Gagandeep Kaur v. Rattandeep Singh Grover

6. Per contra, the submissions of Mr. Rajat Aneja and Ms. Mohna M. Lal, learned counsel appearing on behalf of the plaintiffs are as follows- 6.[1] At the outset, it is submitted that the plaint must be read holistically and in its entirety, rather than in a fragmented or isolated manner, which could distort the context and true intent of the pleadings. It is a well-settled principle of law that an application under Order VII Rule 11 CPC is confined strictly to the contents of the plaint and cannot delve into disputed questions of facts. Any alleged inconsistencies or contradictions within the plaint, are matters to be adjudicated during trial and cannot form the basis for rejection at the threshold. At this preliminary stage, all averments in the plaint are required to be presumed as true. 6.[2] It is submitted that the plaintiffs have categorically pleaded in the plaint that late Sh. Chanchal Singh, father of the parties, was the sole contributor and operator of a chit fund business including entities such as Gursant Trading and Chit Fund Pvt. Ltd. and Sahib Chits (Delhi) Pvt. Ltd, which generated income which was used to purchase various properties. The properties were purchased in the names of defendant No.1 (his son) and late Smt. Rajinder Kaur (his wife), in a fiduciary capacity and not as absolute owners, solely for the purposes of accounting and to reduce income tax liability, while the beneficial interest always remained with late Sh. Chanchal Singh and, by extension, the family as a whole. 6.[3] It is further submitted that neither defendants had any independent source of income at the time when these properties were acquired as defendant No.1 was merely aged around 17-21 year, nor did they contribute to the chit fund or to the consideration for any of the properties. The plaintiffs have specifically asserted that the entire business activity, including the chit fund operation, was conducted and managed solely by late Sh. Chanchal Singh, and the financial flows used for acquisition of properties originated from this business. This has been pleaded not merely in general terms, but with reference to specific properties, years, and transactions. 6.[4] Moreover, it is submitted that the plaint clearly avers that the scheduled properties were purchased from joint family funds. The properties remained in joint possession, and taxes were consistently paid from joint family funds. The family-run companies were closely held private limited entities, managed exclusively by family members, with no involvement of third-party outsiders. Under settled principles of Hindu law, where the Karta or co-parceners acquire property with the aid and assistance of joint family assets or efforts, the source of funds becomes the determining factor, and such matters can only be adjudicated upon evidence at trial. The burden to prove self-acquisition lies on the person asserting it, and such a claim must demonstrate that the property was acquired without any aid from joint family resources. It is, therefore, an admitted and pleaded fact that the family functioned as a joint family, and all such issues are triable and cannot be dismissed at the threshold. 6.[5] Further it is submitted that the defendants have failed to provide critical documents such as income tax returns, bank statements, account books, and documents related to the source of funds despite notice dated 19.03.2022 under Order VIII Rule 12 CPC. This non-disclosure warrants that the claims in the plaint be tested at trial and should not be dismissed at the preliminary stage. 6.[6] In addition, it is submitted that that the Benami Act, 2016 (amended), does not bar the present claim, as the properties were held in fiduciary capacity or in trust for the family. The case falls within the exception under Section 4(3)(b) of the Benami Act, 1988 as late Sh. Chanchal Singh stood in a fiduciary and trustee-like relationship to the defendants and purchased the properties using known sources of income derived from his chit fund enterprise, for the benefit of all family members, not just for the nameholders. 6.[7] Furthermore, it is also submitted that the Benami Act, 2016 (amended), is not retrospective in its operation. The plaintiffs claim pertains to transactions that occurred prior to the enforcement of the Benami Act, 1988 and in some cases, even before the 2016 amendment. In this regard, reliance is placed on the judgment of the Supreme Court in P. Rajagopal v. State of Tamil Nadu[9], where it was categorically held that the provisions of the Benami Act, 1988 are not retrospective and cannot be applied to transactions which took place prior to the coming into force of the Act. Therefore, any plea raised by the defendants invoking the bar of the Benami Act must be rejected in light of the plaintiffs case, which is based on transactions that are alleged to have occurred well before the Act or its amendments came into force. Accordingly, the present suit, which asserts the real ownership of properties purchased in the name of family members by late Sh. Chanchal Singh using his own funds, is not barred under the Benami Act. 6.[8] Coming on to the issue of Court fees it is submitted that the plaintiffs have clearly averred in paragraph 14 of the plaint that they are in constructive possession of the suit properties, and accordingly, a fixed Court fee has been paid as per Schedule II, Article 17(VI) of the Court Fees Act,

1870. It is well-settled in law that, where, plaintiffs are in constructive possession, only a fixed Court fee is payable, and the plaint cannot be rejected under Order VII Rule 11 CPC on the ground of definciency of Court Fee. Ad valorem Court fee becomes applicable only when there is a specific plea of “ouster,” which is not the case here. 6.[9] Conclusively, it is emphasized that the grounds raised in the present application cannot be adjudicated at the preliminary stage of deciding an application under Order VII Rule 11 of the CPC, as they involve disputed questions of fact that require trial and evidence. In support of these submissions, plaintiffs placed reliance on the decisions in Ramesh B. Desai v. Bipin Vadilal Mehta10, Kasthuri and Others vs. Baskaran and Another11, G. Subramani vs. V. Rajasekaran and Another12, Chandra vs. Reddappa Reddy13, Salem Advocate Bar Association Tamil Nadu vs. Union of India14, Metson Education and Development Association (P) Ltd vs. The Church of South India Trust Association15, Pawan Kumar vs. Babu Lal16, P. Rajagopal vs. State of Tamil Nadu17, Sarabjit Singh Anand vs. Manjit Singh Anand & Others18, Popat and Kotecha Property vs. State

2008 SCC OnLine Del 27 Bank of India Staff Association19, Smt. Prakash Wati vs. Dayawanti & Others20, Jagdish Prasad vs. Joti Pershad21, Geeta Tandon vs. Dr. Sunil Gomber & Anothre22, and Manoj Arora vs. Mamta Arora23. Analysis

7. I have heard learned counsels appearing for the parties and perused the records.

8. Before proceeding to the analysis of the facts of the case, it is important to briefly discuss the scope of Order VII Rule 11 of CPC. Although, the principles governing the scope of an application of this nature have been a subject matter of various pronouncements, it is imperative to note that at this stage, while deciding an application under Order VII Rule 11 CPC, the Court is required to examine only the averments made in the plaint. The scope of such an application is limited solely to determine whether, on the basis of the plaint as it stands, and on a comprehensive reading thereof a cause of action is disclosed or if the suit is barred by any law. No reference can be made to the written statement or any defence raised, as the assessment must be confined strictly to the pleadings of the plaintiffs.

9. This Court in Meena Vohra v. Master Hosts (P) Ltd.24, had an occasion to discuss the underlying objective of order VII Rule 11 CPC and held: “11. The real object of Order VII Rule 11 CPC is to keep out irresponsible lawsuits from the Courts and it provides for an

2025 SCC OnLine Del 1758 independent remedy for the defendant no.1/applicant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The Supreme Court in Sopan Sukhdeo Sable v. Asstt. Charity Commr.9, held as under: “17... The real object of Order 7 Rule 11 of the Code is to keep out of courts irresponsible law suits. Therefore, Order 10 of the Code is a tool in the hands of the courts by resorting to which and by a searching examination of the party, in case the court is prima facie of the view that the suit is an abuse of the process of the court, in the sense that it is a bogus and irresponsible litigation, the jurisdiction under Order 7 Rule 11 of the Code can be exercised. *** 20….Rule 11 of Order 7 lays down an independent remedy made available to the defendant no.1/applicant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The law ostensibly does not contemplate at any stage when the objections can be raised, and also does not say in express terms about the filing of a written statement. Instead, the word “shall” is used, clearly implying thereby that it casts a duty on the court to perform its obligations in rejecting the plaint when the same is hit by any of the infirmities provided in the four clauses of Rule 11, even without intervention of the defendant no.1/applicant. In any event, rejection of the plaint under Rule 11 does not preclude the plaintiff/non-applicants from presenting a fresh plaint in terms of Rule 13.””

10. Furthermore, in Hardesh Ores (P) Ltd. v. Hede & Co.25 the Supreme Court has held that it is not permissible to cull out a sentence or a passage and to read it in isolation. It is the substance and not merely the form, which has to be looked into. The plaint has to be construed as it stands, without addition or subtraction of words. If the allegations in the plaint prima facie show a cause of action, the Court cannot embark upon an enquiry whether the allegations are true in fact. Therefore, a roving inquiry akin to appreciation of evidence is not contemplated at the stage of Order VII Rule 11 of the CPC.

11. In the case of Amiteshwar Singh v. Kamal Nain26, this Court observed that the plaintiff had sufficiently pleaded that the suit property was held by the father of the parties in his capacity as karta, for the benefit of the co-parceners. These pleadings were found as adequate to sustain the civil suit. Consequently it was held therein that the plaint could not be rejected summarily under the provisions of Order VII Rule 11 of the CPC. It was thus held that at that stage, the Court was not empowered to assess the veracity or truthfulness of the allegations in the plaint; such matters are to be tested during trial.

12. In Pawan Kumar, the Supreme Court was dealing with a case where the trial court had allowed an application under Order VII Rule 11 of the CPC, and the High Court had affirmed that decision. The matter reached the Supreme Court following the rejection of the plaint on the ground that the suit was barred under Section 4 of the Benami Act, 1988. In that case, the trial Court had held that the suit was barred because the plaintiff had admitted in the plaint that he had purchased the property in the name of his father using his own income or borrowed funds. The High Court concurred, observing that Section 4 of the Benami Act, 1998 prohibited any suit, claim, or action to enforce a right in respect of property held benami, against the person in whose name the property is held. As there were no averments in the plaint suggesting that the property was held by the father (defendant NO. 1) for the joint benefit or as part of joint ownership, the High Court found that the suit was clearly barred under Section 4.

13. However, the Supreme Court in the aforesaid judgment, upon examining the 2004 scheme of the Benami Act and relying on the principle laid down in Marcel Martins27, found that the defendant’s plea was entirely misplaced. In paragraph 13 of the judgment, the Court held as under:

14. It is thus evident that Clause (d) of Rule 11 of Order VII of the CPC applies only to cases where the statements made by the plaintiff in the plaint, without any doubt or dispute, clearly show that the suit is barred by any law in force. If the question of applicability of any legal bar is itself a subject matter of contest between the parties, it could only be resolved after affording the parties the opportunity to lead evidence and appreciation thereof. Interpretative Scope of Unamended Section 4 of the Benami Transactions (Prohibition) Act, 1988 at the Stage of Consideration Under Order VII Rule 11 CPC

15. In the present case, the father of the plaintiffs and defendant No. 1 passed away on 02.01.2008. The amendment to Section 4 of the Benami Act, 1988 came into effect on 01.11.2016. It is therefore understood that sub-section (3) of Section 4, as it stood prior to the amendment, would be applicable to the facts of the present case. This is further supported by the plaintiffs’ pleadings, which indicate that some of the properties were purchased prior to 1988, i.e., before the enforcement of the Benami Act itself, while others were acquired after its enactment. Notably, none of the properties involved in the civil suit were purchased after 01.11.2016. It is thus evident that the provisions of the Benami Act,1988 do not apply to the present set of facts as the amendment does not operate restrospectively.

16. Support for the aforesaid position can be drawn from the decision in Rajgopal Reddy, where the Supreme Court, while interpreting the provisions of the Benami Act, 1988, held that benami transactions were a legally recognized mode of holding immovable property prior to the enactment of the Act. These transactions were commonly practiced, and upon proof of relevant facts, courts would grant relief in such suits. The Parliament, acting on the recommendations of the Law Commission, enacted the Benami Act, 1988 to prohibit such transactions. A benami transaction typically involves the purchase of property in the name of another person who does not pay the consideration but merely lends his name, while the real purchaser the one who provides the consideration remains the actual and beneficial owner. In order to prohibit such arrangements and bar the enforcement of rights over benami property, the Benami Act, 1988 was enacted.

17. However, under Section 4(3) of the Benami Act, 1988, certain exceptions were carved out. Since the pre-amendment provisions of Section 4 (prior to the 2016 amendment) are central to the present controversy, the unamended version of Section 4 is reproduced below in its entirety:

18. Based on the aforesaid submissions, defendant No. 1 contends that the suit is barred by the Benami Act, 1988. In contrast, the plaintiff maintains that the suit falls within the exceptions outlined in Section 4(3)(b) of the Act, which covers, for instance, a case wherein a husband purchases property in the name of his wife for the benefit of the family. The plaintiff further asserts that late Sh. Chanchal Singh, in his fiduciary role, acquired the properties using income from his chit fund business for the collective benefit of all family members. Thus, the claims qua such properties were not banned by the unamended Section 4 of the Benami Act of 1988.

19. In order to understand the development and application of law regarding the benami transactions, it could be divided in the following three time zones: i. The first stage pertains to the period prior to the enactment of the Benami Transactions (Prohibition) Act, 1988. As noted above, benami transactions were a legally recognized mode of holding immovable property during this period. The Supreme Court, in the case of Rajgopal Reddy, affirmed this position and held that the provisions of the 1988 Act do not have retrospective application. Therefore, transactions that took place before the enactment of the Act were governed by the prevailing legal position of that time, wherein a suit qua property held by one in the name of ancestor was not prohibited. In Controller of Estate Duty, Lucknow v. Aloke Mitra28, the Court further held that where a property was purchased by a husband in the name of his wife, and the wife had no independent source of income, the presumption was that the husband was the real owner of the property. ii. The second phase spans from the enactment of the Benami Act, 1988 till the 2016 amendment to the same Act. During this period from 1988 to 2016, though benami transactions were prohibited by law, however, Section 3(2) of the Benami Act, as it stood prior to amendment of 2016, provided an exception inter-alia for purchase of property by the husband in the name of his wife. Further, prior to its omission in the year 2016, exceptions were provided in Section 4(3)(a) and (b) of the Benami Act, i.e., purchase of property by an HUF and purchase of property by a person standing in fiduciary capacity. Thus, if a property was purchased by the husband in the name of the wife, it was presumed that it was for the benefit of the wife. However, the husband could disprove such presumption.

iii. The third time zone commences from 2016 onwards. In 2016, the Benami Act was further amended extensively by way of the Benami Transactions (Prohibition) Amendment Act, 2016. Section 3(2) of the Benami Act was deleted. However, under the definition of prohibited benami transactions in Section 2(9) of the Benami Act as amended in 2016, various exceptions have been provided. Such exceptions as provided in Section 2(9) of the Benami Act includes purchase of property by an individual in the name of spouse or in the name of any child and the payment of consideration for such property has been provided or paid out of the known sources of such individual; property held by a karta or member of HUF provided the property has been held for the benefit of other members in the family and consideration for such property has been provided or paid out of the known sources of the HUF; persons standing in fiduciary capacity for the benefit of another person towards whom he stands in such capacity and includes a trustee, executor, partner, director of a company, etc.

20. As noted hereinabove, in light of the respective dates of acquisition of the immovable properties forming part of the suit property, the present case is governed by two stages: the period prior to the enactment of the Benami Transactions (Prohibition) Act, 1988, and the second stage, i.e., from 1988 until the Amendment Act of 2016 came into force. Thus, it can be observed that the transactions pertain to a time frame during which the exceptions to the prohibition of benami acquisitions were in force. While the plaintiffs claim that the suit properties fall within such exceptions and are therefore not prohibited under the Benami Act, 1988. Thus, the suit is barred by law.

21. As already discussed above, in the case of Pawan Kumar, the exercise of power under Order VII Rule 11 of the CPC in the context of the Benami Act, 1988 has been considered by the Supreme Court. It was held that the question as to whether a matter falls within the purview of Section 4(3) of the Act is an aspect that must be adjudicated upon the strength of the evidence on record. A similar view has been expressed by this Court in the case of Neeru Dhir v. Kamal Kishore Dhir29. Paragraph 12 of the said judgment reads as under:

22. The same Division Bench in Sukruti Dugal v. Jahnavi Dugal30, has held that at the stage of deciding an application under Order VII Rule 11 of the CPC, the Court has to assume that all averments made in the plaint are true and the entire plaint must be read as a whole to determine whether it discloses any cause of action. The opinion of the Court that the plaintiff may

2020 SCC OnLine Del 241 not ultimately succeed in the suit, cannot be the basis for rejecting the plaint. Relevant observations are set out as under:

23. In view of the aforesaid legal position, the plea that the suit is barred under Section 4 of the Benami Act, 1988 cannot be adjudicated at the stage of an application under Order VII Rule 11 of the CPC. The factual matrix of the present case must be examined after affording the parties the opportunity to lead evidence or the question of applicability of the legal bar or the exceptions envisaged in the Benami Act, 1988 is a triable issue and can not be adjudicated in a summary manner. The plaint clearly contains assertions that the properties in question were not purchased exclusively for the benefit of the person in whose name they stand, but for the benefit of the entire family, including the plaintiffs. Factual Matrix of the Instant Case.

24. At this juncture, it is pertinent to refer to the specific pleadings in the plaint, which clearly state that the suit property was purchased exclusively from the known funds of late Sh. Chanchal Singh and was intended for the benefit of the entire family. Repeated assertions to this effect have been made in the plaint, specifically in paragraph numbers 2, 2(a) to 2(h), 4 to 9, and 11:

g. Plot No.2, Meera Kooi. Nilothi Extension (Farm House). Chander Vihar, Delhi, admeasuring 1000 square yards and A-201, Vikas Tower, Vikaspuri. Delhi: The said properties were purchased by late Sh. Chanchal Singh in the name of defendant No.1, out of his known sources of income. The said properties was purchased not for the benefit of the defendant No.1 only but for the benefit of entire family including the Plaintiff. The exact details and status of the properties is not known to the Plaintiff since the defendant No.1 had refused to share it with the Plaintiff. h. Shop No. 10 and 12. 2nd floor. TDI Mall. Vishal Enclave. New Delhi: The said Property was purchased by late Sh. Chanchal Singh in the name of the defendant No.2, out his known sources of income. The said properties was purchased not for the benefit of the defendant No.2 only but for the benefit of entire family including the Plaintiff. The exact details and status of the properties is not known to the Plaintiff since the defendant No. 2 had refused to share it with the Plaintiff.

9. That it is further pertinent to mention here that late Sh. Chanchal Singh was a man having a fme sense of business and late Sh. Chanchal Singh had earned handsomely from the businesses he ran. Though the defendant No.1 was inducted as one of the directors in the Companies ran by late Sh. Chanchal Singh but the entire business was operated himself by late Sh. Chanchal Singh. The defendant No.1 only assisted late Sh. Chanchal Singh in his businesses. The reason for appointing the defendant No.1 as director in the Companies run by late Sh. Chanchal Singh was only to create more accounted income and to reduce burden of tax. Therefore, the income which though were shown in the name of the defendant No.1 belonged to late Sh. Chanchal Singh. It is pertinent to mention here that if the books of accounts and bank statements of late Sh. Chanchal Singh, defendant No.1 and 2 be called the trail of money routing in the bank accounts of the defendant No.1 and 2 can be traced easily, which will ultimately establish that the funds if any had came from the account of late Sh. Chanchal Singh only.

10. That from the above it is clear that late Sh. Chanchal Singh was a defacto owner of the Suit Properties in as much as the entire sale consideration was paid out of the known sources of late Sh. Chanchal Singh. Further, at the time when the substantial properties were purchased by late Sh. Chanchal Singh (Punjabi Bagh Property, Nilothi Property, Fatehpuri Property etc.) the defendant No.I and 2 had no independent source of income of their own and were dependent upon late Sh. Chanchal Singh only. late Sh. Chanchal Singh had purchased the Suit Properties not only for the benefit of the de-jure owner but for the benefit of the entire family. Therefore, no person either the defendant No.I or 2 can claim to be the exclusive owner of the Suit Properties. Further, the Plaintiff being the coowner of the Suit Properties therefore have constructive possession of the Suit Properties. The Possession of the defendant No.I and 2 is the possession for and on behalf of all the co-owners including the Plaintiff.”

25. It is the plaintiffs’ case that the properties purchased by the deceased father of the plaintiffs and defendant No. 1 in the name of his wife were intended for the benefit of the entire joint family. Regarding the properties purchased in the name of defendant No. 1, the plaintiffs contend that defendant No. 1 had no independent source of income, and that late Chanchal Singh utilized income derived from chit fund companies to finance these purchases. It is also the case of the plainitiffs that the properties acquired in the name of RatanDeep Singh were also meant for the benefit of the entire family. These issues involve mixed questions of law and fact, which cannot be conclusively decided at the preliminary stage without allowing the parties to lead evidence. The following averments in the plaint must therefore be examined in detail.

26. Additionally, the plaintiffs have alleged that the defendants have wilfully withheld material documents. A legal notice dated 19.03.2022 was issued under Order XII Rule 8 of the CPC, calling upon defendant No. 1 to produce relevant documents. According to the plaintiffs, the response received was vague and evasive. It is further submitted that the income tax return for the year 1997–1998 in the name of defendant No. 1 reflects “Chanchal (HUF)”, which prima facie supports the plaintiffs' contention that the family was undivided and that an HUF existed in the name of the deceased father. Thus, the contentions qua the existance of HUF and utilisation of HUF funds also remain open till evidence is led and detrrmination of the same is carried out. The decisions relied upon by the defendants are distinguishable on facts or were rendered after evidence had been adduced.

27. In light of the above facts and legal principles, the issue of whether the properties sought to be partitioned were benami in nature and whether the consideration was paid by late Chanchal Singh requires full adjudication after the parties are allowed to lead evidence. Resolution of other ancillary issues will depend on this pivotal question. The Court, therefore, finds no ground to reject the suit under Order VII Rule 11 of the CPC.

28. Moreover, it is a settled principle of law that there cannot be any partial rejection of the plaint under Order VII Rule 11 of the CPC. Either the plaint has to be rejected as a whole or there can be no rejection at all. In this regard reference may be made to the judgment of the Supreme Court in Madhav Prasad Aggarwal v. Axis Bank Limited31 and Roop Lal Sathi v. Nachhattar Singh Gill32, which has been followed in Dr. Ramesh Chander Munjal v. Dr. Suraj Munjal33.

29. The above proposition of law is also reiterated by the Supreme Court in its recent decision in Central Bank of India v. Prabha Jain34, which held as follows: “23.Even if we would have been persuaded to take the view that the third relief is barred by Section 17(3) of the SARFAESI Act, still the plaint must survive because there cannot be a partial rejection of the plaint under Order 7 Rule 11CPC. Hence, even if one relief survives, the plaint cannot be rejected under Order 7 Rule 11CPC. In the case on hand, the first and second reliefs as prayed for are clearly not barred by Section 34 of the SARFAESI Act and are within the civil court's jurisdiction. Hence, the plaint cannot be rejected under Order 7 Rule 11CPC.

24. If the civil court is of the view that one relief (say relief A) is not barred by law but is of the view that relief B is barred by law, the civil court must not make any observations to the effect that relief B is barred by law and must leave that issue undecided in an Order 7 Rule 11 application. This is because if the civil court cannot reject a plaint partially, then by the same logic, it ought not to make any adverse observations against relief B.”

30. Accordingly, the application is dismissed.

31. Needless to state any observations made herein are only for the purposes of deciding the present application and would have no bearing on the final adjudication of the suit.

32. List this matter before the concerned Joint Registrar for taking up further steps in accordance with the extant rules on 04.09.2025.

33. Keeping in view the facts and circumstances of the case, and in light of the stay order dated 11.10.2021 operating against the suit properties mentioned in para 2 of the plaint except for properties 2(a) and 2(b), the Court directs that the evidence be recorded at the earliest. Let the process be completed within six months from today.

JUDGE JULY 02, 2025