S. Satjit Singh & Sons vs Union Of India And Ors.
1995 Latest Caselaw 874 Del

JUDGMENT

Mohd. Shamim, J.

(1) The petitioners through the present writ petition have prayed for issue of directions to the respondents Nos. 1 & 2 to mutate the property bearing No. 64, Sunder Nagar, New Delhi ( hereinafter referred to as the disputed property for the sake of convenience) in the name of the petitioner No.1 and to strike out the name of respondent No.3. They further seek the quashment of the order dated February 12,1974 passed by respondent No.2.

(2) Brief facts which are necessary for the proper appreciation of the points involved herein are being reproduced below: that the petitioner. S.Satjit Singh & Sons are a Hindu undivided family. S. Satjit Singh was the karta of the said family. The said family is the owner of the disputed property which has been fully described in para 1 of the present petition. S. Surjit Singh is the real brother of S.Satjit Singh. S. Surjit Singh purchased the disputed property for a consideration of Rs. 13,400.00 as a benamidar for the petitioner S.Satjit Singh vide perpetual lease deed dated January 17,1952. The purchaser under the terms and conditions of the said lease deed was required to raise construction on the said property within 24 months from the date of the purchase. The petitioner thus raised the construction within the stipulated period on the disputed property and expended a lot of money thereon from his own pocket. The petitioner S.Satjit Singh has since then been spending huge amounts on the maintenance and up-keep of the said property. The petitioner S.Satjit Singh is the real owner of the disputed property. The disputed property has been assessed to income tax and wealth tax. The same is being paid by petitioner no.1 as he is the real owner of the disputed property. The respondent No.3 has never shown the said property as his property in his income tax and wealth tax returns. The petitioner No.1 has always been acting as the real owner of the disputed property inasmuch as it is he who has let out the same to the tenants and is Realizing the rent from them. The disputed property is at present under the tenancy of petitioner No.3 and the rent is being realised from them by petitioner No.1.

(3) Disputes arose in between the petitioner No.1 and S. Surjit Singh in regard to the disputed property. Consequently the petitioner No.1 was constrained to bring forward a suit for declaration. The same suit came up for hearing before Shri Sagar Chand Jain, Sub Judge 1st Class, Delhi, as he then was. The said suit was decreed on January 8,1969 whereby it was declared that the petitioner no.1 was the real owner of the disputed property.

(4) The petitioner No.1 requested the respondent No.2 to mutate the said property in his name in place of respondent No.3, however to no avail despite the said judgment and decree alluded to above. According to the respondents Nos. 1 and 2 the said judgment and decree is alleged to be collusive. Hence they did not act upon it. The petitioner No.1 has now received a letter dated July 12,1974 where through a threat has been extended that the respondents would re-enter upon the disputed property in terms of cl.XIX for violation of cl.IX of the lease deed. The petitioner replied to the said letter. Hence arose the necessity for the presentation of the present petition.

(5) The respondents Nos. 1 & 2 through an affidavit sworn by Shri A.S.Madan, Deputy Land and Development Officer, have refuted all the above said averments. According to them, it was the respondent No.3 who purchased the disputed property in a sale by auction on April 15, 1949 subject to the terms and conditions enumerated in the lease deed. It was he who paid the consideration from his own pocket. Thus, he was the real owner and not the ostensible owner of the disputed property. Since the respondent No.3 was the actual purchaser and he declared himself to be so, thus he is now estopped from claiming any thing to the contrary. Thus the respondents are entitled to enforce cl.XIX of the lease agreement. The auction sale was further subject to the condition of the name of the actual purchaser being disclosed at the fall of the hammer and the name disclosed was that of respondent No.3. It was also made clear at that time that no subsequent change will be permitted and any subsequent change could have been only with the prior permission of the Chief Commissioner of Delhi. The impugned decree was obtained by the petitioner No.1 collusively and by misrepresentation of facts. It was an ex parte decree. S. Surjit Singh never put in any contest. Hence the said decree cannot be acted upon. It is wrong and false that S.Surjit Singh was only a benamidar. The petition is false and frivolous. It is liable to be dismissed.

(6) It is manifest from the facts canvassed above that the only short point which arises for adjudication in the instant case is as to who is the real owner of the disputed property i.e. petitioner No.1 S.Satjit Singh or respondent No.3, S. Surjit Singh ?

(7) Learned counsel for the petitioner Mr. Arun Jaitley, Senior Advocate, and S. Herjinder Singh have vehemently contended that respondent No.3 purchased the disputed property in a sale by auction on April 15,1949 as a benamidar for S. Satjit Singh, petitioner No.1. The sale consideration was paid by S. Satjit Singh for the purchase of the said property. The respondent No.3 who is the real brother of petitioner No.1 S. Satjit Singh has absolutely got nothing to do with the disputed property. He simply lent his name to the said sale transaction. He is thus simply an ostensible owner. In fact, the real owner is S. Satjit Singh. It was he who got the constructions raised on the disputed property within the stipulated period out of his own pocket. He expended a huge amount thereon. It is he who is paying house tax. The said property is also being shown as the property of the petitioner No.1 in the income tax and wealth tax returns. It has been further urged for and on behalf of the petitioner that S. Surjit Singh, is also an income tax and wealth tax payee. However, he has never shown the said property as his property in any of the records of the government.

(8) MR.MADAN Lokur, Standing Counsel, has argued to the contrary. According to him, admittedly, the disputed property was purchased by S. Surjit Singh. It was he whose name was entered in the government records as the purchaser of the property. Again, it was the respondent No.3 who paid the consideration for the said property. Thus there is absolutely nothing on record to show and prove that the real purchaser of the disputed property is S.Satjit Singh, petitioner No.1. If this is so it was in clear violation of cl.IX of the lease agreement in case the property was transferred to petitioner No.1, S.Satjit Singh without prior permission of the authorities. Hence respondents Nos. 1 and 2 are entitled to re- enter upon the disputed property in terms of cl.XIX and as such, the proposed action to be taken vide letter dated February 12,1974 was perfectly justified in the circumstances of the present case.

(9) It is crystal clear from above that the only polemical issue to be decided is as to whether the sale of the disputed property through the auction sale held on April 15,1949 was a benami transaction and S.Surjit Singh lent his name only to the said transaction? In fact the petitioner No.1 was the real purchaser.

(10) Prior to the passing of the Benami Transaction (Prohibition) Act, 1988 ( hereinafter referred to as the act for the sake of brevity) a benami transaction was very much legal. The practice of purchasing properties in the name of other persons was quite common and prevalent throughout the length and breadth of this country and it was permissible under the provisions of different Acts. To illustrate the said point S. 82 of the Indian Trusts Act provided as under: "WHERE property is transferred to one person for a consideration paid or provided by another person, and it appears that such other person did not intend to pay or provide such consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or providing the consideration. Nothing in this section shall be deemed to affect the Code of Civil Procedure, section 317, or Act No. Iv of 1859 (to improve the law relating to Sales of land for arrears of revenue in the Lower Provinces under the Bengal Provinces),..... ".

(11) Thus it is abundantly clear from above that earlier to the passing of the Act there was nothing wrong or illegal in purchasing a property by one person in the name of another person. There is no dispute with regard to the fact that the above said Act is prospective in its operation and not retrospective. I am tempted here to cite a few lines from a decision of the Hon'ble Supreme Court as reported in R. Rajagopal Reddy (dead) by LRs and others v. Padmini Chandrasekharan ( dead) by LRs, ." It must, therefore, be held, with respect, that the Division Bench of this Court in Mithlesh Kumari's case, does not lay down correct law so far as the applicability of S. 4(1) and S. 4(2) to the extent hereinabove indicated; to pending proceedings when these Sections come into force is concerned. Accordingly, the question for consideration is answered in the negative. The Registry will now place all these matters before an appropriate Division Bench for disposing them all on merits in the light of the answer given by us."

(12) The petitioners have placed on record quite a good number of documents in order to substantiate and prove that in fact S. Satjit Singh, petitioner No.1 was the real owner of the disputed property and the respondent no.3 was only a benamidar i.e. the name- lender. It was so held by Shri Sagar Chand Jain, Sub Judge 1st Class, Delhi, as he then was, vide his judgment and order dated January 8,1969. It was held in the said suit No. 118/68 that S. Satjit Singh was the real owner of the disputed property. The said property according to the petitioners was being shown as the property of the petitioner No.1 in the income tax and wealth tax returns vide Ex. P1 to Ex. P4 and Ex. P5 to Ex. P7. The petitioner No.1 is in possession of the same he has been paying the house tax also ( vide statement of Public Witness 1 Shri Kishan Pal Singh in Suit No.118/68). To the same effect are the statements of Public Witness 2 Shri Devi Prashad Gupta and Public Witness 3 S.Satjit Singh. According to Public Witness 3 S. Satjit Singh, the property in dispute was purchased out of the funds provided by him and it was he who raised the constructions thereon.

(13) Respondents Nos. 1 and 2 themselves treated the petitioner No.1 as the real owner of the disputed property. This is very much clear from the letter dated July 23,1973. A perusal of the same reveals that the respondents Nos. 1 and 2 through the said letter dated July 23,1973 demanded the ground rent in respect of the disputed property from the petitioner S. Satjit Singh. If this is so, this Court feels that now this does not lie in the mouth of the respondents to urge to the contrary and to assert that the petitioner is not the real owner of the disputed property.

(14) The petitioner has then placed on record a receipt issued by the Reserve Bank of India which goes to show that the petitioner deposited a sum of Rs. 1278.05p. in the Reserve Bank of India as per the demand notice issued by the respondents.

(15) In view of the above, I conclude that the petitioner S.Satjit Singh was the real purchaser and the respondent No.3 was only a benamidar. If this is so, the disputed property since the very beginning i.e. from the date of its purchase was the property of the petitioner No.1 despite the fact that it was in the government record in the name of the respondent No.3. However, the respondent No.3 lent his name only in order to facilitate the sale transaction. Thus, if the said ostensible owner subsequently declares/asserts through a deed or otherwise that he is not the owner and in fact he held the property for the benefit of the person who paid the consideration and who was the real purchaser then it cannot be held by any stretch of imagination to be a transfer or assignment in favor of the latter by the former. It would simply be tantamount to a release by the benamidar in favor of the actual owner. Admittedly, when a property was purchased by a benamidar it was purchased for the benefit of the real owner as he was simply a name- lender. Thus when the ostensible owner asserts that he is not the owner, he is simply coming forward with the truth inasmuch as he is simply acknowledging the title of the real owner. Thus in case of a benami transaction the real purchaser was always behind the veil as he could have afforded to do so under Section 82 ( since deleted) of the Indian Trusts Act adverted to above.

 (16) The above view was given vent to by a Full Bench of the Calcutta High Court as reported in Rattanlal Bansilal v. Kishorilal Goenka, . It was held:    "THERE are decisions by this Court where it has been held that where the deed of release or relinquishment is a mere declaration admitting that the executant had no interest in the property, it could not operate as a conveyance...."  

 (17) It was further held in the above said case ...    "When the appellant - plaintiff No.1 claims that it is the real owner, the ostensible owner being the benamidar, it is no more open to it to argue that there was a conveyance by the deed of release. The benamidar before the enactment of Benami Transaction (Prohibition) Act could not have any right, title and interest in the property which the benamidar could convey. So, the deed of release could be said to be a mere declaration, a mere admission that the executant i.e. the benamidar had no right or interest in the property and it could not operate as conveyance...."  

 (18) It would not be out of place to cite here a few lines from the observations of their Lordships of the Supreme Court as reported in The Controller of Estate Duty, Lucknow v. Aloke Mitra, .    "It is but axiomatic that a benami transaction does not vest any title in the benamidar but vests it in the real owner. When the benamidar is in possession of the property standing in his name, he is in a sense the trustee for the real owner; he is only a name- lender or an alias for the real owner."  

 (19) It was further held vide para 32 of the said judgment ...    "Abenamidar has no interest in the property standing in his name. Where the transaction is once made out to be benami the Court must give interest to the real and not to the nominal title subject to certain exceptions ........ In the light of these settled principles, the liability to pay estate duty under Section 5(1) of the Act arises upon the death of the real owner and not of the benamidar who is merely an ostensible owner. The test lies in whether upon the death of the benamidar there would be incidence of liability to estate duty."  

 (20) In the circumstances stated above I am of the view that the petitioners are entitled to succeed. The petition is allowed. The respondents Nos. 1 & 2 are hereby directed to mutate the disputed property in the name of the petitioner No.1 in place of respondent No.3. The order dated February 12,1974 passed by respondents Nos. 1 & 2 is hereby quashed.