CHAPTER-4

Control of
corruption in
Benami
Transaction
under other laws
 CHAPTER-4
CONTROL OF CORRUPTION IN BENAMI TRANSACTION
UNDER OTHER LAWS
Introduction

Where, with the consent, express or implied, of the person interested in

immovable property, a person is the ostensible owner of such property and
transfers the same of consideration, the transfer shall not be voidable on the
ground that the transferor was not authorized to make it: provided that the
transferee, after taking reasonable care to ascertain that the transferor had power
to make the transfer, has acted in good faith.

Statutory modifications of general principle recognising benami in India: So

far, in India, two important statutory modification of the general principle that the
real owner is recognised by the law in place of the ‘benamidar’ have been made.
The first is in the Code of Civil Procedure; the second is in the recent amendment
of taxation laws and certain other provisions. The concept of benami transaction
is required to be anlaysed and dealt with in reference to other statutory provisions
and laws in existence, as to control of corruption in these transaction.

(a). Benami Transaction and the Transfer of Property Act, 1882:

Transfer by ostensible owner, section 41: Where, with the consent, express or
implied, of the persons interested in immovable propery, a person is the ostensible
owner of such property and transfers the same for consideration, the transfer shall
not be voidable on the ground that the transferor was not authorised to make it:
provided that the transferee, after taking reasonable care to ascertain that the
transferor had power to make the transfer, has acted in good faith.

Two general principles of the law of transfer has been enunciated by the
maxims which are as follows:

1) Nemo plus juris and alium transferee potest quam ipsa habet (no man can
transfer a right or title grater than what he himself has).

2) Non dat qui non habet (he gives not who hath not).
 114

There are several exceptions. One of them is, that, if the true owner
omits another to hole himself out as real owner a third person who (a) deals
vith that other after taking reasonable care to ascertain that the transferor had
ower to make the transfer, and (b) acts in good faith, such third persons acquires
good title to the property as against the true owner. The ground of this exception
/as stated by the Judicial Committee of the Privy Council in Ram Coomar v.
dacQueen,1 in the following words:

“It is principle of natural equity which must be universally applicable that

where one man allows another to hold himself out as the owner of an
estate and a thirdperson purchases it, for value, from the apparent owner
in the belief that he is the real owner, the man who so allows the other to
hold himself out shall not be permitted to recover upon a secret title,
unless he can overthrow that of the purchaser by showing, either that he
had direct notice, or something which amounts to constructive which
ought to have put him upon an enquiry, that, ifprosecuted would have led
to a discovery of it”.

In his speech, the Hon’ble Mr. Ebert1 with respect to this section observed
s follows:

“The section is based on the principle that where one of two innocent
persons must suffer from the fraud of a third party, the loss shouldfall on
him who has created, or could have prevented, the opportunity for the
fraud, and that, in such cases, hardship is caused by the strict enforcement
of the general rule that none can confer a higher right in property than he
himself possesses. This principle is generally recognised in the
jurisprudence of all civilised nations...”

The principle so stated, is really a form of the equitable doctrine of

stopel.3 In fact, this section is a statutory application of the law of estoppel.4 The

I.A. Supp. Vol. 40, 43, Gurbaksh Singh v. Nikka Singh, AIR 1963 S.C. 1977; (1963) Supp. 1
S.C.R. 55.
Ram Coomar v. MacQueen, I.A. Supp. Vol. 40,43,
Rattan Sen v. Suraj Bhan, I.L.R. 1944 A. 20; 2111.C. 157; AIR 1944 A.l.
general principle of which is stated by the House of Lords in Cairncross v.
Lorimer45 in the following words:

“Ifa man either by words or by conduct, has intimated that he consents to

an act which has been done, and that he will offer no opposition to an act
which has been done, and that he will offer no opposition to it, although it
could not have been lawfully done without his consent, and he thereby
induces others to do that from which they might have abstained-he cannot
question the legality of the act he had so sanctioned to the prejudice of
those who have so given faith to his words, or to the fair inference to be
drawn from his conduct. ”

In Pickering v. Busk6 Lord Ellenborough observed:

“Strangers can only look to the acts of the parties and to the external
indicia ofproperty, and not to the private communications which may pass
between a principal and his broker; and if a person authorises another to
assume the apparent right of disposing ofproperty in the ordinary course
of trade, it must be presumed that apparent authority is the real
authority. ”

This ruling is the basis of this as well as section 115 of the Evidence Act
and has been followed in numerous cases, some of which have been reviewed in
Sarat Chandra v. Gopal Chunder,7 which has considerably extended the rule.

Essential conditions for the applicability of the section: The essential

conditions for the applicability of the section are:

1) a person must be the ostensible owner of a property.

2) he must be such owner with the consent express or implied, of the real
owner:8

4. Hoorbai v. Aishabai, 6 I.C. 898; 12 Bom. L.R. 457; Satyanarayan Murthi v. Pydaya, AIR
1943; Lai Singh v. Grant Saheb, AIR 1951 Pepus 101.
5. 3 Macq. 827, 829.
6. 15 Est. 38,43.
7. L.R. 191.A.. 203; I.L.R. 20 C.296.
8. Abdul Gaffar v. Nawab Ali, AIR 1941 Assam 17.
 116

) the transferee must purchase the property from such ostensible owner of
consideration;

■) before taking the transfer, the transferee must take reasonable care to
ascertain that the transferor has power to make the transfer; in other
words, he must act in good faith.9

If any of the above conditions is wanting, the transferee would not be

ntitled to the benefit of the section.10

The question, whether the section applies to a given set of facts would be a
uestion of law11 because the proper legal effect of a proved fact is necessarily a
1o
uestion of law.

teal owner when deprived of his immovable property: The real owner will be
eprived of his rights in immovable property under this section only if the
ssential conditions for its application are satisfied. That is, it is established that
e had given his consent, express or implied, to another person to represent
imself as the owner of the said property. It is to be observed that mere inactivity
n the part of the real owner, even with the knowledge of the transfer, would not
mount to implied consent as contemplated by this section and would not debar
im from recovering his property from the transferee, unless by some word or
onduct he had induced the transferee to believe that his transferor (ostensible
wner) was competent to make the transfer.13

A benamidar is an ostensible owner and if a person purchases from a

enamidar, the real owner cannot recover unless he shows that the purchaser had
ctual or constructive notice of the real title.14 In the above noted case, the
laintiff executed the sale-deed in respect of certain land in favour of defendant
o 2 for screening the property against his creditors. Defendant no 1 later

Chandi Prasad v. Gadadhar Singh, AIR 1949 C. 666. 53 C.W.N. 349; Beyas Singh v.
Ramjanam, AIR 1961 Pat. 16; 1960 Pat. L.R. 197; Jit Singh v. Kalapati, AIR 1962 Punj 46.
Ballu Mai v. Ram Kishun, I.L.R. 45 A. 263; 64 I.C. 14; AIR, 1921 A. 311; Macneil & Co. v.
Saroda Sundari, 114 I.C. 142; AIR 1929 C. 83. 48 C.L.J. 374.
. Mul Raj v. Fazal Imam, I.L.R. 45 A 520; 74 I.C. 307; AIR 1923 A. 583.
:. Nafer Chandra v. Shukur, I.R. 45 I.A 183; I.L.R. 46C. 189; 51 I.C. 760; AIR 1918 P.C. 92.
. Arta Rout v. Bhagabat, I.L.R. 1957 Cut. 585; AIR 1957 Orissa 157; 23 Cut. L.T. 142.
. Jit Singh v. Kalapati, AIR 1962 Punj. 46.
purchased the properties from defendant no 2 on the strength of the title deeds in
favour of defendant no 2. The actual possession of the property was with the
plaintiff. It was held that the plaintiff could not avoid the slack made by him of
the suit properties in favour of defendant no 2. Here, the plaintiff enabled the
defendant no 2 to occasion the loss. Even if the plaintiff was an innocent person
along with defendant no 1, it was the plaintiff who had to sustain the loss. Even if
the defendant no 1 was aware of the actual physical possession of the properties
by the plaintiff, the possession was not inconsistent with the title of the property
in defendant no 2. The consent of the plaintiff to defendant no 2 to transfer the
property to defendant I was not necessary under this section.

“Ostensible owner”:

(i) Who is an ostensible owner? An ostensible owner is a person who has

got the indicia of ownership, such as title, possession, or entries and records
which go to show ownership.15

In the above-noted case, on the death of their widowed mother the

daughters succeeded to the property of their father. But, thereafter, they allowed a
paternal agnate, who was treated as a member of the family, to take possession of
the property, and allowed him to enter into an agreement of sale of a portion of
the property, and they allowed him to do this, despite the fact that the eldest of
them was living with him; others were not far away and they had relations to their
interest. It was held that the paternal agnate was the ostensible owner of the
property by the implied consent of the daughters.

(ii) Scope of the expression “Ostensible owner”-The section is limited in its

application to an ostensible owner. A mortgagee16 lessee and other person, having
only a qualified or limited interest in the property does not fall within the
expression “ostensible owner”.

An ostensible owner may, however, be any person, whether he be a co­

sharer, a benamidar, manager, agent or a complete stranger. If a person possesses

15. Dambar Singh v. Jawitri, I.L.R. 29 A 292.

16. Karamshi Vershi v. Ratanshi, AIR 1952 Kutch 55, 57
 118

ill the indicia of ownership and retains them with the consent of the real owner,
le is an ostensible owner within the meaning of the section and is entitled to pass
i valid title to a transferee who takes the transfer for consideration, after making
easonable enquiry into his title, in the bona fide belief that the person he is
baling with is the true owner.

In order that the real owner may be afflicted by a transfer made by an

ipparent or ostensible owner, it is essential that the transferee must have believed,
easonably in good faith, that he was dealing with the a person with full powers of
lisposition over the property intended to be transferred. A Hindu lady, for
nstance, cannot, without legal necessity, transfer a part of the estate in her
>ossession, so as to bind the reversioner, much less can she, by orally transferring
lossession and putting such person in possession, destroy the rights of the
eversioners, in case such person in possession transfers the property. The section
efers to personal estoppels, arising out of the conduct of the real owner, and the
nere fact that a widow’s estate is vested in the limited owner, for the time being,
annot create an estoppel against the reversioner by virtue of the consent obtained
17
rom the limited owner.

A transferee, who takes with notice of the limited powers of the transferor,
las no equity against the real owner, for he takes what he should know to be an
□firm title. But a purchaser, in good faith of a defective title from an ostensible
iwner without notice, has an equity against the real owner, who has allowed
nother to give himself out as the true owner. A person cannot be permitted to
epresent, or permit to be represented; a state of facts at one time, and afterwards,
vhen such representation has induced another person to change his position, to
how that such representation was erroneous.18

iii) What are the ostensible acts of ownership? The rule enunciated in the
ection is founded on the doctrine that, as most people hold themselves out as real
>wners of property, an innocent purchaser is entitled to presume that the
istensible owner is the real owner.
?. Jogendra v. Salamat, AIR 1933 C. 92.
!. Shambhu Prasad v. Mahadeo Prasad, I.L.R. 55A. 554; 1441.C. 293; AIR 1933 A. 493.
 But who is an ostensible owner?

What are the ostensible acts of ownership?

(i) Persons who may be ostensible owners: A benamidar is an ostensible

owner, and if a person takes a transfer from a benamidar, the real owner cannot
attack the transfer, unless the purchaser had actual or constructive notice of the
real title.19

A co-sharer, manager, agent, done and even a complete stranger may be

an ostensible owner, if he possesses all the indicia of ownership and retains them
up to the time of the transfer with the consent of the true owner.

(ii) Indicia of ostensible ownership: What is an indicia of ownership will

depend upon the circumstances of each case. Possession is an indicia of
ownership. Exercise of acts of possession in an ostensible act of ownership, but
not always. For the true owner may not himself manager his own property. He
may employ a manger to manage his estate. Management implies possession, but
the manager may be employed to perform other acts of management, such as
giving out leases, collection of rents and general supervision of the estate
entrusted to his care.

The crucial act of ownership, which clothes a manager or the man in

possession with the character of an ostensible owner, must depend upon the
circumstances of each case. Thus, the circumstance that the owner is a purdah-
nashin lady would raise a case for enquiry. So would the circumstance that the
estate was large. The entry of a person’s name in the revenue papers, as owner, is
not clear proof of ostensible ownership.

It has been held that the possession of a manager cannot be treated as

proof of ostensible ownership, even though the name of the manager is entered
in the municipal house-tax register as the real owner.21

19. Colonia Bank v. Cady, 15App Cas. 267,273, per Lord Halsbury, L.C.
20. See Jokhu v. Mehdi, 1881 A.W.N. 67; Ram Sundar v. Ram Narain, 48 I.C. 936; AIR 1918
Pat. 79; Swaminath v. Krishna, I.L.R. 1942 M. 225; 2011.C. 128; AIR 1942 M. 28.
21. Jumnadas v. Uma Shanker, I.L.r. 36 A. 308; 25 I.C. 158.
 120

iii) Who are not ostensible owners? -The following are not ostensible
iwners:

) a professed agent or manager.22

i) A menial servant in occupation of property,23

!) A mortgagor, being the owner of a limited interest,24

i) The trustee or manager of an idol, since the idol is not a sentient being and
capable of giving consent,

5) A co-sharer in occupation of a joint family residential property26

>) A donor who has not reserved to himself power of revoking the deed of
gift;27

1) A manager of joint Hindu family who has power to alienate family

property only in case of necessity, or for the benefit of the estate;28

But the following have been held to be ostensible owners:

1) a son remaining in possession of the daughter (his sister’s) share as well as

his own for twenty-five years, when all the property had been entered in
the revenue papers in his sole name;

2) the widow is in sole possession of an estate allowed, by the others heirs,

who lived in another village, to deal with it as if she was solely entitled to
the whole property;30

3) a widow’s husband’s cousin allowed to deal with her half-share in a

house, as if it were his own.31

22. Muhammad Sulaiman v. Sakina I.L.R. 44 A. 674; 69 I.C. 701; AIR 1922 A. 392.
23. Dambar Singh v. Jawitri, I.L.R. 29 A. 292; Abdullh Khan v, Bundi, I.L.R. 34 A. 22; 11 I.C.
710; Maung Bya v. Maung San, 101.C. 779.
24. Chooni Lai v. Nilmadhab, 86 I.C. 734; AIR 1925 C. 1034; 41 C.I.J. 374.
25. Narayan v. Purushottam, 134 I.C. 667; AIR 1931 N. 144. Hira Singh v. Afzal Khan, AIR
1941 Pesh. 59; Basdeo v. Jugraj Prasad, AIR 1948 Orissa 247.
26. Rattan Sen v. Suraj Bhan, AIR 1944 A. 1; Thakur Rrishan v. Kanhayalal, AIR 1961 A. 206.
27. Ladhibai v. Ravji, AIR 1950 Kutch 34.
2S. Ankamma v. Narasayya, AIR 1947 M, 127.
29. Rangaswami v. Sundarapandia, 110 I.C. 548; AIR 1928 M. 635
30. Mul Raj v. Fazal Imam, I.L.R. 45 A. 520; 74 I.C. 307 AIR1923 A. 583.
(b) Transferees from Hindu Widow or Limited Owners:

A transferee from a Hindu widow cannot claim the protection of this

TO
section, for she holds in her own right and not as an ostensible owner.

The rule underlying this section can, at best, apply during the lifetime of
the limited owner who permits the ostensible owner to remain in possession, and
is not available to protect the transferee against the claims of the reversioners. In
other words, where the person, who allows another to occupy the position of an
ostensible owner, has only a limited estate, the rule contained in this section
applies only during the lifetime of the limited owner, and is not available to
protect the transferee against the claim of the reversioner.

(c) Principle of the Section Applies also to Mortgages:

The principle of the sections is not restricted to sales. It applies to

mortgage also, provided the mortgagee from an ostensible owner acts in good
faith and with reasonable care.34

An ostensible mortgagee is the ostensible owner of the mortgagee’s

interest. A purchaser for value of that interest, who has acted in good faith and
with reasonable care is entitled to the protection of this good faith and with
reasonable care is entitled to the protection of this section. In Baidya Nath v. Alef
Jan,35 the ostensible owner made a mortgage. The mortgagee accepted the
mortgage after enquiry and acted with reasonable care, and believed in good faith
that the ostensible owner was the owner. The mortgagee obtained a decree for sale
of the mortgage and purchased the house in execution. It was held that the owner
was by this section barred from setting up her title to the house.

31. Mohammad Shakur v. Shah Jahan, 63 I.C. 125.

32. Thakuri v. Kundan, I.L.R. 17 A. 280.
33. Shib Deo v.Ram Prasad, I.L.R. 46 A. 637 87 I.C. 938; AIR 1925 A. 79; Abdual Samad v.
Girdhari Lai, I.L.R. 1942 A. 259; 200 I.C. 269; AIR 1942 A. 175; Kapura v. Madsodan, 209
I.C.203; AIR 1943 L. 168; 45 P.L.R. 183.
34. Phool Kuer v. Prem Kuer, AIR 1952 S.C. 207,213.
35. See Muhammad v. Muhammad Ibrahim, I.L.r. 26 A. 490; Baidya Nath v. Alef Jan, 70 I.C.
194; AIR 1923 C. 240; Ghulam Fatma v. Gopal Devi, 190 I.C. 599; AIR 1940 L. 269;
Fakiuddin v. Ramayya, AIR 1944 M. 299. Ananda Mohan v. Nilphamari, 65 I.C. 245;
AIR1921 C. 549; 26 C.W.N. 436; but seenjogendra Kishore v. Salamat Khan, 125 I.C. 863;
AIR 1930 C. 92; Parvati v. Angamuthu, 204 I.C. 128; AIR 1942 A. 730.
 122

d) The expression “ostensible owner” does not include person holding a

fiduciary character:

Under this section only transferees who take from an ostensible owner are.
protected. Agents, guardians or other persons having a fiduciary character do not
3ecome ostensible owners, if they have temporary dominion over the property of
he true owner for a limited purpose.36

e) Transferor should be ostensible owner at time of transfer:

The section enacts a rule, which is a species of estoppel, but which falls
short of the requirement of section 115, Evidence Act. If it is proved that the
.ransfer was made with the consent of the true owner, the case would fall within
section 115, and the true owner would be estopped even though the transferee
made no enquiries to ascertain that the transferor had power to make the transfer,
a condition which is essential for the application of this section. Therefore, it is
not necessary for the application of this section that the transfer itself should be
made with the consent of the real owner.37

(f) Alienation by Kamavan, or other person in similar position, if one by

ostensible owner? -

This section can have no application to a case where the Kamavan of a

Marumakkathyam Tarwad or Illom alienates Tarwad or Ilom property standing in
his name, for he is not the ostensible owner of such property but one of the real
owners, and the property stands in his name, not with the consent of the real
owners, but because of the law that property belonging in the Tarwad or Illom
shall ordinarily vest in the Kamavan, the same applies to other persons in similar
position.

Provided that this section lays down that a transfer by an ostensible owner
shall not be voidable on the ground that the transferor was not authorised to make
it, provided that the transferee has-

36. 701.C. 193; AIR 1923 C. 240.

37. See Dambar Singh Jawitri Devi I.L.R. 29 A. 292; Chandra Kanta v. Bhaggur Bepari, 1 I.C.
525.
(1) taken reasonable care to ascertain that the transferor had power to make
the transfer, and

(2) acted in good faith.

A transferee can get the protection of this section if he did not have
constructive notice of the title of real owner, and nothing to put him on enquiry to
•70

find out who has the title to the property.

Reasonable care - As already stated, the words of the section clearly indicate that
it does not require that the transaction, to be binding on the real owner, must have
been entered into by the ostensible owner with the consent of the real owner. For
the application of the section, it is essential, no doubt, that the possession of the
ostensible owner must continue up to the date of the transfer with the consent of
the real owner. But it is not necessary that the transfer itself should be with the
consent of the true owner.39 For, if it is proved that the transfer was made with the
consent of the original owner, the case would fall within the purview of section
115 of the Evidence Act, and, in such a case, the provision to this section would
be rendered nugatory, and the conditions required by the proviso need not be
satisfied. Such consent of the real owner to a transfer by the ostensible owner
would estop the real owner, even though the transferee took no reasonable care to
ascertain that the transferor has power to make the transfer, and did not act in
good faith.40

The section means that the ostensible owner of the property must be such
ostensible owner with the consent, express or implied, of the person interested in
such property, and for a transfer by such an ostensible owner without the consent
of the real owner, then he is protected under the proviso only if it is proved by
him that he-

38. Fazal Husain v. Muhammad Kazim I.L.R. 56 A. 582; 150 I.C. 81; AIR 1934 A. at pp. 193,
196-97
39. Ram Coomar v. MCQueen, (1872) L.R.I.A. Supp., Vol. 40,43; Baidya Nath v. Alef Jan, AIR
1923 C. 240; Ram Saran v. Harihar Prasad, AIR 1961 Pat. 314.
40. See Ramjanam v. Beya Singh, AIR 1958 Pat. 537; 1958 B.L.J.R. 103.
 124

1) took reasonable care to ascertain that the transferor had prower to make
the transfer, and

2) acted in good faith.41 with respect to (1), as the proviso lays down, the
transferee must take

(i) reasonable care,

(ii) only to ascertain that the transferor had power to make the transfer.

b) Degree of reasonable care.- with respect to the degree of reasonable care

requisite for ascertaining whether the transferee has power to make the
transfer, it may be said that-

1) the question, whether a transferee took reasonable care to ascertain that the
transferee had power to make the transfer, has to be determined with
reference to the circumstances of each particular case, the test being,
whether he acted (a) like a reasonable man of business, and (b) with
ordinary prudence,42

[2) the ordinary standard of diligence, for ascertaining whether the transferor
had power to make the transfer, is calling for the title under which he
claims and inspecting them; if, in the document itself, that is produced as
the title deed for the inspection of the transferee, there is any indication-
anything to put the transferee, on notice or enquiry-with regard to the
existence of some other document, having regard to which any infirmity in
the title of the transferor may be regarded as indicated, then the matter
might be investigated further.43

It is not possible to lay down a general rule or test of universal application

for finding out what would be reasonable care on the part of a transferee in order
to enable him to claim protection under this section. It can only be said, that a
transferee should show that he acted like a reasonable man of business and with

41. Ibid, at p. 540.

42. Ramjanam v. Beya Singh, AIR 1958 Pat. 537, 540; 1958 B.L.J.R. 103.
43. The Catholic Mission Presentation Convent v. Subbanna, AIR 1948 M. 320; (1984) 1 M.L.J
11; Saiju v. Panchananda, I.L.R. 1957 Assam 465; AIR 1959 Assam 15.
ordinary prudence. Whether a particular transferee has acted like a reasonable and
prudent man of business must depend on the circumstances of each case.44 If the
ostensible owner is in possession of the property and he also produces the title
deed which is in order, the transferee should not be expected to make any
searching enquiry, in the absence of any ground of suspicion that the transferor
may not be the real owner. Indeed, as stated above, the standard and nature of the
requisite enquiry by the transferee must vary according to the circumstance of
each case.45

It will be helpful to quote the observations of Sir, Mantague E. Smith in

Ramcoomar v. McQueen 46 which are as follows: “.......where one man allows
antoher to hold himself out the owner of an estate, and a third per son purchases it
for value from the apparent owner in the belief that he is the real owner, the man
who so allowed the other to hold himself out shall not be permitted to recover
upon a secret title unless he can overthrow that of the purchaser by showing.-

(1) either that he had direct notice, or

(2) something which amounts to constructive notice of the real title, or

(3) that there existed circumstances which ought to have put him upon an
enquiry that, if prosecuted, would have led to a discovery of it.

In cases of this kind, the circumstances which should prompt enquiry may
be infinitely varied; but ...they must be of such a specific character that the Court
can place its finger upon them, and say that upon such fact some particular
enquiry ought to have been made. It is not enough to assert generally that enquiry
should be made or that a prudent man would make enquiries ...:

In Muhammad Khan v. Muhammad Ibrahim, 47 the plaintiff purchased a

property in the name of his son whose name was recorded, and he appeared to
have been in occupation of it at the time when he mortgaged it to the defendants.

44. Sethumadhava v. Bacha Bibi, 111 I.C. 589; A.I.R 1928 M. 778, 780.
45. Abdul Gafur v. Nawab Ali, AIR 1949 Assam 17,20 C1.2.
46. Beya Singh v. Ramjanam AIR 1961 Pat. 16,18; 1960 Pat. L.R. 197.
47. I.A. Sup. Vol. 40.
 126

Their Lordships48 said:

" .... Where a person found in possession of property, is recorded as

owner in the title deeds..... and deals with a third party in respect of it,
there is nothing to suggest a want of good faith in such third party in
dealing with him in respect of the property. We do not think that the
defendants-respondents were called upon under the circumstances to
communicate with the father of the mortgagor and enquire from him as to
the title. ”

According to the section, in the case of a transfer by an ostensible owner,

he transferee must take reasonable care to ascertain that the transferor had power
o make the transfer. In all cases, reasonable care is to be expected from all who
laim to have purchased property fee from a really existing right.49

The following are not documents of title:

(1) revenue records;50

(2) municipal and police registers.51

It is not always safe to rely on the entries in such documents. A transferee

rtio does so, and omits to enquire into title, cannot claim to be a bona fide
ransferee without notice, so as to be in a position to defeat the title of the real
iwner.52

The rule may be said to be that, if a man permits another to hold him self
»ut to be the owner of certain property, and a third person purchases it for value
rom the ostensible owner, after reasonable enquiry into title, then the real owner
vill be estopped by virtue of this section from recovering upon his secret title. But
f a person purchases property, (a) accepting without further examination some
ague claim to a title, and (b) when the rightful owner of the interest neither

!. Muhammad Khan v. Muhammad Ibrahim, I.A. Sup. Vol. 40.

\ I.L.R. 26 A. 490.
'. Zungabai v. Bhawani, 9 Bom, L.R. 388.
. Nageshar Prasad v. Raja Pateshri Partab Narain Singh, 34 I.C. 673; AIR 1915 P.C. 103; 20
C.W.N. 265.
!. Kartar Singh v. Mehr Nishan, I.L.R. 16 Lah. 313; 155 I.C. 1064; AIR 1934 Lah. 885.
expressly permitted such ostensible title to be flaunted, nor impliedly consented to
it, he cannot claim the protection of the Court to enforce his unsubstantial title as
against the true owner.

In Nageshwar Prasad v. Raja Pateshri Pratab Narain Singh,54 the name

of R was entered in the revenue papers and he was the ostensible owner of the
property. He made a mortgage in favour of the plaintiff. The plaintiff did not
make any enquiry to ascertain the title of R. If an enquiry had been made, it would
have appeared that, at the time mutation was applied for, objections were
preferred on behalf of the Raja and that the name of R was entered simply
because he was in possession. Further enquiry as to the title of R would have led
to the discovery of the fact that there was a will by virtue of which the Raja was
the owner of the property. Under the circumstances, it was observed that it could
not be said that the name of R was entered as ostensible owner with the consent of
the real owner, the Raja. It was held, that the plaintiff could not claim to be a bona
fide, transferee without notice so as defeat the title of the real owner.

On the facts of particular case, it may be sufficient, if the purchaser

ascertains that (1) his vendor is in possession, and (2) is entered in the revenue
records.55 But the above two facts do not always dispense with the duty to take
reasonable care to ascertain that the transferor had power to make the transfer.56

In P.L.T.A.R. Chettyar Firm v. Maung Kyaung51 there was some default

on the part of the Registering Officer or the Revenue Officer in registering or
recording the transfer, but the appellants (1) allowed the land to remain in the
name of the transferor, and further, (2) also allowed him to remain in occupation
of the land.

53. Gulam Ahmad v. Basheer Ahmad, AIR 1960 M. 399,400; (1960) 2 M.L. J. 570.
54. 341.C. 673; AIR 1915 P.C. 103; 20 CWN at p. 265.
55. Mubarakunnissa v. Muhammad Raza, I.L.R. 46 A 377; 79 I.C. 174; AIR 1924 A. 384.
Mackkama v. Masbi, 86 I.C. 876; AIR 1925 B 299; 27 Bom, L.R. 208; Mahomed Shakar v.
Shehjahan 63 I.C. 125; Mathura Prasad v. Anandi, 74 I.C. 911; AIR 1924 A. 63. 21 A.L.J.
498; Udho Das v. Mehr Baksh, 144 I.C. 340; AIR 1933 Lah. 262.
56. Muhammad Shafi v. Muhammad Said, I.L.R. 52 A. 248; 122 I.C. 871. AIR1930 A. 847;
Muhammad Sulaiman v. Sakina, I.L.R. 44 A. 67; 69 I.C. 701; AIR 1922 A. 392.
57. I.L.R. 7 Rang. 276; 1191.C. 217; AIR 1929 Rang. 333.
 128

Therefore, the transferor was the ostensible owner of the property by

;ason of the neglect of the real owners to take the ordinary precautions which the
wner ought to take, and their consent to the transferor’s position as ostensible
wner could be implied from the acquiescence of the owners and from their
iilure to take reasonable precautions. But, if the transferee had taken care to
scertain whether the transferor had power to make the transfer, he would have
Dund that his transferor who was in possession of the property at the time of the
ansfer had a defective title. The transferee was, therefore, held guilty of a default
/hich deprived him of the rights given by this section.

In Mohammad Safi v. Mohammad Said,58 C gave a usufructuary mortgage

f land to J. The name of J was erroneously entered in the revenue papers as
wner. On 4th June, 1914, the heirs of J made a mortgage in favour of defendants
irst party. The heirs of C sued to redeem the mortgage of 1857. The defendants
irst party pleaded that the heirs of J were in possession were registered as owners
nd represented themselves to be owners, and that they were not liable on the
lortgage of 1867. If the defendants first party had made an enquiry, they would
ave found that in the mortgage of 1902, the money which was left with the
efendants first party, J had described himself as a mortgagee and not as owner. It
/as held, that the defendants first party were not entitled to protection under this
ection. It was observed:

1) that a party relying upon section 115 has to establish-

a) that the opposite party had made a certain declaration;

b) That the said declaration had been believed and acted upon;

c) That it was not reasonably possible for the party acting upon the
declaration to know the true state of affairs by pursuing enquires
reasonably and with diligence;

And where truth is accessible to a party, the plea of estoppel upon

^present action fails:

Ibid.
(2) in order to attract the operation of this section, it is necessary for the party
relying upon the section to establish that:

(a) a particular person was the ostensible owner of the property;

(b) with the consent, express or implied of the real owner, or of the
person interested in the property;

(c) the transferee had taken reasonable care to ascertain the nature and
incidents of the title of the transferor before accepting the transfer.

(c) Transferee must show he had made the usual enquiry into title - It is
an essential condition for the application of the section that, as stated in the
proviso, the transferee must have taken reasonable care to ascertain that the
transferor had power to make the transfer. The transferee must, therefore, show
that he had made the usual enquiry into the title. If he had not done this, he would
not be entitled to the benefit of the section.

A purchaser of goods is under no legal obligation to investigate his

vendor’s title. But, in dealing with immovable property, regard is to be had to the
provisions of the section. If a purchaser willfully, or negligently, departs from, or
disregards, the law, he is not allowed to derive the advantage of his willful
ignorance of, or negligence in discovering, defects in the title which would have
come to his knowledge, if he had taken reasonable care to ascertain whether the
transferor had power to make the transfer.59

(d) Enquiry called for, if title be clear : If the title is clear, no particular
enquiry is called for. So, where a person is found in possession of property,
recorded as owner, and holds the title-deeds of the property, and deals with a third
party in respect of it, in such as case, there is nothing to suggest a want of good

59. See Rajani Kanta v. Bashiram, 121 I.C. 409; AIR 1929C. 636; 49 C.L.J. 532; Muhammad
Sulaiman v. Sakina Bibi, I.L.R. 44 All. 674; 69 I.C. 701; AIR 1922 All. 392 Azima Bibi v.
Shamalanand, (1913) 40 Cal. 378; 17 I.C. 758 (P.C); Maung Than v. Ma On, (1910) 12 I.C.
390; (1932 Nag. 165; Khatun Fatma v. Shib Singh, (1933) A.L.J 1036; Sodha Singh v.
Mangal Singh, (1933) 142 I.C. 860; (1933) A.O. 166; U Po Shin v. Edward, (1934) 150 I.C.
898; (1934) A.R. 139; Jamshedji v. Dorabji, (1933) 35 Bom. L.R. 1091; 149 I.C. 137; (1934)
Bom. 1.
 130

lith in such third party in dealing with him in respect of the property.60 But, in
articular cases, there may be circumstances which may demand further enquiry,
i such cases, the real owner must assert not merely that enquiry should have
een made, or that a prudent man would have made an enquiry, but he must point
ut some special circumstance as the starting point of an enquiry which would
ave led to some definite information. As observed by the Judicial Committee of
rivy Council, the real owner can overthrow the title of the purchaser by (a)
lowing something which amounts to constructive notice of the real fact, or (b)
le existence of circumstances which ought to have put him upon an enquiry, and
diich, if prosecuted, would have led to a discovery of it.61 So, as between
lembers of a joint Hindu family, the fact that the name of one member rather
lan that of another, or of all the members, is used in acquisition of property, does
ot amount to holding out of that member as the ostensible owner, and a person,
ealing with only member of a Hindu family, can hardly say that he was misled,
nless he proves that he had made full enquiries and could not ascertain his title.

It is not enough for the real owner to assert generally, that enquiries should
ave been made or that prudent man should have made further enquiries, but he
aust point out some specific circumstances, as the starting point of an enquiry,
diich might have led to some result. A transferee cannot be said to have acted
without reasonable care, unless there was some clue existing to suggest that the
ransferor was not the real owner.63

It is necessary to make enquiry, for instance-

1) if the transferor is the karta of a joint Hindu family,64

2) if the immovable property is in the possession of a person other than the

transferor,65 or

Khwaja Muhammad v. Muhammad Ibrahim, J.L.R. 26 A. 490.

l. Ram Coomar v. Mac Queen, L.R. I.A. Sup. Vol. 40,43.
!. Jasodar v. Suhurmani, 1701.C. 1005; AIR 1937 Pat. 353.
’. Maung Po v. Bank of Chettinad. 154 I.C. 249; AIR 1934 R. 313; Shiam Lai v. Mata Bin, 151,
I.C. 576; AIR 1934 Oudh 460; Mazhar Hasan v. Mukhtar Hasan' 173 I.C. 360 AIR 1938 A.
64; 1937 A.L.J. 1356; D.A.v. College v. Umrao, 157 I.C. 92; AIR 1935 L. 410.
l. Kunhu Lai v. Pallu Sahu, 571.C., 353; 5 Pat. LJ. 521.
(3) if the transferor is a sister or sister’s son of the original owner, in which
case an enquiry is necessary to ascertain if there are nay collaterals in
existence.66

(e) Cases of persons who allow others to deal with their property: where
real owner, as women or others, allow other persons to deal with their property,
their rights may be defeated by the operation of this section, if the transferee takes
reasonable care to investigate title and acts bona fide, But such cases turn on their
own facts.

In Azima Bibi v. Shamalanand,61ih.Q male members of a Mohammadan

family mortgaged the family property without consulting the female members of
the family. The mortogagee was under the impression that the parties were
governed by the Hindu Law and the females had no proprietary interest. Further,
the males had no previous occasions dealt with the property with the concurrence
of the females. The mortgagee made no enquiry of the females or of their
husbands. The judicial Committee took into consideration the fact that the females
were purdahnashin ladies, who usually leave the management of the property in
the hands of male relations. It held, that the mortgagee was not protected by the
section.

In Rasulan Bibi v. Nand Lai,68 it was observed:

“In most cases coming from Muhammadan families, the names of the
sisters and mother, who are also heirs-at-law of a deceased
Muhammadan, are not entered in the Khewat. If we are to say that
Muhammadan son, simply because their names alone are shown in the
Khewat, are entitled to give a good title to a transferee, and the mother
and the sisters shall be precluded from claiming their share, it would be
disastrous indeed. As remarked in so many cases, each must be treated on

65. Byankapacharya v. Yamanasami, I.L.R. 35B 269; 101.C. 817.

66. Ballumal v. Ram Kishun, I.L.R. 43 A. 263; 64 I.C. 14; AIR 1921 A, 311; Fazal Husain v.
Muhammad Kazim, I.L.R. 56 A. 582; 150 I.C. 81; AIR 1934 A. 193.
67. I.L.R. 40C. 378; 17 I.C. 759 (P.C.).
68. 124 I.C. 757; AIR 1930 A. 521; 1930 A.L.J.1091; see also Amir Jahan v. Khadim Hussain,
132 I.C. 75; AIR 1931 Oudh 253.
 132

its own facts. Ordinarily, when a man makes a purchase, he enquires into
the source ofthe vendor’s title. A mere inspection ofthe khewat should not
suffice as a sufficiently good inquiry under this section specially where the
vendor is a Muhammadan. ”

In Mohammad Sujat v. Chand Bi,69 two Muhammadan brothers and a

lister inherited property, and the sister allowed it to be entered in the revenue
ecords in the names of the brothers who sold it without consulting the sister. It
vas held that it is of the brothers who sold it without consulting the sister. It was
leld that it is of the essence of this section that the conduct of the real owner must
induce a belief in the transferee that the transferor had power to make the transfer,
but mutation of names by itself creates no proprietary title, and a purchaser who
acts upon such an entry as evidence of title does so at his risk. The fact that the
transferors were Muhammadans ought to have put the transferee on enquiry as to
whether there was a female heir in addition to the two transferors.

But each case will depend on its own circumstances. The question being
whether a person is the ostensible owner with the consent of the real owner. In
Deputy Commissioner of Bara Banki v. Receiver,70 the Privy Council held, that
the Muhammadan sisters who left their share of the inherited property in the
hands of a spendthrift brother were barred by the section, as they had husbands
who understood and one of them was in an official position, and that it was
difficult to suppose that they were entirely ignorant of the way in which the
spendthrift brother was encumbering the estate. Their Lordships were satisfied
with respect to the two essentials, namely, (a) that the brother was allowed to be
the ostensible owner of the property with the implied consent of the sister, and (b)
that the transferee took reasonable care to ascertain that the transferor had power
to make the transfer.

In Mubarakunnissa v. Muhammad Roza Khan71 the property of a

deceased Muhammadan descended upon his three grand-sons and two daughters

69. 971.C. 988; AIR 1927 N. 41.

70. L.R. 55 I.A. 303; I.L.R. 3 Luck. 372; 113 I.C. 113; AIR 1928 P.C. 202.
71. I.L.R. 46 A. 377 79 I.C. 174; A. I.R. 1924 All. 384.
The grand-sons took possession of the whole property, got their own names
entered in the register, and two years later mortgaged it. The daughters first
became aware of the mortgage when the mortgagee brought the property to sale.
The claim was held barred by this section; although it did not appear that they had
husbands to protect their interest. Their Lordships were influenced by the entries
in the revenue papers and observed that these entries must naturally have satisfied
the mortagees that the mortgagors had a good title to the properties which they
were mortgaging. Their Lordships referred to the following passage of Lindley,
L.J. in Bailey v. Barnes.n

“A purchaser of property is under no legal obligation to investigate his

vendor’s title. But, in dealing with real property, as in other matters of
business, regard has had to the usual course of business; and a purchaser
who willfully departs from it, in order to avoid acquiring a knowledge of
his vendor’s title is not allowed to derive any advantage from his willful
ignorance of defects, which would have come to his knowledge, if he had
transacted his business in the ordinary way. ”

It may be observed, that the above observations are wide of the mark in
view of the peculiar wordings of this section, which require-

(a) the transferor to the ostensible owner with the consent of the
persons interested in the immovable property; and

(b) reasonable care on the part of the transferee to ascertain that the
transferor had power to make the transfer.

Mere entries in the revenue papers are not evidence of title and do not
dispense with the necessity of making an enquiry into the title of the transferor. In
the above case, the ancestor died in 1907, and the mutation was made in 1908 and
the mortgages ware made between 1911 and 1971. Their Lordships did not pay
sufficient consideration to the above facts in their judgment.

72. (1894) 1 Ch.D.25.

 134

In Macneil & Co. v. Saroda Sundari,13 two Hindu brothers managed the
property in which their mother had a one-third share. The brothers granted a
permanent lease without reference to the mother. The Court distinguished the case
of Azima Bibi v.Shamalanad,74 on the ground that Hindu women do not as a rule
succeed to properties by inheritance. It was observed:

“The expression ‘reasonable care ’ in the section has been interpreted as

meaning such care as an ordinary man of business or a person of ordinary
prudence would take and it is not enough to assert generally that enquiries
should be made or that a prudent man should have made further enquiries
but some specific circumstances should be pointed out as the starting
point ofan enquiry which might be expected to lead to some result....

"....... Defendant No. 1 from the deeds, Viz., rent receipts, copies of
plaints, sale certificates, kabuliyats, etc., produced before him by
defendant No. 3 found that the two brothers had sixteen annas share in the
property.......

“....As the property belonged to Hindus, defendant no 1 had no reason to

suspect that the mother could have any share in the property.... In these
circumstances, defendant no 1 should be considered to be bona fide
purchaser without notice. ”

In Motimul v. Visalakshi75 the name of the wife-owner was entered as

owner of the house in the municipal register. The husband, who was the lessee of
the house-site, alienated the house. The alienee bargained merely on seeing the
written permission of the municipality to build upon in his name. The alienee did
not inspect municipal register. It was held that he did not make reasonable
enquiry.

73. 114 I.C. 142; AIR1929 C. 83; 33 C.W.N. 526.

74. I.L.R. 40 Cal. 378.
75. AIR 1965 M. 432; (1965) 2 M. L.J. 371.
 In Asharfi Devi v. Tirlok Chand16 the name of the alienor was entered as
owner in the relevant records. But under a registered will it was devised to some
one else. As the will could not be inspected by the alienee, See. 41 was of no help.

(f) Reasonable care-Mixed que stion of law and fact: Whether a transferee
took reasonable care to ascertain that the transferor had power to make the
transfer has, no doubt, to be determined with reference to all the circumstances of
a particular case, the test being whether he acted like a reasonable man of
business and with ordinary prudence. The question, whether that test has or has
not been applied in any particular case, cannot be regarded as on of pure fact.77

(g) No reasonable care, if transferee enquires merely of the transferor:

The transferee cannot be said to have made reasonable enquiry, if he does no
more than makes enquiry from the transferor himself.78 Enquiry must be made
from other sources, if any. It may be that under the particular circumstances of the
case, no further enquiry may be necessary.

(h) Effect of want of reasonable care on the part of the transferee : That
section gives protection to a transferee who takes reasonable care to ascertain that
his transferor had power to make the transfer. If this element of reasonable care,
to ascertain the true fact, is missing, the transferee cannot have the advantage of
this legal provision.79

Good faith: The proviso requires that the transferee must not only take
reasonable care to ascertain that the transferee has power to make the transfer, but
he must also act in good faith. It is possible that there may be enquiry without
good faith and good faith without enquiry. In neither case would the real owner be
affected by any transaction with the ostensible owner.

76. AIR 1965 Punj. 140.

11. The catholic Mission Presentation Convent v. Subbana, AIR 1948 M. 320, 322, Col. 2; (1948
1 M.LJ. 11; Sarju v. Panchananda, I.L.R. 1957 Assam 465; AIR 1959 Assam 15.
78. Ibid.
 136

The “good faith” required by this section is honesty. A man may make a
on

mistake or a blunder, but then he must do so honestly. A transfer cannot obtain

the protection of this section, merely on the ground, that he had no notice of the
real owner’s title. He must not shut his eyes and purchase recklessly from an
ostensible owner without taking reasonable care to ascertain, if the transferor had
the power to make the transfer. He must make reasonable enquiry both-

(a) into the title of the transferor, and

(b) his right to sell.81

The expression “good faith” means that the transferee has acted honestly
and in the real belief that the ostensible owner is the true owner. So, when a man
purchases a possessory title, believing in good faith that the transferor is the real
owner, and any enquiry that he could have made would only have confirmed his
belief, he is protected by the section.82

A person cannot be said to act in good faith if he takes the transfer with
O']

knowledge of the infirmity of the title of the transferor.

Mere misconception of the right of the transferor cannot avail. So, a

transfer is not protected by this section when the transferee buys property
belonging to a female, who had been outcasted for unchastity, believing that she
had forfeited her interest.84

Plea of reasonable care and good faith when available: The success or failure
of a plea under this section depends on findings of facts, which must be alleged in
the pleadings. For, unless the party pleads facts to make out a case under this
section, the other party would be taken by surprise, inasmuch as he would be

80. Hakiman v. Badrunnissa, 148 I.C. 742; AIR 1934 L. 658.

81. Zimga Bai v. Bhawani, 9 Bom. L.R. 388; Kasturi Bai v. Baliram, 68 I.C. 732; AIR 1923 N.
15.
82. Chandra Kanta v. Bhagjur, 11.C. 525.
83. Jagmohan Dass v. Inder Prasad, I.L.R. 4 Luck. 597; 115 I.C. 97; AIR 1929 Oudh 160;
Mollaya v. Krishnaswami, 85 I.C. 855; AIR 1925 M. 95; 47; M.L.J. 622; Ragho v. Dwarka
Das, 791.C. 687; AIR 1924 L. 738.
84. Angammal v. Venkata, I.L.R. 26 M. 509.
unable to adduce evidence to demolish such a plea.85 The plea should, therefore,
be specifically pleaded and strictly proved.86 In Parbati Devi v. Kashmiri Lai*1 is
was observed:

“........the decision of a plea ofprotection under section 41 .... Depends

on several question offact each of which requires careful examination.
Unless such a plea is clearly taken in the pleading and put in issue
between the parties, it is not reasonable to expect that the parties will
adduce necessary evidence on it. When that is the position, it is not open
to the Court to look at particulars of statements made in connection with
other matters which might appear to be evidence on the points to be
considered in deciding a plea under section 41........”

The plea cannot be raised for the first time in appeal.88 But if the facts
upon which such plea can be based are on the record of the trial Court, the
appellate court can allow it to be raised.89 And even consider it on its own
initiative.90

Transferee’s title must be considered with reference to date of transfer: The

title of the transferee has to be considered with reference to the date of the
transfer, which could not be avoided by the real owner or by his legal
representatives-either heirs or survivors if the conditions of the section are found
to have been complied with.91 Thus, where the share of the real owner, who is a
conparcener in a joint Hindu family, is transferred by the ostensible owner, the
transferee becomes entitled to the share of the real owner as on the date of the

85. Lai Mohan Prasad v. Govind, AIR 1940 Pat. 620; Parbati Devi v. Kashmiri Lai, AIR 1959 C.
69. Gauri Shankar Singh v. Jwalamukhi Devi, AIR 1962 Pat. 392.
86. Ram Saran V Harihar Prasad, AIR 1961 Pat. 314. 1960 B.LJ.R. 277.
87. AIR 1959 C. 69.
88. AIR 1959 C. 69.See Lakshman v. Vasudeo, AIR 1931 B 227; 133 I.C. 265; Rahiman v.
Khatoon, 35 I.C. 569; AIR 1917 M. 926; 4 L.W. 193; Mahadeo v. Ganeshram, 113 I.C. 373;
AIR 1940 Pat. 620.
89. Mankaur v. Gurbakhsh Singh, 38 P.L.R. 90.
90. Jai Singh v. Wali Mohammad, 190 I.C. 692; AIR 1940 Lah.252.
91. Satyanarayanamurthi v. Pydayya. AIR 1943 M. 459; (1943) 1 M.L.J 219.
 138

ransfer, and undiminished by any subsequent births or deaths in the family

ubsequent to the date of the alienation.92

subsequent Transferee: The section is negative in form. The Legislature defines

le limits of protection of a purchaser from an ostensible owner as well as the
imits of the disability of the real owner. The principle is, that he, who holds out
nother to the world as the owner, must bear all the consequences of it, when his
ight comes in conflict with that of an innocent purchaser for value, who had
iken reasonable care in making the purchase. The section itself is limited, in its
;rms, to the position of the real owner as against the purchaser for value from the
stensible owner. It does not apply to-

a) gratuitous transferees, or

b) to the rights of the successors-in-interest of the real owner, or

;) To the rights of subsequent purchaser from gratuitous transferees, or

d) To subsequent purchasers from first transferees for consideration from the

ostensible owner.

The rights of such successors-in-interest or subsequent transferees are to

QT
e determined on general equitable principles.

The section is not limited to immediate purchasers from an ostensible

wner but extends also to subsequent purchaser. So, even if the immediate
urchaser had notice, yet the ultimate purchaser has purchased bone fide after
sing reasonable care in ascertaining the power of the transferor to make the
ransfer, he is protected.94

'artial Interests: The word “voidable” in the section does not mean voidable in
ntirety. It cannot be construed to mean voidable in its entirety. The Section
pplicable even to cases when the transaction is partly good and partly voidable.95

;. Ibid.
. Pumendu Nath v. Hanut Mull, 1921.C. 416; AIR 1940 C. 565, 568; 44 C.W.N. 813.
. Gholam Siddique Khan v. Jogendra Nath, 96 I.C. 199. AIR 1926 C. 916, 918.
. Sethumadava v. Vacha Bibi, 111 I.C. 539; AIR 1928 M. 778. 782.
 The section applies also to cases where the transferor has actually a
smaller interest but has the appearance of an interest greater than he really
possesses.

Principle well established : The principle underlying section 53 of the Transfer

of Property Act is in accordance with justice, equity and good conscience, and has
been held applicable even in areas where the Transfer of Property Act is not in
force, or in cases not covered by the language of the section.

So, We may also refer to provision relevant to Benami Transfers in the

Transfer of Property Act.96 The law of estoppel is enacted in section 115 o the
Indian Evidence Act, and the leading case on that section falls equally under this
provision of the Transfer of Property Act. In that case the owner transferred
property to his wife as benamidar. After his death, she mortgaged the property,
her son assisting in the transaction and receiving the mortgage money. The son
was held to be estopped from disputing the mortgage. If the provision in the
Transfer of Property Act had been applied, the case would have been similarly
decided on the ground that by the consent of the son, the mother was the
ostensible owner.

(B) The Benami Transaction and the Indian Contract Act,1872:

Meaning of words and phrases: (a) “Consent, express or implied”.The word

“Consent” is defined in section 13 of the Contract Act, but since the “consent,
express or implied,” mentioned in the section operates as estoppel, it seems that
the term “consent” is not used in the limited sense in which it is defined in the
Contract Act. This is so, for, to create an estoppel agreement is not essential.
Indeed, a person may be barred by estoppel, if he has been guilty merely of
omission or negligence.

(a) express words of consent, or

(b) acts or conduct which imply consent.

96. Section 41, Transfer of Property Act.

 140

In order to create ostensible ownership the real owner must, it some

aanner, be privy to it. Mere inaction or silence per se, in the absence of some
ircumstances for making it incumbent on him to act or speak, would not
Lormally be enough; for, if the transferee has been defrauded by the alleged
stensible owner, he can take appropriate proceedings against him, either for the
07
efund of consideration or any other appropriate remedy.

a) Express consent: The consent is express when-

(1) The owner expressly declares by words, spoken or written,-

(a) that he had no interest in the property, or

(b) that another person has an interest in that property, or

(2) the owner does any act which goes to show that he has no interest
in the property, as when he attests a deed which states that he has
no interest m the property

Mere inaction or silence is not material unless there is a duty to speak, or

tie inaction or silence is equivalent to speech.

It is to be observed, that the mere fact that a party attests a deed of

aortgage does not, by itself, estop his from denying that he consented to the
aortgage, but there might be circumstances to show that the attestation was
ntended as involving consent to the transaction.99

b) Implied consent: The expression “implied consent” means consent which

3 to be inferred from the act or conduct of a person. If the real owner knows
nother person is dealing with his property and acquiesces, his inaction may
tnply consent.100 But before such consent can be inferred it must be proved that
tie person giving the consent was aware of his right, title or interest in the
•roperty, and that, in spite of that knowledge, he gave the consent. His act or

'. Basso v. Mir Muhammad, 201.C. 291.

;. Tejmal v. Sawji, 135 I.C. 407; A.I. R. 1931 Nag. 194 27 Nag. L.R. 283.
Mohammad Mazhar-ud-din v. Zahurud-din, 90 I.C. 547; AIR 1926 Oudh 131.
°. Sarat Chandra v. Gopal Chandra 19 I.A. 203; I.L.R. 20 C 296
conduct, at a time, when he was not conscious even of his own right, does not
debar him from urging his own claim against a transferee.

Mere inactivity on the part of the real owner, even with the knowledge of
the transfer, would not amount to implied consent and debar him from recovering
his property from the transferee, unless;

a) by some act or conduct on his part, he has induced the transferee to

believe that his transferor was competent to make the transfer101 or

b) he had knowledge that another person was treating the property as

his own and he acquiesced in it.102

Illustrative cases: (1) A person purchased property in the name of his wife. So
far as there were occasions for doing so, he held her out as the real owner. The
plaintiff took a mortgage from the wife, after making due enquiry. It was held that
an auction-purchaser of the property in execution of a decree against the husband
could not be allowed to defeat the right of the plaintiff who was a transferee in
good faith from the ostensible owner without notice of the husband’s title.103

(3) A Burmese husband from the very outset allowed his wife and
children to hold themselves out as sole owners of the property and to deal with it
as if they were its owners. They mortgaged the property to the mortgagee, who
acted in good faith and without notice of the title of the husband. It was held, that
the husband could not impugn the mortgage as the mortgagee did not act in bad
faith.104

(4) Where a Hindu lady cannot transfer a part of the estate in her
possession without legal necessity, so as to bind the reversioner, much less can
she, by orally transferring possession and putting such person in possession,
destroy the rights of the reversioner,in case such person transfers the property. In
such a case, no estoppel can arise under this section, for it refers to personal
estoppels, arising out of the conduct of the plaintiffs or persons through whom

101. Shamsher Chand Vs. Mehr Chand, I.L.R. 147 Lah. 749; AIR 1947 Lah. 147 (F.B.).
I0Z. Sarju v. Panchananda, AIR 1959 Assam 15; I.L.r. 1957 Assam 465.
103. Ananda Mohan v. Nilphamari Loan Office, Ltd. AIR 1921 C. 549,551.
m. Maung Po Sein v. Ma Myit, 146 I.C. 1063; AIR 1933 Rang. 361.
 142

hey are claiming, and the mere fact, that the Hindu widow’s estate is vested in
he limited owner of the time being, cannot create an estoppel against the
eversioner by virtue of the consent obtained from the limited owner.105

(5) The entry of the name of one of the co-sharers in the revenue
ecords and the fact of his managing the property transferred by him are not
sufficient evidence of his having been put forward by the other co-sharers as an
ostensible owner.106

The consent must be free and intelligent: The consent must be:

(i) a free consent, as defined in section 14 of the Contract Act, and

(ii) . an intelligent consent, i.e., not one brought by a misapprehension

of legal rights.107

But a consent based on a mistake of fact will be within the section.108

The section does not apply to minors: Minors are not bound by the doctrine of
estoppel,109 and the court cannot hold minor estopped by the acts or omissions of
others.110 So also, this section does not apply to minors, and a guardian of a minor
who transfers his property cannot be treated as an ostensible owner with the
consent of the minor.111 In law, a minor is incapable of giving his consent.112

The expression “with the consent, express or implied” governs the expression
“A person is the ostensible owner”: The view that the words “with the consent,
express or implied” govern the words “Transfers the same” is erroneous, for, if

105.Chapalabala v. Sarat Kumari, AIR 1941C 318, 319.

106.Shambhu Prasad v. Mahadeo Prasad, I.LR. 55 A, 554, 1441.C. 293 AIR 1933 A. 493,494.
107.Suraj Rattan v. Azamabad Tea Co. Ltd., AIR 1965 S.C. 295.
108.Dungariya v. Nand Lai, 3 A.L.J. 534.
109.Ram Prasad v. Imratbai. 65 I.C. 477; AIR 1922 Nag. 79. Shori Lai v. Damodar Das, I.L.R.
1937 Lah. 783; 175 I.C. 832; AIR 1938 Lah. 86; 40 P.L.R. 286.
u0. Sadiq Ali Khan v. Jai Kishori, 109 I.C. 387; AIR 1928 P.C. 152; Gandigeppa v. Balangowda,
I.L.R. 55 B 741; 135; I.C. 161; AIR 1931 B. 561 (F.B).
m. Ram Charan v. Joy Ram, 16 I.C. 825; 17 C.W.N. 10.
m. Abdulla Khan v. Bundi, I.L.R. 34 A. 22; 11 I.C. 710; Dambar Singh v. Jawitri, I.L.R. 29A.
292; Dalibai v. Gopibai, I.L.R. 26 B. 433; Maung Sein v. Maung Kywe, I.L.R. 12 Rang.
55;1501.C. 667; AIR 1934 Rang. 90.
the real owner consents to the transfer, he would be estopped under section 115 of
the Evidence Act, irrespective of this section.113

“Of the person interested in immovable property.”- these words refer to the
legal owner of the immovable property,114 as trustees, 115 but not guardians of
minors116

“The transfer shall not be voidable”- The words “the transfer shall not be
voidable” mean that the transfer cannot be attacked.

(C) Benami Transaction and the The Indian Evidence Act,1872:

Burden of proof: Meaning of burden of Proof..- Sections 101 to 114 deal with
the question of burden of proof. Burden of proof signifies an obligation to prove a
fact. The phrase ‘burden of proof has, however, the double meaning. In its proper
sense it means duty of establishing the entire case and as such it never shifts but
rests all the time on the person, who alleges the affirmative, i.e., the plaintiff in a
civil case and the prosecution in a criminal case. In another sense, which is called
onus of proof, it is used to indicate the duty of proceeding to adduce evidence and
that burden shifts to the opposing party each time the prima facie case is made out
by the other. The use of the phrase in the latter sense, though common, is
improper and confusing. Correctly speaking the word ‘proof signifies a state of
mental certainty as to existence or non-existence of some fact and the ‘burden of
proof in its correct sense should mean the responsibility of creating that state of
mind. Where the phrase ‘burden of proof is used to signify the duty of
proceeding to adduce evidence, the word proof is used only as a means by which
such mental state is created. It would be better to replace the word evidence for
proof when the phrase is used in this sense. It should be called ‘burden of
evidence’ rather than ‘burden of proof.

113. Shankar v. Daooji, L.R. 58 I.A. 206; I.L.R. 53 A. 290; 132; I.C. 602; AIR 1931 P.C. 118.
114. Fazal Husain v. Muhammad Kazim, I.L.R. 56A 582; 150I.C. 81; AIR 1934 A. 193. See also
Fakruddin v. Ramayya, AIR 1944 M. 299; Jesa Ram v. Ghulaman, AIR 1936 Lah. 816.
115. Jogendra v. Salamat, 33 C.W.N. 994.
116. D.A.v.College v. Umrao Singh, 157 I.C. 92; AIR 1935 L. 410.
 144

The Indian Evidence Act uses the term in both senses. In Section 101 it is
ised in the first sense of establishing the entire case but in other sections, it is
ised in the sense of duty to adduce evidence. The expression ‘burden of proof
ind ‘burden of proving’ used in the Act also mean the same thing.

Necessity of assigning burden of proof- Predominating influence of

lersonal element in a litigation and practical necessity of time limit for deciding a
(articular case are the main reasons for assigning burden of proof. The question of
rnrden of proof has importance is the early stage of proceedings and when no
vidence has been adduced by the opposite party, but the end of the proceeding
vhen both parties have adduced evidence, it is not of much importance.

Effect of incorrect placing of burden - The incorrect placing of the onus

mounts to a material irregularity of procedure within the meaning of section
15(c) of the Code of Criminal Procedure and the appellate Court may interfere in
evision.

Agreement as to burden of proof- The parties can make an agreement

hat the burden of proof of existence or non-existence of a particular fact shall lie
>n either party in accordance with the agreement.

Burden of proof in Civil and Criminal cases - In criminal cases there is a

•resumption in favour of innocence of the accused and the burden rests on the
•rosecution to establish his guilt beyond reasonable doubt. Throughout the trial
his burden rests on the prosecution. The burden is never on the accused to show
hat he did not commit the crime and it is a matter of choice for him whether he
xplains incriminating circumstances or remains silent. He is not required to rebut
he case made out against him until the evidence is sufficient to establish his guilt
•eyond reasonable doubt and even in such a case it would be enough for him to
ntroduce only such evidence as well again create a reasonable doubt as to his
;uilt. It is only where the accused relies upon some independent matters of
efence or general exceptions that he has to offer evidence in support of such
efence or exception.
 In civil cases the plaintiff is required to prove his case by a preponderance
of evidence. The reasons for this relaxed rule in civil cases are the following:-

In criminal cases there is a presumption of innocence in favour of the

accused, but there is no such presumption in civil cases.

In civil cases proof may result in a judgment for pecuniary damages or

establishing a right, but in criminal cases reputation, freedom, future livelihood,
career and even life are involved.

Presumption and burden of proof- Presumptions may affect burden of

proof and whenever the law places a burden of proof upon a party, a presumption
operates against it. They have close connection with each other and must be
considered together. When there is an ample evidence from both sides, the fate of
the case is no longer determined by presumptions or burden of proof but by a
careful selection of the correct version based on preponderance of probabilities
which has to be so compulsive or overwhelming in the case of a choice in favour
of a conviction as to remove all reasonable doubt. Burden of proof and
presumption may become decisive only where evidence from both sides is equally
balanced or there is paucity of evidence on either side.

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.

Illustrations

(a) A desires a Court to give judgment that B shall be punished for a crime
which A says B has committed.

A must prove that B has committed the crime.

 146

(b) A desires a Court to give judgment that he is entitled to certain land in

he possession of B, by reason of facts which he asserts, and which B denies, to be
rue.

A must prove the existence of those facts.

102. On whom burden of proof lies - The burden of proof in a suit or

iroceeding lies on that person who would fail if no evidence at all were given on
ither side.

llustrations

A sues B for land of which B is in possession, and which, as A asserts,

vas left to A by the will of C, B’s father.

If no evidence were given on either side, B would be entitled to retain his

lossession.

Therefore, the burden of proof is on A.

A sues B for money due on a bond.

The execution of the bond is admitted, but B says that it was obtained by
raud, which A denies.

If no evidence were given on either side, A would succeed, as the bond is

tot disputed and the fraud is not proved.

Therefore, the burden of proof is on B.

103. Burden of proof as to particular fact.- The burden of proof as to any

(articular fact lies on that person who wishes the Court to believe in its existence,
inless it is provided by any law that the burden of proof of that fact shall lie on
ny particular person.

llustrations

[(a)] A prosecutes B for theft, and wishes the Court to believe that B
dmitted the theft to C. A must prove the admission.
 147

(b) B wishes the Court to believe that, at the time in question, he was
elsewhere. He must prove it.

104 - Burden of proving fact to be proved to make evidence admissible-

The burden of proving any fact necessary to be proved in order to enable any
person to give evidence of any other fact is on the person who wishes to give such
evidence.

Illustrations

A wishes to prove a dying declaration by B. A must prove B’s death.

A wishes to prove, by secondary evidence, the contents of a lost

document.

A must prove that the document has been lost.

Burden of proof in real sense.- Sections 101 to 104 lay down certain general
rules regarding burden of proof. Section 101 deals with the burden of proof in its
proper sense of establishing the entire case. In this sense the burden of proof
never shifts. It remains throughout the case exactly where the pleadings originally
place it. That is why it is also called burden of proof on the pleadings. Section 101
lays down that whoever desires any court to give judgment as to any legal right or
liability dependent on the existence of those facts. If a wants that the court should
award punishment to B for a particular crime, say murder, A must prove that B
intentionally caused injuries to the deceased and he died, as a result of those
injuries. Thus, all essential elements of the crime must be proved to establish that
B has committed that crime. If he fails to establish B’s guilt, B will be acquitted.
Similarly, if A files a suit for possession of a property he must prove that he is
entitled to possession. Where a person seeks eviction of rented building on the
ground that he needs it for his personal use, the burden lies on the landlord to
establish that he genuinely needs the accommodation in question.

Burden of adducing evidence.- Sections 102 to 104 deal with the burden of
proof in the sense of duty of proceeding to adduce evidence. Section 102 lays
down that the burden of proof in a suit or proceeding lies on that person who
 148

would fail if no evidence at all were given on either side. The test of burden of
proof, therefore, is this : ask yourself which party will be unsuccessful if no
evidence is given or if no more evidence is given than has already been given at a
particular point of the case. Thus if A is charged with the crime of theft and the
prosecution proves that the stolen articles were recovered from A and that A had
opportunity to commit that theft, the burden is on A to prove his innocence.
Where an agreement is challenged on the ground of being a restraint on trade, the
burden is on the person who supports the agreement. But if he proves that the
restraint is reasonably necessary to protect his interest, the burden shifts to the
person who attacks the contract to prove that it is, nevertheless, injurious to the
public. Where in a suit for price of coal plaintiff alleged that the price was to be
paid by weight whereas defendant alleged that it was to be paid by measurement
and no satisfactory evidence was adduced on either side, it was held that it was for
the plaintiff to prove his claim.

Section 103 provides that the burden of proof as to any particular fact lies
on that person who wishes the Court to believe in its existence unless it is proved
by any law that the burden of proof of that fact shall lies on any particular person.
If A is charged with murder of B and A wants the court to believe that at the time
of murder he was admitted in the hospital, the burden is on A to prove that at the
relevant time he was admitted in the hospital. Where the plea of the appellant was
that the deed in question was induced by misrepresentation, the Supreme Court
held that the onus was upon the appellant to prove the misrepresentation. When a
person applies for registration of trade mark, the onus is on him to establish that
the trade mark is not likely to deceive or cause confusion and does not fall within
the prohibition of section 8 of the Trade Marks Act. In a suit for judicial
separation on grounds of cruelty the burden lies on the petitioner to prove that the
respondent treated him with cruelty as provided under Section 10(1) of the Hindu
Marriage act, 1955. Similarly, where prosecution alleged that a transaction was
benami, it was held that it was the duty of the prosecution to establish by evidence
(not mere suspicion) that it was in fact benami.
 Where death of a patient is caused due to failure on the part of the doctor
to perform emergency operation and the doctor pleads that the patient did not give
his consent for the operation, the burden lies on the doctor to prove the want of
consent of the plaintiff. This is especially so where the patient is not alive to give
evidence.

Section 104 provides that burden of proving a fact, the proof of which
enables a party to give evidence of some other fact, is on the person who wishes
to give such evidence. The burden of proving death is, under Section 104, on the
person who wishes to give evidence of dying declaration. The ordinary
presumption that a person understands the document which he signs does not
apply in case of pardanashin women. The Court has to ascertain that the party
executing has been the free agent. The burden of proof will be on the person who
seeks to sustain transaction entered into with such a woman to prove that she
executed the document after clearly understanding the nature of the transaction.

Burden of proving that case of accused conies within exceptions. Sec.105:

This section is an application or extension of the general rule laid down in

Section 103 which places burden of proof as to any particular fact on the person
who wishes the court to believe in its existence, and a qualification to the general
rule that in criminal trials the burden of proving everything essential to the
establishment of the charge against the accused lies upon the prosecution. When
the accused pleads that his case comes within any of the exceptions mentioned in
the Indian Penal Code or any other law defining crime, the burden, according to
Section 105, is on the accused to establish the circumstances bringing his case
within any such exception exist. The court shall presume the absence of such
circumstances. The accused has to establish them positively.
117
Illustrative cases- In Bhikari v. State of U.P., the appellant was
charged with murder. He pleaded the general exception of insanity under Section
84 of the I.P.C. in his favour. The Court held that it was for the appellant to
establish that he was, at the relevant time, incapable of knowing the nature of the

117
. AIR 1966 SC 1.
 150

ct or that what he was doing was either wrong or contrary to law. As he could
ot establish the exception, his conviction was affirmed and the appeal was
ismissed. In State of M.P. v. Ranga Swami,118 the respondent fired at an object
rom a distance of 152 feet. He thought it to be the same hyena which had been
een in the vicinity on the previous day. But to his surprise he found that it was
le cry of a human being. He gave evidence that at the time of shooting, it was
aining and that the object had brown covering and, therefore, he mistook him for
yena. The Court held that the exception of accident under Section 80 of the
ridian Penal Code was established.

Standard of Proof under Section 105As a general rule, an accused in a

riminal case is entitled to acquittal if a reasonable doubt is created as to his guilt.
Jut the last part of the Section 105 says that the Court shall presume the absence
f circumstances bringing his case within any of the exceptions. The presumption
aised is a rebuttable presumption of law, and according to Section 4 of the Act,
tie fact presumed shall be regarded as proved unless and until it is disproved. In
ther words, absence of the circumstances should be regarded as proved unless
nd until disprove. The word disproved has already been defined by the Act in
lection 3. If the absence of circumstances entitling an accused to the benefit of
xception is not disproved in that sense but only a reasonable doubt is raised in
be mind of the court the question is whether accused is entitled to acquittal in
uch a case.

In Parbhood v. Emperor,119 the Allabahad High Court held ; “In a case in

vhich any general exception in the Penal Code is pleaded by an accused person
nd evidence is adduced to support such a plea, but such evidence fails to satisfy
he Court affirmatively of the existence of the circumstances pleaded, the accused
lerson is entitled to be acquitted if upon a consideration of the evidence as a
vhole (including the evidence given in support of the plea of the said general
xception) a reasonable doubt is created in the mind of the Court whether the
ccused person is or is not entitled to the benefit of the said exception”.

18. AIR 1952 Nag. 268.

9. AIR 1941 All 402: 1941 ALJ 619(FB)
 This case has been followed by the Allahabad High Court in the case Rishi
Kesh Singh v. State120. In that case it was pointed out by the majority that the plea
of the accused person may reach any of the following three stages :

1. The stage of lifting the initial presumption raised at the end of the Section
105.

2. The stage when reasonable doubt as to guilt of the accused is created.

3. The stage of complete proof of the exception by preponderance of

probabilities which covers even a slight tilt of the balance in favour of the
accused’s plea

The accused is not entitled to acquittal if his plea does not go beyond the
first stage. He is undoubtedly entitled if it reaches the third. As to second stage,
the opinion of the majority is that the accused is entitled to acquittal by obtaining
a benefit of doubt. If the court reaches the conclusion that the prosecution has
failed to discharge its burden of proving the guilt of the accused beyond
reasonable doubt, the accused is entitled to be acquitted. Accused has to establish
his plea the standard of proof is not the same as that which rest upon the
prosecution. Where the onus shifts to the accused and the evidence on his behalf
probabilises the plea, he will be entitled to the benefit of reasonable doubt.

In Vijayee Singh v. State of U.P., it was held that an accused is

discharged if he proves preponderance of probabilities in favour of his plea or
creates a reasonable doubt as to his guilt.

In criminal cases sanity is presumed and need not be proved by the

prosecution if the plea of insanity is taken by the accused even if he is unable to
establish conclusively that he was insane at the time he committed die offence, the
accused is entitled to acquittal if the evidence creates a reasonable doubt as to his
sanity. In Mohd. Ramjani v. State of Delhi,122 the accused had pleaded private
defence. It was proved on behalf of the accused that the deceased and his

120. AIR 1970 All 51

m. AIR 1990 SC 1459
m. AIR 1980 SC 1341
 152

ompanion armed with a saria and knife assaulted accused’s father. Then accused
ssaulted the deceased to save his father and himself from further injuries. This
/as held to be sufficient to shift the burden on the prosecution. Because the
rosecution could not prove his case beyond reasonable doubt, the accused was
cquitted.

This section places burden on a party of proving a fact which is especially

/ithin his knowledge. This is because he is in a better position to prove. It would
e difficult, and under certain circumstances even impossible, for the other party
3 prove such a fact. In a case where goods were consigned by the consignor to
re consignee who alleged shortage, it was held that the checking of goods and
scording of weight being obligations of the consignee and within his special
nowledge, it was for the consignee to prove as to what was its weight. Similarly,
/here under Section 5 of Prevention of Corruption Act, the prosecution proves
aat the resources and property found in possession of the accused are
'^proportionate to his known sources of income, it is for the accused to account
or this possession of disproportionate assets. Where a person is prosecuted for
[riving without licence the burden lies on that person to prove that he has licence,
limilarly, where a person claims that he has licence to sell milk, burden is on him
o produce licence.

Lgent’s authority.- Where question is whether a particular act was done by an

gent within the authority, the burden of proving limits of agent’s authority lies on
tie principal.

Section applies only to parties to the suit- Provisions of Section 106

pply only to parties to a suit and not to third persons.

Especially within the knowledge.- The word ‘especially’ is of significance. It

aeans facts that are pre-eminently or exceptionally within his knowledge. This is
lear from the illustrations appended to the Section.
 In State of West Bengal v. Mir Mohammad Umar 123 it was held that the
principle embodied in section 106 of the Evidence Act can be utilized when more
persons than one have abducted the victim who was later murdered. It is within
the legal province of the Court to justifiably draw a presumption that all the
abductors are responsible for murder.

The Court observed that section 106 of the Evidence Act is not intended to
relieve the prosecution of its burden to prove the guilt of the accused beyond
reasonable doubt. The section would apply to cases where prosecution has
succeeded in providing facts from which a reasonable inference can be made of
existence of certain other facts unless accused by virtue of special knowledge
regarding such facts failed to offer any explanation which might drive the court to
draw a different inference.

In Sucha Singh v. State of Punjab,124 on 22-2-1991 three elder sons of one

Diwan Singh were working in the grain market at Amritsar and two younger sons
were staying with the parents. One of them was employed in Army and had come
home on leave. Four armed assailants, including the appellant knocked at the door
at abut 10 p.m. Diwan Singh understood the danger and ran on the roof and hid
himself. The assailants caught the sons and took them away. Their mother, Dalbir
Kaur, followed but she was hit by butt end of rifle and had to stop. After a short
while parents heard the gun shots. Because of fear they could not even gaze
outside. In the morning Diwan Singh went to his brother and searched his sons.
They found dead bodies on the road. After investigation police charge sheeted
only two Sucha Singh and Sarbjit Singh.

The case was sent to TADA Court. The judge convicted both under
section 302 red with section 34 of the I.P.C. but acquitted them of offences under
TADA. They eye witnesses Diwan Singh and Dalbir Kaur could testify that two
deceased sons were taken away by armed assailants and next morning corpses
were found lying on the roadside. The appellant challenged the conviction.

123. AIR 2000 SC 2988

124. AIR2001 SC 1436
 154

It was contended that the appellant was only one of the abductors. This
;ould not be sufficient to hold him as one of the killers. The Court held that the
ibductors could alone tell the Court as to what happened to the deceased after
hey were abducted. When the abductors withhold that information from the Court
here is every justification for drawing the inference in the light of preceding and
ucceeding circumstances that the abductors are murderers of the deceased. Citing
ts judgment in Mir Mohammad Omar’s case supra, the Court observed:

“We are mindful of what is frequently happening these days. Persons are
kidnapped in the sight of others and are forcibly taken out of sight of all
others and later kidnapped are killed. If a legal principle to be laid down
is that for murder of such kidnapped there should necessarily be
independent evidence apart from the circumstances enumerated above we
would be providing a safe jurisprudence for protecting such criminal
activities. India cannot now afford to lay down any such legal principle
insulating marauders of their activities of killing kidnapped innocents out
of the ken ofothers. The appeal was dismissed. ”

Jurden of proving death of person known to have been alive within thirty
rears: Sec.107:

This section raises a presumption against death of a person if it is shown

hat he was alive within 30 years. The burden of proving death lies, then on the
lerson who asserts that he has died. If the death of A is in question and B asserts
lis death, the burden will be on B to establish A’s death by positive evidence, if it
s shown that A was alive within last 30 years. But this presumption is subject to
he provisions of the next section and, therefore, both sections must be read
ogether to arrive at any conclusion.

lurden of proving that a person is alive who has not been heard of for seven
ears .Sec. 108:

This section is, as is clear from its language in the nature of a proviso to
he preceding section. While under Section 107 if a person is shown to be alive
vithin last 30 years he will be deemed to be alive unless the party which asserts
his death proves it, this section provides that where he has not been heard of for a
period of 7 years by those who would naturally have heard of him if he had been
alive, the burden of proving that he is alive is shifted to the person, who asserts
that he is alive. Thus even where A is shown to be alive within 30 years, if it is
proved that he was not heard of within 7 years by those who would naturally have
heard of him, a presumption will be drawn that A is dead and the person who
wants to prove that A is not dead has the burden of proof.

No presumption of death on a particular date- Section 108 of the

Evidence Act has its origin in English law which was stated thus in In re Phenes
Trusts:

“If a person has not been heard offor 7 years, there is a presumption of
law that he is dead, but at what time within that period he died is not a
matter ofpresumption but of evidence, and the onus of proving that the
death took place at any particular time within the seven years lies upon a
person who claims a right to the establishment of which that fact is
essential".

In Mohammad Sharif v. Bande Ali,125 one Madad Ali mortgaged certain

property to the father of the defendants-respondents (Bande Ali and others) on
two occasions, first on 8th January, 1887 and second on 27th May, 1890. Madad
Ali disappeared sometime after and nothing was heard of him again. His brother
Dildar Ali died 5 to 7 years before the present suit. On his death plaintiffs-
appellants (Mohd. Sharif and another) who were heirs of Dildar Ali sought to
redeem the mortgage made by Madad Ali. For plaintiffs to succeed in their suit it
was necessary to prove that they were heirs of Madad Ali. They proved that they
were heirs of Dildar Ali, but Dildar Ali would have been heir of Madad Ali only
if he had survived him. The lower appellate court had found that Dildar Ali died 7
years ago but there was no evidence as to when Madad Ali died.

To establish that Madad Ali died before the death of Dildar Ali the
plaintiffs-appellants contended that a presumption arose on the expiry of 7 years

125
ILR 34 All. 36
 156

that Madad was dead and it was for the other side to prove that he was alive after
that date. If the suit had been brought immediately after the expiry of 7 years the
other side would have had to prove his existence, why should the burden be
shifted now?

Burden of proof as to the relationship in the cases of partners, landlord and

tenant, principal and agent .Sec.109 :

Whenever the existence of a relationship or state of things is shown, the

presumption is that it continues till the contrary is shown or some other
presumption arises. The present section applies to three common and important
relationships. They are-

Partnership,

Landlord and tenant,

Principal and Agent.

Whenever it is shown that any of these relationships existed or a particular

person has been behaving in accordance with such relationship, it becomes the
duty of the person who denies the existence of that relationship to prove that such
relationship did not exist or has ceased to exist.

Illustrations - Suppose A sues B as a partner of a firm. B says that he has

never been partner of that firm or has ceased to be partner of that firm. If it is
shown by A that B has been acting as a partner, a presumption is raised under this
section that he was and still is a partner. The burden of proving that B was not or
has ceased to be a partner is thrown on B.

When the existence of a relationship of a lessor and lessee is proved, its

continuance is presumed under Section 109 and the burden of proving its non­
existence lies on the person who asserts it. Where a person has been in possession
of a land as tenant and there is no proof of the lease being for a definite term or of
a notice to quit, a presumption of continuance will be raised. Where the
relationship of landlord and tenant has been established, the mere non-payment of
rent is not enough to show that the relationship has ceased to exist.
Burden of proof as to ownership.Sec. 110 :

Section 110 raises a presumption that the person in possession of some

property is also owner of that property and throws burden of disproving his
ownership on the person who denies his ownership. The section embodies the
well-known rule ‘Potior est conditio possidentis’ (Possession is nine points of
Law).

Possession for purposes of this section means legal possession. It should

not be prima facie wrongful. The section applies to immovable as well as
movable property and also to cattle. The presumption under this section is
available against Government but it will not apply where there is statutory
presumption of ownership in favour of the Government. The presumption applies
only if the two conditions are satisfied, viz., (i) that the possession of the plaintiff
is not prima facie wrongful and (ii) that the title of the defendant is not proved.

Proof of good faith in transactions where one party is in relation of active

confidence. Sec. Ill:

Ordinarily a transaction is presumed to be entered into in good faith but

where one of the parties occupies a position of active confidence in relation to the
other the ordinary rule is reversed and the misuse of his position is presumed.
Section 111 requires that the person in confidence should prove that the
transaction was made in good faith. Where A sells his property to B ordinarily it
will be presumed that the transaction is bona fide and one who alleges lack of
good faith should prove it, but if B is A’s pleader or otherwise in relation of active
confidence the burden of proof is on B to prove that the transaction was in good
faith.

In order to bind a person who by his act or conduct has divested himself of
his property there must be free and full consent. In transactions in which one of
the parties is unable to appreciate the effect of what he does the main element
which renders his own act is not there. Thus, where because of his state of mind,
age, weakness or other peculiar circumstances a person is incapable of exercising
his free discretion and is induced by another to do some act, that other person
 158

hould not be allowed to take benefit of his misconduct. In Smith v. Kay,126 Lord
Cingdown made the following observation :

“The principle applies to every case where influence is acquired and

abused where confidence is reposed and betrayed”.

’ardanashin ladies: It has been held in a number of cases that strict proof of
;ood faith is required where pardanshin woman is concerned. It is incumbent on
he court to be satisfied that the transaction was explained to her and that she
oiew what she was doing, i.e., she understood the nature and effect of the
ransaction. It will not make any difference even if she signed in English.
3ardanashin ladies have been given this protection in view of social conditions of
he time. They are presumed to be having imperfect knowledge.

In Jubeda Khatun v. Sulaman Khan,127 Gauhati High Court held that in

;ase of a deed executed by a pardanashin woman the Court must satisfy itself-

i) that she is really a pardanashin woman who lives in complete seclusion

and has little or no commerce with the outside world;

b) that the deed was actually executed by her or by some person duly
authorised by her with a full understanding of what she was about to do;

c) that she had full knowledge and understood the nature and effect of the
transactions into which she is said to have entered. A mere reading of the
transaction is not sufficient;

d) that she had independent and disinterested advice;

e) that she understood the whole document.

Quasi-Pardanshin- A lady is said to belong this category if she is strictly

speaking not pardanashin yet she is so close to them in kinship and habits and is
so secluded from ordinary social intercourse that a like amount of incapacity can
be ascribed to her. In Hodges v. London and Delhi Bank,128 the Privy Council

m. (1859) 7 HLC 750,778

127. AIR 1986 Gau. 71, 74
m. ILR23 All. 137 PC
held that the same amount of protection, which the law gives to pardanashin, must
be extended to her. The object of the provision is to help the weak and helpless
and as such it cannot be restricted to particular class or community.

Illiterate and ignorant persons

The rule regarding pardanashin ladies equally applies to an illiterate and

ignorant woman, though she may not be pardanashin. It is not by reason of pardah
alone that law throws its protection round pardanashin lady, but by reason of
those disabilities which a life of seclusion lived by a pardanashin lady gives rise
to and which are presumed to exist in the case of such a lady. Old age, infirmity,
ignorance, illiteracy, mental deficiency, inexperience and dependence upon others
may by themselves create disabilities that may render protection equally
necessary. Thus, where a deed was executed by an old and illiterate lady, the
court held that the burden of proof lies on the defendant to prove that the contents
of the deed were fully understood by the plaintiff.

But where the allegation of the plaintiff was that her husband got
conveyed to him her property fraudulently, the case being based on fraud not
undue influence the court held that the principles of undue influence will not
apply. She was a film actress and it was not her case that she was unable to
understand the nature of the transaction or resist the defendant.

The question whether a lady is Pardanashin and entitled to protection

under this section is a question of fact and therefore must be raised at the trial. If
no issue was framed and the issue was not raised at the trial it cannot be raised at
the time of appeal. It has to be raised at the trial to enable the opposite party to
produce any evidence which he may have.

Section 106 of the Evidence Act lays down the rule that where a person
claims an exception to a general provision of the law, the onus lies on him that the
exception applies.129 The section embodies an exception to the general rule that
no person can dispose of an interest in property that is not vested in him.

129. Maung Sein v. Moung Kawe, I.L.R. 12 Rang. 55; 1501.C. 667; AIR 1934 Rang. 90.
 160

"herefore, it follows that the onus is in first instance on the transferee to show
hat-

) a person is the ostensible owner with the consent of the real owner, and

') the transferee, after taking reasonable care to ascertain that the transferor
had power to make the transfer, has acted in good faith.

In other words, it is for the party, relying on this section, to establish the
acts which, according to him, entitle him to the benefit of the rule laid down in
t 130

The onus is then shifted on to the party seeking to defeat the transferee’s
Ltle to show that there was something to call attention and invoke enquiry. In
ther words, it is not enough for the real owner to say that proper enquiry was not
lade. He must show that there was something to call attention and invoke and
nquiry. The real owner must show that there were means of answering the
nquiry. He must show what the enquiry would have revealed. When this has
ieen done, it will be for the transferee, to entitle him to the benefit of section to
how that he took reasonable care within the meaning of this section.131

The real owner is not permitted to recover on his secret title, unless he
iischarge the burden resting upon him by showing either that-

(a) The transferee had direct notice of the real owner’s title, or

(b) He had constructive notice of the real owner’s title; or

(c) There existed circumstances which ought to have put the transferee
upon an enquiry, which, if prosecuted with care, would have led to
a discovery of the real owner’s title.132

This is so, because, where the real owner has created the appearance of
itle in another person, it is incumbent on him to show something which amounts
3 a constructive notice of the real title. In other words, he must show some

See Sunder Kuer v. Udey Ram 2121.C. 168; AIR 1944 A. 42; 1944 A.LJ 19.
*. Rajani Kanta v. Bashiram, 1211.C. 409; AIR 1929 C. 636; 49 C.L.J 532.
2. Ramcoomar v. MacQueen, L.R.I.A. Sup. Vol. 40.
specific circumstance, as the starting point of an enquiry, which would have led to
1
the discovery of it.

In Gurbaksh Singh v. Nikka Singh,134 it was said that the section is an

exception to the general rule that a person cannot confer a better title than he has.
Being an exception, the onus is on the transferee to show-

id) that the transferor was ostensible owner of the property, and

(2) That he had, after taking reasonable care to ascertain that transferor
has power to make the transfer, acted in good faith.
1
And in Suraj Rattan v. Azamabad Tea Co. Ltd., It was said that in order
that the section could be attracted it should be proved by the transferee that the
transferor was the ostensible owner of the property with the consent of his co­
sharers and besides that the transferee took reasonable care to ascertain whether
the transferor had the power to make a transfer of the full 16 annas interest.

(b) Onus in cases falling under section 115 Evidence Act and in those falling
under this section : There is a difference in the matter of burden of proof in cases
falling under section 115 of the Evidence Act and this section. Where a person
has intentionally induced another to act, the case falls under section 115, and the
burden of proof is on the person so inducing, to show that the transferee knew the
truth and, therefore, is not entitled to rely upon the plea of estoppel. But, in cases
falling under this section, where there is no intentional inducement by the real
owner, the onus is cast on the transferee in the first instance to show that (1) he is
a transferee from an ostensible owner and (2) has acted in good faith after taking
reasonable care. In a case falling under this section, where the transferee has led
his evidence and proved the above two facts, the burden of proving which
primarily rests on him, the onus shifts to the real owner to show either (a) that the
transferee has taken the transfer from a person who was not the ostensible owner,
(b) that the transferee has not taken reasonable care to ascertain that the transferor

133. See. Rajani Kanta v. Bashiram, Supra; sents;’ Baidya Nath v. Alef JaJan, 70 I.c. 194. AIR
1923 C. 240; Mohammad Sujat v. Chandbi, 97 I.C. 988; AIR 1927 Nag. 41.
134. (1963) 2 S.C.J. 285 AIR 1963 S.C. 1917.
135. (1964) S.C.R. 192; AIR 1965 S.C. 295.
 162

Lad power to make the transfer, and has not acted in good faith. The real owner
aust adduce evidence to show that (a) the transferee had notice of the defect in
hie transferor’s title, or (b) of circumstances, which, if prosecuted, would have led
1
a a discovery of such defect.

The existence of circumstances, which would have led to a discovery of

ae defect must not be asserted generally, but some circumstances must be
pecifically pointed out as the starting point of an enquiry, which might have led
1 T7
a the discovery of the real owner’s title.

D). Benami Transaction and the Registration Act, 1908 :

'ime from which registered document operates, Section 47 : A registered

ocument shall operate from the time from which it would have commenced to
perate if no registration thereof had been required or made and not from time of
ts registration.

“Registered’. The term “registered” means validly registered under the

'Let. “Registered” under section 3 of the Transfer of Property Act IV of 1882 and
ection 3(45) of the General Clauses Act further means registered in a State under
tie law for the time being in force regulating the registration of documents.

The section of transfer property act dealing with ostensible owner should
Lot be so construed as to in conflict with section 47, Registration Act. So, where
n owner sells his property to one person but before the deed is registered
xecutes a registered sale-deed in favour of another person, then the first sale-
leed, through registered later, has priority. The second purchaser cannot claim
hat the owner was the ostensible owner with the consent of the first purchaser, so
s to bar his claim under this section.138

Jcope of Section 47: The registration under the Registration Act is not complete
ill the document to be registered has been copied out in the record of the
egistration officer as provided in section 61 of the Act. Section 47 of the

!6. See The Catholic Mission Presectation Convent v. Subbana, AIR 1948 M. 320; 61 L.W. 7;
(1948) 1 M.L.J. 11.
,7. Ramcoomar v. MacQueen. L.R, I.A. Sup. Vol.40.
IS. Ramcoomar v. Mac Queen LR, I.A. Supp. Vol. 40.
Registration Act has nothing to do with the completion of the registration and
therefore nothing to do with the completion of a sale when the instrument is one
of sale. A sale which is admittedly not completed until the registration of the
instrument of sale is complied cannot be said to have been completed earlier
because by virtue of s. 47 the instrument by which it is effected, after it has been
registered, commences to operate from an earlier date.

In Milkha Singh v. Tara Singh, the sale-deed by defendant No. 1 Ramo

had been executed in favour of Sohan Singh and other defendants No. 2 to 10 on
28th October, 1960. This document had been presented for registration on 15th
February, 1961, but the same was actually registered on 1st March 1961. The
question for decision was as to when did the title in the property pass to the
vendee? Was it on 28th October, 1960, as held by the courts below or 1st March,
1961, when the said sale-deed was registered as urged by the learned counsel for
the petitioners.

Prunch and Pandit, J., delivered the judgment and held that in Punjab
when immovable property of the value of Rs. 100 and upwards is sold, the sale-
deed has to be registered... But the title in the property on registration will,
however, pass to the vendees from the date when the sale deed was executed. This
is by virtue of the provisions of section 47 of the Registration Act, which lays
down:

“A registered document shall operate from the time which it would have
commenced to operate if no registration thereof had been required or
made. ”

Section 47 of the Act, does not, however, say when a sale would be
deemed to be complete. It only permits a document when registered, to operate
from a certain date which may be earlier than the date when it was registered. The
object of this section is to decide which of two or more registered instruments in
respect of the same property is to have effect. The section applies to a document
only when it has been registered. It has nothing to do with the completion of
registration and therefore nothing to do with the completion of a sale when the
 164

nstrument is one of sale. A sale which is admittedly not completed until the
egistration of instrument of sale is completed, cannot be said to have been
ompleted earlier merely because by virtue of section 47. The instrument by
vhich it is effected, after it has been registered, commences to operate from an
arlier date.

The Supreme Court in this case had to decide the only question relating to
tie Mohammedan law of pre-emption that whether the first demand talab-i-
nowasibat which has to be made after the completion of the sale in order that the
ight may be enforced, was made before or after such completion. The making of
iemand was not in dispute but the dispute was as to when the sale was completed.
Tie Supreme Court (per majority) held that they do not think (in view of the
hove observation) that the sale in this case can be said, in view of section 47, to
lave been completed on January 31, 1946 (the date of execution).

In Kadam Lai Yadav v. The Additional Member, Board of Revenue and

'thers, the petitioner had no knowledge of the execution of the second deed
vhen the pre-emption applications were filed. The view taken by the Board that
•n registration of the second deed the title would actually relate back to the date
if execution under section 47 of the Registration Act, 1908 and, therefore, the
ubsequent transferees was a necessary party is correct. It was further held that
vhere a subsequent transfer takes place a few days before pre-emption application
s made but is registered later on, the applicant can not have knowledge of the
ransfer till it is registered and therefore the applicant would be entitled to add the
ubsequent transferee as party even though under section 47 of the Registration
^ct, the registration related back to the date of registration.

iection 47 and 75(3) of the Act-harmonious construction :

Whether a document compulsorily registered u/s 75(3) of the Act takes

ffect from the date of execution as provided u/s 47 of the Act or from the date of
•resentation for registration?

I9. AIR 1979 Pat. 179.

 Sec.. 75(3) states that such registration shall take effect as if the document
had been registered when it was first duly presented for registration. It has been
held in Jamuna Prasad v. Bhuvneshwar Thakur,140 in this context that reading the
different provisions of the Act, there does not appear to be any reason to hold that
a document executed through moral procedure is to be operative with effect from
the date of its execution, as provided in section 47 of the Act, and a document
executed through the procedure of compulsory registration is to operate only with
effect from the date it is presented for registration. The Court further observed
that it will lead to an absurd result in as much as the person who had to pursue the
procedure for compulsory registration, in view of the denial of execution by the
executant, ultimately for no fault of his, may lead to a situation where he finds
that the whole exercise has ended in futility, as his vendor had executed another
sale-deed before the earleir sale-deed had been presented for the registration. The
framers of the Act while enacting sub-section (3) of section 75 of the Act not only
wanted to bridge the gap between the date of presentation for registration and the
date of the compulsory registration by the statutory fiction. The court held that
section 47 of the Act shall be applicable even in respect of such registered
document. In other words Sections 47 and 75(3) of the Act have to be read
together harmoniously and the result whereof would be that after a document is
registered compulsorily by virtue of sub-section (3) of Sections 75 and 47 of the
Act,

it shall become operative not only from the date of presentation for
registration but from the date of its execution.

(E). Benami Transaction and the Indian penal Code, 1860:

Consent: Section 87. Act not intended and not known to be likely to cause death
or grievous hurt, done by consent. Volenti non fit injuria is an old maxim of the
Roman Jurisprudence. Although theoretically every crime must involve injury to
the community at large, a large body of offences are those which are essentially
private wrongs. In such cases the harm to society consists merely of the general

140
. AIR 1989 Pat. 113
 166

larm to the public resulting from the harm causes to the individual and there can
•e no harm from an act done to a person with his own consent. The element of
onsent condones offences against the human body and those against property.
Iroadly speaking there is no injury to any right when the act of injury is itself
onsented to by the owner of the right.

leaning of Consent- Consent is not defined in the Penal Code, although

ection 90 states when consent is not free. Consent means to agree to a thing
teing done. According to story consent means an act of reason accompanied with
leliberation of mind, weighing as in a balance the good and evil on each side. To
Stephen ‘consent’ means a consent freely given by a rational and sober person so
ituated as to be able to form a rational opinion upon the matter to which he
onsents. Consent is said to be given freely when it is not produced by force,
raud, or threats of whatever nature. It was held that if a master takes indecent
iberties with a female scholar without her consent, though she does not resist, he
nay be convicted for a common assault.141

ngredients of section 87.- The main principle underlying section 87 is that

onsent never justifies death or grievous hurt. Under this section any harm other
han death or grievous hurt even though intended or known by the doer to be
ikely to be caused will not be an offence under the following conditions :

If act is done neither with the intention of causing death or grievous hurt
lor the knowledge that it is likely to cause death or grievous hurt.

Harm is caused to any person with his consent.

Person giving consent is above 18 years of age.

Consent given may be express or implied.

The defence of consent is based on two propositions : (1) that every

lerson is the best judge of his own interest; (2) that no man will consent to what
Le thinks hurtful to himself. Every man is free to suffer any injury to his person or
iroperty. Therefore, if he consents to the injury being done by another, the doer

" R. v. Nichol R. and R. 130

commits no offence. For example, a man may give away his property, therefore, if
a person takes another’s property with his consent, he commits no offence.
However, this section does not permit a man to consent to anything intended, or
known to be likely to cause his own death or grievous hurt. The authors of the
Code said, if Z chooses to sell his teeth to a dentist, and permits the dentist to pull
them out, the dentist ought not to be punished for injuring Z’s person.

Sections 87, 88 and 89 of the Penal Code deal with the law of consent.
Consent does not justify causing of death or grievous hurt, As far as death is
concerned the prohibition is absolute and unconditional except where by statutory
provision in some cases consent has the effect of reducing the gravity of the
offence.

Section.88. Act not intended to cause death, done by consent in good faith for
person’s benefit: The rule is that consent can never justify an intentional causing
of death. But a person for whose benefit an act is done, may consent that another
shall do that act, even if death may probably ensue although death is never
intended by the doer. Under section 87 any harm other than death and grievous
hurt if caused with the consent of the sufferer is justified. Section 88 condones the
infliction of any harm as it is for the benefit of the person to whom it is caused.

If a person gives his free and intelligent consent to take the risk of an
operation which in a majority of cases, has proved fatal, the doctor who operates
cannot be punished even if death ensues.

Section 88 differs from section 87 in two important ways : one, under

section 88 any harm except death may be inflicted, under section 87 any harm
other than death and grievous hurt may be inflicted : secondly in section 88 the
age of person consenting is not mentioned, under section 87 the age of the person
consenting must be above 18 years.

Ingredients.- This section provides that the doer of an act will not be liable even
though he causes the harm resulting in death intentionally or knowing that the act
is harmful if
 168

the act done is for the benefit of the person who suffers injury,

such act is done with the consent of the person to suffer that harm or to
ake the risk of that harm,

consent may be express or implied,

act is done in good faith,

act is done without intention to cause death though it might have been
lone with the intention of causing such harm as may result in death.

Act done for benefit- In order that the defence under this section may be
ivailed it is necessary to show that the act was done for the benefit of the person.
Vlere pecuniary benefit is not benefit within the meaning of this section or
sections 89 and 92 of the Code.

Act done with the consent.- If an act is done with the consent of the
sufferer defence under this section may be claimed. Consent may be express or
implied. But consent must be a valid consent. It must have been lawfully obtained
consent. Consent must have been given by a person who is capable in law of
giving valid consent.

Act done in good faith - Act which results in harm or injury must be one
done in good faith i.e., it should not be an act done without due care and attention.
What is required under this section is due care and attention and not necessarily
special skill and knowledge. A performed an operation on a person for internal
piles by cutting them out with an ordinary knife. The patient died of profuse
bleeding. A is liable for prosecution for causing his death by doing rash and
negligent act. A is not entitled to protection under this section as he had not acted
in good faith.

Intention to cause harm but not death.- Under this section the wrong-doer
is protected even though he has done the act with the intention of causing harm
including grievous hurt but not death. The defence is available because the act is
done in good faith and for the benefit of the victim.
Section.89. Act done in good faith for benefit of child or insane person, by
consent of guardian: This section gives power to the guardian of an infant under
twelve years or an insane person to consent to the infliction of harm to the infant
or the insane person, provided it is done in good faith and for his benefit. This
section offers protection to guardians as well as to other persons acting with the
consent of the guardian of a person under twelve years of age, or of unsound
mind. Persons above 12 years are considered to be capable of giving their
consent. Under section 88 the consent is that of the sufferer himself, whereas
under section 89 the consent is of the guardian or other person having lawful
charge of the infant or insane.

Ingredients - In order that a person may avail the defence under section 89
the following conditions must be fulfilled :

Act must be done for the benefit of a person who is either a minor under
12 years of age or a person of unsound mind;

Act must be done in good faith;

Act must be done by the guardian or by the consent of the guardian or

other person having lawful charge of that person;

The consent may either be expressed or implied.

Section.90. Consent known to be given under fear or misconception.- A

consent is not such a consent as is intended by any section of this Code, if the
consent is given by a person under fear of injury, or under a misconception of
fact, and if the person doing the act knows, or has reason to believe, that the
consent was given in consequence of such fear or misconception; or

Consent of insane- If the consent is given by a person who, from

unsoundness of mind, or intoxication, is unable to understand the nature and
consequence of that to which he gives his consent; or

Consent of child.- Unless the contrary appears from the context, if the
consent is given by a person who is under twelve years of age.
 170

In the following cases consent is not a free consent under this seetion-

(1) Consent given by a person under fear of injury.

(2) Consent given under misconception of fact.

(3) Consent give by a child under 12 years of age.

(4) Consent given by a person of unsound mind.

(5) Consent given by an intoxicated person.

This section does not require that the transaction to be binding on the real
>wner must have been entered into with his consent-Satyanarayanamurthi v.
ydayya,142; Parvati v. Angamuthu,143

For the application of this section it is essential that the consent of the true
iwner to the possession of the ostensible owner must continue up to the date of
be transfer; but it is not necessary that the transfer itself should be with the
:onsent of the owner. If it is proved that transfer was made with the consent of the
ightful owner, the case would fall within the purview of Sec. 115 of the Evidence
^ct and the other conditions of Sec. 41 of the Transfer of Property Act need not
>e satisfied. Such consent will estop the owner even though the transferee made
lo inquiries to ascertain that the transferor had power to make the transfer- a
:ondition which is essential for the application of Sec. 41- Jesa Ram v.
Ihulaman,144

The mere fact that an entry is made in the survey register in favour of the
ransferor is not evidence of consent of the owner within the meaning of this
ection- Perumal v. Subramania,145

Where a woman allowed her husband to retain possession of title deeds of

. property gifted to her by her father-in-law in lieu of dower, it was held that she
mpliedly consented to the husband holding himself out as the owner of the
iroperty and that a mortgagee from him was protected by this section-Bhagat v.

12. AIR 1943 Mad. 459, (1943) 1 M.L.J. 219

13. AIR 1942 Mad. 730.
M. AIR 1936 Lah. 816.
,5. AIR 1939 Mad. 299.
Fatima,146 But this section cannot be applied to the case of the widow of a
separated member of a Hindu joint family when nothing has been done by her by
which her consent can be implied in allowing other members of the family
executing a mortgage including therein the property left by her husband to pose as
the ostensible owners in respect of that property- Mt. Komal v. Gur Charan,147

The consent referred to in this section must be an intelligent consent and

not one brought about by misrepresentation on the part of the person making it as
to his legal rights-Dungaria v. NandLal,m

Consent may be express or implied, i.e., consent need not always be by

word, it may be by act or conduct, e.g., by acquiescence. Acquiescence does not
mean simply an active intelligent consent, but may be implied if a person is
content not to oppose irregular acts which he knows are being done-Duke of
Leeds v. Earl of Amherst149,; Evans v. Smallcombe,150; Cowell v. Watts,m;
1 S') 1 SI
Ananda v. Parbati, ; Sarat Chunder v. Gopal Chunder, ; Bhimappa v.
Basawa,154.

“If whatever a man’s real intention may be, he so conducts himself that a
reasonable man would believe that he was assenting to the terms proposed
by other party and upon that belief enters into the contract with him, the
man thus conducting himself would be equally bound as ifhe had intended
to agree to the other party’s terms”- per Blackburn, L.J., in Smith v.
Hughes,155; Sukhimoni v. Mohendra,156; Dungaria v. Nandlal,151.

m. AIR 1937 Pesh. 58.

147. AIR 1938 All. 242.
148. AIR 534.
149. 2 Ph. 117
15°. L.R.3H.L.249
U1. 2 Ht. & Tw. 224
152. 4 C.LJ. 198 (207)
153. 19 I.A. 203, 20 Cal. 296 (311)
154. 29 Bom. 400 (403).
155. 6Q.B.607
156. 4 B.L.R. 16 (P.C.)
157. 3 A.L.J. 534
 172

It is the essence of this section that the conduct of the real owner must
nduce a belief in the transferee that his transferor had power to make the transfer-
Md. Sujatv. Chandbi,158

The transferee must prove two things: (1) that he made bona fide enquiry,
nd (2) that the transferor was the ostensible owner with the consent of the real
»wner- Motimul Sowear v. Visalakshi Ammal,159; Asrafi Devi v. Trilok Chand, 16°.

Express or implied consent to ostensible ownership imports that the real

iwner is in one manner, privy to the creation of the ostensible ownership-
Zatholic M.P. Consent v. Subbanna,161. The words “consent express or implied”
efer only to the transferor holding the property as ostensible owner and not also
o the transfer or silence at a time when he was not conscious even of his own
ight would not debar him from urging his own claim against a transferee even if
ie be one for valuable consideration- Shamsher v. Mehr Chand,162.

Acquiescence is not a question of fact but of legal inference from facts

bund-Beni Ram v. Kundan Lai,163 It cannot be inferred from a mere absence of
irotest, especially where the party dealing with the property knew or could have
mown that the property he was dealing with belonged to another- Fatehyab v.
Muhammad,164; Uda Begam v. Immamuddin, 165; Basacntappa v. Ram, 166;
Zhintaman v. Dareppa,161. But it can be inferred from absence of acts of
>wnership was exercised by the plaintiff over the house in dispute, but, on the
:ontrary, she allowed her husband’s cousin to deal with the house apparently as
he ostensible owner thereof, and in consequence of such conduct the defendant

58. AIR 1927 Nag 41

59. AIR 1965 Mad. 432
60. AIR 1965 Punj. 140.
51. AIR 1948 Mad. 320 (1948)
52. AIR 1947 Lab. 147 (F.B).
53. 21 All. 496 (P.C.)
;4. 9 All. 434
15. 1 All. 82
16. 9 Bom. 86
17. 14 Bom. 506
had been induced to purchase the same, it was held that the plaintiff could not
successfully, sue for recovering her share in the house- Thakuri v. Kundan,168.

If A applies to get his name entered in the Revenue papers, and B (the real
owner) opposes the application for the entry, but in spite of the opposition A gets
his name entered, A cannot be said to hold as an ostensible owner with the
consent of the real ovmer-Pateshri v. Nageshar}69-, affirmed on appeal, Nageshar
P.C. 103. Where a revenue sale in favour of the Government is void, a vendee
from the Government cannot invoke the aid of Sec. 41 against the defaulter-
Ramrao Jankiram v. State ofBombay, .

Disclaimer by real owner: A person who has disclaimed a title cannot be

allowed to set it up afterwards; to the prejudice of the parties who have purchased
the disclaimed property from the ostensible owner in good faith and for value-
Fakhir Jahan v. Abdul Ghani,171.

Transfer by ostensible owner after suit by real owner: Although a person

may hold himself out as the ostensible owner of a property with the consent
(express or implied) of the real owner, still if the real owner brings a suit against
the ostensible owner for the possession of the property, and then the latter
transfers the property after the institution of the suit, the previous consent must be
deemed to be revoked by the act of filing the suit. Moreover, the estoppel arising
under Sec. 41 cannot override the imperative provision of lis pendens laid down
in Sec. 52. Further, it is immaterial that the ostensible owner, at the time of
transferring the property, did not know that the real owner had filed a suit against
him; for the pendency of the suit would be previous consent- Shafiqullah v.
Samiullah172.

Minors:- Where the alienation is made by the ostensible owner of a minor’s

property it is impossible for the latter to give his assent, either expressly or by

168. 17 All 280 (281,282)

169. 8A.L.J, 358, 10 I.C. 961 (962)
17°. AIR 1963 S.C. 827
m. 5 O.L.J 49 45 I.C. 307
172. AIR 1929 All. 943 (945)
 174

triplication; hence this section does not apply- Kanhiya Lai v. Deep Chand,173;
latyanarayanamurthi v. Pydayya,174; Pooran Chand v. Radha Raman,175. In such
i case the consent of the guardian is not sufficient -Sadiq Hussain v. Co-operative
Central Bank, . Suit by a deity to set aside a mortgage by the sebait is not hit by
>ec. 41 - Sri Thakur Krishna Chandramajiu v. Kanhayalal,177.

'erson interested:- Under this section alienors must act as ostensible owners
vith the consent express or implied of “persons interested” D.A. V. Gollege v.
Jmrao Singh, 178. A guardian is not a person personally interested in the minor
iwner’s property and therefore cannot give consent to a third party to hold
dmself out to the world as the owner of the infant’s property so as to enable
ransferee from such party to claim the benefit of this section- Dambar Singh v.
witri,179. And a minor will not be bound by the consent given by this guardian in
iossession- Ram Charan v. Joy Ram, .

Similarly, religious endowments do not fall under this section, as the

iroperty is vested in the shrine and no particular person can give consent express
t oi
>r implied- Ghulam Haidar v. Manager, .

F). Benami Transaction and the Prevention of Corruption Act, 1988:

An Act to consolidate and amend the law relating to the prevention of

:orruption and for matters connected therewith.

Statutory concept, amendments and repeal by New Act: Bribery and

orruption amongst public servants were defined and punishable under the Indian
’enal Code, 1860 in Chapter IX. Later on during the Second World War it was
ealised that the provision made in the Indian Penal Code, 1860 regarding bribe
nd corruption among public servants were not sufficient to meet the necessities

”. AIR 1947 Lah. 199

74. AIR 1943 Mad. 459
75. AIR 1943 All 197.
76. AIR 1952 Nag. 106
77. AIR 1961 All. 206
78. AIR 1935 Lah. 410, 1571.C. 92
'9. 29 All 292 (294).
i0. 17 C.W.N, 10, 16 I.C. 825 (828).
,1. 73 I.C. 711.
of the time. As such the Prevention of Corruption Act, 1947 was enacted. It was
later on amended in 1952 by the Criminal Amendment Act, 1952 and thereafter in
1964 based on the Santhanam Committee’s report. And lastly, it was repealed by
the Prevention of Corruption Act, 1988 (Act No. 49 of 1988) which we are
dealing with here, being the prevalent and current Act on the subject.

Statement of objects and reasons of the Act of 1947.- The scope for bribery and
corruption of public servants had been enormously increased by war conditions
and though the war was then over, opportunities for corrupt practices would
remain for a considerable time; large amounts of Government surplus stores were
being disposed of, there would, for some years, be shortages of various kinds
requiring the imposition of controls and extensive schemes of post-war
reconstruction, involving the disbursements of very large sums of Government
money, had been and were being elaborated. All these activities offered wide
scope for corrupt practices and the seriousness of the evil and the possibility of its
continuance or extension in the future were such as to justify immediate and
drastic action to stamp it out.

The then existing law had proved inadequate for dealing with the problem
which had arisen in recent years and the Bill was intended to render the criminal
law more effective in dealing with cases of bribery and corruption of public
servants. 182

Statement of objects and reasons of the Act of 1988:

1. The bill was intended to make the existing anti-corruption law more
effective by widening the coverage and by strengthening the provisions.

2. The prevention of Corruption Act, 1947 was amended in 1964 based on

the recommendations of the Santhanam Committee. There are provisions
in Chapter EX of the Indian Penal Code to deal with public servants and
those who abet them by way of criminal misconduct. There are also
provision in he Criminal Law Amendment ordinance, 1944, to enable
attachment of ill-gotten wealth obtained through corrupt means, including
I82. Vide Gazette of India, 1946, Pt. v. P. 374.
 176

from transferees of such wealth. The Bill sought to incorporate all these
provisions with modifications so as to make the provisions more effective
in combating corruption among public servants.

*. The bill, inter alia, envisaged the scope of the definition of the expression
‘public servant’: incorporation of offences under section 161 to 165-A of
the Indian Penal Code, enhancement of penalties provided for these
offences and incorporation of a provision that the order of the trial court
upholding the grant of sanction for prosecution would be final if it has not
been already challenged and the trial has commenced. In order to expedite
the proceedings, provisions for day to day trial of cases and prohibitory
provisions with regard to grant of stay and exercise of powers of revision
on interlocutory orders have also been included.

1. Since the provision of section 161-A of the Indian Penal Code are
incorporated in the proposed legislation with an enhanced punishment, it
was felt no necessary to retain those actions in the Indian Penal Code.
Consequently, it was proposed to delete those sections with the necessary
saving provision.

5. The notes on the clauses of the Bill explained in detail the provisions of
the Bill.

Who is public servant?.- The chairman of the Managing Committee of a

Municipality has been held by the Supreme Court to be a public servant within the
meaning of this section, since he has power under Rule 68 framed under the
Bombay Municipal act of 1901 to expend money of the municipality on payment
of bills for fixed recurring charges, such as pay bills, as such he comes under the
tenth clause of section 21 of the Indian Penal Code, which merely requires that
the person should have the duty to expend property for certain purposes.183

183. Mahamudappa Kesharappanavar v. State of Mysore, AIR 1961 SC 785;1961 (1) Cr. L.J. 857.
 A person employed by a Railway owned and managed by the Government
of India is a public servant within the meaning of section 21 of the Indian Penal
Code.184

Having regard to section 2 of the Prevention of Corruption Act read with

section 21 of the Indian Penal Code, a railway servant is a public servant within
the meaning of the Act and proceedings may be launched against him under the
Act.185

Person not a pubic servant not to be prosecuted.- A person who is not a public
servant cannot be prosecuted under the provisions of the Act-whether or not
sanction to prosecute him is obtained which is wholly irrelevant to the issue.186

Municipal Councilor-Whether a public servant.-The concept of a “public

servant” is quite different form that of a Municipal Councilor. A “public servant”
is an authority who must be appointed by Government or a semi-Govemment
body and should be in the pay or salary of the same. Secondly, a “public servant”
is to discharge his duties in accordance with the rules and regulations made by the
Government. On the other hand, a municipal councilor does not owe his
appointment to any Government authority. Such a person is elected by the people
and functions undettered by the commands or edicts of a Government authority.
The mere fact that an MLA gets allowance by way of honorarium does not
convert his status into that of a “public servant”. In antulay’s case,187 the Hon’ble
judges of the Constitutional Bench referred to the entire history and evolution of
the concept of a “public servant’ as contemplated by section 21 of the IPC. The
office of elected representative including that of MPs as well as MLAs were also
included within the meaning of public servants.

The Anti Corruption Law (Amendment) Act 40 1964 has substituted the
Twelfth description under section 21 of the Indian Penal Code as follows:

“Twelfth-Every person-

184. P.R. Chowdhary v. State of U.P. AIR 1959 SC 1310; 1959 Cr. L.J. 1497.
185. Pyarey Mohan v. State, AIR 1965 All 358;1956 Cr. L.J. 687.
186. Ramesh Balkrishna Kulkami v. State of Maharashtra, 1985 (3) SCC 606.
187. AIR 1984 SC 684;1984 (2) SCC 183.
 178

(a) in the service or pay of the Government or remunerated by fees or

;ommission for the performance of any public duty by the Government.

In the service or pay of the local authority, or corporation established by or

inder a Central, provincial or State Act or a Government Company as defined in
lection 617 of the companies Act, 1956.

Arsons authorized to investigate, Section 17: - Notwithstanding anything

:ontained in the Code of Criminal Procedure, 1973 (2 of 1974), no police office
)elow the rank:

a) in the case of Delhi Special Police Establishment, of an Inspector of

Police;

b) in the metropolitan areas of Bombay, Calcutta, Madras and Ahmedabad

and in any other metropolitan area notified as such under sub-section (1)
of section 8 of the Code of Criminal Procedure, 1973 of an Assistant
Commission of Police; elsewhere, of a Deputy Superintendent of Police or
a Police officer of equivalent rank, shall investigate any offence
punishable under this Act without the order of a Metropolitan Magistrate
or a Magistrate of the first class, as the case may be, or make any arrest
thereof without a warrant:

Provided that if a police officer not below the rank of a Inspector or Police
is authoirsed by the State of Government in this behalf by general or special
order, he may also investigate any such offence without the order of a
Metropolitan Magistrate or a Magistrate of the first class, as the case may be, or
make arrest therefor without a warrant:

Provided further that an offence referred to in clause (e) of sub-section (1)

of Section 13 shall not be investigated without the order of a police officer not
below the rank of a Superintendent of Police.

Scope of the section.- The section 5-A of the Repealed Act (analogous to S. 17 of
the New Act) enjoins that if investigation is to be conducted by a Deputy
superintendent of Police, he does not require any order from a Magistrate, but if
any investigation is to be conducted by an officer of the lower rank, then
permission of a Magistrate of the First Class is necessary. Giving the words their
ordinary meaning, investigation by a Deputy Superintendent of Police and
investigation by an officer of the lower rank authorised by a Magistrate are placed
on the same footing. There does not appear to be any priority given to one or the
other. The object underlying in both the cases is to save public servant from
frivolous and vexatious harassment at the instance of disgruntled persons. It is the
high rank of a police officer that provides a guarantee against frivolous and
vexatious prosecution and in the case of an officer below the rank of a deputy
superintendent of police, it is the Magistrate who guards against such
eventuality.188

Section 5-A of the Repealed Act (as well as Section 17 of the New Act)
contains a mandatory provision and any investigation conducted in violation
thereof bears the stamp of illegality. However, the contravention of this section is
curable under the Code of Criminal Procedure, if no prejudice is caused to the
accused. Where an evidence is gathered by an officer not competent to
investigate, such investigation is bound to be looked with suspicion.189

The Magistrate before granting permission under this section has to decide
two points-(i) that the facts placed before him justified an investigation into them,
and (ii) that there are good reasons, such as administrative exigencies, to permit
officers lower in rank than those designated in this section to investigate into the
complaints which have been made against the accused.

The powers conferred under this section are not the powers conferred
under the Code of Criminal Procedure. Any Magistrate of the first class appointed
to a District can exercise that power regarding all offences committed in the
District to which he is appointed. The section does not require that a Magistrate

188. Union of India v. Mahesh Chandra Sharma, AIR 1957 MB 43; 1957 Cr. LJ. 184.
189. Gopalkrishan Naik v. State, 1962 (1) Cr. L.J. 55 (Mys).
 180

ssuing order under the section should be a Magistrate having power to try the
ase. 190

When the Magistrate is requested to accord sanction under this section, he

s expected to satisfy himself from all material available that there are good and
ufficient reasons for authorising an officer of lower rank to conduct the
nvestigation. The granting of permission should not be treated as a mere matter
if routine but it is an exercise of his judicial discretion. Having regard to the pre-
mptory language of the section, and the policy underlying it, it is clear that the
(revisions of the section are mandatory.191

Where cognizance of an offence under section 165-A of the IPC is taken

nd the trial proceeds, the invalidity of the investigation due to failure to obtain
amission to investigate, will not vitiate the result, unless miscarriage of justice
1Q0
Las been caused by such failure.

'ossession of disproportionate assets: It is true that interference by the Court at

tie investigation stage is not called for. However, it is equally true that the
nvestigating agency cannot be given the latitude of protracting the conclusion of
be investigation without any limit of time. Under Article 21 of the Constitution,
very citizen has a right of speedy trial of the case pending against him. The
peedy trial was considered also of public interest as it serves the social interest. It
3 in the interest of all concerned that guilt or innocence of the accused is
etermined as quickly as possible in the circumstances. The right to speedy trial
ncompasses all the stages, namely, stage of investigation enquiry, trial, appeal,
evision and re-trial. While determining the alleged delay, the Court has to decide
ach case on its facts having regard to all attending circumstances including
ature of offence, number of accused and witnesses, the work-load of the Court
oncemed, prevailing local conditions, etc. Every delay may not be taken as
ausing prejudice to the accused but the alleged delay has to be considered in the

10. Koarchra v. The State of Mysore, AIR 1960 Mys. 242 ; 1960 Cr. L.J. 1226.
11. Gopalan Nair v. State of Merala, 1960 Ker. L.J. 1056.
'2. Warappan Babu Singh v. Manipur Administration, AIR 1958 Manipur, 17 ; 1958 Cr. LJ.
1053. Barsay v. State of Bombay, AIR 1961 SC 1762 ; 1961 (2) Cr. LJ. 828.
 181

totality of the circumstances and the general conspectus of the ease. Inordinate
long delay can be taken as a proof of prejudice. In case of corruption, the amount
involved is not material but speedy justice is the mandate of the Constitution
being in the interests of the accused as well as that of the society. Cases relating
the corruption are to be dealt with swiftly, promptly and without delay. As and
when delay is found to have been caused during the investigation, inquiry or trial,
the concerned appropriate authorities are under an obligation to find out and deal
with the persons responsible for such delay. The delay can be attributed either to
the connivance of the authorities with the accused or used as a lever to pressurize
and harass the accused as is alleged to have been done to the appellant in this
case. 193

Scope of investigation: The Supreme court has laid down in A.R. Antulay v.
R.S.Nayak,194 that it appears well established that an investigation contemplated
by section 5-A must ordinarily be undertaken by the police officers of the
designated rank and except with the permission of the Magistrate bears
investigation by police officers of lower rank. It may be that at a given case
permission granted by the magistrate for investigation by a police officer of a rank
lower than the designated rank may be judicially revisable. If in case where any
illegality or irregularity in the process of investigation under section 5-A has been
brought to the notice of the court at an early stage, a direction has been given for a
fresh investigation by a police officer of the designated rank, But this is subject to
a well-recognised legal position that the court should not attach any importance to
any illegality in the matter of investigation if it is relied upon at the conclusion of
a trial in the absence of prejudice pleaded and proved. The question is whether
these aspects are sufficient to provide an exception to the well-recognised general
principle apart from the specific power conferred under section 8(1) of the 1952
Act on the special Judge to take cognizance of the offences, the only exception

193. Mahendra Lai Das v. State ofBihar and others, 2001 (3) ACR R 2610 (SC).
194. A.R. Antulay v. R.S. Naik, 1992(1) SCC 225, applied, Ramachand Chaudhary, AIR 1994 SC
948.
 182

being not upon a commitment to him that any one can set the criminal law in
motion. 195
•

If it be held that the special judge is entitled to entertain a private

complaint, no further steps can be taken by him without directing an investigation
under section 5-A so that the safeguard of section 5-A is not whittled down.
Accepting such a submission would tantamount to saying that on receipt of the
complaint the special judge must direct an investigation under section 5-A. The
Supreme Court held that there is no warrant for such an approach.

Numerous provisions of the Code of Criminal Procedure such as section

161, section 164 and section 25 of the Indian Evidence Act would show the
legislature’s intention in placing confidence on police officers away from court’s
gaze. And the very fact that power is conferred on a Presidency Magistrate, or
Magistrate of the first class to permit police officers of lower rank to investigate
these offences would speak for the mind of the legislature that the court is a more
liable safeguard than even superior police officers.

Sanction for investigation.- Where a sanction for investigation for an offence

under section 161 of the IPC issued immediately after a demand has been made,
held that it does not become an anticipatory sanction, even if the payment in
pursuance of such demand made on a different date, the reason being that
although under section 161 of the IPC a demand has itself been made an offence,
where that demand has been effectively carried out by compelling payment and
acceptance of money, the whole series of transactions forms one offence, the
demand being the beginning of the offence and the acceptance its end. The words
of section 161 of the IPC and section 5-A of the Act are wide enough to include
investigation into an intended offence or offence immediately likely to take
place.196

Failure to comply with the provisions of the section-impact of.- The failure to
comply with the mandatory provisions of clause (c) of section 5 of the repealed

1984 (2) SCC 500.

I96. Gulab Singh v. State, AIR 1962 Bom. 263 ; 1962 (2) Cr. L.J. 598.
 183

Act (or section 17 of the New Act) will not necessarily vitiate a trial since the
omission of this nature falls within the category of durable irregularities.
Accordingly it will not be right to regard the entire proceedings based on the
charge-sheet reported by an officer who was not competent to investigate to be
bad if the evidence tendered has been found to be uninfluenced by the
investigation and independently leads to a particular conclusion.197

A full Bench of the Punjab High Court also has laid down in Krishan
Kumar v. State,198 that non-compliance with the provisions of this section, in the
matter of investigation does not bear the trial based on the report of a police
officer who is not empowered by this section to investigate. Such non-compliance
with the provisions of this section in the matter of investigation is curable under
the Code of Criminal Procedure, and the arrest of an offender for an offence
punishable under sections 161, 165 or 165-A of the IPC or section 5 (2) of the
prevention of Corruption Act, without warrant will not vitiate the proceedings in
the trial.

Investigation by sub-inspector of police-Sanction accorded after inquiry-

impact of.- In Khandu Sonu Dhobi and another v. State of Maharashtra,199 the
Supreme Court laid down that it is well established that where cognizance of a cas
has, in fact, been taken by the court on a police report following investigation
conducted in breach of provisions of section 5-A of the Prevention of Corruption
Act, the result of the trial cannot be set aside unless the illegality in the
investigation can be shown to have brought about a miscarriage of justice. The
underlying reason for the above dictum is that an illegality committed in the
course of investigation would not vitiate the conviction of the accused as a result
of the trial unless the illegality in the investigation has caused prejudice to the
accused. (See H.N. Rishbud and Inder Singh v. The state of Delhi,200). Where
there has been no miscarriage of justice in a case because of the alleged non-

197. Government of M.P. v. Bhagirathi, AIR 1955 Nag. 204 ; 1955 Cr. LJ. 1201.
,98. AIR 1955 Punj. 151 ; 1955 Cr. LJ. 1101 (FB).
199. 1972 (3) SCC 786.
20°. AIR 1955 SC 196; 1955 Cr. L.J. 526.
 184

compliance with section 5-A, the conviction of the accused cannot be set aside on
that score.

Sanction when required.- In the first place, it has to be decided whether or not
the accused was a public servant during the concerned period.

Secondly, what is the point of time when the sanction was necessary, viz
the time when the offences were actually committed or when the court took
congizance of the said offences.

Sanctioning authority must be competent to remove the public servant.- The

sanctioning authority must be competent to remove the delinquent civil servant.
Where the accused civil servant was appointed as a signaller in the B.B. & Cl Rly
by the order of the District Traffic Superintendent of the then BB & Cl Railway
company; that railway was managed by the company upto 31st December, 1941.
The management of the company was to be taken over by the Government of
India on 1st January, 1942 and the Railway employees who accepted the offer of
employment by the Government were taken in Government service and
accordingly the accused also was taken in Government Service: Held that
according to the provisions of Article 311 of the Constitution and those of clause
(c) of Rule 1705 of the Railway Establishment Code, Vol. I of 1951, he could be
removed only by an authority who appointed him or who was superior to that
authority, and not by an authority lower than that by which he was appointed to
the post held by him substantively. Therefore, it was to be examined as to by
which authority he was appointed at the time when he was taken into Government
service after taking over the management of the said Railway by the Government
of India. As to which authority appointed him when the management was in the
hands of the said Railway Company was immaterial. Where the sanction was
given by the Regional Traffic Superintendent, it would be valid only if the
appointment was made by the Regional Traffic Superintendent, or an officer of
equal or higher rank. If it was made by an officer of equal or higher rank, the
sanction by an officer of a lower rank would be invalid.201

201. Indu Bhushan Chatteijee v. State of West Bengal, AIR 1958 SC 148 ; 1958 Cr. L.J. 270.
Sanction when bad in the eye of law.- Where the sanctioning authority had
signed the sanction order under section 161IPC with reference to section 5(2) and
section 5 (1) (d) of the Prevention of Corruption Act, held that the sanction
suffered from the vice of total non-application of mind.

Sanction by officer not competent to grant sanction.- Where the sanction for
prosecution under section 161 IPC and section 5 (2) and 5 (1) (d) of the
Prevention of Corruption Act of 1947 (or under S.17 of the New Act) was
accorded by an officer not competent to do so, held that it was no sanction it the
eye of law.

No particular form of sanction is required.- It is not necessary for the sanction

under this section to be in any particular form or in writing or for it to set out facts
in respect of which it was given. However, it is desirable to mention the facts; but
omission to mention them in the order will not invalidate the sanction.203

Where the letter of sanction was signed by the Personal Assistant of the
Sanctioning Authority. The Personal Assistant when examined as a witness, he
proved another document which purported to be the draft of the letter of which the
sanctioning letter was a copy. The draft had been signed by the sanctioning
authority below the word “approved”. Held that the sanction was in fact given,
through its form was not proper.204

Although the sanction under this section is not intended to be nor is it an

automatic formality, nor essential, that the provisions regarding sanction should
be observed strictly. No specific type, design, form or particular words are
prescribed for a sanction order. Accordingly in accordance with common sense
and requirements of justice, all that the order of sanction must show is that all the
relevant materials were placed before the sanctioning authority and the authority
considered those materials and the order of sanction resulted therefrom. The
sanction order need not be set out full facts or reasons why the sanction was

202. Madan Mohan Arora v. State, 1987 (1) Crimes 619.

203. Nyalchand Kevalram v. State, AIR 1955 Sau. 117 ; 1955 Cr. L.J. 1938.
204. Modan Mohan Singh v. State of U.P. AIR 1954 SC 637 ; 1954 Cr. L.J. 1656.
 186

accorded. The court may presume under section 111 (e) of the Indian Evidence
Act that the judicial and official acts have been regularly performed.205

Sanction whether lapses on a fresh investigation.- No.- A sanction already

granted under this section does not lapse on the basis of invalid investigation and
ordering of a fresh investigation. The section does not lay down that the officer
authorised to grant the sanction must peruse the investigation papers. He can
proceed on any material which, according to him, is sufficient or Trustworthy. He
is not concerned to find out even the truth or otherwise of the facts disclosed to
him. All that is necessary for him to do is to apply his mind to the facts as
disclosed to him. Granting of sanction is not a judicial act but a purely executive
one. Accordingly a sanction already accorded under this section does not lapse
due to the fact that a fresh investigation has taken place. The sanction, which was
already granted, remains valid and there is not need of any fresh action after
reinvestigation. Even if fresh material is assumed to have been collected in the
course of the fresh investigation, it will not affect the sanction accorded earlier.

Sanction by Governor against a Chief Minister.- When there is a prosecution

of the Chief Minister, the Governor would while determining whether sanction for
such prosecution should be granted or not under section 6 of the Act, as a matter
of propriety necessarily set in his own discretion and not on the advice of the
Council Ministers.207

Validity of sanction.- The question of validity or sufficiency of sanction may be

raised by the accused at any stage before the final decision is given by the trial
court.208 But now section 19 (4) of the New Act requires that the objection should
be raised at an earlier stage of the proceedings.

Sanction for prosecution by the officer concerned under this section

should not be granted as a matter of routine, merely on the request of the
prosecuting authority. The sanctioning authority should not take his decision

205. G.V. Nair v. Government of India, 1962 (2) LLJ 301 ; 1962 Ker. LJ 581.
206. Parasnath Pandey v. State, AIR 1962 Bo. 205 ; 1962 (2) Cr. L.J. 326, AIR 1958 SC 148.
207'. State of Maharashtra v. Ramdas Shriniwas Nayak and another, 1982 (2) SCC 463.
20S. Budh Sagar Ram Udit v.State, AIR 1961 All 308 ; 1961 (2) Cr. L.J. 51 AIR 1960 SC 487.
 187

lightly, but he should realise that it is his duty to take a deliberate decision
regarding whether it is a fit case to accord sanction for prosecution. Where the
sanction is accorded without application of mind by the concerned officer, and
without ascertaining full facts, the sanction will not be proper and valid and the
whole trial will be vitiated.

A sanction as to prosecution under section 161 of the Indian Penal Code

cannot be a valid sanction for prosecution relating to a quite different offence
covered by section 5 (2) of the Prevention of Corruption Act.209

But, however, the sanction will not be invalid on the ground that the
clause of section 5 (1) of the Act which describes the particular offence for which
the accused is to be prosecuted has not been mentioned in the sanction order.210

Section 6 of the Act of 1947 (now S. 19 of the New Act) is safeguard

which has been afforded to the accused that he will not be prosecuted without the
requisite sanction. The court at the time of taking cognizance of a case ought to
see whether such sanction has been given. However, it is very difficult to see that
the sanction is valid in all respects. The law requires that there should be a valid
sanction to prosecute the accused and the accused cannot be debarred from raising
such a question when he appears before the court if he finds that no valid sanction
has been given under this section.211

A valid sanction mean sanction given after a consideration of all relevant

facts. Those facts may appear on the face of the sanction itself and where they do
so appear, the task of the prosecution is easy. Where they do not appear on the
face of the sanction, the prosecution has the liberty of proving such facts by other
evidence but it is not liberty alone. It is also a duty, because unless the
prosecution proves by reference to other evidence that the sanctioning authority
had in fact applied his mind to the relevant fact, a proper sanction cannot be made

209. Ramautar Mahton v. State, AIR 1961 Pat. 203 ; 1961 (1) Cr. L.J. 694.
210. BaidyaNath Prasad Sinha v. State, 1961 (1) Cr. LJ. 544; AIR 1954 SC 350.
2U. Makhan Lai v. State, AIR 1959 Raj. 214 ; 1959 Cr. L.J. 1115.
 188

out and it cannot be proved that the foundation of the prosecution had been well
and truly laid.212

When sanction is not required.- Sanction for prosecution of a person, alleged to

have committed offences in the capacity of Chief Minister, is not required when
cognizance of such offence is taken after he has already ceased to hold the office
of Chief Minister even though he is still an M.L.A.213

Member of Parlaiment - Sanction/Permission for proecution under

Prevention of Corruption Act - in case of Members of Parlaiment shall have to be
obtained by the prosecuting /investigating agency the chairman of the Rajya
Sabha/Speaker of Lok Sabha.214 It can be made applicable in case of MLAs also.

Whether sanctioning authority can reconsider its earlier decision.-yes- Where

it was submitted that having once declined to grant sanction, a subsequent
Standing Committee cannot grant sanction on the same facts. It was contended
that the grant of sanction by the special officer was not bona fide and was due to
ulterior motive. The Supreme Court in Parmanand Das v. State of A.P.,215did not
find any merit in any of these submissions, because the sanction given by the
Commissioner was rightly rejected by the special judge on the ground that the
Commissioner was not competent to grant the sanction. This could not prevent a
subsequent sanction being given by the competent authority, but the plea of the
learned counsel was that the standing committee again considered the question
but decided to drop the proceedings on the ground that it was an old case and the
accused had already been reinstated in service. There could be no objection to the
standing committee against reconsidering its decision. The validity of the sanction
can only be considered at the time when it is filed before the special judge. There
could be not legal bar to the sanctioning authority revising its own opinion before
the sanction order is placed before the court.

2n. Indu Bhiishan Chatterjee v. State, AIR 1955 Cal 430 ; 1955 Cr. L.J. 1160.
213. R.S. Nayak v. A.R. Antulay Padmakar Balkrishna Samant v. Abdul Rehman Antulay and
another, 1984 (2) SCC 183.
214. P.V. Narsimha Rao v. State (1998) 4 SCC 626.
215. 1978 (4) SCC 32.
Sanction for prosecution of bank officials.- Where sanction for prosecution of
the bank officials was accorded by the Board of Directors acting on the contents
of a letter from the Additional Secretary to the Ministry of Finance who himself
was also a member of the Board : Held that the Board did not apply its mind as it
did not look into the transactions wherein the Board ratified the acts of the
officials in sanctioning loans to them. The Bank had vested discretion in the
officials for decreasing the rate of interest and increased the number of
installments for repayment of loans. The A.P. High Court held in M. Gopal
Krisniah and others v. The State, the exercising discretion within the limits in the
case of old customer, per se does not amount to cheating or causing loss to the
bank or causing advantage to the customer. The sanction order for prosecution
under section 6 of the Act as approved by the Board, which was the competent
“51A
authority, was held not to be valid.

Sanction not limited to a particular sub-section or clause.-Before cognizance

is taken of an offence under the Act, it is imperative that there should be a
sanction as required by section 6 for such prosecution. The sanction has to be
relating to an offence under sub-section (2) of section 5 and if this much appears
from the sanction, it must be accepted as valid. It is not necessary to mention
either one clause or the other of sub-section (1) of section 5 in the sanction. The
effect of the sanction is not to limit the offence committed by the accused to one
and sub-section (3) only of section 5 and the sanction cannot be held to be
invalid.217

‘Written consent’-Whether means “sanction”-(No).- The word “sanction” has

been used in different context in section 6 of the Prevention of Corruption Act of
1947 and carried an altogether different legal meaning. There is obvious
difference between “written consent” and “sanction”. “Written consent” implies
mere concurrence or agreement whereas “sanction” confers authority on the
person in whose favour sanction is granted. Therefore, the consideration

216. 1988 Cr.LJ. 651.

217. Ram Sagar Pandit v. State of Bihar, 1961 (2) Cr. L.J. 385.
 190

pplicable in this case of “sanction” would not be applicable to a case where

written consent” is required.

lemoval from array of accused persons when not authorised by law.- In R.K.
roseph v. Food Inspector, Municipal Council, Angamaly and other, the Kerala
ligh Court laid down that “though there are provisions for impleading accused in
. criminal case, there is no provision in a criminal trial, as in a civil case, to delete
lie name of an accused or to remove him from array of party. A person is made
n accused only on the allegation that he has committed an offence, which is
lunishable. The object is to bring the offender to justice. As in a civil case there is
10 question of necessary, desirable or proforma parties in a criminal case. When a
lerson becomes an accused an is brought before court he could cease to be an
ccused only by one of the methods provided by law, namely dismissal of the
omplaint, discharge, acquittal or release or such other method, if any, provided
iy law.

It was further observed that “The object and purpose of making a person
n accused in a case is not to avoid prejudice to another accused or any other
lerson. It is only because there are reasons to proceed against him for having
ommitted an offence and to bring him to justice in relating to that offence.
Conviction, acquittal or release, or discharge or any other method of exonerating
rim form liability for the offence is also not based on prejudice or absence of
irejudice to a co-accused or anybody else. It is only based on proof of guilt or
nnocence or other reasons of legal or technical nature provided by laws.
Exoneration of the second accused merely on the ground that it will not prejudice
lie first accused is a proposition not known to law.

itay of proceedings.- Section 19 (3) (c) of the Prevention of Corruption Act,

988, provides.

(a) that no Court should stay the proceedings under the Act on any
;round, and (b) that no court shall exercise the powers of revision is relating to

8. Bijoy Kumar Singh v. State of Orissa, 1986 F.A.J. 463 (467, 468) ; 1986 (3) F.A.C. 52, State
of Maharashtra v. Janardan Ram Chandra Narwankar, 1976 Cr. L.J. 811.
9. 1988 Cr. L.J. 10 (Ker.).
any interlocutory order passed in any inquiry, trial, appeal or other proceedings.
To be noted that (b) above is identical to Section 397 (2) of the Criminal
Procedure Code which deals with revisional power of the Court. If section 19 was
only to deal with revisional powers, then the portion set out in (b) above, would
have been sufficient. The Legislature has, therefore, by adding the words “no
Court shall stay the proceedings under this Act on any other ground” clearly
indicate that no stay could be granted by use of any power on any ground. This,
therefore, would apply even where a Court is exercising inherent jurisdiction
under section 482 of the Criminal Procedure Code.

Section 482 of the Criminal Procedure Code starts with the words
“Notwithstanding anything contained in the code”. Thus, the inherent power can
be exercised even if there was a contrary provision in the Criminal Procedure
Code. Section 482 of the Criminal Procedure Code does not provide that inherent
jurisdiction can be exercised notwithstanding any other provision contained in any
other enactment. Thus, if an enactment contains a specific bar, then inherent
jurisdiction cannot be exercised to get over that bar.

Thus, in cases under the Prevention of Corruption Act, there can be no

stay of trials. In appropriate cases, proceedings under section 482 can be adopted.
However, even if petition under section 482 Criminal Procedure Code is
entertained, there can be no stay of trials under the said Act. The mere fact that
yet another prohibition was also tagged with the above does not mean that the
legislation ban contained in clause (c) is restricted only to a situation when the
High Court exercises powers of revision. It would be a misinterpretation of the
enactment if a court reads into clause (c) of section 19 (3) a power to grant stay in
exercise of inherent powers of the High Court.220

Cases tribal by special Judges, Section 4: (1) Notwithstanding anything

contained in the Code of Criminal Procedure, 1973 (2of 1974), or in any other law
for the time being in force, the offence specified in the sub-section (1) of Section
3 shall be tried by Special Judges only.

220. Satyanarayan Sharmav. State of Rajasthan, 2001 (3) ACr. R. 2596 (SC).
 192

(2) Every offence specified in sub-section (1) of Section 3 shall be

ried by the Special Judge for the areas within which it was committed, or, as the
:ase may be by the Special Judge appointed for the case, or where there are more
Special judges than on for such area, by such one of them as may be specified in
his behalf by the Central Government.

(3) When trying in any case, a Special Judge may also try any offence,
tther than an offence specified in Section 3, with which the accused may, under
he Code of Criminal Procedure, 1973, be charged at the same trial.

(4) Notwithstanding anything contained in the Code of Criminal

’rocedure, 1973, a Special Judge shall, as far as practicable, hold trial of an
iffence on day-to-day basis.

Procedure and powers of Special Judge, Seetion-5: (1) A special Judge may
ake cognizance of offences without the accused being committed for trial and, in
rying the accused persons, shall follow the procedure prescribed by the Code of
Criminal Procedure, 1973 for the trial of warrant cases by Magistrates.

(2) A special judge may with a view to obtaining the evidence of any
lerson supposed to have been directly or indirectly concerned in, or privy to, an
ffence, tender a pardon to such person on condition of his making a foil and true
lisclosure of the whole circumstances within his knowledge relating to the
ffence and to every person concerned, whether as principal or abettor, in the
ommission thereof and any pardon so tendered shall, for the purpose of sub-
ections (1) to (5) of Section 308 fo the Code of Criminal Procedure, 1973, be
eemed to have been tendered under section 307 of that code.

(3) Save as provided in sub-section (1) or sub-section (2), the

rovisions of the Code of Criminal Procedure, 1973, shall, so far as they are not
iconsistent with this Act, apply to the proceedings before a Special Judge and for
re purposes of the said provisions, the Court of the Special Judge shall be
eemed to be a Court of Session and the person conducting a prosecution before a
pecial Judge shall be deemed to be a public prosecutor.
 (4) In particular and without prejudice to the generality of the
provisions contained in sub-section (3), the provisions of Section 326 and 475 of
the code of Criminal Procedure, 1973, shall, so for as may be, apply to the
proceedings before a special judge for the purposes of the said provisions, a
Special Judge shall be deemed to be a Magistrate.

(5) A Special Judge may pass upon any person convicted by him any
sentence authorised by law for the punishment of the offence of which such
person in convicted.

(6) A Special Judge while trying an offence punishable under this Act,
shall exercise all the powers and functions exercisable by a District Judge under
the Criminal Law Amendment Ordinance, 1944 (Ordinance 38 of 1944).

(G). Benami Transactions and Indian Trusts Act, 1882:

Benai transactions -What it means - Agnew describes that the word 'benami’ is
of Persian origin made up of two words ‘be’ and ‘nam’ meaning ‘no name’ that is
nameless or fictitious. The simple meaning of Benami is that a purchaser desires
to buy property but does not desire to buy in his own name and therefore, buys it
in the name of someone else.

Nature and object.- Purchases, in the name of others, are known in India
as ‘jBenami Transactions'. The custom of purchasing properties ‘Benami ’ in the
name of third persons is very frequent in India among the Hindus and
Mohammedans, and has been recognised by the courts for a long time.

‘Benami’ literally means ‘without name’, i.e., a transaction effected by a

person without his own name. The person in whose name the transaction is
effected is called ‘Benamidar’. Benami transactions are not confined solely to
purchases but extend also to leases, mortgages and gifts. The object of benami
transaction is sometimes to conceal the real property, sometimes to avoid
creditors and sometimes merely from habit or superstition.

The legal characteristic of these transactions is that there is no intention to

benefit the person in whose name the transaction is made. Thus, he who pays the
 194

lurchase money is the real owner and not the person in whose name the purchase
3 made.

It is a settled law that when real or personal property is purchased in the

lame of a stranger a resulting trust will be presumed in favour of the person who
3 proved to have paid die purchase money in the character of a purchaser.221

Statutory recognition in India.- Sections 81 and 82 of the Indian Trusts

let give statutory recognition to benami transactions.

Section 81 thus says that where the owner of property transfers or

equeaths it and it cannot be inferred consistently with the attendant
ircumstances that he intended to dispose of the beneficial interest therein, the
ransferee or legatee must hold such property for the benefit of the owner or his
;gal representative.

Section 82 also lays down that where property is transferred to one person
Dr a consideration paid or provided by another person, and it appears that such
ther person did not intend to pay or provide such consideration for the benefit of
ae transferee, the transferee must hold the property for the benefit of the person
aying or providing the consideration.

Section 90 of the Indian Trusts Act recites the same rule for tenants for
fe, co-owner, mortgagee or other qualified owner of any property gaining an
dvantage by availing himself of his position as such; but he is entitled to
ayment by such persons interested of their due share of the expenditure incurred,
t was held in Rajendra Prasad v. Ram Prasad Sao,222 that in the cases of persons
rentioned in Section 90, there is presumption of fiduciary relationship and in that
apacity if they gain any advantage, they will be constructive trustees of that
dvantage.

If a mortgagee is in possession he is a constructive trustee of the rents and

rofits; similarly, he allows the estate to be sold for default of payment of revenue
tid purchases it himself.

'. 1950 P.L.R. 387.

2. AIR 1985 Pat. 104.
 There is no equity in favour of a person who lays out money on the
property of another with full knowledge of the state of the title or who lays out
money unnecessarily or improperly.

Section 90 refers to a tenant for life, co-owner, mortgagee or any other

qualified owner of any property and pre-supposes the existence of fiduciary
relationship.223 On this basis mortgagee who gained advantage in derogation to
the rights of mortgagor has been held as trustee.224 And so also a co-parcener
deriving a personal benefit from common property.225 But when co-owner
instituted a partition suit and obtained a decree for mesne profits the suit
proceeded on the basis that the defendant was unauthorisedly retaining the
possession of property, there is no fiduciary relationship and the defendant will
not be treated as trustee.

(H). Benami Transactions and The Code of Criminal Procedure, 1973 :

Power of Police Officer to Seize certain Property: Sec.102 -Any police officer
may seize any property which may be allegated or suspected to have been stolen
or which may be found under circumstances which create suspicious of the
commission of any offence.

Such police officer, if subordinate to the officer-in-charge of a police

station, shall fortwith report the seizure to that officer.

Every police officer acting under sub-section (1) shall fortwith report the
seizure to the Magistrate having jurisdiction and where the property seized is such
that it cannot be conveniently transported to the court226 or where there is
difficulty in securing Proper accommodation for the custody of such property, or
where the continued retention of the property in police custody may not be
considered necessary for the purpose of investigation he may give custody thereof
to any person the court as and when required and to give effect to the further
orders of the Court as to the disposal of the same.

223. Rajendra Prasad v. R.P. Sao, AIR 1985 Pat. 104.

224. Jaya Singh v. Krishna, AIR 1985 SC 1646.
225. N.C.T. Chidambaram v. C.A.E. Subramaniam, AIR 1982 Mad. 228.
226. Inserted by the Cr. P.C. (Amendment) Act, 2005, Sec. 13(a).
 196

Provided that where the property seized under sub-section (1) is subject to
speedy and natural decay and if the person entitled to the possession of such
property is unknown or absent and the value of such property is less than five
lundred rupees, it may forthwith be sold by auction under the orders off the
superintendent of Police and the provisions of sections 457 and 458 shall, as
learly as may be practicable, apply to the net proceeds of such sale.

Sub-Section (1) gives power to a police officer to seize any property

vhich is alleged or is suspected to be stolen or which may be found under
circumstances which create suspicion of the commission of any offence. Under
his section seizure of Indian currency by a police officer on suspicion of the
commission of some offence will not be illegal.227

It was held in Zafar AH v. Tausik Hasan228, that it is the prudency of the

nvestigation that gives jurisdiction to police under section 550 (new Section 102)
o seize property, when investigation is dropped the status quo ante is restored.
The property seized must be returned to the person from whom it was seized.
Question of ownership is irrelevant in such a case.

Seize:- The word ‘seize’ means to take in actual physical custody. It was held in
°.K Parmar v. Union of India219 that the accused are alleged to have
raudulently acquired properties, opened fictitious bank accounts, withdrawn huge
mounts as subsidy from Government by producing bogus documents without
.ctually manufacturing product in question and having kept the amounts of
ubsidies in various bank accounts, lockers etc. in fake names, the issuance of
lirection by C.B.I. to various bankers or financial institutions to freeze the
ccounts of the accused would be legal. But a order by a police officer seizing the
mount to the credit of the accused and prohibiting the bank not to pay to any
•erson till further orders is illegal. 230

!7. K. Sukumaran v. Enforcement Officer, AIR 1968 Ker 208.

!8. 1971 CrLj 986 (All).
9. 1992 Cr.LJ 2499 (Delhi)
°. T.T. Syndicate Ltd. v. State, AIR 405; Purbachal Road Service v. State, 1991 Cr. LJ 2798.
Sub-section (3).—This sub-section was inserted by Act No. 45 of 1978 with a
view to give effect to the observations made by the Supreme Court in Anwar
Ahmad v. State of UP., In this case the U.P. Police seized a car alleged to have
been stolen during investigation and entrusted it to the complainant on
supardginama on his executing a personal bond in favour of police and
undertaking to produce the car in the court whenever necessary. He also bound
himself to pay the penalty in case of failure to produce the car. It was held that the
bond is not legally valid and enforceable. It was held that whenever a police
officer during the course of investigation seized a property suspected to have been
stolen or which is the subject-matter of an offence, his duty is to report the matter
to the Magistrate who will pass such orders regarding disposal of the property as
he thinks fit. The policy of law appears to be that the execution of the bond
involves a civil liability and, therefore, it should be executed before a court. In
this case the Supreme Court observed that there is need to make suitable
amendments in the Cr.P. Code to empower the police to get a bond in such
circumstance because absence of such power is likely to lead to practical
difficulties.

Assistance in relation to orders of attachment or forfeiture of property: Sec.

105-C:-Where a Court in India has reasonable grounds to believe that any
property obtained by any person is derived or obtained, directly or indirectly, by
such person from the commission of an offence, it may make an order of
attachment or forfeiture of such property, as it may deem fit under the provisions
of sections 105D to 105J (both inclusive).

Where the Court has made an order for attachment or forfeiture of any
property under sub-section (1), and such property is suspected to be in a
contracting State, the Court may issue a letter of request to a Court or an authority
in the contracting State for execution of such order.

Where a letter of request is received by the Central Government from a

Court or an authority in a contracting State requesting attachment or forfeiture of

231
. 1976 Cr. LJ 620 (SC).
 198

he property in India, derived or obtained, directly or indirectly, by any person

rom the commission of an offence committed in that contracting State, the
Central Government may forward such letter of request to the Court, as it thinks
it, for execution in accordance with the provisions of sections 105D to 105J (both
nclusive) or, as the case may be, under any other law for the time being in force.

The Indian Courts have power to attach and forfeit property where it has
eason to believe that such property has been obtained directly or indirectly by
uch person from the commission of an offence. Where such property is situated
n a State outside India the court in India may issue a letter of request to the
oncemed court or authority for executing the order of attachment or forfeiture,
iimilarly where a court or an authority outside the territory of India makes a
equest to the Central Government for the attachment or forfeiture of property in
ndia which has been obtained by a person from the commission of an offence in
iiat State then the action will be taken by the Central Government in accordance
vith the provisions of Sections 105-D to 105-J of this Code.

dentifying unlawfully acquired property.Sec.l05-D: - (1) The Court shall,

mder sub-section (1), or on receipt of a letter of request under sub-section (3) of
ection 105-C, direct any police officer not below the rank of Sub-Inspector of
tolice to take all steps necessary for tracing and identifying such property.

(2) The steps referred to in sub-section (1) may include any inquiry,
tivestigation or survey in respect of any person, place, property, assets,
ocuments, books of account in any bank or public financial institutions or any
ther relevant matters.

(3) Any inquiry, investigation or survey referred to in sub-section (2) shall

e carried out by an officer mentioned in sub-section (1) in accordance with such
irections issued by the said court in this behalf.

Seizure of attachment of property.Sec.l05-E: - (1) Where any officer

onducting an inquiry or investigation under section 105-D had a reason to
elieve that any property in relation to which such inquiry or investigation is
eing conducted is likely to be concealed, transferred or dealt with in any manner
which will result in disposal of such property, he may make an order for seizing
such property and where it is not practicable to seize such property, he may make
an order of attachment directing that such property shall not be transferred or
otherwise dealt with, except with the prior permission of the officer making such
order, and a copy of such order shall be served on the person concerned.

(2) Any order made under sub-section (1) shall have no effect unless the
said order is confirmed by an order of the said Court, within a period of thirty
days of its being made.

Management of properties seized or forfeited under this Chapter :Sec.l05-

F:- (1) The Court may appoint the District Magistrate of the area where the
property is situated, or any other officer that may be nominated by the District
Magistrate, to perform the functions of an Administrator of such property.

(2) The Administrator appointed under sub-section (1) shall receive and
manage the property in relation to which the order has been made under sub­
section (1) of section 105-E or under section 105-H in such manner and subject to
such conditions as may be specified by the Central Government.

(3) The Administrator shall also take such measures, as the Central
Government may direct, to dispose of the property which is forfeited to the
Central Government.

Notice of forfeiture of property.Sec.l05-G : - (1) If as a result of the inquiry,

investigation or survey under section 105-D, the Court has reason to believe that
all or any of such properties are proceeds of crime, it may serve a notice upon
such person (hereinafter referred to as the person affected) calling upon him
within a period of thirty days specified in the notice to indicate the source of
income, earnings or assets, out of which or by means of which he has acquired
such property, the evidence on which he relies and other relevant information and
particulars, and to show cause why all or any of such properties, as the case may
be, should not be declared to be proceeds of crime and forfeited to the Central
Government.
 200

(2) Where a notice under sub-section (1) to any person specifies any
iroperty as being held on behalf of such person by any other person, a copy of the
otice shall also be served upon such other person.

forfeiture of property in certain cases. Sec. 105-H (1) The Court may, after
onsidering the explanation, if any, to the show-cause notice issued under Section
05-G and the material available before it and after giving to the person affected
and in a case where the person affected holds any property specified in the notice
hrough any other person, to such other person also) a reasonable opportunity of
•eing heard, by order, record a finding whether all or any of the properties in
[uestion are proceeds of crime

Provided that if the person affected (and in a case where the person
ffected holds any property specified in the notice through any other person such
fher person also) does not appear before the Court or represent his case before it
vithin a period of thirty days specified in the show-cause notice, the Court may
iroceed to record a finding under this sub-section ex parte on the basis of
vidence available before it.

(2) Where the Court is satisfied that some of the properties referred to in
he show-cause notice are proceeds of crime but it is not possible to identify
pecifically such properties, then, it shall be lawful for the Court to specify the
iroperties which, to the best of its judgment, are proceeds of crime and record a
inding accordingly under sub-section (1).

(3) Where the Court records a finding under this section to the effect that
ny property is proceeds of crime, such property shall stand forfeited to the
Central Government free from all encumbrances.

(4) Where any shares in a company stand forfeited to the Central

jovemment under this section, then, the company shall, notwithstanding anything
ontained in the Companies Act, 1956 (Act 1 of 1956) or the articles of
ssociation of the company, forthwith register the Central Government as the
ransferee of such shares.
 This section requires that after considering the explanation, if any, to show
cause notice issued under Section 105-G, the court shall also give to the person
concerned an opportunity of being heard and thereafter by order, record a finding
whether all or any of the properties in question are proceeds of crime. Where the
person affected does not appear before the court or represent his case within a
period of 30 days specified in the show cause notice, the court may proceed to
record an ex parte finding on the basis of evidence available before it. Where the
court comes to the conclusion that any property is proceeds of crime, such
property shall stand forfeited to the Central Government free from all
encumbrances.

Fine in lieu of forfeiture.Sec.105-1: - (1) Where the Court makes a declaration

that any property stands forfeited to the Central Government under section 105-H
and it is a case where the source of only a part of such property has not been
proved to the satisfaction of the Court, it shall make an order giving an option to
the person affected to pay, in lieu of forfeiture, a fine equal to the market value of
such part.

(2) Before making an order imposing a fine under sub-section (1), the
person affected shall be given a reasonable opportunity of being heard.

(3) Where the person affected pays the fine due under sub-section (1),
within such time as may be allowed in that behalf, the Court may, by order revoke
the declaration of forfeiture under section 105H and thereupon such property shall
stand released.

Procedure by police upon seizure of property. Sec. 457: —(1) Whenever the
seizure of property by any police officer is reported to a Magistrate under the
provisions of this Code, and such property is not produced before a Criminal
Court during an inquiry or trial, the Magistrate may make such order as he thinks
fit respecting the disposal of such property or the delivery of such property to the
person entitled to the possession thereof, or if such person cannot be ascertained,
respecting the custody and production of such property.
 202

(2) If the person so entitled is known, the Magistrate may order the
roperty to be delivered to him on such conditions (if any) as the Magistrate
links fit and if such person is unknown, the Magistrate may detain it and shall, in
uch case, issue a proclamation specifying the articles of which such property
onsists, and requiring any person who may have a claim thereto, to appear before
im and establish his claim within six months from the date of such proclamation.

This section requires that the moment a Police Officer during the course of
ivestigation seized a property suspected to have been stolen or which is the
ubject matter of an offence, he has to report the matter to the Magistrate
oncemed and it is for the Magistrate to pass such orders as he thinks fit regarding
le disposal of the property. This Section does not authorize the Police Officer to
ike a bond from the person to whom the property is entrusted. The policy of the
iw appears to be that the execution of the bond involved a civil liability and,
lerefore it is in the fitness of things that it should be executed before a Court.

However, it has been suggested by the Supreme Court that the Code needs
i be suitably amended so as to empower the police to get a bond in such
ircumstances as there is no express provision to that effect and absence of such
lower is likely to lead to practical difficulties.

In M/s Sonbhadra Coke Products v. State of U. P. ,234 trucks loaded with

lack coal had lost their way and overshot their destination due to fog, were seized
y police and owners were charged with offence of cheating. It was held that
efusing to release trucks merely because owners were charged with offence of
heating was improper.

It was held in Shyam M. Sachdev v. State235 that in case of disposal of

eized property opportunity of hearing to rival claimant is necessary though in
2gal sense the custody is of the court but it does not mean that the seized property

12
. Anwar Ahmad v. State of U.P., AIR 1976 SC 680.
13
. Ibid
14
. 1994 Cr.LJ. 657 (All.)
!5
. 1994 Cr.LJ 300 (Del).
can be arbitrarily directed to be delivered to any party without affording an
opportunity of being heard to the person likely to be adversely affected.

(I) . Benami Transactions and Civil Procedure Code,1908 :

Section 66, Civil Procedure Code : As regards the first, the relevant section236 in
the civil Procedure Code (so far as is material) provides that no suit shall be
maintained against any person claiming title under a purchase certified by the
Court, (in such a manner as may be prescribed) on the ground that the purchase
was made on behalf of the plaintiff or on behalf of someone through whom the
plaintiff claims.

Similar provisions exist for revenue, sales and have a long history Under
Regulation 11 of 1822, the Government was empowered, by section 19 and 20, to
cancel and annual benami purchases made at a sale for arrears of revenue. The
next enactment upon the subject is contained in Act 12 of 1841, section 22
whereof provides that ‘any suit brought to oust a certified purchaser as aforesaid
on the ground that the purchase was made on behalf of another persons not the
certified purchaser, though by agreement the name of the certified purchaser was
used, shall be dismissed with costs237

It is unnecessary to refer to later versions of this provision.

It may be added that we have, in our Report on the Code of Civil

procedure, recommended an extension of the principle of this provision so as the
prohibit also the pleading of a defence based on ‘benami’ in such cases. This
provision, it may be noted, is confined to sale certificates issued by courts. It does
not prohibit ‘benami’ transactions in general.

(J) . Benami Transactions and Income-tax Act, 1961:

Section 281-A, Income-tax Act, 1961, inserted in 1972: So far as the recent
amendment in Taxation laws in concerned,238 the effect of the amendment is not
to prohibit ‘benami’ but to avoid its being made the basis of a suit unless

236. Section 66 (a) Code of Civil Procedure, 1908.

237. 54th Report of the Law Commission (Code of Civil Procedure) (1973), paragraph 1-E 53.
238. Taxation Laws (Amendment) Act, 1972.
 204

compliance with the prescribed requirement is made. These requirements, broadly

speaking, are intended to ensure that the taxing authorities concerned with income
tax and wealth tax acquire knowledge of the transactions alleged to be benami.

The germ of such a provision is to be found in the Report of Professor

Kaldor239 on Indian Tax Reform. Professor kaldor had made the following
observations

“As regards benami transactions, my suggestion is that the benami holder

should be asked to disclose the name of the beneficial owner at the time of
the registration and in the event of his failing to do so (and declaring that
he is not the beneficial owner himself) he should be treated as the
beneficial owner in law. The provision is clearly “intended to deter a
person from entering into a benami transaction justfor the purposes of tax
evasion. While it may be true that a certain amount ofpersonal trust is
involved between the benami and the real owners in all such cases, I
seriously doubt whether the system could continue to exist but for the
recognition of benami in common law. Even retention of the title deed
would not protect the true owner in case the benami holder formally
declared that he was the beneficial owner of the property; and in case the
true owner protected himselffurther through 1.0. Us, mortgage deed etc.
this would call for as indicated in para 93 (g) (above) the same kind of
disclosure.

It has been argued that the proposal would make it more difficult to defeat
malafide transfers of property undertaken to prevent attachment of
property in view of outstanding demands. I should be interested to know
the number of cases in which the Revenue succeeded in breaking the
benami through court action. My feeling is that the Revenue would gain
far more screening all benami transactions at the very outset than it would
loss from any added difficulty in breaking the benami in the case of such
fraudulent transactions ”.

239. Nicholas Kaldor, Indian Tax Reform (1956) pages 58-59, para. 104-105.
 A similar recommendation was made by the Administrative Reforms
Commission, also. Accordingly, the Government sponsored legislation through
the Taxation Laws (Amendment) Bill, 1971 to discourage benami holding of
property. Under the provision inserted as section 281-A of the Income tax Act,
1961 no suit shall be instituted in any court to enforce any right in respect of any
property held benami unless the claimant has either disclosed the property held in
question or the income there from in connection with his wealth tax or income-tax
assessments or given notice to the Income Tax Officer about the particulars of
such property in the prescribed form.

Provision in the Income Tax Act: The special case of the husband or father
transferring assets to the wife or minor child (other than a married daughter) is
dealt with by a more direct provision240 in the income tax Act,- a provision which
has been on the statute book for a long time.

There are also other provision in the Income-tax Act,241 designed to check
the avoidance or evasion of tax (or its recovery) by fraudulent and other transfers.

(K). Benami Transactions and The Prevention of Money-Laundering Act,

2002:

Offence of money-Iaundering.Sec.3- Whosoever directly or indirectly attempts

to indulge or knowingly assists or knowingly is a party or is actually involved in
any process or activity connected with the proceeds of crime and projecting it as
untainted property shall be guilty of offence of money- laundering.

Punishment for money-laundering.Sec.4 - Whoever commits the offence of

money-laundering shall be punishable with rigorous imprisonment for a term
which shall not be less than three years but which may extend to seven years and
shall also be liable to fine which may extend to five lakh rupees:

Provided that where the proceeds of crime involved in money-laundering

relates to any offence specified under paragraph 2 of Part A of the Schedule, the

240. Section 64 Income-Tax Act, 1961.

241. Section 175, 178 and 281 Income tax Act, 1961
 206

provisions of this section shall have effect as if for the words “which may extend
to seven years”, the words “which may extend to ten years” had been substituted.

Attachment of property involved in money-laundering. Sec. 5 - (1) Where the

Director, or any other officer not below the rank of Deputy Director authorised by
him for the purposes of this section, has reason to believe (the reason for such
belief to be recorded in writing), on the basis of material in his possession, that—

(b) such person has been charged of having committed a scheduled

offence; and

(c) such proceeds of crime are likely to be concealed, transferred or dealt

with in any manner which may result in frustrating any proceedings relating to
confiscation of such proceeds of crime under this Chapter, he may, by order in
writing, provisionally attach such property for a period not exceeding ninety days
from the date of the order, in the manner provided in the Second Schedule to the
Income-tax Act, 1961 (43 of 1961) and the Director or the other officer so
authorised by him, as the case may be, shall be deemed to be an officer under sub­
rule (e) of rule 1 of that Schedule:

Provided that no such order of attachment shall be made unless, in relation

to an offence under—

(1) Paragraph 1 of Part A and Part B of the Schedule, a report has been
forwarded to a Magistrate under section 173 of the Code of Criminal Procedure,
1973 (2 of 1974); or

(ii) Paragraph 2 of Part A of the Schedule, a police report or a complaint

has been filed for taking cognizance of an offence by the Special Court
constituted under sub-section (1) of section 36 of the Narcotic Drugs and
Psychotropic Substances Act, 1985 (61 of 1985).

(2) The Director, or any other officer not below the rank of Deputy
Director, shall, immediately after attachment under sub-section (1), forward a
copy of the order, along with the material in his possession, referred to in that
sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as
may be prescribed and such Adjudicating Authority shall keep such order and
material for such period as may be prescribed.

(3) Every order of attachment made under sub-section (1) shall cease to
have effect after the expiry of the period specified in that sub-section or on the
date of an order made under sub-section (2) of section 8, whichever is earlier,

(4) Nothing in this section shall prevent the person interested in the
enjoyment of the immovable property attached under sub-section (1) from such
enjoyment.

Explanation. - For the purposes of this sub-section, “person interested”, in

relation to any immovable property, includes all persons claiming or entitled to
claim any interest in the property.

(5) The Director or any other officer who provisionally attaches an

property under sub-section (1) shall, within a period of thirty days from sue
attachment, file a complaint stating the facts of such attachment before the
Adjudicating Authority.

Adjudicating Authorities, composition, powers, etc.Sec.6 - (1) The Central

Government shall, by notification, appoint one or more Adjudicating Authorities
to exercise jurisdiction, powers and authority conferred by or under this Act.

(2) An Adjudicating Authority shall consist of a Chairperson and two

other Members:

Provided that one Member each shall be a person having experience in the
field of law, administration, finance or accountancy.

(3) A person shall, however, not be qualified for appointment as Member

of an Adjudicating Authority,—

(a) in the field of law, unless he -

(i) is qualified for appointment as District Judge; or

(ii) has been a member of the Indian Legal Service and has
held a post in Grade I thereof.
 208

(b) in the field of finance, accountancy or administrating unless he

possesses such qualification, as may be prescribed.

(4) The central Government shall appoint a Member to be the chairperson

of the Adjudicating Authority.

(5) Subject to the provisions of this Act,—

(a) the jurisdiction of the Adjudicating Authority may be exercised by

Benches thereof;

(b) a Bench may be constituted by the Chairperson of the Adjudicating

Authority with one or two Members as the Chairperson of the Adjudicating
Authority may deem fit;

(c) the Central Government shall, by notification, specify the areas in

relation to which each Bench of the Adjudicating Authority may exercise
jurisdiction.

(6) Notwithstanding anything contained in sub-section (5), the

Chairperson may transfer a Member from one Bench to another Bench.

(7) If at any stage of the hearing of any case or matter it appears to the
Chairperson or a Member that the case or matter is of such a nature that it ought
to be heard by a Bench consisting of two Members, the case or matter may be
transferred by the Chairperson or, as the case may be, referred to him for transfer,
to such Bench as the Chairperson may deem fit.

(8) The chairperson and every Member shall hold office as such for a term
of five years from the date on which he enters upon his office:

Provided that no Chairperson or other Member shall hold office as such

after he has attained the age of sixty-two years.

(9) The salary and allowances payable to and the other terms and
conditions of service of the Member shall be such as may be prescribed:
 209

Provided that neither the salary and allowances nor the other terms
conditions of service of the Member shall be varied to his disadvantage a
appointment.

(10) If, for reasons other than temporary absence, any vacancy occur:
the office of the Chairperson or any other Member, then the Central Govemir
shall appoint another person in accordance with the provisions of this Act to
the vacancy and the proceedings may be continued before the Adjudical
Authority from the stage at which the vacancy is filled.

(11) The Chairperson or any other Member may, by notice in wril

under his hand addressed to the Central Government, resign his office:

Provided that the Chairperson or any other Member shall, unless h<
permitted by the Central Government to relinquish his office sooner, continui
hold office until the expiry of three months from the date of receipt of such no
or until a person duly appointed as his successor enters upon his office or until
expiry of his term of office, whichever is the earliest.

(12) The Chairperson or any other Member shall not be removed from
office except by an order made by the Central Government after giving necess
opportunity of hearing.

(13) In the event of the occurrence of any vacancy in the office of

Chairperson by reason of his death, resignation or otherwise, the senior-n
Member shall act as the Chairperson of the Adjudicating as the Chairperson of
Adjudicating Authority until the date on which a new Chairperson, appointee
accordance with the provisions of this Act to fill such vacancy, enters upon
office.

(14) When the Chairperson of the Adjudicating Authority is unable

discharge his functions owing to absence, illness or any other cause, the sen
most Member shall discharge the functions of the Chairperson of the Adjudical
Authority until the date on which the Chairperson of the Adjudicating Autho
resumes his duties.
 210

(15) The Adjudicating Authority shall not be bound by the procedure laid
own b the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the
rinciples of natural justice and, subject to the other provisions of this Act, the
adjudicating Authority shall have powers to regulate its own procedure.

idjudication.Sec.8 - (1) On receipt of a complaint under sub-section (5) of

action 5, or applications made under sub-section (4) of section 17 or under sub-
action (10) of section 18, if the Adjudicating Authority has reason to believe that
ny person has committed an offence under section 3, it may serve a notice of not
;ss than thirty days on such person calling upon him to indicate the sources of his
icome, earning or assets, out of which or by means of which he has acquired the
roperty attached under sub-section (1) of section 5, or, seized under section 17 or
action 18, the evidence on which he relies and other relevant information and
articulars, and to show cause why all or any of such properties should not be
eclared to be the properties involved in money- laundering and confiscated b the
Central Government:

Provided that where a notice under this sub-section specifies any property
s being held by a person on behalf of any other person, a copy of such notice
hall also be served upon such other person:

Provided further that where such property is held jointly by more than one
erson, such notice shall be served to all persons holding such property.

(2) The Adjudicating Authority shall, after -

(a) considering the reply, if any, to the notice issued under sub-section
(i);

(b) hearing the aggrieved person and the Director or any other officer
authorised by him in this behalf; and

(c) taking into account all relevant materials placed on record before
him, by an order, record a finding whether all or any of the
properties referred to in the notice issued under sub-section (1) are
involved in money-laundering:
 Provided that if the property is claimed by a person, other than a person to
whom the notice had been issued, such person shall also be given an opportunity
of being heard to prove that the property is not involved in money-laundering.

(3) Where the Adjudicating Authority decides under sub-section (2) that
any property is involved in money-laundering, he shall, by an order in writing,
confirm the attachment of the property made under sub-section (1) of section 5 or
retention of property or record seized under section 17 or section 18 and record a
finding to that effect, such attachment or retention of the seized property or record
shall—

(a) continue during the pendency of the proceedings relating to any

scheduled offence before a Court; and

(b) become final after the guilt of the person is proved in the trial
Court and order of such trial Court becomes final.

(4) Where the provisional order of attachment made under sub-section (1)
of section 5 has been confirmed under sub-section (3), the Director or any other
officer authorised by him in this behalf shall forthwith take the possession of the
attached property.

(5) Where on conclusion of a trial for any scheduled offence, the person
concerned is acquitted, the attachment of the property or retention of the seized
property or record under sub-section (3) and net income, if any, shall cease to
have effect.

(6) Where the attachment of any property or retention of the seized

property or record becomes final under clause (b) of sub-section (3), the
Adjudicating Authority shall, after giving an opportunity to the person concerned,
make an order confiscating such property.

Search and seizure.Sec.17- (1) Where the Director, on the basis of information
in his possession, has reason to believe (the reason for such belief to be recorded
in writing) that any person—

(i) has committed any act which constitutes money-laundering, or

 212

(ii) is in possession of any proceeds of crime involved in money- laundering,

or

(iii) is in possession of any records relating to money-laundering, then, subject

to the rules made in this behalf, he may authorise any officer subordinate
to him to—

(a) enter and search any building, place, vessel, vehicle or aircraft where he
has reason to suspect that such records or proceeds of crime are kept;

(b) break open the lock of any door, box, locker, safe, almirah or other
receptacle for exercising the powers conferred by clause (a) where the
keys thereof are not available;

(c) seize any record or property found as a result of such search;

(d) place marks of identification on such record or make or cause to be made

extracts or copies there from;

(e) make a note or an inventory of such record or property;

(f) examine on oath any person, who is found to be in possession or control of

any record or property, in respect of all matters relevant for the purposes
of any investigation under this Act:

Provided that no search shall be conducted unless, in relation to an offence

under—

(a) Paragraph 1 of Part A and Part B of the Schedule, a report has been
forwarded to a Magistrate under section 173 of the Code of Criminal Procedure,
1973 (2 of 1974); or

(b) Paragraph 2 of Part A of the Schedule, a police report or a complaint

has been filed for taking cognizance of an offence by the Special Court
constituted under sub-section (1) of section 36 of the Narcotic Drugs and
Psychotropic Substances Act, 1985 (61 of 1985).

(2) The authority, who has been authorised under sub-section (1) shall,
immediately after search and seizure, forward a copy of the reasons so recorded
along with material in his possession, referred to in that sub-section, to the
Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed
and such Adjudicating Authority shall keep such reasons and material for such
period, as may be prescribed.

(3) Where an authority, upon information obtained during survey under

section 16, is satisfied that any evidence shall be or is likely to be concealed or
tampered with, he may, for reasons to be recorded in writing, enter and search the
building or place where such evidence is located and seize that evidence:

Provided that no authorisation referred to in sub-section (1) shall be

required for search under this sub-section.

(4) The authority, seizing any record or property under this section, shall,
within a period of thirty days from such seizure, file an application, requesting for
retention of such record or property, before the Adjudicating Authority.

Power to arrest.Sec.19 - (1) If the Director, Deputy Director, Assistant Director

or any other officer authorised in this behalf by the Central Government by
general or special order, has on the basis of material in his possession, reason to
believe (that reason for such belief to be recorded in writing) that any person has
been guilty of an offence punishable under this Act, he may arrest such person
and shall, as soon as maybe, inform him of the grounds for such arrest.

(2) The Director, Deputy Director, Assistant Director or any other officer
shall, immediately after arrest of such person under sub-section (1), forward a
copy of the order along with the material in his possession, referred to in that sub­
section, to the Adjudicating Authority, in a sealed ‘envelope, in the manner, as
may be prescribed and such Adjudicating Authority shall keep such order and
material for such period, as may be prescribed.

(3) -Every person arrested under sub-section (1) shall, within twenty-four
hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case
maybe, having jurisdiction:
 214

Provided that the period of twenty-four hours shall exclude the time
necessary for the journey from the place of arrest to the Magistrate’s Court.

Appeals to Appellate Tribunal :Sec.26. - (1) Save as otherwise provided in sub­

section (3), the Director or any person aggrieved by an order made by the
Adjudicating Authority under this Act, may prefer an appeal to the Appellate
Tribunal.

(2) Any banking company, financial institution or intermediary aggrieved

by any order of the Director made under sub-section (2) of section 13, may prefer
an appeal to the Appellate Tribunal.

(3) Every appeal preferred under sub-section (1) or sub-section (2) shall be
filed within a period of forty-five days from the date on which a copy of the order
made by the Adjudicating Authority or Director is received and it shall be in such
form and be accompanied by such fee as may be prescribed:

Provided that the Appellate Tribunal after giving an opportunity of being

heard entertain an appeal after the expiry of the said period of forty-five days if it
is satisfied that there was sufficient cause for not filing it within that period..

(4) On receipt of an appeal under sub-section (1) or sub-section (2), the

Appellate Tribunal may, after giving the parties to the appeal an opportunity of
being heard, pass such orders thereon as it thinks fit, confirming, modifying or
setting aside the order appealed against.

(5) The Appellate Tribunal shall send a copy of every order made by it to
the parties to the appeal and to the concerned Adjudicating Authority or the
Director, as the case may be.-

(6) The appeal filed before the Appellate Tribunal under sub-section (1) or
sub- section (2) shall be dealt with by it as expeditiously as possible and
endeavour shall be made by it to dispose of the appeal finally within six months
from the date of filing of the appeal.