SUPREME COURT AFFIRMS MAINTAINABILITY OF PARTITION SUIT IN PRESENCE OF BENAMI ALLEGATIONS

The Judgment in the Case of Smt. Shaifali Gupta vs. Smt. Vidya Devi Gupta & Ors., Special Leave Petition (Civil) No. 4673 of 2023, and Deepak Lalchandani vs. Smt. Vidya Devi Gupta & Ors., Special Leave Petition (Civil) No. 4674 of 2023 was delivered by a Division Bench of the Supreme Court of India, comprising Hon’ble Justice Pankaj Mithal and Justice Ahsanuddin Amanullah on 20th May 2025. In these cases, the Supreme Court addressed whether a suit for partition of joint family properties can be barred at the threshold under Section 4 of the Benami Transactions (Prohibition)Act,1988 and whether the plaint is liable to be rejected under Order VII Rule 11 of the Code of Civil Procedure.

FACTS OF THE CASE

The case revolves around a family dispute wherein Smt. Vidya Devi Gupta (mother) and her younger son, Sudeep Gupta, filed a suit for partition, possession, declaration, injunctionand accounting against the elder son, Sandeep Gupta, his wife Smt. Shaifali Guptaand other family members, along with two subsequent purchasers. The Plaintiffs claimed that various properties were acquired through joint family income and business, initially from a tailoring business named Himalaya Tailors, and later from a fabric business Hemi Textiles. The properties were allegedly purchased in the names of various family members but were essentially joint family assets. Some of these properties were sold by Shaifali Gupta to the subsequent purchasers, Deepak Lalchandani and Surya Prakash Mishra who contested the suit by filing an application under Order VII Rule 11 CPC, asserting that the suit was barred under the Benami Transactions (Prohibition) Act, 1988. Both the trial court and the High Court rejected this application, prompting the present Special Leave Petitions.

 

MAIN ISSUES

1. Whether the suit filed for partition is barred by Section 4 of the Benami Transactions (Prohibition) Act, 1988.
2. Whether the plaint is liable to be rejected under Order VII Rule 11 CPC at the threshold based on the pleadings.
3. Whether properties purchased in the name of individual family members from joint family income can be treated as benami.

 

CONTENTIONS BY BOTH PARTIES

Petitioners Contentions (Shaifali Gupta and Deepak Lalchandani)

They argued that the suit is barred under Section 4 and Section 14 of the Benami Act, as certain properties were purchased exclusively in the name of Smt. Shaifali Gupta and others. They claimed that such properties should be considered as self-acquired and not subject to partition. They also contended that since the propertieswere not jointly owned in name, no claim for joint ownership or partition could be entertained.

Respondents Contentions (Plaintiffs , Vidya Devi Gupta and Sudeep Gupta)

They argued that the suit was not barred under the Benami Act because the properties in question were purchased from joint family income, which falls under the exceptions provided in Section 2(9)(A)(ii) of the Act. Further, they emphasized that the suit is not for declaring any property as benami but for seeking partition of joint family properties, which is permitted. They also contended that the objections raised involve mixed questions of law and fact and must be decided after the evidence is presented.

SUPREME COURT

The Supreme Court dismissed the Special Leave Petitions, affirming the decisions of the trial court and High Court. It held that the issue of whether properties are benami or part of joint family property involves mixed questions of law and fact and cannot be decided merely on plaint allegations at the stage of Order VII Rule 11 CPC. The Court clarified that the Benami Act does not bar suits relating to Hindu Joint Family properties when the property falls under exceptions stated in the Act. It also ruled that Shaifali Gupta had not filed any application under Order VII Rule 11 and thus lacked the standing to challenge its rejection. The Court concluded that since the parties still have the opportunity to contest the issues on merits at trialafter the parties have presented evidence.There was no ground to interfere under Article 136 of the Constitution. Hence, The Court found no reason to entertain these Special Leave Petitions and accordingly dismissed the same.

Parichaya Reddy

Associate

The Indian Lawyer & Allied Services

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