N GOVINDARAJAN Vs. INDIAN OVERSEAS BANK PONDICHERRY

JUDGEMENT

(1.) WHETHER the Benami Transactions (prohibition) Act, 1988 (Act No. 45 of 1988) prohibits sham and nominal transactions also and it is not open to contend that a transaction is sham and nominal and no title passed under if, is the question that has been referred to us for decision.

(2.) INASMUCH as the reference has arisen in the course of the hearing of an appeal, which still awaits consideration and disposal at the hands of the learned single Judge who made the reference, we have refrained from referring to the factual background giving rise to the pending appeal with a view to enable the learned Judge to further deal with the matter in the light of the answer to the reference and on the facts as may be found on the evidence.

(3.) LEARNED counsel for the appellants next contended that the words ?benami? and ?held benami? occurring in Ss. 3 and 4 of the Act have to be read differently and that while it may be that the definition of ?benami transaction? occurring in S. 2(a) of the Act may apply to S. 3 of the Act, it may not apply to S. 4 of the Act, as the expression ?benami transaction? does not occur therein, but only the words held benami' have been used. It has earlier been noticed that the twin objects of the Act are to proh ibit benami transactions and also the establishment of rights over property held benami, either on a cause of action or defence, based on benami. The prohibition of benami transactions is sought to be achieved by preventing persons from entering into such transactions and making it a punishable offence, except in cases provided for under S. 3(2) of the Act. The prohibition contained in S. 4 of the Act is aimed at securing the other object of the Act, viz., to put an end to the right to recover property held benami and to vest the title to the property in the benamidar or the ostensible owner. In other words, in order to accomplish the twin objects earlier referred, provision has been made in the Act to prohibit the entering into of benami transactions and also to put an end to the right of a person claiming to be the real owner, either on a cause or action or by way of defence, and it is with reference to the latter class of cases, the words used are ?held benami. Those words would mean the state of holding property, as a result of entering into a benami transaction or pursuant to such a transaction and necessarily, the definition of a ?benami transaction? found in S. 2(a) of the Act, has to be read into and applied in interpreting the words ?property held benami? occurring in S. 4 of the Act. In view of that, this argument of learned counsel for the appellants also cannot be accepted.