The Allahabad High Court has ruled that a plaint cannot be rejected under Order 7 Rule 11 of the Civil Procedure Code (CPC) on the ground of being barred by the Benami Transactions (Prohibition) Act, 1988, if the plaintiff has pleaded that the property falls within the statutory exceptions, such as fiduciary capacity or Hindu Undivided Family (HUF) funds.
The Bench of Justice Sandeep Jain, while allowing a First Appeal, held that the question of whether a transaction is Benami or falls under the exceptions provided in Section 4(3) of the Act of 1988 is a disputed question of fact that requires evidence and cannot be decided summarily at the threshold.
Background of the Case
The appeal was filed by Sunil Kumar Dublish challenging the order dated August 30, 2025, passed by the Civil Judge (Senior Division), Meerut. The trial court had allowed the defendants’ application (Paper No. 89-C) under Order 7 Rule 11 CPC and rejected the plaint in O.S. No. 782 of 2006, holding that the suit was barred under Section 4(1) of the Benami Transactions (Prohibition) Act, 1988.
The plaintiff asserted that his grandfather, Late Shanti Saran Dublish, owned agricultural property in Meerut. After his death in 1953, the property devolved upon his four sons, including the plaintiff’s father, Ramesh Chand Dublish (Defendant No. 1). The plaintiff claimed that he and his father constituted a Hindu Undivided Family (HUF) and that his father acted as the Karta.
The plaintiff alleged that his father sold a major portion of the ancestral property and, utilizing those funds along with income from a family partnership firm (M/s Sunil Packaging Industries), purchased a residential property at 342/1, Harnamdass Road, Civil Lines, Meerut, in the name of the plaintiff’s mother, Smt. Sarla Dublish (Defendant No. 2).
The plaintiff contended that his mother was merely a “Benami” owner and had no independent income. Following her death, a dispute arose regarding the ownership and a Will executed by her in favor of Defendant No. 3. The plaintiff sought a declaration of ownership.
The defendants moved an application for rejection of the plaint, arguing that since the plaintiff himself alleged that the property was held Benami by his mother, the suit was barred by Section 4(1) of the Act of 1988. The trial court accepted this contention, reasoning that the mother does not fall within the category of a coparcener in an HUF.
Arguments Before the High Court
Sri Durgesh Kumar Singh, learned Senior Counsel for the appellant-plaintiff, argued that at the stage of deciding an application under Order 7 Rule 11 CPC, the court must confine itself strictly to the averments in the plaint. He submitted that the plaintiff had specifically pleaded the existence of an HUF and a fiduciary relationship. He argued that the property was purchased for the benefit of the family using family funds, thereby attracting the exception under Section 4(3) of the Act, which saves such transactions from the prohibition.
Sri Shiv Sagar Singh, learned counsel for the respondents, supported the trial court’s order. He contended that the plaintiff’s explicit admission that the property was Benami in the name of his mother automatically triggered the bar under Section 4(1), justifying the rejection of the plaint.
Court’s Observations and Analysis
Justice Sandeep Jain examined the scope of Order 7 Rule 11 CPC and the provisions of the Benami Transactions (Prohibition) Act.
Referencing the Supreme Court judgments in Vinod Infra Developers Ltd. v. Mahaveer Lunia and others (2025) and Keshav Sood v. Kirti Pradeep Sood and others (2023), the Court reiterated that “at the preliminary stage of deciding Order 7 Rule 11 CPC application, the court is required to confine its examination strictly to the averments made in the plaint and not venture into the merits or veracity of the claims.” The Court emphasized that the defense or documents relied upon by the defendant cannot be looked into at this stage.
On the issue of the Benami Act, the Court observed that while Section 4(1) bars suits to enforce rights in respect of property held Benami, Section 4(3) provides exceptions where the person in whose name the property is held is a coparcener in an HUF or stands in a fiduciary capacity.
The Court cited the Supreme Court decision in Pawan Kumar v. Babu Lal (2019), noting:
“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 7 Rule 11 CPC.”
Applying these principles to the facts, the Court noted that the plaintiff had alleged the property was purchased from the consideration obtained by selling HUF property and income from the family firm.
The Court observed:
“It is true that the plaintiffs mother was not a coparcener in the alleged HUF but certainly, there was a fiduciary relationship between the plaintiff and his mother Sarla Dublish, which lies within the exception enumerated in Section 4(3)(b) of the Act of 1988.”
The Court further held:
“If the plaintiff succeeds in proving that his mother was not having the financial capacity to purchase the disputed land… and the funds were provided by the plaintiff from the income of his firm or were obtained by selling the immovable property of the HUF, then certainly, the plaintiff’s suit was not barred under Section 4(1) of the Act of 1988.”
The Court termed the trial court’s order “perverse” and held that it committed material illegality by deciding a disputed question of fact at the threshold without trial.
Decision
The High Court allowed the appeal and set aside the judgment and decree dated August 30, 2025, passed by the Civil Judge (Senior Division), Meerut.
The application under Order 7 Rule 11 CPC filed by the defendants was dismissed, and O.S. No. 782 of 2006 was restored to its original number. The High Court directed the trial court to decide the suit on merits within six months from the date of receipt of the certified copy of the order, without granting unnecessary adjournments.
Case Details:
- Case Title: Sunil Kumar Dublish vs. Sri Ramesh Chandra Dublish (Since Dead) And 3 Others
- Case Number: First Appeal No. 978 of 2025
- Coram: Justice Sandeep Jain
