Whether money decree be passed basing on cheques , when the defendant admitted his debt paid by the plaintiff and when the defendant failed to discharge his burden of repayment on the same day to the plaintiff by raising unconnected issues to the loan transactions ? The written statement also did not deny that Sanjay requested Surendra for a loan of 80,000/- which was given to him. However, in the defense, Sanjay alleged that Surendra asked him to return the amount on the same day i.e. 30.01.1990, which he did. The written statement then alleged that Sanjay repeatedly asked for the return of the three cheques but being the maternal uncle, the plaintiff insisted on keeping the three instruments, and prevailed upon him as the elder relative. It was also alleged in the written statement that Sanjay was assured that the cheques would be returned on the next day; however they were never returned. The trial court dismissed this suit. The trial court was of the opinion that the evidence clearly showed that a sum of ₹ 80,000/- had been deposited by Surendra in his bank account and that this circumstance, supported Sanjay’s plea that the amount was returned immediately. The trial court was also of the opinion, that the discrepancy in the amount received towards the sale consideration, casts doubt regarding the veracity of the plaintiff’s claim. The High Court then concluded and held as follows:- “15. Since it is not disputed by the respondents that the loan amount of Rs 80,000/- was given by the appellant on 30/01/90 and the dispute is only whether the amount was returned by the respondent no. 2 to the appellant on that very day on not, the important documents are Ex. P/1 to P/3, the cheques and the receipt of Rs 60,000/- Ex. P/9, which was issued by the respondent no. 2 in favour of appellant. When the amount was given back by the respondent no. 2 to the appellant on that very day then it is surprising why the receipt Ex. P/9 and the cheques Ex. P/1 to P/3 were not taken back by the respondent no. 2 from the appellant and why the receipt of refund of the amount was not taken. Apart from this there is nothing on record to show that why the cheque of Rs. 30,000/- Ex. P/8 was given by the respondent no. 2 to the appellant. These all documents goes to show beyond doubt that the appellant who is maternal-uncle of the respondent no. 1 lent a sum of Rs 80,000 to the Respondent no. 2, in lieu of which the cheques EX. P/1 to P/3 were not taken back by the respondent no. 2 as proprietor of respondent no. 1 and the amount was returned by the respondents to the appellant. In view of this appeal stands allowed. Apex court held that there is no dispute that Sanjay wanted 80,000/- and was given it, by his uncle, the plaintiff, Surendra, for the purpose of expansion of his business. This is where the version of the two parties diverges: Sanjay alleged that the amount was returned the next day and that Surendra did not return the post dated cheques issued by him; Surendra alleges that Sanjay in fact never returned the amount. The trial court was persuaded by arguments on behalf of Sanjay and the circumstance that the sum of 80,000/- was deposited in Surendra’s account on the same day. The High Court, however, took note of the plaintiff’s stand, with respect to the real consideration, which was 2,30,000/- as against what was shown in the document, to say that the amount deposited in Surendra’s account had nothing to do with the money lent to Sanjay. Whether a photocopy which was therefore, inadmissible can be considered ? this court notices that the plaintiff had put the matter, during the course of cross examination, to the appellant/defendant. The latter, unsurprisingly, admitted the document, despite the fact that it was a photocopy. The plaintiff had argued that the original of that document was with the purchaser: this was not denied.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 106 OF 2010
M/S FAIR COMMUNICATION AND
CONSULTANTS & ANR. …APPELLANT(S)
VERSUS
SURENDRA KERDILE …RESPONDENT(S)
J U D G M E N T
S. RAVINDRA BHAT, J.

  1. This appeal by Special Leave challenges a decision of the Madhya Pradesh, High
    Court, by which a suit for recovery of 80,000/- was decreed in appeal. The impugned ₹
    judgment set aside the judgment and decree of the XIII Additional District Judge, Indore
    (hereafter “trial court”).
  2. The plaintiff (respondent in the present case, referred to hereafter as “Surendra”)
    is the maternal uncle of the defendant-second appellant (hereafter referred to by his
    name as “Sanjay”). Sanjay is also the sole proprietor of first appellant/defendant (M/s
    Fair Communication & Consultants). Surendra filed a suit for claiming recovery of ₹
    1,08,000/- alleging that Sanjay and his proprietorship firm owed money lent. Surendra
    apparently was a resident of Nashik, but had completed his education at Indore. He was
    an Engineer employed at Nashik and owned some land and a flat (MIG Scheme No. 54,
    Indore). As Surendra wished to settle eventually in Nashik, he appointed Sanjay who
    used to reside in Indore as Power of Attorney and executed a deed of General Power of
    Attorney (GPA) in favour of Sanjay on 30.09.1989 for that purpose. Sanjay entered into
    an agreement to sell the property to one Niranjan Singh Nagra (“buyer”) on 30.11.1989
    and received a sum of 50,000/- as earnest money. Surendra alleged that Sanjay called ₹
    him to Indore on 29.01.1990 and requested that the agreement to sell ought to be
    executed in favour of the buyer directly and that at the time of executing the agreement,
    2
    the buyer had paid 80,000/-. This amount was returned by Sanjay. Surendra also ₹
    alleged that the buyer requested for cancellation of the Power of Attorney which was
    given to Sanjay. Sanjay requested Surendra for an advance in the sum of 80,000/- for ₹
    the expansion of his business, which he was carrying on under the style of the first
    respondent proprietorship concern. Sanjay assured the plaintiff that he would return the
    amount shortly. Accordingly, 80,000/- was given by the plaintiff (Surendra) to Sanjay. ₹
  3. Sanjay issued three post-dated cheques for the sum of 16,500/-, 3,500/- and ₹ ₹
    ₹ 60,000/- all dated 16.02.1990, drawn on the State Bank of India, Indore Branch.
    Before the due date, Sanjay requested the plaintiff (Surendra) not to present the cheques
    for collection for a few months; this request was complied with. The cheques, when
    presented, were returned by the banker to the plaintiff (Surendra). In these
    circumstances, the suit for recovery of a sum of 80,000/- (together with interest @ ₹
    12% till the date of the filing of the suit and for future interest, consequently, was
    instituted.
  4. Sanjay, in his written statement denied the suit allegations. However, the written
    statement did not dispute the execution of the GPA or that he had entered – on behalf of
    the plaintiff, into the agreement to sell with Niranjan Singh Nagra and obtained ₹
    50,000/- as earnest money. The written statement also did not deny that Sanjay
    requested Surendra for a loan of 80,000/- which was given to him. However, in the ₹
    defense, Sanjay alleged that Surendra asked him to return the amount on the same day
    i.e. 30.01.1990, which he did. The written statement then alleged that Sanjay
    repeatedly asked for the return of the three cheques but being the maternal uncle, the
    plaintiff insisted on keeping the three instruments, and prevailed upon him as the elder
    relative. It was also alleged in the written statement that Sanjay was assured that the
    cheques would be returned on the next day; however they were never returned.
  5. After framing issues and recording evidence, the trial court dismissed this suit.
    The trial court was of the opinion that the evidence clearly showed that a sum of ₹
    3
    80,000/- had been deposited by Surendra in his bank account and that this circumstance,
    supported Sanjay’s plea that the amount was returned immediately. The trial court was
    also of the opinion, that the discrepancy in the amount received towards the sale
    consideration, casts doubt regarding the veracity of the plaintiff’s claim. Aggrieved by
    the dismissal of the suit, Surendra appealed to the High Court. During the course of
    appeal, two applications seeking to amend the pleading and relief clause in the plaint
    were sought.
  6. The High Court after an overall reading of the evidence framed three points for
    consideration, while dealing first with the applications, and then the merits: they were
    firstly, the consideration of the sale of the suit property – if it was for 2,30,000/- and ₹
    not 1,30,000/- ; secondly, whether such fact had to be pleaded by the plaintiff in the ₹
    suit and lastly, whether in the absence of such pleading, it was necessary to allow the
    application for amendment. The High Court after analyzing the nature of evidence led,
    concluded that since Sanjay had admitted the signature on the agreement to sell, as well
    as the plaintiff’s GPA, even though the document was a photocopy, it could not be
    ignored.
  7. The impugned judgment also reasoned that there was no dispute that another
    agreement to sell was executed on 30.01.1990 by the plaintiff (Surendra) in favour of
    Niranjan Singh Nagra, where the sale consideration was showed to be 1,30,000/-. The ₹
    sale was also undisputedly completed on 31.01.1990. It was held that in these
    circumstances, the plaintiff had 1,80,000/- as on 30.01.1990, which clearly showed ₹
    that the real consideration for the transaction was 2,30,000/-, though the document ₹
    subsequently executed showed a lesser value as 1,30,000/-. The court noted that ₹
    Surendra had not relied upon these circumstances to seek relief on the basis of the
    contract (for sale). The High Court then reasoned that these documents were needed
    only to consider their impact vis-a-vis the defendants’ claim for return of 80,000/-. ₹
    4
  8. The High Court in its impugned judgment upheld the plaintiff’s contention that he
    possessed sufficient amount to advance 80,000/- to Sanjay. He also had sufficient ₹
    funds to deposit amounts in the bank account, for which statement of account, Ex. D/1
    was on the record. Given that the real consideration for the transaction was ₹
    2,30,000/-, the fact that some amount was deposited in the bank account, did not in any
    way detract from the suit claim. The court, therefore, held that the deposit by itself
    could not be relied on, that the amount was paid to Sanjay who issued three cheques.
    The High Court then concluded and held as follows:-
    “15. Since it is not disputed by the respondents that the loan
    amount of Rs 80,000/- was given by the appellant on 30/01/90 and
    the dispute is only whether the amount was returned by the
    respondent no. 2 to the appellant on that very day on not, the
    important documents are Ex. P/1 to P/3, the cheques and the
    receipt of Rs 60,000/- Ex. P/9, which was issued by the respondent
    no. 2 in favour of appellant. When the amount was given back by
    the respondent no. 2 to the appellant on that very day then it is
    surprising why the receipt Ex. P/9 and the cheques Ex. P/1 to P/3
    were not taken back by the respondent no. 2 from the appellant and
    why the receipt of refund of the amount was not taken. Apart from
    this there is nothing on record to show that why the cheque of Rs.
    30,000/- Ex. P/8 was given by the respondent no. 2 to the appellant.
    These all documents goes to show beyond doubt that the appellant
    who is maternal-uncle of the respondent no. 1 lent a sum of Rs
    80,000 to the Respondent no. 2, in lieu of which the cheques EX.
    P/1 to P/3 were not taken back by the respondent no. 2 as
    proprietor of respondent no. 1 and the amount was returned by the
    respondents to the appellant.
  9. In view of this appeal stands allowed. The judgment and
    decree dated 22/07/95 passed by learned XIIIth Additional District
    Judge, Indore in Civil Suit No. 98-B/93 is set aside. Respondents
    are directed to pay Rs 80,000/- alongwith interest @ 6% p.a w.e.f.
    16/02/90 with a period of two months, failing which the
    respondents shall be liable to pay the interest on the aforesaid
    amount @ 12% per annum. Respondents shall also be liable for the
    costs through out.”
    5
  10. It is argued by Mr. Santosh Kumar, learned counsel for the appellant that the high
    court committed an error in appreciation of the evidence and that the plaintiff had come
    forward with an entirely new case, in the cross-examination which was not backed by
    the pleadings. He further submitted that the impugned judgment was in error because it
    placed reliance on inadmissible documents and rendered findings exclusively based
    upon their appreciation. It was highlighted, that the impugned judgment was conjectural
    inasmuch as the court connected the receipt issued by Sanjay with the agreement,
    showing the sale consideration to be 2,30,000/-. It was emphasized that the original ₹
    agreement was never produced or made part of the record.
  11. Mr. Santosh Kumar next submitted that being a prohibited transaction, the story
    put forward by the plaintiff that the real value of the sale of 2,30,000/- as against the ₹
    declared value of 1,30,000/- could not be countenanced by the court as it was contrary ₹
    to the public policy. He also relied on the Benami Transactions (Prohibition) Act, 1988
    (hereafter “the Benami Act”) to submit that any plea based on benami transactions could
    not be canvassed in courts. It was argued that as on 30.01.1990 or soon thereafter, the
    plaintiff did not have any amount in his bank account. Counsel lastly argued that
    consistent position of the defendant, Sanjay was that the three cheques were issued to
    the plaintiff at the latter’s insistence and that despite repeated requests, they were not
    returned. This was clearly stated in the written statement and was consistently reiterated
    during the course of the oral deposition. The high court, it was urged, fell into error in
    completely overlooking this aspect.
  12. It is submitted on behalf of the plaintiff/respondent that the basis for dismissal of
    the suit by the trial court was that the amount in question was part of the sale
    consideration of a sum of 1,30,000/- for the plot belonging to the respondent which ₹
    has been sold and from which 50,000/- had been received earlier, and the remaining ₹ ₹
    80,000/- was received on the day when the loan had been given to the appellants. The
    6
    trial court observed that the sum of 80,000/- was received by the plaintiff and was ₹
    deposited in the bank account on the next day, i.e. 31.1.1990. It is further argued that
    when this question was put to the plaintiff, it was explained that the entire transaction
    was for a consideration of 2,30,000/- and not 1,30,000/- and therefore, the amount ₹ ₹
    deposited in the bank account had nothing to do with the loan advanced to the
    appellants.
  13. It is argued that the first agreement dated 03.7.1989 was executed for a sum of ₹
    2,30,000/- by the first appellant himself on behalf of the plaintiff, and in fact that
    agreement was put to the first appellant/defendant in cross-examination where he stated
    that:
    “…..it is corrected that my signature appears below at page
    no. 3 of stamp papers purchased on 3rd July. Witness himself stated
    that no any such agreement had been executed. Stamp paper only
    had been purchased in the name of fair communication. My
    signature appears for A to A on the page no. two and three annexed
    with the stamp paper dated 3rd July 1989’ (Copy of the said
    agreement dated 3.7.1989 is Annexed herewith and marked as
    Annexure R-2)
  14. It is urged that the first appellant admitted his signature on the said document in
    his cross-examination; thus, clearly, the fact was established. The original of the
    document was with the buyer of the property and this fact was admitted by the appellant
    in his statement; therefore, its photocopy was produced. The document was relevant
    only to show that the plaintiff had the funds to advance to Sanjay and when extension of
    the loan to the appellant was admitted, the document is of no consequence.
  15. What can be gleaned from the above narrative and submissions is that the plaintiff
    wished to dispose of his property at Indore, where the second defendant, nephew resided
    and carried on business. Since the parties were related, the plaintiff relied on the
    defendant and constituted him as his attorney. An agreement to sell was entered into for
    7
    the sale of the said property (a flat) on 03.07.1989: this fact is not disputed; equally, it is
    undisputed that the consideration for the flat in terms of this agreement was ₹
    2,30,000/-. This was admitted by Sanjay, the defendant in his deposition. It is also not
    disputed that the original agreement with the purchaser (who ultimately finalized the
    transaction), is dated i.e. 03.07.1989. A second agreement was entered into on
    30.11.1989. However, this showed a lesser consideration of 1,30,000/-. It is also not ₹
    disputed that Sanjay, the second appellant received 50,000/- from the buyer and ₹
    handed over that amount to Surendra. Furthermore, on 29.01.1990, Surendra went to
    Indore at Sanjay’s behest to conclude the transaction directly with the purchaser,
    Niranjan Singh Nagra. He also received the amount agreed. Also, there is no dispute that
    Sanjay wanted 80,000/- and was given it, by his uncle, the plaintiff, Surendra, for the ₹
    purpose of expansion of his business. This is where the version of the two parties
    diverges: Sanjay alleged that the amount was returned the next day and that Surendra did
    not return the post dated cheques issued by him; Surendra alleges that Sanjay in fact
    never returned the amount. The trial court was persuaded by arguments on behalf of
    Sanjay and the circumstance that the sum of 80,000/- was deposited in Surendra’s ₹
    account on the same day. The High Court, however, took note of the plaintiff’s stand,
    with respect to the real consideration, which was 2,30,000/- as against what was ₹
    shown in the document, to say that the amount deposited in Surendra’s account had
    nothing to do with the money lent to Sanjay.
  16. The defendant/appellants arguments are two-fold: one, that the document on
    which the High Court returned its findings was a photocopy and was therefore,
    inadmissible; and two, that the question whether the sale consideration was ₹ 2,30,000/-
    or 1,30,000/- could not have been gone into, since that argument was based on a ₹
    prohibited transaction, outlawed by the Benami Act.
  17. As far as the first question goes, this court notices that the plaintiff had put the
    matter, during the course of cross examination, to the appellant/defendant. The latter,
    8
    unsurprisingly, admitted the document, despite the fact that it was a photocopy. The
    plaintiff had argued that the original of that document was with the purchaser: this was
    not denied. Once these were admitted, the plaintiff could not be faulted for seeking a
    consequential amendment, that was purely formal, to back his argument that there was
    sufficient money, after lending 80,000/- to the defendant, which was deposited in his ₹
    account. The appellant’s argument, in the opinion of this court, is insubstantial: the
    impugned judgment cannot be faulted on this aspect.
  18. Now as to the second argument by the appellant, which is that the plaintiff’s plea
    that the real consideration for the sale was 2,30,000/- entails returning findings that ₹
    would uphold a plea based on a benami transaction, this court is of the opinion that the
    argument is unmerited. Benami is defined by the Act as a transaction where
    (a) where a property is transferred to, or is held by, a person, and the consideration for
    such property has been provided, or paid by, another person; and
    (b) the property is held for the immediate or future benefit, direct or indirect, of the
    person who has provided the consideration.
    Benami transactions are forbidden by reason of Section 3; no action lies, nor can any
    defense in a suit be taken, based on any benami transaction: in terms of Section 4 of the
    Act.
  19. In the opinion of this court, the argument that the plaintiff’s plea regarding the real
    consideration being barred, has no merit. The plaintiff did not claim return of any
    amount from the buyer; the suit is not based on any plea involving examination of a
    benami transaction. Besides, the plaintiff is not asserting any claim as benami owner, nor
    urging a defense that any property or the amount claimed by him is a benami
    transaction. Therefore, the defendant appellant’s argument is clearly insubstantial.
  20. The relevant provisions of law, i.e. Sections 3 and 4 of the Benami Act, read as
    follows:
    “Prohibition of benami transactions.
    9
  21. (1) No person shall enter into any benami transaction.
    (2)Whoever enters into any benami transaction shall be punishable
    with imprisonment for a term which may extend to three years or
    with fine or with both.
    (3) Whoever enters into any benami transaction on and after the
    date of commencement of the Benami Transactions (Prohibition)
    Amendment Act, 2016, shall, notwithstanding anything contained in
    sub-section (2), be punishable in accordance with the provisions
    contained in Chapter VII.]
    (4) [***]
    Prohibition of the right to recover property held benami.
  22. (1) No suit, claim or action to enforce any right in respect of any
    property held benami against the person in whose name the
    property is held or against any other person shall lie by or on
    behalf of a person claiming to be the real owner of such property.
    (2) No defence based on any right in respect of any property held
    benami, whether against the person in whose name the property is
    held or against any other person, shall be allowed in any suit,
    claim or action by or on behalf of a person claiming to be the real
    owner of such property…”
  23. In Valliammal (D.) by L.Rs v Subramaniam & Ors. (2004) 7 SCC 233, this Court
    held that the onus of establishing that a transaction is benami is upon one who asserts it:
    “13. This Court in a number of judgments has held that it is well
    established that burden of proving that a particular sale is benami
    lies on the person who alleges the transaction to be a benami. The
    essence of a benami transaction is the intention of the party or
    parties concerned and often, such intention is shrouded in a thick
    veil which cannot be easily pierced through. But such difficulties do
    not relieve the person asserting the transaction to be benami of any
    part of the serious onus that rests on him, nor justify the acceptance
    of mere conjectures or surmises, as a substitute for proof. Refer to
    Jaydayal Poddar v. Bibi Hazra, Krishnanand Agnihotri v. State of
    M. P., Thakur Bhim Singh v. Thakur Kan Singh, Pratap Singh v.
    Sarojini Devi and Heirs of Vrajlal J. Ganatra v. Heirs of
    Parshottam S. Shah. It has been held in the judgments referred to
    above that the question whether a particular sale is a benami or
    10
    not, is largely one of fact, and for determining the question no
    absolute formulas or acid test, uniformly applicable in all
    situations can be laid. After saying so, this Court spelt out the
    following six circumstances which can be taken as a guide to
    determine the nature of the transaction :
    (1) the source from which the purchase money came ;
    (2) the nature and possession of the property, after the purchase ;
    (3) motive, if any, for giving the transaction a benami colour ;
    (4) the position of the parties and the relationship, if any, between
    the claimant and the alleged benamidar ;
    (5) the custody of the title deeds after the sale ; and
    (6) the conduct of the parties concerned in dealing with the property
    after the sale. (Jaydayal Poddar v. Bibi Hazra1, SCC p 7, para 6).
  24. The above indicia are not exhaustive and their efficacy varies
    according to the facts of each case. Nevertheless, the source from
    where the purchase money came and the motive why the property
    was purchased benami are by far the most important tests for
    determining whether the sale standing in the name of one person, is
    in reality for the benefit of another. We would examine the present
    transaction on the touchstone of the above two indicia.

  1. It is well-settled that intention of the parties is the essence of the
    benami transaction and the money must have been provided by the
    party invoking the doctrine of benami. The evidence shows clearly
    that the original Plaintiff did not have any justification for
    purchasing the property in the name of Ramayee Ammal. The reason
    given by him is not at all acceptable. The source of money is not at
    all traceable to the Plaintiff. No person named in the plaint or
    anyone else was examined as a witness. The failure of the Plaintiff
    to examine the relevant witnesses completely demolishes his case.”
    11
    These observations were reiterated in Binapani Paul vs. Pratima Ghosh & Ors.
    2007 (6) SCC 100.
  2. In the present case, the appellants did not prove that the transaction (to which they
    were not parties) was benami; on the contrary, the appellant’s argument was merely that
    the transaction could not be said to be for a consideration in excess of 1,30,000/-: ₹ in
    the context of a defense in a suit for money decree. The defendant/appellants never said
    that the plaintiff or someone other than the purchaser was the real owner; nor was the
    interest in the property, the subject matter of the recovery suit. Therefore, in the opinion
    of this court, the conclusions and the findings in the impugned judgment are justified.
  3. For the foregoing reasons, this court is of opinion that there is no merit in the
    appeal; it is accordingly dismissed, without order on costs.
    .…………………..………………………J.
    [INDIRA BANERJEE]
    ……………………………………………J.
    [S. RAVINDRA BHAT]
    New Delhi,
    January 20, 2020.