Punjab & Haryana H.C : On the date of the coming into force of s. 4 of the Act, that is, 19th May, 1988, this appeal was pending and, of course, is still pending; Can the suit itself be said to be pending?

M. S. Jain & Sanjiv Sharma, for the Appellants : M. L. Sarin & Miss Jai Shree Thakur, for the Respondent

A. L. BAHRI, J. :

Vide this judgment, three Regular First Appeals (Nos. 72, 73 and 74 of 1986) are for disposal. R.F.A. No. 72 of 1986 has arisen out of Suit No. 530 of 1984 for specific performance of the agreement dt. 7th Sept., 1967, brought by Narinder Kumar and others which was dismissed. R.F.A. No. 73 of 1986 has arisen out of Suit No. 551 of 1978. The suit was for declaration which was dismissed. R.F.A. No. 74 of 1986 has arisen out of Suit No. 1526 of 1984 brought by Munisubrat Dass Jain (M. D. Jain) for mandatory injunction which was subsequently amended for possession.

This suit was also dismissed. The trial Court decided the three suits aforesaid by one judgment. It is necessary to refer to some broad facts regarding which there is not much dispute. The pleadings of the parties, in fact, revolve around those facts. M/s Faqir Chand Phool Chand owned land in Kasba Karnal. A partnership was entered into between them and Narinder Kumar, Surinder Kumar and Vijander Kumar, sons of R. S. Jogi Dass Jain. On a portion of the land, a rice mill was constructed as the partnership was to run the business of rice mill, On some portion of the remaining land, rice was to be dried. After some time, finding that the partnership business was not being run harmoniously, it was decided to dissolve the partnership. An agreement in this respect was entered into on 23rd Nov., 1964. Faqir Chand and Phool Chand were to go out of the partnership business. The land under the rice mill, the building and the machinery and the land used for drying paddy were to be sold to Narinder Kumar and other partners. The land under the building was to be sold on instalments to be paid within five years whereas the land used for drying paddy was to be sold on instalments to be paid within ten years. Some price was also fixed. Thereafter, another agreement was entered into on 26th Dec., 1965. Vide this agreement, the partnership firm was to be dissolved w.e.f. 31st March, 1966, and thereafter Narinder Kumar and others were to become owners of the building, etc. The land under the building and the land used for drying paddy were to remain with them on the same terms and conditions which were incorporated in the agreement dt. 23rd Nov., 1964. Ultimately, the matter went to Court and a compromise deed was filed therein which is dt. 29th Aug., 1967. Faqir Chand and Phool Chand agreed to sell the land under the rice mill and another piece of land to be used for drying paddy to M. D. Jain. The said piece of land measured 12 bighas 16 biswas and 12 biswansis. Narinder Kumar and others were to use this piece of land for drying paddy as allowed by M. D. Jain, instead of the land which was earlier being used. In compliance with the said agreement, some instalments were paid to M/s Phool Chand Faqir Chand. Ultimately, the sale deed was executed in respect of the property agreed to be sold in favour of M. D. Jain, his wife and children on his asking on 13th Oct., 1976. On 2nd March, 1974, M. D. Jain and others, in whose favour the sale deed was executed by Faqir Chand and Phool Chand, filed a suit which was ultimately amended as a suit for possession by removal of malba and for a mandatory injunction directing the defendants, Narinder Kumar and others, to deliver possession of the land, including land measuring 12 bighas 16 biswas and 12 biswansis, by removing their belongings and construction on the land, claiming themselves to be the owners having purchased the same. Surinder Kumar Jain, defendant, being the real brother-inlaw of M. D. Jain, plaintiff, and the other defendants, his brothers, had approached the plaintiff for granting permission to them, for drying paddy at their rice mill in the land and the plaintiff permitted them to do so. The licence having been revoked, the plaintiffs were entitled to get back the possession. Narinder Kumar and others contested the suit, inter alia, alleging partnership with Faqir Chand and Phool Chand and on its dissolution they were in possession of the rice mill as well as the land on which paddy was to be dried on lease at the rate of Rs. 150 per bigha. They had agreed to purchase the land in five years and ten years, as noticed above. In the suit for dissolution of partnership, when the compromise agreement was entered into, M. D. Jain was introduced as a benamidar. In fact, the defendants were to purchase the land under the rice mill as well as the land over which paddy was to be dried. Some of the instalments under the agreement were paid by them. It was stipulated in the agreement that the sale deed would be executed in favour of the nominees of M. D. Jain and he had given affidavits on 25th July, 1969, and 25th Jan., 1971, undertaking to get the sale deed executed in favour of Narinder Kumar and others. Several issues having been framed, ultimately, the suit was dismissed.

On 15th Feb., 1978, Narinder Kumar, Surinder Kumar and Vijander Kumar filed a suit for declaration against M. D. Jain and others claiming a decree of declaration that they were owners in possession of the land by virtue of sale deed dt. 13th Oct., 1976, executed by Phool Chand Jain in pursuance of an agreement dt. 7th Sept., 1967, in which M. D. Jain was a benamidar vendee for the plaintiffs who claimed to be the real purchasers. By the said sale deed, M. D. Jain, his wife and children did not acquire any title, right or interest in the land by virtue of sale deed dt. 13th Oct., 1976. According to Narinder Kumar and others, they had agreed to purchase the land from Phool Chand, etc., and a formal agreement dt. 7th Sept., 1967, was executed. This suit was contested by

M. D. Jain and others, defendants , inter alia, alleging that under a fresh agreement to sell, M. D. Jain had agreed to purchase the land under the rice mill as well as another adjoining piece of land (not the one which was earlier in the possession of Narinder Kumar and others for drying paddy). This suit was also tried and ultimately dismissed by the trial Court. The third suit was filed by Narinder Kumar and others claiming a decree for specific performance of the agreement dt. 7th Sept., 1967, read with the agreements dt. 23rd Nov., 1964, and 26th Dec., 1965, as well as an undertaking given by M. D. Jain in his affidavit dt. 25th July, 1969. They claimed to be in possession of the suit land. Similar pleas were taken by both the parties in this suit which was dismissed by the trial Court. Hence, the three Regular First Appeals as noticed above. Two of the appeals have been filed by Narinder Kumar and others (R. F. A. Nos, 72 and 73 of 1986) in the two suits filed by them which were dismissed. The third appeal has been filed by M. D. Jain (R. F. A. No. 74 of 1986) in his suit for mandatory injunction which was amended as a suit for possession which was also dismissed. As already noticed above, all the three suits were decided on 30th May, 1985, by the Senior Sub-Judge, Karnal, by one judgment. Arguments were heard as addressed by counsel for both the parties at length as the question involved related to interpretation of the Benami Transactions (Prohibition) Act, 1988, as there was no judgment of this Court on the subject.

Counsel for the parties also argued the case on merits. Two judgments of the Kerala High Court were cited by counsel for M. D. Jain wherein the aforesaid Act was held to be retrospective as also applicable to the pending suits and appeals. These judgments are C. Narayanan vs. Gangadharan (No. 2) (1988) 72 CTR (Ker) 17 : (1989) 180 ITR 503 (Ker) and Velayudhan Ramakrishnan vs. Rajeev (1988) 73 CTR (Ker) 1 : (1988) 174 ITR 482 (Ker). It was thereafter while the judgment was under process of preparation that counsel for M. D. Jain has brought to my notice the judgment of the Supreme Court in Mithilesh Kumari vs. Prem Behari Khare, decided on 14th Feb., 1989, reported as (1989) 76 CTR (SC) 27 : (1989) 177 ITR 97 (SC). This judgment was brought to the notice of counsel appearing on behalf of Narinder Kumar and others.

In view of the fact that the Supreme Court has decided that the Benami Transactions (Prohibition) Act, 1988, is retrospective and would be applicable to the suits and the appeals pending, it is not necessary to refer to points argued in the appeals, on this subject.

The Supreme Court in Mithilesh Kumari’s case (supra), while dealing with the scope of the Benami Transactions (Prohibition) Act, 1988, held as under : “As defined in s. 2(a) of the Act ‘benami transaction’ means any transaction in which property is transferred to one person for a consideration paid or provided by any other person. A transaction must, therefore, be benami irrespective of its date or duration. Sec. 3, subject to the exceptions, states that no person shall enter into any benami transaction. This section obviously cannot have retrospective operation. However, s. 4 clearly provides that 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. This naturally relates to past transactions as well. The expression ‘any property held benami’ is not limited to any particular time, date or duration. Once the property is found to have been held benami, no suit, claim or action to enforce any right in respect thereof shall lie. Similarly, sub-s. (2) of s. 4 nullifies the defences 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 in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property. It means that once a property is found to have been held benami, the real owner is bereft of any defence against the person in whose name the property is held or any other person. In other words, in its sweep, s. 4 envisages past benami transactions also within its retroactivity. In this sense, the Act is both a penal and a disqualifying statute. In the case of a qualifying or disqualifying statute, it may be necessarily retroactive. For example, when a law of representation declares that all who have attained 18 years shall be eligible to vote, those who attained 18 years in the past would be as much eligible as those who attained that age at the moment of the law coming into force. When an Act is declaratory in nature, the presumption against its retrospectivity is not applicable. Acts of this kind only declare. A statute in effect declaring the benami transactions to be unenforceable belongs to this type. The presumption against taking away a vested right will not apply in this case inasmuch as under law it is the benamidar in whose name the property stands, and law only enabled the real owner to recover the property from him which right has now been ceased by the Act. In one sense, there was a right to recover or resist in the real owner against the benamidar. Ubi jus ibi remedium. Where there is a right, there is a remedy. Where the remedy is barred, the right is rendered unenforceable. In this sense, it is a disabling statute. All the real owners are equally affected by the disability provision irrespective of the time of creation of the right. A right is a legally protected interest. The real owner’s right was hitherto protected and the Act has resulted in removal of that protection.

When the law nullifies the defences available to the real owner in recovering the benami property from the benamidar, the law must apply irrespective of the time of the benami transactions. The expression ‘shall lie’ in s. 4(1) and ‘shall be allowed’ in s. 4(2) are prospective and shall apply to present (future stages) and future suits, claims or actions only. This leads us to the question whether there was a present suit between the plaintiff- respondent and the defendant-appellant on the date of the law coming into force. We have noted the dates of filing the suit and judgments of the Courts below. On the date of the coming into force of s. 4 of the Act, that is, 19th May, 1988, this appeal was pending and, of course, is still pending; Can the suit itself be said to be pending?”

As already noticed above, in the suit brought by Narinder Kumar and others, their allegations are that they are entitled to specific performance of the agreement dt. 7th Sept., 1967, read with previous agreements to purchase the land and M. D. Jain was merely introduced as a benamidar. In the other suit also, their claim is likewise where they claim declaration. Their claim cannot be decreed now in view of the decision of the Supreme Court referred to above as, by enforcement of the Benami Transactions (Prohibition) Act, 1988, they are debarred from making claims on the ground that M. D. Jain was a benamidar acting on their behalf. It is not necessary to refer to the evidence produced in the case as all the documents have been duly proved including the agreement dt. 7th Sept., 1967. Both the appeals (R. F. A. Nos. 72 and 73 of 1986), therefore, deserve to be dismissed on that short ground.

In R.F.A. No. 74 of 1986, the suit was brought by Munisubrat Dass Jain firstly for mandatory injunction and as amended subsequently for possession of the land under the rice mill by removal of the construction and a piece of land on which the defendants were allowed to dry the paddy, their licence having been revoked. In this case, Narinder Kumar, and others took up the plea that M. D. Jain was merely a benamidar for them and, in fact, they were owners in possession of the suit land. They also claimed tenancy rights under the original owners. As far as their defence that

M. D. Jain was merely a benamidar for them in the agreement dt. 7th Sept., 1967, is concerned, it is not available to them in view of the decision of the Supreme Court referred to above. That being the position, a sale deed having been executed in favour of M. D. Jain and his wife and children, they would be owners of the property purchased.

The question as to whether Narinder Kumar and others were in possession as licensees or as lessees remains to be examined in this appeal. Admittedly, under the previous agreements, Narinder Kumar and others were to be lessees of the land under the rice mill as well as a piece of land towards the northern side of the rice mill which was owned by Faqir Chand and Phool Chand. However, when the agreement dt. 7th Sept., 1967 (Exhibit P-7), was entered into between M D. Jain and Phool Chand Faqir Chand, it is in respect of the land under the rice mill as well as another piece of land which is towards the south of the rice mill where Narinder Kumar and others were allowed to dry their paddy. Obviously, Narinder Kumar and others were not earlier in possession of this piece of land (which is in dispute) which is towards the south of the rice mill. They were permitted to dry their paddy by M. D. Jain and it was further provided that if M. D. Jain at any stage refused to allow them to dry paddy, Faqir Chand and Phool Chand would not be responsible (Exhibit DH/2/A). This piece of land was not in the possession of Narinder Kumar and others earlier. Thus, there is no question of lease of this land to Narinder Kumar and others. Since the agreement dt. 7th Sept., 1967, was finalised when the suit was pending and M. D. Jain and others purchased the land under the rice mill, the previous agreements between Phool Chand and Faqir Chand on the one side and Narinder Kumar and others on the other side were extinguished. Now, Narinder Kumar and others cannot claim any right of lease of land under the rice mill on the ground that, in fact, M. D. Jain was acting for their benefit under the agreement. Further, reference has been made to the affidavit of M. D. Jain dt. 25th July, 1969 (Exhibit P-28), that he had undertaken to get the sale deed executed in favour of Narinder Kumar and others, is of no consequence as subsequently this undertaking was withdrawn, dispute having arisen. M. D. Jain never agreed to sell the property to Narinder Kumar and others in this affidavit, Furthermore, even if Narinder Kumar and others were to be lessees of the land under the rice mill and the plot of land towards the north, as allowed by Faqir Chand Phool Chand at the rate of Rs. 150 per bigha, the same ceased when Narinder Kumar and others vacated the vacant plot. M. D. Jain had allowed Narinder Kumar and others to dry paddy on the other plot (south of the rice mill) on which he did not create any fresh lease in favour of Narinder Kumar and others.

M. D. Jain and others, being owners of the land under the rice mill and the plot in dispute, are entitled to possession thereof and their claim cannot be, defeated by, Narinder Kumar and others on the ground that M. D. Jain was a benamidar acting for their benefit.

It has been argued on behalf of Narinder Kumar and others that the present transaction is exempted from the provisions of the Act, 1988 , in view of the provisions of s. 4(3)(b) of the Act as the transaction was entered into on account of a fiduciary relationship. M. D. Jain, as already stated above, is related to Surinder Kumar as his brother-in-law. There is no merit in this contention. There is no evidence on the record produced on behalf of Narinder Kumar and others that M. D. Jain was in such a position to dominate them. On the other hand, their case is that they had paid all the instalments though in the name of M. D. Jain, whereas the stand of M. D. Jain is that he had sent the amount which was paid in his name under the agreement. R. F. A. No. 74 of 1986 is allowed, the judgment and decree of the trial Court are set aside and the suit of M. D. Jain and others for possession of the property in dispute is decreed. R.F.A. Nos. 72 and 73 of 1986 are dismissed. The parties are left to bear their own costs in these appeals.

[Citation : 181 ITR 305]