(Special Leave Petition (Civil) No. 4673 of 2023), delivered on 20 May 2025.
2025 7 SCR 69
The case centered on whether a lawsuit concerning family properties, alleged to be “benami,” could be dismissed at an early stage.
Background of the Case
The dispute arose within a family, pitting a mother (Smt. Vidya Devi Gupta) and her younger son (Shri Sudeep Gupta) against her elder son (Sandeep Gupta) and his wife (Smt. Shaifali Gupta, who was Defendant No.2 and an appellant in the Supreme Court) and their children12. The plaintiffs filed a suit seeking partition, possession, declaration, injunction, and accounting of various properties3. They claimed these were Joint Hindu Family properties, acquired from the nucleus of joint family funds or income from joint family businesses45. It was further alleged that some of these properties, though purchased in the name of different family members, were joint properties. Critically, Defendant No.2 had sold some of these properties to subsequent purchasers (Defendant Nos.5 and 6, also appellants), and these sales were challenged as void4.
Proceedings in Lower Courts
The subsequent purchasers (Defendant Nos.5 and 6) filed an application under Order VII Rule 11 of the Code of Civil Procedure (CPC), seeking the outright rejection of the plaint6. Their primary argument was that the suit was barred by the Benami Transaction (Prohibition) Act, 1988 (Benami Act), meaning the properties were held “benami” and thus the suit was not maintainable7. Notably, Defendant No.2, the elder son’s wife, did not file such an application herself, nor did she challenge the trial court’s decision later89.
• The Court of First Instance (Trial Court) dismissed the application10. It held that the question of whether the properties were Joint Hindu Family properties or subject to partition was a factual issue that required evidence, and based on the plaint’s averments, the suit was not barred by any law710.
• The High Court upheld the trial court’s decision, affirming that the matter required factual adjudication based on evidence, and the plaint could not be rejected at this preliminary stage711.
Supreme Court’s Reasoning and Judgment
The Supreme Court dismissed the Special Leave Petitions, affirming the decisions of the lower courts12. The Court’s reasoning can be summarised as follows:
1. Standing of Defendant No.2 (Shaifali Gupta): The Court noted that Defendant No.2 had not filed the application under Order VII Rule 11 CPC in the first instance, nor had she challenged the trial court’s rejection of it. Therefore, she was not an “aggrieved person” who could challenge the High Court’s order before the Supreme Court, as she had effectively “acquiesced” to the trial court’s jurisdiction89.
2. Standing of Subsequent Purchasers (Defendant Nos.5 and 6): The Court highlighted that the subsequent purchasers could not claim personal knowledge about the original nature of the properties (i.e., whether they were Joint Hindu Family properties or benami). Thus, they were “not the right person to move application” under Order VII Rule 11 CPC on the ground that the suit was barred by the Benami Act1314.
3. Applicability of the Benami Act:
◦ The Supreme Court found that the plaint itself consistently described the suit properties as Joint Hindu Family properties513. It alleged that they were purchased from joint family funds or income, not explicitly as benami properties in the name of any particular family member5.
◦ The Court stated that, from a plain reading of the plaint, it could not ex-facie be concluded that the properties were benami in a manner that would bar the suit under Section 4 of the Benami Act513.
◦ Crucially, the Court reiterated that whether a property is “benami” and whether it falls under an exception (such as properties held in a fiduciary capacity, as outlined in Section 2(9) of the Act) is a question of fact that requires evidence1315. Such an issue cannot be decided merely on the basis of averments in the plaint at the preliminary stage of an Order VII Rule 11 application1516. The Court referred to its own precedent in Pawan Kumar v. Babu Lal16.
4. Applicability of Section 14 of the Hindu Succession Act, 1956: The appellants attempted to argue that the suit was also barred by Section 14 of the Hindu Succession Act. However, the Supreme Court ruled that this plea was raised for the first time before it and had not been argued before the lower courts1317. Furthermore, the Court clarified that Section 14 of the Act, which states that property possessed by a female Hindu is held by her as a full owner, does not contain any provision that bars or prohibits a suit regarding such property1318.
5. No Prejudice or Miscarriage of Justice: The Supreme Court concluded that the lower courts’ decision to allow the suit to proceed on its merits did not cause any prejudice or miscarriage of justice to the defendants1318. They remain free to contest the suit on all relevant issues after evidence is led18.
In essence, the Supreme Court affirmed that a plaint should not be rejected at an early stage unless it is clearly and unequivocally barred by law on its face. Disputed questions of fact, such as the true nature of property ownership (joint family vs. benami), require a full trial and the presentation of evidence.
