Mithilesh Kumari & Anr. v. Prem Behari Khare
K.N. SAIKIA, J. This appeal by special leave is from the judg
ment and order dated 27 .3.1978 of the High .Court of judicature at
Allahabad (Lucknow Bench), in second appeal No. 130 of 1975,
F dismissing the appeal and upholding the decree of the plaintiff-res
pondent's suit.
' The plaintiff-respondent Prem Behari Khare instituted suit
No. 42 of 1971 in the court of Civil Judge, Mohanlal Gunj, Lucknow
praying for the reliefs, inter alia, that he be declared to be the sole and
G real owner of the suit house, and that the defendant-appellant be
permanently restrained from transferring the suit house. The learned
Civil Judge, Lucknow, by his judgment dated 13.3.1974 decreed the
suit declaring the plaintiff to be the sole and real owner of the suit
house and permanently restraining the defendant from transferring the
suit house to any other person. On first appeal by the defendant-
H appellant the learned Additional District Judge, Lucknow by his judg-
'
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MITHILESH KUMAR! v. P.B. KHARE [SAIKIA, J.] 627
ment dated 23.12.1974 dismissed the appeal agreeing with the findings
of the trial court that it was the plaintiff-respondent who paid the
consideration and purchased the suit house benami in the name of the
defendant-.appellant who, therefore, had no right to create any equit
able mortgage or to transfer the suit house. The defendant-appellant's
second appeal thereafter was also dismissed by the High Court of
Judicature at Allahabad by the impugned judgment dated 27.3. 1978.
·. Hence this appeal by special leave.
Mr. A.B. Rohtagi learned counsel for the appellant submits,
inter alia, that the learned courts below erred in holding that the suit
house was not gifted by the plaintiff to the defendant but was held
benami in her name; and that even if it was so held benami, the
subsequent legislation, namely, the .Benami Transactions (Prohibi
tion) Act 1988, has put a complete bar to the pfaintiff's suit against the
defendant in respect of the suit house.
Mr. Yogeshwar PraS!Kl learned counsel for the respondent
refutes submitting that the"issues on gift and benami .have been con- D
eluded by concurrent findings of fact of the learned courts below; and
that the plaintiffs right to the be.nami suit house having already be
come final, it will not be affected by the subsequent Act.
The first question, therefore, is whether or not to interfere with
the concurrent findings of fact of the learned courts below. It has been E
said in a series of decisions that ordinarily this court in an appeal will
not interfere with a finding of fact which is not shown to be perverse or
based on no evidence, (Babu v. Dy. Director, A.LR. 1982 S.C. 756),
but will interfere if material circumstances are ignored by the High
Court. Prasad v. Govindaswamy, A.LR. 1982 S:C. 84. In Dhanjibhai
v. State of Gujarat, A.LR. 1985 S.C. 603 it was observed that where a F
finding of fact has been rendered by a learned Single Judge of the High
Court as a. court of first instance and thereafter affirmed in appeal by
an Appellate Bench of that High Court, this Court should be reluctant
to interfere with the finding unless there is very strong reason to do so.
There is"i10 reason why this should not apply to c~ses where the first.
appellate court was the district court. It was noted in Ganga Bishan v. G
Jay Narayan, A.LR. 1986 S.C. 441 that ordinarily this Court, under
Article 136 of the Constitption, would be averse to interfere with con
current findings of fact recorded by the High Court and the Trial
Court. But where there are material irregularities affecting the said
findings or where the court feels that justice has failed and the findings
are likely to result in unduly excessive hardship this court could not H
628 SUPREME COURT REPORTS 11989] 1 S.C.R.
A decline to interfere merely on the ground that findings in question are
findings on fact. So also in Uday Chand Dutt v. Saibal Sen, A.LR.
1988 S.C. 367 it was said that in an appeal· by special leave under
Article 136 of the Constitution of India where there are concurrent
findings of the courts below this court is not called upon to reconsider
the entire evidence in detail to ascertain whether the findings are
justified. In Ram Singh v. Ajay Chawla, A.LR. 1988 S.C. 514 where
the concurrent finding was that the appellants were in unauthorised
+-
+
occupation of premises of which the respondents were the owners this
court did not interfere with the concurrent findings of fact.
Mr. Rohtagi lays emphasis on the facts, namely, that the plaintiff
C Prem Behari Khare's wife having died in 1955 leaving behind two sons i
r
\
\
aged about 2 and 3 years respectively, he faced great difficulties in
managing the household, looking after his sons and carrying on his -\' ~
duties as employee of the Allahabad Bank; that under these circum
stances he agreed to take in the defendant Mithilesh Kumari whose
relation with her husband Ram Swarup was then estranged; that the
D relation between the plaintiff and the defendant come to be such that
she bore two children to him; that there were efforts to legalise their
de facto living as man and wife by obtaining defendant's divorce from
her husband, and in fact there was a decree for judicial separation in
1958; that the plaintiff had full confidence in, and affection towards
the defendant; and that in the court he could give no reason why he
E purchased the house in the name of the defendant. Under those
circumstances, counsel submits, the purchase of the suit house in the
name of the defendant was made for Rs.8,000 out of which Rs.2,000
contributed by the defendant, and the learned courts below ought,
therefore, to hdve. held the transaction of purchase in the name of
defendant to have been a genuine gift out of love and affection and not \;
· F a benami purchase in her name. · ( _,,..
Perusing the judgment of the Trial Court we find that whether
the transaction was a benami or it was a genuine gift by the plaintiff to
the· defendant were main issues on which parties led evidence. The
averment that the defendant contributed Rs.2,000 towards purchase
~ G price was disbelieved by both the courts below. The plaintiff-res
pondent proved from the statement of his Savings Bank account uf -!
Allahabad Bank, Exts. 6, 7 and 8, that he withdrew Rs.8,250 on
8.11.1962 and stated in witness box that he purchased the suit house in
the name of the defendant by sale deed executed on 8.11.1962 which
was registered on 9.11.1962. The plaintiff-respondent has since been
H staying in the suit house. As the two were living as man and wife the
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MITHILESH KUMAR! v. P.B. KHARE [SAIKIA, J.] 629
custody of the sale deed was not very material. We thus find that the
concurrent findings are based on reasonable appreciation of evidence
on record and, therefore, can in no way be said to be perverse or
unreasonable. Counsel criticises the observation of the High Court
that the relation between the two was of a rather objectionable nature.
We do not think that this observation was unwarranted or it had in any
way prejudiced the defendant's case. The High Court has analysed the
facts and correctly applied the tests to determine whether the trans
action wa~ benami or not discussing the case law. We do not find any
justification in the appeal under Article 136 of the Constitution of
India to interfere with the concurrent findings of fact.
The next question is whether despite the decree in favour of the
plaintiff-respondent his suit or action will be affected by the subse-
·'1. quent legislation, namely, the Benami Transactions (Prohibition) Act,
1988 and its predecessor Ordinance. In other words, whether the
effectuation of the decree has been barred. For this it is relevant to
note that the impugned High Court judgment was dated 27.3.1978.
The first appellate court's judgment was dated 23.12.1974, the trial
court judgment dated 13.3.1974 and the suit was filed in 1971. The
special leave to appeal was granted by this Court on 15.11.1978. The
Benami Transactions (Prohibition of the Right to Recover Property)
Ordinance, 1988, hereinafter referred· to as 'the Ordinance', was
promulgated on May 19, 1988 to come into force at once. The Benami
Transactions (Prohibition) Act, 1988 (Act No. 45 of 1988), hereinafter
referred to.as 'the Act', received the asset of the President of India on
September 5, 1988. The provisions of Sections 3, 5 and 8 of the Act
came into force at once on that date and the remaining provisions were
to be deemed to have come into force on 19th day of May 1988. It is an
~. Act to prohibit benami transactions and the right to recover property
--r 1 held benami and matters connected therewith or incidental thereto.
· Mr. Rohtagi submits that provisions of the Act cover past
benami transactions also and that to hold so it would be permissible for
this Court to refer to the 57th Report of the Law Commission oflndia
wherein it was suggested that the legislation should not be applied to
past transactions but the Parliament did not accept that suggestion, .G
_ ~ and made the law applicable to past transactions also.
Learned counsel for the respondent submits that the provisions
of the Act are prospective and not retrospective, and as such would not
affect the respondent's established right to the bena.mi property. He
has not controverted that this Court can refer to La'W Commission's H
Report.
To decide the controversy the relevant provisions of the Act may
be referred to. As defined in section 2(a) of the Act "Benami Trans
action" means any transaction in which property is transferred to one
person for a consideration paid or provided by another person. As
defined in section 2(c) of the Act "property" means property of any
kind, whether movable or immovable; tangible or intangible and in
cludes any right or interest in such property. There can, therefore, be
no doubt that the transaction by which the suit house was transferred
to the defendant-appellant for Rs.8,000 paid or provided by the
plaintiff-respondent would be a benami transaction if this law is appli
cable to it. There is also no doubt that the suit house being a tangible
immovable would be included within this definition of 'property'.
Section 3 of the Act prohibits benami transactions by providing:
"(1) No person shall enter into any benami transaction.
(2) Nothing in sub-section (1) shall apply to the purchase
of property by any person in the name of his wife or
unmarried daughter and it shall be presumed, unless
the contrary is proved that the said property had been
purchased for the benefit of the wife or the unmarried
daughter.
(3) 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.
( 4) Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), an offence under ~
this section shall be non-cognisable and bailable."
The appellant having not been wife or unmarried daughter of the
respondent the exception in (2) will not be applicable.
Section 4 prohibits the right to recover property held benami by
G providing:
"(l) 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.
L
MITHILESH KUMAR! v. P.B. KHARE [SAIKIA. J.] 631
(2) No defence based on any right in respect of any pro- A
perty 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."
Having upheld the finding that the suit house has been held
benami by the respondent in the name of the appellant, the question is
whether to this transaction the Act shall be applicable. The Act has
not been made retrospective by any specific provision. Is it permissible
to refer to the Law Commission's Report to ascertain the legislative
intent behind the provision? We are of the view that where a particular C
enactment or amendment is the result of recommendation of the Law
Commission of India, it may be permissible to refer to the relevant
report as in this case. What importance can be given to it will depend
on the facts and circumstances of each case.
In Santa Singh v. State of Punjab, [1977) 1 S.C.R. 229 Fazal Ali, D
J. in order to answer the question whether the non-compliance with
the provisions of section 235(2) of the Criminal Procedure Code, 1973
vitiated the sentence passed by the court considered it necessary to
trace the historical background and social setting under which section
235(2) was inserted for the first time in the 1973 Code and referred to
the research done by the Law Commission which made several recom- E
rnendations in its 48th Report for revolutionary changes in the provi
sion. The Statement of Objects and Reasons were also referred to in
that context. In the instance case we find that way back in 1972 the
Government of India considered it necessary to request the Law
Commission of India to examine the problem of benami held property
with a view to determining whether benami transactions should be F
prohibited. The Law Commission accordingly submitted its 57th
Report on benami transactions on 7.8.1973 after studying benami
system as operating in India and in England. It also examined implica
tions of the provisions of th~ Indian Trust Act, 1882 and other statu
tory modifications of the Benami Law as contained in the Code of Civil
Procedure, the Transfer of Property Act, the Indian Penal Code and G
the Income-tax Act. It also suggested in its Report the following draft
of proposed legislation:
6.33 Recommendation: In the light of the above discussion, we
recommend the enactment of a separate law containing the following
legislative provisions: H
632
"(1) No suit 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 be
instituted in any court by or on behalf of a person
claiming to be the real owner of such property.
(2) In any suit, no defence based on any right in respect -t
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 court by or i ~·.
on behalf of a person claiming to be the real owner of
such property.
(3) Nothing in this section shall apply:
(a) whether the person in whose name the property is
held is a manager of, or a co-parcener in, a Hindu
undivided family, and the property is held for the
benefit of the co-parceners 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."
On 19th May 1988, the President of India promulgated the
Benami Transactions (Prohibition of the Right to Recover Property)
Ordinance, 1988 (No. 2 of 1988) "to prohibit the right to recover
property held benami and for matters connected therewith and inci-
F dental thereto" based on the suggestion of the Law Commission of
India made as far back as in 1973. With this Ordinance the judicial
acceptance of benami transactions was being removed with a view to
help people to keep property they were holding for others. It remedied
the age old doctrine of benami and made a benamidar the real owner
in law, of course with few exceptions.
)•f
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The Ordinance was referred by the Government on July 22, 1988 '-).. -
to the Law Commission of India requesting the latter to take up the
question of benami transactions for detail examination and to give its
considered views as early as possible so that a Bill to replace the
Ordinance could be drafted on the basis of its recommendations and
H got passed before the close of the Monsoon Session of the Parliament.
..
MITHILESH KUMAR! v. P.B. KHARE [SAIKIA, J.] 633
--{ The 130th Report of the Law Commission was submitted to the
Government on August 14, 1988. The Benami Transactions (Prohibi
tion) Bill, 1988, drafted after getting the report, was introduced in the
Rajya Sabha on 31st August, 1988 and the Bill was passed. The Law
Commission devoted several pages to justify retrospective legislation
and its view was that the legislation replacing the Ordinance should be
-j- retroactive iit operation and that no locus penitentia need he given to
the person who had entered iit the benami transactions in the past. It
reported at para 3.18 as follows:
· "3.18. Therefore, viewed from either angle, the Law Com
mission is of the firm opinion that the legislation replacing
the ordinance should be retroactive iit operation and that C
no locus penitentia need be given to the persons who had
entered into benami transactions in the past. They had
notice of one and a half decades to set their house in order.
No more iitdulgence is called for."
However, the court has to interpret the language used in the Act, D
and when the language is clear and unambiguous it must be given
effect to. Law Commission's Reports may be referred to as external
aid to construction of the provisions. It may be noted that the Act is a
· ?I. piece of prohibitory legislation and it prohibits henami transactions
subject to stated exceptions and makes such transactions punishable
and also prohibits the right to defences against recovery of benami E
transactions as defined in section 2( a) of the A.ct. The Parliament has
jurisdiction to pass a declaratory legislation. As a result of the provi
sions of the Act all properties held benami at the moment of the Act
coming into force may be affected irrespective of their beginning,
~ duration and origin. This will be so even if the legislation is not
--r ) retrospective but only retroactive. F
The learned counsel for the respondent rightly submits that the
Act contains no specific provision makin~ its operation retrospective.
·The Law Commission itself observed that democratic culture abhors
ex post facto legislatioii:and that it. was ·ne2;essary,io curb unlawful
nefarious uses of property. G
We read in Maxwell that it is a fundamental rule of English Law
that no statute shall be construed to have-retrospective operation tin
less such a construction appears very clearly at the time of the Act, or
· arises by necessary and distinct implic~tion. A retrospective ope.ration
is, therefore, not to be given to a statute so as to impair existing right H
or obligation, otherwise than as regards ma.tier of procedure .unless
that effect cannot be avoided without doing Violence to the languauge
of the enactment. Before applying a statute retrospectively the Court
has to be satisfied that the statute is in fact retrospective. The pre
sumption against retrospective operation is strong in cases in which the
statute, if operated retrospectively, would prejudicially affect vested
rights or the illegality of the past transactions, or impair contracts, or
impose new duty or attach new disability in respect of past transactions
or consideration already passed. However, a statute is not properly
called a retrospective statute because a part of the requisites for its
action is drawn from a time antecedent to its passing. We must look at
the general scope and purview of the statute and at the remedy sought
to be applied, and consider what was the former State of Law and what
the legislation contemplated. Every ·law that takes away or impaiis
rights vested agreeably to existing laws is retrospective, and is gener
ally unjust and may be oppressive. But laws made justli and for the
benefit of individuals and the community as a whole, as in this case,
may relate to a time antecedent to their commencement. The pre
sumption against retrospectivity may in such cases be rebutted by
necessary implications from the language employed in the statute. It
cannot be said to be an invariable rule that a statute could not be
retrospective unless so expressed in the very tenns of the. section which
had to be construed. The question is whether on a proper construction
the legislature may be said to have so expressed its intention. Craise on
Statute Law, 7th Ed. writes that the general rule of law that statutes
are not operated retrospectively may be departed from (a) by express
enactment and (b) by necessary implication from the language emp
loyed, and the author goes on to say:
"If jt is a necessary implication from the language emp
loyed that the legislature intended a particular section to
have a retrospective operation, the courts will give it such
an operation. "Baron Parke," said Lord Hatherley in
Pardo v. Bingham, did not consider it an invariable rule
that a statute could not be retrospective unless so expressed
in the very terms of the section which had to be construed,
and said that the question in each case was whether the
legislature had sufficiently expressed that intention. In
fact, we must look to the general scope and purview of the
statute, and at the remedy sought to be applied, and
consider what was the former state of the law, what it was
that the legislature contemplated." But a statute is not to
be read retrospectively except of necessity .... In Main v.
MITHILESH KUMAR! v. P.B. KHARE [SAIKIA, J.] 635
Stark, Lord Selbome said: "Their lordships, of course do A
not say that there might not be something in the context of
an Act of Parliament, or to be collected from its language,
which might give towards prima facie prospective a larger
operation, but they ought not to receive a larger operation
unless you find some reason for giving it .... In all cases it
is desirable to ascertain the intention of the legislature." B
'L . f
I
He went on: "Words not requiring a retrospective opera
tion, so" as to affect an existing statute preudicially, ought
not to be so construed", but in Renold v. Att. Genl. for
Novo Scotia it was held that this rule did not extend to
protect from the effect of a repeal a privilege which did not
amount to an accrued right." (pp. 392-393)
As defined in Section 2(a) of the Act "benami transaction"
means any transaction in which property is transferred to one person
for a _consideration paid or provided by any other person." A trans
action must, therefore, be benami ii-respective of its date or duration.
Section 3, subject to the exceptions, states th<1t no person shall enter
into any benami transaction. This section obviously cannot have
. ~J retrospective operation. However, section 4 clearly provides that no
r"- 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 real owner of such property. This naturally relates to past trans
actions as well. The expression "any property-,_held benami" is not
· limited to any particular time, date or duration. Once the property is
found to have been held benami, no suit, claim or action to enforce .
-, ~ any right in respect thereof shall lie. Similarly, sub-section (2) of
· section 4 nullifies the defences based on any right iµ respect of any
property held benami whether against the person in whose name the
property is held or against any other person in_ any suit, claim or action
by or on behalf of a person claiming to be the real owner of such
property. It means that once a property is found to have been held
benami, the real owner is bereft of any defence against the person in
whose name the property is held or any other person. In other words in
-.)... its sweep section 4 envisages past benami transactions also within its
retroactivity. In this sense the Act is both a penal and a disqualifying
statute. In case of a qualifying or disqualifying statute it may be neces
sarily retroactive. For example when a Law of Representation declares
that all who hav~ attained 18 years shall be eligible to vote, those who
attained 18 yeat'S in the past would be as much eligible as those who · · H
636 SUPREME COURT REPORTS 11989] I S.C.R.
A attained that age at the moment of the law coming into force. When an 'r
Act is declaratory in nature .ihe presumption against retrospectivity is
not applicable. Acts of this kind only declare. A statute in effect dee-
laring the benami transactions to be unenforceable belongs to this
type. The presumption against taking away vested right will not apply
in this case inasmuch as under law it is the benamidar in whose name
B the property stands, and law only enabled the real owner to recover
'* the property from him which right has now been ceased by the Act. In
one sense there was a right to recover or resist in the real owner
against the benamidar. Ubi jus ibi remedium. Where there is a right,
-1 · there is a remedy. Where the remedy is barred, the right is rendered
unenforceable. In this sense it is a disabling statute. All the real
c owners are equally affected by the disability provision irrespective of
the time of creation of the right. A right is a legally protected interest.
The real owner's right was hitherto protected and the Act has resulted ,.f'-
in removal of that protection.
When the law nullifies the defences available to the real owner in
D recovering the benami property from the benamidar the law must
apply irrespective of the time of the benami transactions. The expres-
sion "shall lie" in section 4(1) and "shall be allowed" in section 4(2)
are prospective and shall apply to present (future stages) and.future
suits, claims or actions only. This leads us to the question whether k there was a present suit between the plaintiff-respondent and the
defendant-appellant on the date of the law coming into force. We have ii
E noted the dates of filing the suit and judgments of the courts below. On
the date of the section 4 of the Act coming into force, that is, 19th May ,..
1988 this appeal was pending and, of course, is still pending. Can the
suit itself be said to be pending?
Lachmeshwar v. Keshwar Lal, A.LR. 1941 F.C. 5 is an authority
~-r-F for holding that the hearing of appeal under the procedural law of
India is· in the nature of re-hearing and therefore in moulding the relief
to be granted in a case on appeal, the appellate court is entitled to take
into account even facts and events which have come into existence
after the decree appealed against. Consequently, the appellate court is
competent to take into account legislative changes since the decision
G under appeal Was given and its powers are not confined only to see
whether the lower court's decision was correct according to the law as -J.~
it stood at the time when its decision was given. Once the decree of the ' .
High Court has been appealed against, the matter became sub judice
again and thereafter this court had seisin of the whole case, though for
certain purposes e.g., execution, the decree was regarded as final and
H the courts below retained jurisdiction in that regard. This was followed
..
'
· MITHILESH KUMAR! v. P.B. KHARE (SAIKIA, J.) 637
in Shyabuddinsab v. The Gadag-Betgeri Municipal Borough, (1955] 1
S.C.!'. 1268 where after the judgment of the High Court and after
gn of special leave by this court the legislation .was passed, and it
WdS applied by this Court. Their lordships, referring to The King v.
The General Commissioner of Income Tax, [1916] 2 K.B. 249 and
Mukharjee Official Receiver v. Ramratan Kaur, [1935] L.R. 63 I.A. 47
rejected the contention that unless there are express words in the
amending statute to the.effect that the amendment shall apply to pend
ing proceedings, it cannot affect the proceedings. In Dayawati v. In~
derjit, (1966] 3 S.C.R. 275 it has been held that the word 'suit' includes
an appeal from· the judgineiit in the suit. The only difference between a
suit· and an appeal is that an appeal only reviews and corrects and
proceedings in a cause already constituted but does not create the C
cause. In Mohan/al Jain v. His Highness Maharaja Shri Man Singh,
[1962] 1 S.C.R. 702 it was observed that "A person is "sued" not only
when the plaint is filed against him; but is "stied" also when the suit
remained pending against him. The word "sued" covers the entire
proceedingjn an actio!I." In AmerjitKaur v. Pritam.Singh, (1975] 1
S.C.R. 605 it has been held· that an appeal is a rehearing and in
moulding relief to be granted in a case on appeal, the appellate court is
entitled to take into account even facts and events which have come
into existence after the passing of the decree appealed against.".
For the respondent it is submitted that right of the parties to a
: suit would be determined on the basis of rights available to them on
the date. of filing (!f the suit. Reliance is· placed on Nand Kishore
Marwtih v. Samundri Devi, (1987] 4 S.C.C. 382 .. That however.was a
case of eviction where the rights of the parties on the date of suit were
material unlike in this case where subsequent legislation has nullified
/
. th': defences of benami holders. That case is, therefore, distin-
1 gmshable. . . . , . . . . , . F 1;
., . . . . -- ' -· - ..
. Counsel for the respondent lastly submits that ·nobody should be
all~wed to suffer for fault of the court. As the maxim ·goes, actus
curiae neininem gravabit. Nobody should sufferfor an act of the court.·
However, the delay in disposal of an appeal cannotbe termed an
action of the court. The consequence is that the plaintiff-respondent's
suit or action cannot be. decreed under the.law; and hence the decree
'i' passed by .thejowei: courts is annihiliated and, the suit dismiss~d. · ·
In the result, this appeal is allowed· in the manner. indicated
above. Under the peculiar facts and drciimstances of the case, we
make no order as to costs.· -·- · ·- · - ·
N.P.V. Appeal allowed. H