Karta has been empowered to alienate the joint family property for legal necessity and benefit to the estate. Where the other coparceners are minors, he can alienate joint immovable property so as to bind not only his own interest but also that of the other minor coparceners provided the needs of the joint family warrant the same. Still the powers of Karta to bind the joint family property are limited and qualified as it has been clearly delineated by the Privy Council in the famous case of Hanooman Prasad Pandey v. Mst. Babooyee. The Court observed:
“The power can only be exercised rightly in the case of need, or for the benefit of the estate. But, where in a particular instance, the charge is one that a prudent owner would 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 instances, is the thing to be regarded.”
The Patna High Court in this connection laid down that the alienation of joint family property could be done only for legal necessity or for benefit to estate. Where the Karta himself executed a permanent lease of joint family property without any legal necessity or benefit to estate, the contract cannot be enforced.
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ADVERTISEMENTS:
Once legal necessity is proved, it is for the Karta to decide as to how the necessity could be fulfilled and what should be the mode of alienation. If he has exercised his power in a bona fide manner for the general interest of the family, then the alienation could not be set aside on the ground that any other person would have transacted differently in the given circumstances.
The Supreme Court in Radha Krishna v. Kaluram held that “where an alienation by way of sale of tine family property made by a Hindu father is challenged by his sons on the ground of want of legal necessity, it is now well-established that what the alienee is required to establish is legal necessity for the transaction and that it is not necessary for him to show that every bit of the consideration which he advanced was actually applied for meeting family necessity. The reason is that the alienee can rarely have the means of controlling and directing the actual application of the money paid or advanced by him unless he enter into management.”
The Supreme Court in Snbodh Kumar and others v. Bhagwant Namdeo Rao Mohatre, held that a Karta has power to alienate for value the joint family property either for necessity or for benefit of the estate. He can alienate the property with the consent of all the coparceners of the family.
ADVERTISEMENTS:
When he alienates the property 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.
In exceptional circumstances, however, the Court will uphold the alienation of a part of the joint family property by a Karta for the acquisition of new property as for example, where all the adult members of the joint family property with the knowledge available to them and possessing all the necessary information about the means and requirements of the family are convinced that the proposed purchase of the new property is for the benefit of the estate.
In this case, the Court also observed that “the position of a Karta in joint Hindu family is sui semis, Because the relation between him and the other members of the family is not 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 in all the duties which are imposed upon the trustees.”
In Dudhnath v. Satnarain Rain, the Court observed that in order to uphold an alienation of joint Hindu family property by the father or the manager, it is not only necessary to prove that there was legal necessity, but also that the father or the manager acted like a prudent man and did not sacrifice the property for inadequate consideration.
ADVERTISEMENTS:
However, great the necessity may be, if the joint family property is sacrificed for inadequate consideration, it would be a highly imprudent transaction and it would be a case where though for necessity, the father or the guardian has not acted for the benefit of the estate or the members of joint Hindu family. The father or the manager is not the sole owner of the property. The ownership vests in all the coparceners taken together as a unit.
The father or manager only represents the coparceners. Consequently, the coparceners stand bound by the act of the father or the manager of the family only to the extent the act is prudent or for the benefit of the coparceners or the estate. The alienation is not binding on his sons if it was made for inadequate consideration, even though there was legal necessity.
Legal Necessity:
The term “legal necessity” has to be read in a wider connotation. It is to be interpreted with due regard to the conditions of modern life. If it is shown that the family’s need was for that thing or that article, and if property was alienated for the satisfaction of that need, it would be enough. It is now well-settled that the term “legal necessity” is not to be understood in the sense of what is absolutely indispensable but what, according to the notions of a Hindu family, would be regarded as proper and reasonable.
The following have been held to be legal necessities:—
(i) Payment of Government revenue and debts payable out of family property;
(ii) Maintenance of coparceners and their family members;
(iii) Marriage expenses of coparceners and daughters of the coparceners;
(iv) Performance of Shraddha, funeral and other religious ceremonies of the members of joint family;
(v) Expenses of necessary litigation;
(vi) Costs of defending the head of the family or any other member of joint family against serious criminal charge;
(vii) Payment of debts incurred for family business;
(viii) Expenses for augmenting the means of livlihood of the members of the family;
(ix) Cost of building a residential house for the family and expenses for repairing the family house;
(x) Sale of family property with the object of conveniently adjusting the shares of the rest of the family,
(xi) Sale of family property for migrating to different place for better living.
A recital in the deed of legal necessity to support the sale does not by itself prove legal necessity though it may be used to corroborate other evidence of legal necessity. In Smt. Rani v. Smt. Santa Bala Debnath, the court held that legal necessity does not mean actual compulsion; it means pressure upon the estate which in law may be regarded as serious and sufficient.
The onus of proving legal necessity may be discharged by the alienee by proof of actual necessity or by proof that he made proper and bona fide enquiries about the existence of necessity and that he did all that was reasonable to satisfy himself as to the existence of necessity. Recitals in a deed of legal necessity do not by themselves prove legal necessity, although admissible in evidence.
In Bhanwar Singh v. Puran Singh and others, here the Court held that legal necessity does not mean actual compulsion; it means pressure upon the estate which in law may be regarded as serious and sufficient. In this case, suit for sale set a side of joint family property on the ground that it was not for legal necessity.
Benefit to Estate:
An alienation of joint family property can be effected for the benefit to estate also. The Privy Council has elaborately illustrated as to what are the incidents of benefit to estate in Palaniappa v. Devsikmony. It laid down that “the preservation,” however, of the estate from extinction, the defence against the hostile litigation affecting it, the protection of it or its portion from injury or deterioration by inundation, these and such like things would obviously be the benefits. In broad sense legal necessity includes ‘benefit to estate’.
For transaction to be regarded as of benefit to the family it need not be of defensive character so as to be binding on the family. In such a case, the court must be satisfied from the material before it that it was in fact such as conferred or was reasonably expected to confer benefit on the family at the time it was entered into. Where in a joint family there are adult members, it is enjoined upon the Karta as well as the adult members to take important decisions relating to benefit of estate.
In Gollamudi Shiva Kumar v. Indian Overseas Bank, the Andhra Pradesh High Court observed: “The Karta of a joint family САП burden the estate by mortgaging the property for the benefit of the estate. However, in doing so, he must act as a prudent owner with the knowledge available to him at the time of transaction. A transaction by the manager which is neither risky nor speculative but calculated to confer a positive advantage on the family, can be said to benefit the estate.
But what transaction would be for the benefit of the family must necessarily defend upon the facts of each case”. Where the Karta who was running a hotel business mortgaged the family property with a view to raise funds for renovation and reconstruction of the hotel building, it was held that the transaction was for the benefit of the estate.
Where a joint family property yielding no profit was agreed to be sold to purchase land available at much cheaper rate and yielding more profit at another village, the intended alienation must be construed to be for the benefit of the family and the agreement to sell was not invalid in law.