Madras on Self Acquired Property
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Transcript of Madras on Self Acquired Property
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Madras High Court
P.N. Venkatasubramania Iyer And ... vs P.N. Easwara Iyer And
Ors. on 21 January, 1965
Equivalent citations: AIR 1966 Mad 266
Author: O Anantanarayanan
Bench: M Anantanarayanan, O.C.J., Natesan
JUDGMENT
Anantanarayanan, Offg.C.J.
(1) I have had the advantage of perusal of the judgment of my learned brother, in
which he has dealt elaborately and fully with the main issues of fact that arise for
our determination in these appeals. I am in entire agreement with his
conclusions; that being the case, I felt somewhat hesitant to write a separate,
concurring judgment. That hesitancy was reinforced by the consciousness that,
though the case does involve the application of several principles of Hindu law, to
the facts, those principles themselves are well settled, and enunciated in
decisions that are now classic. Nor does the application of the principles to the
facts of the case involve any novel departure in any respect. Nevertheless, I
propose, in a brief compass, to survey the principles of Hindu law, that impinge
on the facts and circumstances of this case. There are at least one or tworefinements that render this expedient. I must make it clear, however, that I am
not traversing the facts and evidence again, independently nor dealing with every
aspect of the probabilities; my learned brother has discussed them so fully, that I
shall assume the background, in adding my own observations.
(2) It is important, at the outset, to stress the general picture that emerges from
the facts of the record. This is that of a very affluent family of Malabar,
conducting Indigenous Banking as its main business or Kulachara, and possessed
of very considerable income, both from agricultural lands and the family
avocation. There was a steady flow of money to each of the branches that
constituted the main family, and that was true not merely of the branch of Samu
Pattar, which included Narayana Iyer and his brothers, but equally true of the
restricted family of Narayana Iyer and his sons. Narayana Iyer was handling the
family business de facto, and was in a situation to utilise the moneys that flowed
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into his hands from joint family resources, even before he became the de jure
manager. As my learned brother has pointed out, it is very important, however,
that these different periods should be distinguished from each other and
particularly that a distinction should be drawn between the previous periods and
the last period, after Narayana Iyer had purported to effect not merely a
severance in status, but an actual partition between himself and his sons. This
situation is complicated by the fact that Narayana Iyer was employed as an
official in a bank, rising from a relatively subordinate capacity with a small salary,
to a position of trust at the end, with quite respectable emoluments.
An added factor of complication is that he is supposed to have stood, perhaps
unofficially, as some kind of guarantor in respect of the constituents whom he
introduced to the Imperial Bank; according to the oral evidence, that situation
enabled him to amass large perquisites, which might have been a kind of illegal
gratification, but which, according to the appellants, formed the primary source
of the acquisitions claimed by him as his self acquisition, which are the crux of
the controversy in these appeals. But one undeniable circumstance is that there
was a considerable nucleus of joint family estate, that an appreciable income
from this nucleus passed through the hands of Narayana Iyer even when he was a
junior member, and subsequently when a Manager, and that there was certainly
"blending", in the sense that it does not in the least appear that Narayana Iyer
segregated the joint family moneys over which he had control, or did not utilise
them as freely as his own resources in acquiring the properties that mainly
concern us.
(3) With this picture in view, I shall proceed to a discussion of the principles of
Hindu law, in certain aspects, that arise for application to the issues of fact in the
present case.
(4) When the learned Text Book writers of the past, like Sir Thomas Strange and
Mayne, began their treatises of Hindu law, they must have been oppressed by the
necessity to find English equivalents for Hindu law concepts, which were
themselves unique, and quite unrelated to any Law of Real Property or
Inheritance in Western civilisation; perhaps, they borrowed from translators of
the Codes of Hindu law, like Colebrooke and others. Actually, these English
expressions have subsequently become familiar to students of Hindu law, but the
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content is frequently very different from the dictionary connotation. The word
"nucleus" for instance, implies, according to the Concise Oxford Dictionary, "a
kernal of aggregate or mass, a beginning meant to receive additions". But, as the
expression occurs in a standard treatise, such as Mayne, 11th Edn. Page 359 or
Mullah, 12th Edn. Page 343, there are other shades of meaning that need to be
noted with care. For instance, the proportion of the nucleus itself, in relation to
the estate which is under judgment, is only one factor. Where this is considerable,
the presumption arises that the acquired properly is joint property, and the onus
certainly lies on the party alleging self-acquisition. But, as Mullah is at pains to
emphasise, the income yielding capacity of the nucleus is equally an important
factor.
"A family house in the occupation of the members, and yielding no
income, could not be a nucleus out of which acquisitions could be
made, even though it might be of considerable value. On the other
hand, a running business in which the capital invested is
comparatively small, might conceivably produce substantial income,
which may well form the foundation of the subsequent acquisitions".
With regard to cases on this aspect, a reference might be made to the following as
the most significant in the present context.
First we have Appalasami v. Suryanarayanamurti, AIR 1947 P.C. 189 at pp. 191
and 192. Next, the dicta in Srinivas v. Narayan, , may be noted, upon the question
of the onus, where it is clear that the nucleus could have formed a source of the
acquisition. Mallappa Girimallappa v. Yellappa Gowda, AIR 1959 SC 906
emphasises that the existence and the adequacy of the nucleus are, primarily,
questions of fact. The presumption is certainly stronger where it is the manager
who is responsible for the acquisitions, which he later claims to be his:
Malleseppa v. Mallappa, . As far as cases in Madras are concerned, reference
might be made to Narayanaswami Iyer v. Ramakrishna Iyer, and Manicka
Mudaliar v. Thangavelu, a judgment to which one of us was a party, as well as the
judgment ofVeeraswami J. In Sivagnana Thevar v. Udayar Thevar, . Also see
Amritlal v.
Surathlal, AIR 1942 Cal 553.
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(5) In the light of these well-settled principles, the questions of fact would be,
whether, during the crucial periods, Narayana Iyer was in receipt of a steady flow
of funds from the considerable family estate, whether he did not acquire the
properties in controversy with the aid of the funds, in part or in whole, since he
appears throughout to have 'blended' them with his own earnings, whatever they
might have been, and whether, upon any theory that even if family funds were
thus utilised, they represented the saving from amounts strictly furnished for his
maintenance, so that he accretions must be held to be self acquired, is at all
maintainable. I shall commence with the argument of Mr. Sangameswaran for
the appellants that the terms in Ex.P.3 dated 5-6-1953, which concerns the larger
partition in the main family, itself shows that those properties now in
controversy, part of which had been acquired by Narayana Iyer, then, were
treated as his self-acquisition. The clause is to the effect:
"Except in the case of properties purchased in the name of individual members
for convenience out of moneys found in the joint family business account books,
the other properties standing in the names of individual members are their
private (Swakaryam) properties and are not liable for division."
As my learned brother has shown, shortly after this very recital of agreement, two
brothers of Narayana Iyer, namely, Ranga Iyer and Anantanarayana Iyer, raised
difficulties, and Narayan Iyer had to purchase peace by paying each of them Rs.15000 with interest, at 71/2 per cent per annum at the time of the final partition.
According to Mr. Sangameswaran, the term is eloquent regarding the true
character of the properties in question; it amounts to a very important admission,
by persons who could claim these properties as joint family properties and
adversely to their interest. The inference suggested is that the sons of Narayana
Iyer are thereby precluded from later claiming that those properties are partible
or, at the least, that the term is very important evidence to the contrary effect.
Alternatively, it is claimed that, without bringing the other branches into the
partition now, the properties cannot be divided at all; there cannot merely be a
partial estoppel in such a respect. Per contra, a quite different view is conceivable,
that the heads of the branches then participating in the general partition,
including Narayana Iyer made mutual releases of possible claims in this respect.
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The learned trial Judge, (Subrahmanyam J,) took the view that they found this
the most convenient and expedient course, as, otherwise, each stood to suffer by
an investigation into the sources of acquisition. In any view of this matter, it
seems to me to be clear that the sons of Narayana Iyer would not be bound by any
term in Ex.P. 3, and that, in fact, even as evidence, it is the most slender and
unsafe basis for any inference upon the nature of the properties as self
acquisition, if this aspect is to be interpreted as a question of mutual releases,
obviously, the properties would be partiable within the branch of Narayana Iyer
and his sons, as my learned brother has shown.
(6) This takes us to the next aspect, whether Narayana Iyer and his sons could
not, in law, form a self-sufficient and corporate entity within the larger family, a
sub-branch functioning as such, entitled to jural recognition. That this kind of
entity has been recognised in Hindu law, appears to admit of no doubt. The
question was discussed, at some length, by Bashyam Aiyangar J in Sudarsanam
Maistri v. Narasimhalu, (1902) ILR 25 Mad 149 at p. 154. For the present
purpose, I shall restrict myself to a very brief citation:
"But so long as a family remains an undivided unit, two or more members thereof
whether they be members of different branches or of one and the same branch of
the family--can have no legal existence as a separate independent unit; but if they
comprise all the members of a branch; or of a sub-branch they can form a distinctand separate corporate unit within the large corporate unit, and hold property as
such".
This aspect was discussed by their Lordships of the Supreme Court in Bhagwan
Dayal v. Reoti Devi,, and, after pointing out that coparcenary was a creature of
Hindu law, which could not be created by agreement of parties, except in the case
of reunion, their Lordships affirmed that a sub-branch could also be a corporate
unit, holding and disposing of family properties, subject to the limitations laid
down by the law. This view reinforces what I have stated earlier, about the true
significance of the recital for admission in Ex.P. 3. That takes us to another vital
aspect of the case.
(7) The arguments of Mr. Sangameswaran for the appellant have to be carefully
stated here, in order to do them justice. Learned counsel would agree that, in this
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case, there is a very considerable joint family estate, relevant to the purpose of
acquisition; not merely this, but that the nucleus yielded a very substantial
income, and quite substantial amounts did flow through the hands of Narayana
Iyer. Mr. Sankara Aiyer for the plaintiff-respondent has furnished us with a table
of such entries to be found in the accounts, fragmentary as these are, and the
particulars need not be reiterated here. But Mr. Sangameshwaran's argument is
that, as far as Narayana Iyer and his wife and children are concerned, the picture
disclosed by the accounts is that of remittances made from time to time, for
maintenance; they are not at all out of proportion to the affluence and
conventional modes of spending in the family, and the individual items exhibited
in the accounts strengthen the impression of the remittances being of that
character. Per contra, learned counsel would argue that, though there is no scrap
of documentary evidence about the perquisites enjoyed by Narayana Iyer, theywere probably very considerable, far more than his fixed emoluments. Even if the
acquisitions were made out of savings effected from amount given by Samu
Pattar, the manager of this branch, for maintenance, the properties would still be
impressed with the character of self-acquisition. That would be so, all the more, if
Narayana Iyer's own earnings and perquisites had contributed to the
acquisitions.
(8) The law upon this aspect appears to need some study, for, it is by no means so
very clear and beyond a possible difference of interpretation, as one might desire.
Presumably, the law seems largely from the text of Yajnavalkya in the
Mitakshara, Ch. I S. IV to the effect that the self-acquisition of an undivided
coparcener would be "whatever else is acquired by the coparcener himself,
without detriment to his father's estate" (Pithrudruvya Virodhena) to which my
learned brother has also referred. It is succinctly stated in Mullah (12th Edn)
page 354, that "It is competent to the manager to allot to any individual member
a portion of the family property to enable him to maintain himself out of its
income. Any savings out of the income and investments of such savings will bethe separate property of the member". Also see Mayne 11th Edn p. 361. The
authorities relevant to this aspect are: Bengal Insurance and Real Property Co
Ltd, v. Velayammal, AIR1937 Mad 571; Ramayya Goudan v. Kolanda Goudan,
AIR1939 Mad 911. Latchandhora v. Chinnavadu, , and
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Lachmeswar Singh v. Manowar Hossain, (1892) ILR 19 Cal 253 (PC). The
problem here is: Where from joint family income, a part is diverted towards the
maintenance of a junior member and his family, by the manager, without liability
to account for any balance, and the junior member acquires property out of
savings of such amount, is that to be treated as his self-acquisition, capable of
disposition by him as such, without even his sons having a right to claim a share?
Or, is this proposition too widely stated, which is the view adopted by my learned
brother in his judgment?
(9) The decision in AIR 1937 Mad 571 appears, on the facts to relate to the special
instance of the content or realisation of a policy of life assurance. The learned
Judges referred to a presumption enunciated by Sankaran Nair J. in Balamba v.
Krishnayya, ILR37 Mad 483: AIR 1914 Mad 595 (FB) that the premia for a policy
of insurance, upon his own life, were probably paid by an individual from his
separate resources. In Venkatasubbarao v. Laxminarasamma, , this was again
laid down as a general presumption, arising from the relevant social and
economic background, that the content of a policy of life assurance must be held
to belong to the assured as separate property, ordinarily speaking, and not
treated as a joint family asset. But even this must be doubted, after the dicta of
their Lordships of the Supreme Court in Prabati Kuer v. Sarangdhar. to the effect
that "there is no proposition of law by which the insurance policies must be
regarded as the separate property of the coparceners on whose lives the insurance
is effected by a coparcenary."
Finally, in Karuppa Gounder v. Palaniammal,, the
latest view of the Madras High Court is that no general proposition can be
advanced, and that this will be a question of fact in the individual case. The dicta
in AIR 1939 Mad 911 and have been
referred to by my learned brother, and he has dealt with the facts of the former
case extensively. (1892) ILR 19 Cal 253 (PC) proceeds to this extent, that profit
made by a member of the joint family individually, without detriment to joint
property, would be self acquired property in his hands. The difficulty, as my
learned brother has pointed out, is that neither Ramayya Goundan's case, AIR
1939 Mad 911 nor , nor any other case, to which our attention has been drawn
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deals with the specific question of acquisition of property by saving from amounts
given as maintenance, by a junior member, which the junior member attempts to
claim as his self-acquisition, even as against his own sons, for whose
maintenance, equally, the amounts were furnished in the first instance. With
regard to the mode of self-acquisition set forth by Mullah, this may fall only
within the item "The income of separate property, and purchases made with such
income" for, presumable an amount furnished for maintenance has to be regard
as separate property in the hands of the junior member, to whom it is given.
But, for two important reasons, the entire question whether the proposition, as
stated is too wide or otherwise, is academic in the present case. First of all, in this
case I strongly feel that we have only the facts of a substantial income flowing
through the hands of Narayana Iyer, from joint family resources and of the
"blending." There are really no data for the assumption that he had control only
over amounts given as maintenance, and saving from such amounts. It is not at
all permissible, on the present case, to speculate upon the dimension of other
resources possessed by Narayana Iyer from perquisites and modes of illegal
gratification in his employment in the Imperial Bank; that is simply to reckon
with a super structure, which altogether lacks a foundation. As my learned
brother has stressed, even in a very restricted view, the savings would be the
outcome of sacrifices by the sons as much as by Narayana Iyer, and they would
appear to be equally entitled to the benefit of the utilisation of such resources.
(10) Upon the theory of "blending", which is the next relevant aspect, I desire to
add a few words to the discussion by my learned brother which includes
references to the case-law. Obviously, the expression 'blending' is itself one of
those unsatisfactory English expressions used in treatises on Hindu law which
have been acquired a particularised connotation, to be distinguished from the
literal or dictionary significance. For "blending" might be of income from
separate property with income from coparcenary estate; or, equally, it might be of
separate property itself with the coparcenary estate. Obviously very different
considerations would apply, where a manager or other person in charge of a joint
family estate chooses to treat what is indisputably separate property, which was
of that character at origin, as joint property, by throwing it into the common
stock or hotchpot, whichever expression might be used; as contrasted with the
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situation of "blending", where this has occurred prior to the acquisition itself,
with regard to the respective incomes from separate properties and joint
properties; and subsequent accretions are made from such a mixed fund.
There is a passage in Mayne (11th Edn) at page 350, commencing, with areference to Narayanaswami v. Ratnasabapathy, 1937-2 Mad LJ 906: (AIR 1938
Mad 136) and proceeding to emphasise that the rule as to a trustee mixing his
funds with the funds of a cestui que trust did not furnish any true analogy. "It is
difficult to see how by mixing the income derived from a separate property, such
as a house or a landed estate or a specific investment, with the income of
ancestral property, the corpus of the self-acquisition, which is easily
distinguishable, becomes incorporated into the joint family property....... To say
that there is a duty to keep an account of the income of his separate property is to
say that a man cannot spend his separate income for family purposes except at
his peril'. Per contra, my learned brother has set forth the dicta of Reilly J.
inPeriakaruppa Chetti v. Arunachalam Chetti, ILR50 Mad 582 at p. 591: (AIR
1927 Mad 676 at p. 679), and approved in Nutbehari v. Nanilal, AIR 1937 PC 61,
and also discussed the facts and the dicta in Suraj Narain v. Ratanlal. ILR 40 All
159: (AIR 1917 PC 12). The facts in Lal Bahadur v. Kanhaiyal Lal, (1907) ILR 29
All 244 (PC) have further been discussed. It appears to me, that in interpreting
the case-law, the remarks fall consistently and harmoniously into place, and any
possible conflict is immediately resolved, if a vital distinction is kept in mind.
As the passage from Mayne emphasises, where a man is dealing with the income
from his separate property, the fact that he does not keep separate accounts, and
chooses to "blend" that income with income from a source of joint property,
cannot affect the corpus of the separate property itself. But, the position is clearly
widely different, where the "blending" has occurred, with regard to the income,
from the two sources, prior to the acquisition, the character of which is in
question. Upon the present facts, all that can be said is that, even if the separate
income and perquisites of Narayana Iyer went into the acquisitions which are in
controversy, they could have done so only in part; considerable funds passed
through the hands of Narayana Iyer from joint family income; nor could it be said
for a moment that all that he had at command was only what his parsimony could
effect as savings, from what was strictly a fund for maintenance. Narayana Iyer
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freely "blended" and used these sources of income, as far as we are able to gather,
and acquired considerable immovable properties; could it be pretended that
these are not impressed with the character of coparcenary estate?
The decisions to which Mr. Sangameswaran for the appellants has drawn ourattention, particularly upon this aspect of "blending" are Lakkireddi Chinna
Venkata Reddi v. Lakkireddi Venkatarama Reddi, AIR1957 Andh Pra 93 and
Venkatraju v. Yadukondalu, AIR 1958 Andh Pra 147. He has also stressed the
dicta of the Supreme Court in Venkata Reddi v. Lakshmamma, . Actually, it
appears to be obvious that these dicta lay down the true principles of Hindu law,
which apply to the incidents of separate properties being blended by subsequent
treatment, or being thrown in the common stock. In that situation, the legal
concept of "blending" would be inclusive of an element of a conscious or
volitional surrender of the separate right, by the owner, in favour of the joint
family; no more haphazard accounting, nor utilisation of the income as such for
family benefit, would do. As the Supreme Court observed "a clear intention to
waive separate rights must be established." But these authorities have very little
relevance to the present context of facts. The part of the theory of "blending"
which is here relevant, is the "blending" of the income from both separate and
joint family properties, prior to the acquisition, and to the acquisition of further
estate from such mixed fund. Certainly, the presumption must be that the
subsequent accretion is coparacenary in character.
(11) While upon this question of presumption or onus, I may refer to another
point urged by Mr. Sangameswaran, that this is really immaterial, now that the
extensive documentary and oral evidence in these appeals is before Court. Even
so, the question remains whether the effect of this evidence is to justify any
inference, which is contrary to the presumption. Certainly, that is not the case,
and, hence, the conclusion upon the main issues of facts arrived at by the learned
trial judge, with certain modifications, as my learned brother has pointed out,
must be upheld.
(12) I shall next proceed to one matter, with regard to which both my learned
brother and myself feel constrained to differ from the trial court; though this does
not affect the actual result of the litigation in any important respect. This is with
regard to the treatment of even the salary and emoluments derived by Narayana
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Iyer during the relevant period, as joint family income, because those were
earned by him either through an office involving a skill or knowledge, to the
acquisition of which the family had contributed, or though the freezing of certain
family resources as security for the office, to the detriment of the family, as only a
low rate of interest was earned by the fixed deposits concerned. The entire
question is of considerable legal interest in the light of the developments which
led to the enactment of the "Hindu Gains of Learning" Act XXX of 1930, and
certain decisions subsequent thereto.
(13) As pointed out in such standard treatises as Mulla, Hindu texts classed
"gains of science" as joint family property, if such "knowledge of science" had
been acquired at the expense of joint family funds. But this term "science" was
interpreted by the courts to mean some kind of special learning, as distinguished
from ordinary general education, that all members of the family might be
expected to received. We have a catena of decisions, of great interest, upon
different professions, and the extent to which courts recognised that the pertinent
"science", was acquired under such circumstances as to warrant an inference that
the subsequent earnings by the member of the coparcenary must be treated as
joint family property, and not his separate property. A very early case is
Chalakonda Alasami v. Chalakonda Ratnachalam, (1864-65) 2 Mad HC 56. which
related to expenses incurred for learning connected with the profession of a
dancing girl. Holloway and Kindersley JJ. had occasion to deal with the
profession of a pleader in this respect in D. Gangadharudu v. D. Narasamma
(1871-74) 7 Mad HC 47 Lakshman v. Jamnabai, (1881-82) ILR 6 Bom 225 relates
to the vocation of a pleader and the office of Sub Judge.
Similarily Metharam v. Rewachand, ILR 45 Cal 666:(AIR 1917 PC 105) related to
the vocation of a broker and money lender. In Gokalchand v. Hukumchand, ILR
2 Lah 40 at pages 49 and 50: (AIR 1921 PC 35 at p. 38) there was an instance,
probably unique, of an officer of the Indian Civil Service, who had acquired that
qualifications by special education, of which he had the benefit. The Judicial
Committee held that the salary subsequently earned, was partible property of the
joint family. Their Lordships pointed out that there was a legal presumption in
favour of the partibility, attaching to the gains, while presumption of detriment to
the patrimony involved in acquiring this specialised learning, was a question of
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fact, but the court was of the view that the member had to prove that his case was
an exception. Sometime after this, we have the enactment of the Hindu Gains of
Learning Act XXX of 1930. The provisions of this statue need not be analysed
here, but it is sufficient to note that, under this Act all gains of learning, whether
the learning be special or ordinary, become the self-acquired property of the
acquirer. On this particularised aspect, it seems fairly clear that it will not be
justifiable in law, to treat the salary and emoluments of Narayana Iyer as partible
property because he belonged to a family which followed Indigenous Banking as
Kulachara Assuming that the Hindu Gains to Learning Act did not apply, even so
there is no shred to evidence to prove that the joint family incurred any expenses
for any special learning in this branch of knowledge, acquired by Narayana Iyer;
clearly it is not enough that Narayana Iyer was adept in the family business and
that that constituted a qualification which induced the Imperial Bank to employhim.
(14) But the matter becomes more complicated, when looked at from the point of
view of possible detriment of joint family estate, resulting from the security given
in the form of fixed deposits, for the bond executed by Narayana Iyer for his
office. Upon this aspect, we may commence with the Commr. Of Income tax v.
Sankaralinga Iyer, . That decision has subsequently been dissented from, and
cannot be said to lay down the correct position at law. But it is of interest, upon
its facts. In that case, the necessary shares to acquire the qualification of
Managing director, we purchased out of joint family funds, which suffered a
detriment in that sense; but the shares earned profits, which were included in the
family income. Viswanatha Sastri J. pointed out that it was the individual who
was appointed as the Managing director, and that his holdings of this block of
shares was not the causa causans of his earnings.
In Commr. of Income-tax v. Kalu Babu Lal Chand, the kartha of a Hindu
undivided family was one of the promoters of a company, and the Articles of
Association of the company provided for his appointment as managing director.
Most of the shares of the company stood in his name and that of his brothers, and
the Supreme Court held that the case was governed by the principle laid down in
In re Haridas Purshotham, AIR 1947 Bom 299, and that, in the circumstances,
the remuneration of the Managing director received by the kartha was an asset of
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the undivided family, partible as such In this case, there is a reference to
Gokalchand's case. ILR 2 Lah 40: AIR 1921 PC 35, though without any reference
to the subsequently enacted Hindu Gains of Learning Act XXX of 1930, and
Sankaralinga Iyer's case. has been doubted in a critical reference.
In Commr. of Income-tax v Palaniappa Chettiar, 1964-1 Mad LJ 61 at p. 65, a
Bench of this court has pointed out that the Supreme Court has expressed the
view contrary to that expressed in Sankaralinga Iyer's case. , and that the view of
the Supreme Court was
certainly binding. But it would seem to be clear that the present situation is very
different from the facts in to
which I have referred. In Piyarelal Adiswarlal v. Commr. of Income-tax, Delhi, ,
both Gokulchand's case, ILR 2 Lah 40: (AIR 1921 PC 35) and came in for
reference. This was a
case very near to the present situation, on the facts, as the instance related to
security of family property being furnished for a member to hold a particular
office. The question discussed by their Lordships was whether this implied any
"risk" in regard to the family property, or any "detriment". It was held that the
emoluments received by Sheel Chandra were in the nature of salary, assessable
under Section 7 of the Income-tax Act, as the salary was income of the concerned
individual and not of the Hindu undivided family.
In the present context the words "risk of" can have, obviously, two differing
connotations. Since the family assets were frozen in the form of a security (fixed
deposits), and that security related to a guaranteed discharge of responsibilities
by Narayana Iyer of his office, it could conceivably be argued that there was a
"risk". But there is not the slightest warrant for any presumption that such a
"risk" was anything except a theoretical factor, at any time. The more substantialargument is, of course, that the moneys were frozen in this form, earning only a
low rate of interest. Conceivably, they could have been invested in the Indigenous
Banking business of the family, in the form of Hundis and their renewals, and
they could thus have earned very substantial rates of interest. But, as one of us
observed during the course of arguments, there was no obligation on the family
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to invest moneys at a particular rate of interest, and no obligation on the
Manager to do so. A potential difference of this kind, which could have been
conceivably realised, cannot constitute a "detriment". In our view, therefore, the
salary and emoluments of Narayana Iyer, as they are ascertainable, must be
treated as his separate property, and we have to differ from the learned trial
judge in this respect.
(15) I have now dealt with the main aspects of law, relevant to the findings of fact
that we have arrived at in these appeals. Certain aspects, relatively subsidiary in
character, remain for scrutiny. Learned counsel for the plaintiff respondent (Mr.
K. S. Sankara Iyer) has drawn our attention to presumptions arising from the
mixture of funds in the hands of a Manager, and to certain decisions relevant on
this particular aspect. They are: Umrithnath Chowdhary v. Goureenath, (1869-
70) 13 Moo Ind App 542 (PC); 34 Ind App 65 (PC); Tulasamma v.
Venkatasubbayya, ILR 48 Mad 597: (AIR 1925 Mad 1125); which really relates to
the accountability of an executor de son tort, who intermeddled with the estate,
which principle might also apply to a Hindu in de facto management of joint
family resources. Reference has also been made to Ramabai v. Raghunath, and
Rajanikanta Pal v. Jaganmohan Pal, 50 Ind App 173: (AIR 1923 PC 57). But, so
long as the question is regarded as one of mixture of the funds from both joint
and separate properties, by the maintenance of a common account or otherwise,this might not affect the separate character of the property already acquired, as I
have emphasised; Mayne is specific that, here, the analogy of a trustee and a
cestui que trust might not apply. Certainly, such mixture will raise a presumption
with regard to the subsequent accretions from such mixed funds.
(16) With reference to the settlements, by Narayana Iyer in favour of defendants
2 and 4, regarded as gifts, learned counsel for the plaintiff-respondent cited
certain decisions to show that the powers of a father or manager, while
undivided, are very restricted in this respect; on stronger ground an individual
cannot alienate his undivided share, or any portion thereof, by way of gift. Baba v.
Timma,(1884) ILR 7 Mad 357(FB), Rottla Runganatham Chetty v. Pulicat
Ramaswami Chetty,(1904) ILR 27 Mad 162 and Peramanayakam Pillai v.
Sivaraman, (FB)have been cited and relied on. As Ramaswami J. pointed out
inPalvanna Nadar v. Annamalai Ammal, the occasion for a valid gift and the
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degree to which the gift could be made by the father or manager of a joint family,
are both circumscribed. This decision was followed by Veeraswami J. in . In
Ranganathan v. Controller of Estate Duty,
Srinivasan J. Pointed out that the father could not dispose of joint familyproperty by gift or settlement, even to another member of the coparcenary, prior
to a division. Gifts in favour of daughters, particularly with regard to occasions of
their marriages, stand of course on a different footing. I do not think it is
necessary to proceed further into these aspects, for, I find myself in entire
agreement with my learned brother with regard to the gift or settlements in
favour of the daughters, the degree of accountability of the defendants in the suit,
and the extent to which they could, in equity, advance claims for improvements
made bona fide in pursuance of the partition.
(17) Finally, I might make a brief reference to the question of reopening of the
entire partition on the ground that it was not bona fide and that it was unequal.
Since we are holding that valuable items, which were partible, were erroneously
claimed by Narayana Iyer, as his self-acquisition and made the subject matter of
separate settlements, it would be clear that the partition effected by him, in
regard to what was admittedly joint family estate, was, in any event, imperfect
and partial. The question is, whether that partition was not bona fide, and was so
unequal as to necessitate the reopening of the entire partition in the manner inwhich the learned trial Judge, (Subrahmanyam J.) has directed. The twin criteria
of bona fides and inequality have been applied to the facts, in several decisions of
this court. It is sufficient to refer to Kandaswami v. Doraiswami, (1878-80) ILR
2-Mad 317 and Lakshmandada Naik v. Ramachandra Dada Naik(1879-80) 7 Ind.
App. 181 (PC); Shiv Dayal v. Ramjiwaya ILR 12 Lah. 574: (AIR 1931 Lah. 603)
may also be cited as well as Ratnabai v. Bhola Deo, AIR 1956 Nag
247. On the facts of the present case, I would agree that, even apart from this
legal question, the only practicable course, and the course most in consonance
with the interests of justice and convenience of parties, appears to be that
adopted by the learned trial judge, in remarking the entire partition. This does
not mean that the concerned parties will be precluded from pressing equities in
their favour; for instance, to the extent to which the share of Narayana Iyer could
be disposed of, his sons, who are settlees, may claim those allocations, and also
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claim that their shares may be localised as far as could be done with justice to the
claims of others like the plaintiff in properties settled upon them. But these are
refinements, into the details of which I need not enter; further, they have been
adequately dealt with by my learned brother in his elaborate judgment. In any
event, such a partition, which excluded very valuable properties upon what seems
to be a deliberately erroneous claim, cannot be characterised as entirely bona fide
or strictly equal.
(18) With reference to the arguments advanced on behalf of the 18th defendant
by Mr. M. S. Venkatarama Iyer, and the matter of accounting. I do not think that
any separate treatment of these aspects by me is called for, in the light of the
findings furnished by my learned brother in his judgment, with which I agree.
(19) Before parting with the judgment. I certainly desire to express our
indebtedness to learned counsel on both sides for the presentation of lucid and
painstaking arguments during the course of a protracted bearing.
Natesan, J.
(20) These appeals arise out of proceedings for partition of the properties of a
Hindu joint family whose ancestral home is in Palghat, Malabar Dt, now part of
Kerala State, and whose properties are to be found in the States of Madras and
Kerala. The principal parties to the suit are P. S. Narayana Iyer belonging to a
family of six generations of money-lenders, and his four sons. The pedigree
hereunder gives the history of the family.
NARAYANA PATTAR
| | |
P.S.Thrivikraman P.S.Narayanan P.S.Venkitaraman
Deft 12 Deft 13 Deft 14
Ramachandra Iyer, the third son of Narayana Iyer instituted one suit for
partition, O S 36 of 1950 in the Subordinate Judge's court, Kozhikode and the
eldest son, Eswara Aiyar, instituted another suit for partition of the same
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properties on the original side of this court. The latter suit was numbered as C.S.
367 of 1950 and the suit instituted in Kozhikode was transferred to the Original
side of this court, to be tried along with C.S. 367 of 1950 and numbered as C.S.
474 of 1950. The parties will hereafter be referred to with reference to their ranks
in C.S. 367 of 1950 instituted on the original side of this court. The second
defendant and his two sons have preferred the appeal O.S.A. 74 of 1959 against
the decree in C.S. 367 of 1950. The appeal by the second defendant against the
decree in the connected suit C.S. 474 of 1950 is the other appeal O.S.A. 75 of
1959. The plaintiff in C.S. 367 of 1950, to the extent the decree went against him,
has preferred the appeal, O.S.A. 31 of 1960. O.S.A. 28 of 1960 has been preferred
by the widow of the 4th defendant who died pending suit, with reference to the
special claims put forward by her in the suit C.S. 367 of 1950. O.S.A. 29 of 1960 is
a connected appeal by her preferred against the decree in C.S. 474 of 1950 to thesame end.
(21) The contention of the parties in both the suits has been the same, and the
properties are dealt with in the judgment with reference to the schedules to the
plaint in C.S. 367 of 1950. The plaintiff and defendants 2 to 4 are the sons of the
first defendant. Defendants 5 and 6 are the sons of the 2nd defendant.
Defendants 7 and 8 are the sons of the 3rd defendant. The fourth defendant died
in February 1951 subsequent to his filing the written statement, and his widow,
Annapurni Ammal, was brought on record as the 19th defendant. The first
defendant Narayana Iyer died on 28-5-1951, after filing his written statement,
and his sons have been recorded as his legal representatives. The plaintiff
amended the plaint by addition of paragraph 12(a), claiming that, on the death of
the father, his one-fifth share in the joint family properties devolved on his sons
the plaintiff and defendants 2 and 3, and that the plaintiff was, therefore, entitled
to a 4/15th share in the joint family properties. The second defendant filed an
additional written statement, and, therein, he denied the claim of the plaintiff to
a 4/15th share, and pleaded that under the will and codicil dated 18-4-1943 and14-3-1951, respectively left by the 1st defendant, he was the sole executor and
legatee of all the assets left by the 1st defendant, and that the plaintiff had no
right to claim a share of any of the properties. Though a will has thus been put
forward in the written statement, the will has not been disclosed in the affidavit
of documents or filed in the course of evidence, was not probated and had not
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been relied upon by the 2nd defendant in these proceedings. The case has been
stated and discussed and rights claimed and adjudicated without reference to any
will or codicil.
(22) Narayana Iyer is the eldest of five brothers and the son of Samu Pattar whodied in April 1925. Samu Pattar's brother. Appu Pattar, died in 1900 itself. In the
larger joint family to which Narayana Iyer belonged, the partition of the joint
family properties was taken upon in 1932 and was finalised in 1939 by a
registered deed of partition dated 9-9-1939, evidenced by Ex.P. 4. The two sons of
Appu Pattar then living, his two grandsons by the predeceased son Eswara Iyer,
the son of Venkatarama Pattar, the younger brother of Samu Pattar, and Samu
Pattar's five sons were the parties to that partition. In view of the vastness of the
properties and large business dealings, considerable time was taken in effecting
division. But, it must be stated that the division was made in an atmosphere of
cordiality and compromise. The parties had the assistance of one T. G.
Ramaswami Iyer, a retired District Judge, appointed as Arbitrator, and three of
their family lawyers as advisers. Even during the progress of the partition in the
larger joint family, which was proceeded with in stages, from about 1938, the
relationship between the plaintiff and his father got strained. Letters passed
between Narayana Iyer and the plaintiff, and under Ex.P. 5, dated 13-1-1940, the
father intimated the plaintiff that they would cease to be joint thereafter and that
the plaintiff would have his rights as divided member satisfied by division by
metes and bounds. The father proceeded with the division of the properties,
purporting to exercise the power of the father to enforce division, and sent a
memorandum of division to each of his sons on 12-2-1940. This was later
followed up by a registered deed of partition Ex.P. 1 dated 26-10-1943.
In effecting this partition between himself and his sons, the father retained to
himself immoveable properties, cash outstandings and securities of considerable
value which were in his name, claiming them as his self-acquisitions in which his
sons had no interest. He purported to divide only the properties which were
allotted for his share in the partition of the larger joint family, and, here also, he
claimed that, in respect of the properties allotted for discharge of debts, to the
extent he had discharged joint family debts, by payment of cash, the cash was out
of his separate funds, and to that extent he could appropriate the family
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properties. This partition, it must be stated, was accepted by the 2nd and 4th
defendants without demur. The evidence shows that the 3rd defendant
remonstrated at first, but was later made to submit to the partition. He sought an
exchange of one of the properties allotted to his share with another, and got it.
The plaintiff repudiated this partition wholly and declined to accept in discharge
of the amount due to him from the larger joint family the property which his
father allotted. He filed the suit O.S. 1 of 1940 on the file of the Subordinate
Judge's court, Palghat, for recovery of the amount of Rs. 27,653 impleading all
the members of the larger family and the decree Ex.P. 10 passed on 20-7-1943
was satisfied by payment by Narayana Iyer. In this suit the 3rd defendant has
joined the plaintiff in impugning the partition as unequal and unfair. The second
and fourth defendant in these proceedings affirmed the partition and stated that
they had taken possession of the properties allotted to their respective shares bytheir father in 1940. They have gained substantially by their submission to their
father, being the recipients of considerable favours from him by way of
settlement of valuable properties.
(23) The principal contest in the appeals is about the immovable properties
claimed by the father as his self-acquisitions and but for the settlement he made,
it might not have been necessary for the parties to fight out to the last the issues
as to the character of these properties. One of the valuable items referred to as
the Nilambu forests of "Karulai estate" items 210 to 282 of the A schedule to the
plaint, the father had settled on the 2nd defendant and his sons by a registered
deed Ex.P. 21 dated 21-6-1949. By another registered instrument Ex.P. 22 dated
30-11-1949 he settled another very valuable property a bungalow by name
Venkata Vilas in Madras in favour of the 2nd defendant and his sons and the 4th
defendant. Also a fixed deposit for a sum of one lakh in the General Bank Ltd,
that he had in his name, he divided into two fixed deposits of Rs. 50,000 each in
the names of the 2nd and the 4th defendants about the same period. Three
houses in the city, items 337, 338 and 339 he settled on his three daughters byregistered deeds of gift dated 3-11-1949. It is these various settlements, ignoring
completely the plaintiff and the 3rd defendant, that sparked off the simmering
discontent and led to the institution of the suits by them.
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(24) In the immoveable properties which the plaintiff claims as belonging to the
joint family and set out in the A schedule, there is no dispute about items 1 to 171,
as they have been specifically allotted at the partition of the larger joint family to
the branch of Narayana Iyer. Items 172 to 282 also had been allotted at that
partition to this branch, to enable Narayana Iyer to discharge the debts
amounting to about Rs. 90,000 payable by the larger joint family to his sons, that
is, the plaintiff and defendants 2 to 4. There was a claim that these items were
given to Narayana Iyer personally, subject to his liability to discharge the debts
due to his sons. As regards the remaining items, 283 to 341 the claim by
Narayana Iyer was that these, excepting the items claimed by the 2nd and 4th
defendants were his self-acquisitions. The 2nd defendant claims items 327, 328
and 330 as his self-acquisitions, and the 4th defendant claims a portion of item
341, an extent of 29 grounds and 1777 Sq. ft as his self-acquisition. There aresome minor items in dispute like jewels and outstandings which it is not
necessary to set out here at this stage.
(25) The learned Judge of this court, Subrahmania Nadar J, who tried the suits
on the Original Side, in the main held that all the properties acquired by the 1st
defendant and standing in his name as well as the items claimed by the 2nd and
4th defendants are all joint family properties. He held that the gift in favour of
the 2nd and 4th defendants of item 336 is void. He also held that the gift of the
Karulai estate in favour of the 2nd defendant is void. The learned Judge,
however, upheld the gift of the three houses, items 337 to 339 of the plaint A
schedule in favour of the three daughters. The fixed deposits of Rs. 50,000 each
in favour of the 2nd and 4th defendants were held not binding on the estate.
Excepting the sums acknowledged to be due to the plaintiff and defendants 2 to 4
on account of deposits made by them in the larger joint family and undertaken to
be paid by Narayana Iyer out of the properties allotted specifically for the
purposes, all the other outstandings to the credit of the father and brothers in
deposits or otherwise in the General Bank Ltd, which the father had started wereheld divisible between the plaintiff and defendants 2, 3 and 18. The partition
effected by the father in 1940 followed up by the registered partition in 1943, was
held void and not binding on the plaintiff and 3rd defendant. The claim for
improvements put forward by the 2nd defendant with reference to the properties
which he had taken possession of under the partition effected by the father, was
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negatived. The 2nd 3rd and 18th defendants were directed to render account of
the profits of the properties in their respective possession from the date of
division of status, namely, 13-1-1940. The learned Judge gave certain directions
for the taking of accounts, and the decree finally provides for the division of the
properties equally between the plaintiff and defendants 2 and 3 and defendant 18
as the legal representatives of the 4th defendant.
(26) The first question that calls for consideration in these appeals relates to the
finding that all the immoveable properties set out in the A schedule to the plaint
are joint family properties. As would be seen presently, the family was one of the
richest in Palghat and plenty of funds were available even to the junior members
of the family. The normal presumption as to acquisition by individual members
where substantial nucleus is established would apply, but difficulty arises in this
case by reason of the fact that Narayana Iyer had independent sources of income,
which cannot be considered to be negligible. Added to it, at the partition in the
larger family, several items of properties in the name of individuals coparceners,
including some of the disputed items, were considered as the personal property
of their acquirer, and left out of consideration.
(27) Now, of the acquisitions prior to the partition proceedings in the main
family, the first purchase in Narayana Iyer's name was a site at Purasawalkam,
Madras, for a sum of Rs. 15,000, in May 1920. This property had later been soldby him in 1936 for a sum of Rs. 17,500 and the cash has been received by him.
This alienation as such is not challenged. Next comes the acquisition of item 336
in the plaint A schedule, the bungalow 'Venkata Vilas' in Luz Church Road,
Mylapore. It had been purchased in 1920 for a sum of Rs. 50,000 and
improvements have been made to it estimated at Rs. 10,000 within about six
months after the purchase. The site on which the buildings items 337 to 339
stand was purchased in December 1920 for a sum of Rs. 17,500. Also portions of
the site of items 329 were acquired for small sums in 1926 and 1929.
(28) The principal contention raised by learned counsel appearing for the 2nd
defendant in these appeals is that, as at the partition in the larger family these
acquisitions had all been considered to be not joint family properties, the plaintiff
can have no claim to these properties as properties of the family. Now when the
larger joint family was joint, properties had been purchased not merely in the
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name of Narayana Iyer, but also in the names virtually of all the members in the
several branches of the larger family. The plaintiff, in his evidence, has spoken to
the investments in the names of several members of the family. The second
defendant admits in his evidence that the majority of the members of the family
had properties in their names and that, if each investment by the members were
also taken into account, all the members of the larger joint family had
investments in their individual names. It is also clear from the evidence that few
of them had individual sources of income, apart from family funds. At partition of
the larger joint family, the members agreed that except where an investment in
the name of a member was expressly stated in the accounts of the larger family to
have been made for the family out of the common funds of the family, the
properties in the individual names were not to be brought into the hotchpot for
the division among the members of the family. Such property would be taken bythe individual as his personal property. Learned counsel for the second defendant
contends that by reason of this agreement, the sons of Narayana Iyer are
precluded from claiming a share in the properties held by Narayana Iyer at the
time of partition in the larger joint family and not taken into consideration at the
partition.
(29) As already stated, this family was one of the richest in Palghat and a well
known firm of bankers in Malabar and in parts of Madras. The family had
extensive transactions; its banking business was spread over Malabar, Madras,
Coimbatore, and Madurai and was making good profits. the family properties
were to be found besides in Malabar, in Coimbatore and Madurai. The family had
forest lands, wet lands and dry lands, tile factories and ginning and groundnut
factories. There is also evidence of the family having carried on some business in
piecegoods. Samu Pattar, the father of Narayana Iyer, had assumed charge of the
family business as manager in 1900, when Appu Pattar died, and continued his
hold over the family till his death in 1925 and during this period, the family was
having according to the 2nd defendant, the highest volume of business. DuringSamu Pattar's time, the banking business went under the style of E.N.A. Samu
Pattar.
Even before Samu Pattar died, the evidence shows that Narayana Iyer was
actively participating in the family concerns, though he had entered service in the
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Madras Bank which subsequently became the Imperial Bank, Madras in 1907.
For some years he was in the Tuticorin branch, later he was transferred to
Madurai and from there after some years he was posted to Madras. He retired
from the bank in 1924 and in 1925 admittedly assumed de jure managership of
the joint family and was in sole management thereafter. The 2nd defendant
admits that between 1925 and 1933, properties worth over five lakhs were
acquired for the larger family.
After the division in status in the larger family as the actual partition by metes
and bounds progressed between 1933 and 1939, Narayana Iyer, the first
defendant herein was in management of the affairs of the larger family by
common consent: and it is admitted that, during this period, about four lakhs
worth of properties were acquired for the larger joint family. The ginning factory
and tile works were acquired for the family during the managership of Narayana
Iyer between 1929 and 1931. All the new acquisitions for the larger joint family
were the subject of partition under the 1939 registered partition (Ex.P4) in the
main joint family. It will be seen from the records that as on 26th August 1932,
the branch of Narayana Iyer had drawn from the funds of the main joint family a
sum of Rs. 4,13,226 1-6 the branch of Appu Pattar Rs. 2,43,415 4-0, and the third
branch (Easwara Iyer's branch) Rs. 13,702 2-7. There is some evidence that the
drawings, subsequent to the death of Samu Pattar, by the branches became heavy
and the business was getting dull and this led to the branch of Easwara Iyer
demanding partition by the notice dated 26-8-1932.
(30) Ramakrishna Iyer, Narayana Iyer and others, the then members of the three
branches numbered in the pedigree, on 5-6-1933 entered into the agreement,
evidence by Ex.P.3, for partition of the larger family with the help of the
arbitrator and advisers already referred to Clause 3 of the agreement refers to the
resolving of the following disputes between the parties:
(a) The contention of the first branch, that is, Appu Pattar's branch, that they are
entitled to extra share.
(b) The claim for extra remuneration by Samu Pattar's branch, and
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(c) The decision as to how the drawing from the family funds till that date should
be adjusted.
Under the agreement, the first and second branches abandon their claim for extra
remuneration. It must be noticed that these two branches have been particularlyresponsible for the large acquisitions of the family. Evidently a quid pro quo was
found in other provisions. As regard the withdrawals by the three branches--
withdrawals by Narayana Iyer's branch being the heaviest and Appu Pattar's
coming next--it was agreed that the withdrawals from the family till 26-8-1932,
should be treated as common and joint family drawings and as common expenses
of the family.
The next important clause (Clause 6) in the agreement runs thus:
"Except in the case of properties purchased in the name of individual members
for convenience out of the monies found in the joint family business account
books, the other properties standing in the name of individual members are their
private (swakaryam) properties and are not liable to division.
The dictionary meaning of the word "swakaryam" is 'personal property', 'private
affair'. Provision is made for the inter se division of the properties allotted to the
respective branches among the members of the branches. It will be seen that
Narayana Iyer and his brothers each got 1/15th share in the joint family
properties. The agreement also provided that the members may have their own
separate business pending completion of the partition. The partition was
proceeded with by the parties smoothly, and in 1934 there was a division of the
immoveable properties then available, parties entering into separate possession
of their shares. The parties avoided even an award and a perusal of the registered
partition deed dated 9-9-1939, Ex.P. 4, shows the friendly manner in which the
senior members of the family had proceeded with the partition and avoided any
wasteful ligitation. In fact, the very agreement, Ex.P. 3, states that they had been
advised by friends and well-wishers that if the disputes were not amicably settled,
there was likelihood of huge loss and hardship to the family and big litigation
cropping up.
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Due notice was taken of the fact of difficulties in allotting equal shares in the
immoveable properties and disparities in the allotments were adjusted according
to the satisfaction of the concerned parties. The deed recites that accounts had
been taken of all the immoveable properties belonging to the joint family and
divided. At the ultimate partition, they had divided the properties into 9 shares,
instead of providing for subsequent division inter se in the first and second
branches. Provision was made for discharge of the debts due to Narayana Iyer's
sons from the common family, and immoveable properties of the common family
were set apart for the said purpose and placed in the possession of Narayana Iyer.
They are items 172 to 283 in schedules A to the plaint, and comprised in the J
schedule of the partition deed. The partition deed provided that excepting as
regards the provision for the male children of Narayana Iyer the other debts
payable to the children, sisters, wives etc, of the respective shares should bedischarged by them out of their respective shares.
(31) It will be apparent from the above proceedings relating to the partition in the
larger family that not merely the members of the branches of Appu Pattar and
Eswara Pattar, the sole survivor of the third branch, but also the other members
of Samu Pattar's branch, that is, the brothers of Narayana Iyer, gave up their
claim to share in the properties and funds that stood in the name of Narayana
Iyer at the time of partition in the larger family. It is relevant, in this connection,
to point out that, shortly after 5-6-1933, two of the brothers of Narayana Iyer,
Ranga Iyer and Ananthanarayana Iyer, placed difficulty in the way of the
amicable partition and this dispute was a matter of separate settlement between
Narayana Iyer and the two younger brothers, Narayana Iyer agreeing to pay each
of them a sum of Rs. 15000 with interest at 7 1/2 per cent at the time of the final
partition. On this, they disclaimed all interest over what Narayana Iyer claimed
as his self-acquisitions. This settlement between Narayana Iyer and the two
brothers is evidenced by Ex.P. 7. This settlement is also the subject of reference
and recording in the intermediate partition agreement between the ten membersof the joint family, (Ex.D. 44), dated 22-8-1934.
(32) But the fact that the members of the larger family while settling their affairs,
agreed not to bring into the hotchpot the acquisitions in the name of one or other
of the members unless it had been shown as acquisition for the family in the Joint
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family accounts, cannot by itself conclude that the properties thus left out had
been acquired by the members with their separate earnings and not with funds
drawn from the joint family. The reasons which prompted the members of the
main family not to probe into the acquisitions by the several members may be
manifold. That all the members of the family had properties in their own names
or at least cash investments of large amounts, is a matter of evidence. We do not
have any evidence as to how the paddy income was divided and employed. It may
be that the drawings were more or less equal, and according to equities, if all
aspects of the matter were taken into consideration, and the difficulty of bringing
the other assets into the hotchpot might have been felt by the members, since
each had his own acquisitions. Where the investment were in cash, all the
investments may not get disclosed and those whose investments were in
immoveables would be at a disadvantage. Appu Pattar and Samu Pattar, and, inlater days Narayana Iyer, had done much to swell the estate. The family owed not
a little to them and special claims were advanced on this basis.
These considerations might have weighed with the heads of the branches in not
pressing for putting into the hotchpot the properties held by the individual
members of the branch. The parties were evidently advised that insistence on
such full disclosure might lead to interminable disputes. The income from some
of these properties and investments held by individual members might not have
been brought into the joint family chest and assessed to incometax in that
manner and they might have escaped assessment as individual income also. It
may be that the value of the estate to be divided and the share allotted to the
parties as per the record would swell up considerably if all the properties were
brought in and the parties might have thought of avoiding the same It is a desire
for secrecy it is contended--that led to the payments to Renga Iyer and
Anantanarayana Iyer being shown as amounts due to them for Varadakshinai and
due to their mother. I respectfully agree with the remark of the learned Judge at
the trial that it was a wise decision on the part of the members of the family not todisturb the apparent titles as regards the properties and funds held by individual
members of the larger family. But, as observed by the learned Judge, this does
not lead to the conclusion that the properties or funds held by the individual
member had been acquired as a result of his own separate exertions or out of his
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separate resources so as to disentitle his own son a share in those properties as
member of his immediate branch of the coparcenary.
(33) the matter will have, therefore, to be considered independent of the
provision in the partition agreement of the main joint family. One view could be,that acquisitions made by Narayana Iyer were out of the drawings from the joint
family or other joint family income and would, therefore, be joint family
properties of the larger joint family itself. Substantial and adequate nucleus could
be shown, and in fact, as would be seen presently, has been established. As such
the acquisitions could have been claimed by the main joint family itself as
acquisitions of the family. But the members of the larger joint family would now
be precluded from claiming any interest in the same. They renounced all their
claims or interest therein, each member of the larger joint family relinquishing
his claim against the properties in the hands of the other members. It is a case of
mutual or cross releases. As the several members who participated in the
partition were only representing their own branch and were not there in their
individual capacity, the relinquishments would enure in favour of not only the
members who actually participated in the partition and accepted the
relinquishment but their children also. As each member gave up a possible claim
against the other member in consideration of their not claiming the properties in
his individual name, the release should be deemed to have been acquired at the
expense of giving up a claim for a share in the properties in the hands of the other
members of the family. Thus viewed, all the properties in the names of individual
members would, as between themselves and members of their immediate family,
be partible joint family properties.
(34) Another way of viewing the matter is to regard the acquisitions of each
member as acquisitions for his branch. It should be noticed that, without being
properties liable to be thrown into hotchpot in the division of the properties of
the larger joint family, it was possible for Narayana Iyer to acquire properties for
himself and his children, that is, to have properties separately for his branch.
Narayana Iyer could have invested savings out of the drawings from the family
chest and other funds of the family that passed through his hands, the larger
family not expecting him to account for the same. Of course, there is no question
of any misappropriation as other branches were also making such acquisitions.
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Again, Narayana Iyer who had independent income, might have mingled the
funds and acquired properties with funds thus mixed and mingled. Ex facie, these
acquisitions will be the joint family properties of Narayana Iyer's branch.
(35) The contention the learned counsel for the second defendant that NarayanaIyer's branch by itself could not hold joint family properties when they are not
also the properties of the larger family, is not tenable. The partition proceedings
in the larger joint family may be some evidence of the fact that there are no other
properties of the joint family, but it does not preclude the members of the
immediate joint family showing that, as between them and the head of their
branch, the other properties were joint family properties. That separate branches
as corporate bodies could hold joint family property in a larger joint family, is
well established by decisions. The leading case on this subject is the decision of
Bashyam Aiyangar J. Sitting with Arnold White C. J. In (1902) ILR 25 Mad 149 at
p.154. After setting out the Mitakshara conception of a Hindu family, Bashyam
Aiyangar J observed:--
"According to the above conception of a family, there may, of course, be one or
more families all with one common ancestor, and each of the branches of that
family, with a separate common ancestor.
As regards the property of such family, the 'unobstructed heritage' devolving onsuch family, with its accretions, is owned by the family as a corporate body, and
one or more branches of that family, each forming a corporate body within a
larger corporate body, may possess separate 'unobstructed heritage' which, with
its accretions, may be exclusively owned by such branch as a corporate body.
The main family and its branches may possess joint property not only by
operation of law but also by act of parties. Property acquired without the aid of
joint family property, by or more individual members thereof--whether they
belong to different branches or to one and the same branch of the family--may by
act of parties be incorporated with the joint property of the main family or one of
its branches and a stranger may also give property to the family as a whole (vide
Radhabai v. Nana Rav, (1878-79) ILR 3 Bom 151) or to one of its branches
(videKunacha Umma v. Kuttimammi Hajee (1893) ILR 16 Mad 201 (FB) as a
corporate body. Even if the undivided family is not possessed of any nucleus of
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property, which has come to it as 'unobstructed heritage', it may be that, by act of
parties property acquired jointly by all the members or separately by one or more
members thereof, can be impressed with the character and incidents of
unobstructed heritage or joint property belonging to the main family or to any of
its branches. Property devolving by inheritance as 'obstructed heritage' on all the
members of joint family (vide Gopalasami v. Chinnasami (1884) ILR 7 Mad 458)
or upon any one of them, may likewise be impressed with the character of joint
family property. But so long as family remains an undivided unit two or more
members thereof--whether they be members of different branches or of one and
the same branch of the family--can have no legal existence as a separate
independent unit, but if they comprise all the members of a branch, or of a sub-
branch, they can form a distinct and separate corporate unit within the large
corporate unit and hold property as such. Such property may be the self-acquisition or 'obstructed heritage' of a paternal ancestor of that branch as
distinguished from the other branches which property has come to that branch
and that branch alone as 'unobstructed heritage', or it may be the self-acquisition
of one or more individual members of that branch, which by act of parties has
been impressed with the character of joint property, owned by that branch and
that branch alone to the exclusion of the other branches".
(36) In . The Supreme Court has affirmed the position. Subba Rao J stating the
legal position thus "Coparcenery is a creature of Hindu law and cannot be
created by agreement of parties except in the case of reunion. It is a corporate
body of a family unit. The law also recognises a branch of the family as a
subordinate corporate body. The said family unit, whether the larger one or the
subordinate one can acquire hold and dispose of family property subject to the
limitations laid down by law Ordinarily the manager or by consent, express or
implied of the members of the family any other member or members can carry on
business or acquire property subject to the limitations laid down by the said law
for or on behalf of the family. Such business or property would be the business orproperty of the family. The identity of the members of the family is not
completely lost in the family. One or more members of that family can start a
business or acquire property without the aid of the joint family property, but such
business or acquisition would be his or their acquisition. The business so started
or property so acquired can be thrown into the common stock or blended with
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the joint family property in which case the said property becomes the estate of the
joint family. But he or they need not do so, in which case the said property would
be his or their self-acquisition, and succession to such property would be
governed not by the law of joint family but only by the law of inheritance"
(37) Before examining in detail the nature of the acquisitions made by Narayana
Iyer which commenced in 1920, we may, at the outset set out the extent of the
wealth and resources of the family, whose affairs Samu Pattar the father of
Narayana Iyer, was in management till 1925 and in which Narayana Iyer himself
participated actively till he assumed sole management in 1925. (After discussing
the evidence in this regard, His Lordship proceeded) thus we find that even
during the lifetime of Samu Pattar who had been in management of the family
from 1900, Narayana Iyer was participating in the management and handling the
resources and funds of the family.
(38) Since the acquisitions of Narayana Iyer in this case start from 1920 when he
was only a junior member of the family and they are in three distinctive periods
the scope of enquiry will also vary according to the periods of acquisition. The
first period is the period during which Samu Pattar was in management that is,
till about October 1925. From 1925 to 13th January 1940 is the second period
when Narayana Iyer was the manager of the entire joint family. Till August 1932,
he was the manager of the entire joint family. There is a division in status in thelarger joint family in August 1932 and the partition in this family progressed till it
was finalised in 1939. But, right through the period, he continued to be the
manager of his own branch. The acquisitions of after the partition in his branch
in January 1940 would have to be considered from a different angle and this will
be the third period of acquisition.
(39) The legal position as to acquisitions by members of a family like the one
under consideration is clear. The family was one to whose members fluid
resources were easily available. The evidence shows that members drew cash
from the family chest for the mere asking and as regards Narayana Iyer even
during the period of his father's management he need not even ask it was
available to him for taking at his will. When a coparcener seeks to prove that an
acquisition made by a member is partible the first task is to show that at the
relevant time, the joint family had nucleus ample enough to enable the
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acquisition. If in this he fails the person in whose name the property stands need
not prove out of what funds he acquired the properly to establish that it is
impartible. It is well settled that if in fact on the date of acquisition by a member
of a joint family of any particular item of property the join family had sufficient
resources with the aid of which the property in question could have been
acquired, the property should be presumed to be acquired from out of the joint
family funds and so partible property of the family. Of course it is only a
presumption: the person claiming the property as his own could show the
contrary and establish that the acquisition was without the aid of joint family
property.
(40) In ILR (1948) Mad 440 at p. 447: (AIR 1947 PC 189 at P. 192) the Judicial
Committee stated the legal position thus: "The Hindu law upon this aspect of the
case is well settled, Proof of the existence of a joint family does not lead to the
presumption that property held by any member of the family is joint, and the
burden rests upon any one asserting that any item of property is joint to establish
the fact. But where it is established that the family possessed some joint property
which from its nature and relative value may have formed the nucleus from which
the property in question may have been acquired the burden shifts to the party
alleging self-acquisition to establish affirmatively that the property was acquired
without the aid of the joint family property;"
vide also and Amritalal v. Surathlal, AIR 1942 Cal
553.
(41) In the case of a junior member, it may be open to him to show that, even
though the joint family had ample uncleus, the funds were not at all available to
him. In the case of a manager of a joint family, the burden is heavier. If a
manager of a joint Hindu family in charge of adequate funds claims that the
immoveable property which had been acquired in his name was acquired by him
out of his separate assets, the burden of proof lies heavily on him to establish his
claim. It is needless to point out that the manager as the head of the family has
control over the income and expenditure and he is the custodian of the surplus, if
any. In Gajendragadkar J (as he then was) delivering the judgment of the court
observed:
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"...... in our opinion, there is no doubt that where a manager claims that any
immoveable property has been acquired by him with his own separate funds and
not with the help of the joint family funds of which he was in possession and
charge, it is for him to prove by clear and satisfactory evidence his plea that the
purchase money proceeded from his separate fund. The onus of proof must in
such a case be placed on the manager and not on his coparceners".
(42) Before examining the contested items of acquisition, there is one argument
advanced on behalf of the 2nd defendant which may be dealt with immediately.
This relates to the theory that acquisitions from allowances made by the joint
family without liability to account for the balance or, as put for the 2nd
defendant, acquisitions out of the savings from the maintenance allowance
provided by the manager to a member of the family are his personal property. It
may be noticed that in this case, the drawings of Narayana Iyer's branch was to
the tune of over Rs. 4,13,000 by 1932. It is admitted that each branch has been
drawing large amounts. The contention on behalf of the 2nd defendant is that,
apart from the drawings, the funds of the joint family were not available to
Narayana Iyer, and that these drawings represent allowance for family expenses
of the branch spread over decades. It is represented that though the total has
gone up over four lakhs, it represented debits of small amounts for family
expenditure for clothes, jewels of female members and expenses incurred on
festive occasions like marriage, deepavali etc. It is argued that it is unlikely that
any surplus amount was left out of these amounts. It is further contended that in
law the purchases made out of the savings from the maintenance allowance
would not constitute partible property of the joint family.
(43) First to examine the case on the merits: It must be remarked that the entire
accounts of the family are not before the court, and the accounts available are not
complete (After discussing the merits of the case, His Lordship proceeded:) In the
absence of complete accounts, from the few accounts produced, it is difficult to
agree with the contention of the 2nd defendant that the drawings against
Narayana Iyer's branch represent only maintenance allowance and the amounts
spent on occasions like marriage, deepavali etc.
(44) The proposition without any qualification that an acquisition from the
savings of the joint family income given to the acquirer by the manager without
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spend as soon as he receives it, must, because he chooses to invest it for some
purpose which is clearly not intended for the benefit of the family, be deemed to
be a family acquisition. Their Lordships, following the decision of the Privy
Council in (1892) ILR 19 Cal 253 (PC) observed that a profit made by the member
of a joint family from the enjoyment of joint property without detriment to it is
his separate self-acquired property. They observed further: ILR (1937) Mad 990
at p. 1002: (AIR 1937 Mad 571 at p 575).
"When money is given to a member of a family by the manager from family funds
to be spent by him for his personal use, it seems to us that any profit made by him
can hardly be said to be in detriment of the joint family ".
As already stated, the decision in ILR (1937) Mad 990: (AIR 1937