Supreme Court Upholds Karta’s Authority in Joint Hindu Family Property Sale: Beereddy Dasaratharami Reddy vs. V. Manjunath (2021)

Date of the Judgment: 13 December 2021

Citation: (2021) INSC 760

Judges: M.R. Shah, J. and Sanjiv Khanna, J.

Can a Karta (manager) of a joint Hindu family sell family property without the consent of all family members? The Supreme Court of India recently addressed this question in a case concerning the sale of agricultural land in Karnataka. The core issue was whether the Karta had the legal authority to execute an agreement to sell the property and whether the sale was for a legal necessity. This judgment clarifies the extent of a Karta’s power and the conditions under which such sales are valid.

The Supreme Court bench comprised Justices M.R. Shah and Sanjiv Khanna, with the judgment authored by Justice Sanjiv Khanna.

Case Background

The case revolves around a dispute over the sale of agricultural land belonging to a joint Hindu family in Bagganadu Kaval Village, Karnataka. The property consisted of three plots: (i) Sy.No. 7/1P1, measuring 4 acres, 21 guntas; (ii) Sy.No. 7/1P2 measuring 5 acres; and (iii) Sy.No. 8/3P3 measuring 2 acres, totaling 11 acres 21 guntas.

On 8th December 2006, K. Veluswamy, acting as the Karta of the joint Hindu family, entered into an agreement to sell the land to Beereddy Dasaratharami Reddy for Rs. 29 lakhs, receiving Rs. 4 lakhs as advance. The agreement was also signed by K. Veluswamy’s wife, V. Manimegala, and his father-in-law, P.B. Basavarajaiah. The agreement mentioned that the property was a joint Hindu family property and that the family needed funds for domestic necessities.

The appellant, Beereddy Dasaratharami Reddy, filed a suit for specific performance on 26th November 2007, after K. Veluswamy failed to execute the sale deed. The respondents in the case were K. Veluswamy and his son, V. Manjunath. V. Manjunath contested the sale, arguing that the agreement was not valid without his signature, as he was also a member of the joint Hindu family.

Timeline

Course of Proceedings

The Court of Senior Civil Judge, Hiriyur, initially decreed the suit in favor of Beereddy Dasaratharami Reddy on 22nd January 2013. The trial court rejected the defense that the agreement was a loan agreement and held that K. Veluswamy, as the Karta, had the authority to execute the agreement for legal necessity.

V. Manjunath, K. Veluswamy’s son, appealed to the High Court of Karnataka at Bengaluru. The High Court overturned the trial court’s decision on 6th March 2021, stating that the agreement was unenforceable because it lacked the signature of V. Manjunath, a member of the joint Hindu family. The High Court also held that legal necessity was not proven, relying on the case of Pemmada Prabhakar and Others v. Youngmen’s Vysya Association and Others.

Legal Framework

The case primarily deals with the powers of a Karta in a joint Hindu family under Hindu Law. The Supreme Court referred to the following principles:

• Karta’s Authority: A Karta, as the manager of a joint Hindu family, has the authority to manage the family property. This includes the power to sell or alienate the property for legal necessity or for the benefit of the estate.
• Legal Necessity: The concept of legal necessity allows the Karta to alienate joint family property for essential purposes such as payment of government revenue, debts, maintenance of family members, marriage expenses, and necessary litigation. The court noted that the instances of legal necessity are not exhaustive and depend on the facts of each case.
• Mulla on Hindu Law: The court cited Mulla’s Hindu Law, which states that a Hindu father has special powers to alienate coparcenary property for his own antecedent debts, provided the debts were not for immoral or illegal purposes. Mulla also defines legal necessity as including payments of government revenue, debts, maintenance of family members, and other essential family needs.

Arguments

Appellant (Beereddy Dasaratharami Reddy)’s Arguments:

• The appellant argued that K. Veluswamy, as the Karta of the joint Hindu family, had the legal authority to execute the agreement to sell the property.
• The appellant contended that the agreement itself stated that the family needed funds for domestic necessities, which constitutes legal necessity.
• The appellant also argued that the property was encumbered with a mortgage to the State Bank of Mysore, and the sale was intended to clear this encumbrance, further establishing legal necessity.
• The appellant relied on the principle that a Karta’s actions are binding on the joint family if done for legal necessity or benefit of the estate, citing Sri Narayan Bal and Others v. Sridhar Sutar and Others.

Respondent (V. Manjunath)’s Arguments:

• The respondent argued that the agreement to sell was unenforceable because it was not signed by all members of the joint Hindu family, specifically V. Manjunath himself.
• The respondent contended that the agreement was a camouflage for a loan agreement and that no legal necessity existed for the sale.
• The respondent relied on Pemmada Prabhakar and Others v. Youngmen’s Vysya Association and Others to argue that the agreement was invalid without the signatures of all family members.

Sub-submissions:

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether K. Veluswamy, as a Karta, had the legal authority to execute the agreement to sell dated 8th December 2006 for the sale of the suit land, being agricultural land.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• Sri Narayan Bal and Others v. Sridhar Sutar and Others, (1996) 8 SCC 54 – The Supreme Court of India: This case established that a joint Hindu family can act through its Karta, and a coparcener cannot seek injunction against the Karta from dealing with the property.
• Kehar Singh (D) through Legal Representatives and Others v. Nachittar Kaur and Others, (2018) 14 SCC 445 – The Supreme Court of India: This case referred to Mulla on Hindu Law and the concept of legal necessity, explaining the powers of a father to alienate ancestral property.
• Kannan (Dead) by LRs. and Others v. V.S. Pandurangam (Dead) by LRs. and Others, (2007) 15 SCC 157 – The Supreme Court of India: This case held that the omission to frame an issue does not vitiate the trial if the parties are aware of the case and lead evidence.
• Nedunuri Kameswaramma v. Sampati Subba Rao, AIR 1963 SC 884 – The Supreme Court of India: This case also held that the omission to frame an issue does not vitiate the trial if the parties are aware of the case and lead evidence.

Legal Provisions:

• Order XIV Rule 1 of the Code of Civil Procedure, 1908: This rule deals with the framing of issues in a civil suit.
• Section 8 of the Hindu Succession Act: This section deals with the general rules of succession in the case of a male Hindu dying intestate.

Mulla on Hindu Law:

• Article 254: Discusses the special powers of a Hindu father to alienate coparcenary property.
• Article 241: Defines legal necessity and outlines what constitutes family necessities.

Judgment

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

How each authority was viewed by the Court?

• The Court relied on Sri Narayan Bal and Others v. Sridhar Sutar and Others [CITATION] to affirm that a Karta can manage joint family property and that a coparcener cannot seek an injunction against the Karta.
• The Court referred to Kehar Singh (D) through Legal Representatives and Others v. Nachittar Kaur and Others [CITATION], which cited Mulla on Hindu Law, to explain the concept of legal necessity and the powers of a father to alienate ancestral property.
• The Court cited Kannan (Dead) by LRs. and Others v. V.S. Pandurangam (Dead) by LRs. and Others [CITATION] and Nedunuri Kameswaramma v. Sampati Subba Rao [CITATION] to support its view that the omission to frame an issue does not invalidate the trial if the parties were aware of the case.
• The Court distinguished Pemmada Prabhakar and Others v. Youngmen’s Vysya Association and Others [CITATION], stating that it was not applicable to the present case, as it dealt with intestate property and not joint Hindu family property. The court highlighted that in Pemmada Prabhakar, the agreement was not signed by all Class I heirs under Section 8 of the Hindu Succession Act, making it unenforceable.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the established principles of Hindu Law regarding the powers of a Karta and the concept of legal necessity. The Court emphasized that a Karta has the authority to manage and alienate joint Hindu family property for legal necessity or for the benefit of the estate. The court also noted that the agreement to sell itself stated that the family needed funds for domestic necessities, which satisfied the requirement of legal necessity. The court also considered that the property was encumbered, and the sale was intended to clear this encumbrance.

Fact:Law Ratio

Logical Reasoning:

The Court rejected the argument that the agreement was invalid due to the absence of V. Manjunath’s signature, stating that the Karta’s signature was sufficient. The Court also distinguished the case from Pemmada Prabhakar, noting that the latter dealt with intestate property, whereas the present case concerned a joint Hindu family property. The court’s reasoning was based on the established principles of Hindu law and the specific facts of the case.

The Supreme Court stated, “Right of the Karta to execute agreement to sell or sale deed of a joint Hindu family property is settled and is beyond cavil.” The Court also observed, “The Karta enjoys wide discretion in his decision over existence of legal necessity and as to in what way such necessity can be fulfilled.” Further, it noted, “The agreement to sell states that the subject property is a joint Hindu family property, enjoyed jointly and that the Katha is in the joint names.”

Key Takeaways

• A Karta of a joint Hindu family has the authority to execute an agreement to sell or sale deed for the family property, provided it is for legal necessity or benefit of the estate.
• The absence of signatures of other family members on the agreement does not invalidate the transaction, as long as the Karta has signed.
• Legal necessity includes needs such as domestic necessities, payment of debts, and clearing encumbrances on the property.
• The decision in Pemmada Prabhakar is not applicable to cases involving joint Hindu family property, as it dealt with intestate property.
• Omission to frame an issue does not vitiate the trial if the parties are fully aware of the rival case and lead evidence.

Directions

The Supreme Court directed the following:

• The appellant, Beereddy Dasaratharami Reddy, must deposit the balance sale consideration of Rs. 25 lakhs in the trial court within eight weeks.
• The amount will be kept in an interest-bearing fixed deposit and paid to K. Veluswamy, the Karta, at the time of the execution of the sale deed.
• The appellant will bear the necessary expenses, such as stamp duty and registration charges.
• The respondents must hand over physical possession of the property to the appellant along with the execution of the sale deed, despite any transactions with third parties during the pendency of the appeal.

Specific Amendments Analysis

There were no specific amendments discussed in the judgment.

Development of Law

The ratio decidendi of this case is that a Karta of a joint Hindu family has the authority to execute an agreement to sell or sale deed for the family property, provided it is for legal necessity or benefit of the estate. This judgment reinforces the existing legal position regarding the powers of a Karta in a joint Hindu family and clarifies that the absence of signatures of other family members does not invalidate the transaction. The judgment also distinguishes the present case from Pemmada Prabhakar, clarifying that the latter does not apply to joint Hindu family property.

Conclusion

The Supreme Court allowed the appeal, setting aside the High Court’s judgment and restoring the trial court’s decision. The Court held that K. Veluswamy, as the Karta of the joint Hindu family, had the authority to execute the agreement to sell the property to Beereddy Dasaratharami Reddy. The Court also found that the sale was for legal necessity, as the family needed funds for domestic necessities and to clear a mortgage. The judgment clarifies the powers of a Karta in a joint Hindu family and reinforces the principle that a Karta’s actions are binding on the family if done for legal necessity or benefit of the estate.