P V. SANAKARA KURUP versus LEELAVATHY NAMBIAR

Citation: [1994] SUPP. 2 S.C.R. 660 · Decided: 16-08-1994 · Supreme Court of India · Bench: K. RAMASWAMY, G.N. RAY · Disposal: Dismissed

Judgment (excerpt)

A 
B 
i'.V. SANAKARA KURUP 
v. 
LEELAVATHY NAMBIAR 
AUGUST 16, 1994 
(K. RAMASWAMY AND G.N. RAY, JJ.] 
Code of Civil Procedure 1908 /Benami Transactions (Prohibition) Act. 
1988/Trust Act. 1882 : 
C 
S.66( 1)!Ss.4, 7/S. 8&-Agent and Power of Attomey-Holder purchasing 
D 
property in !tis name-Consideration for purchase and improvemem with 
principle's mon~Wltetlter property vests in Principal or agent-Held : Agel!t 
lteld tlte property in trust in !tis fiduciary capacity and property vests in Prin-
cipal-Hence entitled to declaration and recovery of possession of the property. 
Abuse of Judicial Process : Party acting fraudulently and abusing 
judicial process-£xemplary costs awarded. 
This Special Leave Petition challenged the High Court's judgment 
reversing the concurrent findings of the Courts below that the petitioner 
E was an agent and power of Attorney holder of the respondent-plaintiff and 
was looking after her thavazhy properties which was outstanding on a 
lease. The property was purchased by the petitioner in his name, in a court 
auction. But the consideration for the purchase as well as the improve-
ments of the property were met with the funds of the respondent for whom 
F 
G 
the petitioner was acting as an agent and Power of Attorney. 
The questions which arose in this petition were, whether the title to 
the suit property vested in the petitioner of his principal-the respondent 
and whether the respondent was entitled to the declaration and recovery 
of possession sought in that behalf 
Dismissing the Special Leave Petition, this Court 
HELD : 1.1. Obviously, at the time of the sale, Section 66 of C.P.C. 
wa$ QD the statute which was deleted by the Benami Transactions (Prohibi-
tio;;) Act, 1988. It is true that Sub-section (1) of Section 66 prohibits the 
H maintainability of a suit against any person claiming title under the 
660 
P.V.SANKARAKURUPv. L.NAMBIAR 
661 
purchase-certificate issued by the Court on the ground that the purchase A 
was made on behalf of the plaintiff or on behalf of some one through whom 
the. plaintiff claims and that the defendant also it enjoined not to plead 
that the purchase was made on his behalf or on behalf of some one to whom 
the defendant claims. The public policy behind Section 66(1), as it then 
stood, was to prevent fraud on purchase and to prohibit benami purchase B 
at execution sale enabling genuine participants in the bid to secure the best 
price for the property sold in the court auction and highest bidder secures 
clear title of it. It prohibits a suit by beneficial owner or one claiming 
through him. Therefore, if a real owner purchase the property but the 
name of a third person was fraudulently an without consent of the real 
purchaser was inserted, the real purchaser is entitled to obtain a declara· C 
tion to that effect. [663-B-E] 
1.2. In the instant case, it is clear that the real purchaser is the 
respondent, the petitioner as an against and power-of-Attorney, had pur-
chased the property but ostensibly had his name entered in the sale certifi- D 
cate, fraudulently and "ithout the consent of the respondent. That apart, 
under Section 88 of the Indian Trust Act, an agent or other person is bound 
in a fiduciary character to protect the interests of the principal and the 
former would hold the property for the benefit of the principal or the 
person on whose behalf he acted as an agent. The question of benami, 
therefore, does not arise, though Section 4 of the Benami Transactions E 
(Prohibition) Act, prohibits such a plea. Section 7 thereof does not repeal 
Section of Trust Act. When an agent was employed to purchase the property 
on behalf of his principal and does so in his own name, then, upon con-
veyance or transfer of the property to the agent, he stands as a trustee for 
the principle. [663-F-H, 664-A-B) 
1.3. The property in the hands of the agent is for the principal and 
the agent stands in the fiduciary capacity for the beneficial interest he had 
in the property as a trustee. The petitioner has acted as an agent as a cestui 
que trust, is a trustee and he held the property in trust for the respondent 
F 
in his fiduciary capacity as an agent or trustee and he has a duty and G 
responsibility to make over the unauthorised profits or· benefits he derived 
while acting as an agent or a trustee and property account for the same to 
the principal. [ 664-C) 
1.4. Section 4 of the Benami Transactions (Prohibition) Act does not 
stand in

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