August 13, 2018
Delhi HC: Husband can Claim Ownership over Property Purchased in Wife’s Name
An intriguing concern has been settled by the Delhi High Court, whereby the Court while referring to the Amended provision of the Benami Transactions (Prohibition) Act held that it is legally permissible for a person to purchase an immovable property in the name of his spouse from his known sources but the property will be person purchasing the property and not of the wife/spouse in whose name title deeds exist.
Case name: Manoj Arora v. Mamta Arora
In this case, the Appeal was preferred by the Plaintiff against Trial Court’s order, whereby the Court rejected the Plaintiff’s plaint by applying provisions of Section 4 read with repealed Section 3(2) of the Benami Transactions (Prohibition) Act, 1988.
Sub-section (2) of section 3 of the Benami Transactions (Prohibition) Act, 1988 contemplates that when a property is purchased by a person in the name of his wife, there is a rebuttable presumption that the property had been purchased for the benefit of the wife.
Section 4 of the Act prohibits recovery of property held in Benami.
In the case, the Appellant husband claimed relief with respect to two properties which he claimed were purchased by him from his own sources, however in the Title Deeds of both the Properties, the name of respondent wife existed. Accordingly in the suit, reliefs of declaration and injunction were claimed that it was the appellant who was the owner of the properties and not the respondent wife.
Delhi High Court
With reference to legal provisions, the Delhi High Court allowed the Appeal and set aside the Trial Court’s order. It was observed by the High Court that:
- That the trial court committed fundamental error in rejecting the suit plaint by relying upon the provision of Section 4 read with repealed Section 3(2) of the Benami Transactions (Prohibition) Act, 1988.
- It was observed by the Court that when the impugned judgment was passed on 19.12.2016, the Prohibition of Benami Property Transactions Act, 1988 was applicable w.e.f 1.11.2016 and as per Section 2(9) of the Amended Act what is a Benami Transaction is stated, and also those transactions which are not benami are are also stated/specified.
- The Court in view of the facts of the case noted that the properties in the name of the respondent wife will fall as an Exception to the prohibited benami transaction in view of Section 2(9)(A)(b) Exception (iii) inasmuch as it is legally permissible for a person to purchase an immovable property in the name of his spouse from his known sources, and in which position, the property purchased will not be a benami property but the property will be of the de jure Appellant husband and not of the de facto owner (in whose name title deeds exist), being the respondent wife in the present case.
Here it would be relevant to mention that the The Benami Transactions (Prohibition) Act 1988 was amended and renamed as the Prohibition of Benami Property Transactions Act, 1988 w.e.f. November 01, 2016. As per the amended definition clause under Section 2, a transaction os not a benami transaction when the property is held by any person being an individual in the name of his spouse or in the name of any child of such individual and the consideration for such property has been provided or paid out of the known sources of the individual.
The entire case can be accessed here.