We are afraid that the contention of Mr. Bandiwadekar is completely misconceived. The Act has provided in Section 2(a) a definition for benami transaction. It means "any transaction in which property is transferred to one person for a consideration paid or provided by another." It contemplates cause where (a) there is a transfer of property, and (b) the consideration is paid or provided not by the transferee, but by another. When there is no transfer of property or when there is no consideration for the transaction, the definition of benami transaction is certainly not satisfied.
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Bombay High Court
Laxman Sakharam Salvi And Others vs Balkrishna Balvant Ghatage on 24 October, 1994
Equivalent citations: AIR 1995 Bom 190, 1995 (2) BomCR 678, 1995 (1) MhLj 7
Bench: A Bhattacharjee, A Shah
1. Original defendant Nos. 3 to 6 and 2A to 2D have taken exception to a decree for possession of a house property by way of this letters patent appeal. Briefly stated, the facts are that the plaintiff sued the defendants to recover possession of the suit property on the basis of his title. According to the plaintiff, on May 19, 1970, he purchased the suit property for a consideration of Rs. 12,000/- from the 1st defendant. The 2nd defendant, deceased Laxman Sakharam Salvi, was the brother of the 1st defendant, but given in adoption in Salvi family. The defendants 3 to 6 and 2A to 2D are the legal representatives of the 2nd defendant. According to the plaintiff, the suit property was purchased by the 1st defendant benami in the name of the 2nd defendant on July 31, 1930 from Chhatrapati Maharaja of Kolhapur. In the alternative the plaintiff alleged that if the 2nd defendant was the real owner then the 1st defendant was the ostensible owner of the suit property and that he purchased the same from the 1st defendant bona fide for valuable consideration without notice of the rights of the 2nd defendant. In the alternative the plaintiff also alleged that in case it is held that the suit property was of the joint ownership of the 1st and the 2nd defendant, the portion purchased by him from the 1st defendant be allotted to the share of the 1st defendant. On these allegations the plaintiff claimed possession of the property and past and future mesne profits.
2. The 1st defendant by his written statement (Exhibit 69) supported the suit claim of the plaintiff and contended that he alone was the owner of the property sold to the plaintiff. The legal representatives of the 2nd defendant by their written statements (Exhibits 26 and 40) contended that the suit property is self-acquired property of their father and that the 1st defendant has nothing to do with the ownership of the property and therefore the sale deed executed by the 1st defendant in favour of the plaintiff is not binding on them.
3. The trial Court, upon consideration of the material produced by the parties, held inter alia that there is no evidence to show that the 1st defendant was the real purchaser of the suit property and with his money purchased the same in the name of the 2nd defendant benami. The trial Court, however, held that the 1st defendant was the ostensible owner of the suit property with the consent of the 2nd defendant and that the plaintiff is bona fide purchaser of the property for value without notice and thus entitled to the protection afforded by Section 41 of the Transfer of Property Act, 1882 ("Act" for short). In that view of the matter, the trial Court passed a decree for possession giving liberty to the plaintiff to apply for future mesne profits from the date of the suit till delivery of possession under Order 20, Rule 12(1)(c) of Code of Civil Procedure.
4. In appeal preferred by the defendants 3 to 6 and 2A to 2D, who are the present appellants, the learned single Judge was pleased to confirm the findings of the trial Court holding that all the ingredients of Section 41 of the said Act, namely, an ostensible ownership with the constent of the real owner the transfer for consideration and good faith as well as reasonable care to ascertain that the transferor has a power to transfer the property are satisfied.
5. Mr. Abhyankar on behlaf of the
appellants urged at the bar that the plaintiff has given a go by to his original case of a benami purchase of the property in the name of the 2nd defendant and has based the case entirely on the provisions of Section 41 of the said Act. Mr. Abhyankar, however, urged that Section 41 of the said Act being an exception to the general rule, that a person cannot confer a better title than he has, if the purchaser had knowlege that the title of his transferor was in dispute and that he had taken a risk in purchasing the same, it is not possible to. hold that he had purchased the property in good faith. Mr. Abhyankar further urged that reply Exhibit 96 given by the 2nd defendant on May 19, 1970 did put the prospective purchase upon his guard and having been forewarned, the plea of good faith cannot be accepted. Mr. Abhyankar also urged that there is absolutely no material to show that the plaintiff has taken reasonable care before purchasing the property. According to Mr. Abhyankar, the plaintiff having failed to satisfy all the ingredients of Section 41 of the said Act, is not entitled to any relief. Mr. Bandiwadekar countered the arguments of Mr. Abhyankar by contending that in the public notice the plaintiff had made it sufficiently clear as to what properly he was purchasing and from whom he was purchasing the said property and to that notice the 2nd respondent sent a reply in which he has stated that the property sought to be purchased did not exclusively belong to the 1st defendant and that he has ownership rights in the property. After this reply was received by the plaintiff, the plaintiff by his rejoinder called upon the 2nd defendant to explain how he being Laxman Sakharam Salvi, was concerned with the properly which the plaintiff was purchasing but the 2nd defendant did not respond at all. According to Mr. Bandiwadekar, this correspondence between the plaintiff and the 2nd defendant has led the plaintiff to believe bona fide that the 1st defendant alone was the owner and thus the plaintiff had acted in good faith and taken the reasonable care to ascertain that the tranferor had power to transfer the property. Mr. Bandiwadekar contended that the requirements of S. 41 are thus fully satisfied.
6. We shall now advert to the main question whether the plaintiff was the bona fide purchaser of the property for value without notice of the existing rights of the 2nd defendant and entitled to prosecution afforded by Section 41 of the said Act. One of the general principles of law of transfer of property is that no man can transfer to another a right or title greater than what he himself possesses and he gives not who hath not. Exception to this general principle that if the true owner permits another to hold himself out as the real owner by entrusting him with the documents of title or in some other way a third person who bona fide deals with that other may acquire good title to the property as against the true owner. This exception which is really a form of equitable doctrine of estoppel is embodied in Section 41. The transferee will be protected any if he has acted in good faith after taking reasonable care to ascertain that the transferor had power to make the transfer. The transferee who wilfully shuts his eyes and takes the transfer without any inquiry is not protected. The transferee is also required to show that he had purchased the property after taking care to ascertain that the transferor had power to make the transfer. what is reasonable care depends upon the facts and circumstances of each case and no hard and fast rules can be laid down. We are required to examine the plaintiffs claim in the light of these established legal principles.
7. The plaintiff stated in his evidence that he purchased the suit property for his brother and that before purchasing it, there was an agreement of sale with the 1st defendant. The original agreement of sale is not produced, but from the recitals in the sale deed, it appears that the 1st defendant had entered into an agreement to sell with the plaintiff on April 29, 1970 and had received Rs. 5,500/- as earnest. The sale deed was executed on May 19, 1970. The plaintiff has stated that before purchasing the property he had seen the property card, sanad issued by Sarsubhe, Karvir Ilakha, Karvir, Kolhapur and the certificate of tenure issued by the Director of Town Planning and the municipal tax receipts. The sanad was issued on November
17, 1970 on application of the 1st defendant. The plaintiff could not have possibly seen this document. The plaintiff has stated that after the agreement of sale he issued a public notice in Daily Pudhari on May 7, 1970. The 2nd defendant sent a reply on May 9, 1970, claiming ownership rights to the property. He has further stated that to that reply he had sent a rejoinder on May 13, 1970 and as the 2nd defendant did not do anything in the matter, he got the sale deed executed and registered on May 19, 1970. Thus it is clear that before the plaintiff purchased the property the 2nd defendant put him on his guard and has forewarned about his claim in the suit property.
8. It is not disputed before us that the 2nd defendant was in possession of the suit property and this fact was within the knowledge of the plaintiff before he purchased the property from the 1st defendant. Where the disputed property was found not to be in possession of the transferor at the time of purchase, the transferee should take reasonable care to ascertain as to how and why the transferor was transferring the property of which he was not in possession. By virtue of definition of Section 3 of the said Act, the transferee must be deemed to have given (sic) notice that the real title was in the person in actual possession. If with such statutory requirements the transferee did not make inquiry as to the factum of possession, he cannot be said to have acted in good faith taking reasonable care to ascertain the real owner. Mr. Bandiwadekar, however, submitted that after the reply given by the 2nd defendant was received by the plaintiff, the plaintiff by his rejoinder dated May 30, 1970 called upon the plaintiff how he being Laxman Sakharam Salvi was concerned with the property which the plaintiff was purchasing. The 2nd deffendant did not care to take any further steps in the matter and therefore it cannot be said that the plaintiff has not taken care. The submission of the learned counsel is without any merit. On perusal of the sale deed it is clearly seen that the plaintiff was made aware of the 2nd defendant's relation with the 1st defendant and also the fact that the 2nd defendant is in possession of the property and
in spite of this the plaintiff failed to make any further inquiry in the matter. The plaintiff failed to ascertain in what right or capacity the 2nd defendant was residing in the suit property especially when this fact was known to the plaintiff much prior to the purchase. Had the plaintiff taken inspection of the inquiry register maintained by the City Survey Officer, he could have easily discovered that the property has been acquired by the 2nd defendant. A transferee who does not make any inquiry into the title of the transferor, cannot be said to have been taken the reasonable care required by Section 41 of the said Act. The onus is upon the transfere to show that he acted in good faith and, in our opinion, the plaintiff has completely failed to discharge this onus. The plaintiff is, therefore, not entitled to protection of Section 41.
9. Mr. Bandiwadekar lastly contended that the defence of the defendants is barred by the provisions of Benami Transactions (Prohibition) Act, 1988. Mr. Bandiwadekar urged that though the property was originally purchased by the 2nd defendant on July 31, 1930, in the city survey inquiry, which seems to have been held sometime in 1938, both the defendant Nos. 1 and 2 appeared and the 2nd defendant stated that the property be entered in the name of the 1st defendant, his elder brother, and, accordingly, the property was entered in the name of the 1st defendant. According to Mr. Bandiwadekar, the property was thus held benami in the name of the 1st defendant and in view of the provisions of Section 4(2) of the Act, no defence based on any right in respect of the said property, which was held benami, whether against the benamidar or against any other person, should be allowed. It was also urged by Mr. Bandiwadekar that though this contention was not raised before the lower Courts, we are bound to take into account the provisions of the Act moulding the relief in appeal. Mr. Bandiwadekar placed reliance on the judgment of the Supreme Court in the case of Mithilesh Kumari v. Prem Behari Khare, , in support of his plea that the Act applies to all proceedings pending before the Courts of law on the date of the
commence-ment of the Act, even if they are at the second appellate stage.
10. We are afraid that the contention of Mr. Bandiwadekar is completely misconceived. The Act has provided in Section 2(a) a definition for benami transaction. It means "any transaction in which property is transferred to one person for a consideration paid or provided by another." It contemplates cause where (a) there is a transfer of property, and (b) the consideration is paid or provided not by the transferee, but by another. When there is no transfer of property or when there is no consideration for the transaction, the definition of benami transaction is certainly not satisfied.
11. In the facts of the present case there is no transfer of the property by the 2nd defendant to the 1st defendant. All that happened was that the property was entered in the city survey record in the came of the 1st defendant. By no stretch of immagination this can be described as transfer -- benami or otherwise. Moreover, Section 4 prevents any suit, claim or action to enforce any right in respect of any property "held benami". "Hold", according to Black's Dictionary means "to possess in virtue of a lawful title as in the expression, common in grants, to have and to hold", to possess; to occupy; to be in possession and administration of". In the context and setting of Section 4, the word "held" has to be understood as "possessed or occupied". If the possession or occupation is not benami, Section 4 can have no application. Admittedly, though the property stood in the name of the 1st defendant in the city survey record, it was occupied by the 2nd defendant and, therefore, it cannot be said that the property was held by the 1st defendant either benami or otherwise. A reference may be made to the judgment of Kerala High Court in the case of Ouseph Chacko v. Raman Nair, , wherein it has been held that the definition of benami transaction is inextricably connected with all the provisions of the Act, as the Act is intended "to prohibit benami transactions and the right to recover property held benami" and, therefore, when the transfer is a sham or a nominal or a transfer
without consideration, the provisions of the Act are not attracted. Same is the view taken by the Andhra Pmdesh High Court in the case of B. Anasuya a v. B. Rayudu, . We have, therefore, no hesitation to reject the contention of Mr. Bandiwadekar that the defence is barred by the Act.
12. In the result, the Letters Patent Appeal succeeds. The decree passed by the trial Court is set aside. The plaintiff's suit for possession is dismissed. However, in the circumstances of the case there shall be no order as to costs.
13. Appeal allowed.
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