Holding

If an appeal is pending on the date Section 4 of the Benami Transactions (Prohibition) Act, 1988 comes into force, the appellate court may apply the Act and the suit is barred; a special leave petition counts as a pending appeal.

Summary

The plaintiff claimed ownership of agricultural land purchased through four sale deeds in which the defendants were named only as benamidar, alleging the defendants held the property benami. The trial court dismissed the suit, but the first appellate court reversed the decision, and the High Court upheld the dismissal of the defendants' appeal. While the special leave petition was pending, the Benami Transactions (Prohibition) Act, 1988 came into force. The Supreme Court examined whether a suit concerning a benami transaction could be decreed after the Act when an appeal was pending, and whether a special leave petition qualifies as such an appeal. Relying on the ratio in Mithilesh Kumari v. Prem Behari Khare and the Law Commission’s view that the Act is retrospective, the Court held that an appeal pending at the time of the Act’s commencement allows the appellate court to apply the Act, thereby barring the suit. Consequently, the appeal was allowed, the High Court judgment set aside, and the suit dismissed.

Issues considered

Whether a suit relating to a benami transaction filed before the Benami Act can be decreed after the Act when an appeal is pending.
Whether a special leave petition under Article 136 constitutes a pending appeal for the purposes of Section 4 of the Benami Act.
Whether Section 49 of the U.P. Consolidation of Holdings Act, 1954 can be raised when not pleaded in the written statement.
Interpretation of the prospective language "shall lie" and "shall allow" in Section 4 of the Benami Act.

Legislation cited

Benami Transactions (Prohibition) Act, 1988s. 4(1), s. 4(2)
Code of Civil Procedure, 1908s. Order 6, Rules 1,2,7
Constitution of Indias. Article 136
U.P. Consolidation of Holdings Act, 1954s. 49

Subjects

Benami transactionretrospective legislationSection 4appeal pendingspecial leave petitionproperty lawcivil procedureSection 49consolidation of holdingsprospective prohibition

Judgment

OM PRAKASH AND ANR. A
v.
JAi PRAKASH

JANUARY 9, 1992

[N. M. KASLIWAL AND B. P. JEEVAN REDDY, JJ.] B

Benami Transaction (Prohibition) Act, 1988-Section 4 read with Ar-
ticle 136, Constitution of India, 1950-SLP pending before the Supreme
Court, whether amounts to appeal pending-Suit based on benami transac-
tion instituted prior to the coming into force of the Act, whether barred.
_) c
Benami Transaction (Prohibition) Act, 1988-Section 4-"Shall lie",
"Shall allow" and "any property held benami"-Construction of

Code of Civil Procedure, 1908-0rder 6, Rules 1, 2, 7-Pleading-
Written statement-Question of applicability of section 49 of the U.P. Con-
solidation of Holdings Act not averred-Whether such plea can be taken later D
on appeal.

The defendant-appellant No. 1 and plaintiff-respondent were broth-
ers and defendant-appellant No. 2 was the wife of appellant No. 1.
+-
The appellant No. 1 was in Government service ever since 1953. E
The plaintiff-respondent was loo~ing after the entire agricultural
property in the village.

Partition was effected during consolidation proceedings and en-
tered in the revenue records and chaks were carved out in accordance
with the share of the parties in the consolidation proceedings. F
During the consolidation operation, the plaintiff-respondent did
not raise any dispute that he was owner of the entire property and the
names of defendants-appellants were wrongly mentioned as benami.

Later, the plaintiff-respondent filed a suit on the ground that the G
suit-land was purchased by him alone through 4 sale deeds dated
10.6.1968, 21.6.1968, 17.1.1976 and 23.6.1977, wherein the names of the
defendants-appellants were included only as benamidar and he was the
real owner of the land.

The defe1'dants-appellants contended that they had paid their part H
15
16 SUPREME COURT REPORTS [1992] 1 S. C.R.

A of the sale consideration and the land was jointly purchased in the name \-
of both the parties.

The trial court dismissed the suit holding that the names of the
defendants-appellants in the sale deeds were not mentioned as benami-
dars and that the plaintiff-respondent did not take any objection in the
B consolidation proceedings.

When the plaintiff-'i-espondent filed an appeal before the first ap-
pellate court, it reversed the judgment and decree of the trial court and
decreed the suit iJ! favour of the plaintiff-respondent.

C The second appeal filed by the defendants-appellants was dismissed
by the High Court. The defendants filed a special leave petition before
this Court on 15th March 1988.

During the pendency of the special leave petition, the Benami
Transactions (Prohibition of the Right to Recover Property) Ordinance,
D 1988 was promulgated on 19.5.1988.

The Ordinance was replaced by the Benami Transactions (Prohibi-
tion) Act, 1988, which received the President's assent on 5.9.1988.

The defendants filed an application on 1.5.1989 for allowing them
E to take additional grounds made available on the basis of the aforesaid
'Benami Act'.

Thereafter special leave was granted by order dated 21.8.1989 and
the parties were given liberty to file additional documents, if any, within
four weeks.
F
The defendants-appellants contended that the suit filed by the
plaintiff-respondent was not maintainable and barred under Section 49
of the U.P. Consolidation of Holdings Act, 1954 as the point regarding
the land in question being benami was never raised by the plaintiff-
respondent duripg consolidation proceedings and the chaks were allowed
G to be recorded in the name of the defendant-appellants.

The pJaiptiff-respondent contended that if the ratio of Mithilesh
Kumari's case, JT. 1989(1) SC 275, was applied, it could be made
available only in a case where appeal was pen~ing before the higher
Court and that no advantage could be taken by the defendants-appel-
H lants, of Section 4 of the Benami Act, as no appeal was pending on the
date when the Benami Act came into force.
OM PRAKASH v. JAi PRAKASH 17

On the question, whether any suit relating to benami transactions A ·
can be decreed after the coming into force of the Benami Act, this Court,
allowing the appeal or the defendants,

HELD : 1.01. In a suit for recovery of benami property if any
appeal is pending on the date of coming into force of Section 4, the
appellate court can take into account the subsequent legislative changes. B
[20C]

1.02. The I.aw Commission's view was that the legislation replac-
ing the ordinance should be retrospective in operation and that no locus
I _,
penitentia need be given to the persons who had entered in the benami
transaction in the past. [20G] C
1.03. In the present case the defendants, having lost in High
Court, could have approached this Court only through a special leave
petition under Art. 136 of the Constitution and it is only after the grant
of such special leave that the appeal could be heard. Though the special
leave might have been granted subsequently on 21.8.89 but it is a fact D
that the J1~dgment and decree of the High Court had already been
challenged by the defendant-appellants, and· it cannot be said that no
appeal was pending before this Court simply on the groun8 that only
special leave petition was pending when the Benami Act came into force.
[21C-E]
E
1.04. An appeal is a continuation of ~uit and in the present case,
the appeal was pending before this Court. Th~ suit had been filed by the
plaintiff-respondent claiming that he was the real owner of the property
and the names of the defendants-appellants were mentioned in the sale-
deeds as benami. [21E-F]
F
.;'
>
1.05. Section 4 of the Benami Act is a total prohibition against any
suit based on benami transaction and the plaintiff-respondent is not
entitled to get any decree in such suit or in appeal. [21F]

Mithilesh Kumari and Anr. v Prem Behari Khare, J.T. 1989 (1) S.C.
275, referred to. G
2.01. The expression ''shall .lie" in Section 4(1) and "shall allow"
in Section 4(2) of the Benami Act are prospective and shall apply to
present (future stages) and future suits, claims or actions only. [20B]

~
2.02. The expression ''any property held benami" is not limited to H
any particular time, date or duration. [20C]
18 SUPREME COURT REPORTS [1992] 1 S. C.R.

A 3. No foundations were-laid in the written statement nor any issue
was raised by the defendants-appellants, on the question of applicability
or Section 49 or the U.P. Consolidation of Holdings Act. The derendants-
appellants cannot be allowed to take such plea. [19H-20A]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3552 of 1989.
B
From the Judgment and Order dated 24.11.87 of the Allahabad High
Court in Second Appeal No. 2719 of 1987.

J.P. Goyal, R.C. Verma, M.R. Bidsar and K.K. Gupta (NP) for the Ap-
pellants. \...
c O.P. Rana and Girish Chandra for the Respondent.

The Judgment of the Court was delivered by

KASLIWAL, J. This appeal by special leave is directed against the
D Judgment of Allahabad High Court dated 24.11.1987. The plaintiff-respon-
dent filed a suit on the ground that the land purchased through 4 sale deeds
dated 10.6.1968, 21.6.1968, 17.1.1976 and 23.6.1977 were purchased by him
alone and he was the real owner of said land. The name of the defendants/
appellants were included in the said sale deeds only as benamidar. The
defendants-appellants took the plea that they ha~ paid their part of the sale
E consideration and the land was jointly purchased in the name of both the
parties. It may be noted that the defendant-appellant Om Prakash and
plaintiff-respondent Jai Prakash are· brothers and defendaJti.-appellant No. 2
Smt. Satyawati is the wife of appellant Om Prakash. It has come on record
that the appellant No. I Om Prakash was in Government service ever since
1953 and the plaintiff-respondent was looking after the entire agricultural
F property in the village. Consolidation proceedings also took place in the
village and during the consolidation operation partition had been effected in
the revenue records and chaks had been carved out in accordance with the
share of the parties. At that time no dispute was raised by the plaintiff-
respondent that he was owner of the entire property and the names of
defendants-appellants were wrongly mentioned as benami.
G
The learned trial court arrived at the conclusion that the names of the
defendants-appellants in the sale deeds were not mentioned as benamidaJ:s
and further held that the claim of the plaintiff-respondent could not be
accepted as no objection had been taken by him even during the consolida-
tion proceedings. The suit as such was dismissed by the trial court by
H Judgment dated 24.1.1987. The plaintiff aggrieved against the judgment of
OM PRAKASH v. JAi PRAKASH [KASLIW AL, J. ] 19
~
.the trial court, filed an appeal. The first appellate court reversed the Judgment A
and decree of the trial court and decreed the suit in favour of the plaintiff.
The second appeal filed by the defendants was dismissed by the High Court.
The defendants aggrieved against the Judgment and decree of the High Court·
filed special leave petition before this Court on 15th March, 1988. During the
pendency of the special leave petition, the Benami Transactions (Prohibition
of the right to recover property) Ordinance, 1988 was promulgated by the B
President of India on 19.5.1988. The said ordinance was replaced by the
Benami Transactions (Prohibition) Act, 1988 (Hereinafter called the 'Benami
Act'). The Act received the assent of the President of India on 5.9.1988. The
defendants filed an application on 1.5.1989 for allowing them to take
.../ additional grounds made available on the basis of the aforesaid 'Benami Act' .
Thereafter special leave was granted by this court by order dated 21.8.1989 c
and it was directed that printing of record is dispensed with and appeal will
be heard on the special leave petition paper books. The parties were given
liberty to file additional documents if any within four weeks and the appeal
was directed to be listed on 13.12.1989 for hearing. Pending disposal of the
~ppeal, the parties were directed to maintain status quo as existing on that
day. D

Ii, the above circumstances, the matter came up :or hearing before us.

Though there is no specific order of this Court allowing the application
dated 1.5.1989 filed by the appellants for raising additional grounds, the same
shall be deemed to have been allowed as the special leave petition was E
granted subsequently on 21.8.1989 after hearing both the parties. In any case,
we further make it clear that we had permitted the defendants/appellants to
argue additional grounds made available to them under the 'Benami Act',
which admittedly came into force after the filing of the special leave petition
in this Court.
F
• Learned counsel appearing on behalf of the defendants-appellants had
)- contended that the suit filed by the plaintiff-respondent was not maintainable
and barred under Section 49 of the U.P. Consolidation of Holdings Act, 1954
as the point regarding the land in question being benami was never raised by
the plaintiff-respondent during consolidation proceedings and the chaks were
allowed to be recorded in the name of the defendants-appellants. So far as
G
this objection under Section 49 of the U.P. Consolidation of Holdings Act is
concerned, no foundations were laid in the written statement nor any issue
was raised. The High Court was thus right in holding that in the facts of this
case, no foundation had been laid for the applicability of Section 49 of the
U.P. Consolidation of Holdings Act We see no error in the order of the High
,;..__
H
Court in taking the aforesaid view and we also hold that the defendants-
20 SUPREME COURT REPORTS (1992) 1 S. C.R.

}-
A appellants cannot be allowed to take such plea for which no foundation was ~

laid in the pleadings.

The next important and formidable question which arises for considera-
tion is w~ether any suit relating to benami transactions can be decreed after
the coming into force of the Benami Act. This Court in Mithilesh Kumari and
B Anr. v. Prem Behari Khare, J.T. 1989 (1) SC 275, has already held that the
expression "shall lie" in Section 4 (1) and "shall allow" in Section 4 (2) of
~e Benami Act are prospecti~e and shall apply to present (future stages) and
future suits, claims or actions only. The expression "any property held
benami" is not limited to any particular time, date or quration. In a suit for
recovery of benami property if any appeal is pending on the date of coming \.
c into force of Section 4, · the appellate court can take into account the
subsequent legislative changes. Section 4 of the Benami Act reads as
under :-

"(1) No suit, claim or action to enforce any right in respect of any
property held benami against the person in whose name the
D 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, wheth.er against the person in whose name the property
is held or against ilny other person, shall be allowed in any suit,
E claim or action by or on behalf of a person claiming to be the real
owner of such property."

In the case of Mithilesh Kumari this Court considered the I/30th report
of the Law Commission submitted to the Government on August 14, 1988.
Benami Transaction (Prohibition) Bill, 1988' was drafted after getting the
F report and the Bill was introduced in the Rajya Sabha on 31st August, 1988
and then the Bill was passed. The Law Commission devoted several pages to -~
justify retrospective legislation and its view was that the legislation replacing .,.-
the Ordinance should be retrospective in operation and that no locus peniten-
tia need be given to the persons who had entered in the benami transaction
in the past. Learned counsel ·appearing for the respondent was unable to
G convince us to take a different view from that already taken by this Court in
Mithilesh Kumari' s case.

It was vehemently contended by the learned counsel for the plaintiff-
respondent that even if the ratio of Mithilesh Kumari' s case is applied, it can
be made available only in a case where appeal was pending before the higher
H Court. It was contended that in the present case, only special leave petition
f
OM PRAKASH v. JAi PRAKASH [ KASLIW AL. J.] 21

filed on 15th March, 1988 was pending at the time when the Benami Act A
came into force. It was pointed out that the Ordinance was promulgated on
19.5.1988 and the Benami Act received the assent of the President on
5.9.1988. It was thus contended that no appeal was pending on 19.5.1988 or
5.9.1988 as the special leave was granted much after on 21.8.1989 and thus
no advantage can be taken by the defendants-appellants of Section 4 of the
Benami Act as no appeal was pending on the date when the Benami Act B
came into force.

We find no force in the above contention of the learned counsel for the
plaintiff-respondent. Special leave petition was filed against the Judgment of
the High Court on 15.3.1988 and special leave was granted on 21.8.1989
after hearing both the parties. In the present case the defendants having lost C
in High Court could have approached this Court only through a special leave
petition under Art. 136 of the Constitution and it is only after the grant of
such special leave that the appeal could be heard. Though the special leave
might have been granted subsequently on 21.8.1989 but it is a fact that the
Judgment and decree of the High Court had already been challenged by the
defendant-appellants and it cannot be said that no appeal was pending before D
this Court simply on the ground that only special leave petition was pending
when the Benami Act came into force. There is a clear prohibition under
Section 4 of the Benami Act 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. It is well settled that E
an appeal is a continuation of suit and in the present case the appeal was
pending before this Court. There is no manner of dispute that the present suit
had been filed by the plaintiff-respondent claiming that he was the real owner
of the property and the names of the defendants-appellants were mentioned
in the sale deeds as benami. In our view, Section 4 of the Benami Act is a F
total prohibition against any suit based on benami transaction and the
plaintiff-respondent is not entitled to get any decree in such suit or in appeal.
/
r As a result of the above discussion, we allow this appeal, set aside the
Judgment and decree of the High Court and dismiss the suit In view of the
fact that the suit is dismissed on account of legislative change brought about
during the pendency of the appeal in this Court, there would be no order as
to cost

V.P.R. Appeal allowed.