Supreme Court in Ammathayee @ Perumalakkal v. Kumaresan @ Balkrishnan, AIR 1967 SC 569 has observed :-
Hindu Law on the question of gifts of ancestral property is well settled. So far as moveable ancestral property is concerned, a gift out of affection may be made to a wife, to a daughter and even to a son, provided the gift is within reasonable limits. A gift for example of the whole or almost the whole of the ancestral moveable property cannot be upheld as a gift through affection. (See Mulla’s Hindu Law, 13th Edn., p. 252, para 225). But so far as immovable ancestral property is concerned, the power of gift is much more circumscribed than in the case of moveable ancestral property. A Hindu father or any other managing member has power to make a gift of ancestral immovable property within reasonable limits for “pious purposes”. (see Mulla’s Hindu Law, 13th Edn., para 226 p. 252). Now what is generally understood by “pious purposes” is gift for charitable and/or religious purposes. But this Court has extended the meaning of “pious purposes” to cases where a Hindu father makes a gift within reasonable limits of immovable ancestral property to his daughter in fulfilment of an antenuptial promise made on the occasion of the settlement of the terms of her marriage, and the same can also be done by the mother in case the father is dead.
Reference can be made of Kamla Devi v. Bachulal Gupta, AIR 1957 SC 434. Similarly recently Supreme Court in Thimmaiah and others v. Ningamma and other, AIR 2000 SC 3529(2), has observed that Gift of ancestral property made by father to his daughter, in the absence of any evidence that it was made within reasonable limit or in fulfilment of ante-nuptial promise (if any) made on occasion of settlement of terms of daughter’s marriage such gift is not valid even if denor died after Hindu Succession Act 1956 came in force and sole surviving coparcener had given consent to such gift. Rationale behind the impermissibility of such dispositions of coparcenary property is protection of interests of other coparceners.
In Dev Kishan v Ram Kishan, the Karta affected a mortgage, a sub-mortgage and a sale of two houses belonging to the joint family worth around 8000 to 9000, for a consideration of Rs 400 to Rs 900, which according to him were to be utilized for the marriage of his 3 minor children. The court invalidated the transaction and stated that:
- The transaction is void as it is opposed to the public policy, i.e. child marriage,
- The members of the family had alternative incomes. And hence, no mortgage was needed,
- The transfer of the property was grossly undervalued as the transfer should have been made inadequate consideration.
This type of transaction has been illustrated in the case of Hanooman Prasad Pandey v Mussammat Babooee.In this case, Hanooman was in a business of providing loans. He entered into a loan contract with Raja Singh. After taking a loan, he died leaving behind a minor son Lal Singh and his wife, Mussammat. There was an order of Malgoozaree which stated that there can be confiscation of property, so the wife entered into a transaction of the mortgage.
On attaining majority, Lal singh challenged the transaction on the grounds that:
- Mussammat was a pardanashee woman and, therefore, the transaction was a vitiated one.
- The transaction was with specific reference to ancestral property, and hence, she cannot deal with that kind of property and hence the transaction is void, and the appellant must return the property.
The court for the first time used the term ‘benefit of estate’ but did not explain it properly. But it laid down certain facts:
- Mussammat was de facto guardian whose guardianship with respect to the property matters are not in dispute, and the revenue is proof of that.
- The transaction entered into was for avoiding the danger which was impending on the shape of malgoozaree, which could have led to the confiscation of property.
- Mussammat was very much capable of entering into a contract for the reason that she didn’t enter into the unequal
Hence, the court concluded that the transaction entered into was validated in law as it was in the nature of averting a danger to the ancestral property.
This type of transactions has been discussed by the court in the case of Balmukund v Kamlavati. In this case, a Hindu joint family owned a small portion of a big plot owned by the alienee, who approached the Karta for the purchase of the joint family land, and offered him a higher consideration than the market value. Initially accepting this offer, the Karta accepted the earnest money, but he later failed to execute the sale deed. The alienee, therefore, filed a suit for specific performance of the contract, but the other coparceners objected to it on the grounds of invalidity.
Court held that the doctrine of ‘benefit of estate’ emerged from the doctrine of ‘defensive transaction.’ However such transaction also requires a minimum degree of prudence on the part of the Karta. The idea of ‘benefit of estate’ doesn’t fit in this case as the family was in affluent circumstances and that there was no evidence to show that the Karta was finding it difficult to manage this property.
The courts have laid down some guidelines so as to check that validity of transaction under this doctrine:
- When the alienation is for defensive or protective purpose.
- When it brings any sort of advantage or improvement to the family estate.
- Where the Karta exercises his prudence suitable to family estate subject to:
- The degree of prudence is higher than the level expected in the case of exclusive property.
- How the sale proceeds are used; because it has to be used for the benefit of the family property.
Present article is for educational purposes alone, please take independent Legal advice from a professionals.
Advocate Prakhar Gupta, Arms Length Legal