Order 7 Rule 11 CPC | Whether Property is Benami or Joint Family Asset Is a Matter of Evidence: Supreme Court Refuses to Reject Partition Suit at Threshold

“From a mere reading of the plaint, it cannot be said that the suit is barred under the Benami Act”- Supreme Court of India upholding the decisions of the Trial Court and the Madhya Pradesh High Court which had refused to reject a family partition suit at the threshold under Order VII Rule 11 of the Code of Civil Procedure, 1908.

The primary contention raised by the petitioners was that the suit was barred by Section 4 of the Benami Transactions (Prohibition) Act, 1988, as the properties stood in the names of individual family members. However, the Court held that whether the properties are benami or joint family assets is a mixed question of fact and law, which requires evidence and trial.

The dispute originates from Regular Suit No. 630A/2018 filed by Vidya Devi Gupta (mother) and her younger son Sudeep Gupta, seeking partition, possession, declaration, and injunction in respect of several properties allegedly purchased using joint family funds derived from their family tailoring and textile business.

The suit named various family members as defendants, including the elder son Sandeep Gupta (Defendant No.1) and his wife Shaifali Gupta (Defendant No.2), along with their children and two subsequent purchasers of some of the suit properties, namely Deepak Lalchandani (Defendant No.5) and Surya Prakash Mishra (Defendant No.6).

The plaintiffs claimed that the family business, Himalaya Tailors, was started in 1982 using proceeds from the mother’s jewelry and was jointly run by both sons. Over time, numerous properties were acquired in the names of different family members, allegedly out of joint business income. Some of these properties were sold by Defendant No.2 to third parties (Defendants 5 and 6), which the plaintiffs claimed were void transactions.

Order VII Rule 11 CPC Application and the Legal Challenge

Deepak Lalchandani (Defendant No.5), a subsequent purchaser, moved an application under Order VII Rule 11(d) CPC, arguing that the suit was barred under Section 4 of the Benami Transactions (Prohibition) Act, 1988, since the properties stood in the names of individual members, and the plaintiffs were effectively seeking enforcement of benami claims.

The Trial Court, by order dated 25.02.2019, rejected the application, holding that the question of whether the properties were joint family properties or individual/benami assets was a matter requiring evidence, and thus could not be decided solely on the basis of plaint averments.

The High Court, in its judgment dated 26.09.2022, affirmed the Trial Court’s reasoning, concluding that no legal bar was evident from the plaint alone, and therefore the application under Order VII Rule 11 CPC was rightly rejected.

Supreme Court's Findings: “Benami Bar Not Evident from Plaints”

The Supreme Court, speaking through Justice Pankaj Mithal, reiterated that for a plaint to be rejected under Order VII Rule 11(d) CPC, the bar must be evident from the plaint itself, without requiring any inquiry beyond the pleadings.

“The plaint allegations all through describe the suit properties as the Joint Hindu Family properties... they are not described as benami... from the plaint reading, the suit properties cannot ex-facie be held to be benami.” — Para 25

The Court clarified that Section 4(1) of the Benami Act bars suits to enforce rights in respect of benami property, but this bar applies only when the property is held benami, and that fact must be undisputed and evident on the face of the plaint, which was not the case here.

“Whether a property is benami is an issue of prime consideration… such determination requires analysis of facts and evidence.” — Para 24

On Section 2(9) Exceptions and Family Transactions

The Court took note of Section 2(9) of the Benami Act, which defines “benami transaction” but also lists exceptions, including transactions within a Hindu undivided family. The plaintiffs had contended that even if properties were in individual names, they were acquired from joint family funds and thus fell under the statutory exceptions.

“The defendants have to adduce evidence to prove the property to be benami… it is only when the property is benami and does not fall within the exception… that a suit may be said to be barred.” — Para 27

Reliance on Precedent: Pawan Kumar v. Babu Lal (2019) 4 SCC 367

The Court relied heavily on its earlier ruling in Pawan Kumar v. Babu Lal, which laid down that if the bar to the suit is not apparent from the plaint itself, and disputed factual issues are involved, the plaint cannot be rejected under Order VII Rule 11 CPC.

“Where a plea is taken that the suit is saved by the exception to the benami transaction, it becomes a disputed question of fact... the plaint cannot be rejected at the threshold.” — Para 28

Plea of Female Hindu Ownership under Section 14 of the Hindu Succession Act Rejected

An additional argument raised by the petitioners for the first time before the Supreme Court was that since some properties stood exclusively in the name of Defendant No.2, a female Hindu, they were protected under Section 14 of the Hindu Succession Act, 1956, and thus not amenable to partition.

The Court refused to entertain this contention: “Such a plea was never raised and argued before either of the courts below… defendants cannot be permitted to raise such a plea for the first time in the Special Leave Petition.” — Para 30

Further, the Court clarified that Section 14 does not bar suits for partition or declaration. It simply confers full ownership on a female Hindu for property possessed by her, but does not prohibit civil actions regarding such property.

“Section 14… does not bar or prohibit a suit in respect of such property.” — Para 31

No Legal Bar from Plaints; Suit Must Proceed on Merits

Ultimately, the Court found no merit in the arguments raised by the petitioners. It held that neither the Benami Act nor the Hindu Succession Act barred the institution of the partition suit based on the allegations in the plaint. Since factual disputes existed, the case had to proceed to trial.

“The defendants have not suffered any prejudice and there is no miscarriage of justice… no ground exists to invoke discretionary jurisdiction under Article 136 of the Constitution.” — Para 32

Accordingly, the Special Leave Petitions were dismissed.

Date of Decision: May 20, 2025