Courts should uphold jurisdiction of Civil Court unless expressly or by necessary implication barred: Calcutta HC

A Division Bench of the Calcutta High Court comprising Justices Harish Tandon and Abhijit Gangopadhyay recently had occasion to reiterate that the general jurisdiction of Civil Courts should be upheld unless clearly barred.

The appeal prompting these observations arose when an application to reject a plaint under Order 7 Rule 11 of the Code of Civil Procedure, 1908 (CPC) was allowed by a Trial Court.

The application was filed by the respondents/defendants against a property claim of the plaintiffs, wherein it was admitted that the property in dispute was purchased in the name of a benamder.

The benamder was an employee of the appellant/plaintiff, in the year 1959. In 1972-73, the said employee relinquished his ostensible right in the said property in favour of the appellant/plaintiff by a release deed.

Notably, all these transactions were made before the Prohibition of Benami Property Transactions Act, 1988 came into force.

The Court recorded that the matter was not a suit between the real owner and the ostensible owner (benamder), but a suit against a third party unconnected with the transaction involved in the suit, since he created an embargo over the title of the plaintiff and the same required declaration.

It was argued by the respondents that Section 45 of the Prohibition of Benami Property Transactions Act, 1988 expressly provides a bar on the jurisdiction of the Civil Court when it comes to benami disputes, and the same has been vested on the adjudicating authority constituted under the special Act. Thus, it was contended that the plaint ought to be rejected in accordance with Order 7 Rule 11 of the Code of Civil Procedure, 1908 as it contains the word “Benami” enumerated in it.

The Trial Court had agreed with the respondents (original defendants) and rejected the plaint, finding that since the plaintiff had acquired the property in their employee’s name, it automatically attracts the Benami Transactions and Prohibition Act. Therefore, the Trial Court rejected the plaint in view of the embargo created in the Benami Act, whereby the Civil Courts’ jurisdiction has been expressly excluded under Section 45.

The appellants/plaintiffs challenged the Trial Court order, contending that the Court had approached the matter mechanically.

Contesting the appellants/plaintiff’s arguments, the respondents / defendants had referred to a decision of a Constitutional Bench of the Calcutta High Court in the case of Ratanlal Bansilal vs. Kishorilal Goenka AIR 1993 Cal 144.

In that case, it was held that a deed of release does not exonerate the ostensible owner (benamder) of his right accrued on the basis of the ostensible deed nor confers any right upon the real owner. The Calcutta High Court in the above noted case, held that a benamdar does not hold any right capable of divestation. Thus, the deed of release does transfer such a right and further, the real owner does not acquire any right in the property through such a deed.

The Court, however, took note of the appellants/plaintiff’s submission that the above position of law was set aside/interfered with by the Supreme Court in the case of Sankara Hali & Sankara Institute of Philosophy and Culture vs. Kishori Lal Goenka & anr. (1996) 7 SCC 55. The Calcutta High Court noted that in the Sankara Hali case,

“The Apex Court held that if the ostensible owner has executed a release deed much prior to coming in force of Prohibition Act, the right of the real owner was recognized and, therefore, no plea of benami can be raised. It is further held that if the transaction preceded the promulgation of the Prohibition Act, it does not violate any provision of said Act."

Applying this law, the Court found that the Civil Court’s jurisdiction to entertain the matter remains, particularly since the alleged benami transaction and deed of release predated the enforcement of the Benami Transaction Act. In this regard, the High Court records,

“Admittedly, the entire transactions were made much prior to coming into force of the Prohibition Act and mere recital in the deed of release or the antecedent of the title as pleaded in the plaint does not ipso fact raise an issue of benami. Mere saying that once the benami word is used in the pleading, it ipso facto denudes the Court to entertain the dispute cannot be an universal rule. The Court for a limited purpose whether such issue is actually involved in the suit can go into such aspect before applying the exclusion provision contained in the special Act….

… In the event, there is no issue relating to banami in the suit, it does not take away the jurisdiction of the Civil Court on mere use of the term benami. Admittedly, the property was purchased in the year 1959 and the deed of release was executed by the ostensible owner/benamdar in the year 1973 much prior to coming into force of the Prohibition Act …”

The Court added,

“The main object underlying the said provision [Order 7, Rule 11 of the CPC] is to arrest the frivolous and unmeritorious suit to be nipped in the bud or the Court to invest time by assumption of jurisdiction which it had none because of an express embargo created in the special statute.

In such event, the Court should confine its scrutiny to the averments made in the plaint and not to the defence or the materials surfaced for the first time in an application for rejection of plaint.

Mere narration of antecedent of title in a suit for declaration of title against the third party when atone point of time the sale deed stood in the name of an employee, who later on executed a deed of release in favour of the real owner, cannot raise an issue of benami when apparently such transaction took place much prior to the coming into force of the Benami Property Transactions and Prohibition Act, 1988."

All the same, the Bench also observed,

"The position would have been different when a suit is brought by the real owner against the ostensible owner or by ostensible owner against the real owner challenging the respective deeds…”

With these observations, the Calcutta High Court found that the Trial Court has committed error in allowing the application under Order 7 Rule 11 of the Code of Civil Procedure, 1908 and allowed the appeal.

[Read the Order]