A Will Cannot Cure a Benami Acquisition: Supreme Court Defines the Fiduciary-Capacity Exception
C&C Law Chambers | Property and Benami Law | 4 September 2026
In Manjula and Others v. D.A. Srinivas, 2026 INSC 465, the Supreme Court held that a claimant cannot enforce ownership of property admittedly acquired in another person’s name merely by relying on a later Will from that ostensible owner. The Court also rejected an attempt to convert a commercial employer-employee arrangement into a fiduciary relationship for the statutory exception.
The judgment, delivered on 8 May 2026 by Justices J.B. Pardiwala and R. Mahadevan, restores the rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908.
The pleaded arrangement
The plaintiff said he supplied funds to K. Raghunath under memoranda of understanding for purchasing agricultural lands in Raghunath’s name because statutory restrictions prevented the plaintiff from buying them directly. After conversion, the properties were allegedly to be transferred to the plaintiff. The plaintiff later relied upon a registered Will said to have been executed by Raghunath.
Raghunath’s family disputed the claim. They sought rejection of the plaint on the basis that the plaintiff’s own pleadings disclosed a benami arrangement and that Section 4 of the Prohibition of Benami Property Transactions Act, 1988 barred enforcement by the alleged real owner. The trial court accepted the objection; the High Court reversed it.
Why the Will did not create an independent escape
Pleading a Will did not erase the source of the claimed right. The plaintiff’s case still depended upon proving that he financed acquisition in Raghunath’s name and that Raghunath held the land for him. A testamentary document could not be used to enforce indirectly the beneficial ownership that the Benami Act barred directly.
The Court accordingly examined the plaint as a whole rather than allowing its legal character to be changed by the label attached to the relief. Order VII Rule 11(d) permits rejection where the suit appears from the plaint to be barred by law. At that stage, the court examines the plaint and documents relied upon by the plaintiff, not a contested defence case.
The fiduciary exception is controlled, not open-ended
The plaintiff invoked the exception for property held by a trustee or another person standing in a fiduciary capacity. The amended Act identifies recognised relationships, including trustee, executor, partner and director, and allows the Central Government to notify further categories.
Paragraphs 23.7–23.8 of Manjula explain that this structure calls for a restricted and controlled construction. Courts should not expand the exception on broad equitable considerations when Parliament provided an express notification route.
A fiduciary is bound to protect another’s interests and must not exploit the position of trust for personal gain. An employer-employee relationship is not fiduciary for all purposes merely because confidence exists. Here, the alleged fund transfers arose from negotiated commercial memoranda. Contractual confidence did not become the statutory fiduciary capacity needed to escape the prohibition.
The statutory bar under Section 4
Section 4 bars a suit, claim or action by a person asserting that property held in another’s name is really his. It also restricts a defence founded on an alleged right in benami property, subject to the statutory framework. The judgment prevents the bar from being defeated through drafting devices.
However, the decision does not mean that every Will concerning property once funded by another person is invalid. The result turns on the claimant’s own pleaded foundation: beneficial ownership created through an alleged benami acquisition. Genuine succession rights, lawful trust arrangements and statutory exceptions require separate analysis.
The current-law context
Manjula also records that the Supreme Court recalled its 2022 judgment in Union of India v. Ganpati Dealcom Private Limited. The recalled declarations cannot be cited as currently operative invalidations. The Court distinguished property-identification and confiscation machinery from prospective criminal punishment and held that procedural, curative and machinery provisions can operate retroactively in the manner explained in paragraphs 22.12–22.15, while new offences or enhanced punishment remain prospective.
Practical drafting and due diligence
Parties should not rely on a Will, nomination, side letter or memorandum without testing the original acquisition. Ask who supplied consideration, why title was placed in another name, whether an exception applies, and whether the asserted right requires proof of concealed beneficial ownership.
For Order VII Rule 11 applications, identify the admissions within the plaint that attract the statutory bar. For a claimant resisting rejection, the legal source of title must be articulated without inviting the court to enforce a prohibited arrangement.
Conclusion
Manjula treats substance as controlling. A later testamentary instrument cannot cleanse an acquisition that the claimant himself pleads as benami, and ordinary commercial confidence cannot be enlarged into a fiduciary exception. The judgment nevertheless remains tied to its pleadings and statutory framework; it is not a universal invalidation of Wills or employer-employee transactions.
Sources
Manjula and Others v. D.A. Srinivas, 2026 INSC 465, Civil Appeal No. 7370 of 2026, Supreme Court judgment dated 8 May 2026, particularly paragraphs 21.5–21.7, 22.12–22.15 and 23.7–24: https://api.sci.gov.in/supremecourt/2024/13889/13889_2024_7_1501_71025_Judgement_08-May-2026.pdf
Prohibition of Benami Property Transactions Act, 1988, Sections 2 and 4: https://upload.indiacode.nic.in/showfile?actid=AC_CEN_2_2_00032_198845_1517807326369&filename=a1988-45.pdf&type=actfile
Code of Civil Procedure, 1908, Order VII Rule 11: https://www.indiacode.nic.in/handle/123456789/2191
This article provides general legal information, not advice concerning any particular property or succession dispute.
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