Benami Property Claims Cannot Be Revived Through a Will When the Plaintiff’s Own Pleadings Reveal the Transaction Was Concealed as a Beneficial Ownership Arrangement

Case Name: Manjula and Others v. D.A. Srinivas

Citation: 2026 INSC 465

Date of Judgment/Order: 8 May 2026

Bench: Justice Ahsanuddin Amanullah and Justice R. Mahadevan

Held: The Supreme Court held that a plaint must be read meaningfully and holistically under Order VII Rule 11 CPC, and clever drafting cannot be permitted to disguise a claim that is barred by law. Where the plaintiff’s own pleadings show that properties were purchased in the name of another person with funds allegedly provided by the plaintiff and were allegedly held for his benefit, the claim squarely attracts the mischief of the Prohibition of Benami Property Transactions Act, 1988. The Court held that the plaintiff could not avoid the statutory bar merely by projecting the claim as one based on a Will, because the real foundation of the suit was beneficial ownership arising from a benami arrangement. The Court further held that an ordinary employer-employee or director-employee relationship is not, by itself, a fiduciary relationship capable of bringing the transaction within the fiduciary exception under the Benami Act.

Summary: The dispute arose from O.S. No. 246 of 2020 filed by D.A. Srinivas seeking declaration of ownership over the suit properties on the basis of an alleged Will dated 20 April 2018 said to have been executed by K. Raghunath, the husband of Appellant No. 1 and father of Appellant Nos. 2 and 3. The appellants contended that the properties were the self-acquired properties of K. Raghunath and that he had earlier executed a registered Will dated 28 January 2016 in favour of his wife. They filed an application under Order VII Rule 11(a) and (d) CPC, arguing that the plaintiff’s own pleadings showed that the properties had been purchased in the name of K. Raghunath from funds allegedly supplied by the plaintiff, thereby making the suit a barred attempt to enforce a benami transaction. The trial court rejected the plaint, but the Karnataka High Court restored the suit for trial. The Supreme Court reversed the High Court, holding that the Court must pierce the veil of form and examine the real nature of the claim. It found that the plaintiff’s claim was inseparably tied to an alleged beneficial ownership arrangement, that the fiduciary exception was not available, and that the MOUs relied upon to circumvent statutory restrictions were illegal and void.

Decision: The Supreme Court allowed the appeal, set aside the Karnataka High Court’s judgment dated 22 February 2024, and restored the trial court’s order dated 30 October 2023 rejecting the plaint under Order VII Rule 11 CPC. The Court held that the initial purchases were benami transactions, that the plaintiff could not assert rights over the properties through the alleged Will, and that the defendants as legal heirs also could not derive advantage from the transaction since they failed to establish acquisition from the deceased’s independent funds. The Court further held that the suit schedule properties were liable to confiscation under Section 27 of the Benami Act, clarified that confiscation is a civil consequence distinct from prosecution, and disposed of the pending applications with no order as to costs.