Just because a member of a joint family is the Manager or Karta of the family, he has no larger proprietary interests in the family property than any other coparcener. Nevertheless, he occupies a position superior to that of the other coparceners, inasmuch as he manages the family property and looks after the interests of the family on behalf of the other members. As long as the family remains joint, his authority cannot be revoked.
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However, as seen earlier, he has some special powers of disposition (under certain circumstances) over the whole of the coparcenary property, including the interest therein of the minor coparceners. His special powers can be classified as follows:
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1. Powers over the income and expenditure of the family
2. Power of alienation of joint family property for legal necessity or for the benefit of the estate
3. Power to contract debts
4. Power to acknowledge debts
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5. Power to start a new business
6. Power to give a valid discharge
7. Power to refer disputes to arbitration
8. Power to represent the joint family in suits and other proceedings
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9. Power to compromise
These special powers of a manager are discussed below in necessary details.
1. Manager’s power over income and expenditure:
The manager or Karta of a joint Hindu family has complete control over its income and expenditure. Strictly speaking, he is not a trustee for the other members of the family, within the meaning of that term as used in the Indian Trusts Act, although some of his duties and functions are similar to those of a trustee. Nor is he an agent of the other members of the family, within the meaning of that term as used in the Indian Contract Act.
As long as he spends the income of the family for the purpose of the family, he is not under any legal obligation to economise or to make savings. The family purposes for which he is authorised to spend the family income are the maintenance, residence, education, marriage, sradha and other religious ceremonies of the coparceners and their families.
If the manager spends more on such items than what the other coparceners approve, their only legal remedy would be to ask for a partition. Even at such a partition, the accounts will be taken on the basis of what has actually been spent, and not what would have been spent, had he exercised more skill and had he been more frugal.
A Karta cannot, however, misappropriate the family funds or misapply them to purposes other than those of the family. If he does so, he is liable to make good all such sums to the other members of the family.
2. Manager’s power to alienate coparcenary property:
According to the Mitakshara, the power of a manager to make a valid alienation is confined to three purposes, viz.-
(a) In times of distress, i.e., distress which affects the whole family;
(b) For the sake of the benefit of the family, i.e., for its maintenance, and
(c) For pious purposes, as for instance, for obsequies for the ancestors.
It has been held that the power of a manager of a Hindu joint family to alienate joint family property is analoguous to that of a manager of an infant heir, as defined by the Privy Council in Hanooman Persaud v. Musummat Babooee (1856 6. M.I.A. 393). To validate alienation, it is not necessary that the express consent of the other adult members should have been obtained. The manager has an implied authority to do whatever is best for all concerned, and no coparcener can deprive him of this power by withholding his consent.
The Karta of a joint family can alienate joint family property for value, so as to bind not only his own interest, but also that of the
Other coparceners, including minors, provided such alienation is made:
(i) With the consent of all the coparceners, all of them being adults; or
(ii) For a legal necessity; or
(iii) For the benefit of the estate.
From the above, it will be seen that when the sale of joint family property is clearly beneficial to the interests of the family, there need not be any legal necessity for such a sale; nor is the consent of the other coparceners necessary to validate such a sale. Conversely, even where there is no legal necessity or benefit to the estate, the sale will still be valid if it is made with the consent of all the coparceners, all of them being adults. If alienation is made without the consent of all the coparceners, it would, in the State of Tamil Nadu, Maharashtra and Gujarat, bind the shares of the consenting members. In West Bengal and U.P., however, the alienation would not bind the shares of either the person purporting to alienate or of the consenting members.
An alienation of the Karta which is neither for a legal necessity nor for the benefit of the estate, and which is made without the consent of the other coparceners is not, however, voidable initio; it is merely voidable at the option of the other coparceners. Until they avoid it, such an alienation remains valid and binding.
The Supreme Court has held that a coparcener cannot file a suit against his father, the karta, for a permanent injunction to restrain him from alienating joint family property for a legal necessity. This is so because the coparcener has a remedy to challenge a particular sale and have it set side after the sale is completed. (Sunil Kumar v. Ram Parkash, A.I.R. 1988 S.C. 576)
It is not possible to lay down all the circumstances which would amount to a legal necessity. From the decided cases, however, one can give the following as examples of legal necessity or family necessity, viz.
(i) Payment of Government revenue.
(ii) Payment of debts which are payable out of the family property.
(iii) Payment of debts due to the landlord or payment under a decree for arrears of rent passed in favour of the landlord.
(iv) Costs of necessary litigation in recovering or preserving the estate of the family.
(v) Costs of defending the head of the joint family (or any other member) against a serious criminal charge.
(vi) Maintenance of coparceners and their daughters.
(vii) Marriage expenses of coparceners and their daughters.
(viii) Performance of funeral and other ceremonies.
(ix) Costs of building a residential house for the family.
(x) Sale of the family property for conveniently adjusting the shares of the members of the family.
(xi) Expenses for augmenting the means of livelihood of the family, unless it is risky or speculative.
(xii) Similar purposes provided that these purposes cannot be met out of the income of the family or the cash on hand.
An alienation by the manager without any legal necessity is valid to the extent of the manager’s share therein in the States of Tamil Nadu, Madhya Pradesh, Maharashtra and Gujarat. In such a case, the purchaser is entitled to the manager’s share in such property as at the date of the alienation.
Where the money required to meet such necessary expenses is less than the amount realised by the sale, the question to be decided in each case is whether the sale itself was justified by a legal necessity. In the case of a mortgage, however, the manager can borrow the exact amount required, with the result that the other coparceners will not be liable for any sum borrowed (on the security of the family property) in excess of the required amount.
Where the manager of a joint family sells or mortgages joint family property, the burden of proof lies on the buyer or the mortgagee (as the case may be) to show that there was a legal necessity, or that he had made a proper and bona fide inquiry as to the existence of such a necessity, and that he had done all that was reasonable to satisfy himself as to the existence of such a necessity.
Recitals of a legal necessity in the document of sale or mortgage are not, by themselves, conclusive evidence of such a necessity. The purchaser or the mortgagee is not, however, bound to see that the money is actually applied to meet the necessity.
Likewise, it is also not possible to give an exact definition of what would amount to benefit of the estate of the family. The preservation of the estate from extinction or protection of the estate against deterioration by inundation would obviously be for the benefit of the estate.
The difficulty, however, is in drawing a line between acts that are beneficial to the estate and those that cannot be said to be so. The Supreme Court has thrown some light on this point when it observed that to be for the benefit of the estate, a transaction need not necessarily be of a defensive character. In each case, the Court would have to be satisfied, from the material placed before it, that it conferred some benefit on the family.
The following are illustrative examples of transactions which have been held to be for the benefit of the estate, justifying alienation of joint family property:
(i) An advantageous acquisition of property made in the interests of the family;
(ii) A sale of small shares in inferior lands in different villages, for the purpose of acquiring a compact share in fertile land in one village;
(iii) A sale of joint family property, which is unproductive and inconveniently situated, for the purpose of investing the sale proceeds in a better piece of property;
(iv) A sale of a house in a dilapidated condition, in respect of which a notice had been received from the Municipality for pulling it down;
(v) A mortgage for making additions to, and improvements upon, the family house; and
(vi) A gift to a stranger of a small portion of land with a view to defeat a claim of pre-emption.
It is also to be noted that when the Manager of a joint family happens to be a father, he has two additional powers, viz-
(a) He can make a gift out of affection within reasonable limits.
(b) He can sell or mortgage the joint family property to discharge a debt contracted by him for his own personal benefit, — provided (i) the debt was an antecedent debt, and (ii) it was not contracted for illegal or immoral purposes.
(Both these powers of a father have been discussed later in this Chapter.)
3. Power of the manager to contract debts:
The manager of a joint family has an implied authority to contract debts and pledge the property of the family for this purpose. Such debts would be binding on the other members of the family to the extent of their interest in such property. However, the manager himself would be liable personally also, and not only to the extent of his interest in the property, he being a party to the contract.
4. Power of the manager to acknowledge debts:
A manager of a joint family has the power to acknowledge a debt, but he has no power to relinquish a debt due to the family. Nor can he pass a promissory note to revive a debt which is already time-barred. However, the burden of proving that a promissory note was executed by the manager in respect of a time- barred debts is on the member who alleges the same.
5. Power of the manager to start a new business:
6. Power to give a valid discharge:
The Karta has the full power to give a valid discharge for all debts due to the family. This power is absolute, and can be exercised even when there are dissentions in the family.
7. Power of the manager to refer a dispute to arbitration:
A manager has also the power to refer disputes (relating to joint family property) to arbitration, provided he does so bona fide, i.e., without any fraud or collusion, and for the benefit of the family. In such a case, the other members of the family, including the minors, are bound by the award made at such an arbitration. The subject- matter of the arbitration may be disputes between the family (as a whole) and an outsider or between the members of the family inter se (i.e. amongst themselves).
8. Power of the manager to represent the joint family in suits and other proceedings:
In a suit by or against a Hindu joint family, the Karta fully represents the whole family, and other members of the family are not necessary parties to such a suit. This would mean that the manager of a joint family may sue or be sued in respect of any transaction entered into by him as the manager of the family, and if a decree is passed against him in such a suit, it would be binding on all the members of the family. If a member of the joint family contends that what the manager did was beyond his power, such a person is not properly represented by the manager and ought to be joined as a party to the suit.
9. Power of the manager to compromise:
If a manager of a joint Hindu family enters into a bona fide compromise for the benefit of the family, such a compromise binds all the other members of the family, including minors.
But, if in a suit relating to joint family property, a father and his minor sons are parties and the father himself is the guardian of the minor, his powers are subject to the provisions of the Civil Procedure Code, and he cannot enter into any compromise relating to the joint family property without the leave of the Court.