N the manager of the joint family gifted a small portion of Zamindari land belonging to the joint family, to a stranger with the object of defeating a claim for pre-emption. Other coparcener challenged the alienation as being without legal necessity. Decide

Question: N the manager of the joint family gifted a small portion of Zamindari land belonging to the joint family, to a stranger with the object of defeating a claim for pre-emption. Other coparcener challenged the alienation as being without legal necessity. Decide. [DJS 1979]

Find the question and answer of Hindu Law only on Legal Bites. [N the manager of the joint family gifted a small portion of Zamindari land belonging to the joint family, to a stranger with the object of defeating a claim for pre-emption. Other coparcener challenged the alienation as being without legal necessity.]

Answer

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, 6 MIA 393. 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."

In Bageshwari v. Deopatti, 1965 Pat. 416, 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 the benefit of the estate. Where Karta himself executed a permanent lease of joint family property without any legal necessity or benefit to the estate, the contract cannot be enforced. Once legal necessity is proved, it is for the Karta to decide 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 Subodh Kumar and others v. Bhagwant Namdeo Rao Mohatre, AIR 2007 SC 1324, held that a Karta has the 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. 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 Dudhnath v. Satnarain Ram, AIR 1966 All 315, 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 a legal necessity, but also that the father or the manager acted like a prudent man and did not sacrifice the property for inadequate consideration.

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 a legal necessity.

Legal Necessity 

The term "legal necessity" has to be read with a wider connotation. It is to be interpreted with due regard to the conditions of modem life. If it is shown that the family's need was for that thing or that article, and if the 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:

• Payment of Government revenue and debts payable out of the family property;
• Maintenance of coparceners and their family members;
• Marriage expenses of coparceners and daughters of the coparceners;
• Performance of Shraddha, funeral, and other religious ceremonies of the members of the joint family;
• Expenses of necessary litigation;
• Costs of defending the head of the family or any other member of the joint family against serious criminal charges;
• Payment of debts incurred for the family business;
• Expenses for augmenting the means of livelihood of the members of the family;
• Cost of building a residential house for the family and expenses for repairing the family house;
• Sale of family property with the object of conveniently adjusting the shares of the rest of the family;
• Sale of family property for migrating to a different place for better living.

In Smt. Rani v. Smit. Santa Bala Debnath, AIR 1971 SC 1028, 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 inquiries 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, AIR 2008 SC 1490, where 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, the suit for sale set a side of joint family property on the ground that it was not for legal necessity.

Benefit of Estate 

An alienation of joint family property can be effected for the benefit of the estate also. The Privy Council has elaborately illustrated as to what are the incidents of benefit to estate in Palaniappa v. Devsikmony, 1917 PC 68. It laid down that "the preservation", however, of the estate from extinction, the defense 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 a broad sense legal necessity includes 'benefit to the estate.

For the transaction to be regarded as beneficial to the family, it need not be of a defensive character 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 a 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 the estate.

In Gollamudi Shiva Kumar v. Indian Overseas Bank, AIR 1978 AP 37, the Andhra Pradesh High Court observed:

"The Karta of a joint family can 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 the 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 a 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."

In Balzor Singh v. Raghunandan Singh, (1932) 54 All 85, it was held that a deed of exchange executed by a manager of the joint family with a view to defeat a suit for pre-emption, even though made for the property of equal value, was held not to bind the other members of the family.

In the case of Mohib Ali Khan v. Baldeo Prasad, (1939) All 305, a gift by the manager of a joint family of a small portion of zamindari land purchased by him to a stranger, with the object of defeating a claim for pre-emption was held to be a transaction for the benefit of the family and therefore binding on the family.

It is submitted that a transaction to be binding on the family must be one that not only confers a benefit upon the estate but is necessary for its good management.

As per the above cases discussed and the laws established in the present question the coparceners have the right to challenge the alienation as being without legal necessity. As the manager of the joint family gifted a small portion of Zamindari land belonging to the joint family, to a stranger with the object of defeating a claim for pre-emption. And pre-emption is not covered under the ground of legal necessity or benefit of the estate.

Hindu Law – Notes, Case Laws, And Study Material