Bombay High Court
Sabita Rajesh Narang @ Sabita G. ... vs Sandeep Gopal Raheja And 33 Ors on 11 September, 2015
Bench: G.S. Patel
5-S777-14-RAHEJA-F.DOC
Atul
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO. 777 OF 2014
AND
NOTICE OF MOTION NO.1211 OF 2014
Sabita Rajesh Narang
(née Sabita G. Raheja), Age 49 years, Occ:
business, of Mumbai, Indian Inhabitant, residing
at Narang House Pali Hill, Bandra (West),
Mumbai 400 050. ...Plaintiff
versus
1. Sandeep Gopal Raheja
of Mumbai, Indian Inhabitant, residing at
Raheja Bay, Mount Mary, Bandra (West),
Mumbai 400 050.
2. Durga Sandeep Raheja
of Mumbai, Indian Inhabitant residing at
Raheja Bay, Mount Mary, Bandra (West),
Mumbai 400 050.
3. Gayatri Sandeep Raheja
of Mumbai, minor, aged about 17 years,
Indian Inhabitant, residing at Raheja Bay,
Mount Mary, Bandra(W), Mumbai 400050
a minor through Sandeep Gopal Raheja
(her father and natural guardian).
4. Aditi Sandeep Raheja
of Mumbai, minor, aged about 13 years,
Indian Inhabitant, residing at Raheja Bay,
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Mount Mary, Bandra (West), Mumbai 400
050, a minor through Sandeep Gopal
Raheja (her father and natural guardian).
5. Sonali Nimish Arora
(née Sonali G. Raheja) of Mumbai, Indian
Inhabitant residing at D.C. House, Plot No.
4, Nutan Laxmi Society, Road. 10, JVPD
Scheme, Mumbai 400 049.
6. Archana Desai
of Mumbai, Indian Inhabitant, Company
Secretary, Gopal Raheja Group,
Construction House, "B", 623, Linking
Road, Opp. Khar Telephone Exchange,
Khar (West), Mumbai 400 052.
7. Ferani Hotels Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
8. Unique Estates Development Company
Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
9. Palm Grove Beach Hotels Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
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10. K. Raheja Realty Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
11. Infiniti Malls Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
12.
K. Raheja Real Estate Services Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
13. Glacial Trading Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
14. K. Raheja Homes Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
15. Sandeep Gopal Services Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
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Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
16. Begonia Agro and Developers Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
17. Dulcet Agro & Developers Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
18. Toucan Agro & Developers Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
19. Osmosis Agro and Developers Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
20. Home Care Retails Marts Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
21. Fairprice Traders (India) Pvt. Ltd.
A Company incorporated under the
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Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
22. Jubilant Agro and Developers Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
23. Tresorie Traders Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
24. Hotel Shreelekha Regency Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
25. Make Waves Sea Resort Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
26. Juhu Beach Resorts Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
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27. Sealtite Gaskets Pvt. Ltd.
A company incorporated under the
Companies Act, 1956, having its Registered
Office at Unique Centre 501, 5th floor,
Waterfield Road, Mumbai 400 050.
28. Ideal Properties Pvt. Ltd.
A company incorporated under the
Companies Act, 1956, having its Registered
Office at Unique Centre 501, 5th floor,
Waterfield Road, Mumbai 400 050.
29. Kanishka Properties Pvt. Ltd.
A company incorporated under the
Companies Act, 1956, having its Registered
Office at Unique Centre 501, 5th floor,
Waterfield Road, Mumbai 400 050.
30. Gavotte Traders Pvt. Ltd.
A company incorporated under the
Companies Act, 1956, having its Registered
Office at Unique Centre 501, 5th floor,
Waterfield Road, Mumbai 400 050.
31. Sea Crust Properties Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
32. Greenfield Hotels and Estates Pvt. Ltd.
A Company incorporated under the
Companies Act, 1956, having its Registered
Office at Construction House, "B", 623,
Linking Road, Opp. Khar Telephone
Exchange, Khar (West), Mumbai 400 052.
33. Shyamlal Wadhwani
Adult, of Mumbai, Indian Inhabitant
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Residing at 304, Skylark, New Kantwadi
Road, Pali Hill, Bandra (West), Mumbai
400 050.
34. Bindoo Shyamlal Wadhwani
Adult, of Mumbai, Indian Inhabitant,
Residing at 304, Skylark, New Kantwadi
Road, Pali Hill, Bandra (West), Mumbai
400 050. ...Defendants
A PPEARANCES
FOR THE PLAINTIFF Ms. Rajani Iyer, Senior Advocate, with
Mr. Satish Shah, i/b Pankaj
ig Parsurampuria & Aatish
Parsurampuria
FOR DEFENDANT NO. 1 Mr. D.J. Khambata, Senior Advocate,
with Mr. Z. Behramkamdin, Mr.
Vivek Vashi, Ms. Kanika Sharma,
Ms. Alya Khan & Ms. Aditi Bhansali,
i/b Vivek Vashi
FOR DEFENDANTS NOS. 2 Mr. S.U. Kamdar, Senior Advocate, with
4 Mr. Karl Tamboly, i/b Vivek Vashi
TO
FOR DEFENDANT NO.5 Mr. Pradeep Sancheti, Senior Advocate,
with Mr. Chirag Mody, Mr. Aditya
Mehta, Ms. Teresa Daulat & Mr.
Pariket Shah, i/b Divya Shah &
Associates
FOR DEFENDANTS NOS. 7 Mr. Ravi Kadam, Senior Advocate, with
TO 15, 17, 19, 22, 24, Mr. Sanjay Jain & Mr. Malhar
25, 31 AND 21. Zatakia, i/b M/s. AZB & Partners
CORAM : G.S.Patel, J.
DATED : 8th & 11th September 2015
ORAL JUDGMENT
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1. I have heard counsel for the parties at some length today on
the following two preliminary issues that were framed under
Section 9A of the Code of Civil Procedure, 1908 ("CPC") on 8th
December 2014 in the suit filed on 30th July 2014.
(a) Whether the Suit as filed is barred under the
provisions of the Benami Transactions Act?
(b) Whether the Suit is barred by limitation?
2. Before I proceed to the merits, I note that not only has the
Plaintiff, Sabita Narang ("Sabita") on previous occasions declined
to lead any evidence on either of these preliminary issues but even
more startling, when, earlier this morning, after having heard Ms.
Iyer for Sabita for a little over an hour, I asked her to take
instructions, she was only able to say that Sabita would even then
not step into the witness box. Sabita has been in Court throughout
the day today. Ms. Iyer twice sought and was granted leave
including over the lunch recess to consult with her client. I
indicated that I was even now, at any time before I began dictating
judgment in Court, prepared to allow Sabita to lead such evidence
as she thought necessary for the purposes of these two preliminary
issues. I did so because I was disinclined to decide a matter such as
this without affording Sabita the fullest opportunity to bring all her
material before me. I went so far as to say that I would permit even
an oral application for leave to give that evidence, and that I would
not countenance any opposition from the Defendants in that regard.
About this much I was very clear: that disallowing Sabita an
opportunity to lead evidence, with possibly fatal results, was a
course of action that would certainly determine her rights. Allowing
her to lead evidence, on the other hand, would not in itself be a
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determination of any rights at all. It would only enable Sabita to
place on record all the evidence she could possibly marshall. For
reasons that are even now unclear to me, but which give me
significant pause to doubt, Sabita has chosen not to set foot on this
path. That is certainly her choice. Unfortunately, it is a choice
saddled with consequences.
3. The dispute pertains to certain assets and properties said to
be held in the family of the late Gopal Raheja. During his lifetime,
Gopal Raheja amassed a considerable fortune with his many
enterprises in the hospitality, shopping, construction and real estate
sectors. He died on 18th March 2014 following a protracted illness.
His wife, Sheila, died some years earlier. Disputes began in his
lifetime, in 2012. These were between him and his son, the 1st
Defendant ("Sandeep"). His daughter Sonali Arora (the 5th
Defendant; "Sonali") supported him. So did Sabita, his other
daughter, though after a fashion; for, as the following discussion
shows, her narrative is something of a departure from her father's.
Gopal Raheja filed Suit No. 2363 of 2012. A few months after he
died, Sabita filed this suit for partition. Sonali filed Chamber
Summons No. 708 of 2014 in Gopal Raheja's suit asking to be
transposed as the Plaintiff. I allowed that Chamber Summons on
30th April 2015. Sonali then filed an administration action, Suit No.
103 of 2015. Preliminary issues under Section 9A of the CPC are
pending determination in Gopal Raheja's suit (in which Sonali is
now the plaintiff ) and in Sonali's own suit.
4. The three siblings, Sandeep, Sonali and Sabita are now at
war over the assets and properties in what Ms. Iyer calls the "Gopal
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Raheja Group". This seems to me a somewhat fluid term. It
sometimes includes Sandeep's spouse, the 2nd Defendant, Durga
Sandeep Raheja ("Durga") so that, used in the context of events
that occurred while Gopal Raheja was alive, the so-called "Group"
included five persons (Gopal Raheja, his three children and Durga),
and possibly a sixth, the Gopal Raheja HUF. Inexplicably, the
phrase later shrinks to four persons, viz., Gopal Raheja and his
three children. This is a matter of some moment given the frame of
Sabita's suit. The other Defendants are not relevant for the present
purposes; some are formal parties.
5.
In this suit Sabita claims that the entire complex of
corporations and their holdings is "in reality nothing but a
convenient means or mechanism for the management and
administration of the undivided family holdings and interests which
comprise the Gopal Raheja Group properties, assets and
businesses." She claims that there was an understanding by which
Gopal Raheja as the head of this group was at all material times the
ultimate authority in all matters of decision making in relation to
this group and its assets. Ms. Iyer speaks of the group as some sort
of distinct legal entity, a use that I do not believe is entirely
accurate. Sabita says that from the time of a separation in 1995-1996
between Gopal Raheja and his brother Chandru Raheja all the
assets and properties that 'came to the Gopal Raheja Group' were
the undivided property of all members of this Group, i.e., that all of
them had an equal undivided share, right, title and interest in the
entirety of those assets, holdings and properties. The fact that these
assets were held in the names of one or the other of the members,
or in joint names, is, she says, entirely immaterial. This was only
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'for convenience'. Consequently, Sabita claims to be entitled to a
partition and to her one-fourth share in all these assets; and,
through her father's will (yet to receive probate), a one-half of his
one-fourth share. There having been no separation or partition till
now, Sabita says, she is entitled now to sue for partition. No
question of limitation arises, she insists; and, since there is this
element of co-ownership (the equivalent of being tenants in
common), the implied unity of possession itself means that every
person in that group held any particular asset or property in trust
and in a fiduciary capacity for the others. Thus, in view of the
provisions of Section 4(3)(b) of the Benami Transactions
(Prohibition) Act, 1988 ("the Benami Act"), a claim of this nature
is not prohibited. That is the frame of the suit; and that is the basis
of prayer (A), for a declaration of an equal and undivided share in
all the properties and assets, and prayer (B), for a partition of these,
in the suit.
6. The factual background is this. Gopal Raheja, his parents and
other family members were amongst those who migrated to India at
the time of Partition in 1947. In 1956, having obtained a B.E. in civil
engineering, Gopal Raheja joined his father and two uncles in the
family real estate business. In time, so did his younger brothers
Chandru and Suresh. Their father, Lachmandas, separated from his
brothers in 1966, and continued in business with his sons, the
youngest one joining the business some years later. The
Lachmandas branch did business in the name "K. Raheja Group",
using it as a corporate name and as a brand. Lachmandas died in
1983. Four years later, the youngest of the three brothers, Suresh,
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separated. Gopal and Chandru Raheja continued together in
business.
7. By 1992, the K. Raheja Group, under Gopal and Chandru
Raheja, was already well known in construction, real estate, retail
and hotels. Several prominent projects had been completed. In
1993, Gopal Raheja's wife, Sheila, the mother of Sandeep, Sonali
and Sabita, passed away. Gopal Raheja never remarried.
8. We come now to the events of 1995-1996. These are crucial
to Ms. Iyer's case. This was the time when four separate writings
were executed as part of the family separation between Gopal
Raheja and his brother Chandru Raheja and their respective
families. Copies of these documents dated May 1995, 5th April
1996, 16th November 1996 and 9th December 1996 1 constitute what
Ms. Iyer calls the 1995-1996 arrangement. Between them, these
writings provide for a separation of the various assets and
businesses that were till then held in an interlocking fashion
between Chandru Raheja and his family on the one hand and Gopal
Raheja and his family on the other. Ms. Iyer stresses that these
documents speak of a 'vesting' of assets in the 'Gopal Raheja
Group'. She commends an interpretation that this must mean, and
mean only, that the assets vested jointly in all members of the Gopal
Raheja Group, each of them having an equal undivided share in
every one of these assets, properties and holdings. She also says
that it matters not that the actual assets were held by individual
members of the Gopal Raheja family. According to her, the family
arrangements required the assets to be placed in the names of 'a
Plaint, Exhibit "C1" at pp. 178-180, Exhibit "C2" at pp. 181-183, Exhibit
"C3" at pp. 184-193, and Exhibit "C4" at pp. 200-211
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nominee' or 'nominees' on behalf of each group. For completeness,
she points out that the separation was to be effected in three phases
and that the second and third of these remained undone, and that
this resulted in a later Suit No. 232 of 2014 by the Chandru Raheja
Group against the Gopal Raheja Group. According to Ms. Iyer, the
1995-1996 Family Arrangement made it clear that particular
properties, assets and businesses 'vested collectively' in the Gopal
Raheja Group and each member of the Gopal Raheja Group had
and since then has an equal and undivided share, right, title and
interest in the properties, assets and businesses of the Gopal Raheja
Group and its management and control. This is the basis of the
claim for partition.
9. Ms. Iyer also claims that the working of the Gopal Raheja
Group after the 1995-1996 Family Arrangement demonstrates inter
alia that all holdings were in fact maintained in trust for the Group
as a whole. I must note that there is even at this stage the
unexplained contradiction to which I earlier referred: the 1995-1996
agreement includes Durga, Sandeep's wife. Yet for reasons that are
not at all apparent, Sabita's claim wholly excludes Durga and is on
the basis that Gopal, Sandeep, Sonali and Sabita each had and today
have equal an one-fourth undivided share, right, title and interest in
all properties and assets. On Gopal Raheja's demise, in terms of his
Will, his share is to come, Sabita says, to her and Sonali. Ms. Iyer
also attempts to show that even if any assets or holdings remained
in a particular individual's name this was "for business expediency
and convenience and did not in any manner affect the status of the
undivided Gopal Raheja Group." She also speaks of a so-called
'practice', both before and after the 1995-1996 Family Arrangement
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of adding a second name "again for convenience". In essence, Ms.
Iyer claims that it was agreed and understood that Gopal Raheja as
the pater familias controlled all dispositions, transfers and holdings
between the members of his family till he personally decided on a
separation or their distribution, notwithstanding that the very many
holdings were in the names of one or more individuals. Ms. Iyer
also contends that every one of the four members that she includes
in her definition of the Gopal Raheja Group had a community of
undivided interest in the entirety of the assets that came to Gopal
Raheja's family on his separation from his brother. This includes
ownership of holdings and equity in family-controlled enterprises.
There are then additional claims about similar practices and certain
events, all to allege that no individual exercised any independent
rights to the exclusion of the others, and so on.
10. There then follows Ms. Iyer's delineation of the events of
2004. At that time it seems that Sonali was diagnosed with a grave
medical condition. Sandeep, or so says Sabita, expressed certain
apprehensions and insecurities to their father Gopal Raheja. For the
purposes of limitation, it is important to note that Sabita in her
Plaint now speaks of a 'common understanding' said to have been
arrived at about this time in 2005-2006. Sabita says that in order to
allay Sandeep's fears and insecurities, Gopal Raheja agreed to what
is described as a 'temporary change' in the shareholding and asset
holding patterns so that Sandeep, Durga and their minor daughters
took about 58% of the shareholding, Gopal Raheja himself retained
42%, and the relatively negligible remainder was distributed
between Sabita and Sonali. Sabita insists that these transfers were
merely ostensible: innocuous in execution, placatory in intent and
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ineffective of purpose. She insists that they were not in defeasance
of her claim of undivided interest and co-ownership. She claims
that the consideration for these transfers was illusory and
deceptive, and attempts to show that the consideration was cycled
so that there was no consideration at all. She says that there was no
change in the actual beneficial ownership and that there was an
understanding at that time, i.e., in 2004, that the community of
interest and title in the entirety of the holdings and assets was ever
intended to continue.
11. The disputes, till then evidently suppurating, burst open in
September 2011. Gopal Raheja was then about 78 years old. Sabita
says that Sandeep for the first time did not cooperate in arriving at a
family arrangement. She pegs this date at 1st September 2011. She
claims that this was because Sandeep disapproved of Gopal
Raheja's long-standing relations with another lady. There follow
allegations of deceit, cheating and defrauding, and then finally
Sabita says that Sandeep took disadvantage of his fiduciary position
and claimed inter alia that there was a family arrangement much
earlier in time, in 1992. He claims this for the first time, she says, in
his letter dated 28th January 2012 to Gopal Raheja. There are
allegations about the events of that month, but it is Sabita's case
that after September 2011 and January 2012, Sandeep and Durga
virtually usurped the properties, assets and businesses of the Gopal
Raheja Group as also its management and control, inter alia on the
basis of the alleged family arrangement of 1992. There was some
correspondence thereafter between Gopal Raheja and Sandeep
Raheja and ultimately Gopal Raheja filed Suit No. 2363 of 2012 in
this Court, in which he said that he had made a division and
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distribution on 1st June 2012; that this was valid and binding; and
sought its enforcement. There is in this sequencing a letter dated
13th April 2013 from Sandeep to Sabita in which Sandeep denied
that Sabita had any particular interest in Defendant No. 9 or any
other asset or entity in the Group.
12. Gopal Raheja died on 18th March 2014; just two days, as I
recall, before his examination was to commence by video-
conferencing before me. There followed Sonali's application for
transposition, the present suit and Sonali's suit for administration,
matters to which I have earlier referred and, for that reason, will not
repeat here.
13. I return now to the issue with which I began: Sabita's refusal
to give evidence in the matter. As I see it, the entirety of her case,
from start to finish, demands evidence. She says that after the 1995-
96 Family Arrangement, the family business continued to be
closely-held, and run as a joint family quasi-partnership. This needs
evidence. She says that "no member of the Gopal Raheja Group
ever asserted any rights independently as shareholder and/or
Director but always acted in a fiduciary capacity and in trust for
each other". That needs evidence. She claims that "all properties,
assets and business that came to the share of the Gopal Raheja
Group are vested in the Group as a whole; and since then there has
been no inter se partition/division or distribution between the
members of the Group" and that "all the properties, assets and
businesses continued to vest collectively in the members of the
Group with each member entitled to/holding an equal and
undivided share, right, title and interest in the properties, assets
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and businesses and management and control thereof." Given that
the Plaint says that in the interregnum there was a change in the
share and asset holding pattern, this 'continuance' is a matter of
evidence. She alleges, as a matter of established fact that no member
of the Gopal Raheja Group exercised or attempted to exercise any
independent rights in respect of the shareholding or Directorship.
That requires evidence.
14. Then Sabita says this in paragraph 6.B.1.(ix) of her written
submissions, referencing paragraph 108 of the Plaint:
(ix)
there was only one pro-tem change of ostensible
and/or nominee holders of shares in the year
2005-06 as an interim measure to assuage the
fears, insecurities and apprehensions of
Defendant No.1 (as per the directions of late
Gopal L. Raheja) and on the reiteration of the
common understanding inter se the Gopal Raheja
Group that the final division and distribution of
the properties, assets and businesses of the
Gopal Raheja Group will be effected between
the family members at the appropriate time and
without in any manner affecting the share, right,
title and interest of any member as crystallized
and reiterated in terms of the 1995-96 Family
Arrangement writings.
15. This is clearly a matter of evidence in every single aspect.
Whether the change was pro tem or not, whether the holdings were
ostensible, whether the holders were nominees, whether this was
for the alleged purpose of assuaging Sandeep's 'fears, insecurities
and apprehensions' (and even that he did indeed have any such
'fears, insecurities and apprehensions'), that there were directions
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by Gopal Raheja, that there was a reiteration of anything at all, or
that there was a 'common understanding', and what the terms of
that 'common understanding' might be and how they related to the
1995-1996 Family Arrangement, and so on to the end of the chapter
-- all of this, in my view, demands evidence. It is not the kind of
factual material that can legitimately be assumed. There are other
allegations, too: of Sandeep and Durga reneging on this 'common
understanding', of the incorrectness of Sandeep's claim to a prior
1992 agreement and so on, also all requiring evidence.
16. Yet these allegations are, as the matter stands before me
today, the only basis for Sabita's case that the holdings were all
maintained as nominees, in an ostensible fashion, with the impress
of a trust. Two submissions are, in particular, noteworthy. These
are in paragraphs 6.F.(v) and (vi) of the written submissions.
v) The Plaint throughout states that all holdings
being in terms of 1995-96 Family Arrangement writings
are holdings as 'nominee' in a fiduciary capacity and in
trust for the benefit of the Group as a whole.
vi) The Plaint repeatedly sets out that none of the
parties acquired and/or exercised any beneficial rights
independently.
17. "The Plaint throughout states"; "the Plaint repeatedly sets
out"; what is to be made of this? Am I to assume today the
correctness of any of this merely because "the Plaint throughout
states" this or that or "the Plaint repeatedly sets out" a very great
many things? This is not an application under Order VII Rule 11 of
the CPC. This is a test of jurisdiction under Section 9A. I
understand that the question of whether or not limitation can be
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tried as a preliminary issue is pending before a larger Bench of the
Supreme Court, but the two assertions I have set out above do not
relate to limitation. They relate principally if not exclusively to the
question under the Benami Act. Is the Plaintiff not required to
prove the correctness of what her "Plaint throughout states" or
"repeatedly sets out"? If so, this is an exception to the law that, at
least as of today, is not to be found in the statute.
18. These allegations -- and they are only allegations still,
entirely unproved -- are the only basis on which I am asked to
conclude affirmatively that the first preliminary issue must be
answered in the negative. In other words, I am invited to return a
finding of fact based only on allegations, sans evidence, sans proof. I
must necessarily conclude that there was in fact such a trust of the
kind of which Sabita speaks. Consequently, I must find as a matter
of law following this finding of fact that the provisions of the
Benami Act do not apply.
19. As to limitation, that is always at the very least a mixed
question of law and fact. Sabita says time runs from January 2012 or
24th March 2014 or December 2011 and her suit is within time. She
does not care to explain why it should not run from the 2004 or the
2005-2006 'common understanding' of which her own Plaint
"throughout" and "repeatedly" speaks.
20. This is not the first time Sabita was asked if she wished to
lead evidence. I sought this from her twice before, on 8th December
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2014 and 9th April 2015. Her response, declining to lead evidence,
is noted in the orders of those days.
21. Ms. Iyer attempts a submission that Sabita's evidence is
unnecessary as there are important admissions allegedly made by
Sandeep which will suffice. I do not think that is a permissible
course of action. It is true that an admission furnishes the best
evidence where it remains unexplained.2 But an admission must be
clear and unambiguous. It must be read as a whole. It is substantive
evidence and can be used without being put to the maker of it in
cross-examination, but it is not conclusive proof of the matters
admitted. An admission must still be duly proved; and it is when
proved that an admission is admissible evidence irrespective of
whether the party making it appeared in the witness box or not and
whether or not the party making it was confronted with it because
he or she made a statement contrary to that admission. 3 Therefore,
irrespective of whether or not Sandeep chooses to give evidence,
any admission attributed to him must still be clearly identified, must
itself be unambiguous and must be proved. That can only be done
by Sabita leading evidence. No such admission is shown or proved.
22. Given this, Ms. Iyer's citing of several authorities seems to
me to quite considerably beg the question. At least three of these
seem to me to be against the propositions she advances. Marcel
Martins v M. Printer & Ors.4 speaks of determining the existence of
a fiduciary capacity for the Benami Act "in a factual backdrop".
Ramji Dayawala & Sons (P) Ltd v Invest Import, (1981) 1 SCC 80
Bharat Singh and Anr. v Bhagirathi, AIR 1966 SC 405; Murlidhar Sapuji
Valve v Yallapa Lalu Chougule, AIR 1994 Bom 358
AIR 2012 SC 1987
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That is a clear indicator of the need for evidence. SM Wahi v Ms.
Reeta Wahi5 was in relation to a fiduciary relationship in the context
of the Benami Act, and the decision was under Order VII Rule 11 of
the CPC, a provision that is materially different from Section 9A.
Inescapably, that decision proceeded as on a demurrer, on the basis
of the pleadings in the plaint. That plaint referenced a written
admission of the defendant accepting the fact that the property was
being held by him as a trustee. That is a very different matter from
the case at hand. Incidentally, Wahi also holds that 'every nominee
may not be a fiduciary'. Similarly, Binapani Paul v Pratima Ghosh &
Ors.6 is not an authority for the proposition that no evidence is
required to prove the fiduciary relationship required by Section 4(3)
(b) of the Benami Act. To the contrary: Binapani Paul was a case
that was fully tried and decreed by the trial court. Finally, as regards
limitation, Hari Shankar Singhania v Gaur Hari Singhania & Ors.,7
a case on which Ms. Iyer places considerable reliance, itself says
that the starting point of limitation is a question of fact. The finding
as to the distribution and the onset of disputes was assessed in
Singhania as a matter of commonly accepted fact. I do not believe
that the generally stated principle in that case can be applied willy-
nilly to every single case of a family dispute. Indeed, it seems to me
to be entirely wrongly applied here. The dispute is not about the
1995-1996 Family Arrangement. Even according to Sabita, that is
only the genesis of the 'common' holding, trusteeship and
beneficial interest. That was an arrangement between the Chandru
Raheja and Gopal Raheja families and it is not being tested in this
case at all. What is in dispute in this case is something entirely
2006 ILR 1 Delhi 774
AIR 2008 SC 543
AIR 2006 SC 2488 (1)
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different, i.e., the disputes internal to the Gopal Raheja family.
Here, Sabita's case seems to be that there was a common
understanding of 2004 or 2005-2006, something that is not
admitted, and that there was no previous understanding as Sandeep
claims there was. This decision does not assist Ms. Iyer either. The
remaining authorities carry the matter no further. 8
23. This is enough to unsuit the Plaintiff. But if there were any
remaining doubts, I believe these to be quite firmly extirpated by
the submissions advanced by Mr. Khambata for Sandeep and Mr.
Kamdar for Durga and her children. As they point out, Section 4
forbids an action to recover property held benami, as defined in
Section 2. Then Section 4(3) makes an exception, and the second of
those is in relation to trusteeship. A trustee's holding can never be
said to be benami. The result is that unless trusteeship be shown,
no suit to enforce a right over property held by a benamidar lies at
the instance of a person claiming to be the 'real' owner of that
property. Section 7 of the Benami Act repeals Sections 81 and 82 of
the Trusts Act, which deal with resulting or implied trusts, and
Section 94, which deals with constructive trusts. Consequently, in
order to fit within the exception of Section 4(3)(b) of the Benami
Act, the 'trust' spoken of must be one that is outside Sections 81, 82
and 94 of the Trusts Act; and this leaves only an express trust
within the meaning of Sections 5, 6 and 10 of the Trusts Act. Those
provisions demand the formality of an express declaration of trust,
its objects and purposes, its property, beneficiaries and,
On the Benami Act: Canbank Financial Services v Custodian, AIR 2004
SC 5123; Dr Jagdish Bansal v Shivkumar Pal, MANU/DE/3903/2012;
On limitation: Annasaheb Bapusaheb Patil v Balwant B. Patil, AIR 1995
SC 895; Daya Singh v Gurdev Singh, AIR 2010 SC 3240; Gunvantbhai
M. Shah v Anton Elis Farel, AIR 2006 SC 1556
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importantly, an acceptance of trusteeship by the named trustee.
None of these requirements are met. There is no pleading of an
express trust at all, as indeed there could not have been. The only
pleading, and that is clear even from the written submissions, is of
an implied trust, i.e., of the 'impress' of a trust. At most, Sabita
might have been able to claim the existence of a resulting trust; but
even that is now barred. However, Section 4(3)(b) also speaks of a
property being held by some other person standing in a 'fiduciary'
capacity. This may happen as in Reeta Wahi's case before the Delhi
High Court, where there was an actual admission of the property
being held in trust, albeit without the necessary formality of a
regular deed of settlement of an express trust. It might also arise
where the law imports a fiduciary relation. Not every holding in a
family is fiduciary, and not every nominee is proprio vigore a
fiduciary. It is certainly not insignificant that Sabita's claim extends
to equity holdings in companies. At a minimum, if these holdings
were 'impressed with trust', they required a statutory declaration
under Section 187C of the Companies Act, 1956 or Section 89 of
the Companies Act, 2013. The 2013 Act came into force before the
present suit was filed. Section 89(8) makes it clear that absent the
necessary declaration, no right in relation to that shareholding is
enforceable. This would have been entered on the companies'
registers of members. There is no such case even made out.
24. Sabita had the opportunity to establish this fiduciary
relationship, even outside the exclusions of the Benami Act, and
relying on the second part of Section 4(3)(b), i.e., "other fiduciary
capacity". She might have shown, say, that while assets were held in
one name, the benefits or income from those assets were shared in a
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manner inconsistent with a sole or personal holding. Sabita
repeatedly refers to 'intentions', 'understandings', 'practices' and
more. Of this, there is no evidence whatever. All that I have is a
surmise piled on conjecture wrapped up in speculation.
25. Ms. Iyer's arguments that the 1995-1996 Family
Arrangement used the words "vesting" and "nominee/s" and that,
therefore, there is an admitted commonality of interest is also
incorrect. That word "nominee" is only used in the context of a
separation from the Chandru Raheja Group to say that one or more
assets or properties would vest in this or that person from the
Gopal Raheja Group upon a separation being effected. This does
not mean that the transferee held the asset as a nominee vis-à-vis
other family members of his or her own group. Ms. Iyer's
formulation seems to me to proceed on the basis that the term
'Gopal Raheja Group' is a reference to some sort of juristic entity
rather than a term of convenience used in the documentation of
1995-1996. The transfer of assets between the Chandru Raheja
Group and the Gopal Raheja Group does not by itself demonstrate
any fiduciary capacity within the Gopal Raheja Group itself.
26. In my view, the first preliminary issue must be answered in
the affirmative. The suit is barred under the provisions of the
Benami Transactions (Prohibition) Act, 1988.
27. Mr. Khambata and Mr. Kamdar say that there is a reason that
Sabita has repeatedly declined to enter the witness box or lead
evidence. Had she done so, she would no doubt have been
confronted with her own inconsistencies. In her response to Gopal
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Raheja's suit, Sabita said that Gopal Raheja's three children held
shares and assets in trust for Gopal Raheja. This is a remarkable
departure from the case that is now propounded. In his suit, Gopal
Raheja claimed that there was a 'GL Raheja Family Arrangement'
of June 2012. He sought its enforcement. Sabita in her affidavits
filed in the Notice of Motion in that suit, supported this stand; and
did not controvert Gopal Raheja's case that between 2005 and
2007, Sabita voluntarily transferred some shareholdings to Sandeep
and his family. This is directly contrary to what she now says. The
so-called G L Raheja Family Arrangement is at odds with Sabita's
claim in this suit. Both cannot co-exist. The essence of the G. L.
Raheja Family Arrangement of 2012 is that Gopal Raheja was the
beneficial owner of all the assets and properties; and that it was he
who effected a distribution in 2012. Sabita's case today is that
Gopal Raheja only ever had 25% ownership; and she does not
explain how she could have ever supported Gopal Raheja's case at
any time. She took something akin to the present stand only in her
written statement to Gopal Raheja's suit. The two stands are not
just inconsistent; they are mutually destructive.
28. As regards the second issue of limitation, this can be dealt
with shortly. It is a mixed question of fact and law. No facts are
proved as required by Section 9A of the CPC. Ms. Iyer says that the
suit is within time since it was not till 30th April 2013 that Sandeep
denied Sabita her rights. Even taking the date of 28th January 2012,
which is when Sandeep first claimed the 1992 oral agreement in his
letter to Gopal Raheja, the present suit would nonetheless be in
time. It is filed well within three years of either of these two dates.
This argument unfortunately overlooks a critical set of averments in
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the Plaint itself. To begin with, the Plaint contains no specific
statement as to limitation but only says that the cause of action has
arisen within the three preceding years. Even assuming that Sabita
had a right to sue for partition at any time, her own averments in
the Plaint do not support this. There are share transfers said to have
been made in 1996, 2001, 2005, 2006 and 2007 and each of these is
said to have been in derogation of the rights claimed by Sabita
under the 1995-1996 Family Arrangement. These claims are clearly
out of time. There can be no saving by virtue of Section 10 of the
Limitation Act on the basis that this is a suit against a trustee or his
representatives. The pleading in the Plaint is only of a resulting
trust and not an express trust. 9 Moreover, Sabita herself speaks of
not one but half a dozen different family arrangements or
understandings. One such understanding is post the 1995-1996
Family Arrangement. This finds mention in paragraph 21(g) of the
Plaint. There is then in paragraph 26 a mention of a yet another oral
arrangement and a common understanding arrived at in regard to a
family arrangement for division and distribution of properties.
Then there is a later oral agreement mentioned in paragraph 28(c)
of the Plaint and this is of 2005. There are at least three or four
more such allegations of separate family arrangements.
29. All of these are of course unsupported, without particulars
and today without evidence. It is, I think, for the Plaintiff to have
convincingly led evidence to establish these alleged family
arrangements. In any case, what appears to be material is that if
according to the Plaintiff in 2005-2006 there was an agreement or
Soonderdas Thakersey & Ors. v Bai Laxmibai & Ors., [1945] ILR Bom
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understanding by which certain properties were transferred to
Sandeep Raheja, and if this was in derogation of the 1995-1996
Family Arrangement, then that must surely be a starting point of
limitation of this suit.
30. In my view, it is not possible to hold in favour of the Plaintiff
in the absence of necessary evidence. A mere pleading is
insufficient.10 It appears to me that the suit is wholly out of time. At
any rate, a substantial part of the relief sought is barred by
limitation. Without evidence, a segregation of these claims is
impossible. The second issue is also answered in the affirmative.
The suit is barred by limitation.
31. Consequently, the suit is dismissed. There will be no order of
costs.
(G. S. PATEL, J.)
CERTIFICATE
"Certified to be a true and correct copy of the original signed Judgment/Order."
K. S. Nanji & Co v Jatashankar Dossa, AIR 1961 SC 1474
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