The Supreme Court of India has delivered a landmark ruling affirming that the 2016 amendments to the Prohibition of Benami Property Transactions Act, 1988, operate retrospectively concerning the machinery for property confiscation. Setting aside a Karnataka High Court judgment, the Court restored a trial court’s order to reject a plaint in a property dispute where the Plaintiff was accused of murdering the property holder. The Court further held that trial courts have a duty to “lift the veil” of clever drafting to expose statutory bars at the earliest stage, and that a murderer is barred from succession under Section 25 of the Hindu Succession Act.
Background of the Case
The case, Manjula and Others v. D.A. Srinivas, involved a suit filed by the Respondent (Plaintiff), D.A. Srinivas, seeking ownership of agricultural lands based on a Will dated April 20, 2018, executed by the late K. Raghunath.
The Plaintiff admitted in his pleadings that he had provided the funds for the purchase of these properties because he was legally barred from acquiring agricultural land directly under the Karnataka Land Reforms Act. The Appellants (Defendants)—the widow and children of Raghunath—moved for the rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure (CPC). They argued that the suit was a “sham” to enforce an illegal benami transaction and that the Plaintiff was disqualified from inheriting the estate as he was the principal accused in Raghunath’s murder.
Arguments of the Parties
For the Appellants (Defendants): The Senior Counsel argued that a “meaningful reading” of the plaint, rather than a formal one, exposed a prohibited benami transaction. They contended that the Plaintiff’s own admission of supplying the purchase price while the property stood in another’s name to bypass land ceiling laws attracted the statutory bar under Section 4 of the Benami Act. They also highlighted the pending criminal proceedings against the Plaintiff for the murder of the testator.
For the Respondent (Plaintiff): The Respondent maintained that the suit was founded on a valid Will and that the underlying transaction was protected by a “fiduciary relationship” between the Plaintiff and the deceased (an employee). They argued that the question of whether a transaction is benami is a mixed question of fact and law that must be decided at trial, and that the allegations of murder should not influence the civil maintainability of the suit at the threshold.
Court’s Analysis and Observations
The bench, comprising Justices J.B. Pardiwala and R. Mahadevan, issued several critical findings:
1. Retrospectivity of the 2016 Benami Amendments: The Court clarified that while penal provisions are prospective, the machinery for adjudication and confiscation applies to past transactions.
“We hold that the 2016 amendments, insofar as they are declaratory, procedural, curative and machinery-oriented, operate retrospectively / retroactively, while penal provisions creating new offences or enhancing punishment can operate only prospectively.”
2. Disqualification of Murderer from Succession: The Court invoked Section 25 of the Hindu Succession Act and the equitable principle nullus commodum capere potest de injuria sua propria (no man can take advantage of his own wrong).
“A person accused of the murder of one from whom inheritance is claimed, is disentitled from asserting rights, not only under Section 25 but also on the principles of justice, fair play and equity… Strict proof is not indispensable in civil proceedings if the preponderance of probabilities points to commission of the offence.”
3. Duty to “Lift the Veil” of Clever Drafting: The Court reiterated that it must look past the form of the plaint to its substance to identify fictitious suits.
“If clever drafting has created the illusion of a cause of action, the Court must, upon a meaningful reading of the plaint, nip such litigation in the bud… it then becomes the duty of the Court to lift the veil and expose the bar to reject the suit at the threshold.”
4. Rejection of Fiduciary Capacity Claim: The Court ruled that an ordinary employer-employee relationship does not satisfy the statutory exception for fiduciary holdings under the Benami Act. It noted that the arrangement was a commercial one designed to circumvent the Karnataka Land Reforms Act, rendering the object of the contract unlawful under Section 23 of the Indian Contract Act.
The Decision
The Supreme Court allowed the appeal and set aside the High Court’s judgment, ruling that the Plaintiff’s claim was “inseparably intertwined” with an illegal benami arrangement.
Final Directions:
- The Karnataka High Court’s judgment is set aside and the trial court’s order rejecting the plaint is restored.
- The Central Government is directed to appoint an Administrator and take over the suit properties within eight weeks, as they are liable for confiscation under Section 27 of the Benami Act.
- The Court directed that since the transaction has been judicially declared benami, no court shall entertain any further claims regarding these properties.
Case Details
- Case Title: Manjula and Others v. D.A. Srinivas
- Case No.: Civil Appeal No. 7370 of 2026
- Bench: Justice J.B. Pardiwala and Justice R. Mahadevan
- Date: May 8, 2026
