Payment Of Part Sale Consideration Or Stamp Duty Cannot Be Sole Criteria To Hold Transaction As Benami

In CIVIL APPEAL NO. 4805 OF 2019, Mangathai Ammal vs Rajeswari, the Apex Court bench were considering an appeal against Trial Court and High Court orders which held that the suit properties are benami transactions as the part sale consideration was paid by another person (Narayanasamy Mudaliar) at the time of the purchase of the property. It was also found that the stamp duty at the time of the execution of the Sale Deed was purchased by Mudaliar.

It was the contention of the original plaintiffs that Narayanswamy had purchased the disputed property in the name of his wife by paying out of money received from selling ancestral properties and therefore, the wife did not have exclusive right to the same. Whereas, the original defendants which included the said wife of Narayanswamy contended that the properties were purchased by the defendant no.1 out of the stridhana she received from her parents’ house and by selling the gold jewellery. It was also the case on behalf of defendant no.1 that after purchasing the property from Thangavel Gounder and others; she constructed a house and is in possession and enjoyment of the said property.

The Supreme Court observed that it was not specifically pleaded by the plaintiffs that the Sale Deeds/transactions in favour of defendant no.1 were benami transactions. It was also not pleaded that the suit properties were purchased in the name of defendant no.1 by Narayanasamy Mudaliar from the income derived out of the ancestral properties. Even the learned Trial Court did not specifically frame the issue that whether the transactions/Sale Deeds in favour of defendant no.1 are benami transactions or not? Despite the above, learned Trial Court and the High Court have held that the transactions/Sale Deeds in favour of defendant no.1 were benami transactions. The aforesaid findings recorded by the Trial Court confirmed by the High Court and the consequent relief of partition granted in favour of the plaintiffs is the subject matter of the present appeal.

The Supreme Court disagreeing with the lower courts referred to the judgment in Valliammal v. Subramaniam where it was held that that while considering whether a particular transaction is benami in nature, the following six circumstances can be taken as a guide:

(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. (Jaydayal Poddar v. Bibi Hazra (supra), SCC p. 7, para6)

In view of previous judgments, the Supreme Court observed that the payment of part sale consideration or stamp duty by another person cannot be the sole criteria to hold the sale/transaction as benami.