(1) The point of law raised for admission in this second appeal and which alone can be raised as the findings of fact based upon acceptable an relevant evidence are concurrent & binding upon me is that a benamidar notwithstanding the non-intervention and non-opposition of the real owner cannot maintain a suit for partition and that this objection can be raised by the other parceners or co-owners.
(2) The fact that merely because the appellant has shown that an arguable or prima facie point of law arises in appeal is not a ground for admission, has been expounded by the Law Commission in its 14th Report of the Reform of the Judicial Administration Vol. 1 Chapter 16 page 390. The Court has further to be satisfied that the decision of the lower appellate Court on a point of law is erroneous and that it is necessary in order to do justice between the appellant and the respondent that a further hearing should be given to both the parties.
In fact the Law Commission has gone to the extent of suggesting that a statutory requirement should be made providing that the judge admitting the appeal should state the point or points of law which arise for consideration in the second appeal and that the High Court should in its discretion even be permitted to go further and order that the appellant should be heard only on the point or points of law stated by the judge admitting the appeal. It is to be hoped that this contingency may not arise by ourselves subjecting to 'stricter and better scrutiny' the second appeals at the stage of admission because if such a statutory requirement is made, only a negligible percentage of second appeals will get admitted and a valuable corrective in reserve conferred under S. 100 of the Civil Procedure Code will be greatly lost to the detriment of the litigant public and efficient administration of Civil Justice.
(3) The point of law taken by the learned advocate Mr. N. C. Raghavachari and in regard to which I have the advantage of Sri K. Parasaran assisting me as amicus curiae is neither an arguable point of law nor a prima facie good point of law since the law on the subject has become well settled though the case law is sparse on the subject and the principles relating hereto have not been comprehensively expounded.
(4) The settled law on the subject can be gathered from the elaborate discussion in 'The Law of Benami' (1923) by R. Mookerjee, second edition at page 306 and the following, 'The Law of Benami Transactions in India' by A. Ghosh (5th Edn. 1955) (Eastern Law House Ltd., Calcutta) Chapter XV 'Benamdiar's right of suit' at page 146 and the following, and in the 'Law of Benami Transactions' (1958 Edn.) by Venkoba Rao (Law Book Company, Allahabad) Chapter VII, 'Suits by and against Benamidars' page 190 and following:
(5) The position and status of a benamidar is not merely that of an alias or even an agent of the real owner. He is a person whom the owner for purposes of his own which are not necessarily fraudulent has chosen to represent his estate to the outer public and whom he has furnished with the indicia of ownership to enable him to do so effectively. It is always open to the true owner to come out into the open and prick the bubble of apparent ownership but till then benamidar's suit cannot be resisted on the ground that he has no title or right of possession which that person has given him which is apparently enough to support the suit. A clear distinction has now been drawn between a benami and a sham transaction in Sree Meenakshi Mills Ltd., v. Commr. of Income-tax : 1SCR691 .
(6) The view that the benamidar having no beneficial interest could not sue or be sued though accepted in former days is no longer accepted as sound. The modern view is that the benamidars as trustees are quite competent to sue and be sued and that a decision in the suit by or against him is as much binding on him as on the beneficial owner.
It is well known that benami purchases are common in India and the Legislature has not by any general measure declared such transactions to be illegal and therefore they must still be recognised and effect given to them by courts except in so far as positive enactments stand in the way and direct a contrary course.
(7) The older view may be set out as follows:
The Madras High Court observed in Kuthaperumal v. Secretary of State, ILR 30 Mad 245: The question whether a benamidar should be allowed to sue or not must depend upon his showing whether the facts of the case are such as to give him some right to sue under the general law. For instance it may be shown that the facts are such as to entitle him on the principle embodied in S. 239 of the Indian Contract Act to sue as an agent of an undisclosed principal on a contract made by him; or again the facts may be such as to constitute him a trustee for the real owner and to entitle him to sue under S. 437 C. P.C. without disclosing the name of the real owner.
But where the facts do not show any title to sue under the general law as where a benamidar in whose name lands are purchased sues not on the contract of sale but to recover possession from persons who are not parties to the contract and fails to prove on the facts that the lands become vested in him as a trustee for the real owner the mere fact that lands are purchased in his name will not entitle him to maintain a suit. Thus where a direct contract has been entered into by a benamidar by virtue of his ostensible title as for instance where he has taken a mortgage on land he may sue to enforce it being the person named in the mortgage deed as the mortgagee and the real owner may if necessary for protecting his interest be made party under S. 321 C.P.C.
As the contract is made for good consideration the defendant should not be allowed in such cases to turn round and say that the terms of the document are all incorrect, that the persons for whom the money was received but to whom the document conveys no interest must be brought in. In the older cases a distinction was drawn between suits whose subject-matter was land and other suits and between benamidars and a person who had some legal and equitable title in the property, for example a member of joint Hindu family who had access to the joint family funds and had lent money to the defendant in his own name whether he was entitled to do so or not.
(8) This older view has been set at rest by the decision of the Privy Council in Gur Narayan v. Sheo Lal Singh, ILR 46 Cal 566 : AIR 1918 PC 140 followed in Vaitheeswara Iyer v. Srinivasa, Raghava Iyengar, ILR 42 Mad 348 : AIR 1919 Mad 524 wherein it has been pointed out:--
'A Benamidar represents in fact the real owner and so far as their relative legal position is concerned he is a mere trustee for him. Their Lordships find it difficult to understand why in such circumstances an action cannot be maintained in the name of the benamidar in respect of the property (that stands in his name) although the beneficial owner is no party to it. It is open to the latter to apply to be joined in the action; but whether he is made party or not a proceeding by or against his representative in its ultimate result is fully binding on him'.
In case of a contest between the alleged benamidar and the alleged real owner other considerations might arise. But where there is no dispute between the beneficial owner and the benamidar, if it can be taken that the plaintiff is only a benamidar, that the beneficial owner has not any adverse right which the benamidar's action in any way interferes with, and the beneficial owner has not thought fit to intervene in the action or to interfere in any way, and the only contest is as between the benamidar and the defendant seeking to obstruct his possession--this is just the class of action in which the Judicial Committee have laid down that a suit by a benamidar for possession of the immovable property is maintainable.
(9) It is proper to state here that the benamidar's right to bring suits upon his ostensible title, is subject to all the equities, limitations and disabilities which would have attached to the real owner, if he had been the plaintiff. A benamidar may maintain a suit in his own name, but the court will put the defendant in the same position as if the real owner were the actual plaintiff. The defendant may set up the same defence against the benamidar plaintiff as he could have urged against the beneficiary and a payment made to a benamidar by a debtor not only binds the beneficial owner but any adjudication between him and the benamidar operates as res judicata also against the beneficial owner.
(10) We shall finally discuss the rules of practice and procedure that govern the suits arising out of benami transactions. These are three possible alternatives:--A benamidar might sue as trustee on behalf of the beneficial owner without disclosing the name of the real owner and if the defendant did not object to the suit proceeding in that form and raise no issue on the real title of the plaintiff, the suit might proceed and be decided. Secondly the real owner might intervene either on his own motion or on the allegation made by the defendant and in such a case the court has power to add the real owner as co-plaintiff at any stage of the suit. Thirdly there are cases where the real owner chooses to allow the benamidar to figure as the owner and there is no controversy between them but third parties defendants raise the plea of benami. In such cases it has been held that such persons should not be allowed to challenge the benamidar's position.
(11) The sum and substance of all the decisions is that if the real owner repudiates the benamidar and assets his own rights different considerations arise and he is to be added as co-plaintiff but a sale deed cannot be challenged by a person who is no party to it when apart from the untrue recital as to consideration there was no other flaw in the transaction. In other words unless a benami transaction is manifestly illegal or fraudulent or opposed to public policy no third party is entitled to question the title of the benamidar.
(12) Bearing these principles in mind if we examine the facts of this case where the real owner has not repudiated the title of the benamidar the latter can maintain a suit for partition and the fact that it is a suit for partition and not one for recovery of possession and which is covered by the direct authority of the Privy Council decision makes no difference. In the State of Madras the purchaser of the undivided interest of a coparcener in a specific property belonging to the joint family is not entitled to a partition of that property alone but can enforce his rights by a suit for general partition.
The non-alienating parceners are entitled to sue the purchaser for partition of the alienated property without bringing a suit for a general partition. In such a suit the purchaser is not entitled to counter claim for a general partition. He must bring a suit of his own for a general partition. The equitable right of the purchaser to be put in possession of the property purchased by him will be adjusted by means of owelties or otherwise as far as possible in his favour in the final decree. See Mulla's Principles of Hindu Law (12th edn. page 395). So the position of a benamidar cannot be worse than that of a creditor vis-a-vis non-alienating coparceners or co-tenants.
Therefore in view of the settled law on the subject this second appeal cannot be admitted and it is hereby dismissed.
(13) Appeal dismissed.