Supreme Court rules on family property rights: Vinod Kumar Dhall vs. Dharampal Dhall (2018) INSC 289

Date of the Judgment: 16th April 2018
Citation: (2018) INSC 289
Judges: Justice Arun Mishra and Justice Uday Umesh Lalit
Can a property acquired in the name of one family member be considered family property, even if other family members have lived in it and contributed to it? The Supreme Court of India recently addressed this question in a dispute over a house in Delhi. The court examined whether a property, originally allotted in the name of one sibling but where the entire family resided, could be considered the exclusive property of that sibling or a family property. The judgment was delivered by a two-judge bench consisting of Justice Arun Mishra and Justice Uday Umesh Lalit.

Case Background

The case involves a property dispute between two brothers, Vinod Kumar Dhall (the appellant) and Dharampal Dhall (the deceased respondent, represented by his legal heirs). The dispute centers around a house in Tagore Garden, New Delhi. Dharampal Dhall claimed the property was his, while Vinod Kumar Dhall argued it was a family property.

The property was initially allotted to the eldest sister, Kumari Sneh Lata, in 1963. Later, in 1966, the property was transferred to Dharampal’s name. The entire family, including the parents, siblings, and their families, lived in the house. The marriages of all the children were solemnized from this house. Dharampal, who was studying at IIT Kharagpur at the time of the initial allotment, joined service only in April 1966. The family continued to reside in the house, and Dharampal himself never lived there. In 1995, Dharampal sought to evict Vinod, leading to the legal battle.

Timeline:

Course of Proceedings

The trial court decreed the suit in favor of Dharampal, ordering the eviction of Vinod. The High Court upheld the trial court’s decision in the first appeal and also rejected the review application. Aggrieved by these decisions, Vinod Kumar Dhall appealed to the Supreme Court.

Legal Framework

The Supreme Court considered the following legal provisions:

• Section 2(a) of the Benami Transactions (Prohibition) Act, 1988: Defines a benami transaction as “any transaction in which property is transferred to one person for a consideration paid or provided by another person.”

• Section 4 of the Benami Transactions (Prohibition) Act, 1988: Prohibits the right to recover property held benami. However, Section 4(3)(a) and (b) provides exceptions where the property is held by a coparcener in a Hindu Undivided Family or by a trustee for the benefit of another person. The court noted that the bar of the Act is not applicable to a transaction as contained in section 4(3) (a) and (b).

Arguments

Appellant’s (Vinod Kumar Dhall) Arguments:

• The property was initially allotted to Kumari Sneh Lata, and the money for the allotment and construction came from the father, Kashmiri Lal Dhall, not Dharampal. Dharampal was a student at the time and had no source of income.

• The property was used as a family residence, and marriages of all children were solemnized there, indicating it was a family property.

• The plaintiff himself admitted that he never resided in the house.

• The property was transferred to Dharampal’s name only due to Kumari Sneh Lata’s marriage.

Respondent’s (Dharampal Dhall) Arguments:

• The property was acquired by Kumari Sneh Lata out of her own earnings as a teacher.

• Kumari Sneh Lata had the right to give the property to Dharampal, and it does not become a family property just because the family occupied it.

• Dharampal permitted Defendant No. 2 to reside in the house due to her strained relationship with her husband and Defendant No. 1 was ousted by the mother in 1986.

• Defendant No. 1 had acquired two other properties in Delhi.

• The lower courts had concurrently found that Dharampal was the owner.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue was whether the property should be considered the exclusive property of Dharampal or a family property, given the circumstances of its acquisition and usage.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

1. Surendra Kumar v. Phoolchand (Dead) Through Lrs. & Anr. (1996) 2 SCC 491, Supreme Court of India: The court discussed the presumption of joint family property and the burden of proof in such cases.

2. Union of India v. Moksh Builders & Financiers Ltd. & Ors. (1977) 1 SCC 60, Supreme Court of India: The court emphasized that the real test is the source of consideration and who enjoys the benefits of the transaction.

3. Sri Marcel Martins v. M. Printer & Ors. (2012) 5 SCC 342, Supreme Court of India: The court discussed the applicability of the Benami Transactions (Prohibition) Act, 1988.

4. Vathsala Manickavasagam & Ors. v. N. Ganesan & Anr. (2013) 9 SCC 152, Supreme Court of India: The court considered whether a property was held benami or was joint family property.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Surendra Kumar v. Phoolchand (Dead) Through Lrs. & Anr. (1996) 2 SCC 491*: The court relied on this case to emphasize that the burden of proving a property is joint family property lies on the person asserting it, but this burden shifts when a family possesses a nucleus of joint property.
• Union of India v. Moksh Builders & Financiers Ltd. & Ors. (1977) 1 SCC 60*: The court used this case to highlight that the real test to determine ownership is the source of consideration and who enjoys the benefits of the transaction.
• Sri Marcel Martins v. M. Printer & Ors. (2012) 5 SCC 342*: The court referred to this case to clarify the applicability of the Benami Transactions (Prohibition) Act, 1988, and noted that it does not apply when property is held by a coparcener in a Hindu Undivided Family.
• Vathsala Manickavasagam & Ors. v. N. Ganesan & Anr. (2013) 9 SCC 152*: The court cited this case to support the view that a property purchased by a father in his son’s name can be considered joint family property.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the following factors:

• Source of Funds: The court emphasized that the funds for acquiring the plot and constructing the house came from the father, Kashmiri Lal, and not from Dharampal. Dharampal was a student at the time and had no independent source of income. The court noted that it was Kashmiri Lal who had spent the money in getting the land allotted and also had raised the construction in the year 1965-66.

• Family Residence: The court noted that the property was used as a family residence from the beginning, and all family members, including parents, siblings, and their families, lived there. The marriages of all the children were also solemnized from this house.

• Dharampal’s Absence: The court highlighted that Dharampal never resided in the house, and he was not in possession and enjoyment of the house at any point in time.

The court’s reasoning was based on a combination of factual analysis and legal principles. The court relied heavily on the factual circumstances, such as the source of funds and the family’s use of the property, to conclude that it was a family property. The legal principles from the cited cases were used to support this conclusion.

The court rejected the argument that the property was exclusively Dharampal’s, emphasizing that the source of funds and the family’s use of the property indicated it was a family property. The court also rejected the argument that the property was acquired by Kumari Sneh Lata from her earnings, as there was no evidence to support this claim. The court emphasized that the legal inferences from admitted facts have not been correctly drawn by the lower courts.

The Supreme Court held that the lower courts acted perversely and illegally in accepting the plaintiff’s claim and decreeing the suit. The court noted that the findings of fact by the lower courts were impermissible and perverse.

The Supreme Court stated, “Thus, all the facts and circumstances indicate that it was a family property and not the exclusive property of the plaintiff – Dharampal.”

The court also observed, “Merely the fact that house tax receipt, electricity and water bills and other documents are in the name of Dharampal would carry the case no further, as it was the father who got the name changed of Kumari Sneh Lata in question in the name of Dharampal.”

The court further noted, “The receipts were only to be issued in the name of the recorded owner, but Dharampal never resided in the house as he was in service out of Delhi, obviously, the amount was paid by family, not by Late Dharampal.”

Key Takeaways

• A property acquired in the name of one family member can be considered family property if the funds for its acquisition came from the family and the property was used as a family residence.

• The source of funds for acquiring a property is a critical factor in determining ownership, especially in cases of family disputes.

• The Benami Transactions (Prohibition) Act, 1988, does not apply to properties held by a coparcener in a Hindu Undivided Family for the benefit of the coparceners.

Directions

The Supreme Court allowed the appeals and dismissed the suit filed by the plaintiff-respondents.

Development of Law

The ratio decidendi of this case is that a property acquired in the name of one family member can be considered family property if the funds for its acquisition came from the family and the property was used as a family residence. This case reinforces the principle that the source of funds and the usage of the property are critical factors in determining ownership in family disputes. The court has reiterated the view that the source of consideration and who enjoys the benefits of the transaction are critical factors in determining ownership in such cases.

Conclusion

The Supreme Court’s decision in Vinod Kumar Dhall vs. Dharampal Dhall highlights the importance of considering the source of funds and the usage of property when determining ownership in family disputes. The court overturned the lower courts’ decisions, emphasizing that the property was a family property and not the exclusive property of Dharampal. This judgment provides clarity on how courts should approach disputes involving family properties and the application of the Benami Transactions (Prohibition) Act, 1988.