Supreme Court Upholds Joint Family Business Claim in Property Dispute: Vitthalrao Marotirao Navkhare vs. Nanibai (Dead) (2024) INSC 283

Date of the Judgment: 8 April 2024

Citation: 2024 INSC 283

Judges: Aniruddha Bose, J., Sanjay Kumar, J.

Can a High Court reverse its own decision in a review petition based on a misreading of facts? The Supreme Court recently addressed this question in a property dispute between brothers, where the core issue was whether a family business was a joint venture or solely owned by one brother. The Supreme Court overturned the High Court’s decision, reaffirming the principle that a sworn statement made by a person against their interest is binding on their successors.

Case Background

The dispute began when Vitthalrao Navkhare (the plaintiff) filed a suit for partition and separate possession of properties, including houses and agricultural lands, against the widow and children of his deceased brother, Laxmanrao Navkhare (Defendant Nos. 1 to 6). Vitthalrao claimed that these properties were purchased from the income of their joint family business, “Gajanan Automobiles” and “Trimurti Auto Garage”. He asserted that he and Laxmanrao constituted a Joint Hindu Family, with Laxmanrao as the Karta (Manager). The defendants contested this, claiming the business was solely owned by Laxmanrao, and that Vitthalrao was merely an employee.

The plaintiff’s case was that after their father’s death, he and his brother Laxmanrao formed a Joint Hindu Family. They started an auto garage business in 1962, and the properties were purchased from the income of this business. Some properties were bought in different names, including those of the defendants. The business was expanded and run on their own lands, with the electric meter and municipal tax assessment in the plaintiff’s name. After Laxmanrao’s death, the defendants mutated the properties in their names, leading to the plaintiff’s legal notice for partition.

The defendants argued that Laxmanrao built the garage business on his own and the plaintiff was a wage worker. They claimed that the business was started in 1964 on a rented site and later shifted to their own lands in 1991. They also stated that the plaintiff had separated from the business in 2003 and had his own separate establishment. They denied the existence of a Joint Hindu Family or ancestral family property.

Timeline

Course of Proceedings

The Trial Court initially decreed partial partition, holding that only the agricultural land was ancestral property, while the rest were self-acquired properties of Laxmanrao. The Appellate Court reversed this decision, decreeing full partition and holding that all properties were joint family properties. The High Court dismissed the second appeal filed by the defendants. However, in a review petition, the High Court modified its order, excluding certain properties from partition based on an erroneous observation that the business became joint only in 1991. The Supreme Court then heard the matter in appeal.

Legal Framework

The Supreme Court primarily considered Section 32(3) of the Indian Evidence Act, 1872, which deals with the relevance of statements made by a person who is dead or cannot be found. Specifically, it states:

‘Section 32 – Cases in which statement of relevant fact by person who is dead or cannot be found, etc., is relevant.-
Statements, written or verbal, or relevant facts, made by a person who is dead, or who cannot be found, or who has become incapable of giving evidence, or whose attendance cannot be procured, without an amount of delay or expense which under the circumstances of the case appears to the Court unreasonable, are themselves relevant facts in the following cases :
(3) – or against interest of maker.- When the statement is against the pecuniary or proprietary interest of the person making it or when, if true, it would expose him or would have exposed him to a criminal prosecution or to a suit for damages.’

This section was crucial as it allowed the Court to consider the sworn statement of late Laxmanrao, which was against his proprietary interest, as evidence.

Arguments

Plaintiff’s Arguments:

• ✓ The plaintiff argued that he and his brother, Laxmanrao, constituted a Joint Hindu Family, and the garage business was a joint family business started in 1962.
• ✓ He claimed that the properties were purchased from the income of this joint business, and therefore, he was entitled to a half-share in all the properties.
• ✓ He relied on the affidavit and deposition of late Laxmanrao, where Laxmanrao stated that he was the Karta of the joint family and that the garage business was a joint family business.
• ✓ He pointed out that the three-phase electric meter and municipal tax assessment for the garage were in his name, indicating joint ownership.

Defendants’ Arguments:

• ✓ The defendants contended that Laxmanrao was the sole proprietor of the garage business, which he started in 1964 on a rented site.
• ✓ They claimed that the plaintiff was merely an employee who worked in the garage on weekly wages.
• ✓ They argued that the properties were purchased by Laxmanrao from his own income and that the plaintiff had no right to them.
• ✓ They asserted that the business was started in 1991, and the plaintiff had separated from the business in 2003.
• ✓ They argued that the statement made by Laxmanrao in the affidavit was only to help the plaintiff’s son in a defamation suit and should not be taken as an admission in this suit.

The innovativeness in the plaintiff’s argument lies in the reliance on Laxmanrao’s sworn statement, which was against his own interest. This was a strong piece of evidence that the defendants could not easily refute.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues but considered the following:

• ✓ Whether the High Court was correct in reviewing its earlier order based on a misreading of the Appellate Court’s judgment.
• ✓ Whether the garage business was a joint family business or the sole proprietorship of Laxmanrao.
• ✓ Whether the statement given by Laxmanrao in the affidavit and deposition can be used against the defendants.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

Cases Relied Upon:

• ✓ D.S.Lakshmaiah and another vs. L. Balasubramanyam and another [ (2003) 10 SCC 310 ] – Supreme Court of India. This case was cited by the defendants to argue that there is no presumption that a property is a joint family property just because a Joint Hindu Family exists. However, the Supreme Court distinguished this case, stating that in the present case, Laxmanrao himself had stated on oath that the business was a joint family business.
• ✓ Kiran Devi vs. Bihar State Sunni Wakf Board and others [ (2021) 15 SCC 15 ] – Supreme Court of India. This case was cited by the defendants to argue that a member of a Hindu Undivided Family can enter into a contract with a stranger in his individual capacity. The Supreme Court distinguished this case by stating that Laxmanrao had given evidence that the business was a joint family business.

Legal Provisions Considered:

• ✓ Section 32(3) of the Indian Evidence Act, 1872 – This section was crucial for admitting the statement of late Laxmanrao as evidence, as it was against his proprietary interest.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• ✓ D.S.Lakshmaiah and another vs. L. Balasubramanyam and another [(2003) 10 SCC 310]*: The Court distinguished this case, stating that it was not applicable because Laxmanrao himself had stated on oath that the business was a joint family business.
• ✓ Kiran Devi vs. Bihar State Sunni Wakf Board and others [(2021) 15 SCC 15]*: The Court distinguished this case, stating that it was not applicable because Laxmanrao had given evidence that the business was a joint family business.
• ✓ Section 32(3) of the Indian Evidence Act, 1872: The Court applied this provision to admit the statement of late Laxmanrao as evidence, as it was against his proprietary interest.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the sworn statement given by late Laxmanrao, which was against his own proprietary interest. The Court found that this statement, made under oath, was binding on his successors and could not be disregarded. The Court also noted the inconsistencies in the defendants’ arguments, particularly their changing stance on the nature and timing of the business and the plaintiff’s role in it. The Court emphasized that the High Court’s review order was based on a misreading of the Appellate Court’s judgment and was factually incorrect.

Logical Reasoning:

The Court considered alternative interpretations, such as the defendants’ claim that the business was solely owned by Laxmanrao and that the plaintiff was a wage worker. However, these interpretations were rejected due to the lack of evidence and the strong evidence provided by Laxmanrao’s sworn statement. The Court also rejected the defendants’ claim that the business started in 1991, finding it to be an inconsistent and unsubstantiated claim.

The Court’s decision was based on a careful analysis of the facts, the legal provisions, and the evidence presented. The Court’s reasoning was logical and consistent with the principles of justice and fairness.

The Supreme Court stated the following in its judgment:

“The irrefutable fact also remains that late Laxmanrao himself filed an affidavit in lieu of his examination-in-chief before a Court of law, wherein he stated as follows: ‘I am a Karta (Manager) of Hindu Joint Family and carrying on business of Motor Garage under the name and style of ‘Shri Gajanan Automobiles’, Amravati and ‘Trimurty Auto Garage, Amravati’ and also having some landed property situated within limits and territorial jurisdiction of Amravati Municipal Corporation, Amravati.'”

“What is of relevance presently is the statement made by late Laxmanrao on oath before a Court of law which would be binding not only upon himself but also upon his successors-in-interest and would, therefore, have to be construed as having been made against their interest, if they take a different stand, and would bind them.”

“In any event, the High Court acting in second appellate jurisdiction could not have arrived at a new finding of fact without any foundation being laid therefor and the stray observation made by the learned Judge that the joint family business commenced in the year 1991, based on a misreading of the Appellate Court’s judgment, cannot stand.”

There were no minority opinions in this case. The bench consisted of two judges, both of whom concurred with the judgment, with Justice Sanjay Kumar authoring the opinion.

Key Takeaways

• ✓ A sworn statement made by a person against their proprietary interest is binding on their successors.
• ✓ Courts will look at the substance of the evidence and not just the form.
• ✓ High Courts cannot reverse their own decisions in review petitions based on misreadings of facts.
• ✓ The existence of a joint family business can be established through evidence of joint management, shared resources, and sworn statements of family members.
• ✓ Inconsistencies in the arguments of parties can be detrimental to their case.

Directions

The Supreme Court set aside the offending observation in the judgment dated 24.11.2018 in Second Appeal No. 38 of 2009 and the order dated 22.03.2019 in Misc. Civil Application (Review) No. 46 of 2019. The Court upheld the judgment dated 14.11.2008 of the learned District Judge-III, Amravati, in Regular Civil Appeal No. 69 of 2008.

Development of Law

The ratio decidendi of this case is that a sworn statement made by a person against their proprietary interest is binding on their successors and cannot be disregarded. This decision reinforces the evidentiary value of such statements and provides clarity on the legal implications of sworn testimony in property disputes involving joint family businesses. This case also clarifies that the High Court cannot reverse its own decision in a review petition based on a misreading of facts. This case does not change the previous position of law but reinforces it.

Conclusion

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court’s order and upholding the Appellate Court’s judgment. The Court reaffirmed the principle that a sworn statement made by a person against their interest is binding on their successors. The Court held that the garage business was a joint family business and that the plaintiff was entitled to a half-share in the properties purchased from its income.