TMI Blog1994 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... rred the question to a Bench which in turn the Division Bench has referred to the Full Bench. Shri Thottathil B. Radhakrishnan, advocate, has raised the contention that Balakrishnan J., has not in fact adopted a contrary view in C.T. Moltanan v. C. Yesoda [1990] 185 ITR 31 ; [1989] 1 KLT 867 in conflict with the ratio involved in Ouseph Chacko v. Raman Nair [1989] 180 ITR 511 ; [1989] 1 KLT 767. Bethatas it may,we will now examine the question whether sham transactions are included within the purview of the Benami Act at least partially. For the sake of convenience, we will set out the facts in C. R. P. No. 1446 of 1989 in which Varghese Kalliath J., has passed the reference order. That revision arose out of a suit filed for a declaration that title of the suit property is that of the plaintiff in spite of a document executed by the-plaintiff in favour of his wife purporting to transfer the property to the transferee. According to the plaintiff, it was a sham transaction and the property ever remained with him. Hence, the suit for declaration of title. But the wife contended that it was a genuine transaction. She resisted the suit, inter alia, on the ground that the suit is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 (SC), Venkatarama Ayyar J., has stated that the first category of transactions is " usually " termed " benami ", while the second category is " occasionally " used as a benami transaction. His Lordship added that it is " perhaps not accurately so used ". In Bhim Singh v. Kan Singh, AIR 1980 SC 727, Venkataramiah J. (as he then was), straightaway called the first category benami, but has chosen to describe the second category as " loosely " termed benami. By the Ordinance, a prohibition was imposed against enforcement of any right " in respect of any property held benami " and no defence based on any such right was permitted to be raised by or on behalf of a person claiming to be the real owner of such property. The Ordinance had only one operative provision and that was section 2, the hub of which is mentioned above. Section 3 of the Ordinance declared that nothing in it shall affect section 53 of the Transfer of Property Act. The only remaining provision, section 4 consisted of a repeal provision by which section 82 of the Indian Trusts Act, 1882, section 66 of the Code of Civil Procedure, 1908, and section 281A of the Income-tax Act, 1961, were repealed. It is contextually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G. Wariyar, senior counsel, led the main arguments. Shri Rajasekharan Nair supplemented the same. Shri Thottathil B. Radhakrishnan has addressed the main arguments on the opposite side which were supplemented by Shri V. Sivaswamy, advocate. The main points stressed by counsel who argued in favour of the expansive scope of the Benami Act are the following : (1) The definition clause took care to caution that the contours of the definition are pliable in accordance with the context by employing the words in the definition portion " unless the context otherwise requires ". (2) In spite of using the expression " benami transaction " for definition purposes, the Legislature has chosen not to use that expression in sections 4 and 5. Instead, the Legislature has cautiously adopted a different expression " property held benami ", though the Legislature could have conveniently employed the words " property held under a benami transaction ", if it intended to have the first category or the tripartite transaction alone to be covered by those sections. Change of expression in a different context must be treated as a legislative practice of emphasising a change in the application, contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for an interpretation of the words used in the statute. We are not concerned with any presumed intention of the Legislature ; our task is to get at the intention as expressed in the statute ". The Supreme Court has again stated in B. N. Muttoo v. Dr. T. K. Nandi, AIR 1979 SC 460 ; [1979] 1 SCC 361 that "the court has to determine the intention as expressed by the words used. If the words of statutes are themselves precise and unambiguous then no more can be necessary than to expound those words in their ordinary and natural sense. The words themselves alone do in such a case best declare the intention of the law-giver." A Constitution Bench of the Supreme Court in Punjab Land Development and Reclamation Corpn. Ltd. v. Presiding Officer, Labour Court [1990] 77 FJR 17 ; [1990] 3 SCC 682 has reiterated the principle and further quoted with approval the observations of Tindal C. J., in Sussex Peerage's case (8 ER 1034 (HL)). Shri T. R. G. Wariyar has taken us through the relevant portions from the voluminous Report of the Law Commission (130th Report) and also the Statement of Objects and Reasons for the Bill (which ultimately resulted in the passing of the Benami Act in replacemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended both transactions to be involved in the statute ? If the argument that the definition clause is not to be followed in regard to sections 4 and 5 of the Benami Act, gains acceptance, then practically the definition clause has utility only for just one section in the Benami Act, i.e., section 3. Is it a legislative practice in delineating a definition clause with all its intents and purposes solely for using the same in regard to just one section in the statute ? Had that been the idea, the draftsman would only have given the definition in section 3 itself to the effect that benami transaction mentioned in the section would mean the first category. This is how normally enactments are framed up if the intention was that. Instead of adopting such a convenient method of draftsmanship, the Legislature included the definition in a separate section and in a specific clause. Again, the definition provision contains the introductory paragraph like this : " In this Act, (a) benami transactions means . . . .". If Parliament had an idea of confining the definition to section 3 alone, why should it have said the definition is intended for " this Act ". That apart, the idea of using the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a meaning different from that contained in the interpretation clause ; all definitions given in an interpretation clause are, therefore, normally enacted subject to the usual qualification " unless there is anything repug nant in the subject or context ", or " unless the context otherwise requires ". Even in the absence of an express qualification to that effect such a qualification is always implied. (emphasis supplied). If section 5 of the Benami Act has application to both categories of benami transactions, the consequence is that the property covered by the latter is also liable to be acquired without compensation or payment of any amount. The provision is enacted for the purpose of enabling the authority concerned to acquire the property held benami. If the property held under bipartite benami transaction is liable to be acquired without compensation, why has the Legislature not declared it as opposed to public policy and prohibited the same prospectively ? We fail to comprehend any reason whatsoever as to why Parliament subjected only the tripartite transaction to prospective prohibition as well as penal consequences and saved the bipartite transaction therefrom and subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Benami Act. Bhaskaran Nambiar J. has endeavoured to explain it in Ouseph Chacko v. Raman Nair [1989] 180 ITR 511 ; [1989] 1 KLT 767. The learned judge took the view that " in the context and setting of section 4, the word held has to be understood as ' possessed or occupied ', and if the possession or occupation is not benami, section 4 has no application ". No particular reason can be attributed as to why Parliament did not use the expression " held under a benami transaction ", but restricted to " property held benami ". It can at best be attributed to frugality in draftsmanship of legislative exercises. Having defined " benami transaction ", it might be unnecessary to repeat " property held under benami transaction ". We bear in mind that the reference there is to the subject " property " and not to the transaction. The character of the subject is denoted by the words " held benami ". In a sham transaction, there is no " holding " of property benami. A person holds a property benami if he has at least ostensible title. In Handique (K. K.) v. Member, Board of Agrl. I. T., Assam, AIR 1966 SC 1191 and Ha?! Ram v. Babu Gokul Prasad, AIR 1991 SC 427, the expression " hold " i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to comprehend the principles involved in section 82 of the Trusts Act. It is analogous to the first category--tripartite--benami transaction since in both there is an operative transfer of property for consideration. The prominent feature of the second category benami transaction is that there is neither any transfer nor any passing of consideration. It is a sham transaction which is only a camouflage. The document is a facade behind which nothing took place in reality. But section 81 of the Trusts Act contains transfer of the property concerned as sine qua non for its application. The said section is extracted below. 81. Where it does not appear that transferor intended to dispose of beneficial interest.--Where the owner of property transfers or bequeaths it and it cannot be inferred, consistently with the attendant circumstances, that he intended to dispose of the beneficial interest therein, the transferee or legatee must hold such property for the benefit of the owner or his legal representative. By no stretch of imagination can it be said that section 81 of the Trusts Act was intended to refer to the second category of benami transaction. Even otherwise, mere expansion o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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