Monday, 29 June 2020

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.
So
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
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.
25. In view of the aforesaid discussion, the present appeal succeeds. The
impugned judgment is quashed and set aside. The suit is restored to its
original position for being taken further from the stage at which the
impugned judgment was passed.
26. The appeal is disposed of alongwith the pending applications, with no
orders as to costs.
(HIMA KOHLI)
JUDGE
(ASHA MENON)
JUDGE
MAY 01, 2020

Print Page

No comments:

Post a comment