SC clarifies on who can claim share in ancestral wealth

The Supreme Court (SC) recently declared that a Hindu father or the manager of a Hindu Undivided Family (HUF) has the power to make a gift of ancestral property for a ‘pious purpose’, but such an alienation can’t be permitted ‘out of love and affection’.

A petitioner had filed a suit against his father­ and another person called KC Laxmana for partition and separate possession of his one­-third share in the property, and for a declaration that the gift or settlement deed executed by ­his father in favour of the second defendant­, KC Laxmana, be declared null and void.

Bharat Chugh, former judge and advocate, says, “The plaintiff argued that the property belonged to the joint family (of which Laxmana was not a part), and transfer of property without his consent was not valid.”

The SC ruled that gifting out of natural love and affection cannot be interpreted as ‘pious purpose’.

“The SC categorically observed that it is well settled that a Hindu father or any other managing member of a HUF has the power to make a gift of ancestral property only for a ‘pious purpose’.

"The term ‘pious purpose’ refers to a gift for charitable and/or religious purpose.

"A deed of gift in regard to ancestral property executed ‘out of love and affection’ does not come within the scope of the term ‘pious purpose’,” says Tushar Agarwal, advocate, Supreme Court of India.

Conditions apply

There are limits on the powers of the karta or manager. Suraj Malik, senior advisor, Burgeon Law, says, “The courts have held that the manager of a joint Hindu family can gift property, to a small extent, to strangers for pious purposes.

"But the manager does not have absolute power of disposal over joint Hindu family property.”

According to the law, which was also reiterated in the K.C. Laxmana case, the karta or manager of a joint family property, may alienate such property in the following situations: legal necessity; for the estate's benefit; and with the consent of all coparceners.

Aditya Chopra, managing partner, Victoriam Legalis-advocates and solicitors, says, “If an alienation is made without the consent of all the coparceners, it is voidable at the instance of the coparceners whose consent has not been obtained.”

While the above case offers clarity on the rights of the Karta or manager, there are a few other crucial aspects about ancestral property you should be aware of.

Definition of ancestral property

The Hindu laws of succession and inheritance are governed by two major traditional legal treatises - the Dayabhaga school, which applies to Bengal and Assam; and Mitakshara, which governs the rest of India.

Samir Malik, partner, DSK Legal, says, “Since the Hindu Succession Act, 1956, and other legislation are silent on the definition of ancestral property, the SC has relied on the Mitakashara school, which holds that the property inherited by a male Hindu from his father, paternal grandfather, or paternal grandfather’s father, is called ancestral property.”

The essence of an ancestral property is that the sons, grandsons and great grandsons of a person acquire an interest and rights to the property at the time of their birth.

If an ancestral property has remained undivided, descendants up to four generations can claim a share in it.

These members are known as coparceners.

Chugh says, “There is a common misconception even today that if a father acquires some property, the moment a son or a daughter is born to him, the property becomes ancestral property.

"This is incorrect. A father now owns the property acquired by him as his own separate property and does not form a coparcener with his children.”

Rights determined per stirpes

Section 8 and The Schedule of the Hindu Succession Act, 1956, explain how ancestral property is to be shared.

Anushkaa Arora, principal and founder, ABA Law Office says, “Rights in ancestral property are determined per stirpes and not per capita. Each generation’s share is determined first.

"Successive generations sub-divide what has been inherited by their predecessor.”

Per stirpes means the beneficiary’s inheritance is passed on to the next-in-line heir, or heirs.

Per capita means the beneficiary’s inheritance is divided evenly among any surviving beneficiaries.

Daughters have equal rights

After the enactment of the Hindu Succession (Amendment) Act, 2005, daughters hold an equal share as sons in ancestral property.

Female descendants now have the right to be coparceners in a joint family property.

The Supreme Court has confirmed the status of coparcener for daughters born before or after the amendment.

Chopra says, “With effect from September 9, 2005, these rights can be claimed by the daughter born earlier, except in cases where disposition or alienation, partition or testamentary disposition had taken place prior to December 20, 2004.”

The rights of women over agricultural property have not been as clearly defined. Arora says, “Agriculture being a state subject, the implementation differs from one state to another.”

Key points to remember

No individual coparcener, including the karta, has the power to dispose of ancestral property without the consent of coparceners, except under a limited set of circumstances.

Agarwal says, “The head has the power to manage the family assets under Hindu law.

"But four generations have a claim over ancestral property.

"Each stakeholder’s consent is required to sell an undivided ancestral property.”

A person also does not have the right to exclude his descendants from inheriting ancestral properties.

Any person can sell his share in ancestral property if there is no dispute.

If there is dispute, a coparcener will have to file a partition suit to claim his share of the ancestral property.