Huf Case Study

News

ICAI Study guidelines for elective papers of CA Final


Study Guidelines Electives Paper 6A Risk Management The pattern of examination for this paper is open book and case study based The modified version of the Study Material for Final Paper 6A Risk Management would be provided to students as open book This version of the Study Material would not contai

CBI registers case for causing alleged loss of Rs 4886 crore to PNB


CBI REGISTERS A CASE AGAINST MANAGING DIRECTOR OF A MUMBAI BASED PRIVATE COMPANIES AND OTHERS INCLUDING THEN BANK OFFICIALS FOR CAUSING AN ALLEGED LOSS OF RS 4886 72 CRORE APPROX TO PNB CONDUCTS SEARCHES AT 26 LOCATIONS The Central Bureau of Investigation has registered a case on 15 02 2018 U s 120B

CBEC issues notification on GST


First Amendment 2018 to CGST Rules Reduction of late fee in case of delayed filing of FORM GSTR 1 Reduction of late fee in case of delayed filing of FORM GSTR 5 Reduction of late fee in case of delayed filing of FORM GSTR 5A Reduction of late fee in case of delayed filing of FORM GSTR 6 Extension of

Defaulter of Income Tax TDS arrested


Tis Hazari Court has ordered judicial custody of the Director of a Delhi based Real Estate and IT Solution Company for non compliance in Income Tax TDS Default case It was found during investigations that the company had deducted TDS but had not deposited in the Government account despite there bein

Sharp increase in prosecutions of tax evaders by Income Tax Department


The Income Tax Department has accorded the highest priority to tackle the menace of black money With this objective in mind the Department has initiated criminal prosecution proceedings in a large number of cases of tax offenders and evaders Prosecutions have been initiated for various offences incl

More News

Experts Opinions

Itr-5 ( non account case )


Sir can we file ITR 5 on the option of NON ACCOUNT CASE Whether shall be treated as defective return

Itr-3 non account case


I had filed ITR 3 on the option of Non Account Case by showing therein Gross Receipt of brokerage and commission gross profit expenses and net profit but the income tax department has treated the ITR 3 as defective return with the memo of disallowances defects identified in the income tax return Ple

Dt study plan


I had already studied VG 3 main modules but keeping in mind time constraint couldnt able to do remain two Can i refer summary module for those or all topics and practice sums in main module Will i able to score good marks with this kinda plan

Refund in case of export without payment of igst


I have exported goods worth Rs 1 00 000 USD 1540 In shipping Bill claimed duty drawback Rs 2000 2 I purchased that goods worth Rs 50000 with pay IGST Rs 9000 and same is exported My question is How much amount of refund will i get 9000 or 7000 or NIL refer sec 54 3 CGST

Further study plan


I am pursuing CS professional in my previous attempt I failed only because of aggregate got 45 in Advanced Company Law 45 in Secretarial audit 40 in corporate restructuring In my Dec 2017 attempt i got 45 in Company law 41 in Secretarial audit 32 in corporate restructuring And this time i also attem

 By Ananya Khanna, Symbiosis Law School Pune

EDITOR’S NOTE:-

The rights of coparceners in the interests of Hindu Undivided Families properties have been hotly contested in the recent times. This case discusses the altered position of the Hindu Succession Act 1956 with regards to coparcenary rights in the ancestral properties or Hindu Undivided Family properties. The Court held that after the death of the coparcener, his or her interests in the ancestral property devolved to his or her sons and daughters( after the amendment of 2005) by means of testamentary succession and not by survivorship as per Section 8 of the Hindu Succession Act. Until the Amendment of 2005, daughters and other female relatives were considered as heirs and were entitled to their shares by means of notional partition only upon the death of the male relative. However, the amendment has given them the status of coparceners, who are equally entitled to their shares in the ancestral property by succession.

FACTS OF THE CASE

In this case, the plaintiffs and the defendants approached the Court seeking for a declaration that they both were co-owners of the suit properties for ascertaining of the share claimed by them, for partitioning of suit properties as per such shares, and for the possession of such partitioned share. The parties claimed through one Rajaram Balkrishna Raut (Rajaram), who died intestate on the 23rd of November, 1991, leaving behind 8 children ( 5 sons and 3 daughters), and several grandchildren  various ancestral properties. The children and the grand children who are the children of the pre-deceased or the deceased children of Rajaram were the parties to the suit. The great grand-children of Rajaram were not sought to be made parties, though the suit properties were claimed to be ancestral properties of Rajaram. In the present case, the son and the grandson of plaintiff No. 4 had sought to be made party-defendants to the suit. They claimed that they are coparceners in the coparcenary property of the joint family, and claimed to be entitled to their share therein separately and individually from plaintiff No. 4 who, according to them, was unable to manage his affairs and claim his share. According to the son and the grandson of Plaintiff no. 4, the parties to the suit had taken advantage of the old age of their father/grand-father who resided, alone, which may have adversely affected his share and consequently their shares. They had claimed their right by virtue of their birth in the suit properties which were claimed to be coparcenary properties.

The plaintiffs as well as the defendants contended that during the lifetime of plaintiff No. 4, his son and grandson would not have any share in the suit properties and, therefore, have no locus to be joined as party-defendants. The parties to the suit had also disposed of two of the properties in the suit. Hence the defendants applied for deletion of two immovable properties. They claimed that the suit had become in fructuous with regard to those properties and there is no relationship between the parties with regard to those properties.

RATIO DECIDENDI OF THE CASE

The Ratio decidendi of the case was found to be, “Entire property of deceased which is ancestral and which continues joint would not succeed to his sons as heirs of deceased alone but other legal heirs would have a share in HUF properties, being ancestral properties of deceased left after interest of deceased.”

ANALYSIS

The first question before the Court was whether the applicants, who are the son and grandson of Plaintiff No. 4 must be made a party to the suit as having an independent right and interest in the suit properties being coparceners of the joint Hindu family. Whether a son or a grandson of a coparcener claiming an interest in the joint family properties/coparcenary properties would be entitled to claim such interest by virtue of his birth? If that is so decided, the properties which are sold pending the suit would have to be accounted for to them. If not, the properties sold by the parties with which the parties to the suit, at present, have no dispute, may stand deleted.

Coparcenary property

Let us first understand the meaning of the word ‘coparcenary property’, and the concept of succession. The joint family property and the joint family ancestral property are collectively, or individually called as coparcenary property. Coparcenary property is collectively owned by all the coparceners, and thus, to own an interest in the ancestral or joint family property, a Hindu male or female (females were given the status of coparceners after the Hindu Succession Amendment Act, 2005) must be a coparcener. There is joint possession, and since the ownership is collective, a Hindu male or female has limited powers of disposal over it. The property inherited by a Hindu from his father, father’s father or father’s father’s father is the ancestral property (unobstructed heritage as regards his own male issue).[i] His male issues acquire an interest in it from the moment of their birth. They become coparceners with their paternal ancestor upon their birth. The joint and undivided family is a normal condition of Hindu society. An Undivided Hindu family is ordinarily joint in estate, food and worship.

A Hindu coparcenary is a narrower body than the joint family. It includes only those persons who acquire by birth an interest in the joint or coparcenary property. The persons who acquire an interest by birth in a joint family property or coparcenary property are sons, grandsons and great grandsons of the holder of the joint property, and now, after the 2005 Amendment Act , even daughters, daughters’ daughters, daughters’ sons’ daughters, daughters’ daughters’ and daughters sons’ daughters. They become entitled to joint property/coparcenary property upon their birth. The property inherited by a person from his father is ancestral in his hands. He is not the owner of the property, he is entitled merely to hold and manage the property as the head of the family for and on behalf of the family. The ownership of the property is in the joint family consisting of himself and his sons. They are all co-owners or coparceners. (Hence the expression co-owners and coparceners are synonymous). As can be seen, the essence of a coparcenary is unity of ownership[ii] .

No coparcener or member of a joint Hindu family has a definite share in the property. His interest is a fluctuating interest. It is enlarged by the deaths in the family; it is diminished by the births in the family. Hence his interest is called “undivided coparcenary interest”. He becomes entitled to a definite share only on partition, and the members of a joint family who are within 3 degrees from the last holder of the property have a right to demand partition. The interest of the deceased members passes on his death to the surviving coparceners. Each and every coparcener has an equal interest in the coparcenary property.

Section 8 of the Hindu Succession Act, 1956

Now, according to Section 8 of the Hindu Succession Act, 1956, after the death of a male Hindu, who dies intestate (without leaving a Will behind him), his property shall devolve to his immediate heirs (relatives specified in class I and class II of the Schedule)[iii], and not to all the coparceners in the family tree. The interest that the male had in the coparcenary property, upon his death, is divided equally among all his heirs, that is, his sons, daughters, widow and mother. This property is devolved by the rules of succession, and not survivorship. The Schedule annexed to Section 8 showing Class I and Class II heirs show the son, daughter, widow and mother of a Hindu male dying intestate as his first heirs. Along with them are included the sons and daughters of predeceased sons and daughter; a grandson is not included anywhere in Class I or Class II of the schedule to Section 8 of the HSA. The grandson never succeeds to the property of the Hindu male dying intestate. That includes also the interest in the joint family property which that Hindu male had and which would constitute his property or his estate. Under Section 6 of the HSA 1956, there is a notional partition which is deemed to have been effected upon the death of a coparcener. The share so separated devolves upon the heirs of the deceased instead of vesting in the other coparceners by survivorship.

SECTION 6 OF THE HINDU SUCCESSION ACT, 1956 AND THE HINDU SUCCESSION AMENDMENT ACT, 2005

Section 6 of the Hindu Succession Act, 1956 deals with the devolution of interest in the coparcenary property. It states that when a male Hindu dies after 1956, having at the time of his death an interest in a Mitakshara coparcenary property, his interest in the property shall devolve by survivorship upon the surviving members of the coparcenary. Also, if the deceased had left him surviving a female relative specified in class I of the Schedule or a male relative specified in that class who claims through such female relative, the interest of the deceased in the Mitakshara coparcenary property shall devolve by testamentary or intestate succession, as the case may be, under this Section, and not by survivorship. After 1956, daughters and widows were considered to be heirs, and not coparceners, and they could get their father’s/husband’s share of notional partition on his death. Daughters could get their share only upon their father’s death, and not during his lifetime. However, after the amendment of 2005 in Section 6 of the HSA, daughters started getting equal treatment to the sons. They started getting recognised as coparceners, and would have the same interest in the coparcenary property as that of the son.

The relevant part of Section 6 ,as amended in 2005, runs thus:

Devolution of interest in coparcenary property.- (1) On and from the commencement of the Hindu Succession (Amendment) Act, 2005, in a joint Hindu family governed by the Mitakshara law, the daughter of a coparcener shall,-

(a) by birth become a coparcener in her own right in the same manner as the son;

(b) have the same rights in the coparcenary property as she would have had if she had been a son;

(c) be subject to the same liabilities in respect of the said coparcenary property as that of a son,

and any reference to a Hindu Mitakshara coparcener shall be deemed to include a reference to a daughter of a coparcener:

Provided that nothing contained in this sub-section shall affect or invalidate any disposition or alienation including any partition or testamentary disposition of property which had taken place before the 20th day of December, 2004.

(2) Any property to which a female Hindu becomes entitled by virtue of sub-section (1) shall be held by her with the incidents of coparcenary ownership and shall be regarded, notwithstanding anything contained in this Act, or any other law for the time being in force, as property capable of being disposed of by her by testamentary disposition.

(3) Where a Hindu dies after the commencement of the Hindu Succession (Amendment) Act, 2005, his interest in the property of a Joint Hindu family governed by the Mitakshara law, shall devolve by testamentary or intestate succession, as the case may be, under this Act and not by survivorship, and the coparcenary property shall be deemed to have been divided as if a partition had taken place and,-

(a) the daughter is allotted the same share as is allotted to a son;

(b) the share of the pre-deceased son or a pre-deceased daughter, as they would have got had they been alive at the time of partition, shall be allotted to the surviving child of such pre-deceased son or of such pre-deceased daughter; and

(c) the share of the pre-deceased child of a pre-deceased son or of a pre-deceased daughter, as such child would have got had he or she been alive at the time of the partition, shall be allotted to the child of such pre-deceased child of the pre-deceased son or a predeceased daughter, as the case may be.

Explanation.- For the purposes of this sub-section, the interest of a Hindu Mitakshara coparcener shall be deemed to be the share in the property that would have been allotted to him if a partition of the property had taken place immediately before his death, irrespective of whether he was entitled to claim partition or not.”[iv]

There would be a notional partition under Section 6 of HSA, 1956 if a female relative (heir) or a person claiming through female relative (heir) was left by the deceased male Hindu coparcener. There shall be a deemed partition under the statutory provisions contained in Section 6(3) of the Act as amended in 2005. That would be a partition of the interest in Mitakshara property of a Hindu dying intestate.

Consequently, after 2005, upon the death of a coparcener, leaving any child, his son and his daughter would share equally in his interest in coparcenary property. They would share as if there was a partition. For all the Hindus dying after the commencement of the Amendment Act, leaving any child, the interest in the joint family property which he had would not survive at all. It would only succeed – either by testamentary or intestate succession. After 2005 for all Hindus leaving any child there could be no case of survivorship at all; after 1956 but before 2005 there would be survivorship of interest in coparcenary property but only in a family having no female relatives (heirs). Even during that period in a family having female relatives (heirs) there would be no survivorship but only succession of the interest of a Hindu male in Mitakshara coparcenary property.

In this case, Rajaram expired on 23.11.1991 leaving behind 8 heirs being his 5 sons and 3 daughters. Some of them have expired leaving behind their widow and sons and daughters. These are the parties to the suit. Rajaram died intestate. Rajaram’s succession opened on 23.11.1991. His interest in his ancestral property which was Mitakshara coparcenary property, therefore, devolved upon his sons and daughters by intestate succession under Section 8 of the Hindu Succession Act and not by survivorship. All his sons and daughters would share equally per capita as tenants in common. Upon their death their children would take their share. Under that succession so long as the sons and daughters of Rajaram are alive, the grandsons or the great-grandsons of Rajaram would not succeed at all to any interest in the coparcenary property that Rajaram had. In the case of Commissioner of Wealth-tax, Kanpur v. Chander Sen[v], the Supreme Court held that the heirs in Class I do not include the grandson being the son of a son living. Hence it is held that when the son as a Class I heir inherits the property, he does so in his individual capacity. The son takes individually in his individual capacity and not as Karta of his own family.

It is seen in this case that though the suit is indeed in respect of the ancestral properties left by Rajaram, the shares claimed by the plaintiffs are ascertained as if on succession. They are not ascertained taking into account the survivorship of any coparcener of the Hindu Undivided Family (hereinafter referred to as “HUF”) of Rajaram but as co-owners of the property belonging to Rajaram. The addition of the applicants to the array of parties in the suit would necessitate revision of the shares of each coparcener which, upon partition, he/she would be entitled to. Consequently the share of the parties to the suit would also similarly vary. The applicants would be required to file their own separate suit for partition of the coparcenary interest which they have in the HUF of Rajaram which would continue after his death, until partition is demanded by any coparcener. Though, therefore, the applicants may be entitled to partition, it would not be proper to allow them to join in this suit. They may sue separately upon showing all the coparceners of the HUF of Rajaram.

After the death of  Rajaram when the family continued joint but with diminution of the share of Rajaram and upon the death of Sumant, another son of Rajaram on 22.01.2008, the interest of Sumant in the coparcenary also devolved by succession, he having left a widow and a daughter as his female relatives (heirs). The daughter of Rajaram, Sunanda having died in 2001, the share in the coparcenary would not augment or diminish, she not having been a coparcener until her death; she is only an heir of the deceased Rajaram who would have succeeded to his Rajaram’ interest in his ancestral properties.

The applicants, therefore, do have a share in the HUF properties, being the ancestral properties of Rajaram left after the interest of Rajaram and Sumant and another such deceased coparcener leaving behind female heirs or male heirs claiming though their female heirs is deducted there from. However, since the suit is not fully settled, it continues. The applicants are, therefore, seen to be the coparceners of the suit properties which are admittedly ancestral properties. The applicants would certainly be entitled to demand partition of the properties. They would have to consider and account for the notional partition as had taken place upon the death of Rajaram leaving three female heirs and ascertained their share in the suit properties. The applicants would also have to consider and account for the notional partitions which may have taken place in their HUF upon the death of other coparceners leaving behind other female heirs.

CONCLUSION

The Court held that applicants did have a share in HUF properties, being ancestral properties of deceased. Since coparceners jointly own the coparcenary property, these properties could not have been alienated without the consent of all coparceners. In coparcenary property, after the death of a coparcener, his interest of the property would be equally divided among his heirs, by notional partition, and other coparceners would continue to enjoy their interest in the joint family property. Before the 2005 Act[vi], daughters were only regarded as heirs to their father, and could only get the father’s share of notional partition after his death, and not in his lifetime. Though the 1956 Act did try to remove the disparity that existed between male and female child before 1956, it did not fully succeed. Complete equality was brought about by the 2005 Amendment Act, where the daughters were given equal status to that of the sons, by being made more than just heirs. Daughters now enjoy the same rights as that of the son, and are also equally subjected to liabilities in the coparcenary property. This Act of 2005 has opened up new horizons for women getting their fair share in the society. It is in tune with true spirit of our Constitution, and treats men and women alike.

Edited By: Raghavi Viswanath

[i] Mulla’s Hindu Law Volume-I, Twentieth Edition, Chapter XII, Page 357.

[ii], Mulla’s Hindu Law Volume-I, Twentieth Edition Chapter XII, Page 366.

[iii] The Hindu Succession Act, 1956.

[iv] Hindu Succession Act,1956.

[v] AIR 1986 SC 1753.

[vi] The Hindu Succession Amendment Act, 2005.

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *