Property purchased for a child out of joint family funds is excluded from Benami transactions, preventing plaint rejection under Order VII Rule 11.

By | August 7, 2026
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Property purchased for a child out of joint family funds is excluded from Benami transactions, preventing plaint rejection under Order VII Rule 11.
Issue
Whether a suit claiming property purchased in the name of a child out of joint family funds as joint family property is barred under Section 4 of the Prohibition of Benami Property Transactions Act, 1988, warranting rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908.
Facts
  • Property Purchase: The plaintiff (father) purchased the suit property in 1976 in the name of Defendant No. 1 (his son) using joint family income, claiming it formed part of the joint family property.
  • Property Sale: Defendant No. 1 sold the property to Defendant No. 2 in 2009 without the plaintiff’s consent.
  • Relief Sought: The plaintiff filed a suit seeking a declaration that the property was joint family property, that the 2009 sale deed was null and void, and a permanent injunction against the defendants.
  • Application under Order VII Rule 11 CPC: Defendant No. 2 applied for rejection of the plaint, arguing that the suit was barred by Section 4 of the Prohibition of Benami Property Transactions Act, 1988.
  • Trial Court Ruling: The Trial Court allowed Defendant No. 2’s application and rejected the plaint.
Decision
  • Exclusion from Benami Definition: Under Section 2(9)(i) and Section 2(9)(iii) of the Prohibition of Benami Property Transactions Act, 1988, property held for the benefit of coparceners in a Hindu Undivided Family (HUF) or purchased in the name of a spouse or child is expressly excluded from the definition of a “benami transaction.”
  • Plaint Disclosed Valid Cause of Action: Based on the pleadings and annexed documents, the transaction did not fall under the statutory definition of a benami transaction.
  • Order VII Rule 11 Not Applicable: Because the bar under Section 4 of the 1988 Act did not apply to joint family property/purchases for a child, the Trial Court erred in rejecting the plaint. The rejection of the plaint was set aside [Paras 9, 10, 11].
Key Takeaways
  • Scope of Statutory Exceptions: Property purchased in the name of an individual’s child or acquired using joint family funds for the benefit of coparceners does not constitute a benami transaction under Section 2(9) of the 1988 Act.
  • Threshold for Order VII Rule 11 CPC: A plaint cannot be rejected at the threshold under Order VII Rule 11(d) as barred by law if the pleadings fit squarely within statutory exceptions.
  • Substantive Trial Required: Disputes involving whether property was genuinely acquired as joint family property are factual matters that require a trial rather than summary rejection at the preliminary stage.
HIGH COURT OF MADHYA PRADESH
Chhotelal
v.
Moolchand Lodhi
Vivek Jain, J.
FIRST APPEAL No. 2326 of 2024
JULY  14, 2026
Ms. C. Veda Rao, Adv. for the Appellant. Tirath Prasad Jaiswal, Anil Lala, Advs. and Ms. Sulekha Sharma, Panel Lawyer for the Respondent.
ORDER
1. The present appeal under Section 96 of Civil Procedure Code has been filed challenging the order dated 30.06.2014, whereby the application of the respondent/ defendant no. 2 under Order 7 Rule 11 CPC has been allowed and the suit has been rejected as being barred by law in view of Section 4 of the Prohibition of Benami Property Transactions Act 1988, (for short “Act of 1988”).
2. Learned counsel for the appellant has vehemently argued that the suit was filed by the father of defendant no. 1, against the defendant no. 1 and the purchaser from defendant no. 1, on the assertion that the property was purchased in the name of defendant no. 1 by the nucleus of joint family income. Therefore the actual title in the property lay with the joint family of the plaintiff and all his sons, and not with the defendant no. 1 alone who was only one of the sons of the plaintiff. It is argued that the suit was filed on the assertions that the property was purchased by the nucleus of joint family income and therefore the property should be deemed to be joint family property and declaration to that effect was sought in the plaint. However, the trial court has considered the said assertions to be the assertions of the property being purchased Benami in the name of defendant no. 1 and the suit has been held to be barred by Section 4 of the Act of 1988 without adverting to the position that the assertion was of purchasing property in the name of son by the father and that too, from the nucleus of joint family income and declaration was sought that the property be declared to be joint family property which in no terms from the plaint assertions, brings the property within the purview of Benami property and the same is not within the purview of Benami transaction.
3. It is argued that it is for the plaintiffs to prove their assertions that whether the property was purchased from the income of nucleus of joint family and if the plaintiffs succeed in proving this assertion then the suit would not be barred even otherwise property purchased by the father in the name of son is not hit by Act of 1988 being Benami transaction and it is for the plaintiff to prove the position that the property was indeed purchased by the father in the name of son. Therefore, without setting the case for evidence the plaint could not have been rejected.
4. Per contra, the counsel for the respondent no.2/defendant no. 2 has vehemently argued that the suit in question is a collusive suit in as much as the property was purchased by defendant no. 1 and he sold the property to the defendant no. 2 in the year 2009 and immediately after selling the property to defendant no. 2, a collusive suit was filed by the father of defendant no. 1 seeking declaration on the said property to be joint family property which is only a malicious piece of litigation instituted by the plaintiff to harass and blackmail the defendant no. 2. It is further argued that looking to the plaint assertions, the transaction in question duly falls within the prohibited transactions in terms of Section 4 of Act of 1988.
5. This court has heard learned counsel for the rival parties at length and perused the record.
6. The plaint assertions are that the property was purchased in the year 1976 by the plaintiff who is father of defendant no.1, in the name of defendant no. 1 and therefore the property was understood to be joint family property as it was purchased from the nucleus of joint family income. However the defendant no. 1 sold the property to defendant no. 2 in the year 2009 and that was stated to be cause of action for filing the suit.
7. The declaration has been sought that the property in question be declared to be joint family property and it be declared that it was purchased by the plaintiff in the name of his eldest son i.e. defendant no. 1 and it may also be declared that the sale deed was executed by the defendant no. 1 in favour of defendant no. 2 is null and void. Permanent injunction was also sought by the plaintiff.
8. The question that whether the plaint assertions in itself disclose the transaction to be Benami transaction and hit by Act of 1988, is to be considered. Though Section 4 prohibits the right to recover property held Benami and suit by the person claiming to be real owner of such property is barred against the person in whose name the property is held. However, it is to be seen that whether the property looking to the plaint assertions, becomes subject matter of Benami transaction or not. Section 2(9) of Act of 1988 defines Benami transaction which is in the following terms.
“[2. Definitions. In this Act, unless the context otherwise requires,-
xx xx xx
(9) “benami transaction” means,-
(A) a transaction or an arrangement-
(a) where a property is transferred to, or is held by, a person, and the consideration for such
property has been provided, or paid by, another person; and
(b) the property is held for the immediate or future benefit, direct or indirect, ofthe person who has provided the consideration, except when the property is heldby-
(i) a Karta, or a member ofa Hindu undivided family, as the case may be, and the property is held for his benefit or benefit of other members in the family and the consideration for such property has been provided or paid out ofthe known sources ofthe Hindu undivided family;
(ii) a person standing in a fiduciary capacity for the benefit of another person towards whom he stands in such capacity 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 (22 of 1996) and any other person as may be notified by the Central Government for this purpose;
(iii) any person being an individual in the name ofhis spouse or in the name ofany child of such individual and the consideration for such property has been provided or paid out of the known sources ofthe individual;
(iv) any person in the name ofhis brother or sister or lineal ascendant or descendant, where the names ofbrother or sister or lineal ascendant or descendant and the individual appear as joint-owners in any document, and the consideration for suchproperty has been provided or paid out ofthe known sources ofthe individual; or
(B) a transaction or an arrangement in respect of a property carried out or made in a fictitious name; or
(C) a transaction or an arrangement in respect of a property where the owner of the property is not aware of, or, denies knowledge of, such ownership;
(D) a transaction or an arrangement in respect ofa property where the person providing the consideration is not traceable or is fictitious;
Explanation. For the removal ofdoubts, it is hereby declared that benami transaction shall not include any transaction involving the allowing of possession of any property to be taken or retained in part performance of a contract referred to in section 53A of the Transfer ofProperty Act, 1882 (4 of 1882), if, under any law for the time being in force, -(i) consideration for suchproperty has been provided by the person to whom possession of property has been allowed but the person who has granted possession thereofcontinues to hold ownership ofsuchproperty;
(ii) stamp duty on such transaction or arrangement has been paid; and (iii) the contract has been registered.”
9. As per Section 2(9)(i), the joint family properties are excluded from the definition of Benami transaction and as per Section 2 (9)(iii), the property purchased in the name of spouse or child of such of individual is not covered in the definition of Benami transaction.
10. Therefore, if the definition of Benami transaction is seen, then the plaint assertions do not disclose the transaction of sale of year 1976 to be Benami transaction, though the defendant no. 2 can take such defence in the written statement and it would be for the defendant No. 2 to prove the fact in support of his assertions if he takes such an objection. However, the plaint pleadings and documents attached to this plaint do not disclose the transaction in question to be Benami transaction.
11. It is settled in law that at the stage of application under Order 7 Rule 11 CPC, only the plaint assertions and the documents attached to the plaint are to be seen, that do not disclose the transaction to be Benami transaction on the face of such pleadings.
12. Therefore, this court is unable to uphold the impugned order passed by the trial court in rejecting the plaint.
13. In the result, the impugned order passed by the trial court dated 30.06.2014 is set aside. The application under Order 7 Rule 11 CPC filed by the defendant no. 2 stands rejected.
14. The defendant no. 2 is set at liberty to take all such legal and factual objections, including the objection of Benami transaction in his written statement and press the same at the time of trial of the suit.
15. In the above terms the appeal is allowed and disposed of.