Supreme Court Rejects Benami Suit Dressed as Will Claim, Orders Property Confiscation

A bench of Justices J.B. Pardiwala and R. Mahadevan held that clever pleading cannot disguise a benami transaction, restoring the trial court's plaint rejection and directing confiscation of the suit properties.

The Supreme Court on 8 May 2026 set aside a Karnataka High Court judgment that had restored a civil suit to trial, holding that the plaint — though framed as a claim under a Will — was in substance an attempt to enforce a benami transaction prohibited by the Prohibition of Benami Property Transactions Act, 1988. The Court directed the Central Government to appoint an Administrator and take over the suit properties within eight weeks. The judgment in Manjula and Others v. D.A. Srinivas, Civil Appeal No. 7370 of 2026 (arising out of SLP (C) No. 7924 of 2024), also lays down that the 2016 amendments to the Benami Act operate retrospectively, that courts must scrutinise plaints at the admission stage itself, and that once a judicial determination of benami character attains finality, confiscation follows without recourse to the Adjudicating Authority.

How the Dispute Reached the Supreme Court

The respondent, D.A. Srinivas, filed O.S. No. 246 of 2020 before the Principal Senior Civil Judge, Bengaluru Rural District, seeking a declaration of ownership over agricultural properties on the strength of a Will dated 20 April 2018, allegedly executed by one K. Raghunath, who died on 4 May 2019. K. Raghunath was the husband of Appellant No. 1 (Manjula) and father of Appellant Nos. 2 and 3. The respondent also sought rectification of errors in the Will schedule and a consequential injunction.

The appellants contended that the properties were K. Raghunath's self-acquired properties, that he had executed an earlier registered Will dated 28 January 2016 bequeathing them to his wife, and that revenue records had been mutated in the appellants' favour. They further alleged that the respondent had conspired to murder K. Raghunath, and two FIRs — Crime No. 0089/2020 and Crime No. 0148/2020 — were registered against the respondent and others.

During the pendency of the suit, the appellants filed an application under Order VII Rule 11(a) and (d) of the Code of Civil Procedure, 1908, seeking rejection of the plaint on the grounds that it disclosed no cause of action and that the suit was barred under Sections 4 and 6 of the Benami Act. The trial court allowed the application on 30 October 2023 and rejected the plaint.

The respondent appealed. The High Court of Karnataka, by its judgment dated 22 February 2024 in Regular First Appeal No. 2216 of 2023, allowed the appeal, holding that the plaint did not attract the Benami Act and restoring the suit for adjudication on merits. The appellants then approached the Supreme Court. On 8 April 2024, the Supreme Court stayed the restored proceedings pending final hearing.

What the Plaint Actually Disclosed

The respondent's case, as set out in the plaint itself, was that he had provided the entire purchase consideration for the agricultural lands but caused them to be acquired in the name of K. Raghunath because Sections 79A and 79B of the Karnataka Land Reforms Act prohibited him from purchasing agricultural land in his own name. The respondent relied on memoranda of understanding between himself and the deceased, and contended that the Will of 20 April 2018 was intended to restore title to him.

The appellants argued that this arrangement — funding a purchase in another's name to circumvent a statutory restriction — was precisely the mischief targeted by the Benami Act. They submitted that the absence of the word “benami” in the plaint was irrelevant; a holistic reading of the averments and the documents annexed to the plaint unmistakably disclosed a benami arrangement. They also pointed out that the Will itself was under CBI investigation for alleged forgery, including the use of stamp papers purportedly printed after the testator's death, and that the respondent had been arrested and remained in custody since 22 December 2025.

The respondent countered that the suit was founded on a valid Will and testamentary succession, not on any benami transaction; that the fiduciary exception under Section 2(9)(A)(ii) of the Benami Act applied to the relationship between the respondent and the deceased; and that questions of benami character and fiduciary relationship were mixed questions of fact and law requiring a full trial, not threshold rejection.

The Court's Reasoning on Order VII Rule 11 and the Benami Bar

Justice R. Mahadevan, writing for the bench, began with an extended analysis of Order VII Rule 11 CPC. The Court held that admission of a plaint is not a mechanical process: trial courts must verify, before issuing summons, whether the plaint satisfies the requirements of Order VII Rule 11. If the plaint is liable to rejection, the court must reject it at that stage itself, without waiting for the defendant to appear and apply.

The Court reiterated that under Order VII Rule 11(a) and (d), the court is required to undertake a meaningful and substantive reading of the plaint and the documents filed with it. The defence in the written statement is irrelevant at this stage. However, the court is not confined to a formal or superficial reading; it must pierce the veil of clever drafting to ascertain the real nature of the claim. The bar under law may be express or by necessary implication.

Turning to the facts, the Court found that the plaint, read with the Will and the MOUs referred to therein, disclosed that the respondent had funded the purchase of the properties and caused them to stand in K. Raghunath's name solely to circumvent the Karnataka Land Reforms Act. The Court held that such an arrangement was hit by Section 23 of the Indian Contract Act, 1872, as its object was to defeat a statutory prohibition. The MOUs were therefore illegal and void, and no rights could arise from them.

The Court further held that the transaction bore all the indicia of a benami arrangement within the meaning of Section 2(9) of the Benami Act. The respondent's own pleadings showed that the consideration flowed from him, the purchase was made at his instance, and the deceased held the properties merely as an ostensible owner. The Will was, in substance, an attempt to reconvey title arising from that prohibited arrangement. The Court said that

Fiduciary Exception and Retrospectivity of the 2016 Amendment

The respondent had argued that the employer-employee relationship between himself and K. Raghunath constituted a fiduciary relationship, attracting the exception under Section 2(9)(A)(ii) of the Benami Act. The Court rejected this. It held that there is no fiduciary relationship between a director of a company and an employee of the company; rather, the relationship between a company and its director is fiduciary. Contractual relationships supported by valid consideration are commercial transactions, not arrangements founded on trust, and fall outside the fiduciary exception. The Court also noted that the respondent had not even pleaded the existence of a fiduciary relationship in the plaint, and could not invoke such an exception for the first time in argument.

On retrospectivity, the Court held that the 2016 amendments to the Benami Act are retrospective in operation. A curative or declaratory amendment operates retrospectively. The scheme of the Act does not prescribe any timeline for initiation of action by issuance of notice. The provisions of the amended Act can therefore be invoked in respect of benami transactions that took place before 1 November 2016, when the amendment came into force. The sale deeds in the present case were executed in 2006 and 2011, but the Court held the amended Act applied to them.

The respondent had relied on the Supreme Court's earlier decision in Union of India v. Ganpati Dealcom Private Limited, (2023) 3 SCC 315, which had held the 2016 amendment to be prospective. The Court noted that this decision had since been recalled in Union of India and Another v. Ganpati Dealcom Private Limited, (2024) SCC OnLine SC 2981 : (2025) 474 ITR 354, and therefore the argument based on prospectivity did not survive.

Bar on Succession and the Hindu Succession Act

The Court also addressed the bar under Section 25 of the Hindu Succession Act, 1956, which disqualifies a person who commits murder from inheriting the estate of the deceased. The Court held that this bar applies to both intestate and testamentary succession. A person accused of the murder of the individual from whose estate inheritance is claimed is disentitled from asserting rights, not only under Section 25 but also on the principles of justice, fair play, and equity. The Court held that strict proof is not indispensable in civil proceedings if the preponderance of probabilities points to commission of the offence. Given the pending criminal proceedings against the respondent for the alleged murder of K. Raghunath, this bar was an additional ground on which the plaint was unsustainable.

Confiscation and the Role of the Adjudicating Authority

The Court held that confiscation is a civil consequence and does not amount to prosecution under the Benami Act. Confiscation and prosecution operate in distinct spheres and are governed by different procedures. Article 20(2) of the Constitution, which prohibits double jeopardy, is therefore not attracted.

On the question of procedure, the Court held that once a transaction is declared benami in judicial proceedings and that declaration attains finality, the property is liable to confiscation without the need to follow the procedure under Sections 24 to 26 of the Act before the Adjudicating Authority. The Adjudicating Authority cannot sit in appeal over a judicial determination. Prosecution under Chapter VII of the Act may thereafter proceed if not already initiated.

The Court also directed that trial courts, wherever any matter touching upon a benami transaction is pending, shall take up the issue as a preliminary issue and decide it at the earliest point of time. If a prima facie case is made out, the matter shall be transferred to the Adjudicating Authority or the Appellate Tribunal, as the case may be.

As for the appellants themselves, the Court held that although the plaint was liable to rejection, the appellants could not claim entitlement to the suit properties either. They had failed to establish that the properties were acquired from the independent funds of K. Raghunath. The properties were therefore liable to confiscation under Section 27 of the Benami Act.

Order

The Supreme Court set aside the High Court's judgment dated 22 February 2024 in R.F.A. No. 2216 of 2023. The trial court's order dated 30 October 2023 rejecting the plaint under Order VII Rule 11(a) and (d) CPC was restored. The Central Government was directed to appoint an Administrator and take over the suit schedule properties in accordance with law within eight weeks from the date of receipt of the judgment. The Court declared that no court shall entertain any claim in respect of the subject properties arising out of or founded upon the benami transaction. The Civil Appeal was disposed of with no order as to costs.