In cases where Karta alienates joint Hindu family property for value, either for legal necessity or benefit of estate, it would bind interest of all undivided members: SC

Read Judgment: Beereddy Dasaratharami Reddy vs. V. Manjunath & Another

Pankaj Bajpai

New Delhi, December 14,2021: While stating that the instances are not the only indices for concluding whether the alienation was in need for legal necessity as enumeration on what would be legal necessity is unpredictable, the Supreme Court has opined that in the present case,the agreement to sell could not be set aside on the ground of absence of legal necessity. 

A Division Bench of Justice M.R. Shah and Justice Sanjiv Khanna observed that the exercise of powers given the rights of the Karta on fulfilling the requirement of legal necessity or betterment of the estate is valid and binding on other coparceners. 

The background of the case was that K. Veluswamy (Karta of the joint Hindu family) executed the agreement to sell of the suit property for Rs.29 lakhs and received Rs.4 lakhs in advance from Beereddy Dasaratharami Reddy (Appellant). Later, the Appellant instituted the suit for specific performance of the agreement to sell impleading both K. Veluswamy (second Respondent) and V. Manjunath (first Respondent). In pursuance of the same, the Senior Civil Judge, Hiriyur decreed the suit rejecting the defence that the agreement was a camouflage for a loan agreement as second Respondent was in need of money for construction of a farmhouse. 

K. Veluswamy accepted the decision, whereas his son V. Manjunath approached the High Court, which while accepting that K. Veluswamy did execute the agreement to sell for the suit property for Rs.29 lakhs and had received Rs.4 lakhs as advance, held that the agreement to sell is unenforceable as the suit property belongs to the joint Hindu family consisting of three persons, K. Veluswamy, his wife V. Manimegala and his son V. Manjunath and, therefore, could not have been executed without the signatures of V. Manjunath. Accordingly, the High Court dismissed the suit. 

After considering the arguments and precedents, the Apex Court opined that the signature of V. Manjunath, son of Karta – K. Veluswamy, on the agreement to sell were not required. K. Veluswamy being the Karta was entitled to execute the agreement to sell and even alienate the suit property. 

Absence of signatures of V. Manjunath would not matter and is inconsequential, added the Court.

Speaking for the Bench, Justice Khanna noted that right of the Karta to execute agreement to sell or sale deed of a joint Hindu family property is settled and is beyond cavil vide several judgments of this Court including Sri Narayan Bal and Others v. Sridhar Sutar and Others, (1996) 8 SCC 54 wherein it has been held that a joint Hindu family is capable of acting through its Karta or adult member of the family in management of the joint Hindu family property. 

A coparcener who has right to claim a share in the joint Hindu family estate cannot seek injunction against the Karta restraining him from dealing with or entering into a transaction from sale of the joint Hindu family property, albeit post alienation has a right to challenge the alienation if the same is not for legal necessity or for betterment of the estate, added the Bench. 

Justice Khanna went on to observe that where a Karta has alienated a joint Hindu family property for value either for legal necessity or benefit of the estate it would bind the interest of all undivided members of the family even when they are minors or widows.  

The Apex Court therefore restored the judgment and decree passed by the trial court, and directed the appellant to deposit the balance sale consideration of Rs.25 lakhs in the Trial Court which would be kept in an interest bearing fixed deposit and would be handed over/paid to K. Veluswamy, Karta of the joint Hindu family at the time of execution of the sale deed by him in favour of the appellant.