Ashutosh Gupta and Gaurav Rana
The burden of proof of a fact is the most crucial aspect in any legislation and disputes or litigation arising in the implementation of the legislation. Entire thrust of the litigation and also the fate of the parties to the litigation depends on this fundamental issue. In this piece we will discuss upon whom the burden of proof lies under Prohibition of Benami Property Transactions Act, 1988 (“Act” or “PBPT”), whether it is the Respondents/benamidar/real owner etc. or the Initiating Officer (“IO”).
We will also be discussing the impact of Benami Transactions (Prohibition) Amendment Act, 2016 (“Amendment Act”) on the said burden.
A. BURDEN OF PROOF:
Before adverting to the issue it is incumbent to understand that what is burden of proof and principally upon whom the said burden lies. It would be profitable to reproduce Section 101 and 102 of the Evidence Act herein :
“101. Burden of Proof.- Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person”
“102. On Whom Burden of Proof lies .- The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.”
From the above it can be deciphered that principally the petitioner/complainant is the person upon whom the burden of proof lies and if he fails therein to discharge the said burden then suit/proceedings initiated by him would also fail.
B. POSITION BEFORE AMENDMENT ACT:
Prior to the Amendment in 2016 the Hon’ble Supreme Court in catena of judgements decided the issue raised in this piece. Some of the dictums of the Hon’ble Supreme Court are enlisted herein below:
It has been pointed out by the Hon’ble Supreme Court in Shih Kumari Devi v. Jagdish Prasad Singh, 1962 BLJR 314 (SC) that
“the burden of proof is to begin with on the party pleading that the transaction is benami.
It was also inter-alia observed that:
“Suspicious circumstances are not sufficient to prove the benami character of a transaction “
As recently as in 2004, the Hon’ble Supreme Court in the case of Valliammal v. Subramaniam and others (2004) 7 SCC 233), held that:
“This court in a number of judgments has held that it is well established that burden of proving that a particular sale is benami lies on the person who alleges the transaction to be a benami. The essence of a benami transaction is the intention of the party or parties concerned and often, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him, nor justify the acceptance of mere conjectures or surmises, as a substitute of proof.
In 2008 again, the Hon’ble Supreme Court occasioned in Smt. P. Leelavathi (D) vs V. Shankarnarayana Rao (Civil Appeal No. 1099 of 2008, Dt. of judgment 9th April 2019) to discuss and analyse the entire law with regard to benami transactions and laid down important propositions:
” ………. It is well settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact …….. “
On conjoint reading of the aforesaid judgements and provisions of the Evidence Act, though not strictly applicable but principles enunciated in it have binding force on the benami proceedings, person alleging benami transaction and real owner to himself is bound to lead the evidence and discharge burden with cogent and credible evidences.
C. POSITION POST AMENDMENT ACT:
A bare perusal of the Amended Act would reveal that there is no provision under the law stipulating or shifting the burden of proof upon the defendant. There is no provision under Amended provision wherein any presumption has been made about existence of a fact in favour of the authority alleging a transaction/property to be benami and issuing a show cause notice to that effect nor there is any such presumption against the person to whom such notice is issued. Thus, it could be surmised that the burden of proof is still on the person alleging i.e. Initiating Officer (post amendment).
Said proposition was tested in K. Renuga v. K. Visakh [FPA/PBPT/28,40 AND 51/CHN/2018) by Appellate Tribunal for Forfeited Property (AFTP), New Delhi and held that:
” … 42. The existence of the “benami” transaction has to be proved by the authorities i.e., the person who alleges the transaction (Sitaram Agarwal v. Subrata Chandra MANU/SC/762612008 :  7 SCC
716) …… …. Thus, if the respondent wishes to invoke the amended provision of Benami Act, the respondent has to adhere the provisions strictly as defined and not otherwise against the innocent parties. The respondent has to provide cogent and clear reason to the aggrieved parties.”
It will be profitable to reiterate herein the relevant para of Valliammal v. Subramaninam, supra, wherein the Hon’ble Supreme Court has held that
“There is a presumption in law that the person who purchases the property is the owner of the same. This presumption can be displaced by successfully pleading and proving that the document was taken benami in the name of another person for some reason, and the person whose name appears in the document is not the real owner, but only a benami. Heavy burden lies on the person who pleads that the recorded owner is a benami-holder.”
AFTP in Shri Ramnek Singh Vs IO FPA-PBPT-3/CHD/2018 date 21.06.2019 again occasioned to discuss and analyse the proposition and the amendment’s impact on the same. AFTP after relying on Smt. P. Leelavathi (D) (supra) held that:
“37. In proceedings pertaining to Benami Property /Transaction, it is the Initiating Officer who is the party asserting the existence of benami transaction, therefore the burden of proving such assertion qua cogent evidence is upon the Initiating Officer only and unless such burden is discharged, the other party is not legally obliged to be alled upon to prove his case
39.There is no provision at all which shifts the burden of proof from the Initiating Officer to the Defendant (Appellant here). Thus, the principle of law laid down and clarified by Hon’ble Supreme Court and provisions contained in section 91, 92, 101 and 102 and other provisions of the Indian Evidence Act are applicable here and thus burden of proof to prove a property as ‘benami’ was upon the Initiating Officer, which has not been discharged.”
From the above it can be lucidly deducted that in the absence of a statutory presumption shifting the onus onto the defendants, the onus of proof a in the initial stages shall always remain upon the Initiating Officer due to the presumption as expounded by the Hon’ble Supreme court that a purchaser is presumed to be the owner of the property until he brings out with cogent evidences either direct or strongly circumstantial that a presumption arises that the transaction is benami. Only then can the onus be said to shift to the Defendants to disprove the new presumption.
Thus, from the above it can be unresistingly concluded that burden of proof has to be shouldered by the person alleging benami transaction even after benami Amendment, 2016 and said proposition holds the land. In other words it is the duty of the Initiating Officer to first discharge the burden by adducing cogent, irresistible and strict proof/evidence to support his case of benami and then only burden will shift to the Defendant to rebut the conclusion drawn by the IO and adduce evidence in his favour.
#PBPT #BenamiTransactions #BenamiProperty #ILS
Authors are advocates at New Delhi and Managing Partner & Partner respectively at Indo Legal Services a boutique law firm in New Delhi.
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