UNION OF INDIA versus MOKSH BUILDERS AND FINANCERS LTD. AND ORS. ETC.

Citation: [1977] 1 S.C.R. 967 · Decided: 27-10-1976 · Supreme Court of India · Bench: M. HAMEEDULLAH BEG · Disposal: Appeal(s) allowed

Judgment (excerpt)

J 
967 
UNION OF INDIA 
v. 
MOKSH BUILDERS AND FINANCERS LTD. AND ORS. ETC. 
October 27, 1976 
[M. H. BEG AND P. N. SHINGHAL, JJ.] 
Benami transaction-Proof of benami nature. 
Evidence Act (I of 1872) ss. 
17 and 33-Evidence nf admissions-
Admfa-.jbility. 
The appellant (plaintiff) filed a suit on behalJi of and for the benefit of 
itself and of other creditors against the respondents (3 defendants) and prayed 
for a dc~aration that, (I) the sale deed of the house in t.lispute by the 2nd 
defendant in favour of the !st defendant was void as against the plaintiff and 
all other creditors of the 3rd defendant; and (2) that the house was and conti-
nued to be owned by the 3rd defendant. The house was sold in the name of 
the 2nd defendant for Rs. 69,000. He is the son of the 3rd defendant who was 
alleged to be the real purchaser. 
As the 3rd defendant failed to pay the 
arrears of income tax due from him the house was attached as his property .. The 
2nd defendant raised an objection but the objection was rejected. 
The 3rd 
defend:mt filed an appeal against the assessment o~ income tax and while the 
appeal was pending before the Appellate Assistant Commissioner, the 2nd and 
3rd. defendants, and five other persons formed a limite~ company, namely, the 
1st defendant. 
The Appellate Assistant Commissioner allowed the 3rd defen-
dant's appeal and ordered a fresh assessment of his income, and the Income 
Tax Officer made a fresh assessment. 
Soon after the 2nd defendant purported 
to convey the house of the 1st defendant for Rs. 1,00,000 of which Rs. 90,000/-
were payable to the 2nd defendant in the shape of shares in the company. The 
house was again attached fori recovery of the tax due from the 3rd defendant. 
The l st defendant objected to that attachment. The objection was allowed and 
the parties were referred to the Civil Comi for redress, and the suit was filed. 
The trial court decreed the suit, but the High Court, in appeal, set aside the 
judgment. 
Allowing the appeal to this Court, 
HELD : The evidence disclosed that the 3rd defendant was the owner of the 
bonse, and bis son, the 2nd defendant, was merely a benamidar for him; and 
that the !st defendant-Company was formed just to transfer the house to it in 
an effort to save it from attachment and sale for realisation of the income tax 
arrears of the 3rd defendant. [978 A·Cl 
(a) In a case where it is asserted that an assignment in the name, of one 
person is in reality for the benefit of another, it is necessary to find out the 
source whence the consideration came, and to examine who actually was en-
joying the benefits of the transfer. [907 F-G] 
A 
B 
c 
D 
E 
F 
Gangadara. Ayya,..and others v. Subramania Sastrigal and others 
(A.LR. 
G 
1949 F.C. 88) referred to 
Mernakshi Mills, Madurai v. The Commissioner of Income-tax, 
Madras 
[(1956) S.C.R. 691] followed. 
(b) Although the onus of establishing that a transaction is benami is on the 
plaintiff, where it is i:iot possible to obtain evidence which conclusively establishes 
or rebuts ~be allegation,, . the case must be dealt ~itb on reasonable probabilities 
and legal mferences ansmg from proved. or admitted facts. 
While the burden 
initially rests on the party who would fail if no evidence is led at all after the 
evidence is recorded, it rests upon the party against whom judgment' would be 
given if no further evidence ·were adduced by either side. Thus the burden of 
proof is not ~tatic, and may shift during tb~ course of the tri;l. 
Where 
the 
H 
.P 
F 
968 
SUPREME COURT REPORTS 
[1977] 1 S.C.R. 
entire evidence has been led by the contesting parties on the question in issue, 
abstract considerations of onusl are out of place, and the truth or otherwise of 
the case must always be adjudged on the evidence led by the parties. lt is 
therefore necessary to weigh the evidence in this case and to decide whether, 
even if it were assumed that there was nQ conclusive evidence to establish 
or 
rebut the benami allegation, what would, on a careful assessment· of the evi-
• dence, be a reasonable probability and a legal inference from relevant and ad-
missible evidence. [973 A-DJ 
Kalwa Devadattam and two Others v. The Union of India and others [1964J 
3 S.C.R. 191 followed. 
In the present case, the 2nd defendant, at the time of the sale, was just 18 
years old, and did not have any money o~ his own. His father the 3rd defen-
dant vras alive. The High Court did not examine· the reliability of tfie 2

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