Law Web: Whether the court can reject the plaint at the initial stage on the ground that the Benami Prohibition Act bars suit?

In the present case, the controversy has arisen in an

application under Order 7 Rule 11 CPC. Whether the matter

comes within the purview of Section 4(3) of the Act is an

aspect which must be gone into on the strength of the evidence

on record. Going by the averments in the plaint, the question

whether the plea raised by the appellant is barred under

Section 4 of the Act or not could not have been the subjectmatter

of assessment at the stage when application under

Order 7 Rule 11 CPC was taken up for consideration. The

matter required fuller and final consideration after the

evidence was led by the parties. It cannot be said that the plea

of the appellant as raised on the face of it, was barred under

the Act. The approach must be to proceed on a demurrer and

see whether accepting the averments in the plaint the suit is

barred by any law or not. We may quote the following

observations of this Court in Popat and Kotecha

Property v. SBI Staff Assn. [Popat and Kotecha

Property v. SBI Staff Assn., (2005) 7 SCC 510] : (SCC p. 515,

para 10)

10. Clause (d) of Order 7 Rule 7 speaks of suit, as appears

from the statement in the plaint to be barred by any law.

Disputed questions cannot be decided at the time of

considering an application filed under Order 7 Rule 11

CPC. Clause (d) of Rule 11 of Order 7 applies in those cases

only where the statement made by the plaintiff in the plaint,

without any doubt or dispute shows that the suit is barred by

(emphasis added)

23. If we go strictly by the averments made in the plaint and the

documents filed by the appellant/plaintiffs, we are of the opinion that the

suit ought not to have been rejected outright under Order VII Rule 11 CPC

on the ground that the pleas taken by the appellants/plaintiffs are barred

under Section 4(3) of the unamended Benami Act. In our view, the matter

would require a more comprehensive consideration after permitting the

parties to lead evidence in the case. Order VII Rule 11 CPC was not the

appropriate stage for testing the veracity of the pleas taken in the plaint and

return any finding on the merits of the said plea taken by the

appellants/plaintiffs in the plaint or to extensively examine the underlying

intent of the parties on a perusal of the documents filed by the appellants. On

a bare reading of the averments made in the plaint read in conjunction with

the documents placed on record, we are of the opinion that sufficient

material facts have been disclosed requiring determination only after a

proper trial. At the stage of deciding an application moved by the

respondents under Order VII Rule 11 CPC, there was no occasion for the

court to have taken pains to interpret and analyse the documents filed by the

appellants/plaintiffs to hold in favour of the respondents.

24. In the instant case where it has been asserted that the suit premises

was purchased in the name of the respondent No.1, but from the exclusive

contributions made by late Shri R.P. Dhir and therefore in reality, was meant

for the benefit of all the family members, the real test would be the source

from which the purchase money came from, the nature and status of

possession of the property after its purchase, the motive if any for giving the

transaction a Benami colour, the position of the parties and their inter se

relationship, between the appellants/plaintiffs and the respondent No.1, the

overall conduct of the parties in dealing with the suit premises after it was

acquired, etc. [Refer: Jaydayal Poddar (Deceased) through LRs and Anr. vs.

Mst. Bibi Hazra and Ors. reported as (1974) 1 SCC 3] It would therefore be

imperative to weigh the evidence in the instant case for the court to

conclusively decide as to whether the appellants/plaintiffs can succeed in

their claim that the respondent No.1 is holding the suit premises in a

fiduciary capacity, for the benefit of all the family members.

IN THE HIGH COURT OF DELHI AT NEW DELHI

RFA(OS) 73/2019 and CM APPL. 35637-35638/2019

Date of decision: 01.05.2020

IN THE MATTER OF:

NEERU DHIR Vs KAMAL KISHORE DHIR

CORAM:

HON'BLE MS. JUSTICE HIMA KOHLI

HON'BLE MS. JUSTICE ASHA MENON

HIMA KOHLI, J.

1. The appellants/plaintiffs have questioned the judgment dated

23.05.2019, passed by the learned Single Judge dismissing a suit for

partition and permanent injunction instituted by them against the

respondents/defendants claiming that they are collectively entitled to 1/10th

undivided share in the residential premises bearing No.C-324, Vivek Vihar,

Delhi.

2. The three appellants/plaintiffs are the successors-in-interest (widow

and children) of late Shri Anil Kumar Dhir, brother of the respondents No.1

to 7 and the deceased respondents No.8 and 9. The factual averments made

in the plaint have been neatly summarised in para 1 of the impugned

judgment. For the sake of convenience, the said para is extracted below:-

1. The three plaintiffs, namely (a) Neeru Dhir; (b) Nipun

Dhir; and, (c) Vatsala Dhir, being the widow, son and

daughter of late Anil Kumar Dhir, have instituted this suit for

partition of Property No.C324, Vivek Vihar, Delhi 110 095

and for permanent injunction restraining the defendants from

alienating, encumbering or parting with possession of the said

property, against the four brothers, three sisters and heirs of

another two sisters, of Anil Kumar Dhir pleading that (i) R.P.

Dhir father of Anil Kumar Dhir and defendants no.1 to 7 was a

government servant and his family was a Hindu Undivided

Family (HUF); (ii) during his service period the said R.P.

Dhir was living in government accommodation along with his

wife and children; (iii) R.P. Dhir, in the year 1966, from his

nd benefit of

from Delhi Development Authority (DDA) and in the year

1977 built a single storeyed house thereon; (iv) however at the

time of allotment and execution of documents, R.P. Dhir and

the

documents/allotment etc. be got executed in the name of the

suit property was got allotted in the name of defendant no.1;

(vi) the defendant no.1 from time to time, in various letters has

admitted the said fact; (vii) R.P. Dhir died intestate on 20th

December, 1993, leaving five sons and five daughters; (viii)

however Anil Kumar Dhir predecessor of the plaintiffs and two

of the daughters of R.P. Dhir have also since expired; (ix) the

defendants no.1 to 3 have been residing abroad and the

defendant no.4 has been residing in government

accommodation and the defendants no.5 to 9A have been

residing in their matrimonial homes; (x) the three plaintiffs

alone are residing in the property and paying charges for

electricity, water and telephone therein; (xi) the defendant

no.1 had written letters to the DDA as well as Delhi Municipal

Corporation that the land underneath the property was

purchased by R.P. Dhir in the name of defendant no.1 and

construction thereon had also been made by R.P. Dhir from

his own funds and that after the demise of R.P. Dhir all his

sons were co-owners of the property; (xii) upon the defendant

no.1 applying to DDA for converting the leasehold rights in

the land underneath the property into freehold in his own

name, the plaintiffs objected; and, (xiii) the plaintiffs together

have 1/10th share in the property.

3. Written statements were separately filed by the respondent No.1,

respondents No.2 and 3 and respondents No.4 to 9A. Pleadings were

completed in the suit. In the meantime, respondent No.1, respondents No.2

and 3 and the respondents No.4 to 9A filed separate applications under

Order VII Rule 11 CPC praying inter alia for rejection of the plaint on

several grounds, including the ground that the predecessor of the parties i.e.,

Shri R.P. Dhir did not own any property; that there was no Hindu

Undivided Family; that the suit instituted by the appellants is barred by

limitation and that the same is also barred by the Benami Transactions

(Prohibition) Act, 1988

4. The grounds taken by the respondents to seek rejection of the plaint

have been encapsulated in para 5 of the impugned judgment in the following

words:-

R.P. Dhir had a fixed salary with a family of ten children and

the defendant no.1 being the eldest son was supporting the

father since joining employment in the year 1961;(ii) the

defendant no.1, in the year 1963 shifted to United Kingdom

(UK) and continued to help the father to meet the expenses of

education and marriage of his children; (iii) R.P. Dhir had no

sufficient means to acquire the land underneath the property or

to raise construction thereon; (iv) it was the defendant no.1 who

had applied to the DDA and was the successful bidder and who

was allotted the land and who had raised construction thereon;

(v) however since the defendant no.1 was residing in UK, he

had executed a General Power of Attorney (GPA) in favour of

his father R.P. Dhir for the said purpose and all documents

relating to the property also remained in the custody of R.P.

Dhir and which documents are being illegally withheld with the

plaintiffs; (vi) R.P. Dhir retired from employment in the year

1975; (vii) Anil Kumar Dhir was unemployed and was

struggling to find gainful employment after graduation and was

supported by defendants no.1,2&3 to start a business and

though initially acquired a house with the gains of the business

but subsequently suffered loss compelling him to sell the house

and continued to be supported by his brothers; (viii) R.P. Dhir

had no property and no HUF; (ix) even if it were to be believed

that the property was purchased by R.P. Dhir in the name of

defendant no.1, the claim of the plaintiffs in the present suit

would be barred by Benami Transactions (Prohibition) Act,

1988 and the plaint is liable to be rejected; (x) the suit is also

barred by limitation inasmuch as the plaintiffs admittedly had

knowledge for more than three years prior to the institution of

the petition that the property was in the name of the defendant

no.1 and the defendant no.1 was getting the leasehold rights in

the land converted into freehold; (xi) Article 113 of the

Limitation Act, 1963 is applicable and which provides for

limitation of three years; and, (xii) the plaintiffs have not given

any particulars or filed any document to show the existence of

5. The reasons that have weighed with the learned Single Judge for

allowing the applications filed by the respondents under Order VII Rule 11

CPC and rejecting the suit are primarily premised on the embargo placed by

the Benami Act. The plea taken by the appellants that though the suit

premises was applied for and allotted in the name of the respondent No.1,

but the consideration for acquiring the land and the construction raised

thereon was paid for by late Shri R.P. Dhir, has been treated as a plea of

Benami within the parameters of the Benami Act and the suit has been

dismissed by the learned Single Judge, who has held that the appellants can neither claim an exception to the Benami law under the unamended Act, or

under the amended Act.

6. For the sake of completeness, it is also considered necessary to refer

to an order dated 24.04.2019, passed by the learned Single Judge before

passing the impugned judgment on 23.05.2019 and relied on by learned

counsel for the respondents, which records the statement made by learned

counsel appearing for the appellants that under the amended Act that was

enforced w.e.f. 11.08.2016, the appellants would not have any right to the

suit premises. In the order dated 24.04.2019, the learned Single Judge had

expressed a prima facie view as below:-

9. In my prima facie opinion, even under the unamended Act

the plaintiffs have no right and in any case the amended

provisions have to be enforced even though the suit is found to

have been instituted on 25th February, 2016 i.e. prior to the

coming into force of the amended Act with effect from 11th

August, 2016.

7. However, after passing the aforesaid order, being mindful of the fact

that it was a dispute between family members, efforts were made by the

learned Single Judge to facilitate a settlement between the parties, which did

not bear any result and finally led to passing of the impugned judgment,

whereby the suit instituted by the appellants was rejected as being barred by

law.

8. Mr. Prag Chawla, learned counsel for the appellants has assailed the

impugned judgment on the ground that the learned Single Judge has

completely overlooked the letters dated 27.04.1987 and 12.03.2001 issued

by the respondent No.1, wherein he had stated that though the suit premises

stood in his name, it was purchased for the welfare and benefit of the family.

He also referred to an Agreement dated 13.02.1993 executed by the

respondents No.1 to 3, admitting inter alia that the suit premises had been

financed by Shri R.P. Dhir. It was thus contended that the suit instituted by

the appellants clearly falls within the ambit of the exception carved out

under Section 4(3) of the unamended Benami Act. Learned counsel further

contended that since the suit was instituted by the appellants in February,

2016, amendment of the Benami Act w.e.f. 01.11.2016, whereby sub-section

(3) of Section 4 was omitted, would hardly be of any significance as the said

sub-section was in currency when the suit was instituted and therefore, the

exception carved out in the said provision, entitled the appellants to take a

plea that the suit fell within the purview of the said sub-section.

9. It was further submitted by learned counsel for the appellants that

there was no occasion for the learned Single Judge to have examined the

document dated 13.02.1993, to decide as to whether it took a character of a

family settlement for partitioning the suit premises as it was never the stand

of the appellants that they were claiming any right in the suit premises based

on the said family settlement. He emphasised that the entire case set up by

the appellants was founded on the plea that the suit premises had been

purchased by Shri R.P. Dhir in the name of the respondent No.1, for the use

and welfare of the family and therefore, the suit clearly fell within the

exception carved out under Section 4(3) of the unamended Benami Act.

10. Per contra, Mr. Nilava Bandyopadhyay, learned counsel for the

respondents supported the impugned judgment and handed over a set of

documents filed by the respondent No.1 in the suit proceedings including

copy of the perpetual Lease Deed dated 02.03.1968 of the suit premises

executed in favour of the respondent No.1, copy of the General Power of Attorney dated 10.05.1968 executed by the respondent No.1 in favour of his

father authorizing him to deal with the suit premises, e-mails exchanged

between the family members and an application dated 04.12.2012, submitted

by the respondent No.1 to the DDA for conversion of the suit premises from

leasehold to freehold etc. Learned counsel also cited the judgment dated

06.03.2017 passed by a Division Bench of this Court in RFA(OS) 46/2016

entitled Sagar Gambhir vs. Sukhdev Singh Gambhir (since deceased through

his legal heirs) & Anr. to urge that pleadings in the present suit are illusory

in nature, devoid of cause of action and are mere bald statements, that do not

disclose any material details and on this ground too, the plaint ought to have

been rejected as being vague, vexatious and bereft of material particulars,

sufficient to demonstrate any actionable pleadings.

11. We have heard the arguments advanced by learned counsel for the

parties, carefully examined the impugned judgment and gone through the

documents placed on record.

12. The plea taken by Mr. Chawla, learned counsel for the appellants that

the bar placed under Section 4 of the Benami Act would not apply

retrospectively, is no longer res integra. The said proposition had come up

before the Supreme Court in R. Rajagopal Reddy (dead) by LRs and Ors. vs.

Padmini Chandrasekharan (dead) by LRs reported as (1995) 2 SCC 630,

wherein Justice S.B. Majmudar, speaking for the other members of a three

Judge Bench had arrived at a conclusion that Section 4(1) of the Benami Act

does not have any retrospective application. By the same analogy, any

amendment to the said enactment by virtue of Act 43 of 2016, that came into

effect on 01.11.2016, cannot acquire retrospectivity in a case like the present

one where the suit was instituted by the appellants well before the said date,

in February, 2016. We therefore have no hesitation in accepting the

submission made by learned counsel for the appellants that the amended

Benami Act, wherein sub-section (3) of Section 4 was omitted, would not

apply to the instant case. Instead, the unamended Act, which included subsection

(3) to Section 4, would govern the case.

13. Coming to the next submission made by learned counsel for the

appellants that there was ample factual narrative in the plaint as also the

documents filed by the appellants/plaintiffs that go to demonstrate that the

suit instituted by the appellants falls within the purview of the exception

carved out in Section 4(3) of the unamended Act, we may note that in the

present case, the impugned judgment has been pronounced on separate

applications moved by the respondents under Order VII Rule 11 CPC. In

order to examine as to whether the plaint is liable to be rejected under any of

the provisions enumerated under Order VII Rule 11 CPC, the court is

required to peruse only the averments made in the plaint and proceed on a

demurrer to examine as to whether on accepting the submissions made in the

plaint as they stand, could the suit be said to be barred by any law or not. At

that stage, it is impermissible for the court to look into the pleas taken in the

written statement or any other evidence. But, a reference can certainly be

made to the documents filed by the plaintiffs in support of the averments

made in the plaint.

14. In a recent decision of this Bench in the case of Sukruti Dugal vs.

Jahnavi Dugal, reported as 2020 SCC OnLine Del. 241, we had the

occasion to examine several decisions of the Supreme Court on the above

aspect including T. Arivandandam vs. T.V. Satyapal reported as (1977) 4

SCC 467, Roop Lal Sathi vs. Nachhattar Singh Gill reported as (1982) 3

RFA(OS) 73/2019 Page 9 of 21

SCC 487, I.T.C. Ltd. vs. Debts Recovery Appellate Tribunal reported as

(1998) 2 SCC 70, Raptakos Brett & Co. Ltd. vs. Ganesh Property reported

as (1998) 7 SCC 184 Saleem Bhai vs. State of Maharashtra reported as

(2003) 1 SCC 557 and Popat and Kotecha Property vs. State Bank of India

Staff Association reported as (2005) 7 SCC 510, and had summarised the

legal position in the following words:-

cannot be rejected on the basis of allegations levelled by the

defendant in the written statement or for that matter, in an

application moved under Order VII Rule 11 CPC, for seeking

rejection of the plaint. In exercise of its powers under Order VII

Rule 11 CPC, the court is required to look into the averments

made in the plaint, which alone are germane. The entire plaint

must be read as a whole to determine as to whether it discloses

a cause of action. In undertaking the said exercise, the court is

not expected to consider a particular plea and instead, the

averments made in the plaint in entirety, have to be taken to be

correct. Since a cause of action comprises of a bundle of facts,

the same are required to be proved by the plaintiff only at the

time of the trial. Only the material facts are required to be

stated in the plaint without referring to the evidence except in

circumstances where the pleadings relate to misrepresentation,

fraud, undue influence, wilful default etc. As long as the court is

satisfied that the plaint discloses some cause of action that

requires determination, the plaint ought not to be rejected. At

the end of the day, the court must be mindful of the fact that the

underlying object of Order VII Rule 11 CPC is to nip in the bud,

irresponsible and vexatious suits. At the same time, the opinion

of the court that the plaintiff may not ultimately succeed in the

suit, ought not to form the basis for rejecting the plaint.

15. The material averments made by the appellants in the suit for partition

and permanent injunction instituted by them for seeking partition of the suit

premises, set out in para 1 of the impugned judgment and extracted above,

would show that the case pleaded by the appellants is as under :-

(i) Late Shri R.P. Dhir, a government servant who had retired from the post

of Under Secretary from UGC, Government of India, had or the welfare

and benefit of the family members purchased the suit premises/plot from his

own resources and earnings from DDA in the year 1966 and thereafter

raised construction and built up a single storeyed house in the year 197 ;

(ii) At the time of allotment and execution of the title documents, Shri R.P.

Dhir and the respondents had decided that the property was being purchased

for the welfare and benefit of the family and only for the sake of

convenience was the application for allotment and the title documents got

executed in the name of the respondent No.1;

(iii) That in the year 1974, Shri R.P. Dhir had got the building plans

sanctioned and constructed a single storey house on the subject land and had

borne all the expenses and funds relating to the construction;

(iv) That on several occasions, respondent No.1 had admitted and

acknowledged the fact that the suit premises is a joint family property and he

is not the sole owner thereof. For this, reference was made to the letter

dated 27.04.1987 written by the respondent No.1 to the DDA and the letter

dated 27.04.1987 written by the respondent No.1 to the Assessor and

Collector, Municipal Corporation of Delhi. Besides relying on the aforesaid

correspondence, the appellants also filed a copy of the letter dated

12.03.2001, written by the respondent No.1 to his siblings, an undated letter

written by the respondent No.1 to his siblings suggesting options for

partitioning the suit premises and a document dated 13.02.1993 executed by

the respondents No.1 to 3 in respect of the suit premises.

16. It is considered necessary to extract below, the relevant paras of the

aforesaid documents:-

Letter dated 12.3.2001 written by respondent No.1 to his siblings

(pg. 86)

Despite the fact that the Vivek Vihar property is in my name, it

is our ancestral home and family property and I have no selfish

interest in it. I provided a number of documents in the past to

support this and respected father had full control and authority

to do what he liked with the property.

WILL, it was decided by mutual consent to authorize Ashok and

Anil to repair and renovate the ground floor and proceed with

the construction of an additional one and a half storeys, out of

money left by respected father with further funds to be provided

by Ashok and Anil. They were both to be given legal ownership

of one floor each and the half storey on the second floor was to

remain family property.

Undated letter written by respondent No.1 to his siblings.

(pg. 86)

I feel that the matter of family property has remained

unresolved for far too long. The wording of the General Power

of Attorney sent by Anil was not suitable and I sent my

comments to all of you on the 28th March, 1994. Since then I

have not received any constructive reply from either Ashok or

Anil on this matter.

I outline below the options available and would ask all of yhou

to consider it seriously and let me know your comments and

suggestions, in writing, sop that the situation can be resolved to

the satisfaction of all concerned.

OPTION 1) In our family meeting in India in January, 1994, it

was decided to construct a further one and half storeys to be

financed exclusively by Ashok and Anil. Upon completion Anil

and his family will continue to occupy the ground floor and

Ashok and his family will occupy the first floor. The storey on

the second floor will be kept as common family property.

Upon completion, a suitable Power of Attorney or a long Lease

for 999 years will be granted to Anil for the ground floor and a

RFA(OS) 73/2019 Page 12 of 21

17. Vide document dated 13.02.1993 executed by the respondents No.1 to

3, they had reduced into writing the agreement arrived at by them in respect

of the suit premises wherein it was agreed as follows:-

4. The land financed by Mr. Ram Prakash Dhir will remain

registered in the name of Mr. Kamal Kishore Dhir and all the five

brothers are joint owners of the land.

6. Mr. Ram Prakash Dhir is the sole legal and beneficial owner of the

said property.

7. Upon sale of the land and building situated at C-324 Vivek Vihar,

Delhi, the proceeds of the land and ground floor will be divided

equally amongst the five brothers and the proceeds of the five storey

will be divided between Mr. Ashok Dhir and Mr. Anil Dhir in the

18. The aforesaid documents have not only been discussed, but have been

extensively reproduced in the impugned judgment. However, the learned

Single Judge has held that even if proved, the said documents only go to

demonstrate that the parties were attempting to amicably resolve their inter

se disputes and that the said distribution did not acquire the colour of a legal

document. It has been observed that rights in an immovable property cannot

be transferred on the basis of such documents, which even if taken at the

highest pedestal of being a family settlement, would not be of any relevance

since no registered document was executed by the respondent No.1 and the

said documents as they stand did not create any title in favour of the

plaintiffs in the suit property.

19. For considering the submission made by learned counsel for the

appellants to the effect that the case of the appellants/plaintiffs falls within the exception of sub-section (3) of Section 4 of the unamended Benami Act,

we may reproduce hereinbelow, Section 4, as it stood before the

amendment:-

4. Prohibition of the right to recover property held benami.

(1) No suit, claim or action to enforce any right in respect of any

property held benami against the person in whose name the

property is held or against any other person shall lie by or on

behalf of a person claiming to be the real owner of such

property.

(2) No defence based on any right in respect of any property held

benami, whether against the person in whose name the property

is held or against any other person, shall be allowed in any suit,

claim or action by or on behalf of a person claiming to be the

real owner of such property.

(3) Nothing in this section shall apply:-

(a) where the person in whose name the property is held is a

coparcener in a Hindu undivided family and the property is held

for the benefit of the coparceners in the family; or

(b) where the person in whose name the property is held is a

trustee or other person standing in a fiduciary capacity, and the

property is held for the benefit of another person for whom he

is a trustee or towards whom he stands in such capacity.

20. An instructive discussion on the scope of sub-section (3) of Section 4

of the Banami Act is found in Marcel Martins vs. M. Printer and Others

reported as (2012) 5 SCC 342, where the Supreme Court has elaborated the

definition of the expression, used in sub-section 3(b) of

Section 4 of the Benami Act and concluded that for determining whether a

relationship is based on a fiduciary capacity, the court will have to take into

consideration the factual context in which the question arises and only in

that background, can any finding be returned. We may usefully reproduce below, the view taken in paras 28 to 38 of the captioned case:-

28. The critical question then is whether sub-section (3) of

Section 4 saves a transaction like the one with which we are

concerned.

29. Sub-section (3) to Section 4 extracted above is in two

distinct parts. The first part comprises clause (a) to Section 4(3)

which deals with acquisitions by and in the name of a

coparcener in a Hindu Undivided Family for the benefit of such

coparceners in the family. There is no dispute that the said

provision has no application in the instant case nor was any

reliance placed upon the same by the learned counsel for the

respondent-plaintiffs.

30. What was invoked by Mr Naveen R. Nath, learned counsel

appearing for the respondents was Section 4(3)(b) of the Act

which too is in two parts viz. one that deals with the trustees

and the beneficiaries thereof and the other that deals with the

persons standing in a fiduciary capacity and those towards

whom he stands in such capacity. It was argued by Mr Nath that

the circumstances in which the purchase in question was made

in the name of the appellant assumes great importance while

determining whether the appellant in whose name the property

was acquired stood in a fiduciary capacity towards the

respondent-plaintiffs.

31.

the 1988 Act or any other statute for that matter. And yet there

is no gainsaying that the same is an expression of known legal

significance, the import whereof may be briefly examined at this

stage.

32. The term has been explained by Corpus Juris

Secundum as under:

is sufficiently

comprehensive to embrace all cases cannot well be given.

The term is derived from the civil or Roman law. It

connotes the idea of trust or confidence, contemplates

good faith, rather than legal obligation, as the basis of

the transaction, refers to the integrity, the fidelity, of the

party trusted, rather than his credit or ability, and has

been held to apply to all persons who occupy a position

of peculiar confidence toward others, and to include

those informal relations which exist whenever one party

trusts and relies on another, as well as technical

fiduciary relations.

thing in trust for another, a trustee, a person holding the

character of a trustee, or a character analogous to that of

a trustee with respect to the trust and confidence involved

in it and the scrupulous good faith and condor which it

requires; a person having the duty, created by his

undertaking, to act primarily for another's benefit in

matters connected with such undertaking. Also more

specifically, in a statute, a guardian, trustee, executor,

administrator, receiver, conservator or any person acting

33.Words and Phrases, Permanent Edn. (Vol. 16-A, p. 41)

defines as under:

relationships between parties, such as guardian and

ward, administrator and heirs, and other similar

relationship

the legal relationships, and also every other relationship

wherein confidence is rightly reposed and is exercised.

occupies a position of peculiar confidence towards

another. It refers to integrity and fidelity. It contemplates

fair dealing and good faith, rather than legal obligation,

as the basis of the transaction. The term includes those

informal relations which exist whenever one party trusts

and relies upon another, as well as technical fiduciary

34.Black's Law Dictionary (7th Edn., p. 640) defines

thus:

Fiduciary relationship. A relationship in which one

person is under a duty to act for the benefit of the other

on matters within the scope of the relationship. Fiduciary

relationships such as trustee-beneficiary, guardianward,

agent-principal, and attorney-client require the

highest duty of care. Fiduciary relationships usually

arise in one of four situations: (1) when one person

places trust in the faithful integrity of another, who as a

result gains superiority or influence over the first, (2)

when one person assumes control and responsibility over

another, (3) when one person has a duty to act for or give

advice to another on matters falling within the scope of

the relationship, or (4) when there is a specific

relationship that has traditionally been recognised as

involving fiduciary duties, as with a lawyer and a client

35.Stroud's Judicial Dictionary explains the expression

as under:

Fiduciary capacity. An administrator who [had]

received money under letters of administration and who

is ordered to pay it over in a suit for the recall of the

grant, holds i

Debtors Act, 1869 so, of the debt due from an executor

who is indebted to his testator's estate which he is able to

pay but will not, so of moneys in the hands of a receiver,

or agent, or manager, or moneys due on an account from

the London agent of a country solicitor, or proceeds of

sale in the hands of an auctioneer, or moneys which in

the compromise of an action have been ordered to be

held on certain trusts or partnership moneys received by

36.Bouvier's Law Dictionary defines as

under:

subject of controversy. It has been held to apply to all

persons who occupy a position of peculiar confidence

towards others, such as a trustee, executor, or

administrator, director of a corporation or society,

medical or religious adviser, husband and wife, an agent

who appropriates money put into his hands for a specific

purpose of investment, collector of city taxes who retains

money officially collected, one who receives a note or

other security for collection. In the following cases debt

has been held to be not a fiduciary one: a factor who

retains the money of his principal, an agent under an

agreement to account and pay over monthly, one with

37. We may at this stage refer to a recent decision of this Court

in CBSE v. Aditya Bandopadhyay [(2011) 8 SCC 497] ,

wherein Raveendran, J. speaking for the Court in that case

explained the terms and in

the following words: (SCC pp. 524-25, para 39)

to act for the benefit of another, showing good faith and

candour, where such other person reposes trust and

special confidence in the person owing or discharging

describe a situation or transaction where one person

(beneficiary) places complete confidence in another

person (fiduciary) in regard to his affairs, business or

transaction(s). The term also refers to a person who

holds a thing in trust for another (beneficiary). The

fiduciary is expected to act in confidence and for the

benefit and advantage of the beneficiary, and use good

faith and fairness in dealing with the beneficiary or the

things belonging to the beneficiary. If the beneficiary has

entrusted anything to the fiduciary, to hold the thing in

trust or to execute certain acts in regard to or with

reference to the entrusted thing, the fiduciary has to act

in confidence and is expected not to disclose the thing or

may not be capable of a precise definition, it implies a

relationship that is analogous to the relationship between a

trustee and the beneficiaries of the trust. The expression is in

fact wider in its import for it extends to all such situations as

place the parties in positions that are founded on confidence

and trust on the one part and good faith on the other.

RFA(OS) 73/2019 Page 18 of 21

38. In determining whether a relationship is based on trust or

confidence, relevant to determining whether they stand in a

fiduciary capacity, the court shall have to take into

consideration the factual context in which the question arises

for it is only in the factual backdrop that the existence or

otherwise of a fiduciary relationship can be deduced in a

given case. Having said that, let us turn to the facts of the

present case once more to determine whether the appellant

stood in a fiduciary capacity vis-à-vis the respondentplaintiffs.

(emphasis added)

21. It is noteworthy that the aforesaid view was expressed by the

Supreme Court in a case where a full blown trial had taken place before the

trial court, which included framing of issues, oral and documentary evidence

led by the parties followed by the judgment of the trial court whereby the

suit instituted by the appellants therein was finally dismissed. In the appeal,

the High Court had reversed the finding of the Trial Court and proceeded to

decree the suit in favour of the respondents/plaintiffs therein, which made

the defendants/appellants prefer an appeal before the Supreme Court urging

that the suit instituted by the respondents was squarely hit by the Benami

Act. The said appeal was finally dismissed by the Supreme Court holding

that the transaction in the said case was saved from the mischief of Section 4

of the Act, as it fell under the exception carved out under sub-section (3) and

resultantly, the respondents/plaintiffs were declared to be coparceners of

certain properties to the extent of their contribution made therein.

22. In the present case, the stage of evidence had not even been arrived at.

In fact, only pleadings in the suit were completed. Issues have also not been

framed. Therefore, there was no occasion for the court to determine as to-a-vis his deceased brother, Shri Anil Kumar Dhir, predecessor-in-interest of the

appellants/plaintiffs. On perusing the averments made in the plaint, it cannot

be said at this stage that the suit is barred by Benami Act. In this context, we

may usefully refer to a recent decision of the Supreme Court in Pawan

Kumar vs. Babulal Since Deceased through Legal Representatives and Ors.

reported as (2019) 4 SCC 367, wherein it has been held as below:-

13. In the present case, the controversy has arisen in an