SMT. SHAIFALI GUPTA  [PETITIONER(S)] Vs.  SMT. VIDYA DEVI GUPTA & ORS. [RESPONDENT(S)]

SPECIAL LEAVE PETITION (CIVIL) NO. 4673 OF 2023

(2JB, PANKAJ MITHAL and AHSANUDDIN AMANULLAH JJ. delivered by PANKAJ MITHAL, J.)

In a significant judgment, the Supreme Court of India reaffirmed that the issue of whether a property is benami and not covered by statutory exceptions under the Benami Transactions (Prohibition) Act, 1988, must be determined through proper evidence and cannot be resolved merely based on the averments made in the plaint. The verdict came in the matter of Smt. Shaifali Gupta v. Smt. Vidya Devi Gupta & Ors., where the Apex Court upheld the decisions of the lower courts rejecting applications filed under Order VII Rule 11 of the Code of Civil Procedure (CPC).

The case involved two special leave petitions filed by the second defendant and a subsequent purchaser (defendant 5) challenging the trial court’s and the High Court’s refusal to reject a partition suit filed by a mother and her son against the other son and his wife. The plaintiffs alleged that the properties in question were acquired from joint family funds or income derived from the family business and were therefore joint Hindu family properties.

The petitioners argued that the suit was barred under Section 4 of the Benami Act, which prohibits claims to benami property. They filed an application under Order VII Rule 11 CPC seeking rejection of the plaint on this ground. However, the trial court and the High Court dismissed the application, holding that whether the properties were benami was a factual issue requiring evidence, not a matter that could be decided merely from the face of the plaint.

A Division Bench of the Supreme Court, comprising Justice Pankaj Mithal and Justice Ahsanuddin Amanullah, upheld this reasoning. The Court stated that the mere assertion of joint ownership and familial ties in the plaint did not automatically make the properties benami. It emphasized that the question of whether a transaction is benami and not covered by the exceptions under Section 2(9) of the Act is a disputed factual matter that must be established through evidence during trial.

The Court also referred to the precedent in Pawan Kumar vs. Babu Lal (2019), which held that a plaint can only be rejected under Order VII Rule 11 CPC when it is evident from the plaint itself that the suit is statutorily barred without any need for further inquiry. If there are factual disputes regarding the applicability of exceptions under the Benami Act, the matter must go to trial.

Additionally, the Bench noted that Section 14 of the Hindu Succession Act, which deals with a Hindu female’s property rights, does not bar a suit regarding property she possesses. Therefore, it found no legal impediment to the suit continuing.

Ultimately, the Supreme Court dismissed the special leave petitions, holding that the lower courts rightly refused to reject the plaint, and the matter must be adjudicated based on merits and evidence. The decision reinforces the principle that legal claims involving factual disputes, especially in family property disputes and benami claims, must be tried thoroughly in court rather than dismissed prematurely.