Full Judgment Text
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PETITIONER:
K. V. NARAYANAN
Vs.
RESPONDENT:
K. V. RANGANANDHAN & ORS.
DATE OF JUDGMENT12/03/1976
BENCH:
SINGH, JASWANT
BENCH:
SINGH, JASWANT
GUPTA, A.C.
CITATION:
1976 AIR 1715 1976 SCR (3) 637
1977 SCC (1) 224
ACT:
Hindu Law-Joint family and partition-Allotment to a
member of properties for discharge of family debts-When may
be regarded as his exclusive property-Managers liability for
account-From which date.
HEADNOTE:
The appellant and V, father of respondents, were
brothers. They, together with their cousin, formed a joint
Hindu family. In a partition in 1929 between the two
branches, certain properties were given to V for discharging
some family debts. V took over the management of his branch
of the family and after discharging the debts, filed in 1956
a suit for partition against the appellant claiming, inter
alia, that one of the items earmarked for the discharge of
the debts which remained undisposed of, was his exclusive
property as it was given to him absolutely; and also for
accounts on the ground that the appellant took over the
management from 1938. The trial court negatived the claim in
respect of the property, but directed the appellant to give
accounts from 1947 when admittedly he took over management.
On appeal, the High Court upheld V’s claim with respect to
the property and gave modified directions for accounts by
the parties.
Dismissing the appeal to this Court,
^
HELD: (1) The properties given to V became his separate
properties from the date of the partition deed of 1929 and
were not liable to partition. [643A]
(a) The salient features of the deed are, (i) the sole
responsibility for discharge of the debts was placed on V;
(ii) V’s liability was not to the extent of the properties
but was irrespective of the sufficiency or otherwise of the
properties and any deficit or surplus was to be met or
enjoyed by him exclusively; (iii) the cousin was no longer
liable for the debts; (iv) in case there was a default on
V’s part, and if, any loss was caused to the cousin he was
to be indemnified by V; and (v) exclusive dominion and
control over, and enjoyment of, the properties was vested in
V in consideration of the obligation undertaken by him to
discharge the debts. The properties were thus given to V in
view of his personal undertaking to discharge the debts,
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and, the conveyance was in the nature of remuneration for
services to be rendered by him. [642 C-G]
Raj Kumar Singh Kukam Chandji v. Commissioner of
Income-tax Madhya Pradesh [1971] 1 SCR 748 referred to.
(b) The arrangement was valid because it was bona fide
and its terms were fair. [643E]
Sahu Madho Das v. Pandit Mukand Ram [1955] 2 SCR 22,
Maturi Pullaiah v. Maturi Narasimham AIR 1966 SC 1836 and S.
Shanmugam Pillai & Ors. v. K. Shanmugam Pillai & Ors. AIR
1972 SC 2069 referred to.
(c) There was no blending of the properties by V with
other joint family properties. There was no evidence of any
intention on V’s part to abandon his separate rights over
the properties. The mere fact that they were not separately
entered by him in the account books or that no separate
account of the earnings from them was maintained by him
cannot rob them of their separate character. [644B-C]
Lakkireddi Chinna Venkata Reddi & Ors. v. Lakkireddi
Lakshmama [1964] 2 S.C.R. 172 and G. Narayana Ram v. C.
Chamaraju & Ors. A.I.R. 1968 S.C. 1276 referred to.
638
(d) If any amount of the joint family funds was used by
V for the discharge of the debts, the respondents (legal
representatives of V) would be liable for them, but that
would not affect the character of the properties. [644 C-D]
(2) It is well-settled that in the absence of proof of
misappropriation or fraudulent or improper conversion by the
manager, a coparcener, seeking partition, cannot call upon
the manager to account for his past dealings with the family
property. Since there was no evidence of any
misappropriation by V, he was not liable for accounts during
his period of management. [644E-F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1365 of
1968
From the Judgment and Decree dated the 8-12-66 of the
Madras High Court in Appeal No. 609 of 1961.
K. N. Balasubrahmaniam and Miss Lily Thomas for the
Appellant.
K. Jayaram for the Respondent.
The Judgment of the Court was delivered by
JASWANT SINGH, J.-This is an appeal by certificate
granted by the High Court of Judicature at Madras under
Article 133(1) (a) and (b) of the Constitution of India
against its judgment and decree dated December 8, 1966 in A.
S. No. 609 of 1961.
The facts culminating in this appeal lie in a short
compass and may be briefly stated thus:
Kota Venkatachala Pathy whose legal representatives are
the respondents herein and Kota Narayanan, the appellant
herein, were real brothers being the sons of one Kota
Rangaswami Chettiar. Together with their cousin Subramanyam
Chettiar, the son of Kota Kuppuswami Chettiar, the brother
of Kota Rangaswami Chettiar, they formed a joint family
which was a trading one. Prior to 1927, Subramanyam Chettiar
was the manager and karta of the family. After 1927 Kota
Venkatachala Pathy took over the management of the family
and its properties. By registered deed dated May 29, 1929
(Exh. A-1) a partition of joint family properties was
effected between Subramanyam Chettiar on the one hand and
Kota Venkatachala Pathy and his brother, Kota Narayanan, who
was then a minor, on the other, each branch taking a half
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share. As karta of the joint family. Subramanyam Chettiar
had, before November 20, 1927 incurred debts to the tune of
Rs. 9,506/- from several creditors. Five items of joint
family properties detailed in Schedule D-1 to the deed of
partition were earmarked for the discharge of the aforesaid
debts and were given over to Kota Venkatachala Pathy who was
made responsible for the discharge of the debts. These debts
were discharged by Kota Venkatachala Pathy before March 26,
1934. On September 7, 1956, Kota Venkatachala Pathy brought
a suit, being No. O. S. 87 of 1956, in the Court of the
Subordinate Judge of Vellore, North Arcot, for partition and
separate possession of 3/4th of the properties set out in
Schedule ’A’ to the plaint, 1/2 of the properties set out in
Schedule A-1 to the plaint and whole of the properties set
out in Schedule ’B’ to the plaint. One of the items namely,
item No. 1 of Schedule
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’B’ to the plaint which consists of four shops is what
remains undisposed out of the properties mentioned in
Schedule ’D-1’ to the deed of partition which were set apart
for the purpose of discharging the aforesaid debts incurred
by Subramanyam Chettiar before 1927.
The case as set out by Kota Venkatachala Pathy in his
plaint was that the properties set out in Schedule ’B-1’ to
the deed of partition were given over to him absolutely for
the discharge of the aforesaid debts set out in Schedule ’D’
to the deed of partition and it was provided in the said
deed that either he would discharge the debts mentioned in
the deed or undertake to pay the same himself within a month
from the registration of the document and obtain and hand
over to Subramanyam Chettiar receipts from the creditors
specifically mentioned there that Subramanyam Chettiar was
not liable for payment of the aforesaid debts and that if
the aforesaid conditions were not satisfied by him i.e. by
Kota Venkatachala Pathy and any loss was occasioned to the
former, the latter would be liable for those losses. The
case of Kota Venkatachala Pathy further was that since he
had discharged the debts detailed in Schedule ’D’ to the
deed of partition, he was entitled to the exclusive
possession of item No. 1 of Schedule ’B’ to the plaint as
his self acquired property by virtue of the terms of deed of
partition and also to the rest of the properties detailed in
the said Schedule ’B’ as he had purchased the same with his
own funds. Kota Venkatachala Pathy based his claim of 3/4th
share in properties detailed in Schedule ’A’ to the plaint
on the ground that he was entitled to 1/4th by birth as a
coparcener and the rest of the half share allotted to
Subramanyam Chettiar as he had purchased the same from
auction purchasers. The relief for accounts was based by
Kota Venkatachala Pathy on the ground that there was an oral
division in status in 1938 and it was the appellant who was
managing the properties either as a co-owner or as an agent
since then.
The appellant resisted the claim of extra share made by
Kota Venkatachala Pathy and contended that the latter was
entitled only to half share in all the suit properties.
According to the appellant, the family debts set out in
Schedule ’D’ to the aforesaid deed of partition was
discharged by Kota Venkatachala Pathy not only by the sale
of the properties set out in Schedule ’D-1’ to the deed of
partition but also by substantially utilising other joint
family properties available for division. It was also
contended by the appellant that since Kota Venkatachala
Pathy acted as Karta of his branch, the aforesaid deed of
partition should be construed as meaning that any item
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salvaged or saved after the discharge of the aforesaid
family debts would be ancestral property and not exclusive
property of the plaintiff. As regards the properties other
than item No. 1 of Exhibit ’B’ of the plaint, it was
contended by the appellant that they were also to be shared
half and half between him and Kota Venkatachala Pathy as
they were purchased from the joint family funds. With regard
to the relief for rendition of accounts, the appellant
contended that he became the Karta of the joint family in
1947 and Kota Venkatachala Pathy was not entitled to the
relief of rendition of account till the date of the suit
when alone there was a division of status and not in 1938 as
claimed by Kota Venkatachala Pathy.
640
On a consideration of the evidence adduced in the case,
the Trial Court by its judgment and decree dated September
12, 1960, held that there was no division in status till the
date of the suit. With regard to item No. 1 of Schedule ’B’
to the plaint, the Trial Court held that the total amount of
debts paid was Rs. 15,669-6-2 and out of D-1 Schedule
properties of the estimated value of Rs. 9,506/- only Rs.
2,575/- were realized from the sale of four items thereof
and the balance of the debts were discharged from out of the
joint family assets like jewels, outstandings realized and
other immovable properties allotted to Rangaswamy Chettiar’s
branch in 1929 partition and that the conversion of such
joint family assets was made by Kota Venkatachala Pathy who
was managing the family till 1957. The Trial Court
accordingly held that the properties namely item No. 1 of
Schedule ’B’ to the plaint should be deemed to have been
salvaged by detriment to the paternal estate. The Trial
Court also found that as the defendant-appellant herein was
a minor at the time of 1929 partition and Kota Venkatachala
Pathy, the original plaintiff had acted as his guardian, the
latter must be deemed to have acted for the former also when
he undertook to discharge the debts and that as between the
original plaintiff and defendant to whom the properties were
jointly allotted under Exhibit A-1, there was a position of
implied trust in respect of properties set out in Schedule
’A’ and ’B’ to the plaint. The Trial Court also upheld the
appellant’s plea of blending of all the properties by Kota
Venkatachala Pathy. The Trial Court also found that
properties covered by sale deeds Exhibit B-1 and Exhibit B-4
which originally formed part of the half share allotted to
Subramanyam Chettiar though purchased by the original
plaintiff in his own name were joint family properties and
as such were liable to partition in equal shares. The Trial
Court negatived the claim of Kota Venkatachala Pathy for a
share in excess of one half in the aforesaid properties and
held that he was entitled to only one half of all the suit
properties. The Trial Court also decreed that the appellant
shall render true and proper accounts in respect of the
income and expenses regarding half share of the respondents
in the properties mentioned in Schedule A, A-1 and to the
plaint from 1947 onwards but did not give directions as to
the assets and funds of capital nature withdrawn by Kota
Venkatachala Pathy from out of the joint family utilised for
his own separate and independent business.
Aggrieved by this judgment, Kota Venkatachala Pathy,
the original plaintiff, whose legal representatives are the
respondents herein, preferred an appeal to the High Court of
Judicature of Madras. By its judgment dated December 8,
1966, the High Court allowed the appeal in part, set aside
the judgment and decree of the Trial Court and decreed the
suit brought by the original plaintiff with regard to item
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No. 1 of Schedule to the plaint holding that the properties
mentioned in Schedule D-1 to the partition deed were
conveyed absolutely to the original plaintiff in lieu of his
undertaking to be liable to discharge the entire debts
mentioned in Schedule ’D’ to the partition deed whether the
properties were sufficient or insufficient to discharge the
same and if there was any surplus out of the properties he
was to have the same absolutely, but if the properties were
not sufficient, he was to dis-
641
charge the debts on his own responsibility without making
Subramanyam Chettiar liable for the same; that though a
portion of the debts were discharged out of the joint family
funds that only cast on the legal representatives of the
original plaintiff a liability to account to the appellant
for such drawings as the original plaintiff might have made
and whatever amount was found to be so drawn would have to
be debited against his i.e. the original plaintiff, after
giving him credit for whatever amount he might have put into
the common fund. The High Court further held that in
determining the net drawals by the original plaintiff from
the joint family funds, credit would be given to him for
drawings made by the appellant by way of receipts of rents
from item No. 1 of Schedule ’B’ to the plaint; that the
original plaintiff was not liable to account for the joint
family properties as there was no proof of mismanagement,
mishandling or improper application of joint family
properties or funds and that the defendant was also not
liable to account to the original plaintiff for the
management of the properties of which he was in charge. The
High Court affirmed the judgment of the Trial Court in
regard to the properties covered by Exhibits B-1 and B-4
holding that these were acquired with the common funds of
the original plaintiff and the appellant which he was
managing. Dissatisfied with this judgment and decree, the
defendant has come up in appeal to this Court.
The learned counsel for the appellant has, while
supporting the appeal, strenuously urged that the properties
mentioned in Schedule D-1 to the deed of partition (Exh. A-
1) were not intended by the parties thereto to be given to
Kota Venkatachala Pathy as his separate properties but were
given to him only for a specific purpose viz. for
discharging the family debts; that the ancestral properties
could not be converted into separate properties by means of
an arrangement arrived at between Subramanyam Chettiar and
Kota Venkatachala Pathy; that the character of a property
has to be decided after considering whether it is saved as a
result of detriment to the paternal estate and as in the
instant case, property mentioned at item No. 1 of Schedule
D-1 to the deed of partition was saved by using the joint
family assets, the said property could not but be regarded
as the ancestral property of the parties which was subject
to partition. He has further urged that in any event D-1
Schedule properties lost the character of separate
properties as they were blended by Kota Venkatachala Pathy
with the joint family properties. He has lastly urged that
the directions given by the High Court with regard to
accounting cannot be sustained as they are neither clear nor
justified.
The principal question for determination in this case
is whether the properties mentioned in D-1 Schedule to the
deed of partition were separate properties of Kota
Venkatachala Pathy or retained the character of ancestral
properties. The answer to this question depends largely on
the construction of the deed of partition (Exh. A-1),
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material portion whereof is reproduced below for facility of
reference:-
"Venkatachala Pathy the individual No. 2 shall
discharge the debts described in ’D’ Schedule, the
debts payable to outsiders by Subramanyam Chetti
amongst us for the
642
amount borrowed for conducting the family business
prior to 20-11-27 and individual No. 2 for discharging
the loans, shall enjoy absolutely the properties
mentioned in Schedule D-1. Venkatachalapathi Chetti,
the individual No. 2 shall either discharge the debts
within a month from the date of registration of this
document and obtain receipt for the creditors stating
that Subramanyam Chetti is not liable to the aforesaid
loans and shall give those receipts to Subramanyam
Chetti. If it is not done so and thereby any loss is
caused to Subramanyam Chetti by creditors,
Venkatachalapathi Chetti shall be liable for those
losses. The aforesaid Venkatachalapathi Chetti himself
shall get possession of D-1 Schedule properties given
to him in lieu of discharging the aforesaid debts
whether those properties are adjusted to the aforesaid
debts, or whether there remain any balance or any
deficit".
The salient features of the deed as extracted above
are: (1) sole responsibility for discharge of the debts
detailed in Schedule D-1 to the deed of partition which were
payable to the outsiders was placed on Kota Venkatachala
Pathy. (2) The liability cast on Kota Venkatachala Pathy for
the discharge of the debts was not to the extent of the
properties detailed in Schedule D-1 to the deed of partition
but was irrespective of the sufficiency or otherwise of the
properties and any deficit or surplus was to be met or
enjoyed by him exclusively. (3) The debts were to be
discharged by Kota Venkatachala Pathy within a month of the
registration of the deed and he was required to have it in
writing from the creditors that Subramanyam Chettiar was no
longer liable for the debts. (4) In case, there was a
default on the part of Kota Venkatachala Pathy to discharge
the debts as undertaken by him and any loss was caused to
Subramanyam Chettiar, to the former was to indemnify the
latter. (5) Exclusive dominion, control and enjoyment of the
properties mentioned in Schedule D-1 was vested in Kota
Venkatachala Pathy in consideration of the obligation
undertaken by him to discharge the debts.
The aforesaid salient features leave no manner for
doubt that the properties mentioned in D-1 Schedule to the
deed of partition were given to Kota Venkatachala Pathy in
lieu of the personal undertaking given by him to discharge
the aforesaid debts. In other words, the conveyance of the
properties to Kota Venkatachala Pathy was in the nature of
remuneration for the services to be rendered by him. It will
be useful in this connection to refer to the decision of
this Court in Raj Kumar Singh Kukam Chandji v. Commissioner
of Income-tax, Madhya Pradesh where on the question whether
the managing director’s remuneration received by the
assessee was assessable in his individual hands or in the
hands of the assessee’s Hindu undivided family, this Court
expressed the view that the remuneration was assessable as
the assessee’s individual income and not as the income of
his Hindu undivided family. We are, therefore, of the
643
view that Schedule D-1 properties were given absolutely to
Kota Venkatachala Pathy as his separate properties.
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Let us now see as to whether the aforesaid arrangement
entered between the members of the Hindu undivided family
whereby properties mentioned in Schedule D-1 to the deed of
partition were made over to Kota Venkatachala Pathy was
valid according to Hindu Law. A reference to page 426 of
Mayne’s Treatise on Hindu Law and Usage (11th Edition) makes
it clear that while dividing the family estate, it is
necessary for the joint family to take account of both the
assets and the debts for which the undivided estate is
liable and to make provision for discharge of the debts. It
is also well settled by the decisions of this Court in Sahu
Madho Das v. Pandit, Mukand Ram Maturi Pullaian v. Maturi
Narasimham and S. Shanmugam Pillai & Ors. v. K. Shanmugam
Pillai Ors. that if family arrangements which are governed
by a special equity peculiar to themselves or entered into
bonafide to maintain peace or bring about harmony in the
family and the terms thereof are fair taking into
consideration the circumstances of the case, every effort
must be made by the Court to recognise and sustain it.
Examining the matter in the light of these principles, we
find that by the aforesaid arrangement both Subramanyam
Chettiar and the defendant-appellant were absolved of the
responsibility to discharge the family debts and liability
was cast on Kota Venkatachala Pathy alone to discharge the
same irrespective of the fact whether the properties
mentioned in Schedule D-1 to Exhibit A-1 ultimately turned
out to be sufficient or insufficient to meet the burden.
Thus the arrangement being bonafide and its terms being
fair, we cannot but hold that it was valid and the
properties detailed in Schedule D-1 to the deed of partition
became separate properties of Kota Venkatachala Pathy from
the date of the execution of the deed of partition and are
not liable to partition.
This takes us to the question as to whether there was,
as contended by the appellant, any blending of the
properties mentioned in Schedule D-1 to the deed of
partition with the rest of the properties of the joint
family consisting of Kota Venkatachala Pathy and the
appellant. It is true that property separate or self-
acquired of a member of a joint Hindu family may be
impressed with the character of joint family property if it
is voluntarily thrown by the owner into the common stock
with intention of abandoning his separate claim therein but
the question whether a coparcener has done so or not is
entirely a question of fact to be decided in the light of
all the circumstances of the case. It must be established
that there was a clear intention on the part of the
coparcener to waive his separate rights such an intention
cannot be inferred merely from the physical mixing of the
property with his joint family or from the fact that other
members of the family are allowed to use the property
jointly with himself or that the income of the separate
property is utilised out of generosity or kindness to
support persons whom the holder is not bound to support or
from the failure to maintain separate accounts for an
644
act of generosity or kindness cannot ordinarily be regarded
as an admission of a legal obligation. (See Lakkireddi
Chinna Venkata Reddi & Ors. v. Lakkireddi Lakshmama and G.
Narayana Ram v. G. Chamaraju & Ors..
In the instant case we are unable to find that there
was any intention on the part of Kota Venkatachala Pathy of
abandoning his separate rights over the properties set out
in Schedule D-1 to the deed of partition. The mere fact that
these properties were not separately entered by Kota
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Venkatachala Pathy in the account books or that no separate
account of the earning from these properties was maintained
by him cannot rob the properties of their character of self
acquired properties. We are accordingly of the view that
there was no blending of the properties by Kota Venkatachala
Pathy as contended by the appellant.
The mere fact that some amount out of the joint family
funds was used for discharge of the debts mentioned in
Schedule to the deed of partition is also of no consequence.
If any amount out of the joint family funds was used for the
discharge of the outstandings payable to the outside
debtors, the legal representatives of Kota Venkatachala
Pathy would, as pointed out by the High Court be liable for
them.
There is also no substance in the last contention
advanced on behalf of the appellant. The legal position is
well settled that in the absence of proof of
misappropriation or fraudulent or improper conversion by the
manager of a joint family a coparcener seeking partition is
not entitled to call upon the manager to account for his
past dealing with the family property. The coparcener is
entitled only to an account of the joint family property as
it exists on the date he demands partition. In the instant
case there being no evidence to establish any
misappropriation or fraudulent conversion of the joint
family property by Kota Venkatachala Pathy during the period
he acted as karta of the family, we are unable to interfere
with the direction issued by the High Court which is just
and proper.
For the foregoing reasons, the appeal fails and is
hereby dismissed but in the circumstances of the case
without any order as to costs.
V.P.S. Appeal dismissed.
645