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Ruling on benami property held for personal use

J. Venkatesan

The benamidar cannot make the claim for the property if his/her father rebuts it

NEW DELHI: The Supreme Court has held that if a father purchases an immovable property such as house or plot in the name of his wife, son or daughter but holds it for personal use, the person in whose name the property is purchased cannot make a claim for the property if the father rebuts the claim.

A Bench of Justice D.M. Dharmadhikari [since retired] and Justice Tarun Chatterjee said that Section 3 (2) of the Benami Transaction (Prohibition) Act made it clear that if a property was purchased in the name of an unmarried daughter or son for her/his benefit, that would only be a presumption, which could be rebutted by the real owner on production of evidence that the property was intended for his personal use.

In this case, G. Mahalingappa, on the advice of an astrologer, purchased a house in his daughter's name in 1970 when she was seven. He stayed in the house with his family, made several improvements to it and rented out four portions. He paid the house tax, etc. After her marriage, his daughter filed a suit for a declaration that the house purchased in her name belonged to her. The trial court and a single judge in the Karnataka High Court rejected her claim. However, on second appeal, the High Court held that the property belonged to her. The SLP by Mr. Mahalingappa was directed against this High Court order.

Allowing the SLP, the Bench held that evidence showed that it was not the father's intention to vest any right or benefit on the daughter, who was only a benamidar. On auspicious days, he purchased property in the name of his wife and children and his intention was not to create any right .

Setting aside the High Court order, the Bench said it must be noted that the father had created a will in favour of his two sons and daughter. This would indicate that he treated the suit property as his own. He created a will only to avoid any possible conflict or dispute that might arise among the children with reference to sharing of the property after his lifetime.

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