Issue Of Property Being Benami & Not Covered By Exception Is To Be Decided On The Basis Of Evidence & Not Simply On Mere Plaint Averments: Supreme Court

The two special leave petitions had been preferred, one by the second defendant to the suit and the other by one of the subsequent purchasers (defendant 5) of some of the suit properties against the rejection of an application under Order VII Rule 11 of Code of Civil Procedure by the court of first instance as well as the High Court in revision.

The Division Bench of Justice Pankaj Mithal and Justice Ahsanuddin Amanullah held,“It is only where the property is benami and does not fall within the exception contained in Sub-Section (9) of Section 2 that a suit may be said to be barred. However, the issue whether the property is benami and is not covered by the exception, is again an issue to be decided on the basis of evidence and not simply on mere averments contained in the plaint. The defendants have to adduce evidence to prove the property to be benami.”

“Accordingly, in our opinion, the courts below have not committed any error of law in rejecting the application under Order VII Rule 11 CPC on the above score”, it added.

Senior Advocate Navin Pahwa represented the Petitioners while Senior Advocate Kavin Gulati represented the Respondents.

Factual Background

The two plaintiffs i.e. the mother and the son instituted a Regular Suit against the other son of first plaintiff i.e. Sandeep Gupta (defendant 1) and his wife Shaifali Gupta (defendant 2). The aforesaid suit was for partition, possession, declaration, mandatory & permanent injunction and for accounting with regard to the properties alleged to be the family properties purchased out of the funds of the joint family or derived from the income from the joint family business. The suit was between the family members. The mother and one son on one side, and the other son and his family on the other side. The children of both sons were non-active or passive parties.

In 1982, the two sons jointly started a tailoring business from a rented shop. The younger brother (plaintiff 2) was appointed and declared to be the sole proprietor. The family purchased a house. They lived there jointly at least up to the year 2011. The elder son (defendant 1), along with his famil,y started residing in a house jointly purchased by the family from the income of the joint family business in the year 2014. It was categorically asserted that the properties had been purchased in the name of the plaintiffs and the defendants or the members of the family and were the joint properties of the Joint Hindu Family. In the suit instituted by the plaintiffs for partition, the subsequent purchasers, defendants 5 and 6, moved an application under Order VII Rule 11 CPC, contending that the suit was not maintainable in view of the provisions of Benami Transaction (Prohibition) Act, 19883. The court of first instance, by the order impugned, rejected the same. The Revision filed by the defendants was also dismissed. Aggrieved thereby, the second and fifth defendants filed a Special Leave Petition.

Reasoning

The Bench, at the outset, explained that Section 4 of the Benami Act bars the suit, claim or action in respect of a property held benami by person at the behest of the person claiming to be its true owner. It was noted that the plaint allegations all through described the suit properties as the Joint Hindu Family properties and that they had been purchased either from the nucleus of the Joint Hindu Family property or the income derived from the joint family business. “The properties are not described as benami in the name of any member of the family. Therefore, from the plaint reading, the suit properties cannot ex-facie be held to be benami properties in respect whereof the suit may not be maintainable in view of Section 4 of the Benami Act”, it said.

The Bench noted that whether a property is a benami has to be considered not in the light of Section 4 of the Benami Act alone but also in connection with Sections 2 (8) and 2 (9) of the said Act i.e. whether the property if benami falls in the exception.

Reference was also made to the judgment in Pawan Kumar vs. Babu Lal (2019) wherein it was held that for rejecting a plaint, the test is whether from the statement made in the plaint it appears without doubt or dispute that the suit is barred by any statutory provision. Where a plea is taken that the suit is saved by the exception to the benami transaction, it becomes the disputed question of fact which has to be adjudicated on the basis of the evidence. Therefore, the plaint cannot be rejected at the stage of consideration of application under Order VII Rule 11 CPC. “The ratio of the above case squarely applies to the facts of the case at hand. Accordingly, in our opinion, the courts below have not committed any error of law in rejecting the application under Order VII Rule 11 CPC on the above score”, the Bench stated.

The Apex Court further noted that Section 14 of the Act simply provides that the property possessed by a female Hindu shall be held by her as a full owner. It does not bar or prohibit a suit in respect of such a property. Therefore, in the absence of any bar contained in the above provision, the suit plaint is not liable to be rejected as barred by law. Considering that the courts below had rejected the application filed by defendants under Order VII Rule 11 CPC and refused to reject the plaint as barred by any statute, the Bench noted that this meant that the parties were at liberty to contest the suit on merits.

Thus, in light of the fact that no miscarriage of justice was done, the Bench dismissed the Special Leave Petitions.

Cause Title: Smt. Shaifali Gupta v. Smt. Vidya Devi Gupta & Ors. (Neutral Citation: 2025 INSC 739)

Appearance:

Petitioners: Senior Advocate Navin Pahwa, Advocate Rajul Shrivastav, AOR Mohit D. Ram, Advocates Anubahav Sharma, Nayan Gupta, Rajul Shrivastav, AOR Charu Ambwani, Advocate Nayan Gupta

Respondent: Senior Advocates Kavin Gulati, Apoorv Kurup, AOR Sudipto Sircar, AOR Charu Ambwani, AOR Anuj Tyagi, Advocates Nishit Agrawal, Maitry Kakade, Akshita Agarwal, AOR Mohit D. Ram

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