Whether Property Is Benami Or Falls Within Section 4(3) Exception Is A Matter Of Evidence: Allahabad High Court Restores Suit Rejected Under Order VII Rule 11 CPC

“If Any Triable Issue Arises From The Pleadings, The Plaint Cannot Be Summarily Rejected”, In a decisive reaffirmation of the narrow scope of Order VII Rule 11 CPC, the Allahabad High Court has held that a civil suit cannot be rejected at the threshold merely because the plaintiff alleges that the property stands benami in the name of a family member.

The Court declared that the bar under Section 4(1) of the Benami Transactions (Prohibition) Act, 1988 does not automatically apply where the plaintiff invokes the statutory exceptions under Section 4(3), and such issues necessarily require evidence.

On 10 February 2026 , Hon’ble Mr. Justice Sandeep Jain set aside the order of the Civil Judge (Senior Division), Meerut, which had rejected the plaint under Order VII Rule 11(d) CPC. The High Court restored the suit to its original number and directed its expeditious disposal within six months.

The ruling stands as a significant pronouncement on the interplay between procedural law and the substantive bar under the Benami Act.

The plaintiff, Sunil Kumar Dublish, sought a declaration that he was the absolute and sole owner of House No. 342/1, Harnamdass Road, Civil Lines, Meerut. He pleaded that the property, though purchased in 1989–1990 in the name of his mother, Smt. Sarla Dublish, was acquired from funds belonging to the Hindu Undivided Family and from income generated by a partnership firm in which his father was a sleeping partner.

According to the plaint, the agricultural property originally belonged to his grandfather, Late Shanti Saran Dublish, and devolved upon his father after a family partition in 1953. The plaintiff asserted that the residential property was purchased from HUF funds and proceeds of joint family assets but was registered in his mother’s name in a fiduciary capacity.

After the mother’s death, disputes arose regarding a Will allegedly executed by her. The plaintiff contended that she had no independent title and therefore could not have validly bequeathed the property.

The defendants moved an application under Order VII Rule 11(d) CPC, arguing that since the plaintiff himself described the transaction as benami, the suit was barred under Section 4(1) of the 1988 Act. The trial court accepted this plea and rejected the plaint, prompting the present appeal.

“Court Must Confine Itself To The Plaint” – Scope of Order VII Rule 11 CPC

Justice Sandeep Jain reiterated the settled position that at the stage of deciding an application under Order VII Rule 11 CPC, the Court must examine only the averments made in the plaint and the documents filed along with it.

The Court observed:

“It is also apparent that if any triable issue arises out of the pleadings of the plaintiff, then the plaint cannot be summarily rejected.”

Relying on precedents such as Vinod Infra Developers Ltd. v. Mahaveer Lunia and Keshav Sood v. Kirti Pradeep Sood, the Court made it clear that neither the written statement nor the defence documents can be looked into at this preliminary stage. The Court is not required to test the merits of the plaintiff’s claim but only to see whether the suit is barred on the face of the plaint.

“Whether The Property Is Benami Or Falls Within Section 4(3) Is A Matter Of Evidence”

The High Court closely examined Sections 4(1) and 4(3) of the Benami Transactions (Prohibition) Act, 1988. While Section 4(1) bars suits by a person claiming to be the real owner of property held benami, Section 4(3) carves out crucial exceptions where the property is held by a coparcener in an HUF for the benefit of the family or by a person standing in a fiduciary capacity.

The Court categorically held:

“Whether the disputed property is Benami or not, is a disputed question of fact, which cannot be decided at the stage of considering an application under Order 7 Rule 11 CPC.”

It further clarified that where a plaintiff pleads that the property was purchased from joint family funds or that it was held in a fiduciary capacity, the applicability of the statutory exception becomes a matter requiring full-fledged trial.

“Fiduciary Relationship Between Son And Mother Cannot Be Ignored”

A key aspect of the judgment was the recognition of the fiduciary exception under Section 4(3)(b). The trial court had reasoned that the mother was not a coparcener and hence the exception under Section 4(3)(a) was inapplicable. However, the High Court held that Section 4(3)(b) is wider and includes trustees or persons standing in fiduciary capacity.

Justice Jain observed:

“It is true that the plaintiffs mother was not a coparcener in the alleged HUF but certainly, there was a fiduciary relationship between the plaintiff and his mother Sarla Dublish, which lies within the exception enumerated in Section 4(3)(b) of the Act of 1988.”

The Court further noted that even a husband could purchase property in the name of his wife, and if the funds originated from HUF assets or the plaintiff’s income, the statutory bar under Section 4(1) would not apply.

Thus, the existence of a fiduciary relationship and the source of funds were held to be matters that could only be determined on evidence.

Burden of Proving Benami – Cannot Be Decided Without Trial

Referring to Supreme Court decisions including Pushpalata v. Vijay Kumar, Marcel Martins v. M. Printer, Shaifali Gupta v. Vidya Devi Gupta, and Pawan Kumar v. Babulal, the Court reiterated that the burden of proving a benami transaction lies on the person asserting it.

Such determination depends upon factors like the source of purchase money, the relationship between parties, possession, conduct, and surrounding circumstances. These are factual issues that cannot be conclusively adjudicated at the stage of Order VII Rule 11 CPC.

Trial Court’s Order Termed “Perverse”

In clear terms, the High Court concluded:

“From the above discussion, it is apparent that the trial court has committed material illegality in allowing the defendants application under Order 7 Rule 11(d) of CPC. The impugned order is perverse and is liable to be set aside.”

Accordingly, the appeal was allowed, the order dated 30 August 2025 was set aside, the application under Order VII Rule 11 CPC was dismissed, and the suit was restored. The trial court was directed to decide the matter within six months without granting unnecessary adjournments.

This judgment delivers an important procedural safeguard in property disputes involving allegations of benami transactions. It reinforces that the statutory bar under Section 4(1) of the Benami Act cannot be invoked mechanically to defeat a suit at inception where the plaintiff invokes exceptions under Section 4(3).

The Allahabad High Court has once again underscored that civil disputes involving complex family property arrangements, fiduciary relationships, and joint family funds must be resolved through evidence — not by summary rejection.

Date of Decision: 10 February 2026