TMI Blog2012 (5) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... :- HC held that if a part of the consideration paid for the property in dispute had been provided by the appellant in whose name the property was purchased, the transaction could not be said to be a benami transaction under section 4 of Benami Transactions (Prohibition) Act, 1988. Scope of the term fiduciary capacity - Benami Transactions (Prohibition) Act, 1988 - held that:- It is manifest that while the expression fiduciary capacity may not be capable of a precise definition, it implies a relationship that is analogous to the relationship between a trustee and the beneficiaries of the trust. The expression is in fact wider in its import for it extends to all such situations as place the parties in positions that are founded on confidence and trust on the one part and good faith on the other. - 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 deduced in a given case. - CIVIL APPEAL N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly purchased on 13th November, 1986 by debit to the saving account of respondent no.1 and her husband and paid to the Corporation on the 14th November, 1986. A sale deed was on payment of the sale consideration, executed in favour of the appellant on 26th June, 1987. The plaintiffs-respondents further case was that Sri C.F. Martins-plaintiff no.1 executed a registered will on 16th August, 1989 whereby he bequeathed his entire estate including the suit schedule property equally to all his children. An affidavit setting out the circumstances in which the suit schedule property was transferred in favour of the appellant was also sworn by the father of the parties on 15th November, 1989. A dispute relating to the suit schedule property having arisen between the parties including Sri C.F. Martins, their father, the latter filed a criminal complaint in December 1989 followed by OS No.3119 of 1990 in the Court of VI Additional City Civil Judge, Bangalore, praying for a declaration to the effect that the plaintiffs were co-owners in the schedule property to the extent of their contribution and praying for an injunction restraining the defendant-appellant herein from interfering with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Post Office the withdrawals having been made in the year 1982 whereas the sales consideration was deposited five years later in 1987. The High Court further held that the deposition of plaintiff no.1 Sri C.F. Martins to the effect that his children had contributed equally towards the sale consideration had remained unassailed in cross-examination. The contention urged on behalf of the defendant-appellant herein that the suit was hit by The Benami Transactions (Prohibition) Act, 1988, was also repelled by the High Court. 2. Appearing for the appellants Mr. Anoop G. Chaudhary strenuously argued that the findings recorded by the High Court were contrary to the weight of evidence on record hence legally unsustainable. Mr. Chaudhary took pains to refer to us the depositions of the witnesses and the documents on record in an attempt to persuade us to reverse the findings of fact recorded by the High Court. Mr. Naveen R. Nath, learned counsel appearing for the respondents, on the other hand, argued that the High Court being the last Court of facts, in the absence of any perversity in the approach adopted by the High Court causing miscarriage of justice, there was no room for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ager had deposed that plaintiff no.1, Sri C.F. Martins, used to get cheques in pound sterling from the Crown Agents, London and the bank used to purchase the cheques convert the same into rupees and credit the amount to the account every month. It was also stated that although the defendant-appellant was a joint holder of the account, he had never operated the said account. The High Court upon a careful reappraisal of the evidence concluded as under: "From the aforesaid evidence on record what emerges is Rs. 48,636.00 is the consideration amount paid to the Corporation for purchase of the schedule property. The same amount was paid by way of a demand draft. The said demand draft was obtained from the Savings bank Account no. 339 of the second plaintiff on 13.11.1986. These facts are not in dispute. Now it is also not in dispute a sum of Rs. 35,636.00 was paid to the second plaintiff by the first plaintiff from his Savings Bank Account which amount was utilized by the second plaintiff to purchase the demand draft towards sale consideration after making good the balance amount. The defendant contends in one breath that he sent a cheque for Rs. 48,636.00 from Bombay where he was wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a benami transaction . The High Court was of the view that since the appellant had raised the contention that the entire sale consideration had been provided by him, he was according to the High Court estopped from contending that the transaction was a benami transaction hit by the provisions of Section 4 of Benami Transactions (Prohibition) Act, 1988 . 9. Mr. Chaudhary, learned counsel for the appellant submitted that the High Court was in error in holding that the Benami Transactions (Prohibition) Act, 1988 was not applicable. The transaction in question argued the learned counsel was benami to the extent the title to the property was transferred in the name of the appellant while consideration for such transfer was provided by the plaintiffs. He submitted that Section 3 prohibited any benami transaction while Section 4 prohibited recovery of property held benami from a person in whose name the same is held. He contended that the suit filed by the respondents fell within the mischief of Section 4 and was, therefore, liable to be dismissed. 10. Mr. Nath, learned counsel for the respondents, on the other hand, submitted that not only on the principle of estoppel which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property was transferred in the name of the appellant had been executed before the enactment of above legislation yet the suit out of which this appeal arises had been filed after the year 1988. The prohibition contained in Section 4 would, therefore, apply to such a suit, subject to the satisfaction of other conditions stipulated therein. In other words unless the conditions contained in Section 4(1) and (2) are held to be inapplicable by reason of anything contained in sub-section (3) thereof the suit filed by plaintiffs-respondents herein would fall within the mischief of Section 4. 14. The critical question then is whether sub-section (3) of Section 4 saves a transaction like the one with which we are concerned. Sub-section (3) to Section 4 extracted above is in two distinct parts. The first part comprises clause (a) to Section 4(3) which deals with acquisitions by and in the name of a coparcener in a Hindu undivided family for the benefit of such coparceners in the family. There is no dispute that the said provision has no application in the instant case nor was any reliance placed upon the same by learned counsel for the plaintiffs-respondents. What was invoked by Mr. Nav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrectly applicable to legal relationships between parties, such as guardian and ward, administrator and heirs, and other similar relationships, and 'confidential relation' which includes the legal relationships, and also every other relationship wherein confidence is rightly reposed and is exercised. Generally, the term 'fiduciary' applies to any person who occupies a position of peculiar confidence towards another. It refers to integrity and fidelity. It contemplates fair dealing and good faith, rather than legal obligation, as the basis of the transaction. The term includes those informal relations which exist whenever one party trusts and relies upon another, a well as technical fiduciary relations." 18. Black's Law Dictionary (7th Edn. Page 640) defines "fiduciary relationship" thus: "Fiduciary relationship- A relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship. Fiduciary relationships- such as trustee-beneficiary, guardian-ward, agent-principal, and attorney-client - require the highest duty of care. Fiduciary relationship usually arise in one of four situations: (1) when one person places ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary" 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." 22. It is manifest that while the expression "fiduciary capacity" may not be capable of a precise definition, it implies a relationship that is analogous to the relationship betwee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r legal representatives of the deceased-tenant neither gave up their tenancy rights in the property nor did they give up the benefits that would flow to them as legal heirs of the deceased tenant consequent upon the decision of the Corporation to sell the property to the occupants. That conclusion gets strengthened by the fact that the parties had made contributions towards the sale consideration paid for the acquisition of the suit property which they would not have done if the intention was to concede the property in favour of the appellant. Superadded to the above is the fact that the parties were closely related to each other which too lends considerable support to the case of the plaintiffs that the defendant-appellant held the tenancy rights and the ostensible title to the suit property in a fiduciary capacity vis- -vis his siblings who had by reason of their contribution and the contribution made by their father continued to evince interest in the property and its ownership. Reposing confidence and faith in the appellant was in the facts and circumstances of the case not unusual or unnatural especially when possession over the suit property continued to be enjoyed by the pla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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