Dr. Ravichander vs Karunakaran and Others

S.S. Subramani, J.—These revision petitions are filed by plaintiff in O.S.32 of 1997 on the file of Sub Court. Cuddalore. These revision

petitions arise under the following circumstances:

Petitioner herein filed the suit for partition claiming 1/4th share in plaint ''B."" Schedule properties on the ground that the said item is family property.

According to him, plaintiff and defendants 1 to 4 constitute a joint family. First defendant obtained about 5-1/2 acres of land from his ancestors

and they were yielding good income. It is also said that 4th defendant is also employed and first defendant is also getting good income. The income

from the property was kept as surplus. Plaintiff after completing his education, is now a Medical Practitioner. Out of the family funds, a property

was purchased at Annamalai Nagar, Chidambaram. Since first defendant was the Kartha of the family, the same was taken in his name. Family

also purchased a Mahindra Van. though the permit is also in the name of first defendant. The Van was profitably operated and that also yielded a

good income. In view of his medical practice, plaintiff did not get time to verify how the income from the property was being spent.

Plaint property in this suit belonged to TELC, Cuddalore and first defendant and plaintiff negotiated for purchase for consideration of Rs. 12

lakhs. For the said purpose, a loan on record was taken from 5th defendant and plaintiff was also informed that document has been taken. Plaintiff

was also informed that the property has been purchased and plaintiff wanted to verify the sale deed. First defendant was giving evasive answers

and after verification, it was found that document has been taken in the name of 5th defendant. It is the case of plaintiff that the document in favour

of 5th defendant is only sham and real owner is the family. Though document stands in the name of 5th defendant, it is only sham transaction and he

has not spent any amount for purchasing the same. Family fund alone was utilised and 5th defendant is not getting any independent title. It is the

case of plaintiff that sale deeds have not been completed and returned to defendants 3 and 5. Suit was therefore, laid for partition claiming 1/4th

share in the plaint ''B'' schedule properly and allot plaintiff on demarcating the same by Commissioner.

Reason for filing this revision petition is that 5th defendant filed an application in I. A. 304 of 1997 under Order 7. Rule 11 of Code of Civil

Procedure. In his affidavit, 5th defendant contended that suit is barred under Benami Transactions Prohibition Act and consequently barred by law.

Even though plaint allegation is only that it is sham transaction under Benami Transactions Prohibition Act, even sham transaction is barred and

consequently suit is liable to be struck off the file and the same is liable to be rejected.

Detailed counter affidavit was filed by defendants contending that plaintiff has no cause of action and plaint is liable to be struck off.

Plaintiff also filed I.A.662 of 1997 to reject I. A. 304 of 1997 filed by 5th defendant.

Both these applications were heard together and by the impugned order, it was held that in regard lo ''B'' Schedule item No.1 is concerned, the

plaint is rejected. Application filed by plaintiff in I. A.662 of 1997 was also dismissed. It is against the common order, plaintiff has filed these

revision petitions.

Notices have been served on the respondents and I heard the Learned Counsel on both sides.

Learned Counsel for petitioner submitted that the impugned order is without jurisdiction and lower court has acted illegally in rejecting plaint in

part. Learned Counsel further submitted that Benami transactions and sham transactions are entirely different and what is prohibited under Benami

Transaction (Prohibition Act) is only Benami transaction as defined under that Act and not sham transaction.

Learned Counsel for respondents submitted that impugned order did not call for any interference and lower court has applied the law rightly.

After hearing counsel on both sides, I do not think that the order of lower court could be supported?

11.I will first consider the question whether a sham transaction will come within the provisions of Benami Transaction Act.

In 1991-1-L.W. 649 (N. Govindarajan and another v. The Indian Overseas Bank) a Division Bench of our High Court held that Sham

transaction and Benami transaction are different and prohibition in regard to Benami transaction will not apply for Sham transactions. Their

Lordships overruled the Judgment of learned single Judge of this Court reported in Kathoom Bivi Ammal Vs. S. Mohamad alias Sheik Mohamad

and Others, of the Judgment, their Lordships held thus,

On a careful consideration of the rival submissions, we find it difficult to accept the contention of Learned Counsel for the appellants. When the

expression benami transaction'' has been defined in the Act, and the expression ""property held benami"" has lo be interpreted in the light of the

definition occurring in the Act relating to a benami transaction and also as referable to property held, as a result of or attributable to, such a

transaction, in the absence of a ''benami transaction'' preceding, it is difficult to conceive the holding of any property benami. Necessarily,

therefore, the definition of ""benami transaction"" in S.2(a) of the Act has to be read into S.4 of the Act also, while interpreting the words ""property

held benami"" and so read, only ""transactions"" answering the definition of a benami transaction'' under S.2(a) of the Act, pursuant to which property

is held benami, would be affected by S.4 of the Act. S.4 of the Act cannot be so interpreted as to include sham and nominal transactions, which

are outside the scope of a benami transaction'' as defined in S.2(a) of the Act. Similarly, the repeal of S.81 of the Indian Trusts Act, 1882, does

not in any manner assist the appellants as pointed out earlier. A situation contemplated under S.81 of the Indian Trusts Act, 1882. in so far as we

have been able to ascertain from provisions of the Act, has not been provided for, while provision has been made, as pointed out earlier, with

reference to matters falling under Ss.82 and 94 of the Indian Trusts Act, 1882. In other words, it looks as though S.81 of the Indian Trusts Act,

1882 has been repealed, but that would have only the effect of releasing the property from the obligations of being held in accordance with S.81 of

the Indian Trusts Act, 1882. The decision in Kathoon Beevi. v. S. Mohamed alias Shaik Mohammed proceeded to hold that the repeal of S.81 of

the Indian Trusts Act, would suffice to include sham and nominal transactions also within the scope of the provisions of the Act. It is difficult to

persuade ourselves to the line of reasoning adopted in that decision. Further, it is seen that apart from the repeal of Ss.81 and 82 of the Indian

Trusts Act, 1982, no other aspect has been adverted to and examined and on a careful consideration of the scope and ambit of the provisions of

the Ordinance and the Act we have earlier pointed out that the repeal of S.81 of the Indian Trusts Act, 1982, by itself would-be of no avail to

bring within the provisions of the Act sham and nominal transactions. We, therefore, hold that the decision in Kathoon Beevi Ammal v. Mohamed

alias Shaik Mohammed, in so far as it held that sham and nominal transactions are also covered by the provisions of the Act, is not correct. It is

seen that in Ouseph Chacko v. Raman Nair the view has been expressed that a sham and nominal transaction is not a benami transaction and S.4

of the Act would not apply. We find on a careful consideration of the reasoning in that decision that it accords generally with the view we have

earlier expressed on all the aspects relating to the exclusion of sham and nominal transactions from the scope of the provisions of the Act and we

hold that decision has laid down the law correctly. Though Learned Counsel for the respondent submitted that the provisions of the Act would be

inapplicable to the decree-holder/respondent, who had attached the property in execution of the decree"", adverse to the interest of the judgment-

debtor, we do not express any opinion thereon as that aspect of the matter would be totally outside the scope of the reference. We therefore, hold

that sham and nominal transactions would not be covered by the provisions of the Act and that it is open to the parties to contend that a transaction

is sham and nominal and no title passed under it.....

A similar view was taken by Kerala High Court in the Full Bench decision reported in AIR 1995 Kerala 42 (Bhargavy P. Sumathykutty v.

Janaki Sathyabhama) wherein the Division Bench decision of this Court (cited supra) was also relied on. In paragraphs 34 to 36 of the Judgment,

the Full Bench held thus:

The scheme as well as the setting unfurled in the tiny piece of legislation - Benami Act would thus unmistakably proclaim even though the

frugality of words set forth therein that it is only the tripartite benami transaction (which is recognised by the case law as the real benami

transaction) which the Parliament has sought to snuff out with its statutory forceps. The corollary is that Parliament would not have intended to

make any foray into the sphere of sham transaction, perhaps because what is sham will ever remain sham though the case law happened to

loosely"" or ""inaccurately"" call that also benami.

A learned Judge of the Madras High Court has held in Kathoon Bivi Ammal v. S. Mohammed, (1990)\-L.W.284 that Benami Act would

apply to both categories of transactions. The reasoning adopted by the learned Judge is that inclusion of Sections 81 and 82 of the Trusts Act

within the repeal provision is indicative that sham transaction also is brought within the purview of the Benami Act. We pointed out earlier that

repeal of Sections 81 and 82 of the Trusts Act cannot have such an implication on the scope of the Benami Act. That apart, correctness of the

decision in Kathoon Bivi Animals case was questioned and a Division Bench of the Madras High Court in N. Govindarajan v. Indian Overseas

Batik, (1991H-L.W.649 has overruled the same. Ratnam, J. (as he then was) quoted the decision of Ouseph Chacko v. Raman Nair (1989) 1

Ker LT 767: (AIR 1989 Kerala 317) and followed the ration in arriving at the said conclusion.

For the aforesaid reasons, we are in agreement with the conclusion arrived at by Bhaskaran Nambiar, J. in Ouseph Chacko v. Raman Hair,

(1989) 1 Ker LT 767: (AIR 1969 Kerala 317) and followed the ratio in arriving at the said conclusion.

The case of plaintiff is that the document in favour of 5th defendant is really sham transaction and 5th defendant is not getting any right over the

same. The question whether it is Benami Transaction or sham transaction will have to be decided on evidence and only thereafter court can

consider whether suit is barred under Benami Transaction Act. By the impugned order lower court took sham transaction also as Benami

transaction. That approach of lower court is not correct.

The other contention raised by Learned Counsel for petitioner is that plaint cannot be rejected in part and the same will be without jurisdiction.

I find force in that contention.

In Roop Lal Sathi Vs. Nachhattar Singh, , it is held thus,

The order passed by the High Court directing the striking out of paragraphs 4 to 18 of the election petition can hardly be supported. It is not

clear from the order that the High Court proceeded lo act under Order 7, Rule 11 (a) or under Order 6 Rule 16 of the code in passing the order

that it did. It is rightly conceded that the High Court could not have acted under Order 7, Rule 11 (a) of the Code Where the plaint discloses no

cause of action, it is obligatory upon the court to reject the plaint as a whole under Order 7, Rule 11 (a) of the Code, but the rule docs not justify

the rejection of any particular portion of a plaint: Mulla''s Civil Procedure Code, 13th Edn., Vol. 1, p.755. It is therefore necessary to consider

whether the order passed by the High Court could he justified under Order 6, Rule 16 of the Code, which reads as follows:

Striking out pleadings.- The Court may at any stage of the proceedings order to be struck out or amended any matter in any pleading -

(a) which may be unnecessary, scandalous, frivolous or vexatious, or

(b) Which may tend to prejudice, embarrass or delay the fair trial of the suit, or

(c) which is otherwise an abuse of the process of the Court.

The order passed by the High Court directing that paragraphs 4 to 18 of the Election Petition be struck out cannot be sustained on the terms of

Order 6, Rule 16 of the Code. There is no finding reached by the High Court that the averments in paragraphs 4 to 18 of the Election Petition are

either unnecessary, frivolous or vexatious, or that they are such as may tend to prejudice, embarrass or delay the fair trial of the election, nor is

there any finding that the averments therein are such as to constitute an abuse of the process of the court. That being so, the High Court had no

power lo direct the striking out of paragraphs 4 to 18 of the Election Petition:''

The same principle was reiterated in the recent decision of Honourable Supreme Court reported in (1999) I.C.T.C.715=2000-1-L.W.184

(Ramachandran, D. v. R,V. Janakiraman). In para 10 of the Judgment learned Lordships held that it is elementary that under Order 7. Rule 11(a).

C.P.C. them Court cannot dissect the pleading into several parts and consider whether each one of them discloses a cause of action. Under the

Rule, there cannot be a partial rejection of the plaint or petition.

Mulla on CPC Abridged 13th Edition (1999). has said thus.

The Rule does not justify the rejection of any particular portion of a plaint. If the plaint discloses a cause of action in part it cannot be rejected.

In this case, plaintiff is claiming partition of all the ''B'' Schedule items. Lower court rejected the plaint in respect of item No. 1 of ''B''

Schedule. That finding of lower court is without jurisdiction.

It is true that an order rejecting a plaint is appealable since it comes within the definition of decree. But when court passed an order without

jurisdiction as in this case, or when it is patently illegal, there is nothing wrong in invoking supervisory power of the Court tinder Section 115 of

CPC and rectify the illegality committed by it. In the result, both the revision petitions are allowed and lower court is directed to proceed with the

suit in accordance with law. There will be no order as to costs. C.M.P. 1175 of 1998 is closed.