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TMI Blog2025 (1) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... rict of Chhattisgarh in the name of Sh. Onkar Singh Gond(FPA- PBPT-2590/RP/2023) who is his employee. Copies of relevant sale deeds were obtained by the I.O. Upon verification from the official CG Bhuiyan website, it was discovered that either the attached immovable properties were in the name of Sh. Onkar Singh Gond or they were transferred in the name of the person acting on behalf of Sh. Dwarika Gupta. The former appeared to be holding the properties benami on behalf of the latter who appeared to be the beneficial owner. 3. On the basis of the above information a summons was issued u/s 19(1) of the PBPT Act, 1988 to Sh. Onkar Singh Gond who was holding the legal title of the property in question and a statement was recorded on oath. It was revealed from the statement of Sh. Onkar Singh Gond that he belongs to a Scheduled Tribe and has been working as the manager in Narmada Phosphate Ltd., Hardi since 2006 and drew monthly salary of Rs. 13,500/-. The director of this company is Sh. Firoz Khan and the promoter is Sh. Dwarika Gupta. 4. With respect to immovable property standing in his name, Sh. Onkar Singh Gond, he stated: i. That he owns one ancestral property at Umaria, Madh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Sh. Onkar Singh. This is corroborated from the signature of the depositor in the instrument as the deposits have been made by person other that Sh. Onkar Singh which cast a doubt as Sh. Onkar Singh had no means to make huge transactions, thereby, indicating that Sh. Dwarika Prasad Gupta was using the said account for his personal benefit. 7. In view of the evidence placed on record by the I.O. and subsequent conclusions drawn, the IO had reasons to believe that the properties mentioned in the Table below were "benami properties" within the meaning of Section 2(8) of the PBPT Act, 1988. Sr. No. Khasra no. Village Tehsil District Area (in Hectare) 1. 807 Akalsara Jaijaipur JanjgirChampa 1.129 2. 816/1 Akalsara Jaijaipur JanjgirChampa 0.324 3. 816/2 Akalsara Jaijaipur JanjgirChampa 0.324 4. 820 Akalsara Jaijaipur JanjgirChampa 0.729 5. 821/2 Akalsara Jaijaipur JanjgirChampa 0.028 6. 821/3 Akalsara Jaijaipur JanjgirChampa 0.049 7. 821/5 Akalsara Jaijaipur JanjgirChampa 0.308 8. 821/6 Akalsara Jaijaipur JanjgirChampa 0.040 9. 821/7 Akalsara Jaijaipur JanjgirChampa 0.359 10. 821/9 Hardi Jaijaipur JanjgirChampa 0. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Gupta and the I.O., as well as oral arguments. The analysis of the financial profile of Sh. Onkar Singh, revealed that he is a person having very me ager income and was a lowly paid employee of Sh. Dwarika Gupta and it may safely be concluded that he did not have the financial capacity to purchase the properties in question and that the parcels of land as mentioned above were purchased in the name of Sh. Onkar Singh from the funds provided by Sh. Dwarika Gupta which is a duly admitted fact in the statements as well as the submissions made in response to the show cause notice u/s 24(1) of the Act, and that the purpose behind purchasing the properties in question in the name of Sh. Onkar Singh is to defeat the provisions of Chhattisgarh Land Revenue Code, 1959 which places restrictions on the purchase of land of a tribal person by a nontribal person and that the lands were later transferred from Sh. Onkar Singh to Sh. Divya deep Gupta, son of the Sh. Dwarika Gupta and that this is a clear cut violation of section 6 of the PBPT Act, 1988, and thus, void. 12. With respect to the properties mentioned at Sr. no. 1 to 3 in the table above, Sh. Dwarika Gupta claimed that he had provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficial use of Sh. Dwarika Gupta. In another agreement dated 02.05.2020 wherein it has been stated that he is purchasing the subject properties in his name from the funds provided by Sh. Dwarika Gupta, there is no signature by Sh. Onkar Singh on the said agreement. Moreover, it is seen from the record that the signatures of Sh. Onkar Singh on the said agreement are poles apart from his signatures on sale deed executed in respect of property at serial no 1. The Ld. AA concluded that such kinds of agreement are not permissible under provision of section 25 of the Indian Contract Act, 1872 and in the clear absence of supporting evidence regarding the authenticity of the agreements, the agreements become dubious and cannot be relied upon. 15. With respect to property sr. no. 4 to 10 mentioned in the table above, the Appellants submitted that the said properties did not belong to Sh. Onkar Singh at any point of time and in order to prove this claim, they provided copy of Form B1 "किश्तबंदीखतौनी" for the year 2021-22. The Ld. AA noticed that the copy submitted by the Appellants is digitally signed but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1988 due to which the present proceedings cannot be retrospectively applied to an earlier transaction. The Ld. AA observed that the retrospective application of the amended PBPT Act, 2016 has been decided by the Hon'ble Supreme Court in its decided in case of Union of India & Anr. v. M/s Ganapati Deal com Pvt Ltd. in SLP (C) 2784/2020vide its order dated 23.08.2022 and that the properties at serial no. 16 & 17 were acquired prior to 25.10.2016 (on 02.09.2015) , that is the date of coming into force of the amended PBPT Act, 2016 and that in the view of the Supreme court judgement, the PAO holding the above properties at serial no. 16 & 17 as benami properties cannot be sustained as alleged benami transaction have occurred before the amended PBPT Act of 2016 came into force on 25.10.2016 whose provisions have been held by the Hon'ble Supreme Court as not being applicable retrospectively. In consequence of his findings as above, the Ld. AA confirmed the attachment of the properties at sl. No. 1 to 15, holding the same to be benami properties and revoked the attachment made in respect of the properties at serial no. 16 & 17. Aggrieved by the said order of the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prehending not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include and that exhaustive meaning of "fiduciary capacity" and "includes"makes it evident that an employer is well within his rights under proprietorship concern to authorize his employee to act on behalf for specific purposes due to confidence, trust and good faith posed upon him. It is further clear from the aforesaid authority of the Hon'ble Apex Court that the meaning and context of "fiduciary capacity"and "includes" is well defined and there is no ambiguity at all due to which the principle of "Noscitur a Socii" is not applicable over section 2 (9)(A)(ii) of the PBPT Act, 1988. Further, if erroneous interpretation given by department is accepted, then it will render the entire section 2 (9)(A)(ii) otiose and partially defunct since the first part of section 2 (9)(A)(ii) will have no meaning or interpretation and that fiduciary relationship is not exhausted by a few well- known patterns of relationship. Any relationship in which one party enjoys the "active confidence" of another party who is to lean on him and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid vide cheque no. 002219 dated 14th January 2019 which got debited on 28th February, 2019. It is pertinent to note that the Sh. Dwarika Gupta is interested in getting a quarry lease over a large area in village but properties listed at serial number 1,2&3 were coming in the middle of the area purchased by Sh. Divya deep Gupta and without purchasing the same, it was legally impossible to make continuous and compact area available for quarry lease so as to undertake mining in a systematic and scientific manner. Another problem arising was that the said land belongs to schedule tribe due to which the Sh. Dwarika Gupta and Sh. Divya deep Gupta would not have been able to purchase the land directly due to the bar of section 165 (6) of the Chhattisgarh land Revenue Code for mining purpose. Further, the state government does not entertain any request for transfer of land from scheduled tribe to general Category for the purpose of mining under section 165 (6) of the Chhattisgarh land Revenue Code. 23. The properties listed at serial number 11 & 12 were purchased by Sh. Onkar Singh from the funds of the Sh. Dwarika Gupta and his firm since the said land were owned by scheduled tribe and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y capacity. If the said exclusion clause is limited to this part, it will cover all the transactions that fall under this relationship. This can be said so because a Beneficial Owner, in general, buys a property in the name of a trusted person only for example servant/driver/household help. Thus, if all such relationship between master servant, employer-employee, etc falls under the category of the fiduciary capacity, then the very purpose of the introduction of the PBPT Act, 1988 would be defeated which was to prohibit benami transactions. Therefore, considering only the first part would be a very narrow interpretation as to the general meaning of the word 'fiduciary'. Sh. Onkar Singh and Sh. Dwarika Gupta have taken this stand of a narrow interpretation of the statute and have ignored the entire provisions. 27. The second part reads that 'and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 (22 of 1996) and any other person as may be notified by the Central Government for this purpose'.The second part starts with the word 'and' and gives the list of per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the provisions concerning the Benami transaction. 30. Further, the Respondent submits, it is pertinent to mention that the PBPT Act,1988 does not explain the term "fiduciary capacity" in any manner. Hence, the meaning and scope of the term "fiduciary capacity" are attempted to be drawn from external sources of interpretation of a statute. Herein, the rule of the Latin maxim Noscitur a Sociis to be applied. The applicability of this rule of interpretation arises when a word or phrase in question cannot be interpreted in isolation. It requires that the words that surround it shall also be understood in order to better grasp the meaning of the word whose meaning is warranted. The respondent has cited Maharashtra University of Health and Others Vs Satchikitsa Prasarak Mandal& Others, [Arising out of SLP(C) No. 15458 of 2007]and C.B.S.E. V. Aditya Bandhopadhyay [(2011) 8 SCC 497] in this context. 31. It is submitted that in the present case, the Benamidar Sh. Onkar Singh has stated that he shared a relationship of trust with the Beneficial Owner, Sh. Dwarika Gupta. It is contended that a mere presence of trust between two persons cannot be said to constitute a 'fiduciary capac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to facilitate the re-transfer of the properties to the son of the Sh. Dwarika Gupta for using a parcel of land for getting a mining lease. It is crystal clear that the Sh. Onkar Singh was used for the sole purpose of purchasing benami properties, as he is a man of meagre means and it was not possible for him to purchase such expensive pieces of land. Moreover, the statements of the Sh. Onkar Singh clearly suggest that he was just being used as a filer to facilitate the benami properties in question. 33. It is also contended that the object behind incorporating section 165(6) under the Chhattisgarh Land Revenue Code is to provide social justice to the members of the backward tribe and save them from the harsh clutches of the socially and economically well- off persons. Further, section 170A of the Code provides for setting aside transfers made in violation of section 165(6) of the Code, meaning thereby that the sale which is violative of section 165(6) of the Code is absolutely barred under the law. In support of this contention, the Respondent has cited Pooran Singh V. Dhaniram (since dead) Through LRs, [2015 SCC Online Chh 1672], decided by the High Court of Chhattisgarh which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionship between the two did not exist as, firstly, no trust was placed in the Benamidar by the Beneficial Owner. Secondly, he noted that there was no question in the present case of the Benamidar, Sh. Onkar Singh gaining any "superiority" or "influence" over Sh. Gupta or assuming control and responsibility over him, or rendering advice to him. What was in existence was an unequal relationship between the two, with the sole intention of defeating the legislative intent of protecting tribal lands from acquisition by non-tribals and business interests. 36. The submissions made from the two sides on the above issue of "fiduciary capacity" before us were also on similar lines. The same have been mentioned as above in detail in paragraphs 18-22 and26-31 (supra) and are not repeated here in the interest of brevity. 37. We have given careful consideration to the rival submissions of parties. Section 2(9)(A)(ii) of the Prohibition of Benami Property Transactions Act, 1988 (as amended by the Act 2016) reads as below: "(9) "benami transaction" means,- (A) a transaction or an arrangement- (a) where a property is transferred to, or is held by, a person, and the consideration for such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation" have been used under section 55(2) of the Transfer of Property Act, section 51 of the C.P.C. and Section 16(1)(a), Indian Contract Act, but the same have not been defined under those Acts either. However, one common feature that clearly emerges from the existing judicial precedent as well as all authoritative texts which have also been cited by both sides in their respective submissions in the present case, is that fiduciary relationship is a relationship based on confidence, trust and good faith. 40. Having considered the matter in the above light, we are of the view that no fiduciary relationship could be said to have existed in the present case between the alleged Benamidar and the Beneficial Owner. On the contrary, the facts on record clearly reveal that such trust and confidence was singularly missing. Sh. Onkar Singh, when asked, was unaware about the person to whom land was sold and said that he will be able to tell after seeing the documents. However, he was not in possession of the relevant documents either, and said that the same are in the office of Unnat Beej Utpad, Hardi which was under the control of Sh. Dwarika Prasad Gupta, the Beneficial Owner. It emerges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and compact area available for quarry lease so as to undertake mining in systematic and scientific manner. Another problem arising was that Khasra No. 807, 816/1 and 816/2 belonged to Schedule Tribe due to which undersigned and Mr. Divya Deep Gupta would not have been able to purchase the land directly due to bar of Section 165(6) of Chhattisgarh Land Revenue Code for mining purpose. Further, State Government does not entertain any on of Renan request for transfer of land from Schedule Tribe to General Category for the purpose of Mining under Section 165(6) of Chhattisgarh Land Revenue Code. A copy of Map of the Area and FORM P-II of Mr. Diya deep Gupta is attached herewith as Annexure B. 9. Under the aforesaid precarious situation, undersigned had authorised Mr. Onkar Singh to act as an agent on his behalf for purchase of Khasra No. 807, 816/1 and 816/2 since he belonged to Schedule Tribe so that Quarry Lease will be easily granted to him and the funds were provided by him for the purchase of land. It is submitted that undersigned will be giving consent to undersigned as and when Quarry Lease will be granted to him by the State Government. It is apposite to note that undersig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but those owners have given their consent due to which those lands were not purchased. Thus, the aforesaid transaction falls under the exemption category of Section 2(9)(A)(ii) of Benami Transaction under The Prohibition of Benami Property Transactions Act, 1988. A copy of Quarry Lease Deed, Authorization Letter and Consent Letters are attached herewith as Annexure D." With regard to the above contentions of the Appellants which have been reiterated in detail before us, we are in agreement with the submission of the Ld. Counsel for the Respondent that the PBPT Act, 1988 (as amended by the Act of 2016) frowns upon such transactions. Section 53 of the said Act provides that where any person enters into a Benami Transactions in order to defeat the provisions of any law, the Beneficial Owner the Benamidar and any other person who abets or induces any person to enter into the benami transaction shall be guilty of the offence of benami transaction which is liable to be punished with rigorous imprisonment for a term of 1 to 7 years and also a fine of up to 25 percent of the fair market value of the property. In fact, the said Section 53 is the most stringent provision of the PBPT Act. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose of the present case. In that case, the petitioner was an agent and power-of-attorney holder of the respondent. Accordingly, the Hon'ble Supreme Court observed as follows: "Thus the consideration for the purchase as well as the improvements of the property were met with the funds of the respondent for whom the petitioner was acting as an agent and Power-of-Attorney. He, thereby, obviously had acted in a fiduciary capacity as agent of the respondent." [Emphasis added] 46. Thus, the existence of a fiduciary relationship in the capacity of a duly appointed agent, was a pre-existing fact in that case. The substantial questions of law before the Hon'ble Court were whether the title to the suit-property vests in the petitioner or his principal (respondent), and whether she is entitled to the declaration and recovery of possession sought in that behalf. It was held that though the sale-certificate ostensibly stands in his name, he obviously obtained it while acting as an agent and Power-of-Attorney of the respondent. It was obtained without her knowledge and consent, playing fraud on her. In the facts and circumstances of the case, it was held: "The question of benami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld on facts that such trust and confidence did not exist between the parties. Moreover, it is noteworthy that in the preceding part of the very same paragraph, the Hon'ble Supreme Court has observed as follows: "200. A fiduciary must be entrusted with a degree of discretion (power) and must have freedom to act without resorting to prior approval of the beneficiary. The greater the independent authority to be exercised by the fiduciary, the greater the scope of fiduciary duty. The person so entrusted with power is required to determine how to exercise that power." 49. In the present case, we have already held that the nominal owner Sh. Onkar Singh, had not been entrusted with any degree of discretion or freedom or even trust and confidence. His only role was to lend his name, without even being fully aware of the transactions entered into in his name. He had no say in the matter, leave alone "determining how to exercise power". 50. In Can bank Financial Services Ld. v. Custodian and Others (2004) 8 Supreme Court Cases 355 (03.09.2004),the legal position was reaffirmed that a transaction which falls within the purview of Section 88 of the Indian Trusts Act does not fall wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No. 3 (Andhra Bank) and Respondent No. 4 (Andhra Bank Financial Services Ltd.), at the request of Respondent No. 1 (Sh. Hiten P. Dalal), applied for CANCIGO units of face value of Rs. 11 crores and Rs. 22 crores respectively. The payment of application money for purchase of said CANCIGO units was made out of the monies lying in the bank account of Respondent No. 2. As already mentioned, disclosure had been made by the Respondents No. 3 and 4 in their applications for allotment of CANCIGO that the same were filed on behalf of the Respondent No. 2.Had such a disclosure been made in the present case, the sale transactions would never have materialized as transfer of tribal lands to non-tribals was expressly prohibited by a statute and the whole intention of the appellant was to conceal the fact that the property was actually being purchased by Shri Gupta and not Shri Gond. Furthermore, the Hon'ble Supreme Court categorically noted in that case that it does not appear also to be a case where the parties entered into a transaction with a view to contravene any law. 53. Having considered the facts of that case we find that the same are distinguishable from those of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on account of existence of a fiduciary relationship between the alleged Benamidar and the alleged Beneficial Owner was upheld. However, while doing so, it was also categorically held as follows: "20. ............ . The fiduciary capacity cannot be used as an exception in all the circumstances which may include transfer of property for or is held for illegal purpose. It cannot be even when there is a concluded contract which pass on the title to others then keeping the property by the person on whose favour title gets transferred would not keep it in "fiduciary capacity" rather with the transfer of the title, the relationship would also change and those cases would not fall in the sweep of the exception of fiduciary capacity. It would be simpliciter in those cases where the money has been kept with other person on trust for safe custody." 56. In the present case not only was there a transfer of title to the property in the name of the Benamidar, Sh. Onkar Singh but also the same was for the unlawful purpose of circumventing the law regarding purchase of tribal land by non-tribals. On both counts, therefore, the exception under Section 2(9)(A)(ii) is not available to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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