Partial Contribution Does Not Confer Ownership; Benami Exception Requires Full Proof of Fiduciary Capacity: Allahabad High Court in Ila Gupta Case

“The bar under Section 4 of the Benami Act is absolute unless the fiduciary relationship is proved with legal certainty” — Allahabad High Court delivered a decisive judgment rejecting a claim for ownership based on alleged fiduciary trust and benami arrangement. The Court held that partial financial contribution and familial relationship are insufficient to override the statutory bar under Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, unless a clear fiduciary capacity is legally established.

“The plaintiff’s claim collapses under the weight of her own evidence. Mere trust, even within family, is not a substitute for the statutory test of fiduciary confidence,” observed Justice Sandeep Jain, upholding the Trial Court’s dismissal of the plaintiff’s suit.

The dispute concerned House No. 2C/322, Sector 2C, Vasundhara, Ghaziabad, allotted by the Uttar Pradesh Awas Evam Vikas Parishad (UPAVP) in the name of Om Prakash Gupta, the plaintiff’s paternal uncle. Despite making early payments towards registration and initial cost, Dr. Ila Gupta failed to prove either ownership or fiduciary entrustment, thereby invoking no protection under Section 4(3)(b) of the Act.

“Benami Allegations Must Pierce the Veil with Clear Evidence; Trust and Emotion Cannot Replace Law” — Court Applies Six-Fold Benami Test Strictly

The core of the case revolved around whether the uncle, who applied for the property in his own name, was merely holding it benami for the benefit of his niece, the plaintiff, who claimed to have financed the initial payments from her own account.

While she did pay ₹8.45 lakhs out of the total consideration of approximately ₹30 lakhs, the Court noted that the remaining amount, including the final sale deed and stamp duty, was paid by Om Prakash Gupta, who also held the lease deed (2006) and registered sale deed (2008) in his own name.

The Court ruled that: “Since in this case the whole consideration of the disputed house has not been paid by the plaintiff, she cannot be treated as the real owner of the house.”

In dissecting the evidentiary standard to prove benami transactions, the Court invoked the Jaydayal Poddar v. Bibi Hazra and Pushpalata v. Vijay Kumar (2022) precedents to reaffirm that:

“The burden of proving that a particular sale is benami and the apparent purchaser is not the real owner always rests on the person asserting it. This burden must be strictly discharged by adducing legal evidence of a definite character.”

The six guiding indicators—source of purchase money, nature and possession of property after purchase, motive for benami, relationship of the parties, custody of title deeds, and conduct in dealing with the property—were all weighed by the Court and found to be tilting against the plaintiff.

“Fiduciary Capacity Requires Legal Confidence, Not Familial Closeness” — Court Rejects Exception under Section 4(3)(b)

The plaintiff had built her case primarily on fiduciary relationship, claiming her uncle was entrusted with the purchase due to her professional commitments and his senior citizen status. But the Court held:

“The plaintiff and defendant were not residing together, nor was the defendant dependent upon the plaintiff. The defendant had his own income, his own house, and was neither mentally incapacitated nor subordinate to the plaintiff in any legal manner. Such mere financial support or familial respect cannot constitute fiduciary capacity in the eyes of law.”

Relying on Marcel Martins v. M. Printer (2012) 5 SCC 342, the Court emphasized the need for scrupulous good faith, dominance of one party, and legal trust akin to that between trustee and beneficiary to invoke the fiduciary exception. The facts of the case failed that threshold.

“Although defendant no.1 has admitted that there were financial transactions between him and the plaintiff… only on the basis of these financial transactions, it is not proved that he was in fiduciary capacity.”

“A Suit Barring the Bar of Section 4 is Not Maintainable — No Right Can Be Enforced on Alleged Benami Foundations”

Applying Section 4(1) of the Benami Transactions (Prohibition) Act, 1988, the Court found the suit itself legally untenable. The section expressly prohibits any suit to enforce rights over a property held benami unless falling within the narrow exception of coparcenary or fiduciary holding.

“Since the plaintiff is not a coparcener of a Hindu Undivided Family of defendant no.1, nor is the case covered by fiduciary exception, the claim squarely hits the bar of Section 4(1) of the Act.”

Despite partial financial contribution, the Court observed that the intention of the parties, post-purchase conduct, and legal possession must be aligned to establish benami ownership. The defendant had taken full possession, paid the balance amount, and did not hold the title in trust. The plaintiff, despite sending legal notices, failed to produce any written agreement or consistent evidence that would establish her as the real owner.

“A Registered Deed Is a Legal Reality; Emotions and Allegations Cannot Undo It”

Noting that the lease deed (2006) and registered sale deed (2008) were in the defendant’s name, the Court concluded that the plaintiff’s oral testimony and assertions did not override the statutory presumption of ownership under law.

“The sale deed is a solemn document… the person expressly shown as the purchaser in the deed starts with the presumption in his favour that the apparent state of affairs is the real state of affairs,” the Court reiterated from Jaydayal Poddar.

The High Court upheld the Trial Court’s decree which had already awarded refund of ₹8,45,865 with 6% interest to the plaintiff but declined all other reliefs. The appeal under Section 96 CPC was dismissed.

“In view of the facts and as per the law laid down… the plaintiff failed to prove that the defendant was in a fiduciary capacity vis-à-vis the plaintiff. As such, the instant case does not fall within the exceptions mentioned in Section 4(3) of the Act.”

This ruling reinforces the legal position that benami allegations must meet the statutory burden of proof, and partial contributions or informal understandings, especially within family, cannot override registered title unless fiduciary entrustment is conclusively demonstrated.

Date of Decision: 12 September 2025