The Supreme Court ruled that Order VII Rule 11 CPC cannot be invoked to reject a partition suit based on the Benami Act when plaint averments describe properties as joint family assets. Whether properties are benami or fall under exceptions (Section 2(9)(A)) requires evidence. Section 4’s bar applies only to proven benami transactions, not disputed claims requiring trial.
Facts Of The Case:
The dispute involved a family partition suit (Regular Suit No. 630A/2018) filed by Vidya Devi Gupta (mother) and Sudeep Gupta (younger son) against Sandeep Gupta (elder son), his wife Shaifali Gupta, and their children, along with subsequent property purchasers Deepak Lalchandani and Surya Prakash Mishra. The plaintiffs claimed that multiple properties acquired in individual family members’ names – including shops in Bhopal and residential houses – were purchased using joint family funds from their tailoring businesses (“Himalaya Tailors” and “Hemi Textiles”). They sought partition, declaration, and injunction, alleging that Shaifali Gupta illegally sold three properties (listed as items 19–21 in the plaint) to Lalchandani and Mishra. The subsequent purchasers (defendant Nos. 5–6) filed an application under Order VII Rule 11 CPC, arguing the suit was barred by the Benami Transactions (Prohibition) Act, 1988, as properties stood in individual names. The trial court and High Court rejected this plea, holding that determining whether the properties were joint family assets or benami required evidence. Shaifali Gupta (who never filed a rejection application) and Lalchandani then approached the Supreme Court via Special Leave Petitions (Nos. 4673–4674/2023), which were dismissed, affirming that such factual disputes must be resolved at trial.
Procedural History:
The case originated with a partition suit (Regular Suit No. 630A/2018) filed before the trial court by Vidya Devi Gupta and Sudeep Gupta against family members and subsequent property purchasers. The defendant purchasers (Nos. 5-6) filed an application under Order VII Rule 11 CPC seeking rejection of the plaint based on the Benami Transactions (Prohibition) Act, which was rejected by the trial court on 25.02.2019. The purchasers then filed Civil Revision No. 324/2019 before the High Court of Karnataka, which was dismissed on 26.09.2022, upholding the trial court’s view that the nature of the properties required evidentiary determination. The matter reached the Supreme Court through two Special Leave Petitions (Nos. 4673-4674 of 2023) filed by defendant No. 2 (Shaifali Gupta) and defendant No. 5 (Deepak Lalchandani), despite Shaifali Gupta having never filed the original rejection application. On 20.05.2025, the Supreme Court dismissed both petitions, affirming that disputed questions of fact regarding property ownership cannot be decided at the preliminary stage under Order VII Rule 11 CPC.
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Court Observation:
The Court observed that applications under Order VII Rule 11 CPC require examining only plaint averments, not defenses. It emphasized that the Benami Transactions Act’s bar under Section 4 applies only to proven benami transactions, not properties claimed as joint family assets. The Bench noted the plaint specifically described the disputed properties as acquired through joint family business income, bringing them potentially under Exception (ii) to Section 2(9)(A) of the Benami Act. The Court clarified that determining whether properties fall under benami exceptions requires evidence, making such disputes unsuitable for adjudication at the Order VII Rule 11 stage. It rejected the petitioners’ attempt to raise new arguments about Section 14 of the Hindu Succession Act, noting these were never pleaded before lower courts. Significantly, the Court held that subsequent purchasers (petitioners) lacked standing to challenge maintainability when the main contesting defendants had accepted the suit’s continuation. The judgment reinforced that technical pleas cannot short-circuit substantive property disputes requiring full trial.
Final Decision & Judgement:
The Supreme Court dismissed both Special Leave Petitions (Nos. 4673-4674 of 2023), upholding the concurrent findings of the trial court and High Court. The Bench ruled that the partition suit could not be rejected at the threshold under Order VII Rule 11 CPC, as the plaint’s averments about joint family properties required evidentiary determination. The Court held that the Benami Transactions Act’s prohibition under Section 4 was inapplicable since the plaintiffs claimed the properties as joint family assets, not benami holdings, bringing them within Exception (ii) to Section 2(9)(A). It emphasized that subsequent purchasers lacked standing to challenge maintainability when primary defendants had accepted the suit’s continuation. The judgment restored the suit to the trial court for merits determination, directing framing of appropriate issues while clarifying that all observations were prima facie and wouldn’t prejudice the trial. Justices Mithal and Amanullah affirmed that disputed questions of title and ownership must be resolved through full trial, not preliminary objections.
Case Details:
Case Title:Smt. Shaifali Gupta vs. Smt. Vidya Devi Gupta & Ors. Citation:2025 INSC 739 Civil Appeal No.: Special Leave Petition (Civil) Nos. 4673-4674 of 2023 Date of Judgment: May 20, 2025 Judges/Justice Name: Justice Pankaj Mithal & Justice Ahsanuddin Amanullah
Download The Judgement Here