Smt. N. Durga Bhavani, vs N.V. Rama Raju,
2022 Latest Caselaw 6291 Tel

       THE HONOURABLE SMT. JUSTICE P.SREE SUDHA

     APPEAL SUIT No.1448 of 1998 & Tr.A.S.No.1523 of 2001

JUDGMENT:

This appeal suit is filed by the plaintiffs in the suit in

O.S.No.43 of 1992. One N.Durga Bhavani and N.Saraswathi

filed suit in O.S.No.43 of 1992 against N.V.Rama Raju S/o.

N.V.S.Raju aged 29 years for declaration and recovery of

possession. The defendant in the suit i.e, M/s. Sri

Venkateshwara Engineering Works represented by its proprietor

N.V.Rama Raju filed suit for perpetual injunction in O.S.No.679

of 1991. As the parties and properties are one and the same,

O.S.No.43 of 1992 is comprehensive suit both the matters were

clubbed and the Common Judgment was passed on 10.04.1998.

2. A.S.No.1448 of 1998 filed and numbered here in High

Court aggrieved by the order dated 10.04.1998 passed in

O.S.No.43 of 1992 on the file of the I - Additional Senior Civil

Judge, Ranga Reddy District.

3. While ordering Tr.C.M.P.No.214 of 1999 this Court

directed the Registry to club A.S.No.78 of 1998 on the file of

I - Additional District Judge, Ranga Reddy District be transferred to this High Court and to be heard along with

A.S.No.1448 of 1998.

4. A.S.No.78 of 1998 is transferred to High Court and

renumbered as Tr.A.S.No.1523 of 2001 and connected with

A.S.No.1448 of 1998.

5. Tr.A.S.No.1523 of 2001 is filed by plaintiffs in the suit to

set aside the decree and Judgment in O.S.No.679 of 1991 dated

10.04.1998.

6. The trial Court examined P.Ws.1 to 5 and marked Exs.A1

to A17(a) and also Ex.X1 and examined D.W.1 and marked

Exs.B1 to B12. Considering the entire evidence on record the

trial Court dismissed O.S.No.43 of 1992 and decreed

O.S.No.679 of 1991. Aggrieved by the said order plaintiffs

preferred an appeal. Appellants mainly contended that in the

cross-examination of the defendant, he clearly admitted that

plaintiffs in the suit never interfered with his possession, as

such there is no cause of action and the suit filed by the

defendant ought to have dismissed. The appellants also stated

that Benami (Prohibition Transaction Act, 1988) is not

applicable to the facts of the present case as the factory

established in the year 1984 and the said Act is not

retrospective in effect. Though, the trial Court believed the

version of the defendant that he invested entire amount for

establishing the suit unit, failed to observe that the suit unit

belongs to the plaintiffs. The trial Court erroneously believed the

version of the defendant that he is the proprietor of the suit unit

though he has no capacity or source of income to establish the

unit. Though the defendant failed to produce the original books

the trial Court erroneously gave finding that he is the proprietor

of the suit unit, in fact he was only an employee. The trial Court

erroneously held that husband of the plaintiff has withdrawn

his guarantorship in respect of the suit unit, but he was still

continuing as guarantor. Therefore, requested the Court to

allow the appeal by setting aside the Judgment and decree

dated 10.04.1998.

7. Heard arguments of both sides, perused the entire record.

The case of the plaintiffs in O.S.No.43 of 1992 before the trial

Court is that the husband of the first plaintiff is executive

engineer in E.C.I.L with technical experience. The husband of

the second plaintiff is the Technical Officer in Marine

Communication Engineering Works, Kushaiguda and both of

them are brothers. The defendant is the son of the elder brother

of the husbands of the plaintiffs. The defendant secured

diploma in Mechanical Engineering and staying in his native

place without any employment. As such, the husband of the

first plaintiff brought him to the Hyderabad and got him

employment as instructor in private I.T.I with a salary of

Rs.500/- per month in December, 1982. The defendant

requested the husbands of the plaintiffs to provide employment

with higher salary. As such, they thought of starting a small

scale unit utilizing his services. The husband of the second

plaintiff sold his house and contributed Rs.40,000/- to the

industry and the husband of the first plaintiff managed to pay

the rest of the amount or payment of 50% of cost of the land for

allotment in industrial area, Mallapur. The application was

submitted in the name of Sri Venkateswara Engineering Works

showing the defendant as proprietor and he also gave

application for loan under Gramodaya scheme and Rs.25,000/-

loan was sanctioned by the State Bank of India, Nacharam

branch. Initially unit was started in the plaintiffs' house by

purchasing raw material for Rs.25,000/- and the loan of the

S.B.I is repaid by the husbands of the plaintiffs. They also paid

balance cost of the land to A.P.I.I.D.C. The defendant

discontinued the job in Venkateswara Engineering Works and

worked somewhere as employee and again joined as employee in

Venkateswara Engineering Works from January, 1989 on salary

of Rs.1500/- per month.

8. The Andhra Pradesh State Finance Corporation

sanctioned loan of Rs.6,38,000/- and husbands of the plaintiffs

invested Rs.3,75,000/- towards the promoters share. When

defendant got marriage in the year 1990 at the instigation of his

father - in - law, he started quarrelling with the husbands of

the plaintiffs and filed cases against them. Plaintiff No.1 and her

husband were living in the factory premises supervising the

work of the factory. The husband of the first plaintiff stood as a

guarantor for the loan obtained in the name of Sri

Venkateswara Engineering Works, as such the bank issued

notice to the defendant and the husband of the first plaintiff.

The plaintiffs issued legal notice dated 25.11.1991 to the

defendant. The defendant filed O.S.No.679 of 1991 for perpetual

injunction, as such they filed suit for declaration and

injunction.

9. In the written statement filed by the defendant, he stated

that he is an Engineering diploma holder and unemployed. He

applied for allotment of plot at Mallapur and got plot No.72 from

A.P. Industrial Infrastructure Corporation in April, 1984. He

obtained a loan of Rs.25,000/- from S.B.I.Nacharam under

Gramodaya Scheme for running refractory Fire Bricks Industry.

He also applied loan from A.P. State Financial Corporation. The

turnover of the defendant increased day by day and by the end

of 1989 it was about Rs.5,00,000/- per year. The husbands of

the plaintiffs are the paternal uncles and they helped in

establishing the industry and securing loans. He borrowed

Rs.5,000/- from the husband of the first plaintiff and

Rs.17,000/- from the husband of the second plaintiff as hand

loan and repaid the same by way of cheque and same was also

acknowledged by them. The State Bank of India, Nacharam

sanctioned a loan of Rs.1,75,000/- in April, 1989. The husband

of the first plaintiff stood as a surety. He further stated that

husbands of the plaintiffs used to visit the workshop and take

away the amount available in the workshop and they also

developed jealousy against him. In May and June 1991, they

started claiming industry as their own and asked him to leave

the industry, but the same was refused by the defendant. They

beat the defendant on 21.06.1991, he gave police complaint and

also filed O.S.No.671 of 1991 against them in which he filed

I.A.No.1535 of 1991 for temporary injunction. Later plaintiffs

also filed the suit and plaintiff No.1 has withdrawn his

guarantee and thus instigated the bank to file suit for recovery

of amount in O.S.No.161 of 1992. The claim of the plaintiffs is

hit by Sections 3 to 5 of the Benami Transactions (prohibition)

Act 1988.

10. The trial Court observed that there is no dispute

regarding the fact that plot No.72 admeasuring 3007 Sq. yards

situated in Industrial Development area which was allotted in

the name of defendant as proprietor and the loan was also

sanctioned in his name under Gramodaya Scheme. Along with

the husband of the first plaintiff, 4 other witnesses were

examined on behalf of the plaintiffs including the father of the

defendant/P.W.3 and Chartered Accountant/P.W.5. Considering

the evidence on record the trial Court held that there may be

some understanding between the parties but the plaintiffs are

not entitled to any relief in the absence of any partnership or

other document. Even if it is assumed that husbands of the

plaintiffs purchased the suit and erected machinery, the

Benami Transactions (Prohibition) Act 1988 comes into play.

According to Section 4(1) of the Benami Transaction

(Prohibition) Act, 1988, the suit filed by the plaintiffs for

declaration and recovery of possession is not maintainable on

the ground that they are real owners, as such O.S.No.43 of

1992 is dismissed and injunction was granted as prayed for in

O.S.No.679 of 1991.

11. The case of the plaintiffs is that defendant is the son of

elder brother of the plaintiffs husbands, they brought him from

their native village and started a unit in his name and he gave

an application for allotment of plot and also for securing loan,

but in fact he was only working as employee in the unit initially

for a salary of Rs.500/- per month and later for a salary of

Rs.1500/- per month. Though, Advocate Commissioner was

appointed to seize the account books available in the residence

of the defendant and also in the factory premises, no books were

seized from the factory premises, but the books from the house

of the defendant are only seized and to that effect he also filed a

report under Ex.X1. P.W.3 is the father of the defendant. He

stated that husbands of the plaintiffs are his real brothers. The

defendant is his son and he completed diploma. P.W.1 brought

him to Hyderabad and started Sri Venkateswara Engineering

Works in the name of his son in the year 1982. But, the

defendant after his marriage in the year 1990 at the instigation

of his father - in - law rebelled against the husbands of the

plaintiffs and claiming the Venkateswara Engineering Works as

his exclusive property. He further stated that he is not capable

of investing and the defendant had no resources. P.W.1 invested

all the necessary amounts for the Venkateswara Engineering

Works. He also requested P.W.2 and Venkataramaraju to settle

the dispute between the plaintiffs and the defendant as his son

started picking up quarrel with the husbands of the plaintiffs

after his marriage. He further stated that the plaintiffs filed suit

only after filing of the suit by his son and thus his evidence is in

support of the plaintiffs but not in favour of defendant. Though,

he stated in the cross - examination that he was not in talking

terms with his son, it cannot be stated that he deposed falsely

against his son in the Court. The evidence of P.W.3 is

trustworthy and he clearly stated that he has no source of

income for investing amount, only P.W.1 invested in the name of

his son.

12. P.W.2 is the mediator. He also stated that husbands of

the plaintiffs invested the amount. He requested auditor to give

account books and papers to the defendant and accordingly

auditor handed over all the account books necessary to the

defendant. When he made efforts for mediation of both parties,

defendant did not turn up. In the cross-examination he stated

that he was working in the National Institute of Rural

Development. The defendant started engineering works in the

year 1984 in Hyderbad. On enquiry he came to know that both

parties are jointly doing business. He also seen the account

books in which the investment of the husbands of the plaintiffs

are found. He further stated that father - in - law of the

defendant is his classmate during 1956 - 58.

13. P.W.1 stated that initially they started the unit in the

premises of their house situated at K.P.H.B. Colony, Moulali.

The amount was entirely contributed by him and the husband

of the plaintiff No.2. Initially defendant worked in Electro

mechanical engineer at Kushaiguda with a salary of Rs.500/-

per month and worked till 1986. Later he left the job and joined

in Indian duplicate company with salary of Rs.800/- and

worked till 1988. He further stated that the defendant has no

source of income and brother of the defendant was also working

in the factory as an employee. When the State Bank of India,

Nacharam Branch sanctioned working capital to the company

P.W.1 stood as guarantor and created equitable mortgage by

depositing his title deeds.

14. The Chartered Accountant who is examined as P.W.5

stated that the estimated total investment required for the

factory is Rs.14,00,000/-. He stated that Income Tax return was

filed in the name of the proprietor. The company incurred loss

of Rs.3,00,000/-. He also stated that he is not aware of the

personal investment made by the parties. He further stated that

P.W.1 is maintaining katcha account book and there is no

regular account book.

15. D.W.1 during his cross-examination admitted that the

allotment of plot was cancelled in the year 1987 for not paying

the amount and it was restored when P.W.1 paid Rs.52,000/-.

He clearly admitted that plaintiffs never interfered with the

possession/business and he gave complaint against P.W.1 in

the year 1991. He further admitted that the land was allotted in

the year 1991 and it was registered in his name in the year

1995. He further stated that he did not know whether A.P.G.S.C

put the stamp on the account books. The service certificate of

D.W.1 dated 10.01.1992, in which it was stated that he was

Fitter Instructor from 01.10.1982 to 15.03.1984 with the salary

of Rs.575/- per month and in another service certificate dated

27.12.1991 which shows he worked as superviser from

01.02.1985 to 30.04.1986 with the salary of Rs.500/- per

month was filed before this Court. P.W.1 also filed several

promissory notes executed by him.

16. The counsel for the appellants relied upon the Judgment

passed by the Hon'ble Supreme Court in the case of Probodh

Chandra Ghosh Vs. Urmila Dassi and another,1 in which it

was held that Section 4 of the Benami Transaction Act was not

expressively made retrospective by the legislature. The

transaction in other words may be of the past but the suit,

claim or action would not lie subsequent to the coming into

force of the Act. The counsel for the appellants contended that

the unit was established in the year 1984 prior to the coming

into effect of the Benami Act on 19.05.1988 and thus the said

Act has no retrospective effect, the provisions of the Act are not

2000(6) SCC 526

applicable to them. The counsel for the appellants also relied

upon the Judgment passed by the High Court of Andhra

Pradesh and Telangana at Hyderbad in the case of

Brughumalla Seethamahalakshmi Vs. Brughumalla

Raghunayaka Gupta and another,2 in which it was held as

follows:

"10. There used to be a controversy as to whether Section 4 of Benami Act has retrospective effect in the sense whether the Act applies to benami transactions entered into prior to the Act. This controversy was resolved by Apex Court in R. Rajagopal Reddy Vs. P.chandrasekharan. The scope and ambit of Section 4 and its retrospectivity are dealt with in the said decision. The said decision was followed in a subsequent judgment in Samittri Devi Vs. Sampuran Singh.

11. As per the above precedential jurisprudence, it is clear that Section 4 is prospective in operation i.e. no suit or written statement contending that the transaction relating to property is benami is maintainable after the advent of benami Act. However, this section has limited sphere retrospectivity. Though the original transaction took place prior to the advent of the Act, still, a suit or written statement contending that the said transaction was benami cannot be taken after the Act came into force. To this extent only, Section 4(1) & (2) of the Act were held retrospective. It would mean, if a benami transaction and institution of the suit or filing of written statement, both were taken place prior to the advent of the Act, Section 4 of the Act would have no application."

2018(5) ALT 524

17. As per the analysis of the evidence on record, this Court

finds that the husbands of the plaintiffs brought defendant to

the Hyderabad and got established Sri Venkateshwara

Engineering Works in the name of the defendant and he was

shown as proprietor, plot was allotted in his name and loan was

also obtained in his name, but the loan was repaid by the

husbands of the plaintiffs and they supervised the work by

staying in the factory premises. The defendant worked only as

an employee in the factory with the salary of Rs.1500/- per

month. After his marriage in the year 1990 at the instance of

his father - in - law, as he was shown as proprietor of the suit

unit, he claimed ownership, but it was admitted by him that

P.W.1 gave guarantee. When he addressed letter to the bank

withdrawing his guarantee, bank filed suit for recovery against

him. But, it was stated by the appellants that still they are

continuing the guarantee. The main contention of the appellants

is that the trial Court failed to declare that the unit belongs to

them. The defendant admittedly stated in his cross-examination

that the plaintiffs never interfered with his possession, as such

suit filed by him for temporary injunction is not maintainable,

but the trial Court granted decree in his favour and it is liable to

be set aside. Regarding the declaration of the unit in the name

of the plaintiffs, though the evidence on record including the

evidence of D.W.3 clearly establishes that unit was established

by the husbands of the plaintiffs in the year 1984, the suit was

filed in the year 1992 after the commencement of the Benami

Transaction (Prohibition) Act, 1988. As such, the suit filed by

the plaintiffs for declaration is hit by the provisions of the

Benami Transaction (Prohibition) Act, 1988 and thus they are

not entitled for declaration in view of Section 4 of the Benami

Transaction (Prohibition) Act, 1988 the said Section was alone

made as retrospective, but in the citation relied upon by the

appellants it was held that unless the property was purchased,

suit was filed and written statement was filed prior to the

enactment it cannot be said that provisions of Benami

Transaction Act are not applicable to the same. In this case, the

property was purchased in the year 1984 prior to the Benami

Transaction Act, but the suit was filed only after the enactment

of the Benami Transaction (Prohibition) Act, 1988, in the year

1992 as such it was rightly held by the trial Court that plaintiffs

are not entitled for the relief of declaration as it is hit by the

Benami Transaction (Prohibition) Act, 1988.

In the result, A.S.No.1448 of 1998 merits no

consideration and is dismissed by confirming the order of the

trial Court in O.S.No.43 of 1992 and Tr.A.S.No.1523 of 2001 is

allowed by setting aside the order of granting injunction in

O.S.No.679 of 1991 dated 10.04.1998.

Miscellaneous petitions pending, if any, shall stand

closed.

_________________________

JUSTICE P.SREE SUDHA

DATED: 01.12.2022

tri

THE HONOURABLE SMT. JUSTICE P.SREE SUDHA

APPEAL SUIT No.1448 of 1998 & Tr.A.S.No.1523 of 2001

DATED: 01.12.2022

TRI