NATIONAL LAW INSTITUTE UNIVERSITY

FAMILY LAW- II

A Project On:

POWER OF ALIENATION OF COPARCENARY PROPERTY OF THE KARTA: LEGAL NECESSITY

SUBMITTED TO: SUBMITTED BY:

AKSHEY JOSE DEBASHREE SARKAR

2013 B.A.LLB 39 ASSISTANT PROFESSOR

Contents

The Problem.............................................................................................................................................3

Aims.........................................................................................................................................................3

Introduction..............................................................................................................................................3

Manager or Karta...............................................................................................................................4

Alienation of coparcenary for legal necessity..........................................................................................4

Legal Necessity.................................................................................................................................6

Alienation by Manager for Benefit of Estate...........................................................................................6

Burden of Proof of Necessity.............................................................................................................7

Money raised on Mortgage applied only in part for the purposes of Legal Necessity........................8

Alienation for the purposes of Family Business......................................................................................9

Satish Kumar v. Sat Prakash..................................................................................................................10

Bibliography..........................................................................................................................................12

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The Problem

No coparcener has the right to alienate the coparcenary property out of his own sweet will but

the karta has been given the power to alienate the coparcenary property in certain instances.

Thus, this is exception to the general powers of a coparcener.

Aims

1- To research into the situations in which a karta can alienate the coparcenary property.

2- To analyse the extent to which the karta can exercise such power for legal necessity.

Introduction

Only a coparcener is competent to alienate a coparcenary property. Further only the following

coparceners can alienate coparcenary property-

1- The whole body of coparceners, where they are adults.

2- The manager or karta of the joint family

3- The father

4- A sole surviving coparcener

The right of alienation is subject to restrictions in the last three cases. No other coparcener is

entitled to alienate coparcenary property so as to bind the other coparceners unless he is

authorised by them to do so.

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Manager or Karta

Property belonging to a joint family is ordinarily managed by the father or other senior

member of the family. The manager of the joint family is called karta.

In the case Pandurang v. Pandurang 1947 Nag 299, the Court held that a mother, in absence

of adult male member, was competent to act as manager of the family. Her acts as the karta of

the family for legal necessity or for benefit of estate would be binding on the joint family.

The manager or karta has the following powers-

1- To control the income and expenditure of the joint family property.

2- To account on partition of coparcenary property.

3- To contract debts for family purpose and family business.

4- To alienate coparcenary property for legal necessity or benefit of estate.

Alienation of coparcenary for legal necessity

The karta of the Hindu joint family has the power to alienate joint family property so as to

bind the interest of both adult and minor coparceners in the property, provided the alienation

is made for legal necessity. Where a joint family consists of adults and minors, the mere fact

that all the adult male members including the manager have consented is not proof of legal

necessity.

When an alienation is made by the manager without legal necessity but with consent of all

other coparceners, the alienation is valid in its entirety. An alienation by a manager of joint

family without legal necessity is not void but voidable at the instance of the other

coparceners.

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Hunooman Persaud v. Mussumat Babooe1

The Privy Council in this case held that-

“The power of the manager for the infant heir to charge an estate not his own is under the

Hindu law, a limited and qualified power. It can only be exercised rightly in case of need, or

for the benefit of the estate. However where in the particular instance, the charge is one that

a prudent will make, in order to benefit the estate, the bona fide 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.”

The Lordships further held that the lender is bound to inquire into the necessity for the loan

and to satisfy himself as well as he can, with reference to parties with whom he is dealing,

that the manager is acting in the particular instance for the benefit of estate. However, 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 then under the

circumstances he is not bound to see the application of money.

The issue in the present case was regarding the extent of the power of a mother as a manager

of the state of her minor son, to alienate the estate. The case related to a mortgage created by

the mother. The principles laid down in this case were-

1- The manager of a joint family acting on behalf of minor members of the family.

2- A Hindu widow and other limited heirs of the property inherited by them from males.

3- Managers of religious endowments.

4- Mangers of estates of lunatics.

1 (1856) 6 MIA 393

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Legal Necessity

The following come within the meaning of legal necessity-

1- Payment of government revenue and of debts which are payable out of the family

property.

2- Maintenance of coparceners and of members of their families.

3- Marriage expenses of male coparceners and daughters of coparceners.

4- Performance of the necessary funeral or family ceremonies.

5- Costs of necessary litigation in recovering or preserving the estate.

6- Costs for defending the head of the family or any other member against serious

criminal charge.

7- Payment of debts incurred for family business or other necessary purpose.

Gift of a small portion of property for educational purposes is not legal necessity. The selling

by the karta or manager for the purpose of migrating to a new place for a better living has

been held to be a sale for legal necessity.2

Alienation by Manager for Benefit of Estate

There was a conflict of opinion as to the meaning of the words ‘for the benefit of the state’

which occur in the judgement of the judicial committee in Hunooman Prasad’s case.

One view was that a transaction cannot be said to be for the benefit of estate, unless it is of

defensive character calculated to protect the estate from some threatened danger or

destruction.

Another view was that for a transaction to be for the benefit of estate, it is sufficient, if it is

such as a prudent owner would have carried out with the knowledge available to him at the

time of the transaction.

2 Vanimisatti v. Jayavarapu AIR 1995 AP 105

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The first authoritative exposition of the expression ‘for the benefit of estate’ is to be found in

Palanippa v. Deivaskamon.3 The question in this case was as to the power of the mahant to

alienate debutter land. The judicial committee observed:

“No indication is to be found in any of them as to what is, in this connection, the precise

nature of the things to be included under the description ‘benefit of estate’. It is impossible to

give a precise definition of it applicable to all cases and they do not attempt to do so. The

preservation of the estate though, from extinction, defence against hostile litigation, would

obviously be benefits.”

The manager of the joint family is not entitled to sell the joint family land solely for the

purpose of so investing the price of it as to bring in an income larger than that derived from

the probably safer and certainly more stable property, ie- the land itself. A mortgage of a

family property for the purposes of solely purchasing another property is not for benefit of

estate. A sale of a joint family property which is inconveniently situated and is unproductive,

the purchase money being invested in another property which is a sound investment is for

benefit of estate. A mortgage or a sale solely for the purposes of pr-empting another property

is not a sale for the benefit of estate.

A gift by the manager of a joint family of a small portion of zamindari land purchased by him

to a stranger, with the object of defeating a claim for pre-emption was held to be transaction

for the benefit of the family and therefore binding on the family.4

Burden of Proof of Necessity

Where the manager of a joint Hindu family sells or mortgages joint family property, the

purchaser or mortgagee is bound to inquire into the necessity for the sale or mortgage, and

the burden lies on the purchaser or mortgagee to prove either that there was a legal necessity

in fact, or that he made proper and bonafide enquiry as to the existence of such necessity or

did all that was necessary to satisfy himself as to the existence of such a necessity.

The existence of necessary purpose is not the same as a legal necessity as there may be large

resources, a large income making loans unnecessary. The lender must show necessity for the 3 (1917) 44 IA 1474 Mohib Ali khanv. Baldeo Prasad (1939) All 305

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loan. If the purchaser or mortgagee proves that there was a legal necessity, in fact, the

alienation will be upheld, even though the necessity was brought about by the previous

mismanagement of the manager, unless it is shown that the previous mismanagement was

contributed to by the purchaser or mortgagee himself.

Money raised on Mortgage applied only in part for the purposes of Legal Necessity

If the sale itself is not justified by legal necessity, and the purchaser pays a fair price for the

property sold, and acts in good faith and after due inquiry as to the necessity for the sale, the

mere fact that the part of the price is not proved to have been applied to purposes of necessity

would not invalidate the sale, the purchaser not bound to see the application of the money.

Sri Nath v. Jagannath5

There was a sale for Rs. 6,000 which was a fair price but the amount proved to have been

applied for the purposes of legal necessity was only Rs. 3,281 and there was no evidence of

any enquiry having been made by purchaser as to the necessity for the loan. It was held that

the sale itself was not one which was justified by legal necessity for the loan, it was held that

the sale itself should be set aside conditionally on payment by the plaintiffs of Rs. 3281 to the

purchaser.

If the sale is completed at a time when the property was deprived of all its value as absolvent

of the financial difficulties the sale should be set aside but if the purchase money has been

applied by the manager in the payment of the family debt, the purchaser should have full

benefit of the mortgage.

Alienation for the purposes of Family Business

5 (1931) 52 ALL 391

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The power of a manager to carry on family business necessarily implies a power to mortgage

or sell the family property for a legitimate and proper purpose of business. An alienation so

made is bonding upon family property including interests of minor coparceners therein.

Further, the manager has the authority to raise money not only to discharge debts arising out

of family business but also for the money needed to carry on the trade. It is a matter of

decision whether the money necessary should be raised by mortgage or by a sale, and

whether it was better to raise money to continue a business, which of late had not been

profitable, or to close it down it would be unreasonable to expect a lender or purchaser to

investigate questions of that kind. If the lender or purchaser acted honestly and with due

caution and made reasonable inquiries which led him to believe that a sufficient and real

necessity for the raising of the money for the purposes of the family business did exist and he

is not bound to see the application of money.

Where the alienation was made by the manager who was blind and deaf and practically all the

money which had been disallowed by the High Court had been borrowed by the fourth and

fifth defendants who were the eldest members of the family and the manager’s right hand

men, their conduct not giving evidence and remaining as defendants, while causing their sons

to file questioning the alienation was held by their Lordships of the Privy Council to be

strong corroborative evidence of legal necessity.

A mortgage by the manager for enlarging a family business by the purchase of fresh stocks is

binding on the family property including the interest of the minor coparceners therein,

provided the transaction is one which a prudent owner would enter into having regard to all

the circumstances of the case.

Where the family is a trading family e.g. - Kayasthas, who have been known to carry on

business throughout generations as a means of livelihood, in such cases the karta has the right

to alienate coparcenary property for the purposes of such a business without existence of any

legal necessity or benefit of estate as here the business is the only means of livelihood.

Satish Kumar v. Sat Prakash

C.M. No. 22051-CII of 2009 and Civil Revision No. 3377 of 2009 (O and M)

High Court of Punjab & Haryana

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Decided on: 18/09/2009

Issue before the Court:

“Whether an injunction could be granted against Karta of joint family property restraining

him from alienating the same without legal necessity?"

Contentions:

The plaintiff being the son claiming himself to be the coparcener has instituted a suit

restraining the defendant (father) from alienating, mortgaging or disposing of the suit

property, on the allegations that the same was ancestral coparcenary and joint Hindu family

property; the plaintiff being the coparcener had birth right in it, as such, the defendant could

not alienate the same without legal necessity. During the pendency of the suit, the plaintiff

sought temporary injunction against alienation.

Both the parties have placed reliance on the judgment delivered in case Sunil Kumar v. Ram

Parkash6, in order to press their rival contentions. The intent and purport of the judgment was

to avoid interference of the coparceners in the bonafide acts of the karta in dealing,

transferring, mortgaging or otherwise disposing of the property for legal necessity, benefit

and welfare of the estate. Thus, in order to seek injunction the plaintiff coparcener was to

make out a case that the property was being thrown away by the defendant-Karta.

Judgment:

Injunction not granted on the grounds of no case of defendant-karta throwing away property

made out.

Conclusion

6 AIR 1988 SC 576

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Thus it can be seen that the karta of a family or a father can alienate the coparcenary property

only if there exists a legal necessity or he can do so for the benefit of estate. He may also

alienate it for the furtherance of the family trade and such an alienation would be binding on

the minor coparceners though, there is an onus on the karta to prove the existence of the

above mentioned grounds. But in no circumstance can a karta alienate the coparcenary

property for his own benefit unless he has consent of all the coparceners or he is the sole

surviving coparcener.

Bibliography

Book Sources

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Hindu Law, Mulla

Family Law Material

Internet Sources

www.manupatra.com

www.indiakanoon.org

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