P L D 1969 Karachi 221 (PLP)

2. The respondent went in appeal to the Additional District Judge at Nawab Shah, who reversed the trial Court's decision and decreed the respondent's suit by judgment dated 16‑10‑1965.

3. The appellant has brought this second appeal to question the judgment of the Lower Appellate Court. Mr. A. A. Zari did not contest the findings of the First Addi tional District Judge on issues Nos. 1 to

5. He confined his arguments to issues Nos. 6 and 7, in connection with which he contended that on the respondent's own admission he was not entitled to purchase the disputed land from the Barrage Department and, therefore, by setting up the appel lant as his benamidar, the respondent brought about the sale of the disputed land by committing fraud on the Government and accordingly the sale of the land to the respondent should be held to be void, with consequent dismissal of the respondent's suit. Before discussing the legal position, it will be convenient to refer to the respondent's admission with regard to the circumstances under which he purchased the disputed land in the appellant's name. In para. 3 of the plaint the respondent stated as follows :‑ "Another reason for purchasing the land in the name of the defendant was that nobody at the time could have purchased the land from Barrage Department to the extent of more than 12 acres, that the plaintiff had already pur chased 12 acres of land from Barrage Department, that the disputed land and his other land is situated on the same water course and it was convenient for the plaintiff to purchase the suit land." In his evidence the respondent stated that he owned 543 acres of land; that the land in dispute was `D' class which was reserved for sale by the Government to small land holders and therefore this land could not have been granted to the respondent himself as he was already owner of a large holding of agricultural land, and as he had already purchased similar lands` benami in the name of his relations. These admissions establish conclusively that the land in dis pute would not have been sold by the Government to the respondent if he had applied to purchase this land in his own name. The question is whether the transaction by which the land was purchased by the respondent 'benami' in the name of the appellant is void and cannot be given effect to by the Civil Courts. In this connection, Mr. Zari referred to section 23 of the Contract Act, which reads as follows :‑ "The consideration or object of an agreement is lawful unless‑ It is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law ; or is fraudulent; or involves or , implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy." "In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void." Fraud itself is defined by section 17 of the Contract Act in these terms :‑ "Fraud" means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract :‑ "(1) The suggestion, as to a fact, of that which is not true by one who does not believe it to be true; (2) The active concealment of fact by one having knowledge or belief of the fact; (3) A promise made without any intention of perform ing it; (4) Any other act fitted to deceive; (5) Any such act or omission as the law specially declares to be fraudulent."

4. Accordingly, Mr. Zari's argument is that the object of the transaction by which the respondent purchased the suit land 'benami' in the appellant's name was unlawful, being fraudulent, that is, that the respondent intended to deceive the Government that the real purchaser of the disputed land was a hari, namely, the appellant, and not a big Zamindar, and that if it be held to be so, then the respondent's suit for 9clar4tipn that he is the owner of the suit land should fail. On the other hand, Mr. A. H. Memon, the learned Advocate for the respondent, contends that the transaction by which the appellant purchased the land from the Government is merely voidable in terms of section 19 of the Contract Act. In other words, this transaction may be avoided if the Government so wishes, but until then the transaction is enforceable in law. Before discussing these respective argu ments it will be useful to say a few words about the nature of a 'benami transaction'. A transaction of this nature really consists of two transactions. One is the agree ment, express or implied, between the ostensible owner and the 'benamidar', by which the latter agree to purchase the property in his name but for the benefit of the person who advances the consideration, that is, the ostensible owner. The other is a transaction between the 'benamidar' and the 'seller' of the property, to which transaction the ostensible owner is not a privy. The case before me also, in fact, relates to two transactions. There is an agreement, express or implied, by which the appellant consented to lend his name as purchaser of the Government land. The other is the transaction by which the appellant purchased the land from ‑ the Government in his own name. The respondent' suit is for enforcement of the first transaction, that is the agreement by which the appellant expressly or impliedly agreed to purchase and hold the land in his name but for the benefit of the respondent. The question is whether this' agreement is unlawful and consequently void? Under section 23 of the Contract Act, an agreement is unlawful if its consideration or object is fraudulent. The expression 'object here means 'purpose' or design. Now what was the purpose of the agreement between the appellant and the respondent' The only answer is that the purpose of this agreement was to deceive the Government into believing that the real pur chaser of the land was a 'hari' and not a 'Zamindar' who already held large agricultural holding. This purpose clearly fraudulent, and it being so, the agreement between the appellant and the respondent that the former should purchase and‑ hold the land for the latter's benefit is void, and consequently the respondent cannot enforce his claim to the disputed land against the appellant. Mr. Memon's argu ment with regard to the applicability of section 19 of the Contract Act loses sight of the fact that the agreement which is under challenge as being void for its fraudulent object is the agreement between the appellant and the respondent, and not the agreement under which the appellant purchased the land from the Government. If it was the question of the enforcement of this second agreement, then of course it could be said that the agreement would continue to be in force unless avoided by the Government, who is the seller of the disputed land. The rule that an ostensible owner cannot enforce his right against the 'benamidar' if the object of the agreement between the two parties is fraudulent, has been recognised in several decisions. I would first refer to the decision of the Chief Court of Punjab in Sahib Ram v. Nagar Mal ((1884) 19 P R 63). In this case the object of the agreement between the plaintiff and the defendant was to obtain a contract from the Commissariat Department for the benefit of both, which could not be obtained for both of them, without practising fraud on the department, as the defendant was in the employment of this department, whose rules required that no person connected with the Department should be admitted as a partner in the contract between the tenderer and the department. It was held that the object of the agreement was fraudulent and the agreement was, therefore, void. This rule was adopted by the High Court of Allahabad in Mani Ram v. Purshotam Lal and another (A I R 1930 All. 732). In this case a railway company had refused to grant any contract to the plaintiff who, therefore, entered into an agreement with the defendant that the defendant should put himself forward as the applicant for the contract and when the same was secured he would serve the plaintiff, who would be the real contractor. The plaintiff later brought a suit against the defendant for declaration that he was the real, person who held the contract. The Court held that when the defendant represented to the railway company that he was the contractor he represented a fact which was not believed to be true by him, and in the result the object of the agreement was to commit a fraud on the railway company. On this view the Court upheld the dismissal of the plaintiff's suit. This decision was followed by the High Court of Madras in Ganesa Naicken v. Arumugha Nalcken (A I R 1954 Mad. 811). In this case, the plaintiff apprehended that if he himself applied, he would not be granted a building site by the Government, and, therefore set up the defendant to apply for the site with the intention to appropriating the same to himself. The plaintiff succeeded in this attempt, and later brought the suit for declaration of his title to the site which had been granted by the Government to the defendant. The learned Judges who decided the case took this view of the transaction "There is also another way of looking at the transaction. The plaintiff says that he apprehended that if he himself applied, he would not have been granted a site, and, there fore, he set up some one else to apply for a site with the intention of appropriating that site to himself. This would in a way also amount to playing a fraud on the Government. The decision in Maniram v. Purshotami A I R 1930 All. 732(C) is a case in which a like attempt by a person to obtain a railway contract for his own benefit was not allowed to succeed."

5. These decisions support Mr. Zari's contention that the respondent cannot enforce his claim to the disputed land as this claim is based on an agreement the object of which was fraudulent. But I should also refer to a decision cited by Mr. A. H. Memon, that is the case of Harak Chand Babu and others v. Charu Chandra Singha and others ((1910‑11) 15 C W N 5). In this case the plaintiff's father was the defaulting `putnidar' when the `putni' was sold for arrears of rent under Regulation VIII of 1819, and was precluded by section 9 of this Regulation from bidding at the sale and from purchasing the `putni'. Accordingly, the plaintiff's father set up a `benamidar' who purchased the land at the sale. The Calcutta High Court held that this rule was only voidable and not void. But in this case the contest was not between the ostensible owner, and the benamidar but between the latter and third parties and, further, in reaching this decision the Court did not take into considera tion the provisions of section 23 of the Contract Act. Moreover, this case was decided with reference to the provisions of Regulation VIII of 1819 and, therefore, would have ' no bearing to a case like the one before me, where agricultural land reserved for landless peasants and small land holders is purchased by big Zamindars `benami' in the name of their haris. To uphold this kind of transaction would defeat the policy of the Government to avoid concentration of agricultural land in a few hands and would be injurious to the interests of the large body of landless peasants and small land‑holders.

6. In my opinion, the correct view of the legal position is that the respondent's claim is based on an agreement whose object was fraudulent. The object with which the respondent set up the appellant as the ostensible purchaser of the disputed land was to play fraud upon the Govern ment, and to persuade the Government to believe that the real purchaser of the land in question was a `hari' and not a big Zamindar. As such, the object is unlawful within the meaning of section 23 of the Contract Act, and it being so, the transaction on which the respondent based his title itself is void. In this view of the matter, the respon dent cannot succeed in his suit. Accordingly, I would accept the appeal and set aside the judgment of the Additional District Judge and restore that of the trial Court dated 28‑9‑1964. The appellant shall have costs of the proceedings in this Court and in the Lower Appellate Court. Order accordingly. Appeal accepted.