1995 (1) TMI 67 - SUPREME COURT

Whether section 4(1) of the Benami Transactions (Prohibition) Act, 1988 can be applied to a suit, claim or action to enforce any right in property held benami against a person in whose name such property is held or any other person, if such proceeding is initiated by or on behalf of a person claiming to be the real owner thereof, prior to the coming into force of section 4(1) of the Act?

Held that:- The Division Bench erred in taking the view that section 4(1) of the Act could be pressed in service in connection with suits filed prior to the coming into operation of that section. Similarly, the view that under section 4(2) in all suits filed by persons in whose names properties are held no defence can be allowed at any future stage of the proceedings that the properties are held benami, cannot be sustained. As discussed earlier, section 4(2) will have a limited operation even in cases of pending suits after section 4(2) came into force if such defences are not already allowed earlier. It must, therefore, be held, with respect, that the decision of this court in Mithilesh Kumari's case [1989 (2) TMI 111 - SUPREME Court] does not lay down the correct law so far as the applicability of section 4(1) and section 4(2) to the extent hereinabove indicated, to pending proceedings when these sections came into force, is concerned. Accordingly, the question for consideration is answered in the negative. The registry will now place all these matters before an appropriate Division Bench for disposing of them on the merits in the light of the answer given by us.