1) and such suits would be liable to be dismissed as laid down by that section.

( 5 ) LEARNED counsel appearing for the concerned plaintiffs submitted before us that Sections 3, 5 and 8 of the Act came into force on 5/09/1988 when the Act received the Presidents assent and the remaining Sections were deemed to have come into force on 19/05/1988 and that prior to the coming into force of the Act and the relevant provisions thereof, litigations were already filed by the parties and they had to be governed by the then existing law which held