The Delhi High Court has held that a person claiming the statutory exception for property purchased in the name of a spouse under the Prohibition of Benami Property Transactions Act, 1988 must establish that the consideration was paid from his known sources of income. Justice Neena Bansal Krishna dismissed an appeal filed by a husband claiming ownership over a Malviya Nagar property registered jointly in the names of his wife and mother-in-law, finding that his own pleadings did not establish that the entire purchase consideration came from his exclusive known sources.
The Court also held that the challenge to the 2007 sale deed was barred by limitation and by Order IX Rule 9 of the Code of Civil Procedure, since the appellant had earlier filed a suit questioning the same transaction which was dismissed for non-prosecution and was not restored.
Background
The appellant, Surya Deep Garg @ Suraj Garg, married Neha Garg in December 2001. According to his plaint, he had over the years purchased and sold multiple properties, though some of the documents were executed in his wife’s name.
The dispute concerned a property at 90/80-AB, First Floor, Malviya Nagar, New Delhi, purchased in April 2007 for ₹27 lakh. The registered sale deed was executed jointly in the names of his wife and mother-in-law, Suneeta Gupta. The appellant claimed that he had provided the entire consideration and that their names were included in the sale deed for reasons connected with the family arrangement and financing of the property.
He asserted that his mother-in-law was included as co-owner because a portion of the consideration was arranged through a bank loan taken in her name at a lower rate of interest available to her as a government servant. He claimed that he subsequently repaid the loan.
The appellant alleged that his wife and mother-in-law later sold the property through a registered sale deed dated January 9, 2018. He thereafter sought declarations that the 2007 transaction was benami and that the 2018 sale deed was illegal and void, apart from possession and permanent injunction.
The District Judge rejected the plaint under Order VII Rule 11 CPC, holding that the claim was barred by the Benami law, limitation and the consequences of the earlier civil proceedings. The husband challenged that decision before the High Court.
Appellant’s Arguments
The appellant contended that the property had been purchased from his own funds for the benefit of the family and that the transaction was protected by the statutory exception applicable to property purchased in the name of a wife.
He argued that the source of funds and the intention behind the transaction required evidence and could not have been decided while considering an application under Order VII Rule 11 CPC.
It was also submitted that even if the claim concerning the mother-in-law’s share was barred, the claim in respect of the wife’s share remained maintainable.
The appellant further claimed that a fresh cause of action arose from the 2018 sale deed, of which he claimed knowledge only in 2022. He relied upon judgments concerning limitation and the bar against a fresh suit after dismissal of an earlier proceeding.
Challenge to 2007 Sale Deed Barred by Limitation
The High Court first noted that the appellant was admittedly aware of the 2007 sale deed because, according to his own case, he had provided the consideration for the transaction.
It observed that the suit challenging the 2007 sale deed was filed about 16 years after its execution.
The Court held:
“The Appellant was admittedly aware of the execution of the Sale Deed dated 20.04.2007. The challenge to the said Sale Deed, therefore, cannot be treated as a claim arising for the first time upon the subsequent Sale Deed dated 09.01.2018.”
The subsequent transfer of the property in 2018, therefore, could not revive the appellant’s challenge to the original title created in favour of his wife and mother-in-law.
Earlier Suit Also Barred Fresh Proceedings
The Court noted that the appellant had previously instituted CS(OS) No.2351/2010 concerning the same 2007 sale deed. That suit was dismissed for non-prosecution, and the application seeking restoration was also dismissed. The challenge ultimately attained finality after the Supreme Court dismissed the SLP.
Referring to the Supreme Court’s decision in Ganesh Prasad v. Rajeshwar Prasad, the High Court explained that Order IX Rule 9 CPC bars a later suit where it is based substantially on the same cause of action as an earlier suit dismissed in default.
The Court found that the validity of the 2018 sale deed depended entirely on the appellant first succeeding in his challenge to the 2007 sale deed.
“The challenge to the subsequent Sale deed dated 09.01.2018 is, therefore, dependent upon the challenge to the first sale Deed.”
It consequently held that the present suit was based on the same cause of action and attracted the bar under Order IX Rule 9 CPC.
Known Sources of Income Not Established
On the Benami law issue, the High Court referred to the Supreme Court’s decision in Manjula & Ors. v. D.A. Srinivas and noted that Section 2(9)(A)(iii) excludes from the definition of a benami transaction property purchased by an individual in the name of his spouse or child, provided the consideration is paid from the individual’s known sources.
The Court examined the appellant’s own description of how the ₹27 lakh consideration had been arranged.
It found that ₹7 lakh and ₹3.85 lakh had been paid from joint accounts held by the appellant and his wife. The Court said both account holders had equal rights over the funds and the appellant could not claim that the money represented exclusively his known sources of income.
Another ₹5.85 lakh came from the account of M/s Credit Solutions, a proprietorship firm which, according to the appellant’s own pleadings, stood in his wife’s name.
The remaining ₹10.30 lakh represented a loan obtained in the mother-in-law’s name. The appellant claimed to have subsequently repaid it, but the Court found that no cogent documentary proof supported the claim.
The Court observed:
“The Appellant has, therefore, failed to establish that the consideration for the suit property was paid out of his own known sources of income, within the meaning of Section 2(9)(A)(iii) of the Act.”
Accordingly, the statutory exception was held inapplicable.
The Court further held that the appellant’s claim that the property, though standing in the names of his wife and mother-in-law, was actually held for his benefit as the real owner fell within the prohibition contained in Section 4(1) of the Act.
Source of Money Alone Not Conclusive
The High Court also referred to Binapani Paul v. Pratima Ghosh, where the Supreme Court held that the source of consideration is relevant but is not by itself conclusive in deciding whether a transaction is benami.
“The source of the purchase money, though relevant, is not by itself sufficient to determine whether a transaction is benami. The intention of the parties has to be gathered from the surrounding circumstances, including the motive for the transaction, possession of the property, relationship between the parties, custody of the title documents and subsequent conduct.”
Appeal Dismissed
Upholding the District Judge’s decision, the High Court held that the appellant’s challenge to the 2007 sale deed was barred under the Benami law.
It further held that once the challenge to the 2007 sale deed was found unsustainable and the property stood in the names of the wife and mother-in-law, they were entitled to deal with it. Consequently, the appellant could not challenge the subsequent sale deed executed in 2018.
Finding no merit in the appeal, the Court dismissed it along with the pending applications.
Case Title: Surya Deep Garg @ Suraj Garg v. Smt. Neha Garg & Ors.
Case No.: RFA 674/2026 & CM APPL. 44816/2026, CM APPL. 44817/2026
Bench: Justice Neena Bansal Krishna
Date: September 24, 2026
