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Supreme Court Quashes Criminal Proceedings in Benami Land Transactions and Establishes Legal Precedents for Government Employees Engaging in Similar Transactions

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Case Name: C Subbiah @ Kadambur jayaraj & Ors v. The Superintendent of Police & Ors 

Case No.: SLP (Criminal) No(s). 8990 of 2019 

Dated: May 15, 2024 

Quorum: Justice B R Gavai and Justice Sandeep Mehta 

 

FACTS OF THE CASE: 

The complainant filed a complaint at the Court of Learned Judicial Magistrate No. II, Kovilpatti, claiming among other things that he was a graduate of the MD programme with an M.Sc. On October 8, 2007, he was hired as a government instructor. The claimant had been making his living from the real estate sector for the previous sixteen years prior to being assigned as a Government teacher.  

The complainant making the complaint was acquainted with Kannabiran, also known as “A-3,” who held a managerial position at the Kovilpatti branch of the State Bank of India (SBI). The complainant met A. Vijaya (hence referred to as “A-2”) and Subbiah @ Kadambur Jeyaraj (hereinafter referred to as “A1”) while working in the real estate industry. 

The complaint was introduced to Chandrasekar (henceforth referred to as “A-4”), his son Pandiyaraj (henceforth referred to as “A-6”), his wife S. Pandiyammal (henceforth referred to as “A-5”), and his brother—all of whom were involved in the real estate industry—through A-1 and A-2.  

Additionally, the plaintiff was duped into thinking that smaller plots would be acquired from the larger pieces of land so be cut up and sold to various people, which would regularly demand the seller’s personal presence, and given that the complainant was a teacher, hence he would experience difficulties if the land lots were to be put on file under his name. 

As the appellants in this case, A 1–12 filed CRL.O.P.(MD) No. 3846 of 2013 to challenge the FIR and the charge sheet before the Madras High Court, Madurai Bench. The appeal by special leave is being challenged in this appeal, and the learned single judge of the Madras High Court dismissed the petition that the appellants had filed in their ruling of April 23, 2018. 

 

LEGAL PROVISIONS:  

  • Section 420 IPC- Cheating and dishonestly inducing delivery of property.— If someone deceives someone by cheating and then dishonestly persuades them to give up property to someone else, create, alter, or destroy a valuable security in whole or in part, or create something signed or sealed that has the potential to be turned into a valuable security, they will be subject to a fine and up to seven years of imprisonment of a similar kind. 
  • Section 120(B) of IPC- Any individual involved in a criminal conspiracy that is not related to a criminal conspiracy to commit an act listed above faces a maximum sentence of six months in either type of jail, a fine, or both. 

 

CONTENTIONS OF THE APPELLANTS: 

The learned counsel for the appellants fiercely and strongly argued that the charges listed in the charge sheet and the formal complaint are not sufficient to establish the offences claimed, even if they are accepted as genuine on the face of the record. A continuation of the proceedings in accordance with the charge sheet filed against the accused appellants would amount to a flagrant abuse of the legal process, he argued, given the acknowledged facts as stated in the complaint, which indicates that any disagreement between the parties is solely civil in nature. 

The charge sheet makes it very evident that although the complainant received some of the selling proceeds from the land deals, he did not receive the full amount that was due to him. He further argued that since the complainant was a teacher employed by the government and was not permitted to engage in real estate transactions, he made the investments through the accused appellants in this case at his own risk.  

He further said that when the profit-sharing component of the land deals failed to satisfy the complainant, he felt that the criminal legal system had been abused in order to bring a baseless case against the accused appellants. 

The argument put forth by the knowledgeable senior attorney was that there is absolutely nothing in the case file that indicates the accused appellants intended to deceive the complainant at the outset of the transactions.  

Furthermore, the accused appellants would not be found guilty of a criminal breach of trust because the complainant’s accusation concerns a disproportionate sharing of profits from land dealings that he entered into with their knowledge. 

 

CONTENTIONS OF THE RESPONDENTS: 

The arguments put forward by the learned counsel for the appellants were sharply and passionately rejected by the learned counsel for the respondent complaint as well as the learned Standing Counsel representing the State.  

It was argued that the accused appellants deceitfully persuaded the complainant to make large investments in real estate transactions by gaining his trust through the use of phrases like “honey quoted.” The accused repeatedly assured the complainant that he would receive his rightful portion of the profits or the plots from the lands, as the case may be, which would be bought in the accused’s name because the complainant was not permitted to engage in such transactions as a government teacher.  

The complainant committed large sums of money in land agreements, putting total faith in the accused appellants’ guarantees, after falling for their enticements. Nevertheless, the accused appellants broke their word and conned the complainant by not providing him with the necessary number of plots that would have been in line with his investment. 

According to their argument, the fact that the complainant has already used a civil remedy for the same complaints does not automatically bar him from using the criminal court’s jurisdiction to hold the accused appellants accountable for their fraudulent acts. This is because the allegations made in the complaint are equivalent to both criminal and civil offences, allowing for the continuation of parallel legal proceedings. 

 

COURT’S ANALYSIS AND JUDGMENT: 

The court said that it was evident from the complaint that none of the allegations therein could support a finding that the accused appellants’ goal was to deceive the complainant right from the beginning of the transactions. Without a doubt, the accused appellants gave the complainant some plots and a portion of the profits from the land deals, but there is a disagreement over how much profit was made and whether the complainant’s share of the profits was fully satisfied in relation to his investments. 

The court held that, at most, the complainant may use these accusations as justification to file a civil lawsuit against the accused appellants. However, Section 4 of the Benami Act prohibits such a remedy, as was previously mentioned.  

With regard to the accused appellants, the court was firmly of the opinion that the accepted allegations included in the complaint and charge sheet did not establish the requisite elements of the offences punishable under Section 406 and Section 420 IPC. There is no denying that by abusing the criminal justice system, a civil issue has been given a criminal prosecution colour by means of accusations of fraud and criminal breach of confidence. 

At the risk of repetition, it should be emphasised once more that the complainant was not permitted to sue the accused appellants for the identical set of facts and claims that form the basis of the criminal proceedings due to the explicit bar stated in Section 4 of the Benami Act. 

 

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.” 

Judgment reviewed by Riddhi S Bhora. 

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Supreme Court Quashes Criminal Proceedings in Benami Land Transactions and Establishes Legal Precedents for Government Employees Engaging in Similar Transactions

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Supreme Court Quashes Criminal Proceedings in Benami Land Transactions and Establishes Legal Precedents for Government Employees Engaging in Similar Transactions 

Case Name: C Subbiah @ Kadambur jayaraj & Ors v. The Superintendent of Police & Ors 

Case No.: SLP (Criminal) No(s). 8990 of 2019 

Dated: May 15, 2024 

Quorum: Justice B R Gavai and Justice Sandeep Mehta 

 

FACTS OF THE CASE: 

The complainant filed a complaint at the Court of Learned Judicial Magistrate No. II, Kovilpatti, claiming among other things that he was a graduate of the MD programme with an M.Sc. On October 8, 2007, he was hired as a government instructor. The claimant had been making his living from the real estate sector for the previous sixteen years prior to being assigned as a Government teacher.  

The complainant making the complaint was acquainted with Kannabiran, also known as “A-3,” who held a managerial position at the Kovilpatti branch of the State Bank of India (SBI). The complainant met A. Vijaya (hence referred to as “A-2”) and Subbiah @ Kadambur Jeyaraj (hereinafter referred to as “A1”) while working in the real estate industry. 

The complaint was introduced to Chandrasekar (henceforth referred to as “A-4”), his son Pandiyaraj (henceforth referred to as “A-6”), his wife S. Pandiyammal (henceforth referred to as “A-5”), and his brother—all of whom were involved in the real estate industry—through A-1 and A-2.  

Additionally, the plaintiff was duped into thinking that smaller plots would be acquired from the larger pieces of land so be cut up and sold to various people, which would regularly demand the seller’s personal presence, and given that the complainant was a teacher, hence he would experience difficulties if the land lots were to be put on file under his name. 

As the appellants in this case, A 1–12 filed CRL.O.P.(MD) No. 3846 of 2013 to challenge the FIR and the charge sheet before the Madras High Court, Madurai Bench. The appeal by special leave is being challenged in this appeal, and the learned single judge of the Madras High Court dismissed the petition that the appellants had filed in their ruling of April 23, 2018. 

 

LEGAL PROVISIONS:  

  • Section 420 IPC- Cheating and dishonestly inducing delivery of property.— If someone deceives someone by cheating and then dishonestly persuades them to give up property to someone else, create, alter, or destroy a valuable security in whole or in part, or create something signed or sealed that has the potential to be turned into a valuable security, they will be subject to a fine and up to seven years of imprisonment of a similar kind. 
  • Section 120(B) of IPC- Any individual involved in a criminal conspiracy that is not related to a criminal conspiracy to commit an act listed above faces a maximum sentence of six months in either type of jail, a fine, or both. 

 

CONTENTIONS OF THE APPELLANTS: 

The learned counsel for the appellants fiercely and strongly argued that the charges listed in the charge sheet and the formal complaint are not sufficient to establish the offences claimed, even if they are accepted as genuine on the face of the record. A continuation of the proceedings in accordance with the charge sheet filed against the accused appellants would amount to a flagrant abuse of the legal process, he argued, given the acknowledged facts as stated in the complaint, which indicates that any disagreement between the parties is solely civil in nature. 

The charge sheet makes it very evident that although the complainant received some of the selling proceeds from the land deals, he did not receive the full amount that was due to him. He further argued that since the complainant was a teacher employed by the government and was not permitted to engage in real estate transactions, he made the investments through the accused appellants in this case at his own risk.  

He further said that when the profit-sharing component of the land deals failed to satisfy the complainant, he felt that the criminal legal system had been abused in order to bring a baseless case against the accused appellants. 

The argument put forth by the knowledgeable senior attorney was that there is absolutely nothing in the case file that indicates the accused appellants intended to deceive the complainant at the outset of the transactions.  

Furthermore, the accused appellants would not be found guilty of a criminal breach of trust because the complainant’s accusation concerns a disproportionate sharing of profits from land dealings that he entered into with their knowledge. 

 

CONTENTIONS OF THE RESPONDENTS: 

The arguments put forward by the learned counsel for the appellants were sharply and passionately rejected by the learned counsel for the respondent complaint as well as the learned Standing Counsel representing the State.  

It was argued that the accused appellants deceitfully persuaded the complainant to make large investments in real estate transactions by gaining his trust through the use of phrases like “honey quoted.” The accused repeatedly assured the complainant that he would receive his rightful portion of the profits or the plots from the lands, as the case may be, which would be bought in the accused’s name because the complainant was not permitted to engage in such transactions as a government teacher.  

The complainant committed large sums of money in land agreements, putting total faith in the accused appellants’ guarantees, after falling for their enticements. Nevertheless, the accused appellants broke their word and conned the complainant by not providing him with the necessary number of plots that would have been in line with his investment. 

According to their argument, the fact that the complainant has already used a civil remedy for the same complaints does not automatically bar him from using the criminal court’s jurisdiction to hold the accused appellants accountable for their fraudulent acts. This is because the allegations made in the complaint are equivalent to both criminal and civil offences, allowing for the continuation of parallel legal proceedings. 

 

COURT’S ANALYSIS AND JUDGMENT: 

The court said that it was evident from the complaint that none of the allegations therein could support a finding that the accused appellants’ goal was to deceive the complainant right from the beginning of the transactions. Without a doubt, the accused appellants gave the complainant some plots and a portion of the profits from the land deals, but there is a disagreement over how much profit was made and whether the complainant’s share of the profits was fully satisfied in relation to his investments. 

The court held that, at most, the complainant may use these accusations as justification to file a civil lawsuit against the accused appellants. However, Section 4 of the Benami Act prohibits such a remedy, as was previously mentioned.  

With regard to the accused appellants, the court was firmly of the opinion that the accepted allegations included in the complaint and charge sheet did not establish the requisite elements of the offences punishable under Section 406 and Section 420 IPC. There is no denying that by abusing the criminal justice system, a civil issue has been given a criminal prosecution colour by means of accusations of fraud and criminal breach of confidence. 

At the risk of repetition, it should be emphasised once more that the complainant was not permitted to sue the accused appellants for the identical set of facts and claims that form the basis of the criminal proceedings due to the explicit bar stated in Section 4 of the Benami Act. 

 

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.” 

Judgment reviewed by Riddhi S Bhora. 

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Delhi High Court dismissed the Regular First appeal filed, seeking partition of the property.

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Title: Smt. Sarita Dua vs Dr. Gautam Dev Sood & Ors.

Reserved on: 14.03.23

Pronounced on: 04.07.23

+ RFA(OS) 27/2022

CORAM: HON’BLE MR. JUSTICE SURESH KUMAR KAIT

                 HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA

Introduction

Delhi high court held that the petition for partition is not maintainable if the cancellation of existing Gift deed is not sought.

Facts of the case

The three plaintiffs, who were sisters, filed a lawsuit against the defendant seeking to divide the property bearing N-32, Greater Kailash, New Delhi (hence referred to as the suit property).

In order to profit himself, the late Dr. Vyas Dev Sood, the parties’ father, acquired the suit property on April 27, 1965, using his own money. He did this in the name of his wife, the late Smt. Raj Kumari Sood, and a two-story home was subsequently built there. He passed away on January 31, 2001, while the parties’ mother, Smt. Raj Kumari Sood, passed away in October 2004. They both passed away intestate, leaving behind two sons and three daughters: Dr. Devashish Kumar Sood, who is being represented by his legal heirs, and the three daughters who are the plaintiffs. The parties’ disagreements led to the filing of the lawsuit for partition and rendition of accounts.

Analysis and decision of the court

The court analysed and stated that the parties have agreed that the suit property was acquired in 1965 under the mother of the plaintiff through a recorded Sale Deed. The appellant/plaintiff asserts that the plaintiff’s father paid all of the money necessary for the acquisition of the suit property out of his own pocket. Therefore, in contrast to the father who was a de jure owner, the mother was just a de facto owner of the property. now the property was benami, the de jure ownership remained with the father until his passing. Thereafter, according to the law of succession, it passed to all of the legal heirs, who have now requested the property’s division. It also held that the basic argument behind the plea of benami transaction is that the father purchased the property out off his own funds and registered it in name of the mother, While the law creates a prohibition against the right to recover property held benami, the law has culled out certain exceptions to benami transactions under Section 3(2) of the Benami Act. the mother’s name was used in the recorded Sale Deed dated 27.04.1965 to acquire the subject property. Both the mother and father have passed away, and the father never asserted ownership of the land throughout his lifetime. The appellants have now contested the Sale Deed as being in violation of the Benami Transaction Act, approximately 50 years after the Sale Deed was executed. A claim of father-owned property that is so nebulous and unsupported by any information, including any explanation of the finances that can be traced to the father, has been rightfully dismissed as unsubstantiated. Section 3(2) of the Act, no doubt creates a presumption if the property is purchased in the name of wife or daughter, but this presumption would have arisen only if there was any basis to establish that father had purchased property benami in the name of his wife. Section 4 of the Act places a complete embargo on claiming any right if the transaction is per se benami i.e. the property is purchased in the name of one while the funds are paid by another. Section 4(2) of the Benami Act prohibits any suit on the basis of such transaction; no person can assert to be the real owner of such property held benami. The Apex Court in the case of R. Rajagopal Reddy (dead) by LRs and Ors vs Radmini Chandrasekaran (dead) by LRs (1995) 2 SCC 630 clarified the retrospective application of Section 4 and observed that Section 4 shall be applicable from the date it came into effect and no claim, suit or action preferred by the real owner, to enforce any right in respect of the property held benami, would lie/be admissible in any court. A Division Bench of this Court in the case of Sanjay Roy Vs. Sandeep Soni, (Supra) followed the judgement of Ramti Devi (Supra) and observed that Section 27 of the Limitation Act, 1963 extinguishes the right in property on expiry of the period of limitation.

The appellants have cited as Manoj Arora v. Mamta Arora (Supra), in which the husband claimed to be the de jure owner of the two and launched a lawsuit against the wife seeking a declaration and an injunction homes that he had bought in the defendant, his wife’s name.

He had provided information on the source of the funds and the sums that he had used to pay for those properties. The Coordinate Bench of this Court noted that the action could not have been dismissed in accordance with Order VII Rule 11 of the CPC where there are explicit allegations in the plaint that the husband acquired the property in the name of his wife.

However, in this instance, neither the mother nor the father ever said that the father had bought the property benami (in the name of) the mother’s. In fact, the parties to the lawsuit did not claim the property was benami in the mother’s name while their parents were alive. Furthermore, neither in this lawsuit nor the prior civil litigation with case number CS (OS) 1912/2009 has any statement been requested in relation to the Sale Deed that was completed on April 27, 1965, in the mother’s name. Additionally, the plaintiffs have not revealed the origin of the cash.

The appellant in Ramti Devi v. Union of India (previous) understood that the Sale Deed had been executed and registered on January 29, 1947. When the appellant gained information that the instrument was being completed, the three-year limitation period outlined in Article 59 of the Schedule to the Limitation Act, 1963, started to run. The 1966 lawsuit was rejected by the Apex Court as being time-barred since the 1959 lawsuit had been withdrawn and replaced by the 1966 lawsuit. This case is similar to the present petition where defendants had countered the claim of appellants for partition with asserting a right in their favour on the basis of two registered Gift Deeds dated 13.03.2000 and 11.03.2002, executed in their favour by the mother. The defendants in the prior litigation had argued for their exclusive claim to the suit property on the basis of the two Git Deeds, according to the appellant’s averments in paragraph 17, which are obviously evident. Therefore, the plaintiffs had knowledge of the two Gift Deeds from at least 2009. The cause of action to dispute the aforementioned Gift Deeds emerged in 2009 when the appellants became aware of the Gift Deeds, and according to Article 59 of the Limitation Act, 1963, the cause of action may only be contested three years after the date of knowledge. Therefore, we concur with the learned Single Judge’s conclusions that the case was barred by limitation.

The defendants, respondents, claimed that the current lawsuit for partition and rendition of accounts could not be maintained without first requesting the cancellation of the two gift deeds as their second defence. In the case of Prem Singh and Ors vs Birbal and Ors. (2006) 5 SCC 353 The Supreme Court established the need for setting aside a registered document and observed thus: “27. There is a presumption that a registered document is validly executed. A registered document, therefore, prima facie would be valid in law. The onus of proof, thus, would be on a person who leads evidence to rebut the presumption.” The Coordinate Bench of this Court had stated in Anita Anand v. Gargi Kapur, (Supra), that the plaintiff would not be eligible for partition until he challenged the Gift Deed. The determination of the Gift Deed’s illegality would result in relief from division. Similar to this, the Supreme Court ruled in Ramti Devi v. Union of India (Supra) that a document that has been duly completed and registered stays valid and binds the parties unless it is properly revoked by the Court.

Thus, it has been held that the petition for partition is not maintainable if the cancellation of existing Gift deed is not sought.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Written By – Shreyanshu Gupta

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