Hindu Law and the Transfer of Property Act

Abstract: This paper deals with the rights and remedies which the alinees of Hindu joint family property enjoy. Firstly it gives an introduction to Hindu joint family and alienation of the property owned by them in a common ownership. It also covers the modes in which and when it can be alienated. It also discusses about persons who are competent to alienate and their rights and remedies. A comparison is made between the Hindu Law and the Transfer of Property act governing the alienation.

Introduction

A Hindu joint family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters [1]. But a Hindu coparcenary is a much narrower body than the joint family. It includes only those persons who acquire by birth an interest in the joint or coparcenary property [2]. These are the sons, grandsons and the great grandsons of the holder of joint property for time being, in other words the holder in unbroken male descent. The essence of coparcenary under Mitakshara law is unity of ownership. The interest is of fluctuating nature, capable of being enlarged by deaths in family and liable to be diminished by births in the family [3]. It is only on partition that he becomes entitled to a definite share. Joint family property is purely the creation of Hindu Law, and those who own it are called coparceners [4].

Alienation means transfer of property, such as gifts, sales and mortgages. Alienations have an added importance in Hindu Law, as, ordinarily, neither the Karta nor any other coparceners singly, possesses full power of alienation over the joint family property or over his interest in the joint family property, though under the Dayabhaga School a coparcener has the right of alienation over his interest in the joint family property. Alienation of separate property by a Hindu, whether governed by the Mitakshara School or any of its sub-schools or the Dayabhaga School, has full and absolute powers over it. Such alienations are governed by the Transfer of Property Act.

Modes of Alienation

Property can be alienated in two ways:

• Voluntary alienation
• Involuntary alienation

When the owner of property transfers it willingly, it is voluntary alienation. It may be made in three ways, (i) for consideration e.g. by sale, mortgage, lease or exchange, (ii) by gift, and (iii) by will.

Involuntary alienation takes place when the court attaches the property of a person. The property of the joint family or undivided interest of a coparcener in such property may also be alienated by this mode.

When can the Joint Family Property be alienated

A person can alienate joint family property only when there is some necessity, legal necessity or for the benefit of estate.

Any necessity

The leading case on the subject of alienation for necessity is Hunooman Persuad’s case [5] . In that case, their Lordships of the Privy Council said:

The power of the manager for an infant heir to charge an estate not his own is under a Hindu law, a limited and qualified power. It can only be exercised rightly in a case of need, or for benefit of the estate. However, where, in the particular instance, the charge is one that a prudent owner would make, in order to benefit the estate, the bonafide lender is not affected by the precedent mismanagement of the estate. The actual pressure on the estate, the danger to be averted, or the benefit to be conferred upon it, in the particular instance, is the thing to be regarded…their Lordships think that the lender is bound to inquire into the necessities for the loan, and to satisfy himself as well as he can, with reference to the parties with whom he is dealing, that the manager is acting in the particular instance for the benefit of the estate. However, they think that if he does so inquire, and acts honestly, the real existence of an alleged sufficient and reasonably credited necessity is not a condition precedent to the validity of his charge, and they do not think that if he does so inquire, and acts honestly, the real existence of an alleged sufficient and reasonably-credited necessity is not a condition precedent to the validity of his charge, and they do not think that, under the circumstances he is bound to see the application and a lender can rarely have, unless he enters on the management, the means of controlling and rightly directing the actual application. Their Lordships do not think that a bonafide creditor should suffer when he has created should suffer when he has acted honestly and with due caution, but is himself deceived.

Legal necessity

The following have been held to be the family necessities:

Payment of government revenue and of debts which are payable out of the family property [6] .

Maintenance of coparceners and of the members of their families [7] .

Marriage expenses of male coparceners [8] and of the daughters of coparceners [9] .

Performance of the necessary funeral or family ceremonies [10] .

Cost of necessary litigation in recovering or preserving the estate [11] .

Costs of defending the head of the joint family, [12] or any other member [13] against a serious criminal charge.

Payment of debts incurred for family business or other necessary purpose. In the case of a manager other than father, it is not enough to show merely that the debt is pre-existing debt [14] .

The above are not the sole indices for concluding as to whether the alienation was indeed for a legal necessity, nor can the enumeration of criterion for establishing legal necessity be copious or even predictable. It must therefore depend on the facts of each case. When, therefore, property is sold in order to fulfill tax obligations incurred by a family business, such alienation can be classified as constituting legal necessity.

It has been held by Patna High Court that the mortgage of joint family property by the managing member to defray the marriage expenses of his daughter’s daughter, when the father of daughter was not indigent is not justified by legal necessity. [15]

The expenses of second marriage of member of the family have been held to not constitute legal necessity by Madras High Court [16] . Gift of small portion of property for educational purposes is not legal necessity [17] . The selling of a property by Karta for the purpose of migrating to a new place for a better living has been held to be a sale for legal necessity. [18]

Benefit of estate

Even in the absence of a legal necessity, if the alienation of the joint property is for the benefit of estate of the family, it is justified. The Privy Council has used the expression ‘benefit of estate’ in Hanooman Persaud Panday v. Mst. Babooee Munraj Koonwere, but it is not explained there. In Palaniappu Chetty v. Deivasikamony Pandara, the Lordships of Privy Council observed that the phrase ‘benefit of the estate’ as used in the decisions with regard to the circumstances justifying an alienation cannot be precisely defined but includes the preservation of the estate from extinction, its defence against hostile litigation, its protection from inundation and similar circumstances.

M.M. Kumar, J. of the Punjab and Haryana High Court has used the expression “act of good management” in place of “benefit of the estate”. It is submitted that though it is easier to prove the benefit or loss of benefit of family estate than to prove the act of good or bad management, yet the expression is sound. If the act is for good management taking into account the present and reasonably foreseeable facts and circumstances, the karta is right in his place even if he by chance, it results in the loss of the estate.

The following have been held to be for the “benefit of the estate”:

The sale of a family house in a dilapidated condition situated in a small city for raising funds for constructing another house in a big city for the family [19] . But management cannot be called prudent if the entire homestead land is sold for the purchase of another piece of land for the construction of residential house, when there is no evidence that the house sold was dilapidated or that the consideration was gainful. [20]

The sale of house which was in a dilapidated condition and which the Municipal Committee wanted to pull down [21] .

The sale of land for the construction of a pucca house in the place of a house with a roof of foos [22] .

Sale of property distantly situated and which was difficult to cultivate for purchasing property in lieu thereof nearby where cultivation could be managed by them at a lower cost [23] .

Reclamation for cultivation of a major part of banjar land with the help of the money acquired by selling a small part of it [24] . If the land were not so reclaimed and cultivated the whole of it would have been leased out by the government to some other person.

Borrowing of money for purchasing a tractor, maintaining family and improving the property [25] .

Acquisition of tenancy rights [26] .

Mortgage of a house for money required to complete improvements in the family house [27] .

Mortgage of the property for money at a less rate of interest for the purpose of repaying a debt at a higher rate [28] .

Mortgage of property to raise funds for the reconstruction and renovation of the business site e.g. hotel or shop [29] .

Limited Right of alienation

There is a fundamental difference between the rules of alienation of personal and separate property and those for the alienation of joint family property. A Hindu has unrestricted power to alienate his personal property according to his own interest or a fortiori the interest of the other coparcener in joint family property.

Persons competent to alienate the Joint family property

Only the coparceners possess the right to alienate the joint family property. The non-coparcener members of the family do not have this authority. The coparceners who have such competence may be classified as follows:

All coparceners as one body

Single coparcener in his personal capacity

The Karta, and

The father

Unauthorized alienation

Alienation of joint family property is unauthorized in following cases even when it is made for consideration:

Alienation by an undivided coparcener of the interest of the other coparceners without their consent in the state of Maharashtra, Gujarat, Tamil Nadu, Andhra Pradesh and Madhya Pradesh.

Alienation by an individual coparcener of his own interest or that of the other coparceners in the other parts of India.

Alienation by the Karta it the absence of a legal necessity or the benefit of estate; and

Alienation by the father of the interest of his sons for the repayment of his debt which is neither antecedent nor avyavaharika.

Injunction against alienation

Every coparcener has got the right to impugn the alienation made by the Karta or Father, as the case may be. But this right is not inclusive of the right to obstruct alienation. Therefore a blanket injunction restraining permanently the Karta or father, as case may be, from alienating the joint family property cannot be granted [30] .

Legality of unauthorized alienation

The unauthorized alienations are voidable at the instance of the other coparceners. In raj Kumar Raghubanchmani Prasad Narain Singh v. Ambica Prasad Singh, [31] Shah C.J. held “In any event alienation by the manager of the joint Hindu family even without legal necessity is voidable and not void.”

The nature of an unauthorized alienation is such that if the other coparceners who are prejudiced by it ratify it, the transaction gets binding force and if on contrary it is not ratified it does not bind any party and the transaction remains unenforceable.

Rights and Remedies of Alinee

Where the sale of coparcenary property or an interest therein is within the authority of the alienor, it cannot be set aside and the Alinee gets certain rights in respect of that property. If the whole of the coparcenary property is sold, the position of the vendee is governed by the general law. He is full owner of the property, entitled to the possession thereof and to the ejectment of the members of the joint family. No question of Hindu law arises here. But where a person purchases an undivided interest of a coparcener in the joint family property, some important issues of personal Hindu law crop up.

Here ordinarily the rule of Hindu law is that the vendee whether at a private sale or at an auction sale by court stands in the shoes of vendor, but it does not mean that he becomes a member of joint family property like his vendor. When translated into practice this yields him the following rights:

Right to joint possession

Right to partition

Right to mesne profits

Right to specific performance

Right to impeach unauthorized previous alienation

Right to sue for partition after vendor’s death

Purchaser takes subject to equities

Right to share on Partition

Right to joint possession

There are two views in this matter. The purchaser has no right to joint possession of the property compelling partition. He can sue all other coparceners for that purpose. [32]

If the vendee has obtained possession, the other coparceners can get him ejected by a suit. All that the purchaser is entitled to in such a suit is a declaration that he is entitled to the share of the coparcener against whom the decree has been passed.

The Bombay High Court has a different approach. It gives some discretion to the court in the matter of ejectment of a stranger purchaser. In Bhau Laxman v. Budha Manku [33] the court laid down three rules:

First, if a purchaser stranger of the undivided interest of a coparcener in a joint family property is out of possession, he should not be given joint possession with the other coparceners but should be left to his remedy of a suit for partition.

Secondly, on the other hand if the purchaser has obtained possession of the property, a coparcener who has been excluded may obtain joint possession with the purchaser.

Thirdly, the purchaser in possession need not be ejected in a suit for recovery of possession brought by an excluded coparcener. The matter should be decided on merits because he is not a trespasser. In a suitable case he may be declared to be entitled to hold (pending partition) as a tenant-in-common with other coparceners.

The issue came to be discussed by Supreme Court in M.V.S. Manikayala Rao v. M. Narasimhaswami [34] . The court held that it is well settled that a purchaser in such a case cannot claim to be put in joint possession with the other coparceners. He has only the right to ask for general partition of the joint property.

Right to partition

The purchaser of a coparcener’s interest in the joint family property can get the share of the seller partitioned off. The Privy Council held this view right in the beginning [35] .

According to the Bombay and Madras High Courts, the purchaser cannot demand the very property which has been sold to him. He can only ask for the general partition of the interest of his alienor. The reason is that because of the unity of ownership of the coparcenary property, the alienor coparcener cannot be held to be entitled to the specific property to the exclusion of the other coparceners. [36]

But on the other hand, the Allahabad and Calcutta High Courts hold that there is no need for a general partition. The purchaser can ask for partition of the interest of the alienor in the specified property purchased by him. The reason for partial partition is that a purchaser cannot institute a suit for partition in respect of property in which he has no interest at all. [37]

The non-alienating coparcener can also sue the purchaser for the partial partition of the property transferred. He need not ask for general partition. [38]

The purchaser can demand partition not only during the lifetime of the vendor but also after his death. [39]

Obviously, the purchaser has the right only to that interest of the seller-coparcener which was available to that coparcener at the date of sale. His interest or share is not subject to fluctuations by births and deaths after the alienation. This rule applies for the determination of the share ofthe alienor coparcener. But what are the properties available for partition can be ascertained only by the state of joint property at the time of the partition and not the alienation. [40]

On the general partition of the joint property the purchaser has the equity to the allotment of that particular property which he has purchased. If it can be done without prejudice to the interests of the other coparceners or if they consent to it he may be allotted that portion. Where it is inequitable, the purchaser has the right to recover from the seller property of an equivalent value out of the properties allotted to the seller for his share in substitution of the property purchased by him. [41]

Right to mesne profits

In Sidheshwar Mukherjee v. Bhubneshwar Prasad Narain Singh the Supreme Court has held that the purchaser of the share of a coparcener is entitled to the possession of the property he has purchased with effect from the date when the specific allotment was made in his favour. Therefore, he cannot ask for mesne profits for the period between sale to him and the allotment to him. The reason is that he cannot claim any interest higher than the alienor-coparcener who has no right to ask for past accounts. Again, the Alinee has not got a vested interest in the property purchased. He gets only equity to compel partition. [42] However, this is true when the family is undivided. But where the coparceners are divided in status, though the property is not partitioned and distributed among them by metes & bounds, the purchaser can get a decree for mesne profits. [43]

Right to specific performance

If the alienor-coparcener dies before the completion of the contracts of sale of his interest in the joint property, the purchaser is entitled to the specific performance thereof against the surviving coparceners. [44]

On the question whether alinee has right has a right of possession of the specific properties alienated to him before he seeks partition, there is a difference of opinion among the High Courts. The law can be summarized as under:

According to Madras high Court, both at the private sale and court sale but according to Calcutta and Allahabad High Courts at the court sale only, the alinee does not acquire any right of joint possession with the other coparceners have the right to sue forthe recovery of possession of the entire property [45] . In a suit for recovery of possession the alinee cannot counter-claim partition [46] . But non-alienating coparcener cannot straightway walk into the property and recover possession of the property without regard to the right of the purchaser. If they do so the purchaser can be granted an injunction restraining them from taking possession [47] .

The Bombay High Court takes a different view. According to it, whether alienation is by private sale or court sale:

If the purchaser is a stranger and has not obtained possession, he cannot be given possession and his remedy is s suit for partition.

If the alinee has obtained possession, the non-alienating coparceners are entitled to joint possession with him [48] . Or, it is also open to them to sue for recovery of possession of the whole of property. But the Bombay High Court, differing from the Madras High Court, takes the view that in such a case the court is bound to eject the alinee. It is open to the court to hold that the alinee is entitled to retain possession till partition [49] . This is also the view of the Rajasthan High Court [50] .

If purchaser is in possession, he need not be dispossessed on the suit of possession by the coparceners but can continue in joint possession, as tenant-in-common. He can claim partition while remaining in joint possession [51] .

When the alinee has taken possession and the alienation is valid, the other coparceners can claim proportionate mesne profits [52] .

When two strangers purchase property from different coparceners of the joint family, they cannot claim joint possession of the property [53] .

When there exist a valid contract for alienation of joint family property, the alinee can sue for specific performance of the contract [54] .

Right to impeach unauthorized previous alienation

The purchaser of a coparcenary property in a transaction of sale which is authorized can challenge the earlier alienation which was not authorized. This happens in three cases:

When he Inherits the property of a coparcener by testamentary or intestate succession

When the property alienated without an authority is later on alienated with authority to a different person, the later Alinee can challenge the earlier alienation. This right is given to him for the purpose of protecting the interest he has acquired. [55]

A purchaser in an execution sale of the coparcenary property which had already been alienated without authority can challenge the earlier alienation. [56]

Right to sue for partition after vendor’s death

Alinee has right to sue for partition after vendor’s death and the remaining coparceners are entitled to make it effective.

Purchaser takes the properties subject to equities

The alinee of coparcener’s interest will take the property subject to all charges, incumbrances and liabilities affecting the joint family property or interest of the coparcener. For instance, he will take its subject to the obligation of the family to pay debts binding on the family and this will include the liability of sons to pay father’s untainted personal debts [57] . A purchaser at court sale of the undivided interest of a coparcener holds it subject all charges such as for marriage expenses of daughters. [58]

Right to share on Partition

As a general rule, the alinee in a suit for partition to work out his right cannot claim that the specific properties that were alienated to him should be allotted to his share. But he has an equitable claim and ordinarily the court may assign that very property to his share if it could be done without injustice to other coparceners. [59] In case the court does not allot hi that property, the question arises can he have something else in substitution of the property alienated to him? This is known as the “substituted security”. The Courts have recognized that this can be done. [60] The Bombay, Madras and Andhra Pradesh High Courts have held the principle “substituted security” does not apply to court sales also. [61] The Kerela High Court has held that the principle applies to court sales also. [62] Poti, J. observed that the “doctrine of substituted security” will be applicable not only when the undivided share of a coparcener in all the items of the coparcenary property or the undivided share of a coparcener in all the items owned jointly, is alienated, but also when specific item of property is alienated by such coparcener and ultimately it is found that the alienating coparcener is allotted some other item in partition. The doctrine will apply irrespective of the question whether the right of coparcener is transferred by private sale or by court sale. With this view the present writer is in respectful agreement. [63]

Liabilities of alinee of coparcenary interest

If the property which a purchaser buys from a coparcener is charged or burdened with any liability, he takes the share of the vendor on partition subject to the liabilities thereon [64] . For example, if the share of the vendor is liable for the repayment of his father’s debts which were antecedent and not avyavaharika, there has to be made a provision for those debts before the share of the vendor is allotted to him [65] .

Position Suit by Alinee of share in dwelling house

This matter is governed by section 4 of the Partition Act, 1893 which lays down as follows:

“4. Partition suit by transferee of share in dwellin