Full Judgment Text
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PETITIONER:
INSPECTOR ASSISTANT COMMISSIONER OF AGRICULTURAL INCOME TAX
Vs.
RESPONDENT:
V.K. RAMUNNI PANIKKAR, RECEIVER OF ZOMORINESTATE
DATE OF JUDGMENT05/10/1971
BENCH:
HEGDE, K.S.
BENCH:
HEGDE, K.S.
GROVER, A.N.
CITATION:
1971 AIR 2513 1972 SCR (1) 934
ACT:
Hindu Succession Act, 1956, s. 7(3) and Kerala Agricultural
Income-tax Act, 1950, s. 24(1)-Sthani liable to pay tax-
Death of Sthani--Liability of other members of Tarwad.
HEADNOTE:
Section 7(3) of the Hindu Succession Act, 1956, by a fiction
deems that the Sthanam property stands divided amongst the
sthani and the :members of his tarwad, a split second before
the death of the sthani. The members of the tarwad took the
property as co-owners and not as heirs ,of the deceased
sthani. The purpose of the fiction was to gradually abolish
the sthanams and to provide for the devolution of the
sthanam properties on the members of sthani’s tarwad except
as regards one per capita share which the personal heirs of
the sthani are to inherit as the heirs of the sthani.
On May 2, 1958, the Zamorin of Calicut died. In respect of
the agricultural income-tax under the Kerala Agricultural
Income-tax Act, 1950, which he was liable to pay for the
period November 1, 1956 to March 31, 1958, the person who
took possession of the sthanam property claiming to be the
succeeding sthani was assessed to tax as the sursthani
After his death, the Agricultural Income-tax Officer
attempted to collect the tax from the successive senior most
members of the Zamorin’s family. The validity of the
assessment was challenged and the High Court held that the
liability to pay the tax and penalty imposed was only that
of the personal heirs of the person who took possession of
the properties immediately after the death of the Zamorin,
and that, only to the extent of the assets of that person
which had come into their possession. Thereafter, it was
ordered by the Department that, as the entire Sthanam
property bad devolved on the 693 members of the tarwad all
those persons were liable to pay the tax and penalty, but
the order was made without notice to the parties. When the
authorities threatened to proceed against the properties in
the hands of the Receivers, who were appointed in the par-
tition suit in the Zamorin’s family, the Receivers filed a
writ petition challenging the right of the Agricultural
Income-tax Officer to collect the arrears of tax and penalty
from out of the properties in their hands. The High Court
quashed the demand holding that the only persons who were
liable to pay the tax were the personal heirs of the Zamorin
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as it was they who had received the income.
Dismissing the appeal to this Court,
HELD:Under the law relating to sthanams the sthani was alone
entitled to the income of the sthanam properties. Therefore
the income of the sthanam property in the present case,
during November 1, 1956 to March 31, 1958 was the exclusive
property of the Zamorin who has the sthani. Hence, he alone
was liable to pay the tax. Under the Agricultural Income-
tax Act, no charge is created on property in respect of the
arrears of agricultural income-tax. Under s. 24(1) of the
Act the liability to pay
935
the arrears of tax due from the deceased sthani fell on his
personal heirs and that, only to the extent they received
any of his assets. The assessment made of the person who
took possession of the properties after the Zamorin’s death
as the successor sthani was an invalid assessment, because,
legally he never became the sthani. On the death of the
Zamorin the sthanam came to an end and the only persons who
could have represented the estate of the Zamorin were his
personal heirs who, however, were not made parties to the
assessment. [938 F-H; 939 A-B]
Income-tax Officer, Kozhikode v. Mrs. Susheela Sadananda, 57
I.T.R. 168, K. K. Kochuni v. State of Madras, [1960] 3
S.C.R. 887 and M. K. B. Menon v. Asstt. Controller of
Estate Duty, C.A. No. 1137/1969 dt. 5-10-1971, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1397 of 1969.
Appeal from the judgment and order dated January 1, 1968
of theKerala High Court in O. P. No. 2413 of 1965.
V.A.Seyid Muhammad and A. G. Pudissery, for the appellant.
alias
A. R. Somanatha Iyer and P. Kesava Pillai for the
respondent.
The Judgment of the Court was delivered by
Hegde J. One K. C. Sreemanavikraman alias Eattan Raja was
the Zamorin of Calicut. He was a Sthanamdar. In respect of
the sthanam property, he was liable to pay agricultural
income-tax under the Kerala Agricultural Income-tax Act,
1950 (in brief the Act) for the period from November 1, 1956
to March 31, 1958. Sreemanavikraman Raja died on May 2,
1958. Thereafter on May 12, 1958, Sthanam Properties (As-
sumption of Temporary Management and Control) and Hindu
Succession (Amendment Act 1958), Act 28 of 1958 came into
force. After the death of Sreemanavikraman Raja, the
sthanam property was taken possession of by Kunhammaman Raja
claiming to be the succeeding sthanamdar. In respect of the
assessment due for the, period November 1, 1956 to March 31,
1958, Kunhammaman Raja was assessed to tax as the successor
sthanamdar. The said Kunhammaman Raja died on December 23,
1960 without making any payment. Thereafter the next senior
most member in the Zamorin family, P. C. Cheria Kunjunni
Raja took possession of the sthanam property. He also died
soon after. During the life time of P. C. Cheria Kunjunni
Raja, the Agricultural Income-tax Officer imposed a penalty
of Rs. 5,000/- for non-payment of the tax referred to
earlier. P. C. Cheria Kunjunni Raja paid a sum of Rs.
20,100/out of the tax and penalty due, as coercive
proceedings were threatened to be taken against him. On the
death of P. C. Cheria Kunjunni Raja, the next senior most
member in the Zamorin family was K. C. Cheria Kunjunni Raja.
When the
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936
Agricultural income-tax Officer attempted to collect the tax
imposed under the assessment order mentioned earlier from K.
C. Cheria Kunjunni Raja, he filed a petition before that
officer representing that he had nothing to do with the
sthanam property and the sthanam property stood divided
under s. 7(3) of the Hindu Succession Act, 1956 on the death
of Sreemanavikraman on May 2, 1958. The Hindu Succession
Act, 1956 had come into force on June 18, 1956. After the
receipt of that representation, the Agricultural Income-tax
Officer passed an order on March 25, 1963 stating that as
the successors of the Zamorin who died on 2-5-1958 had
designated themselves as Zamorin Rajas, they have the
liability to pay the arrears due to the Government. He
directed K. C. Cheria Kunjunni Raja to pay the tax and
penalty imposed. Aggrieved by that order K. C. Cheria
Kunjunni Raja filed a writ petition in the Kerala High Court
challenging the validity of the threatened proceedings
against him. The High Court quashed the demand notices
issued by the Agricultural Income-tax Officer to K. C.
Cheria Kunjunni Raja. It held that the assessment having
been made on Kunhammaman Raja, his share alone was liable to
be proceeded against. It further held that the liability’
to pay that tax and penalty was that of the personal heirs
of Kunhammaman Raja and that only to the extent, they had
come into possession of the assets of the said Raja.
Thereafter the Inspecting Assistant Commissioner, Kozhikode
ordered that as the entire sthanam property had devolved on
the 693 members, all those persons were liable to pay the
arrears of the tax and penalty. This order was made without
notice to the parties.
Meanwhile in the partition suit in the Zamorin’s family, the
court appointed two joint receivers. The receivers objected
to the order of the Assistant Commissioner demanding the
arrears of tax referred to earlier from them. They
represented to him that the estate in their hands is not
liable to pay the arrears of tax and penalty demanded. But
those representations were not accepted by the authorities.
They threatened to proceed against the assets in the hands
of the receivers. At that stage, the receivers filed the
writ petition from which this appeal arises. Therein they
challenged the right of the Agricultural Income-tax Officer
to collect the arrears of tax and penalty from out of the
properties in their hands. The question before the High
Court was whether the tax due from Manavikraman Raja was
realisable from the assets in the hands of the receivers.
The writ petition was heard by a full bench of three judges.
By a majority, the High Court came to the conclusion that
the only persons who were liable to pay the tax in question
were the personal heirs
937
of Sreemanavikraman Raja who had received the income. The
Court held that in view of s. 7(3) of the Hindu Succession
Act, the sthanam property stood divided at the time of the
death of Sreemanavikraman Raja into 693 shares, out of which
692 shares went to members of the Tarwad of the deceased and
one share to his Personal heirs-wife and children. It
opined that the tax due from Manavikraman Raja could have
been levied and collected only from his personal heirs as
they alone were liable to pay that tax. As a result of that
conclusion, it quashed the impugned demand.
Section 7 of the Hindu Succession Act provides for the devo-
lution of interest in the property of a tarwad, tavazhi,
kutumba, kavaru, or illom. Section 7(3) provides :
"Notwithstanding anything contained in sub-s.
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(1) when a sthanamdar dies after the
commencement of this Act, the sthanam property
held by him shall devolve upon the members of
the family to which the sthanamdar belonged
and the heirs of the sthanamdar as if the
sthanam property had been divided per capita
immediately before the death of the sthanamdar
among himself and all the members of his
family then living and the shares falling to
the members of his family a the heirs of the
sthanamdar shall be held by them as their
separate property."
"Explanation-For the purposes of this sub-
section the family of a sthanamdar shall
include every branch of that family, whether
divided or undivided, the male members of
which would have been entitled by any custom
or usage to succeed to the position of
sthanamdar if this Act had not been passed."
We have considered the scope of this section in Civil Appeal
No. 1137 of 1969. Hence it is sufficient for our present
purpose to state that in view of s. 7(3) of the Hindu
Succession Act, it must be held that on the death of
Sreemanavikaraman Raja, each of the members of his tarwad
took a per capita share in the sthanam property as co-owners
and not as his heirs. His personal heirs took the share
which the deceased was deemed to have got as his share when
he was taking his last breath. Section 7(3) of the Hindu
Succession Act embodies a fiction. The purpose of that
fiction was to gradually abolish the sthanams and to provide
for the devolution of the sthanam properties on the members
of sthani’s tarwad except as regards one per capita share
which the personal heirs of the sthanamdar are to inherit as
the heirs of the sthanamdar.
938
The nature of a sthanam was considered by this Court in K.
K. Kochuni and ors. v. The State of Madras and ors. (1)
Therein this Court observed that according to the custom,
Sthanam means a position of dignity and respect and for
maintaining that position, properties were attached to that
office and the same was held by the "stani". Stani is
solely entitled to the income of that property during his
life time. The senior most member of a tarwad usually
became the sthanamdar of the sthanam attached to that
tarwad. On his succession to stanom. he stood separated
from the rest of the family. He solely became entitled to
the stanom property but he gave up his right in the tarwad
property. All the same he and the members of his tarwad had
the same right of succession to the properties of each other
as if his severance from the family had been the result not
of his succession to the stanom, but a voluntary division
between him and the rest of the family.
Whatever might have been the customary law, s. 7(3) of the
Hindu Succession Act-the validity of which was not in issue
before us-by a fiction deems that the sthanam property stood
divided amongst the stani and the members of his tarwad, a
split second before his death. From the language of the
section. it is clear that the members of the tarwad took the
property as co-owners and not as the heirs of the deceased
stani. This fiction was created for the purpose of
providing for the devolution of the sthanam properties. The
Act 28 of 1958 came into force only on May 12, 1958.
Therefore that Act cannot have any effect on the sthanam
with which we are concerned in this case because that stanom
stood destroyed on May 2, 1958. Hence we need not refer to
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the provisions of that Act.
The income of the sthanam property during November 1, 1956
to March 31, 1958 was the exclusive property of Sreemana-
vikaraman Raja. He was alone entitled to that income.
Therefore he alone was liable to pay the tax. Under the
Agricultural ,Income-tax Act, no charge is created on
property in respect of the arrears of agricultural income-
tax. That being so, the liability to pay the arrears of tax
due from the deceased stani fell on his personal heirs and
that only to the extent they received any of his assets.
This position is clear from S. 24(1) of the Act which
provides that "when a person dies, his executor,
administrator or other legal representative shall be liable
to pay out of the estate of the deceased person to the
extent to which the estate is capable of meeting the charge,
the agricultural income-tax assessed as payable by such
person or any agriculture income-tax which would have been
payable by him under this Act, if be had not died".
(1) [1960] 3 S.C.R. 887.
939
The assessment made on Kunjunni Raja in his capacity as the
successor sthanamdar was an invalid assessment. Legally he,
never became the sthanamdar. There was no sthanam after
the, death of Manavikraman Raja. With the death of
Manavikraman Raja the sthanam came to an end. The only
persons who could have represented the estate of
Sreemanavikraman Raja were his personal heirs. They were
not made parties to the assessment. No notice of the
assessment proceedings was given to them. Kanjunni Raja was
not one of his legal representatives. Even if it is
considered that the sthanam properties had devolved on the
members of the tarwad by succession. Kanjunni Raja alone
could not have represented the entire body of successors
numbering 692. There was no question of any bona fide
enquiry by the assessing authority. It was clearly a case
of misunderstanding the legal position. Further, it does
not appear that Kunjunni Raja was assessed as the legal
representative of the deceased stani. He appears to have
been assessed as the successor stani liable to pay the debts
due from the estate. Hence the assessment was not made in
accordance with law, see Income-tax Officer, Kozhikode v.
Mrs. Susheela Sadananda and anr.(1). In this view of the
matter it is not necessary for us to consider the other
provisions of the Act providing for the assessment and
collection of the tax due from a deceased person.
In the result this appeal fails and the same is dismissed
with costs.
V.P.S. Appeal
dismissed.
(1) 57 I.T.R. 168
940