JUDGMENT
Thomas, J.
1. The hub of the dispute, shorn of all its ramifications, is whether Section 4 of the Benami Transactions (Prohibition) Act, 1988 (for short ‘the Benami Act) applies to “sham transactions”. Bhaskaran
Nambiar, J. has held in Ouseph Chacko v. Raman Nair, (1989) 1 Ker LT 767 : (AIR 1989 Kerala 317), that it does not. But one of the observations made by Balakrishnan, J. in Mohanan v. Yesoda, (1989) 1 Ker LT 867 : (AIR 1989 Kerala 286) is treated as expression of contrary view. Though the decision of Balakrishnan, J. was rendered earlier in point of time, we don’t think that Bhas-karan Nambiar, J. was aware of the said decision. Varghese Kalliath, J. while hearing arguments in C.R.P. No. 1446/89 noticed the aforesaid conflict in views of two learned Judges mentioned above and hence through a fairly lengthy reference order referred the question to a Bench which in turn the Division Bench has referred to the Full Bench.
2. Shri Thottathil B. Radhakrishnan, Advocate, has raised a contention that Balakrishnan, J. has not in fact adopted a contrary view in Mohanan v. Yesoda, (1989) 1 Ker LT 867 : (AIR 1989 Kerala 286) in conflict with the ratio involved in Ouseph Chacko v. Raman Nair, (1989) 1 Ker LT 767 : (AIR 1989 Kerala 317). Be that as it may, we will now examine the question whether sham transactions are included within the purview of the Benami Act at least partially.
3. For the sake of convenience we will set out the facts in C.R.P. No. 1446/89 in which Varghese Kalliath, J. has passed the reference order. That revision arose out of a suit filed for a declaration that title of the suit property is that of the plaintiff in spite of a document executed by the plaintiff in favour of his wife purporting to transfer the property to the transferee. According to the plaintiff, it was a sham transaction and the property ever remained with him. Hence the suit for declaration of title. But the wife contended that it was a genuine transaction. She resisted the suit, inter alia, on the ground that the suit is not maintainable in view of S- 4 of the Benami Act. The contention was repelled by the trial court on the strength of the decision in Ouseph Chacko’s case (AIR 1989 Kerala 317). So, the defendant filed the revision against the said order by which the objection regarding maintainability was repelled.
4. Before the Benami Act was passed, there existed an ordinance called “the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988” (for convenience, we shall refer to it as ‘the Ordinance’). It came into force on 19-5-1988. It was replaced by the Benami Act on 5-9-1988. In between the two, there was deliberation at the instance of the Law Commission of India which submitted its 130th Report which eventually paved the way for passing the Benami Act.
5. Before the Benami Act and even before the promulgation of the Ordinance, Courts in India have, by and large, recognised two distinct classes of transactions as Benami. The first type or class of Benami transaction was called the real benami transaction. A typical instance of it is when ‘A’ sells a property to ‘B’, but the sale-deed mentions ‘C’ as the purchaser. Here the real purchaser is ‘B’and ‘C’is only the benamidar. Such a transaction is described as the real benami transaction. The second class or category of benami transaction is the sham transaction in which one person purports to transfer his property to another without intending to pass the title to the transferee. This second type of transaction was “loosely” called benami transaction. (For convenience, the first type of transaction can be referred to hereinafter as tripartite benami transaction — as three persons are involved in it — or the first category of benami transactions. The second class of transaction can be referred to either as bipartite benami transaction — since only two persons are involved in it — or the second category of benami transaction).
6. The fundamental difference between the two categories of transactions is this. In the former, there is an operative transfer resulting in vesting of title in the transferee, whereas in the latter, there is no operative transfer and the transferor continues to retain title of the property notwithstanding execution of the document. The latter transaction is known as “sham transaction”.
7. In Sree Meenakshi Mills Ltd. v. Income-tax Commissioner, AIR 1957 SC 49, Venkatarama Ayyar, J. has stated that the
first category of transactions is ‘usually’ termed as ‘benami’, white the second category is ‘occasionally’ used as a benami transaction. His Lordship added that it is “perhaps not accurately so used”. In Bhim Singh v. Kan Singh, AIR 1980 SC 727, Venkataramiah, J. (as he then was) straightaway called the first category as benami, but has chosen to describe the second category as “loosely” termed benami.
8. By the Ordinance, a prohibition was imposed against enforcement of any right “in respect of any property held benami” and no defence based on any such right was permitted to be raised by or on behalf of a person claiming to be the real owner of such property. The Ordinance had only one operative provision and that was Section 2, the hub of which is mentioned above. Section 3 of the Ordinance cleared that nothing in it shall affect Section 53 of the Transfer of Property Act. The only remaining provision, Section 4 consisted of a repeal provision by which Section 82 of the Indian Trusts Act, 1882, Section 66 of the Code of Civil Procedure and Section 281-A of the Income-tax Act, 1961 were repealed. It is contextually relevant to point out that the Ordinance did not contain any definition for benami transaction and hence it was thought that the Ordinance would have embraced both types of benami transactions.
9. The Benami Act received the assent of the President of India on 5-9-1988. It is atiny statute consisting only of nine sections including all the formal and usual provisions necessary for a statute. It contains a definition for “benami transaction” under Section 2 as this : “In this Act, unless the context otherwise requires,– (a) ‘benami transaction’ means any transaction in which property is transferred to one person for a consideration paid or provided by another person”. The aforesaid definition, apparently, takes in only the first category or the tripartite benami transactions. Section 3 of the Benami Act contains a prohibition against any person entering into any “benami transaction”. It also contains a penal provision that whoever enters into any benami transaction shall be punishable with imprisonment…..”. It was not contended
that Section 3 of the Benami Act has any application to the second category or bipartite transactions. Section 4 of the Benami Act prohibited enforcement of any right “in respect of any property held benami”. Subsection (2) imposed a ban against setting up of any defence based on any right “in respect of any property held benami”. It provided two exceptions to the prohibition contained in the section. (As they are not relevant, we omit them here). Sections of the Benami Act contained a new provision that “all properties held benami shall be subject to acquisition…..” and it was declared [hat no
amount shall be payable for such acquisition. In the repeal provision (Section 7) Section 81 of the Trusts Act was also included within the sweep of repeal in addition to the repeals made in the Ordinance.
10. As the expression “benami transaction” is not used in Sections 4 and 5 of the Benami Act, it is contended that the sections would rope in both categories — tripartite and bipartite — of transactions. The further contention is that Section 3 of the Benami Act is intended to cover only the first category of benami transactions while Sections 4 and 5 embrace both categories and as such sham transactions, though they are called benami only loosely, are nevertheless covered by the two sections.
11. Shri T. R. G. Wariyar, senior counsel, led the main arguments. Shri Rajasekharan Nair supplemented to the same. Shri Thotta-thil B. Radhakrishnan has addressed the main arguments on the opposite side which was supplemented by Shri V. Sivaswamy, Advocate.
12. The main points stressed by the counsel who argued in favour of the expensive scope of the Benami Act are the following : (1) The definition clause took care to caution that the contours of the definition are pliable in accordance with the context by employing the words in the definition portion “unless the context otherwise requires”. (2) In spite of using the expression “benami transaction” for definition purpose, the legislature has chosen not to use that expression in Sections 4 and 5. Instead the legislature has cautiously adopted
a different expression “property held
benami,” though the legislature could have
conveniently employed the words “property
held under a benami transaction”, if it
intended to have the first category or the
tripartite transaction alone to be covered by
those sections. Change of expression in
different context must be treated as a legis
lative practice of emphasising a change in the
application, contended the counsel by quot
ing Maxwell on “Interpretation of laws” (at
page 282 of the 12th edition). (3) A perusal of
130th Report of the Law Commission of
India which paved the way for the present
shape of the Benami Act would unerringly
show that the idea was to cover both types of
transactions. A Statement of Objects and
Reasons for the Bill introduced in Lok Sabha
for making Benami Act is yet another aid. (4)
By the Ordinance Section 81 of the Trust Act
was retained intact. Section 82 covers only the
tripartite benami transactions. But when the
Benami Act was passed Section 81 of the
Trust Act was also repealed as the said section
covers cases belonging to the second category
or bipartite transactions. Parliament by
repealing Section 81 of the Trust Act was
certain about the superfluity of such a provi
sion as the same was banned in the Benami
Act, according to the counsel. Those are the
main contentions.
13. We remind ourselves of the well established guidelines for interpretation of statutory provisions. The object of purpose of all constructions or interpretations is to ascertain the intention of the law-makers and make it effective. In Crawford’s “Interpretation of Laws” learned authors quoting from a series of decisions, stated that “the basic principle has been announced time after time that if the statute is plain, certain and free from ambiguity a bare reading suffices and interpretation is unnecessary. It is only when the statute is ambiguous or its meaning is uncertain that interpretation is required in order to ascertain what the legislature meant”, (vide page 244). The caution in this regard is that in the endeavour to discover the intention of the law-maker court shall not rewrite a statute and shall not exercise a sort of legislative power which the court does
not have. Even when Lord Coke reported Heydon’case “the mischief rule” laid down the standards to eschew the mischief which the statute wanted to undo and uphold the remedy adumbrated therein. (Maxwell on “Interpretation of Statutes” at page 40 of the 12th Edition.).
14. A Constitution Bench of the Supreme Court has observed in Nagiprasad v. A.D. Divelkar, AIR 1957 SC 121, like this: “There is no doubt that when the Act itself provides a dictionary for the words used, we must look into that dictionary first for an interpretation of the words used in the statute. We are not concerned with any presumed intention of the legislature, our task is to get at the intention as expressed in the statute.” Supreme Court has again stated in Mutto v. T.K. Mandi, (1979) 1 SCC 361 : (AIR 1979 SC 460) that “the court has to determine the intention as expressed by the words used. If the words of a statute are themselves precise and unambiguous then no more can be necessary than to expound those words in their ordinary and natural sense. The words themselves alone do in such a case best declare the intention of the lawgiver.” A Constitution Bench of the Supreme Court in Punjab Land Devl. and Reclamation Corpn. Ltd., v. Presiding Officer, Labour Court, (1990) 3 SCC 682 has reiterated the principle and further quoted with approval the observations of Tindal, C.J. in Sussex Peerage case (1844) SER 1034.
15. Shri T.R.G. Wariyar has taken us though the relevant portions from the voluminous Report of the Law Commission (130th Report) and also the statement of Objects and Reasons for the Bill (which ultimately resulted in the passing of the Benami Act in replacement of the Ordinance). We are not able to discern from such materials any reason highlighted for truncating benami transaction to the first category — tripartite — alone. But such materials can at the most be used to aid the court in finding out the intention of the legislature, when such intention cannot be gathered from the words of the statute itself. So, the primary effort which we have to endeavour at is to churn out the legislative intent from the words of the
staute. Only in case of failure in the endeavour, would we be justified in resorting to external aids?
16. When it is not disputed that the definition contained in Section 2(a) of the Benami Act will take in only the first category of benami transaction, it can be said without any ambiguity that Section 3 will apply only to the first — tripartite — category. In fact, there was no dispute on that point. Section 3 prohibits future benami transactions. If the prohibition is confined to the first — tripartite — category of benami transactions, it means that the sham transcations are not prohibited by the Act. Sub-section (2) is an exception to the said prohibition and in spite of the prohibition a “purchase” made in the name of wife or daughter is made permissible with a rider that such a “purchase” shall be presumed for her benefit. It is to be noted that Sub-section (2) refers only to a “purchase” and not a sale. Sub-section (3) makes it punishable offence of any one entering into the first category — tripartite — benami transactions. This means that whoever enters into the second category — bipartite — benami transaction has no penal consequence prescribed in the Benami Act. We are not told of any special legislative object in confining the prohibition and the penal provision to the first category — tripartite — benami transactions. We could not disccern any jurispru-dential idea in drawing a hiatus between the two categories just for the purpose of including only one among them within the amplitude of the prohibition and penal consequences prescribed in one section and to secure the other transaction from the tentacles of that provision, while at the same time to incorporate both categories of benami transactions to be subjected to the consequences envisaged in the next following two sections. Why should there be such a partisan treatment to one category of benami transaction if the legislature intended both transactions to be involved in the statute?
17. If the argument that the definition clause is not to be followed in regard to Sections 4 and 5 of the Benami Act gains acceptance then practically the definition clause has utility only for just one section in
the Benami Act i.e., Section 3. Is it a legislative practice in delineating a definition clause with all its intents and purposes solely for using the same in regard to just one section in the statute? Had that been the idea, the draftsman would only have given the definition in Section 3 itself to the effect that benami transaction mentioned in the section would mean the first category. This is how normally enactments are framed up if the intention was that. Instead of adpoting such a convenient method of draftsmanship, the legislature included the definition in a separate section and in a specific clause.
18. Again, the definition provision contains the introductory paragraph like this: “In this Act, (a) benami transaction means …..”. If the Parliament had an idea of
confining the definition to Section 3 alone, why should it have said the defintion is intended for “this Act”. That apart, the idea of using the word means instead of the word “includes” must also be pointed out with a particular emphasis.
19. Beg. J. (as he then was) has observed in State of T.N. v. Pyare Lal Malhotra, AIR 1976 SC 800 that a definition is expected to be exhaustive, but the terms may show that they are not meant to be so exhaustive. “For example, a purported definition may say that the term sought to be defined includes what it specifies, but in that case the definition by itself is not complete”. Craies on Statute Law (7th Edition — page 213) states that “where an interpretation clause defines a word to mean a particular thing, the definition is explanatory and prima facie restrictive, and whenever an interpretation clause defines a term to include something, the definition is extensive. The aforesaid passage has been quoted by the Supreme Court with approval in Central Inland Water Transport Corpn. Ltd. v. Broje Nath, AIR 1986 SC 1571.
20. Hence, by expressing that the definition is intended for the Act and by employing the restrictive term “means” in preference to the word “includes”, Parliament has conveyed its intention that the word benami transaction is not to be confined to one section alone and also that the definition
would contain only one category — tripartite — of benami transaction.
21. In this context we would point out that employment of the words “unless the context otherwise requires” has no special impact on the statute so far as benami transaction is concerned. Perhaps, those words may be useful in regard to the other terms included in the definition section. Those words are, no doubt, indicative of some play at the joints, but even without emloy-ment of such words a definition will be useful only subject to the inviolable rule that the meaning will remain like that unless the context otherwise requires.
22. The aforesaid position was considered in Sales Tax Commissioner, Gujarat v. Union of Medical Agency, AIR 1981 SC 1. In paragraph 14, their Lordships have pointed out that it is a well settled principle that when a word or phrase has been defined in the interpretation clause, prima facie that definition governs whenever that word or phrase is used in the body of the statute. But where the context makes the definition clause inappli-able, a defined word when used in the body of the statute may have to be given a meaning different from that contained in the interpretation clause, all definitions given in an intepretation clause are, therefore, normally enacted subject to the usual qualification “unless there is anything repugnant in the subjecte or context” or “unless the context otherwise requires”. Even in the absence of an express qualification to that effect such a qualification is always implied.
23. If Section 5 of the Benami Act has application to both categories of benami transactions, the consequence is that the property covered by the latter is also liable to be acquired without compensation or payment of any amount. The provision is enacted for the purpose of enabling the authority concerned to acquire the property held benami. If the property held under bipartite benami transaction is liable to be acquired without compensation, why the legislature has not declared it as opposed to public policy
and prohibit the same prospectively? We fail to comprehend any reason whatsoever as to why the Parliament subjected only the tripartite transaction to prospective prohibition as well as penal consequences and saved the bipartitite transaction therefrom and subject to both to the consequences envisaged in Section 5 of the Benami Act. A reading of Section 5 would indicate that it is yet another form of penalty on the parties involved in a benami transaction as the property is made liable fo acquisition without compensation. It is again difficult to think that Parliament would have intended to encompass the bipartite transaction within the tentacles of Section 5 of the Benami Act without making the position understandably clear.
24. Parliament must be presumed to be aware of the legal principles laid down by the Supreme Court and the High Court, at least those which have been settled. When the Act was enacted, Parliament must be aware that the Judge made law has covered both types of transactions — tripartite and bipartite transactions — within the ambit of benami transactions. Still the Parliament has chosen to confine the definition to one category alone. We feel, that the idea was to make the intention abundantly clear that Parliament did not want to encircle the second category.
25. In the above context it has to be pointed out that when the Ordiance has chosen to leave benami transaction without claiming it into any defined contours, the Parliament has chosen to set up boundaries for it in the Benami Act by creating a definition.
26. Section 1 (3) of the Benami Act reads
thus:
“The provisions of Sections 3, 5 and 8 shall come into force at once, and the remaining provisions of this Act shall be deemed to have come into force on the 19th day of May, 1988”.
Thus, the definition clause “benami transaction” in Section 2(a) took effect from 19-5-1988. What would have been the object of Parliament in giving retrospective application to the paid definition clause from the date which was the date of promulgation of the
Ordinance? It must be remembered that except in the captain of the Ordinance the expression “benami transaction” has not been used in .the Ordinance. Yet the definition ‘benami transaction” was declared to have come into operation from the date of Ordinance. To us the intention is manifest that Parliament wanted even the Ordinance to confine to the tripartite benami transaction and not the other.
27. We shall now consider the contention based on Parliament using the expression “property held benami” unstead of the expression “property held under a benami transaction” in Sections 4 and 5 of the Benami Act. Bhaskaran Nambiar, J. has endeavoured to explain it in Ouseph Chacko v. Raman Nair, (1989) 1 Ker LT 767 : (AIR 1989 Kerala 317). Learned Judge took the view that “in the context and setting of Section 4, the word held has to be understood as possessed or occupied, and if the possession or occupation is not benami Section 4 has no application.” No particular reason Can be attributed as to why the Parliament did not use the expression “held under a benami transaction”, but restricted to “property held benami”. It can at best be attributed to frugality in draftmanship of legislative exercises. Having defined “benami transaction” it might be unnecessary to repeat “property held under benami transaction”. We bear in mind that the reference there is to the subject “property” and not to the transaction. The character of the subject is denoted by the words “held benami”.
28. In a sham transaction there is no “holding” of a property in benami. One person holds a property benami if he has at least ostensible title. In Handique v. Agrl. I.T. Board, Assam, AIR 1966 SC 1191 and Hari Ram v. Babu Gokul Prasad, AIR 1991 SC 427 the expression “hold” is understood as the actual possession invested with legal title. In the first category — tripartite — in which the transaction took place, transferee can hold the property under a legal title though he is only an ostensible title holder. It cannot be thought that by using the expression “property held benami” the Parliament would have made a substantial departure from
“property held under a benami transaction”.
29. -That apart, a contention advanced by Shri. Thottathil B. Radhakrishnan in this context appears to us to provide a formidable support to the view that Benami Act applies only to the first category — tripartitle –transactions. It was pointed out earlier that the definition clause in Section 2 has been given retrospective operation from the date of promulgation of the Orinance. It would certainly mean that the Parliament wanted the meaning given to benami transaction as defined in Section 2(a) of the Benami Act to be applicable to the Ordinance. It is significant to note that in the Ordinance the only operative provision (Section 2) contained the expression “any property held benami” and not “property held under benami transaction.” It must also be noted that there is no other provision in the Ordinance where the expression “benami transaction” was used. Thus, if the meaning given to “benami transaction” in Section 2 of the Benami Act has to apply to any provision in the Ordinance, the only provision which can have the use is Section 2 of the Ordinance wherein also the expression employed is “property held benami”. We think that this aspect would really clinch the issue.
30. However, we shall now consider how for the inclusion of Section 81 of the Indian Trusts Act within the sweep of repeal in the Benami Act would have any impact on the provisions of the Benami Act for encircling the second category — bipartite — benami transaction at least partially.
31. The repeal provision in the Ordinance is Section 4(1) of the Ordinance which reads thus:
“4. Repeal of provisions of certain Acts, — (1) Section 82 of the Indian Trusts Act, 1882 (2 of 1882), Section 66 of the Code of Civil Procedure, 1908 (5 of 1908) and Section 281 A of the Act Income-tax Act, 1961 (43 of 1961), are hereby repealed.”
It is clear that the two additions brought in the repeal sweep under the Benami Act are Sections 81 and 94 of the Indian Trusts Act. There is no much difficulty to comprehend
the principles involved in Section 82 of the Trust Act. It is analogous to the first category –tripartite — benami transaction since in both there is an operative transfer of property for consideration. The prominent feature of the second category benami transaction is that there is neither any transfer nor any passing of consideration. It is a sham transaction which is only a camouflage. The document is a facade behind which nothing took place in reality. But Section 81 of the Trusts Act contains transfer of the property concerned as sine qua non for its application. The said section is extracted below:
“81. Where it does not appear that transferor intended to dispose of beneficial interest — Where the owner of property transfers or bequeaths it; and it cannot be inferred, consistently with the attendant circumstances, that he intended to dispose of the benaficial interest therein, the transferee or legatee must hold such property for the benefit of the owner or his legal representative.”
By no stretch of imagination can it be said that Section 81 of the Trusts Act was intended to refer to the second category of benami transaction.
32. Even otherwise, mere expansion of the sphere of repeal is no indication that the Parliament wanted to spread the umbrella beyond the contours fixed in the definition as to the application of Sections 4 and 5 of the Benami Act. It must be remembered that Section 94 of the Trusts Act was also repealed which is another improvement in the Benami Act from the Ordiannce, Nobody can possibly contend that Section 94 of the Trusts Act would cover any type of benami transaction.
33. We have no reason to think that neither Section 66 of the Code of Civil Prosecution or Section 281 A of the Income-tax Act would ever have envisaged a sham transaction and hence the repeal of these two sections has no special implication on the question involved herein.
34. The scheme as well a the setting unfurled in the tiny piece of legislation –Benami Act would thus unrm’stakbly pro-
claim even though the frugality of words set forth therein that it is only the tripartite benami transaction (which is recognised by the case law as the real benami transaction) which the Parliament has sought to snuff out with its statutory forceps. The corollary is that Parliament would not have intended to . make any foray into the sphere of sham transaction, perhaps because what.is sham will ever remain sham though the case law happened to “loosely”or “inaccurately” call that also benami.
35. A learned Judge of the Madras High Court has held in Kathoon Bivi Ammal v. Section Mohamad, (1990) 1 Mad LW 284 that Benami Act would apply to both categories of transactions. The reasoning adopted by the learned Judge is that inclusion of Sections 81 and 82 of the Trusts Act within the repeal provision is indicative that sham transaction also is brought within the purview of the Benami Act. We pointed out earlier that repeal of Sections 81 and 82 of the Trusts Act cannot have such an implication on the scope of the Benami Act. That apart, correctness of the decision in Kathoon Bivi Animal’s case was questioned and a Division Bench of the Madras High Court in N. Govindrajan v. Indian Overseas Bank, (1991) 1 Mad LW 649 has overruled the same. Ratnam, J. (as he then was) quoted the decision of Ouseph Chacko v. Raman Nair (1989) 1 Ker LT 767 : (AIR 1989 Kerala 317) and followed the ratio in arriving at the said conclusion.
36. For the aforesaid reasons, we are in agreement with the conclusion arrived at by Bhaskaran Nambiar, J. in Ouseph Chacko v. Raman Nair, (1989) 1 Ker LT 767 : (AIR 1989 Kerala 317) that Sham transactions do not come within the purview of the Benami Act.
Accordingly, we dismiss C.R.P. No. 1446/89. Counsel for the petitioner in C.R.P. No. 1188/87 reported that the revision is not pressed and hence that revision is also dis-missed, A.S. No. 84/84 and A.S. No. 424/81 have to be heard and disposed of on merits in view of the decision regarding the point referred to the Full Bench. Hence we direct the registry to board the said appeals before
the appropriate Bench without delay.
