Case Note & Summary
The Appellants, original Plaintiffs, filed Suit No. 187 of 1993 seeking specific performance of an agreement to sell dated 1st August 1985 in respect of a property at Nepean Sea Road, Mumbai. The Plaintiffs alleged that Defendant No. 2, Santosh Prakash Mehra, agreed to sell the property to them for Rs. 1,05,00,000 and that they paid Rs. 10,00,000 as earnest money and were put in possession. Subsequently, Defendant No. 2 transferred the property to Defendant Nos. 4 to 6 (Suniti Prints, Suniti Sunil Mehra, and Vivek Jagdish Mehra) through a deed of assignment dated 30th March 1988, which the Plaintiffs claimed was sham, without consideration, and benami. The Plaintiffs sought a declaration that the assignment was void and that they were entitled to specific performance. Defendant Nos. 4 to 6 filed Notice of Motion No. 2515 of 2016 seeking rejection of the plaint against them under Order VII Rule 11(a) CPC for want of cause of action. The Learned Single Judge allowed the motion, rejecting the plaint against them. The Plaintiffs appealed. The Division Bench held that the plaint, read as a whole, disclosed a cause of action against all defendants. The allegations of sham and benami transactions were sufficient to require a trial. The court distinguished between benami and sham transactions, noting that the Benami Transactions (Prohibition) Act, 1988 does not bar a suit based on a sham transaction. The court also held that the question of part performance under Section 53A of the Transfer of Property Act, 1882 is a matter of evidence. The impugned order was set aside, and the Notice of Motion was dismissed. The plaint was restored against Defendant Nos. 4 to 6.
Headnote
A) Civil Procedure - Rejection of Plaint - Order VII Rule 11(a) CPC - Cause of Action - The court considered whether the plaint disclosed a cause of action against Defendant Nos. 4 to 6. The Appellants/Plaintiffs alleged that the suit property was transferred by Defendant No. 2 to Defendant Nos. 4 to 6 through a sham transaction, and that Defendant Nos. 4 to 6 were benami holders. The Single Judge had rejected the plaint against them. The Division Bench held that the plaint, read as a whole, disclosed a cause of action against all defendants, including Defendant Nos. 4 to 6, as the allegations of sham and benami transactions were sufficient to require a trial. The court set aside the impugned order and restored the plaint against Defendant Nos. 4 to 6. (Paras 1-29) B) Property Law - Benami Transaction - Sham Transaction - Section 4 Benami Transactions (Prohibition) Act, 1988 - The court examined whether the transaction in favour of Defendant Nos. 4 to 6 was benami or sham. The Plaintiffs alleged that the transfer was without consideration and that Defendant Nos. 4 to 6 were mere name-lenders. The court noted that the Benami Transactions (Prohibition) Act, 1988 does not bar a suit based on a sham transaction, as a sham transaction is not a benami transaction. The court held that the plaint made out a case of sham transaction, which is not prohibited, and thus the plaint could not be rejected. (Paras 20-29) C) Property Law - Part Performance - Section 53A Transfer of Property Act, 1882 - The court considered whether the Plaintiffs could claim protection under Section 53A of the Transfer of Property Act, 1882. The Plaintiffs alleged that they were put in possession of the suit property in part performance of an agreement to sell. The court held that the question of part performance is a matter of evidence and cannot be decided at the stage of rejection of plaint. The plaint disclosed a claim under Section 53A, which required trial. (Paras 20-29)
Issue of Consideration
Whether the plaint discloses a cause of action against Defendant Nos. 4 to 6 so as to reject the plaint under Order VII Rule 11(a) of the Code of Civil Procedure, 1908.
Final Decision
The appeal is allowed. The Impugned Order dated 14.01.2019 is set aside. Notice of Motion No. 2515 of 2016 is dismissed. The plaint is restored against Defendant Nos. 4 to 6. No order as to costs.
Law Points
- Order VII Rule 11(a) CPC
- cause of action
- rejection of plaint
- benami transaction
- sham transaction
- part-performance
- Section 53A Transfer of Property Act
- 1882
- Section 4 Benami Transactions (Prohibition) Act
- 1988
