Property, landed: India
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Benami Properties
‘Property in wife’s name, when valid funds used’
The Delhi high court has said that a property purchased by the husband in the name of his wife from known sources can’t be treated as benami property. Setting aside a trial court order that treated one such property as benami, HC said it was to be proved during trial whether the property was purchased through known or unknown sources of income and it couldn’t be automatically dubbed benami if the husband bought it in his wife’s name.
Justice Valmiki J Mehta noted that “in the present case, the existence of the properties in the name of the wife will fall as an exception to the prohibited benami transaction as it is legally permissible for a person to purchase an immovable property in the name of his spouse from his known sources”.
Citing a particular clause of Section 2 of the amended Prohibition of Benami Property Transactions Act, 1988, the court noted that such a property purchased would “not be a benami property but the property will be of the de-jure owner (the husband) and not of the de facto owner (in whose name title deeds exist), which is the wife in the present case”.
The court was hearing a challenge filed by the husband, Manoj, against the decision of the trial court to outrightly reject his suit where he had sought injunctions and certain other relief with respect to two properties in Moti Nagar and Gurgaon. Appearing on his behalf, advocate Sufian Siddiqui argued that despite the new benami law providing an exception, the trial court went ahead and discarded the plea treating these properties as benami even though these were purchased by his client from his own sources.
HC termed the trial court’s decision “unfortunate”, adding that it had “committed a grave and fundamental error in rejecting the suit” by relying upon repealed clauses of the Benami Transactions (Prohibition) Act where as when the judgment was passed in 2016 the Act applicable remained the Prohibition of Benami Property Transactions Act, 1988.
Siddiqui welcomed the verdict, pointing out that “this would restore some confience against the least favoured spouses as, in this case, the properties were purchased by the husband from known sources and didn’t fall under definition of benami property”.
HC said it was to be proved during trial if the property was purchased through known or unknown sources of income and it couldn’t be automatically dubbed benami if the husband bought it in his wife’s name
The legal position
SC retracts its 2022 verdict quashing parts of benami property law
Dhananjay Mahapatra, Oct 19, 2024: The Times of India
New Delhi : Supreme Court reversed its 2022 decision to strike down two sections of the benami properties Act after the Centre argued that the court had pronounced its verdict even though no one had challenged the provisions.
“It is undisputed that there was no challenge to the constitutionality of the unamended provisions of the Act. It is trite law that a challenge to the constitutional validity of a provision of a law cannot be adjudicated without pleadings,” SC bench stated.
Supreme Court also allowed govt to file review petitions against HC orders which have been passed on confiscation proceedings following the 2022 judgment.
Solicitor general Tushar Mehta said the law was to curb the activities of shell companies and facilitate attachment of properties held benami (in another entity’s name). He buttressed his argument on the error committed by SC by showing that the judgment itself had recorded that the only question to be adjudicated was whether the 2016 amendments to the 1988 Act were to operate prospectively or retrospectively. SC in its 2022 judgment had declared Section 3, which provides for punishment of persons indulging in benami transactions, and Section 5, which provides for confiscation of benami properties, as unconstitutional. Consequently, it also quashed the penal and confiscation proceedings initiated against offenders and benami properties.
The Centre said, “By striking down Sections 3 and 5 of the unamended 1988 Act, without those provisions having been challenged, and without hearing the parties regarding the vires of those provisions, SC has overturned and upset four decades of jurisprudence developed by SC, wherein it has decided rights between parties in property disputes inter-se, as well presuming the entering into benami transactions to be an offence under the 1988Act.”
The legal position
=SC retracts its 2022 verdict quashing parts of benami property law
Dhananjay Mahapatra, Oct 19, 2024: The Times of India
New Delhi : Supreme Court reversed its 2022 decision to strike down two sections of the benami properties Act after the Centre argued that the court had pronounced its verdict even though no one had challenged the provisions.
“It is undisputed that there was no challenge to the constitutionality of the unamended provisions of the Act. It is trite law that a challenge to the constitutional validity of a provision of a law cannot be adjudicated without pleadings,” SC bench stated.
Supreme Court also allowed govt to file review petitions against HC orders which have been passed on confiscation proceedings following the 2022 judgment.
Solicitor general Tushar Mehta said the law was to curb the activities of shell companies and facilitate attachment of properties held benami (in another entity’s name). He buttressed his argument on the error committed by SC by showing that the judgment itself had recorded that the only question to be adjudicated was whether the 2016 amendments to the 1988 Act were to operate prospectively or retrospectively.
SC in its 2022 judgment had declared Section 3, which provides for punishment of persons indulging in benami transactions, and Section 5, which provides for confiscation of benami properties, as unconstitutional. Consequently, it also quashed the penal and confiscation proceedings initiated against offenders and benami properties.
The Centre said, “By striking down Sections 3 and 5 of the unamended 1988 Act, without those provisions having been challenged, and without hearing the parties regarding the vires of those provisions, SC has overturned and upset four decades of jurisprudence developed by SC, wherein it has decided rights between parties in property disputes inter-se, as well presuming the entering into benami transactions to be an offence under the 1988Act.”
Caretaker, occupation by
Caretaker has no claim on a property: SC
Sep 25, 2021: The Times of India
A caretaker or servant can never “acquire interest” in a property irrespective of his long possession, the Supreme Court has ruled, adding that he or she has to vacate the premises on the owner’s demand.
The verdict has come in a case in which the apex court has set aside the order of a trial court and high court refusing to allow the plea of an owner for not proceeding on a suit filed by a caretaker seeking he shouldn’t be vacated from the premises. “The trial court has committed a manifest error,” a Supreme Court bench headed by Justice Ajay Rastogi said.
Illegal occupation
SC: Protest within 12 years or lose property to squatter
If a person does not protest someone illegally occupying his property for 12 years, then the squatter would get ownership rights over that property , the Supreme Court has ruled.
A bench of Justices R K Agrawal and A M Sapre said if a person proved actual, peaceful and uninterrupted possession of a property owned by another for more than 12 years, “a case of adverse possession can be held to be made out which, in turn, results in depriving the true owner of his ownership rights in the property and vests ownership rights of the property in the person who claims it“.
However, the bench put in a caveat by ruling that such a person (squatter) must necessarily first admit ownership of the true owner over the property and make the true owner a party to the suit before a court for claiming ownership over the property through adverse possession.
This ruling came in a case where a Muslim man had claimed ownership over a property through adverse possession in Jalgaon of Maharashtra. He had attempted to advance the plea of adverse possession to claim ownership rights over the property , which was inherited by a Muslim woman after the death of her father.
Setting aside a Bombay high court order in favour of the man, the SC bench said, “When both courts below held and, in our view rightly , that the defendant has failed to prove the plea of adverse possession, then such concurrent finding of fact was unim peachable and binding on the HC. The HC erred fundamentally in observing that it was not necessary for the defendant to first admit the ownership of the plaintiff before raising such a plea.“
The man's next plea was that he was the adopted son of the deceased original owner and hence was the rightful owner of the property. “The plea taken by the defendant about adoption for proving his ownership over the land as an heir of the original owner was rightly held against him. He has failed to prove that he was the adopted son. It is a settled principle of Mohammadan law that it does not recognise adoption,“ said Justice Sapre, who wrote the judgment for the bench.
The court gave ownership rights to the woman who had inherited the land from her father.
Ownership rights
Mutation doesn’t confer property title right: SC
Sep 10, 2021: The Times of India
The Supreme Court has reiterated that mutation of property in revenue records neither creates nor extinguishes the title to a property, which can only be decided by a competent civil court. The court said an entry in revenue records does not confer title on a person whose name appears in record of rights.
Sale: Rights and liabilities
From the archives of The Times of India 2007, 2009
Rights and liabilities in property sale
Ashish Gupta
In any contract for sale or purchase of property, both the buyer and the seller have certain rights and corresponding liabilities to each other. The law also establishes such rights in the rule book. The main provisions that relate to this aspect are covered under the Transfer of Property Act. According to the act, in the absence of a contract to the contrary, a seller of property has certain rights and is subject to some liabilities.
A seller is bound to disclose all information related to the property to the buyer. He is bound to inform any material defect in the property or in his own title which the buyer is not aware of, or which the buyer cannot discover with ordinary care.
The seller should give the buyer all documents of title relating to the property which are in the seller’s possession or power. After the buyer has paid the amount due, the seller should execute a proper conveyance of the property in favour of the buyer for execution at a proper time and place. Further, between the date of the contract of sale and the handing over of the property, the seller should take as much care of the property and all documents of title relating to it which are in his possession as an owner of ordinary prudence would take.
The seller is bound to give the buyer or any person as he directs possession of the property. Till the date of sale of the property, the seller is bound to pay all public charges and rent due in respect of the property as well as the interest on all encumbrances on the property.
The buyer has a right to assume the seller has interest in the property and that he has the power to transfer it. In case the sale is made by a person in a fiduciary capacity, the buyer has a right to assume the seller has done no act whereby the property is either encumbered or he is hindered from transferring it.
After the money has been paid by the buyer to the seller, the seller is bound to deliver all documents of title relating to the property which are in his possession or power. However, there are two exceptions to this rule. Where the seller retains any part of the property comprised in the documents, he is entitled to retain the documents. And where the property is sold to different buyers, the buyer of the part of greatest value is entitled to the documents.
In such cases, the persons retaining the documents are bound, upon request by the buyer, and at the cost of the person making the request, to produce the documents and furnish true copies or extracts as the buyers may require.
On the other hand, a seller is entitled to any rent and profit from the property till the ownership of the property passes to the buyer. In case the ownership of the property has passed to the buyer before payment of the entire money, the seller is entitled to a charge on the property for the unpaid amount.
He is also entitled to interest on the amount from the date on which possession has been delivered to the buyer.
See also
Property, landed: India
