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Rights And Legal Authority Of Karta Of HUF To Deal With HUF Property

It is common knowledge that the Karta of an HUF often executes agreement/sale deed of an immovable property belonging to the HUF on the firm conviction that he is legally entitled to execute the said deed on account of legal necessity. The said deeds are often assailed/challenged as unenforceable/void by the other coparceners on the ground that the said immovable property belonged to the joint Hindu family and a transfer deed cannot be executed by the Karta alone without the signatures of all the coparceners.

It is indeed worrying that the Civil Courts are flooded with such cases praying for annulment of the sale deeds executed earlier by the Karta of the HUF or for restraining the Karta from executing the transfer deed. In fact, this proposition is being used as a device/ruse to extract money from the purchaser in the name of forged litigation by the other coparceners at the instance of the seller/Karta himself.

It is not only a convention but a settled proposition that as the head of the family, the Karta's power of management of the family is almost absolute. He may manage the family affairs, family property and family business in such manner as he may deem fit and no one can question his management. However, he cannot deny maintenance or use and occupation of the HUF property to any coparcener.

The issue entails two legal questions. One is the rights & authority of the Karta to transfer the immovable property belonging to the HUF. The second is the existence & scope of a legal necessity necessitating the said transfer.

A Karta has power to alienate for value/consideration the joint family property in three special cases- legal necessity, benefit of estate or for the performance of indispensable duties. The presence of these circumstances generally depend on the particular facts and circumstances and there are no definite rules as to what falls under these categories.

For these purposes, a Karta need not take consent of other coparceners of the family, since he has absolute right to manage the HUF property. The only reasonable limitation that can be imposed on the Karta is that he must act with prudence, which implies caution as well as foresight and excludes hasty, reckless and arbitrary conduct.

If any of the three special cases referred to above exist, then in such circumstances, a coparcener will not have a right to obstruct the alienation of HUF property since it will tantamount to interference with the act of management of the Karta of the joint family affairs. Therefore, a coparcener will not normally be able to move the court to obtain relief by grant of an injunction restraining the Karta from alienating the coparcenary property.

However, it does not imply that coparceners cannot do anything in case the Karta is unnecessarily or arbitrarily alienating property. In such circumstances, the coparceners have a right to challenge the alienation in a court of law and then the burden of proof will lie on the person alienating others to prove that there was in fact presence of legal necessity, benefit of estate or indispensable duties.

Further, if the Karta wants to alienate the HUF property for purposes other than the three mentioned above, then the consent of all the coparceners is required. If the Karta goes ahead with the alienation without taking consent of all the other coparceners, the alienation becomes voidable to the extent of the undivided share of the non-consenting coparcener.

The Apex Court in a catena of cases has settled that the rights of the Karta to execute an agreement to sell or sale deed of a joint Hindu family property are beyond cavil. The Apex Court in Sri Narayan Bal and Others v. Sridhar Sutar and Others (1996) 8 SCC 54 held that a joint Hindu family is legally capable of acting through its Karta or adult member of the family in management of the joint Hindu family property.

The Apex Court has consistently held in a number of cases that a coparcener has a right to claim a share in the joint Hindu family estate but he cannot seek injunction against the Karta restraining him from dealing with or entering into a transaction from sale of the joint Hindu family property. However, post alienation he has a right to challenge the alienation if the same was not for legal necessity or for betterment of the estate.

The Court has held, in clear terms, that where a Karta has alienated a joint Hindu family property for value either for legal necessity or benefit of the estate it would bind the interest of all undivided members of the family even when they are minors or widows.

It would be apposite to refer to Kehar Singh (D) through Legal Representatives and Others v. Nachittar Kaur and Others (2018) 14 SCC 445 wherein the Apex Court has referred to Mulla on Hindu Law and the concept of legal necessity and observed thus:

20. Mulla in his classic work Hindu Law while dealing with the right of a father to alienate any ancestral property said in Article 254, which reads as under:
Article 254

254. Alienation by father:
A Hindu father as such has special powers of alienating coparcenary property, which no other coparcener has. In the exercise of these powers he may:
  1. make a gift of ancestral movable property to the extent mentioned in Article 223, and even of ancestral immovable property to the extent mentioned in Article 224;
  2. sell or mortgage ancestral property, whether movable or immovable, including the interest of his sons, grandsons and great-grandsons therein, for the payment of his own debt, provided the debt was an antecedent debt, and was not incurred for immoral or illegal purposes (Article 294).

21. What is legal necessity was also succinctly said by Mulla in Article 241, which reads as under:
Article 241
241. What is legal necessity:
The following have been held to be family necessities within the meaning of Article 240:
  1. payment of government revenue and of debts which are payable out of the family property;
  2. maintenance of coparceners and of the members of their families;
  3. marriage expenses of male coparceners, and of the 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 of defending the head of the joint family or any other member against a serious criminal charge;
  7. payment of debts incurred for family business or other necessary purpose. In the case of a manager other than a father, it is not enough to show merely that the debt is a pre-existing debt;
The above are not the only indices for concluding as to whether the alienation was indeed for 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 fulfil tax obligations incurred by a family business, such alienation can be classified as constituting legal necessity.

(See Hindu Law by Mulla 22nd Edition)

26. Once the factum of existence of legal necessity stood proved, then, in our view, no co-coparcener (son) has a right to challenge the sale made by the Karta of his family. The plaintiff being a son was one of the co-coparceners along with his father Pritam Singh. He had no right to challenge such sale in the light of findings of legal necessity being recorded against him. It was more so when the plaintiff failed to prove by any evidence that there was no legal necessity for sale of the suit land or that the evidence adduced by the defendants to prove the factum of existence of legal necessity was either insufficient or irrelevant or no evidence at all.

The Apex Court in the case Subhodkumar vs. Bhagwant Namdeorao Mehetre (2007) 10 SCC 571 held thus:

A Karta has power to alienate for value the joint family property either for necessity or for benefit of the estate. He can alienate with the consent of all the coparceners of the family. When he alienates for legal necessity he alienates an interest which is larger than his undivided interest. When the Karta, however, conveys by way of imprudent transaction, the alienation is voidable to the extent of the undivided share of the non-consenting coparcener ....

It is pertinent that the Apex Court in case of Sunil Kumar and another v. Ram Parkash and others AIR 1988 SC 576 it has been held that the right to obstruct alienation is different from the right to challenge the alienation. The coparcener has a right to challenge the alienation. However, he has no right to interfere in the act of management of the joint family affairs. In this connection, the Court has held thus:

21. In a Hindu family, the Karta or manager occupies a unique position. It is not as if anybody could become manager of a joint Hindu family. As a general rule, the father of a family, if alive, and in his absence the senior member of the family, is alone entitled to manage the joint family property. The manager occupies a position superior to other members. He has greater rights and duties. He must look after the family interest. He is entitled to possession of the entire joint estate. He is also entitled to manage the family properties. In other words, the actual possession and management of the joint family property must vest in him. He may consult the members of the family and if necessary take their consent to his action but he is not answerable to every one of them.

22. The legal position of Karta or manager has been succinctly summarised in the MAYNE'S Hindu Law (12th Ed. Para 318) thus:
318. Manager's Legal position The position of a Karta or manager is sui generis: the relation between him and the other members of the family is not that of principal and agent, or of partners, it is more like that of a trustee and cestui que trust. But the fiduciary relationship does not involve all the duties which are imposed upon trustees.

23. The managing member or Karta has not only the power to manage but also power to alienate joint family property. The alienation may be either for family necessity or for the benefit of the estate. Such alienation would bind the interests of all the undivided members of the family whether they are adults or minors. The oft quoted decision in this aspect, is that of the Privy Council in Hanuman Parshad v. M.T. Babooee (1956) 6 Moo Ind. App. 393.

There it was observed at p. 423:
  1. The power of the manager for an 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. This case was that of a mother, managing as guardian for an infant heir
A father who happens to be the manager of an undivided Hindu family certainly has greater powers to which I will refer a little later. Any other manager however, is not having anything less than those stated in the said case. Therefore, it has been repeatedly held that the principles laid down in that case apply equally to a father or other coparcener who manages the joint family estate.

Remedies against alienations:
24. Although the power of disposition of joint family property has been conceded to the manager of joint Hindu family for the reasons aforesaid, the law raises no presumption as to the validity of his transactions. His acts could be questioned in the Court of law. The other members of the family have a right to have the transaction declared void, if not justified.

When an alienation is challenged as being unjustified or illegal it would be for the alienee to prove that there was legal necessity in fact or that he made proper and bona fide enquiry as to the existence of such necessity. It would be for the alienee to prove that he did all that was reasonable to satisfy himself as to the existence of such necessity.

If the alienation is found to be unjustified, then it would be declared void. Such alienations would be void except to the extent of manager's share in Madras, Bombay and Central Provinces. The purchaser could get only the manager's share. But in other provinces, the purchaser would not get even that much. The entire alienation would be void. [Mayne's Hindu Law 11th ed. para 396].

The Apex Court recently in the case of Beereddy Dasaratharami Reddy Vs. V. Manjunath and Anr. (Civil Appeal No. 7037 of 2021 decided on December 13, 2021) has dealt with identical issue and held thus:

There are no specific grounds that establish the existence of legal necessity and the existence of legal necessity depends upon facts of each case. The Karta enjoys wide discretion in his decision over existence of legal necessity and as to in what way such necessity can be fulfilled. The exercise of powers given the rights of the Karta on fulfilling the requirement of legal necessity or betterment of the estate is valid and binding on other coparceners.

Thus it settled law that a Karta of a HUF can validly & legally enter into an agreement for sale or execute a sale deed in respect of any immovable property owned by the HUF for legal necessity and the same shall be binding on the other coparceners of the HUF. However, in order to contain litigation, the purchasers of immovable property owned by HUF should ascertain to make all adult coparceners are made party to the deed or at-least witnesses to the deed. Once this precaution is taken any suit for assailing the transfer deed would not be maintainable.

Written By: Inder Chand Jain
Email: [email protected], Ph no: 8279945021

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