Benami Transaction vs. Fiduciary-Capacity Exception

1. The Core Dispute: Tribal Land & Fictitious Fiduciaries

This case centers on the purchase of tribal lands in the name of Late LCM (the Benamidar), using funds provided by DG (the Beneficial Owner).

The Transaction: DG funded the purchase of tribal lands, which were recorded in LCM’s name. It was admitted that these lands were intended for the future business use of DG.
The Violation: Under the Chhattisgarh Land Revenue Code, there are strict prohibitions against transferring tribal land to non-tribals. The Revenue department alleged that LCM, a simple laborer, was used as a “name-lender” to bypass these land laws.

2. Legal Analysis: Why the “Fiduciary Exception” Failed

The primary defense used by the beneficial owner was the Fiduciary-Capacity Exception under Section 2(9)(A)(ii). This exception excludes properties from being “Benami” if they are held by someone in a fiduciary capacity (like a trustee or director) for the benefit of another.

I. Criteria for Section 2(9)(A)(ii)

The court held that for a transaction to qualify as a fiduciary holding, it must meet specific evidentiary standards:

Evidence of Intent: The sale deed must indicate that the purchase is for the benefit of the fund provider. (In this case, the sale deeds were silent).
Power of Attorney (PoA): There should be a formal legal instrument establishing the fiduciary relationship. (None existed here).
Statutory Compliance: Fiduciary relationships cannot be used to facilitate an illegal act. Since the transfer to a non-tribal was prohibited by law, no “trust” could be legally created for that purpose.

II. The “Labourer” Argument

The court observed that Late LCM was a laborer with no financial capacity to purchase the land. Merely “entrusting” him with the consideration money did not create a fiduciary relationship under the Indian Trusts Act, 1882. Instead, it was a classic Benami arrangement where the property was held by one person for the direct or indirect benefit of the one who paid for it.

3. Final Ruling: Confirmation of Attachment

The court affirmed the findings of the Initiating Officer and the Adjudicating Authority.

Finding of Fact: The transaction clearly fell within the definition of a Benami transaction under Section 2(9)(A).
Result: The provisional attachment of the tribal lands under Section 24 and the subsequent confirmation order under Section 26 were upheld.
Outcome: The lands are liable for confiscation by the Central Government.

Key Takeaways for Property Investors

Circumventing State Laws: Using a Benamidar to bypass state-specific land laws (like those protecting tribal or agricultural land) is one of the most common triggers for PBPTA proceedings.
The “Fiduciary” Bar is High: To claim the fiduciary exception, you must have transparent documentation (Trust Deeds, Board Resolutions, or Registered Agreements) at the time of purchase. Post-facto claims of “trust” are rarely accepted.
Known Sources: Even for family members, if the consideration does not flow from “known sources” of the individual, the transaction can be flagged.

APPELLATE TRIBUNAL SAFEMA, NEW DELHI BENCH

Laxmi Chand Maravi

Initiating Officer^*

BALESH KUMAR and Rajesh Malhotra, Member

FPA/PBPT/75-76/2025

FEBRUARY 5, 2026

Lzafeer Ahmad B.F. and Sachin Dubey, Advs. for the Appellant. Kanhaiya Singhal, S.P.P. for the Respondent.

ORDER

Rajesh Malhotra, Member.- The present appeals u/s 46(1) of the Prohibition of Benami Property Transactions Act, 1988 (as amended) is filed by the appellants against the impugned order dated 24.10.2024 passed by the Adjudicating Authority, whereby the reference No. F. No. DCIT(BP)/ RPR/24(4)/LCM/2023-24 dated 03.01.2024 made by the Initiating Officer (BPU), Raipur, Chhattisgarh, u/s 24(5) of PBPT Act, 1988, was confirmed, qua the Provisional Attachment Order dated 28.12.2023. The properties of the benamidar, Late Laxmi Chand Maravi and the beneficial owner, Shri Dwarika Gupta confirmed by the Adjudicating Authority are detailed as under:-

S. No.	Name of property (village/ Tehsil & District)	Khasra No.	Area (in Acre)
1	Lohrakot, Tehsil Jaijepur, Distt: Janjgir Champa	408/4, 416/4, 431/3	0.59
2		417	1
3		408/1,416/1	0.57
4		423/6	0.4
5		418/1, 423/2	0.7
6		407/6	0.06
7		403	0.1
8		423/3,418/2	0.7
9		408/2,416/2, 431/1	0.29
10		437/2	0.28
11		407/2	0.15
12		404, 405/1, 405/2	0.68
13		446/3	0.54
14		419	0.97
15		407/5	0.06
16		407/7	0.06
17		408/2, 416/2, 431/1	0.3
18	Lohrakot, Tehsil Jaijepur, Distt: Janjgir Champa	420	0.70
19	Dumarpara, Naya Baradwar Tahsil-Sakti,Distt: Janjgir Champa (C.G)	2251/10	1.3
20		2168/4	0.33
Total			9.78

2. The facts of the case are that the Initiating Officer had information that Shri Dwarika Gupta, S/o Shri Mangali Prasad Gupta, a non-tribal person had purchased various Tribal lands in the name of a tribal Shri Laxmi Chand Maravi at Villages-Lohrakot & Dumarpara (Total-9.7 acre or 3.958 ha) Tehsil Jaijaipur/Sakti, District Janjgir Champa, Chhattisgarh. Thereafter, on strength of information, sale deeds and bank statements were obtained from the respective revenue authorities of Government of Chhattisgarh and the banks.

Initiating Officer also gathered information during the course of investigation that Shri Laxmi Chand Maravi had made application before the District Collector, Janjgir Champa (CG) for obtaining permission u/s 165(6) of C.G Land Revenue Code to sell certain Tribal lands to one non-Tribal person Shri Dwarika Gupta, S/o Shri Mangali Prasad Gupta.

During the course of investigation, Initiating Officer learnt that Shri Laxmi Chand Maravi was an employee of Shri Dwarika Gupta and had been working in the mines of Shri Dwarika Gupta at village-Hardi, Tehsil-Bilha, Distt: Bilaspur, Chhattisgarh, since last 10-15 years. Therefore, summon u/s 19 of the PBPT Act, 1988 was issued to Shri Laxmi Chand Maravi for recording his statement, wherein, it was learnt by the Initiating Officer that Shri Laxmi Chand Maravi died in a road accident on 26.12.2022.

Initiating Officer, thereafter issued summons to Smt. Tij Kuar W/o Late Shri Laxmi Chand Maravi and her statement under section 19(1) was recorded on oath. The facts that emerged from statements of Smt. Tij Kuar W/o Late Shri Laxmi Chand Maravi, are as under:

She stated in her statement that her husband Shri Laxmi Chand Maravi died on 26.12.2022 in a road accident.

ii.

She stated in her statement that she & her family belong to ‘Sohediuee Tribe. Family is a BPL Card holder and takes benefit as free ration from government for living daily life.

iii.

Her source of income is doing manual labour works. She stated in her statement that her husband Late Shri Laxmi Chand Maravi had been working in dolomite mine since 10-15 years and earned salary Rs. 10,000/- per month. The mine is situated at village- Hardi, Tehsil Bilha, Distt: Bilaspur and the owner of this mine is Shri Dwarika Gupta. She also stated that her son, Shri Satish Maravi has also been working in the same dolomite mine, since last 2 years and earned income less than her husband.

iv.

She stated that her husband Late Shri Laxmi Chand Maravi had left his job from dolomite mine and he was working somewhere else, but exactly it is not known to her.

She stated in her statement that her family barely has any income left after all day-to-day expenses.

vi.

She stated in her statement that she and her son Shri Satish Maravi have saving accounts in the Indian Overseas bank branch at Hirri, Bilha, and the account nos. 322701000005698 & 322701000009545 respectively. Her husband Shri Laxmi Chand Maravi has saving bank account in State Bank of India branch in chakrabhata bearing account no. is 32730587726. She also stated that all of these bank accounts were maintained by her husband Late Shri Laxmi Chand Maravi. Further, she stated that she does not have any knowledge of ATM and cheque book of bank account of her husband Late Shri Laxmi Chand Maravi.

vii.

In respect of immovable properties, she has stated that she and her family have not bought or sold any immovable property in the last 10 years. She also stated that she and her family (her son- Shri Satish Maravi, her husband- Late Shri Laxmi Chand Maravi and three daughters) did not possess any land property, except the ancestral land/home, where they are presently residing with family at village- Hardi, Tehsil-Bilha, Distt: Bilaspur.

viii.

Regarding the details of lands and registry deeds in the name of Shri Laxmi Chand Maravi, she stated that she does not have knowledge of any lands/properties situated at Village-Lohrakot & Dumarpara, Tehsil Jaijepur in the name of her husband- Late Shri Laxmi Chand Maravi and also she does not have knowledge that how her husband managed to purchase all these lands/properties. Further she also stated that her husband (Shri Laxmi Chand Maravi) never discussed about these lands/properties with her.

The Initiating Officer also analyzed the bank account statement of State Bank of India account maintained in Chakrabhata branch bearing account no. 32730587736, held by Shri Laxmi Chand Maravi for the period from year 2020 to 2022 showing recurring deposits in huge amounts made by Shri Dwarika Gupta in order to make payments to various sellers from whom the Tribal lands were purchased. Thereafter, the Initiating Officer cross verified the amount of transactions as mentioned in the registry/sale deeds of the properties from the bank account statement of Shri Laxmi Chand Maravi, which reveal that Shri Laxmi Chand Maravi has paid consideration amount through Cheque to the seller of the land. However, prior to the date of issuance of the cheques to the sellers, amounts were credited in the account of Shri Laxmi Chand Maravi. The credits of such funds/amounts in the bank account of Shri Laxmi Chand Maravi (SBI A/c No. 32730587726) are sourced from the bank account of M/s Gupta Stone Mines (Proprietor: Dwarika Gupta).

The Initiating Officer also analyzed the income profile of the Late Shri Laxmi Chand Maravi and found that Shri Laxmi Chand Maravi had acquired PAN, but never filed Income Tax Returns. The Initiating Officer noticed that the purchase of the impugned lands were done between the periods of 01.07.2020 to 31.01.2022. However, bank balance as on 01.07.2020 was only Rs.2,970/- and further the balance of the bank account never exceeded Rs.25,000/- before the date 01.07.2020. Therefore, the Initiating Officer concluded that Shri Laxmi Chand Maravi was never in a financial position to purchase the impugned lands and it was Shri Dwarika Gupta, who arranged and managed the entire transactions for purchasing of lands in the name of Late Laxmi Chand Maravi.

On the basis of facts and documents available on record, the Initiating Officer observed that holding of property by Late Shri Laxmi Chand Maravi is satisfying all the conditions of being a Benami transaction as per the PBPT Act, 1988 and squarely falls u/s 2(9)(A) of the PBPT Act, 1988. The Initiating Officer further concluded that Late Shri Laxmi Chand Maravi is the benamidar and holding the said land (“benami property”) for benefit of Shri Dwarika Gupta (“beneficial owner”). On that conclusion a Show Cause Notice under sub-section (1) of Section 24 of the Prohibition of Benami Property Transaction Act, 1988 dated 20.09.2023 was issued to the benamidar and the beneficial owner. In response to the Show Cause Notice, they filed reply on 31.10.2023, before the Initiating Officer. After considering their submissions, the Initiating Officer concluded that said property held by the benamidar is benami property and the beneficial owner is Shri Dwarika Gupta. Hence, Initiating Officer passed the Order U/s 24(4) of PBPT Act on 28.12.2023 provisionally attaching the property mentioned above.

After receiving the reference and going through the same, the Adjudicating Authority issued the notice U/s 26(1) of the PBPT Act, 1988 to the Benamidar and Beneficial Owner as to why the said property should not held as Benami Property.

In reply to the Show-Cause Notice, the legal heirs of Late Laxmi Chand Maravi filed the reply which is reproduced as under:-

First and foremost, statement recorded on oath by the officers of your good office of Smt. Tij Kuar W/o Late Laxmi Chand Maravi and Mr. Laxmand Gond (Maravi) Brother of Late Laxmi Chand Maravi on 3 February 2023 was under duress, coercion, and undue influence, wherein you had compelled them to make submissions against Mr. Dwarika Gupta to falsely implicate him along with Smt. Tij Kuar and Mr. Satish Maravi in the present matter.

It is submitted that Late Laxmi Chand Maravi was employee of the Mr. Dwarika Gupta and being a responsible and honest person, undersigned had posed a lot of faith and trust on him whereby Late Laxmi Chand Maravi undertaken business transactions on behalf of the undersigned as an agent and trustee.

It is submitted that M/s Gupta Stone Mines was granted the Prospecting License over an area admeasuring 4.47 Hectare in Village – Lohrakot, Tehsil – Jaijaipur, District – Janjgir Champa in Khasra No. 406, 407/1, 407/2, 407/3, 408, 411, 413, 414/2, 415/1, 415/2, 416, 417/1, 418, 419, 420, 421/1, 421/2, 423/1, 423/2 and 423/3. The entire area of the Prospecting License was granted over the private lands of the Schedule Tribe persons due to which their consent was pre-condition for the grant. It is submitted that Mr. Dwarika Gupta had taken the consent of the respective owners in April, 2008 for undertaking the prospective operations over the aforesaid subject area.

It is pertinent to note that the arrangement entered between the M/s Gupta Stone Mines and the land owners of Khasra No. 406, 407/1, 407/2, 407/3, 408, 411, 413, 414/2, 415/1, 415/2, 416, 417/1, 418, 419, 420, 421/1, 421/2, 423/1, 423/2 and 423/3 over an area admeasuring 4.47 Hectare in Village Lohrakot, Tehsil – Jaijaipur, District Janjgir Champa pertains to April 2008 and which was renewed in 2017, but the original arrangement is prior to 1 November 2016, due to which proceedings cannot be undertaken under The Prohibition of Benami Property Transactions Act, 1988 in terms of judgment passed by Hon’ble Supreme Court of India in the matter of Union of India v. Ganpati Dealcom (P) Ltd., Canbank Financial Services Ltd. v. Custodian, (2023) 3 SCC 315.

Thereafter, State Government had granted the Quarry Lease to the M/s Gupta Stone Mines over an area admeasuring 4.47 Hectare in Village Lohrakot, Tehsil – Jaijaipur, District – Janjgir Champa in Khasra No. 406, 407/1, 407/2, 407/3, 408, 411, 413, 414/2, 415/1, 415/2, 416, 417/1, 418, 419, 420, 421/1, 421/2, 423/1, 423/2 and 423/3 for Dolomite Mineral for a term of 23rd February 2018 to 22nd February 2068. Again, M/s Gupta Stone Mines had taken the consent of land owners of the aforesaid land prior to conducting of the Quarry operations over the subject area in the year 2017.

It is submitted that all the aforesaid lands belonged to Schedule Tribe due to which M/s Gupta Stone Mines would not have been able to purchase the land directly due to bar of Section 165(6) of Chhattisgarh Land Revenue Code for mining purpose and that too instantly at the request of land owners. Further, State Government does not entertain any request for transfer of land from Schedule Tribe to General Category for the purpose of Mining under Section 165(6) of Chhattisgarh Land Revenue Code in lieu of which M/s Gupta Stone Mines was constrained to provide funds through banks to Late Laxmi Chand Marawi to act as an agent and trustee for purchasing the aforesaid lands on behalf of the undersigned. It is an admitted position that all the lands involved in the present case were purchased from the legal funds, which were duly audited.

Thus, the aforesaid transaction falls under the exemption category of Section 2(9)(A)(ii) of Benami Transaction under The Prohibition of Benami Property Transactions Act, 1988. It is in lieu of the fiduciary relationship between the Late Laxmi Chand Maravi and its Legal Heirs and M/s Gupta Stone Mines that Khasra No. 406, 407/1, 407/2, 407/3, 408, 411, 413, 414/2, 415/1, 415/2, 416, 417/1, 418, 419, 420, 421/1, 421/2, 423/1, 423/2 and 423/3 admeasuring 4.47 Hectare in Village Lohrakot, Tehsil – Jaijaipur, District-Janjgir Champa was purchased.

Similarly, Khasra No. 2251/10 and Khasra No. 2168/4 admeasuring 0.660 Hectare in Village Dumrapara, Naya Baradwar, Tehsil & District – Sakti was purchased by the Late Laxmi Chand Maravi as an agent of the M/s Gupta Stone Mines for providing Right to Way to the Crusher Plant of the undersigned in the name of M/s Gupta Stone Mines. The Sale proceeds were provided by the M/s Gupta Stone Mines from the banking mode.

It is submitted that Section 2(9)(A)(ii) of the Prohibition of Benami Property Transaction Act, 1988 uses the term “fiduciary capacity” which is in fact wider in its import for it extends to all such situations as place the parties in positions that are founded on confidence and trust on the one part and good faith on the other. It is apposite to note that first part of Section 2(9)(A)(ii) and second part of Section 2(9)(A)(ii) of the Prohibition of Benami Property Transaction Act, 1988 is connected with an expression “and includes” is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include. The expression “include” or “including is used as a word of extension and expansion to the meaning and import of the preceding words or expressions.

10.

The expression “fiduciary capacity” has not been defined in the PBPT Act, 1988 or any other statute for that matter. And yet there is no gainsaying that the same is an expression of known legal significance, the import whereof may be briefly examined at this stage. The term “fiduciary” has been explained by Corpus Juris Secundum as under:

‘A general definition of the word which is sufficiently comprehensive to embrace all cases cannot well be given. The term is derived from the civil or Roman law. It connotes the idea of trust or confidence, contemplates good faith, rather than legal obligation, as the basis of the transaction, refers to the integrity, the fidelity, of the party trusted, rather than his credit or ability, and has been held to apply to all persons who occupy a position of peculiar confidence toward others, and to include those informal relations which exist whenever one party trusts and relies on another, as well as technical fiduciary relations.”

11.

The word “fiduciary”, as a noun, means one who holds a thing in trust for another, a trustee, a person holding the character of a trustee, or a character analogous to that of a trustee with respect to the trust and confidence involved in it and the scrupulous good faith and candour which it requires; a person having the duty, created by his undertaking, to act primarily for another’s benefit in matters connected with such undertaking. Also more specifically, in a statute, a guardian, trustee, executor, administrator, receiver, conservator or any person acting in any fiduciary capacity for any person, trust or estate.”

12.

A fiduciary must be entrusted with a degree of discretion (power) and must have freedom to act without resorting to prior approval of the beneficiary. (Tamar Frankel, Fiduciary Law, Oxford University Press, 2011) The greater the independent authority to be exercised by the fiduciary, the greater the scope of fiduciary duty. Scott, Austin W. “The Fiduciary Principle”, California Law Review 37, No. 4 (1949): 539-55.] The person so entrusted with power is required to determine how to exercise that power. Tamar Frankel, Fiduciary Law, Oxford University Press, 2011) Fiduciaries are identified by ascendancy, power and control on the part of the stronger party and therefore, a fiduciary relationship implies a condition of superiority of one of the parties over the other. | Ken Coghill, Charles Sampford and Tim Smith “Fiduciary Duty and the Atmospheric Trust”, Ashgate (2012)[It is not necessary that the relationship has to be defined as per law, it may exist under various circumstances, and exists in cases where there has been a special confidence placed in someone who is bound to act in good faith and with due regard to the interests of the one reposing the confidence. Such is normally the case with, inter alia, attorney-client, agentprincipal, doctor-patient, parent-child, trustees-beneficiaries | Section 88, Indian Trusts Act, 1882], legal guardian-ward | Section 20, Guardians and Wards Act, 1890), personal representatives, court appointed receivers and between the Directors of company and its shareholders. In Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. , (1981) 3 SCC 333) and Dale & Carrington. Inut. (P) Ltd. v. P.K. Prathapan [Dale & Carrington Invt. (P) Ltd. v. P.K. Prathapan, (2005) 1 SCC 212), this Court held that the Directors of the company owe a fiduciary duty to its shareholders. In P.V. Sankara Kurup v. Leelavathy Nambiar (P.V. Sankara Kurup v. Leelavathy Nambiar, P.V. Sanakara Kurup v. Leelavathy Nambiar (1994) 6 SCC 68), this Court held that an agent and power of attorney can be said to owe a fiduciary relationship to the principal

13.

What constitutes a fiduciary relationship is often a subject of controversy. It has been held to apply to all persons who occupy a position of peculiar confidence towards others, such as a trustee, executor, or administrator, director of a corporation or society, medical or religious adviser, husband and wife, an agent who appropriates money put into his hands for a specific purpose of investment, collector of city taxes who retains money officially collected, one who receives a note or other security for collection. In the following cases debt has been held to be not a fiduciary one: a factor who retains the money of his principal, an agent under an agreement to account and pay over monthly, one with whom a general deposit of money is made.’

14.

It is submitted that when an agent is employed to purchase the property on behalf of his principal and does so in his own name, then, upon conveyance or transfer of the property to the agent, he stands as a trustee for the principal. 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 in light of the Section 88 of the Indian Trust Act. Late Mr. Laxmi Chand Maravi has acted as an agent, as a cestui que trust, is a trustee and he held the property in trust for the undersigned Le Mr. Dwarika Gupta in his fiduciary capacity as an agent.

15.

From the discussion above, a fiduciary is someone who acts for and on behalf of another in a particular matter giving rise to a relationship of trust and confidence. A fiduciary relationship implies a condition of superiority of one of the parties over the other, where special confidence has been reposed in an individual to act in the best interests of another. Further, due to aforestated fact, tittle deeds are in the office of the undersigned. Thus, the aforesaid transaction falls under the exemption category of Section 2(9)(A)(ii) of Benami Transaction under The Prohibition of Benami Property Transactions Act, 1988.

16.

That after the demise of Late Laxmi Chand Maravi, the aforesaid subject lands have not been mutated in the name of the undersigned till date due to which the instant proceedings are null and void against the undersigned. It is submitted that undersigned have very primary education due to which the Reference was handed over to our advocate who had prepared the reply on our behalf on facts and law for safeguarding our interest. It is submitted that Reply filed by the undersigned to the Show Cause Notice should be considered as part and parcel of the present reply along with documents.

17.

Therefore, considering the aforesaid facts and circumstances stated herein above, the undersigned had acted within the exemptions of Benami Transactions provided in The Prohibition of Benami Property Transactions Act, 1988 due to which Order under Section 26(3)(c)(i) of PBPT Act, 1988 be issued in the interest of justice.” [Unquote]

The Initiating Officer also filed the rejoinder to the same which is reproduced in para 5 of the impugned order. After hearing rival submissions and going through the documents on record, the Adjudicating Authority confirmed the reference qua the attachment of the properties, as mentioned in para no.1 above.

Aggrieved by the said order dated 24.10.2024, the appellants/LRs of the benamidar, filed the present appeal.

3. After hearing the rival submissions, we have given our thoughtful consideration to the same. There is clear admission on part of both appellants that the impugned property was purchased in the name of Sh. Laxmi Chand Maravi by utilising the amount advanced by appellant no.2 Sh. Dwarika Gupta. Moreover, both the the appellants are contesting that the case would fall under the exception (ii) pertaining to fiduciary relationship of Section 2(9)(A) of PBPT, Act. By claiming said exception, the appellants impliedly admitted that the case is covered under Section 2(9)(A) of the PBPT Act and if the said exemption wouldn’t be applicable, the case would be fit for proceedings under PBPT Act. Thus, there is no doubt that the case falls under the definition of ‘Benami Transaction’, subject to the exemption (ii) to Section 2(9)(A) of the PBPT Act.

Contention on Behalf of Appellants

4. Ld. Counsel on behalf of the Appellants contended that the aforesaid transaction falls under the category of fiduciary relationship, as mentioned in exception (ii) to Section 2(9)(A) of Benami Transaction, under The Prohibition of Benami Property Transactions Act, 1988. It is in lieu of the fiduciary relationship between the Sh. Laxmi Chand Maravi and Sh. Dwarika Gupta of M/s Gupta Stone Mines that land comprised in Khasra No. 406, 407/1, 407/2, 407/3, 408, 411, 413, 414/2, 415/1, 415/2, 416, 417/1, 418, 419, 420, 421/1, 421/2, 423/1, 423/2 and 423/3 admeasuring 4.47 Hectare in Village- Lohrakot, Tehsil- Jaijaipur, District- Janjgir Champa was purchased. Similarly, land comprised in Khasra No. 2251/10 and Khasra No. 2168/4 admeasuring 0.660 Hectare in Village- Dumrapara, Naya Baradwar, Tehsil & District- Sakti was purchased by Sh. Laxmi Chand Maravi as an agent of the M/s Gupta Stone Mines for providing Right to Way to the Crusher Plant of the alleged beneficial owner Sh. Dwarika Gupta, in the name of M/s Gupta Stone Mines. The Sale proceeds were provided by the M/s Gupta Stone Mines from the banking mode. It is submitted that Exemption (ii) to Section 2(9)(A) of the Prohibition of Benami Property Transaction Act, 1988 uses the term “fiduciary capacity”, which is infact wider in its import for it extends to all such situations as place the parties in positions that are founded on confidence and trust on the one part and good faith on the other. It is apposite to note that first part of exemption (ii) of Section 2(9)(A) and second part of exemption (ii) are connected with an expression “and includes” is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. The expression “include” or “including” is used as a word of extension and expansion to the meaning and import of the preceding words or expressions.

5. He stated that the expression “fiduciary capacity” has not been defined in the PBPT Act, 1988 or any other statute for that matter. And yet there is no gainsaying that the same is an expression of known legal significance, the import whereof may be briefly examined at this stage. The term “fiduciary” has been explained by Corpus Juris Secundum, as under:

“A general definition of the word which is sufficiently comprehensive to embrace all cases cannot well be given. The term is derived from the civil or Roman law. It connotes the idea of trust or confidence, contemplates good faith, rather than legal obligation, as the basis of the transaction, refers to the integrity, the fidelity, of the party trusted, rather than his credit or ability, and has been held to apply to all persons who occupy a position of peculiar confidence toward others, and to include those informal relations which exist whenever one party trusts and relies on another, as well as technical fiduciary relations”.

6. Ld. Counsel for the appellants contended that in the light of the facts recorded earlier, it is clear that a real purchaser is the respondent Sh. Dwarika Gupta, and Mr. Maravi just acted as an agent/authorised attorney, had purchased the property, but ostensibly had his name entered in the Sale Certificate inadvertently and without the consent of the employer. He pointed out that as per Section 88 of the Indian Trusts Act, 1882, an agent or other person 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. In this regard he relied upon the matter of P.V. Sanakara Kurup v. Leelavathy Nambiar (1994) 6 SCC 68, wherein it has been observed that:

3. The question of benami, therefore, does not arise, though Section 4 of the Benami Transactions (Prohibition) Act, prohibits such a plea. Sub-section (3)(b) of Section 4 of unamended PBPT Act, provides that:

“Nothing in this section shall apply,-

(b) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity.”

Section 7 does not repeal Section 88 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 conveyance or transfer of the property to the agent, he stands as a trustee for the principal. 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 in his fiduciary capacity as an agent or trustee and he has a duty and responsibility to make over the unauthorised profits or benefits he derived while acting as an agent or a trustee and properly account for the same to the principal.

He stressed that the case of the Appellants falls within the “Trust” as mentioned in exemption (ii) to Section 2(9)(A) of Benami Transaction under The Prohibition of Benami Property Transactions Act, 1988 in lieu of Section 88 of Indian Trust Act and the aforementioned judgment including case of Canbank Financial Services Ltd. v. Custodian (2004) 8 SCC 355, wherein it has been held that:

“49. A transaction which falls within the purview of Section 88 of the Trusts Act does not fall within the category of benami transaction in terms of the provisions of the Benami Transactions Act. (See P.V. Sankara Kurup v. Leelavathy Nambiar [P.V. Sanakara Kurup v. Leelavathy Nambiar (1994) 6 SCC 68 : AIR 1994 SC 2694]).”

He also relied upon the judgment of the Hon’ble Supreme Court of India in case of Central Public Information Officer v. Subhash Chandra Agarwal (SC)/(2020) 5 SCC 481, wherein it has been observed that:

“244. A fiduciary must be entrusted with a degree of discretion (power) and must have freedom to act without resorting to prior approval of the beneficiary. [Tamar Frankel, Fiduciary Law, Oxford University Press, 2011] The greater the independent authority to be exercised by the fiduciary, the greater the scope of fiduciary duty. [Scott, Austin W. “The Fiduciary Principle”, California Law Review 37, No. 4 (1949): 539-55.] The person so entrusted with power is required to determine how to exercise that power. [Tamar Frankel, Fiduciary Law, Oxford University Press, 2011] Fiduciaries are identified by ascendancy, power and control on the part of the stronger party and therefore, a fiduciary relationship implies a condition of superiority of one of the parties over the other. [Ken Coghill, Charles Sampford and Tim Smith “Fiduciary Duty and the Atmospheric Trust”, Ashgate (2012)] It is not necessary that the relationship has to be defined as per law, it may exist under various circumstances, and exists in cases where there has been a special confidence placed in someone who is bound to act in good faith and with due regard to the interests of the one reposing the confidence. Such is normally the case with, inter alia, attorney-client, agentprincipal, doctor-patient, parent-child, trustees-beneficiaries [Section 88, Indian Trusts Act, 1882], legal guardian-ward [Section 20, Guardians and Wards Act, 1890], personal representatives, court appointed receivers and between the Directors of company and its shareholders. In Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. , (1981) 3 SCC 333] and Dale & Carrington Invt. (P) Ltd. v. P.K. Prathapan [Dale & Carrington Invt. (P) Ltd. v. P.K. Prathapan, (2005) 1 SCC 212], this Court held that the Directors of the company owe a fiduciary duty to its shareholders. In P.V. Sankara Kurup v. Leelavathy Nambiar [P.V. Sankara Kurup v. Leelavathy Nambiar, P.V. Sanakara Kurup v. Leelavathy Nambiar (1994) 6 SCC 68], this Court held that an agent and power of attorney can be said to owe a fiduciary relationship to the principal.

246. From the discussion above, it can be seen that a fiduciary is someone who acts for and on behalf of another in a particular matter giving rise to a relationship of trust and confidence. A fiduciary relationship implies a condition of superiority of one of the parties over the other, where special confidence has been reposed in an individual to act in the best interests of another.”

Accordingly, he prayed to allow the present appeals, as the case is covered within the exception no. (ii) of section 2(9)(A).

Contention on Behalf of Respondent

7. Ld. Counsel on behalf of the Respondent department submitted that the plain reading of the exclusion clause (ii) with respect to fiduciary capacity in section 2(9)(A), can be read into two parts which are combined by the words “and” and also give an inclusive definition. The first part reads that “a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity”. This is a general part which inter-alia means any relationship that exists in a fiduciary capacity. If the said exclusions clause is limited to this part, it will cover all the transactions that fall under this relationship, this can be said so because a Beneficial owner in general, buys a property in the name of a trusted person only e.g. servant/driver/household help. Thus, if all such relationship between master-servant, employer-employee, etc. falls under the category of the fiduciary capacity, then the very purpose of the PBPT Act would be defeated, which was to prohibit benami transactions.

Further, the second part reads that ‘and includes a trustee, executor, partner, director of a company, a depository or a participant as an agent of a depository under the Depositories Act, 1996 and any other person as may be notified by the Central Government for this purpose”. The second part starts with the word “and” which gives the list of persons covered under the fiduciary capacity. It means that the fiduciary relationship is as such as akin to the relationship existing between trustee-trust, executor-executee, partner-firm, directorcompany, depository, or a participant as an agent of a depository. Thus, besides the nature of the relationship as mentioned in the said exclusion clause, no other relationship can exist on the ground of fiduciary capacity, unless the same is notified by the Central Government.

8. Ld. Counsel for the respondent contended that in the present case, the Beneficial owner and the benamidar are in a relationship of a Master- Servant or employee-employer. It would have been wrong to say that the parties shared the fiduciary relationship, as the same was not notified by the Central Government and its nature is not akin to the relationship included in the statute. Reference of section 56(1) of the PBPT Act, 1961 is also drawn which says that Sections 81, 82 & 94 of the Indian Trusts Act, 1882, section 66 of the Code of Civil Procedure, 1908 and section 281A of the Income Tax Act, 1961 are hereby repealed. The repeal of the provisions vide section 56(1) is aimed at ensuring that trust relationships, even though property may appear to be held in a fiduciary capacity does not provide an automatic exemption from the provisions concerning benami transactions.

9. He submitted that in the present case, the beneficial owner contended that he shared a relationship of trust with the benamidar. But, in the present case, benamidar was just a labourer with the beneficial owner. He was not discharging any duties as manager or agent under the said beneficial owner. The benamidar was never in an dominating position. If the interpretation stressed by Ld. Counsel for the appellants is accepted as correct, then there can never be any benami transaction taking place. It is a common understanding that the Benamidar in a benami transaction are a trusted or submissive persons of the Beneficial owner and the benami transactions are entered only because of that relationship between the two parties, in order to conceal the identity of true purchaser/beneficial owner, with an undertaking to revert the property in the name of the true owner at a later stage. If the fiduciary capacity is taken to mean and include all persons who trust each other or hold a position of trust, then all benami transactions would come into the ambit of exception (ii) to section 2(9)(A) of the Act, which is certainly not the intent of legislature. Hence, the term fiduciary relationship cannot be interpreted in a manner as stressed to frustrate the very purpose of the PBPT Act.

10. He also contended that the object behind incorporating Section 165(6) under the Chhattisgarh Land Revenue Code (CLR Code) is to provide social justice to the members of the backward tribe and save them from the harsh clutches of the socially and economically well-off persons. Further, sections 170A of the CLR Code provides for setting aside transfers made in violation of section 165(6) of the CLR Code, meaning thereby that the sale which is violative of section 165(6) of the code is absolutely barred under the law. In support of this contention, the Respondent has cited the judgment in case, Pooran Singh v. Dhaniram (since dead) through LRs, [Pooran Singh v. Dhaniram 2015 SCC Online Chh 1672 ], decided by the High Court of Chhattisgarh, which held that section 170 of the CLR Code provides for avoidance of transfer in contravention of Section 165 of the CLR Code.

11. He pointed out that the purchase of the impugned lands in the name of the Appellant no.1 was just a way to defeat the provisions of Chhattisgarh Land Revenue Code. The real motive behind entering into the said benami transaction was that the sellers of the land were tribal persons and according to the Section 165 of Chhattisgarh Land Revenue Code, the tribal land can only be acquired by a tribal person. As the Beneficial Owner Sh. Dwarika Gupta is not a tribal person, so he got the land registered in the name of his employee i.e. the appellant Sh. Laxmi Chand Maravi, who is a tribal person (Since deceased). Section 53 of the said PBPT Act provides that where any person enters into a benami transactions in order to defeat the provisions of any law, the Beneficial Owner, the Benamidar and any other person, who abets or induces any person to enter into the benami transaction shall be guilty of the offence of benami transaction, which is liable to be punished with rigorous imprisonment for a term of 1 to 7 years and also fine of up to 25 percent of the fair market value of the property. It is also noteworthy to mention here that the Standing Committee on Finance (2015-16), Sixteenth Lok Sabha, Ministry of Finance to which the Benami Transactions Prohibition (Amendment) Bill, 2015 was referred after the introduction of the Bill in the Parliament, in its report (TwentyEight Report, April, 2016) in Part-III, which comprised the Observations/Recommendations of the Committee, had observed as follows:

“8. It should be ensured that the provisions of the Bill are not in conflict with the provisions of the existing Tribal Land Acts administered by States in Tribal Areas specified under the Constitution. Ground realities in these specified areas should thus be considered and duly factored in”

He stressed that the observations of the Parliamentary Standing Committee, which were duly taken into account by the Government while enacting the Amendment Bill of 2016 into law, reflect the concern of the Legislature regarding protection of tribal lands, which Sh. Dwarika Gupta, by his own active admission, tried to circumvent by acquiring the property ostensibly in the name of his employee who belongs to the Schedule Tribe category.

12. Ld. Counsel for respondent also placed Reliance on the judgement of this Appellate Tribunal, in case ” Dwarika Gupta v. Onkar Singh Gond [FPA-2584/RP/2023, dated 19-12-2024]. The facts of the present case are similar to the aforesaid case. Even the Beneficial Owner of the present case, as well as of the said case was the same person, i.e. Mr. Dwarika Gupta. Identical submissions were raised and this Hon’ble Tribunal has observed that and held:

45. Coming to the case laws cited, we find that the facts of the case in P. V. Sankara Kurup v. Leelavathy Nambiar 1994 6 SCC 688 (SC), which has been relied upon by the appellant, were entirely different from the present case. In that case, the petitioner was an agent and power-of-attorney holder of the respondent. Accordingly, the Hon’ble Supreme Court has observed as follows:

“Thus the consideration for the purchase as well as the improvements of the property were met with the funds of the respondent for whom the petitioner was acting as an agent and Power of Attorney. He, thereby, obviously had acted in a fiduciary capacity as agent of the respondent”

46. Thus, the existence of a fiduciary relationship in the capacity of a duty appointed agent, was a pre-existing fact in that case. The substantial questions of law before the Hon’ble Court were whether the title to the suit property vests in the petitioner or his principal (respondent), and whether she is entitled to the declaration and recovery of possession sought in that behalf. It was held that though the sale-certificate ostensibly stands in his name, he obviously obtained it while acting as an agent and power-of-attorney of the respondent. It was obtained without her knowledge and consent, playing fraud on her.

47. In Central Public Information Officer, Supreme Court of India v. Subhash Chandra Agarwal MANU/SC/ 1561/2019 (13.11.2019) it was held as follows:

“200……… It is not necessary that the relationship has to be defined as per law, it may exist under various circumstances, and exists in cases where there has been a special confidence placed in someone who is bound to act in good faith and with due regard to the interests of the one reposing the confidence. Such is normally the case with, inter alia, attorney-client, agentprincipal, doctor-patient, parent-child, trustees- beneficiaries, legal guardian-ward, personal representatives, court appointed receivers and between the directors of company and its shareholders.”

48. As can be seen from the above, a fiduciary relationship can exist on account of the existence of trust, confidence and good faith, even without being explicitly defined by the law. In the present case, we have already held on facts that such trust and confidence did not exist between the parties. Moreover, it is noteworthy that in the preceding part of the very same paragraph, the Hon’ble Supreme Court has observed as follows:

“200. A fiduciary must be entrusted with the degree of discretion (power) and must have freedom to act without resorting to prior approval of the beneficiary. The greater the independent authority to be exercised by the fiduciary, the greater the scope of fiduciary duty. The person so entrusted with power is required to determine how to exercise that power”

50. In Canbank Financial Services Ld. V. Custodian and Others (2004) 8 Supreme Court Cases 355 (03.09.2004), the legal position was reaffirmed that a transaction which falls within the purview of Section 88 of the Indian Trusts Act does not fall within the category of benami transaction in terms of the provisions of the Benami Transactions Act. For this legal proposition, the Hon’ble Supreme Court relied upon the decision in P.V Sankara Kurup v. Leelavathy Nambiar, MANU/SC/0533/1994. For ready reference section 88 of the Indian Trusts Act, 1882 is reproduced below:

“88. Advantage gained by fiduciary. Where a trustee, executor, partner, agent, director of a company, legal advisor, or other person bound in a fiduciary character to protect the interests of another person, by availing himself of his character, gains for himself any pecuniary advantage, or where any person so bound enters into any dealings under circumstances in which his own interests are, or may be, adverse to those of such other person and thereby gains for himself a pecuniary advantage, he must hold for the benefit of such other person the advantage so gained.”

51. In the above case of Canbank Financial Services, the Hon’ble Supreme Court further held that the list of persons specified in Section 88 of the Indian Trusts Act is not exhaustive. It was held that the expression ‘other person bound in fiduciary character to protect the interest of other persons’ included a large variety of relationships. The heart and soul of the matter is that wherever as between two persons one is bound to protect the interests of the other and the former availing of that relationship makes a pecuniary gain for himself, the provisions of Section 88 would be attracted, irrespective of any designation which is immaterial.

“20. the fiduciary capacity cannot be used as an exception in all the circumstances which may include transfer of property for or is held for illegal purpose. It cannot be even when there is a concluded contract which pass on the title to others then keeping the property by the person on whose favor title gets transferred would not keep it in “fiduciary capacity” rather with the transfer of the title, the relationship would also change and those cases would not fall in the sweep of the exception of fiduciary capacity. It would be simpliciter in those cases where the money has been kept with other persons on trust for safe custody.”

56. In the present case not only was there a transfer of title to the property in the name of the Benamidar, Sh. Onkar Singh but also the same was for the unlawful purpose of circumventing the law regarding purchase of tribal land by non-tribals. On both counts, therefore, the exception under Section 2(9) (A)(ii) is not available to the appellants in the present case.

He also placed reliance on another decision of this Hon’ble Tribunal in the case of M/s Gurushree Minerals Pvt. Ltd. v. DCIT (FPA-PBPT- 76/RP/2024) dated 14.10.2025, whereby this Hon’ble Tribunal held as under:

“From the analysis of facts, it is clear that total of 30.602 hectares of lands were purchased in the name of Shri Ratan Singh and his family from the funds provided by M/s Gurushree Minerals Pvt. Ltd. As per the provisions of the Section 165 of Chhattisgarh Land Revenue Code, 1959, a land originally belonging to a tribal can be purchased by a tribal person only. It was only due to this reason only that the land was purchased from the funds made available by the company M/s Gurshree Minerals Pvt. Ltd. for its own direct or indirect use in the name of its employee Shri Ratan Singh, a tribal. It is important to mention here that in purchasing the land in the name of a tribal person for direct or indirect use of the company, the provisions of Section 165 of Chhattisgarh Land Revenue Code, 1959 were violated. This violation has resulted in committing a prima facie offence in terms of section 53 of the PBPTA. The Initiating Officer on the basis of his investigation and analysis of the documents concluded that Shri Ratan Singh is a person of no means and a lowly paid employee of M/s Gurushree Minerals Pvt. Ltd. for purchase of land of 30.602 hectares in his name and in the name of his family members to defeat the provisions of Chhattisgarh Land Revenue Code, 1959, which prohibits the purchase of tribal land by a nontribal person. The lands were purchased from the funds made available by M/s Gurushree Minerals Pvt. Ltd. for purpose of mining activities. Thus, the land was purchased in the name of Shri Ratan Singh and his family members for immediate or future benefits, direct or indirect, of M/s Gurushree Minerals Pvt. Ltd. i.e. the person who has provided the consideration.”

Discussion and findings:

13. We agree with the contention of the Ld. Counsel for the respondent that the present case does not fall under the ‘fiduciary relation’ and is thus not liable to be exempted under clause (ii) of Section 2(9)(A) of the PBPT Act. There was no Special or General Power of Attorney executed by Sh. Dwarika Gupta in his favour. Hence, in absence of the same, question of execution of the sale deed in favour of Sh. Dwarika Gupta was not possible. The impugned sale deed is silent that Vendee Laxmi Chand Maravi purchased the land for the benefit of Sh. Dwarika Gupta or tendered the sale consideration on his behalf. Also, the appellant no.2 should have been present in-person at the time of execution of sale-deed, in absence of Power of Attorney, however, he was not present. No permission from competent authority was taken before execution of said sale deed for granting permission in favour of Sh. Dwarika Gupta i.e., by a tribal in favour of non-tribal. Further, the details of the transactions in the bank account of the benamidar made by the beneficial owner and subsequent transfer made by the benamidar, to various sellers/ vendors of the tribal lands is clearly evident. Also, it is on record that only the appellant Late Laxmi Chand Maravi, had moved an application on 29.09.2021 seeking permission of the District Collector, Janjgir Champa (C.G.) for sale of certain parcels of lands in the name of Sh. Dwarika Gupta, a non-tribal person. Thus, it fortifies our view that the matter is that of benami transaction and is covered under ‘Benami Transaction’ as the appellant Sh. Dwarika Gupta purchased the land through Benamidar with an end view to ultimately transfer it in the name of Dwarika Gupta, the beneficial owner for his future business use.

14. Further, the appellant no.1 cannot be considered as a trustee because he was an employee working as labourer with the beneficial owner. He was merely used for the task of purchasing the property on his behalf, to circumvent the stringent provisions of Section 165(6) under the Chhattisgarh Land Revenue Code for taking prior permission for purchasing the land of a tribal by a non-tribal. Mere entrustment of sale consideration does not give rise to the ‘trust’ and cannot be protected by invoking Section 88 of the Indian Trusts Act. Moreover, if the fiduciary capacity is taken to mean and include all persons who trust each other or hold a position of trust, all benami transactions would come into the ambit of exception (ii) to section 2(9)(A) of the Act. Hence, the term fiduciary relationship cannot be interpreted in a manner to frustrate the very purpose of the Act. Moreover, the nature of said relation the fiduciary relationship was not notified by the Central Government and its nature is not akin to the relationship included in the statute. Further, section 56(1) of the PBPT Act, specifically states that Sections 81, 82 & 94 of the Indian Trusts Act, 1882, section 66 of the Code of Civil Procedure, 1908 and section 281A of the Income Tax Act, 1961 are hereby repealed. The repeal of the provisions vide section 56(1) is aimed at ensuring that trust relationships, even though property may appear to be held in a fiduciary capacity does not provide an automatic exemption from the provisions concerning benami transactions.

15. Further, the object behind incorporating Section 165(6) under the Chhattisgarh Land Revenue Code is to provide social justice to the members of the backward tribe and save them from the harsh clutches of the socially and economically well-off persons. Further, sections 170A of the CLR Code provides for setting aside transfers made in violation of section 165(6) of the CLR Code, meaning thereby that the sale which is violative of section 165(6) of the code is absolutely barred under the law. In support of this contention, the Respondent has cited Pooran Singh v. Dhaniram (since dead) through LRs, [Pooran Singh v. Dhaniram(supra) decided by the High Court of Chhattisgarh which held that section 170 of the CLR Code provides for avoidance of transfer in contravention of Section 165 of the CLR Code.

16. Thus, we are of the view that the present appeals need to be dismissed on merits, as the appellants do not fall within the exemption clause of the Section 2(9)(A) of the PBPT Act. Further, since the matter already falls under Section 2(9)(A) of PBPT Act, the properties are rightly attached given that the same are benami properties, which the appellant (benamidar) has bought using the money given by the beneficial owner, Mr. Dwarika Gupta to defeat the provisions of the Chhattisgarh Land Revenue Code.

17. In sequel to our discussion & findings in para no.13 to 16, the present appeals are hereby dismissed being devoid of any merits and thereby the Provisional Attachment Order dated 28.12.2023 passed by the Initiating Officer and confirmation order dated 24.10.2024 passed by the Adjudicating Authority, qua the properties mentioned in para no.1 above, is hereby upheld.