The Supreme Court has ruled that a plaint alleging joint family ownership of properties cannot be rejected at the threshold under Order VII Rule 11 of the Civil Procedure Code (CPC) merely on the ground of a benami transaction claim, where the nature of the property ownership is a disputed fact requiring trial. The Court emphasized that such determinations must be made based on evidence, not solely on pleadings.
The case was adjudicated by a Bench comprising Justice Pankaj Mithal and Justice Ahsanuddin Amanullah, arising from Special Leave Petition (Civil) Nos. 4673 and 4674 of 2023. The petitions were filed by Smt. Shaifali Gupta, wife of a defendant in the original suit, and Shri Deepak Lalchandani, a subsequent purchaser of some disputed properties.
Background of the Case
Smt. Vidya Devi Gupta and her son Sudeep Gupta filed Regular Suit No. 630A/2018 for partition, possession, declaration, mandatory and permanent injunction, and accounting of properties allegedly acquired from joint family funds and business income. The suit named multiple family members as parties, along with two subsequent purchasers.
According to the plaintiffs, the family business began in 1982 under the name ‘Himalaya Tailors’, funded by the sale of jewellery belonging to the mother, and was operated by both sons. Over time, properties were acquired in the names of various family members from the earnings of this and related family businesses. The suit alleged these were joint family properties, including some sold by Shaifali Gupta to Deepak Lalchandani and another purchaser.
Plea Under Order VII Rule 11 CPC
The application to reject the plaint under Order VII Rule 11 CPC was filed by the subsequent purchasers, not by the main contesting family members. The applicants argued that the suit was barred under Section 4 of the Benami Transactions (Prohibition) Act, 1988, as amended in 2016, contending that the properties were held benami.
The plaintiffs opposed the application, arguing that all properties were acquired before the 2016 amendment and that the suit pertained to joint family property, not benami transactions. They asserted that the properties fell under the exceptions outlined in Section 2(9)(A)(ii) of the Benami Act, concerning joint family holdings.
Trial Court and High Court Decisions
The trial court dismissed the application under Order VII Rule 11, holding that the question of whether the properties were joint family or individual assets was a matter of evidence. This decision was upheld by the High Court in revision, stating that the plaint could not be rejected as barred by law based solely on the allegations.
Supreme Court Analysis and Conclusion
The Supreme Court noted that Shaifali Gupta had neither moved the original application nor filed a revision and was therefore not an aggrieved party eligible to challenge the decision. The Court further held that the subsequent purchasers could not claim personal knowledge about the character of the family properties.
The Bench reiterated that under Section 4 of the Benami Act, the bar applies only to suits regarding benami properties, and whether a property is benami is itself a factual issue. Citing Pawan Kumar vs. Babu Lal [(2019) 4 SCC 367], the Court held:
“Where a plea is taken that the suit is saved by the exception to the benami transaction, it becomes the disputed question of fact which has to be adjudicated on the basis of the evidence. Therefore, the plaint cannot be rejected at the stage of consideration of application under Order VII Rule 11 CPC.”
The Court emphasized that properties described as joint family assets in the plaint could not ex facie be treated as benami, thereby warranting rejection under Order VII Rule 11(d).
The plea under Section 14 of the Hindu Succession Act, 1956, raised for the first time before the Supreme Court, was also rejected as it was neither pleaded nor argued in the lower courts. The Court found no statutory bar to maintainability of the suit.
Decision
Dismissing both Special Leave Petitions, the Court concluded:
“In such a situation, the defendants have not suffered any prejudice and there is no miscarriage of justice so as to permit them to avail the discretionary jurisdiction of this Court under Article 136 of the Constitution of India.”
The petitions were accordingly dismissed, allowing the suit for partition to proceed on merits.
