Husband Acquiring Property In Wife's Name Does Not Necessarily Imply Benami Transaction: Calcutta High Court

The Calcutta High Court has clarified that the mere transfer of money from a husband to his wife for the purchase of property would not qualify as a benami transaction.

A Division bench of Justice Tapabrata Chakroborty and Justice Partha Sarthi Chatterjee observed,

"In the Indian society, if a husband supplies the consideration money for acquiring property in the name of his wife, such fact does not necessarily imply benami transaction. Source of money is, no doubt, an important factor but not a decisive one. The intention of the supplier of the consideration money is the vital fact to be proved by the party who asserts benami."

In other words, even if it is proved that husband paid the consideration money, it will have to be proved that the husband really intended to enjoy the full benefit of the title in him alone.

The bench was hearing an appeal whereby one Sekhar Kr Roy claimed that his father, Sailendra Kumar Roy, since deceased had purchased the suit property by a registered deed of sale in 1969 in ‘benam’ of his wife, Smt. Lila Roy, since deceased.

Sailendra died, leaving behind his son Sekhar (“the appellant”), Lila his wife and his daughter Sumita (“the respondents). The appellant stayed in the suit property till 2011 after which he started living apart. He had thereafter approached his mother and sister (“the defendants”) for the partition of the suit property, which was not agreeable to the respondents, leading to this suit.

According to the respondents, Lila had purchased the suit property from her stridhan and that she became the absolute owner of the suit property and same was duly mutated in her name.

Amidst the conflicting submissions, the most important question that needed deciding in the view of the Bench was whether the purchase of the suit property by Sailendra would amount to a benami transaction. According to the Benami Transaction (Prohibition) Act, 1988 in Section 2(a) ‘benami transaction’ means any transaction in which property is transferred to one person for a consideration paid or provided by any other person. The bench observed:

“In India, two kinds of benami transactions are generally recognized. Where a person buys a property with his own money but in the name of another person without any intention to benefit such other person, the transaction is called benami. In that case, the transferee holds the property for the benefit of the person who has contributed the purchase money, and he is the real owner. The second case which is loosely termed as a benami transaction is a case where a person who is the owner of the property executes a conveyance in favour of another without the intention of transferring the title to the property thereunder. In this case, the transferor continues to be the real owner."

However, court said, this must be counterbalanced with the presumption that the one who purchases the property is the owner of such property in law. It opined that such a presumption can only be displaced by showing that such a person, whose name is in the registration documents, is not the real owner but a mere name-lender or benami and a heavy burden of proof lies on the one making such allegations to prove their claim.

In this case, the appellant who had made such a claim only adduced oral testimony regarding the same and did not provide any documentary evidence, whereas Lila not only deposed but also produced the documents relating to suit property. In order to decide on the question of burden of proof and whether it rested with the appellant or the respondent, the Bench relied on the Supreme Court judgement in Jaydayal Poddar (Deceased) thr. Lrs. –vs. Mst. Bibi Hazra reported in AIR 1974 SC 171 in which the Hon’ble Court ruled as follows:

“The essence of a benami is the intention of the party or parties concerned….Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformly applicable in all situations, can be laid down; yet in weighing the probabilities and for gathering the relevant indicia, the courts are usually guided by these circumstances: (1) the source from which the purchase money came; (2) the nature and possession of the property, after the purchase; (3) motive, if any, for giving the transaction a benami colour; (4) the position of the parties and the relationship, if any, between the claimant and the alleged benamidar; (5) the custody of the title-deeds after the sale and (6) the conduct of the parties concerned in dealing with the property after the sale.”

On applying the above principles to the instant case, the Court held that while Lila had since the beginning admitted to being a homemaker and having paid for the property with her stridhan by selling her gold ornaments, the appellant Sekhar had not been able to adduce evidence regarding the actual consideration that was paid for the suit property. He made no attempt to verify the same from attesting witnesses and claimed that his father never claimed himself to be the real owner of the suit property or that the suit property was solely for his enjoyment. Sekhar also was not able to produce any document showing that his father paid the consideration money. The bench observed:

“Court is required to bear in mind the well-settled principles to the effect that the burden of showing that a transfer is a benami transaction always lies on the person who asserts it. In the Indian society, if a husband supplies the consideration money for acquiring property in the name of his wife, such fact does not necessarily imply benami transaction. Source of money is, no doubt, an important factor but not a decisive one. The intention of the supplier of the consideration money is the vital fact to be proved by the party who asserts benami. In other words, even if it is proved that Sailendra paid the consideration money, the plaintiff must further prove that Sailendra really intended to enjoy the full benefit of the title in him alone.”

Since the appellant was not able to prove any particulars regarding the purchase of the suit property by his father, and because the title deed and all documents relating to the suit property were all in the custody of the respondents who had paid municipal tax and got the suit property mutated in their name, the appellant was unable to bring any evidence on record to lead the Court to infer that his father had a motive to create benami in name of his mother. Thus, the appeal was dismissed and it was held that:

“As a result, we are inclined to hold that learned Court below has correctly held that Sekhar has failed to discharge his burden to prove that subject sale transaction is benami transaction and we have not found any wrong in the approach and decision of the learned Court below and we are of the view that judgment and decree impugned cannot be annihilated.”

Coram: Justice Tapabrata Chakroborty and Justice Partha Sarthi Chatterjee

Case Title: Sekhar Kr Roy v Lila Roy & Anr (FA 109 of 2018)

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