Property under Hindu law may be divided into two classes, viz.,
(1) Joint-family property or coparcenary property; and
(2) Separate property or self-acquired property.
Image Source: royaldocks.com
1. Joint-family property or Coparcenary property:
Joint-family property or coparcenary property signifies the property in which all the coparceners have community of interest and unity of possession. Such property consists of—
(a) Ancestral property;
(b) Property jointly acquired by the members of the joint family;
(c) Separate property of a member “thrown into the common stock”;
ADVERTISEMENTS:
(d) Property acquired by all or any of the coparcener with the aid of joint family funds.
In Bhagwant P. Sulakhe v. Digamber Gopal Sulakhe, the Supreme Court observed that the character of any joint family property does not change with the severence of the status of the joint family and joint family property continues to retain its joint family character so long as the joint family property is in existence and is not partitioned amongst the co-sharers. By a unilateral act it is not open to any member of the joint family to convert any joint family property into his personal property.
(A) Ancestral Property:
Ancestral property is a specie of coparcenary or joint family property. By the term “ancestral property” is meant that property which descends from father, father’s father and great grandfather. In this property a person’s descendant’s upto three generations, i.e., sons, son’s son, son’s son’s son acquire an interest by birth.
The following kind of properties will constitute ancestral property with its incidental characteristics, namely:
ADVERTISEMENTS:
(1) Such property will devolve by survivorship and not by succession.
(2) It is a property in which male issues of a coparcener acquire an interest by birth.
In this case a male Hindu inherits the property from his father, father’s father or father’s father’s father. Thus only the property inherited by a Hindu from anyone of the three immediate paternal ancestors mentioned above is termed as ancestral property and the only persons who acquire an interest in it by birth are sons, son’s son and son’s son’s son.
The Privy Council dealing with the source of ancestral property held that it is confined to property inherited from the three immediate paternal ancestors and the property inherited from a maternal grandfather is the absolute property of the inheritor in which his son does not acquire any interest by birth.
Any property inherited by a person from his female relatives, cannot be termed as ancestral property. Where a property is given in gift to the sister by her brother, after the death of the sister, her son inherits the same; it would be his separate property not an ancestral property.
Where a question arises as to whether a property obtained by a male Hindu by way of a gift or will from his father, grandfather or great grandfather would be ancestral or self acquired, the Supreme Court held that it depends upon the intention of the father or grandfather as expressed in the deed of gift on will or to be gathered from the terms of the document and surrounding circumstances.
If the intention of the grandfather was that the father should take the property exclusively, the property in the hands of the father would be his separate property. If the intention of the grandfather was that the father should take the property for the benefit of the branch of the family it would be an ancestral property in the hands of the father, for his sons would get equal rights with him in the property.
Whatever property……… till the day of partition that shall be treated as joint family property. The property earned by the brothers after partition shall not be regarded as joint family property. In Commissioner of Income-tax v. P. Chettiar, the Court held that where it has not been indicated in the deed of gift that the donee will take as a joint family property, that property shall be absolute property of the donee, in which his sons will not have any right by birth.
In Hindus the ancestral business of joint family has been regarded as a distinct heritable asset. Where a Hindu dies leaving a business it descends like other heritable property to his heirs. In the hands of sons, son’s son and great grandsons it will become a joint family business on the death of male ancestor and the firm which consists of male issues becomes a “joint family firm”.
The manager of a joint family cannot start a new business so as to bind the share of the other adult coparceners, unless the business is started or carried on with their express or implied consent.
The income of joint family business constitutes joint family property.
Similarly any property acquired in exchange of a joint family property would also be held to be joint family property.
In case ancestral property is absolutely lost to the family, and a member of the family, by his own exclusive exertions recovers it without any aid from the joint funds, and with the consent actual or implied, of the others, the recoverer has certain special claims on the property. The recovery, if not made with the privity of the co-owners, must at least be bona fide, and not in fraud or by anticipation of the intention of other co-owners.
In Dharam Singh and others v. Sadhu Singh and others, the question was whether the property was ancestral or separate. In this case properties devolving on father of party due to the death of issueless brothers and addition to it by the relinquishment of shares by sisters was held not to be ancestral property vis-a-vis his sons.
(b) Property jointly acquired by the members of the joint family:
Where property has been acquired by the members of joint Hindu family by their joint labour whether in business, profession or vocation, with the aid of joint family property, it becomes joint family or coparcenary property. According to Bombay High Court a property acquired by the joint labour of the members, even without the aid of joint family funds, is presumed to be joint family property in absence of any indication of an intention to the contrary.
Where two brothers acquired some property in a joint Hindu family by their joint efforts, in absence of an intention to the contrary it would be presumed to be joint property and their male descendants would acquire an interest in that property by birth.
In Bhagwant P. Sulakhe v. Digambar Gopal Sulakhe, the Supreme Court held that the character of any joint family property does not change with the severance of the status of the joint family and a joint family property continues to retain its joint family character so long as the joint family property is in existence and is not partitioned among the co-sharers. By a unilateral act it is not open to any member of the joint family to convert any joint family property into his personal property.
In the above case, the remuneration received by two of the members of a joint family who constituted a firm which was appointed as managing agent of a company, for acting as managing agent of the company must be held to be the joint family property when the agreement of the partnership indicated that the two family members became members of the firm which was appointed the managing agent of the company, representing the joint family and for the benefit of the joint family.
In Gumam Singh v. Pritam Singh & others. the court further held that if property is acquired by the fund of joint labour even if it was purchased from income derived from land which was taken on batai and cultivated jointly there would be presumption of jointness and property would be treated as joint Hindu family coparcenary property.
(C) Property Thrown Into the Common Stock:
Where any coparcener voluntarily throws his self-acquired property into the joint fund with the intention of abandoning all separate claims to it, it would be joint property, so as to be divisible among all the members. Such an intention need not be express, it is sufficient if the owner blends it as one general account without discriminating between the two, in such a way that a clear intention to waive his separate rights may be established.
When the head of a joint Mitakshara family kept only one account of ancestral and self acquired property and sued to amalgamate the funds, it was held that the self-acquired property became joint property.
Blending is not done by the primary act of blending but it is possible only by deliberate and intentional acts of the owners of the property. Such an act can be done by express words or by express conduct of the parties. The act of blending is unilateral. When a member of joint family mixes his property to a joint family property, he does not do the act of gift nor is it gift. There is neither any donor nor donee, nor does it attract the provisions of Transfer of Property Act.
In K. Abebul Reddy v. Venkata Narayan the Supreme Court observed that once it is presumed that the family is joint and it holds joint property it would be a legal presumption that the property held by an individual member or by all the members is joint family property. If any member claims his separate right over certain part of joint property the burden of proof would be on him to prove that it was his separate property.
In Subrammania Reddi v. Venkatasubba Reddi, the husband of daughter had brought in certain properties which got blended with joint family properties; she had become widow and was issueless. The main consideration to make a sort of family arrangement and therefore property had been given to her.
The other family members themselves have treated certain items of properties as separate properties. The partition effected on that basis, but the family members blending properties of widow as joint Hindu property. The Supreme Court observed that properties inherited by widow from his relations on his maternal side, cannot blended with property of joint family property.
Where joint family does have joint family property, the separate property of coparceners does not convert into joint family property, although it is quite possible that the coparceners regard their separate property as joint family property. He can permit the other coparceners to treat that property as their property also.
Where the view is taken that separate or self-acquired property has been thrown into common stock and one’s separate rights have been abandoned, these facts have to be established expressly. A presumption to this effect cannot be drawn on the basis of mutual love and affection of the coparceners.
In Lakireddi v. Lakireddi, the Supreme Court observed that the law relating to blending of separate property with joint family property is well settled. Property separate or self-acquired of a member of a joint Hindu family may be impressed with the character of a joint family property if it is voluntarily thrown by the owner into the common stock with the intention of abandoning his separate claim thereto, but to establish such abandonment a clear intention to waive separate rights must be established.
From the mere facts that the other members of the family were allowed to use the property jointly with himself, or that the income of the separate property was utilised out of generosity to support persons whom the holder was not bound to support or from the failure to maintain accounts, abandonment cannot be inferred, for an act of generosity or kindness will not ordinarily be regarded as an admission of legal obligation.
In Pipari Lai v. Nanak Chand, the Privy Council had laid down that where a son claims that a business started by his father is a joint family business because he has been actively assisting in its promotion, there the burden lies on him to establish that the business which was started in absence of any financial assistance from ancestral property, was intended to be a joint family business and it was earnestly regarded as such. Once it is established to be a joint family business, its character will not change despite the change in the attitude of the father later.
Where a member of coparcenary voluntarily gives up his right in any property and mixes it with joint property, it would be deemed to be joint property. Where he gives away his property in the common stock it would become a part and parcel of the joint Hindu property and would not be treated separately.
All the members of joint Hindu family cannot create joint property by throwing their money in common stock. The property belonging to the coparceners only can create joint family property by blending them into common stock. Such a right is not available to female members of the joint family as they are not coparceners.
The doctrine is peculiar to Mitakshara school of Hindu law. When a coparcener throws his separate property into the common stocks, he makes no gift under the Transfer of Property Act and therefore it does not amount even to transfer.
(D) Property Acquired With The Aid of Joint Family Funds:
Property acquired with the aid and assistance of joint family property is also joint. Thus, accumulation of income, i.e., rent etc. of joint family property, property purchased out of such income, the proceeds of sale or mortgage of such property and property purchased out of such proceeds are also joint family property.
Where in a joint Hindu family some property is purchased in the name of one of its members, it will be regarded as a joint family property not his own separate property. If he has acquired any property without the help of joint family property it could be treated as his separate property. Where any member of joint family blends his self acquired property into common property of the family or joint family property, it all becomes joint property.
Where the Karta of joint family purchases any property in his name and does not assert that joint family property was inadequate to purchase that property, there the burden of proof is on him to establish that the property was purchased by his own separate property. In absence of such proof, it would be presumed, that the property was purchased out of joint family property and that would be regarded as joint family property.
In D. Latchandora v. Chinnabadu, the Court held that where certain property is given to a member of joint Hindu family in order to meet the expenses of his maintenance and he acquires some other property out of the income from that property, in that case all the properties thus acquired by him would become his separate property. But in a case from Madras High Court, it was held that all the property thus acquired by him would be regarded as joint family property in the context of his sons.
In Smt. Parbatia Devi v. Mst. Sakuntala Devi, the Patna High Court held that under Hindu law, when a property stands in the name of a member of a joint family, it is incumbent upon those asserting that it is joint family property to establish it.
When it is proved or admitted that a family possessed sufficient nucleus with the aid of which the member might have made the acquisition, the law raises a presumption that it is a joint family property and the onus is shifted to the individual member to establish that the property was acquired by him without the aid of the said nucleus.
In Satchidananda Samanta v. Ranjana Kumar Basil, the Court held that a business run by coparcener on joint property need not always be joint family business. In Dayabhag coparcenary one coparcener started cinema business on joint family property with the consent of other coparceners.
The other coparceners did not contribute capital in it. The cinema licence was obtained only in the name of one coparcener. Evidence on record showed that the grant of cinema licence was not opposed by other coparcener. It was held that the cinema business was not family business merely because it was run on joint property.
2. Separate or Self-acquired property:
Property which is not joint is called separate or self-acquired property. The word ‘separate’ suggests that the family was formerly joint but has now become separate. When a member separates from joint family, the property which he acquires will be treated as his separate property vis-a-vis his relations with his brothers, but so far his sons are concerned it would be regarded as joint family property. The term “self acquisition” signifies that the property has devolved upon him in such a manner as nobody except himself has any interest in it.
Property acquired by a Hindu in any of the following ways is his self-acquired or separate property even though he be a member of a joint Hindu family:—
(1) Property acquired by a Hindu by his own exertion would be his separate property as it is not the result of any joint labour with the other members of the joint family, provided it is obtained without detriment to joint family property. Where a person has acquired any property by way of adverse possession after remaining in its possession adversely for a period of twelve years it would be treated as his self-acquired property not a joint property.
Where a member of joint family carries on a business of medical practitioner in Ayurvedic medicines and thereby earnes heavy sum of money and gives loan on mortgage, thus accumulating further income, all the earnings and the property thus acquired by him would be his separate property.
Recently in Maklian Singh v. Kulwant Singh, Supreme Court observed that if a male member of the Joint Hindu Family purchased the property by his own incomes like salary income, such property is his self acquired property. Such property inherit his heir by succession. It could not be said to be the property of Joint Hindu Family.
(2) Property inherited by a Hindu from any person other than his father, grandfather or great grandfather would be his separate property. Where a person earns money from the practice of a hereditary profession like the hereditary priest, it will not be regarded as his joint family property but on the other hand his separate property.
In Madan Lal Phul Chand Jain v. State of Maharashtra, the Court held that a Hindu can own separate property besides having a share in ancestral property. Where any member of joint family inherited land left by his uncle that property came to him as a separate property and he had an absolute and unfettered right to dispose of that property in the manner he liked. Thus property inherited by a person from colleterals such as brother, uncle etc. cannot be said to be ancestral property and his son cannot claim a share therein as if it were ancestral property. On the death of a brother issueless, the property inherited by a person would be his separate property.
(3) Any property obtained by a Hindu as his share of partition of a joint Hindu family, provided he has no male issue, shall be treated his separate property. Where a Hindu makes some acquisitions after partition with the help of his share in joint family property, that property shall be regarded as his separate property.
(4) Any property devolving on a sole surviving coparcener provided there is no widow in existence who has power to adopt or has a child in her womb, will be regarded as his separate property.
(5) Property obtained by a Hindu by a gift or will unless made by his father, father’s father or father’s father’s father for the benefit of the family and not exclusively for himself, would be his separate property.
(6) Property obtained by gift of ancestral property made by the father through affection, will be his separate property.
(7) Property obtained by a Hindu by grant from the Government shall be regarded as separate property.
(8) Joint family property lost to the joint family and subsequently recovered by a member thereof without the assistance of joint funds from a stranger holding adversely to the family property shall be regarded as his separate property.
(9) Gains of Learning:
Any income earned by a member of joint family substantially by means of his education or specialisation, expertise or special intelligence would be regarded as his separate property. Where a member of joint family acquires some knowledge or specialisation after getting the education at the cost of joint family fund and later on earns a considerable sum, whether that sum will be treated as his separate property or joint family property, became a controversial issue.
In order to bring the controversy to an end the Hindu Gains of Learning Act, 1930 was passed. The Act provided that no gams of learning shall be held not to be the exclusive and separate property of the acquirer merely by reasons of learning having been imparted to him by any member of his family or with the aid of the joint funds of the family or with the aid of the funds of any member.
Section 3 of the Act provides:
“Notwithstanding any custom, rule or interpretation of the Hindu law, no gains of learning shall be held not to be exclusive and separate property of the member of the joint family who acquires them merely by reason of (a) his learning having been in whole or in part, imparted to him by any member living or deceased, of his family or with the aid of joint funds of his family or with the aid of joint fund of any member thereof, or (b) himself or his family having while he was acquiring such learning been maintained or supported, wholly or in part, by the joint funds of his family or by the funds of any member thereof.
“Learning means education whether elementary, technical, specific, special or general and training of every kind which is usually intended to enable a person to pursue any trade, industry, profession or a vocation in life”—Section 2(c).
“Gains of learning means all acquisitions of property made substantially by means of learning, whether before or after the commencement of the Act and whether ordinary or extra-ordinary result of such learning.”—Section 5(d).
Salary and Remunerations:
Where a member of joint family makes acquisition with the aid of any part of joint family property, it cannot be his separate earning nor can it be said to be his separate property simply on account of the fact that such acquisition was made by him by applying his own wisdom or skill. In Palanippa v. Commissioner of Income-tax.
The Supreme Court observed that where no part of the family funds had been spent to enable the Karta to earn remuneration of managing director and the family funds had been invested to obtain dividends and other advantages of being shareholders, the salary, commission and sitting fees of Karta as managing director shall remain his personal property.
In Dhanwantary v. Commissioner of Income Tax, the Court held that the salary earned by a coparcener as partner constituted joint family property. Where the coparceners invested joint family assests in partnership and it was agreed that the profits earned in partnership were to be taken as personal salary of each coparcener, the salary which the manager earned on account of his personal skill and labour was held to be as a part of joint family property.
On the other hand in Commissioner of Income-tax v. D.C. Shah, the Supreme Court held that the salary given to a coparcener as partner on account of his special skill and experience constituted his self acquired property, even though the family has contributed a large parts of its capital to the firm.
Where the security is given out of joint family property for the appointment of Karta of joint family on the post of a manager in an industry, the court held that the salary and remuneration earned by the Karta will still be regarded his separate property of Karta.
In Bhagwantji Sulakhe v. Digambar Gopal Sulakhe, the Court observed: Where a coparcener has been appointed as a managing director of a company the remuneration earned by the coparcener will be regarded his separate property irrespective of the fact that a few shares of the company were purchased out of joint family property to enable him to become the managing director.
Where the premium of the insurance policy of a coparcener is deposited out of joint family fund, the benefit earned by him would be his separate property not the joint family property.
In Sidrammappa v. Babajappa, the Mysore High Court observed that if the father has taken an insurance policy in the name of the son and paid the premiums thereof out of love and affection, then the benefits of the policy will belong to the son and constitute his separate property.
Similar view was taken by the Andhra Pradesh High Court in Narayanlal v. Controller of Estate duty. The Supreme Court in Prabhavati v. Sarangdhar observed: “There is no proposition of law by which the insurance policies must be regarded as the separate property of the coparceners on whose lives the insurance is effected by the coparcenary.” If the insurance policy were taken with any detriment to the joint family funds, then anything obtained thereby would belong to the joint family.
In Chandra Kant Mani Lai Shah v. Income Tax Commissioner, the Supreme Court laid down a new proposition by saying that a partnership firm can be constituted between the Karta and undivided member of Hindu undivided family. It is not necessary that such undivided member should contribute cash assets to become partner in the firm. When an individual in place of cash asset contributes his skill and labour in consideration of a share in the profits of the firm he can become a partner in the firm.
In such cases when a coparcener contributes his skill and labour while entering into partnership with the Karta of Hindu undivided family, it cannot be said that he has not made contribution of any separate asset to meet the requirement of a valid partnership. The profit thus earned by that coparcener would not constitute the property of the joint family but would be the separate property of the individual coparcener concerned.
In K.S. Subbiah Pillai v. Commissioner of Income Tax, the remuneration and commission was received by the Karta of the family. The tribunal had held that the remuneration and commission received by the Karta of the joint Hindu family where earned by him on account of his personal qualifications and exertions and not on account of the investment of the family funds in the company, therefore it could not be treated as the income of H.U.F. In this case the Supreme Court also observed that the decision given by tribunal is correct.