Legal principle

Courts are concerned not with the façade but with the substance that lies beneath it, and the judicial process cannot be invoked to validate, protect, or perfect that which the law itself declares impermissible.

Court decision

The Supreme Court allowed the defendants' appeal and set aside the High Court's judgment dated 22.02.2024: the transaction was held benami, the suit properties were held liable to confiscation under Section 27 of the Benami Act, and the Central Government was directed to appoint an Administrator and take over the properties within eight weeks, with no court to entertain any claim founded on the benami transaction; no order as to costs.

Facts

D.A. Srinivas (plaintiff/respondent) sued the widow and children of the late K. Raghunath (appellants/defendants) in O.S. No. 246 of 2020 seeking declaration of ownership of suit schedule properties (agricultural lands) on the strength of a Will dated 20.04.2018, with rectification of the schedule and injunction, while on the plaintiff's own pleadings he had financed the purchase of the lands in the deceased's name as a name-lender owing to statutory restrictions on his own eligibility to purchase them. The defendants applied under Order VII Rule 11(a) and (d) CPC to reject the plaint as disclosing no cause of action and as barred by Sections 4 and 6 of the Prohibition of Benami Property Transactions Act, 1988, and the trial court rejected the plaint on 30.10.2023. The Karnataka High Court, in RFA No. 2216 of 2023 (DEC/INJ), reversed on 22.02.2024, holding the pleadings did not attract the Benami Act, and restored the suit for trial. The defendants appealed to the Supreme Court, which stayed the restored proceedings by order dated 08.04.2024; the deceased had been murdered and the plaintiff was stated to be the principal accused in the pending criminal proceedings.

Key provisions

• Section 105, Customs Act, 1962 — Power to search premises
• Section 137, Customs Act, 1962 — Cognizance of offences