Delhi High Court
Dr. Jagdish Bansal vs Shiv Kumar Pal & Ors. on 7 August, 2012
Author: Reva Khetrapal
Bench: Reva Khetrapal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 1949/2011
DR. JAGDISH BANSAL ..... Plaintiff
Through: Dr. Surat Singh and Ms. Esha
Mazumdar, Advocates.
versus
SHIV KUMAR PAL & ORS ..... Defendants
Through: Mr. H.S. Phoolka, Sr. Advocate
With Ms. Prabhsahay Kaur,
Advocate for D-1 to 3.
Mr. S.L. Gupta for D-8.
% Date of Decision : August 7th , 2012
CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
JUDGMENT
: REVA KHETRAPAL, J.
IA No.5347/2012 (under Order VI Rule XVII CPC filed by the plaintiff)
1. By this common order, it is proposed to decide the application filed by the plaintiff under order VI Rule 17 of the Code of Civil Procedure for amendment of the plaint being IA No.5347/2012, and two applications filed by the defendants No.1 and 2, one under Order XXXIX Rule 4 for vacation of the interim order dated August 12, 2011 passed by this Court restraining the defendants from CS(OS) No.1949/2011 Page 1 of 50 transferring, alienating or parting with possession of the suit properties being IA No.18753/2011 and the other under Order VII Rule 11 of the Code of Civil Procedure for rejection of the plaint being IA No.17345/2011.
2. The facts leading to the filing of the aforesaid applications as set out in the suit for declaration, injunction and rendition of accounts filed by the plaintiff, Dr. Jagdish Bansal through his attorney, Mr. Anil Goyal may be briefly delineated as follows.
3. The plaintiff alleges that he is a senior citizen, residing in New York since the last several decades, and is a practicing Doctor who has amassed a huge amount of money from his medical practice. He came in contact with the defendant No.1 over a decade ago. Defendant No.1 gave him to understand that if he (the plaintiff) sends some money from U.S.A., defendant No.1 would buy properties on his behalf. Since the appreciation of the rates of properties in India, particularly in the National Capital Region were lucrative to the plaintiff, the plaintiff out of his own funds and also from contribution from his family members started sending money to defendant No.1, both for the purpose of doing business in India as well as for CS(OS) No.1949/2011 Page 2 of 50 purchasing properties on his behalf and on behalf of his family members. Plaintiff states that defendant No.1 thereupon purchased certain properties in the name of the plaintiff and his family members, and, also purchased some properties either in his own name (defendant‟s name) or in the name of his family members with the clear understanding that the plaintiff is the lawful owner for them.
4. Subsequently, defendant No.1 turned dishonest and started purchasing properties only in his own name or in the name of his family or in the name of firms owned by him or his family members. Defendant No.1 also took loans in the name of his firms/companies against these properties, without obtaining the prior permission or concurrence of the plaintiff. The defendant No.1, when confronted by the plaintiff about his wrongful acts, admitted that he had received large sums of money from the plaintiff and his family members, and wrote down his admissions on a piece of paper, as recently as 18.03.2011. Defendant No.1 also signed, on 29.06.2011, General Powers of Attorney in favour of the plaintiff in respect of eight of the properties purchased by him in his own name or in the names of his family members/firms/companies.
CS(OS) No.1949/2011 Page 3 of 50
5. On 6.8.2011, however, the plaintiff came to know that despite his signing General Powers of Attorney of eight of the properties, set out in the Schedule annexed to the plaint, in favour of the plaintiff, and admitting that he had purchased the properties out of funds sent by the plaintiff and his family members, defendant No.1 was planning to sell/dispose of the properties in a desperate hurry. The plaintiff accordingly instituted the present suit seeking a declaration in his favour that he was the owner of the properties bought by the defendant No.1 out of the funds sent by him and his family members to defendant No.1 "in trust". Plaintiff also sought a mandatory injunction directing the defendants to hand over the original title- deeds of the properties in question with peaceful vacant possession of the properties to the plaintiff and his family members; permanent injunction against the defendants from creating any third party interest in the suit properties; and rendition of accounts with the direction to the defendants to pay all the outstanding loans which they had taken against the properties bought out of the funds sent by the plaintiff and his family members.
CS(OS) No.1949/2011 Page 4 of 50
6. Immediately after the institution of the suit, the plaintiff moved an amendment application being IA No.12746/2011 under Order VI Rule 17 of the Code of Civil Procedure seeking leave to incorporate an alternative relief in the plaint for a money decree for Rs. 15 crores alongwith interest at the rate of 12% per annum from the year 2007. The suit being at an initial stage, the said amendment was allowed and summons of the suit issued to the defendants. An ex-parte ad interim injunction order was also passed on the application of the plaintiff under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure (IA No.12627/2011) restraining the defendants from alienating the suit properties mentioned in paragraph 26(i) (a) to (j) of the said order and an order of attachment before judgment issued in respect of the property bearing No.153-H, Country Lane No.5, Anupam Garden, Sainik Farms, New Delhi.
7. On service of the summons of the suit, defendant Nos.1 and 2 filed an application under Order VII Rule 11 of the Code of Civil Procedure, being IA No. 17345/2011, seeking rejection of the plaint. Subsequently, an application was filed by the defendant Nos.1 and 2 under Order XXXIX Rule 4 of the Code of Civil Procedure for CS(OS) No.1949/2011 Page 5 of 50 vacation of the interim order dated 12th August, 2011, being IA No.18753/2011.
8. In the course of hearing of the aforesaid applications, the plaintiff was directed to appear in person for recording of his statement under the provisions of Order X of the Code of Civil Procedure and his detailed statement was recorded on March 06, 2012 to which I shall presently advert. A fresh application for amendment of the plaint was also filed by the plaintiff being IA No.5347/2012, and on the completion of pleadings in the said application, all three applications were set down for hearing simultaneously.
9. Detailed arguments were addressed by Dr. Surat Singh, the learned counsel for the plaintiff and Mr. H.S. Phoolka, learned senior counsel for the defendant No.1.
10. In the course of his submissions, Dr. Surat Singh contended that the amendments sought for by him did not in any manner change the basic structure of the plaint; and in view of the fact that the suit was at a preliminary stage and written statement had yet to be filed by the defendants, there was no reason for rejecting the application for amendment. He further contended that in the course of arguments CS(OS) No.1949/2011 Page 6 of 50 under Order VII Rule 11 read with Section 151 of the Code of Civil Procedure, learned counsel for the defendant No.1 had pointed out certain deficiencies in the plaint, some of which were baseless but some deserved to be removed. For example, he stated, details of the properties were not given in the plaint but only in a document, though the document was explicitly mentioned in the plaint and hence was considered to be part of the pleadings. He asserted that it was bona fide believed that since defendant No.1 in his letter dated 18.03.2011 had admitted and confirmed the fact that various properties had been purchased by him out of the funds sent by the plaintiff and his family members and later, on 29.06.2011, he (the defendant No.1) had executed General Powers of Attorney in favour of the plaintiff, and all the said documents were annexed with the plaint and were considered to be part of the plaint, full details were not required to be set out in the plaint. But now, the defendant No.1 having taken a somersault, full details were sought to be supplied specifically in the plaint, including the details of the funds sent through wire-transfer by the plaintiff and his family members to the defendant No.1 and his various concerns, that is, M/s Embex Inc., M/s Embex Exports CS(OS) No.1949/2011 Page 7 of 50 Private Limited and M/s N.D. Exports, alongwith the full details of the properties purchased out of the said funds by the defendant No.1, initially annexed as Schedule to the plaint.
11. Dr. Surat Singh contended that in the unamended plaint, it was specifically asserted that the plaintiff had come into contact with the defendant No.1 over a decade ago and the defendant No.1 had given him to understand that if the plaintiff sent money from the United States of America, defendant No.1 would buy properties on his behalf, and on this clear understanding, plaintiff and his family members had sent money from U.S.A. to the defendant No.1 for the purchase of properties, but unfortunately after buying some properties in the name of the plaintiff and his family members, defendant No.1 started showing dishonest intention by buying the properties either in his own name or in the names of his family members or in the names of the firms owned by him or his family members. In these circumstances, the plaintiff confronted the defendant No.1, and the defendant No.1 admitted in his letter dated 18.03.2011 that he had purchased various properties from the funds sent by the plaintiff and CS(OS) No.1949/2011 Page 8 of 50 his family members; and on 29.06.2011 executed General Powers of Attorney in favour of the plaintiff in respect of some of the properties.
12. Dr.Surat Singh submitted that in paragraph 10 of the plaint relating to cause of action, it was specifically asserted that the cause of action had arisen in favour of the plaintiff and against the defendants every time money was sent to the defendant No.1, and the property was purchased or not purchased by the defendant No.1, and the money was kept by defendant No.1 as a trust for the plaintiff and his family members. In the amended plaint, however, the exact nature of the fiduciary relationship between the plaintiff and defendant No.1 was sought to be elaborated by adding the following paragraph:-
"B. That documents also proves the fiduciary relation between the Plaintiff and Defendant No.1 as Defendant No.1 is addressing and treating the Plaintiff as „Daddy". Money was paid by the plaintiff in trust for buying properties on plaintiff‟s name. Defendant No.1 asked plaintiff to send him money for this purpose through the mode of payments suggested by him and promised to discharge the trust by buying the properties in the name of Plaintiff. The plaintiff is infirm due to his advanced age and has trusted on defendant No.1 with whom he has fatherly relations........."CS(OS) No.1949/2011 Page 9 of 50
13. Dr. Surat Singh contended that apart from the above, two amendments of a purely formal nature were sought to be incorporated. The first relating to a typographical error in paragraph 5 of the amended plaint where the date 28.06.2011 was mentioned, instead of 29.06.2011, as the date of the execution of the General Powers of Attorney and the second, relating to amendment in the verification. As regards the verification, on account of a typographical error instead of the words "as per my knowledge", the words "our knowledge" had been typed. Similarly, since the plaint was signed by the Power of Attorney holder and not by the plaintiff himself, in the standard language of verification, it was stated "that the contents of paras 1 to 9 are true and correct to the best of our knowledge and belief", and now the plaintiff is seeking permission to amend the verification to the extent that "the contents of paras 1 to 9 are true and correct to my knowledge as per the information and record supplied by the plaintiff to the deponent and believed to be true."
14. The sum and substance of Dr. Surat Singh‟s contentions in support of his prayer for amendment were that there was no reason to CS(OS) No.1949/2011 Page 10 of 50 decline the amendment as no change was sought to be made in the substratum of the plaint apart from furnishing better particulars, the details whereof had already been set out in the documents annexed with the plaint; and that the amendments were being sought at the initial stage of the suit even before the commencement of the trial and there was, therefore, no cogent justification for rejecting the application. Reference was made by Dr. Singh to the oft-cited decisions of the Supreme Court in Jai Jai Ram Manohar Lal Vs. National Building Material Supply, Gurgaon 1969 (1) SCC 869 and Rajesh Kumar Aggarwal and Ors. Vs. K.K. Modi and Ors. 2006(4) SCC 385.
15. Dr. Surat Singh placed reliance on the document dated 18.03.2011 captioned "Conformation by Shiv Kumar Pal in respect of moneys provided to him by the Bansal family for purchase of assets in India". This document, being relevant, for the ease of ready reference is reproduced hereunder:-
"CONFORMATION BY SHIV KUMAR PAL IN RESPECT OF MONEYS PROVIDED TO HIM BY THE BANSAL FAMILY FOR PURCHASE OF ASSETS IN INDIA CS(OS) No.1949/2011 Page 11 of 50 SHIV KUMAR PAL S/o Shri Mahdev Prasad Pal resident of 153-H, Country Lane No.5, Anupam Garden, Sainik Farms, New Delhi herein confirm the understated facts today the 18th March, 2011. I had received moneys from Dr.Jagdish Bansal, Dr.Rajiv Bansal, Dr.Sanjiv Bansal, Dr.Indu Garg and Ms.Nira Sharma and their other associates who are all residents of New York USA, through the regular Banking channels and for the purpose of different properties in their names.
I had received the moneys from the extended Bansal family as Dr.Jagdish Bansal had considered me as a son and the other members of the family had considered me as their brother and I have not lived up to their expectations.
However, the same was not done by me, and all the properties have been bought be me either in my name or my wife or in the name of companies or firms controlled by me or where me and my family have substantial interest but they actually belong to all these persons named herein after Dr.Jagdish Bansal, Dr. Rajiv Bansal, Dr. Sanjay Bansal, Dr. Indu Garg and Ms. Nira Sharma and other associates us all the moneys for purchases have been provided to me by Dr. Jagdish Bansal, Dr. Raajiv Bansal, Dr. Sanjiv Bansal, Dr. Indu Garg and Ms. Nira Shama and other associates. I have searched my conscious (sic.conscience) and have realized what I have done is wrong and I wish to rectify the same. Therefore I in consultation with my wife have decided to revert all these assets to Dr. Jagdish Bansal, Dr. Rajiv CS(OS) No.1949/2011 Page 12 of 50 Bansal, Dr. Indu Garg and Ms. Nira Sharma and other associates and will execute and transfer all the said assets in their name or to whomever they wish to transfer.
I also have to confess that I have taken loans against some of the properties and I have no source to repay the same as of today. I am requesting the extended Bansal family to clear the loans and transfer the properties in their names or their nominees.
I am confirming that even by the transfer of these assets in the name of the extended Bansal family or their nominees, the moneys owned by me will not be over, I will settle the account with the extended Bansal family over a period of time but it is in all sincerity I want them to transfer the below mentioned properties in their name at the earliest.
I am handing over either the original or the photocopies of all the below mentioned titled deeds and if the same are mortgaged then I am also stating the loans against them and the outstanding as of date are stated herein below against properties.
I also confirm that I will execute a registered power of Attorney for the said works in favour of any person the Bansal family may designate.
The details of the properties is as under:
1. Property at 52B, Indira Enclave, plot measuring 625 sq. yards (650 sq. yrds including CS(OS) No.1949/2011 Page 13 of 50 road) in the name of my wife Mrs.Babita Pal through power of attorney.
Loans outstanding NIL
Loan Payable to
Address:
Property payment outstanding
2. Plot No.47 measuring 4000 sqm in Ecotech-
II, Industrial Area in Greater Noida in the name of Iccha (I) Exports Loans outstanding NIL Loan Payable to Address:
Property payment outstanding Rs.7512491/-
3. Shop/Office/commercial space bearing No.DSC-304 on ___ floor, in the South Court, DLF Saket, New Delhi measuring 688 Sq. ft.
Loans Outstanding Rs.65 lac Appx.
Loan Payable to
Address:
Property payment outstanding
4. Space No.C03/30 on second floor in mat
measuring 24 sq. Mts equivalent to 248 sq. ft. in plot No.25,27,28 and 29 at Knowledge Park-II, Greater Noida, U.P. in the name of N.D. Exports.
Loans outstanding Rs.20 lacs
Loan Payable to Mr. Ravi 9811428797
Address: 217, Sant Nagar
Property payment outstanding
CS(OS) No.1949/2011 Page 14 of 50
5. Plot No.G-100 at Industrial Area, Surajpur Sight-V, Greater Noida measuring 2496 sq. mts.
In the name of Embex Exports Private Limited.
Loan outstanding 1.20 cr.
Loan Payable to
Address: Mr. P.S. Bhushan, 9999002485
Mr. S. Sinndh UK 0044 207288925
Property payment outstanding Mr. Rajiv
9650927999
6. Property no.317, 3rd Floor, DLF Star
Tower, Silokhere - II, N.H-8 Gurgaon measuring 1533 sq. ft.
Loan outstanding NIL
Loan Payable to
Address:
Property payment outstanding Rs.38 lac +
Interests
7. 15 acres of agricultural land at Jhansi,
Uttar Pradesh
Loans outstanding NIL
Loan Payable to
Address: Paper not available
Property payment outstanding Rs.1.20 cr.
8. E-58, Sector-8, Noida, measuring 800 sq. yrds, + 292 Sant Nagar Loan outstanding Rs.1.80 cr.
Loan Payable to Address:
Property payment outstanding SBI South
CS(OS) No.1949/2011 Page 15 of 50
Extn. Part I
9. Industrial plot at Gajraula measuring 5000 sq. mtrs.
Loan outstanding NIL
Loan Payable to
Address: Paper not available
Property payment outstanding NIL
10. Three floors on property no.291, Sant
Nagar, East of Kailash, New Delhi
Loans outstanding Rs.55 Lacs
Loan Payable to
Address: Mr. K.G. Gupta, Sant Nagar
Property payment outstanding
I further wish to confirm that I am making the above statement out of my own free will without any force or coercion or undue influence from any one person or persons but solely on my own guilt on realization of my wrong doings and misrepresentation of facts to the Bansal family."
16. It was contended by the learned counsel for the plaintiff that the aforesaid document is replete with admissions and as held by the Supreme Court in Nagindas Ramdas Vs. Dalpatram Ichharam alias Brijram and Ors. AIR 1974 SC 471, admissions, if true and clear constitute a waiver of proof. The relevant extract of the judgment reads:-
CS(OS) No.1949/2011 Page 16 of 50
"Admissions, if true and clear, are by far the best proof of the facts admitted. Admissions in pleadings or judicial admissions, admissible under Section 58 of the Evidence Act, made by the parties or their agents at or before the hearing of the case, stand on a higher footing than evidentiary admissions. The former class of admissions are fully binding on the party that makes them and constitute a waiver of proof. They by themselves can be made the foundation of the rights of the parties. On the other hand, evidentiary admissions which are receivable at the trial as evidence, are by themselves, not conclusive. They can be shown to be wrong."
17. Mr. H.S. Phoolka, the learned senior counsel for the defendant No.1 on the other hand contended that an application for amendment should never be permitted if it is mala fide, worthless and/or contains dishonest amendment [Revajeetu Builders and Developers Vs. Narayanaswamy and Sons and Ors. (2009) 10 SCC 84], and in the instant case, the amendment sought for by the plaintiff is mala fide, worthless and dishonest, apart from the fact that the plaintiff by way of amendment seeks to set up a new case completely contrary and inconsistent with his earlier pleadings.
18. Mr. Phoolka placed reliance on the decision of this Court in the case of Madho Parshad Vs. Ram Kishan & Ors. 94 (2001) DLT 254. In the said case while rejecting the plaintiff‟s application for CS(OS) No.1949/2011 Page 17 of 50 amendment of the plaint on the ground that it lacked bona fides, a learned Single Judge of this Court observed as follows:-
"In the present case in hand the plaintiff had filed the civil suit specifically asserting his title on basis of the sale deed. Now an explanation is forthcoming that plaintiff was treating the revenue record as the sale deeds. Indeed it cannot be accepted. It was the plaintiff who himself had signed the plaint. At no time it had been explained as to why such a mistake had occurred. Seemingly it is being so done only to overcome the objection of the contesting defendants. The amendment claimed does not appear to be bona fide, and therefore, I.A. 6620/99 must fail and is dismissed."
19. Mr. Phoolka contended that on the same analogy, the application filed by the plaintiff deserved to be rejected. He argued that the plaintiff had umpteen opportunities to amend his plaint, since November, 2011, when the defendant moved his application under Order VII Rule 11, but he did not do so. He did not even seek to amend the plaint when he was examined under the provisions of Order X of the Code of Civil Procedure, though the deficiencies in the plaint were very apparent at that stage. The present application, he contended was nothing but a delaying tactic and an endeavour to prevent this Court from rejecting his plaint. It was also sought to be CS(OS) No.1949/2011 Page 18 of 50 contended that the mala fides of the plaintiff were apparent from the fact that if the plaintiff had disclosed all the information that he now seeks to add by way of amendment, the ex-parte order dated 12.08.2011 would never have been passed and, therefore, he had concealed material information. In any case, it was a worthless amendment, for, even if the said amendment is allowed, the plaintiff‟s plaint would still be liable to be rejected under the provisions of Order VII Rule 11 of the Code of Civil Procedure. Mr. Phoolka pointed out that in the case of Patasibai and Others Vs. Ratanlal (1990) 2 SCC 42, the Supreme Court, on an application filed by the plaintiff for amendment of the plaint, subsequent to the defendant having filed an application under Order VII Rule 11(a) of the Code of Civil Procedure for rejection of the plaint as not disclosing any cause of action, made the following pertinent observations.
"We do not find any ground to allow this application which apart from being highly belated, is clearly an afterthought for the obvious purpose of averting the inevitable consequence of rejection of the plaint on the ground that it does not disclose any cause of action or raise any triable issue."CS(OS) No.1949/2011 Page 19 of 50
20. It was further contended that completely new pleas were sought to be introduced by the plaintiff for the first time, for instance, nowhere does the plaintiff state in the unamended plaint that the defendant called him "Daddy" nor the plaint contains the stand now sought to be raised that the money was given "on trust" and defendant No.1 "promised to discharge the trust". Mr. Phoolka contended that the modus operandi of the plaintiff is that he now seeks to draw advantage from one of the Exceptions carved out by the Legislature to the bar created by the Benami Transactions (Prohibition) Act, 1988, by placing reliance on the provisions of Section 4 (3)(b) of the said Act, and is, for the said purpose, raising a completely new plea that the money was given in trust by the plaintiff to the defendant No.1. The plaintiff cannot be allowed to improve his case in such a twisted manner.
21. Mr. Phoolka also contended that the plaint was also liable to be rejected on account of improper and shoddy verification, as it was settled law that the words "are true and correct to the best of my knowledge and belief" carried no sanctity. In this context, he relied upon the decision of this Court in Hira Lal Vs. Amarjit Singh 1977 CS(OS) No.1949/2011 Page 20 of 50 RLR 520 wherein it was laid down that affidavits must be either affirmed as true to knowledge or form information received provided the source of information is disclosed, or as to what the deponent believes to be true provided that the grounds for such belief are stated. It was held that "the words that the contents of the affidavits are true and correct to the best of my knowledge and belief carry no sanctity and such a verification cannot be accepted."
22. Having considered the rival submissions of the parties on the issue of amendment of the plaint, in my considered opinion, the amendment deserves to be allowed. There is no denying the fact that the application for amendment has been filed at the initial stage of the proceedings. The trial has not yet commenced and as a matter of fact the defendants have not even filed their respective written statements (except the defendant No.8/State Bank of India whose written statement is formal in nature). Undoubtedly, it is the application of the defendant No.1 under Order VII Rule 11 of the Code of Civil Procedure for rejection of the plaint, which has propelled the plaintiff into action and the plaintiff now seeks to cover certain flaws and lacunae left in the plaint. A close scrutiny of the unamended plaint CS(OS) No.1949/2011 Page 21 of 50 and the amendments now sought to be incorporated, however, leave no manner of doubt that the amendments are clarificatory in nature and seek to incorporate better particulars, leaving the original cause of action untouched. To the aforesaid extent, I am in agreement with Dr. Surat Singh‟s contention that the proposed amendment does not change the basic structure of the case, and is merely explanatory in nature.
23. The well settled principle regarding grant of amendment sought by a party is that a liberal approach must be adopted by the Court in favour of allowing amendment, unless the amendment seeks to alter the substratum of the case or is in the nature of an abuse of the process of the Court. In the present case, a reading of the documentary evidence placed on record with the unamended plaint shows that the details sought to be added of the properties purchased by the defendant No.1 and the funds generated by the plaintiff for the purpose are, in fact, contained in the document dated 18.03.2011, annexed by the plaintiff to the unamended plaint, which document is explicitly mentioned and relied upon in the plaint. Also the unamended plaint in paragraph 2 clearly states that the CS(OS) No.1949/2011 Page 22 of 50 plaintiff, who was residing in New York had come into contact with defendant No.1 over a decade ago and defendant No.1 had given the plaintiff to understand that if the plaintiff sends money from U.S.A., defendant No.1 would buy properties on his behalf. So, plaintiff out of his own funds and also from contribution from his family members started sending money to defendant No.1 for the purpose of both doing business in India as well as for purchasing properties on his behalf or on behalf of plaintiff‟s family members. In paragraph 3 of the unamended plaint, it is stated that the defendant No.1 did purchase certain properties with the clear understanding that the plaintiff is the lawful owner for them, but subsequently his intention became dishonest and he started purchasing properties either in his own name or in the names of his family members. In paragraph 4 of the unamended plaint, it is asserted that the defendant No.1 started raising loans against these properties without the prior permission of the plaintiff. In paragraph 5, it is stated that the plaintiff and his family members tried to pursue (sic. confront) defendant No.1 about his wrongful acts, and defendant No.1 admitted that he had received large sums of money from the plaintiff and his family members and "he CS(OS) No.1949/2011 Page 23 of 50 very honestly wrote down his admission on a piece of paper admitting his liabilities as recent as 18.03.2011." It is also stated that the defendant No.1 had also signed Powers of Attorney in respect of eight properties on 28.06.2011 in favour of plaintiff. In paragraph 10, which relates to the cause of action, it is specifically stated that the cause of action arose on each and every date when money was sent to defendant No.1 and property was purchased or not purchased by defendant No.1 and money was kept by defendant No.1 as a „trust‟ for plaintiff and his family members.
24. Pertinently, in the document dated 18.03.2011 annexed with the plaint, it is specifically stated: "I had received the money from the extended Bansal family as Dr. Jagdish Bansal had considered me as a son and the other members of the family had considered me as their brother and I have not lived up to their expectations."
25. Significantly also, when the plaintiff appeared in the witness box for his examination under Order X of the Code of Civil Procedure, he stated as under:-
"The defendant - Shiv Kumar was introduced to me by my son-in-law - Dr. Anil Gupta, who is present in the court today. He had come to visit me in the USA with my son-in-law. Since my son-CS(OS) No.1949/2011 Page 24 of 50
in-law calls me Daddy, the defendant - Shiv Kumar also started addressing me as Daddy. I was told by my son-in-law that Shiv Kumar was residing in India, where he was running a factory and was a hard working person. Whenever he visited me he used to touch my feet and bring gifts for me. He told me that property prices in Delhi were soaring and that I should invest some of my money in landed estate in Delhi.
First of all, he purchased property in „Sun City‟ Ghaziabad on my behalf and on behalf of my two sons and my daughter. After we had gained confidence in him, he asked us to purchase a property either in Noida or Gurgaon. We opted to purchase property in Noida. I transferred the money by wire to India for both the aforesaid properties after meeting my tax obligations in New York. I asked him to send the title deeds of the aforesaid two properties to us, but I did not receive the same and I was told that the properties had not been purchased in my name and would be transferred to me. However, he failed to transfer the said properties to my name. In this manner, he purchased 9 or 10 properties with the money sent by me. The said properties were purchased by him mostly in Noida and Gurgaon. My son-in-law, who is present in court today, can give the exact details of what transpired as he was looking after my business. I have seen the plaint in the present suit, which is signed and filed on my behalf by Shri Anil Goyal, son of Shri Ghanshyam Das Goyal as my attorney. I had duly authorized the aforesaid Shri Anil Goyal to file the suit on my behalf in view of the fact that I reside in the United States of America. It is correct that one of my daughters, namely, Nira Sharma was carrying on business CS(OS) No.1949/2011 Page 25 of 50 with the defendant. The defendant used to make garments in his factory, which he was sending to New York, where my aforesaid daughter is a Fashion Designer. I used to send the money to the defendant through my daughter‟s Company to Embex Inc., Embex Exports and ND Exports. The money was sent through wire transfer."
26. In view of the aforesaid, in my considered opinion, it cannot be said that the plaintiff in the garb of carrying out amendment seeks to alter the basic contours of his case, and is in fact setting up a new case, inconsistent with his earlier pleadings. The amendments prayed for by the plaintiff must, therefore, be allowed, including the amendment relating to verification, as it is settled law that defect in verification is not fatal to the plaint. The details of the money sent by wire transfer by the plaintiff and the details of the properties, as noted above, were already contained in the documents annexed with the plaint and all that is sought for by way of amendment is to incorporate the said details in the plaint itself.
27. IA No.5347/2012 is accordingly allowed.
IA No.17345/2011 (under Order VII Rule 11 CPC filed by the defendant Nos.1 and 2)
28. Adverting to the application of the defendant Nos.1 and 2 under Order VII Rule 11 for rejection of the plaint, the application is CS(OS) No.1949/2011 Page 26 of 50 predicated on the following grounds and contentions raised by the defendants.
29. The first contention is that the suit is not properly instituted, in that there is no proper authorization, authorizing the alleged Power of Attorney holder, namely, Shri Anil Goyal to institute the suit and the plaint is thus liable to be rejected. This contention was not pressed at the time of hearing, in view of the fact that the statement of the plaintiff was recorded by this Court under the provisions of Order X of the Code, wherein the plaintiff clearly stated that he had authorised his Power of Attorney holder, Shri Anil Goyal to institute the plaint on his behalf.
30. The second contention raised in the application is that the plaint does not contain a proper verification and is liable to be rejected. This contention also does not survive for consideration as the prayer of the plaintiff for amendment of the verification to the plaint now stands granted.
31. The third contention is that the plaint fails to stand on its own legs. Elaborating on this contention, it was urged by Mr.H.S.Phoolka, the learned senior counsel for the defendants that a perusal of the CS(OS) No.1949/2011 Page 27 of 50 plaint would show that the plaintiff has sought a declaration to the effect that he is the owner of certain properties, however he conspicuously fails to mention the very properties that he seeks declaration of in the plaint. The details of the properties have intentionally not been mentioned, as that would entail setting out details as to the title deeds and the plaintiff has avoided to do that as he would be hit by the Limitation Act. Alternatively, it is contended that the plaintiff, in any case, cannot seek a declaration on these properties, without challenging their Sale Deeds and having the same cancelled or set aside.
32. Mr. Phoolka, in this context, places reliance on the decision of the Supreme Court in T. Arivandandam vs. Satyapal and Anr., AIR 1977 SC 2421, to contend that as held by the Supreme Court in the said case if the plaint is manifestly vexatious and meritless in the sense of not disclosing a clear right to sue, the Courts should exercise their power under Order VII Rule 11 CPC; and if clever drafting has created the illusion of a cause of action, the Courts must nip the action in the bud.
CS(OS) No.1949/2011 Page 28 of 50
33. The aforesaid contention of Mr.Phoolka, in my view is wholly untenable. Post amendment, the details of the properties in respect of which the declaration has been sought and the details of the payments made by the plaintiff to the defendants have been incorporated in the plaint and it cannot be said that the plaint fails to stand on its legs. To be noted at this juncture that even prior to amendment, the details were set out in the documents enclosed with the plaint. This contention is, therefore, rejected.
34. The fourth contention of the defendants‟ counsel in support of his plea for rejection of the plaint is that the gross concealment made by the plaintiff in the plaint disentitles the plaintiff to any relief. He contended that the plaintiff has concealed the fact that the family of the plaintiff and the defendants are in the business of export of garments and have a long standing relationship that dates back to 12 years. The defendant No.1 is the proprietor of the firm Embex Exports that manufactures and exports garments to the plaintiff‟s family. The plaintiff‟s daughter, Nira Sharma is also in the business of export, which she runs in the name and style of Embex Inc. Since the parties have a long standing relationship, there exists a running CS(OS) No.1949/2011 Page 29 of 50 account between them and as on date, the plaintiff‟s family owes an amount of ` 8,35,07,462.15 as payment of goods exported to them, and there is overwhelming documentary evidence produced by the defendants with the present application, including bank invoices, e- mails, orders of goods, etc., from which the aforesaid facts are apparent. Mr. Phoolka also contended that the defendant No.1 treated the plaintiff as his father, but neither the close personal relationship nor the close business relationship were even fleetingly referred to in the plaint. The learned senior counsel relied upon the decisions of the Supreme Court in S.P. Chengalvaraya Naidu (Dead) by LRs vs. Jagannath (Dead) by LRs & Ors., (1994) 1 SCC 1, and Swarn Singh vs. Surinder Kumar & Ors., 2012 (1) AD (Delhi) 266 to urge that non-disclosure of relevant and material facts and documents with a view to obtain advantage by a party tantamounts to fraud on the Court as well as on the opposite party, and merits rejection of the plaint on account of concealment.
35. Undoubtedly, it is established law that a litigant who approaches the Court is bound to disclose all facts and produce all documents within his knowledge which are relevant to the litigation, CS(OS) No.1949/2011 Page 30 of 50 and as held by the Supreme Court in the case S.P. Chengalvaraya Naidu (supra) and reiterated in case of Swarn Singh (supra), any attempt made by a party to score a point on his opponent by concealing material facts and documents and consequently misleading the Court, amounts to fraud and must be dealt with severely by the Court.
36. In the present case, however, it cannot be said that the plaintiff has failed to disclose any material fact or document, for, the plaintiff has clearly mentioned his business relations as well as his personal relations with the defendants in the plaint and stated that he was first introduced to the defendant No.1 over a decade ago. The plaintiff has in fact filed the present suit premised on the relationship of trust between the parties, based on which the defendant No.1 prevailed upon him to purchase properties in New Delhi and he (the plaintiff) sent money to the defendant No.1 from New York for the purchase of various properties on his behalf, only to discover subsequently that the defendant No.1 had turned dishonest and started purchasing properties in his own name and in the names of his family members/firms. There is, thus, no concealment in the present case. CS(OS) No.1949/2011 Page 31 of 50 The plaintiff has enclosed with the plaint document dated 18.03.2011 addressed by the defendant No.1 to the plaintiff, which, as noted above, clearly states that the plaintiff used to treat the defendant No.1 as his son.
37. Adverting to the last contention of the defendants‟ counsel that the suit is liable to be rejected under Order VII Rule 11(d) CPC as hit by the provisions of the Benami Transactions (Prohibition) Act, 1988 (hereinafter referred to as "Benami Transactions Act") on account of the fact that the plaintiff has alleged that properties that belong to him and his family members were bought by the defendant No.1 and his family members in their names, in my view, the said contention is wholly misplaced.
38. Section 2(a) of the said Act defines a benami transaction in the following words:-
"2. Definitions.- In this Act, unless the context otherwise requires,-
(a) "Benami transaction" means any transaction in which property is transferred to one person for a consideration paid or provided by another person."
Sub-Section (1) of Section 3 of the Benami Transactions Act provides that no person shall enter into any benami transaction. Sub- CS(OS) No.1949/2011 Page 32 of 50 Section (3) of Section 3 lays down that whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. Section 4 provides for a prohibition of the right to recover property held benami, either by way of claim or by way of defence. Section 5 provides that all properties held benami shall be subject to acquisition by such authority, in such manner and after following such procedure, as may be prescribed.
39. For the purposes of the present case, Section 4 of the Benami Transactions Act is significant, in that it imposes a complete prohibition on the right to recover a property held benami. Sub- Section (3), however, carves out two exceptions by providing that the prohibition shall not apply in a case (i) where the person in whose name the property is held is a coparcener in a Hindu Undivided Family and the property is held for the benefit of coparceners in the family; or (ii) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity. For the sake of CS(OS) No.1949/2011 Page 33 of 50 ready reference, the provisions of Section 4 of the Benami Transactions Act are reproduced hereunder:-
"4. Prohibition of the right to recover property held benami.- (1) No suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
(2) No defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.
(3) Nothing in this section shall apply,-
(a) where the person in whose name the property is held is a coparcener in a Hindu undivided family and the property is held for the benefit of the coparceners in the family; or
(b) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity."
40. The contention of Dr. Surat Singh, the learned counsel for the plaintiff is that the present case falls within the four corners of sub- clause (b) of Section 4(3) of the Benami Transactions Act, as funds CS(OS) No.1949/2011 Page 34 of 50 were sent by the plaintiff to the defendant No.1 for the purchase of property on account of the long standing relationship between the parties spanning a period of more than a decade, during which period a father-son relationship had developed between the plaintiff and the defendant No.1, as borne out by defendant No.1‟s own communication dated 18.03.2011. Dr. Surat Singh took the stand that the defendant No.1, in the said communication dated 18.03.2011, had categorically admitted that the properties had been purchased by him from the funds generated by the plaintiff, and were, in fact, the properties belonging to the plaintiff. Dr. Surat Singh also relied upon the eight General Powers of Attorney placed on the record by him along with the plaint, duly signed by the defendant No.1 in favour of the plaintiff. He contended that all the aforesaid documents were in the nature of admissions and as held by the Supreme Court in the case of Nagindas Ramdas (supra), admissions if true and clear are by far the best proof of the facts admitted.
41. Dr. Surat Singh contended that it had been specifically stated in the plaint, in paragraph 5, that the plaintiff had asked the defendant No.1 to purchase the property in his name. The plaintiff nowhere CS(OS) No.1949/2011 Page 35 of 50 states that he had asked the defendant No.1 to purchase the properties in the defendants‟ name. It was also specifically stated in the plaint that the defendant had turned dishonest and had started purchasing properties in his own name or in the name of firms owned by him and his wife. The defendant cannot be allowed to take advantage of his own wrong by now contending that the plaintiff is not entitled to the properties dishonestly purchased by the defendants benami. He contended that the maxim nullus commodum capere potest de injuria sua propria was squarely applicable as held in the case of Eureka Forbes Limited vs. Allahabad Bank and Ors., (2010) 6 SCC 193, the relevant extract whereof reads as under:-
"Maxim nullus commodum capere potest de injuria sua propria has a clear mandate of law that, a person who by manipulation of a process frustrates the legal rights of others, should not be permitted to take advantage of his wrong or manipulations."
42. Relying upon the decision of this Court in Mahinder Singh vs. Pardaman Singh reported in AIR 1992 Delhi 357, Dr. Surat Singh urged that the mere fact that the defendant has used the word benami would not throw his case out of Court, when it is yet to be proved by reliable evidence as to whether the property in suit was purchased CS(OS) No.1949/2011 Page 36 of 50 benami or not and, what was the intention of the parties when the same was purchased. He contended that for arriving at any conclusion, the merits of the case would be relevant and before arriving at any decision on the merits it was necessary that the parties should lead evidence. Merely on the ground of Section 4 itself, the suit cannot be thrown out at this preliminary stage.
43. On the other hand, it is the contention of Mr. Phoolka that sub- clause (b) of Section 4(3) has no application. He contended that the plaintiff has sought to urge that the plaintiff had entrusted money to the defendants on "trust" and thus sought the applicability of Section 88 of the Indian Trusts Act, 1882, but a bare perusal of Section 88 of the Trusts Act makes it apparent that it is applicable only in case of an executor, trustee, partner, agent, director of a company, legal advisor or other person bound in a fiduciary character to protect the interest of another. According to Mr. Phoolka, all the illustrations and case law under the provision envisage that there must be a written agreement that binds the parties. The parties in the present suit had entered into no such written agreement or arrangement, and thus the argument predicated on Section 88 of the Indian Trusts Act, 1882 has CS(OS) No.1949/2011 Page 37 of 50 no applicability whatsoever. In the circumstances, the case set up by the plaintiff is directly hit by Section 4 of the Benami Transactions Act and the plaint is liable to be rejected as being barred by law.
44. In order to substantiate his aforesaid contention, Mr. Phoolka relied upon the following decisions of this Court:
(i) Santosh Malik vs. Maharaj Krishan, 2012 (127) DRJ 582 - In this case, it was held that since there is no plea that the plaintiff and his family constituted a Joint Hindu Family or an Undivided Hindu Family, there was no scope to hold that Clause (a) of Sub-Section (3) of Section 4 of the Benami Act was applicable.
(ii) Ram Prakash Kathuria vs. Ved Prakash Kathuria, 2007 (5) AD (Delhi) 694 - In this case, a suit for declaration filed by the plaintiff that the alleged Gift Deed executed by his mother in whose name the property was registered was of no consequence as the property was purchased by the defendant No.3 out of his own funds, though in the name of the mother, and that subsequently there was a family settlement in which it was decided that the four sons would have close shares in the CS(OS) No.1949/2011 Page 38 of 50 suit property, was rejected on the ground that it was hit by Section 3 of the Benami Act.
(iii) Sardar Nirmal Singh and Anr. vs. Sardar Harinder Singh and Anr., 150 (2008) DLT 486 - In this case, while considering a petition under Section 34 of the Arbitration and Conciliation Act, 1996, a plea was taken that the properties were purchased from the funds of the respondent benami in the names of different family members and all those properties, therefore, had the character of properties belonging to either the respondent or his business. The Court rejected the plea on the ground that the property of a third person, even if held benami cannot be brought into the subject matter of dispute by the Arbitrator without the third person being a party to the dispute, and in any event the respondent No.1 had not taken a single step against any of the holders of the properties to say that these properties were held benami/held in trust, and they should be declared so.
(iv) Padmavati Mahajan vs. Yogender Mahajan, 152 (2008) DLT 363 - In a suit for permanent and mandatory injunction, the CS(OS) No.1949/2011 Page 39 of 50 Court on consideration of the case law held that the onus to prove and establish benami owner‟s rights protected by Section 4(3), is on the person who makes the said assertion and, on consideration of the evidence, opined that the defendant No.1 on whom the onus was placed had not produced any document or material to support his contention with regard to the payment of consideration as well as to establish intention of the parties to record and treat the property as benami property. The Court accordingly held that the plaintiff was the owner of the property and the defendant No.1 was not the benami owner thereof.
(v) Aarti Sabharwal vs. Jitender Singh Chopra & Ors., 162 (2009) DLT 38 - In this case, the Court held that the contention that under Section 4(3)(b) one of the parties was holding the property in fiduciary capacity was neither pleaded nor substantiated even prima facie through any document filed along with the plaint and, thus, viewed from any angle the bar under Section 4 of the Benami Act would apply and prevent the CS(OS) No.1949/2011 Page 40 of 50 plaintiff from claiming any relief vis-à-vis the said properties standing in the name of the other party.
45. From a conspectus of the above case law relied upon by Mr.Phoolka, it clearly emerges that none of the decisions relied upon have any bearing or application to the facts of the present case. The principle underlying these decisions is, however, of some import, namely, that in determining whether a property is held benami or not the Court shall have to take into consideration the facts of the case to ascertain whether there was a fiduciary relationship between the parties and for the aforesaid purpose, the pleadings and the evidence adduced must be resorted to.
46. In a recent pronouncement of the Supreme Court in Sri Marcel Martins vs. M. Printer & Ors. reported in (2012) 5 SCC 342, the Supreme Court while considering the provisions of Section 4(3)(b) of the Benami Act laid down the law as follows:-
"23. In determining whether a relationship is based on trust or confidence, relevant to determining whether they stand in a fiduciary capacity, the Court shall have to take into consideration the factual context in which the question arises for it is only in the factual backdrop that the existence or otherwise of a fiduciary relationship can be CS(OS) No.1949/2011 Page 41 of 50 deduced in a given case. Having said that, let us turn to the facts of the present case once more to determine whether the appellant stood in a fiduciary capacity vis-à-vis the plaintiffs- respondents."
47. Dealing with the contention of Mr. Phoolka on behalf of the defendants that a bare perusal of Section 88 of the Indian Trusts Act, 1882 makes it apparent that it is applicable only to the persons listed therein, i.e., an executor, trustee, partner, agent, director of a company, legal advisor or other person bound in a fiduciary character to protect the interest of another and that there must be a written agreement that binds the parties, I am afraid there is no merit in this contention. In Canbank Financial Services Ltd. vs. Custodian and Ors., (2004) 8 SCC 355, the Supreme Court while dealing with the question as to whether the list of persons specified in Section 88 of the Trusts Act is exhaustive or not, held that the expression "other person bound in a fiduciary character to protect the interest of another person" includes a large variety of relationships and adumbrated the law as follows:-
"49. A transaction which falls within the purview of Section 88 of the Trusts Act does not fall within the category of benami transaction in terms of the provisions of the Benami CS(OS) No.1949/2011 Page 42 of 50 Transactions Act. [See P.V. Sankara Kurup v. Leelavathy Nambiar (1994) 6 SCC 68 : AIR 1994 SC 2694.)
50. The list of persons specified in Section 88 of the Trusts Act is not exhaustive. The expression "other person bound in a fiduciary character to protect the interests of another person" includes a large variety of relationships. The heart and soul of the matter is that wherever as between two persons one is bound to protect the interests of the other and the former availing of that relationship makes a pecuniary gain for himself, the provisions of Section 88 would be attracted, irrespective of any designation which is immaterial. The said principle would also apply for a banker holding the customer's money.
51. A fiduciary would not be liable for any action if there is no concealment by him or no advantage taken by him.
52. A civilised society furthermore always provides for remedies for cases of what has been called unjust enrichment or unjust benefit derived from another which it is against conscience that he should keep. [See Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. (1942) 2 All ER 122 : 1943 AC 32 : 167 LT 101).
53. In Carreras Rothmans Ltd. v. Freeman Mathews Treasure Ltd. [1985 Ch 207 : (1985) 1 All ER 155] (Ch 207 at p. 222), it is stated: (All ER p. 165f-g) "[E]quity fastens on the conscience of the person who receives from another CS(OS) No.1949/2011 Page 43 of 50 property transferred for a specific purpose only and not therefore for the recipient's own purposes, so that such person will not be permitted to treat the property as his own or to use it for other than the stated purpose."
54. The parties to the transactions cannot enter into any benami transaction so as to get any property transferred in their names for consideration paid by a third party. A presumption, thus, arises that the parties never intended that the transaction would be a benami one. By reason of the said transaction, a cestui que trust was created, inasmuch as Respondents 3 and 4 applied for allotment of CANCIGOs on behalf of Respondent 2 and not on their own behalf. The trust was created for a purpose, namely, the benefit arising therefrom would be appropriated by Respondent 2. The principle of cestui que trust is a synonym of a beneficiary. The said principle is not confined to the ingredients of Section 82 of the Trusts Act. It also covers cases falling under Section 88 thereof. Thus if it be held that the properties were acquired by Respondents 3 and 4 in their own names in breach of their obligations while acting as an agent of Respondent 2, the case would be covered under Section 88 of the Trusts Act. Section 88 of the Trusts Act has not been repealed by Section 7 of the Benami Transactions Act. In such a case the Benami Transactions Act would not operate.
55. A beneficial interest indisputably can be transferred. For the said purpose, the only legal requirement will be essence of a trust. The right of a beneficiary to transfer his interest being CS(OS) No.1949/2011 Page 44 of 50 absolute, the transferee derived rights, title and interest therein."
48. It may be noted at this juncture that in the Canbank Financial Services Ltd. case (supra), the Supreme Court while dealing with the Benami Transactions Act emphasized that benami transactions in India were generally recognized by the Courts unless such transactions (a) violated the provisions of any law; or (b) defeated the rights of innocent transferees for value; or (c) when the object of the benami transaction was to defraud creditors; or (d) when it was against public policy. The Supreme Court held that benami transactions as such had not been declared to be invalid in law by any statute including the Benami Transactions Act and as a matter of fact the Benami Transactions Act was required to be strictly construed. In paragraph 66, it was stated:-
"66. The Benami Transactions Act is not a piece of declaratory or curative legislation. It creates substantive rights in favour of benamidars and destroys substantive rights of real owners who are parties to such transactions and for whom new liabilities are created by the Act. A statute which takes away the rights of a party must be strictly construed. (See R. Rajagopal Reddy v. Padmini Chandrasekharan (1995) 2 SCC 630 : AIR 1996 SC 238).CS(OS) No.1949/2011 Page 45 of 50
49. Relying upon the enunciation of the law in the Canbank Financial Services Ltd. Case (supra), a learned Single Judge of this Court (Hon‟ble Mr. Justice Madan B. Lokur, as His Lordship then was) in the case of S.M. Wahi vs. Ms. Reeta Wahi, 2006 (90) DRJ 616, dealing with an application under Order VII Rule 11 CPC for rejection of the plaint on the ground that it was hit by the Benami Transactions Act, noted that the heart and soul of a fiduciary relationship was described by the Supreme Court in the case of Canbank Financial Services Ltd. (supra), as one person being bound to protect the interest of the other. His Lordship further noted that the aspect of confidence and trust was also adverted to by the Supreme Court in State of Gujarat vs. Jaswantilal Nathalal, 1968 Cri. LJ 803 (cited with approval in Pratibha Rani vs. Suraj Kumar, 1985 Cri. LJ
817) in the following words:-
"The expression „entrustment‟carries with it the implication that the person handing over any property or on whose behalf that property is handed over to another, continues to be its owner. Further the person handing over the property must have confidence in the person taking the property so as to create a fiduciary relationship between them."CS(OS) No.1949/2011 Page 46 of 50
50. In S.M. Wahi's Case (supra), a suit was brought by the real owner against the registered owner predicated on the fact that the plaintiff had appointed the defendant as his nominee in whose favour the Sale Deed was to be executed. The defendant moved an application seeking rejection of the plaint as being barred by the Benami Transactions Act. The Court held that the provisions of the Act must be strictly construed and considering all the averments made in the amended plaint, and the facts disclosed from the documents filed alongwith it, it was held that there was no escape from the conclusion that the plaintiff had made out a case that the defendant No.4 was standing in a fiduciary capacity vis-à-vis the plaintiff and was much more than a mere nominee. The suit was, therefore, not rejected summarily and allowed to proceed to trial.
51. In view of the aforesaid adumbration of the law by the Supreme Court and this Court, I am unable to uphold the contention of Mr. Phoolka, the learned senior counsel for the defendants that the list of persons mentioned in Section 88 of the Trusts Act is exhaustive. I am also unable to agree with the contention of Mr. Phoolka that there must be an agreement in writing between the CS(OS) No.1949/2011 Page 47 of 50 parties to attract the provisions of Section 88 of the Trusts Act and that a person is bound in a fiduciary capacity to protect the interest of another person if and only if there is a written agreement to this effect. In Central Board of Secondary Education and Anr. vs. Aditya Bandopadhyay and Ors., (2011) 8 SCC 497, the Supreme Court explained the term "fiduciary" and "fiduciary relationship" in the following words:
"39. The term "fiduciary" refers to a person having a duty to act for the benefit of another, showing good faith and candour, where such other person reposes trust and special confidence in the person owing or discharging the duty. The term "fiduciary relationship" is used to describe a situation or transaction where one person (beneficiary) places complete confidence in another person (fiduciary) in regard to his affairs, business or transaction(s). The term also refers to a person who holds a thing in trust for another (beneficiary). The fiduciary is expected to act in confidence and for the benefit and advantage of the beneficiary, and use good faith and fairness in dealing with the beneficiary or the things belonging to the beneficiary. If the beneficiary has entrusted anything to the fiduciary, to hold the thing in trust or to execute certain acts in regard to or with reference to the entrusted thing, the fiduciary has to act in confidence and is expected not to disclose the thing or information to any third party."CS(OS) No.1949/2011 Page 48 of 50
52. The scope and ambit of the expression "fiduciary" cannot, therefore, in my opinion, be narrowed down to the extent canvassed by Mr. Phoolka, either in law or in equity. Law does not mandate such an interpretation; equity does not countenance it. In equity, it would tantamount to the trustee not only betraying the trust reposed in him but also taking advantage of his own wrong. Surely, this could not have been the intentment of the legislature which specifically saved fiduciary relationships from being hit by the prohibition imposed on benami transactions by culling out an exception to such transactions in the form of Section 4(3)(b) of the Benami Transactions Act.
53. For the aforesaid reasons, I am not inclined to reject the plaint at this preliminary stage as being hit by the Benami Transactions Act. The result is that the application for rejection of the plaint must be rejected and is accordingly dismissed albeit with the caveat that the course of evidence must be left to determine the real nature of the relationship between the parties and the real import of the transactions emanating from such relationship.
CS(OS) No.1949/2011 Page 49 of 50 IA No.18753/2011
54. In view of the aforesaid, the application of the defendants for vacation of the ad interim injunction order granted by this Court, dated 12th August, 2011, being premised on identical grounds is also rejected, making the interim orders absolute during the pendency of the suit.
CS(OS) 1949/2011 List on 3rd September, 2012 for further proceedings.
REVA KHETRAPAL JUDGE August 7th , 2012 sk/km CS(OS) No.1949/2011 Page 50 of 50