A Karta has legal authority to execute an agreement to sell land of agricultural nature: Supreme Court of India

IN THE CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7037 OF 2021 ARISING OUT OF SPECIAL LEAVE PETITIONNO. 13853 OF 2021 BEEREDDY DASARATHARAMI REDDY V. MANJUNATH AND ANOTHER JUDGMENT SANJIV KHANNA J The legal issue which arises for consideration in the present appeal is whether K. Veluswamy as a Karta has legal authority to execute agreement to sell dated 8th December 2006 for sale of the suit land being agricultural land Sy.No. 7 1P1 measuring 4 acres 21 guntas of land Sy.No. 7 1P2 measuring 5 acres of land andSy.No. 8 3P3 measuring 2 acres of land in all 11 acres 21 guntas of wet land situated in Bagganadu Kaval Village J.G. Hally Hobli Hiriyur Taluk Chitradurga District Karnataka Civil Appeal No. 70321 It is an accepted position that on 8th December 2006 K Veluswamy as a Karta of the joint Hindu family had executed the agreement to sell of the suit property for Rs.29 lakhs and had received Rs.4 lakhs in advance from Beereddy Dasaratharami Reddy the appellant before us. K. Veluswamy the second respondent before us has not entered appearance and contested this appeal. The appeal is contested by the first respondent before us namely V. Manjunath who is the son of K. Veluswamy. 5 SCC 355 Civil Appeal No. 70321 father in law of V. Veluswamy had also signed the agreement to sell. Payment of Rs. 4 lacs by Beereddy Dasaratharmi Reddy and receipt of the said amount by K. Veluswamy as advance is also not disputed. Remaining amount of Rs.25 lakhs was to be paid within three months and the sale deed executed and registered 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. What is significant and important is the avowal by the executants that they were in need of funds to meet the domestic necessities and consequently had agreed to sell the suit property. If any dispute arises with regard to the sale transaction it would be solved by the executants personally at their own risk and cost. Lastly if there was any loan mortgage revenue arrears etc over the property the same shall be cleared by the executants so as to execute and register the sale deed in favour of Beereddy Dasaratharami Reddy. The agreement to sell does mention that it would be also executed by V. Manjunath and it is a fact that it is not signed and executed by him but this as discussed below would not nullify the rights and liabilities arising from the agreement to sell 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 Civil Appeal No. 70321 several judgments of this Court including Sri Narayan Bal and Others v. Sridhar Sutar and Others 2 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. 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. There are no specific grounds that establish the existence of legal necessity and the existence of legal necessity depends upon facts of each case. The Karta enjoys wide discretion in his decision over existence of legal necessity and as to in what way such necessity can be fulfilled. 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 Elucidating the position in Hindu law this Court in Kehar Singh D) through Legal Representatives and Others v. Nachittar 28 SCC 54 Civil Appeal No. 70321 Kaur and Others3 has referred to Mulla on Hindu Law and the concept of legal necessity to observe thus “20. Mulla in his classic work Hindu Law while dealing with the right of a father to alienate any ancestral property said in Article 254 which reads as under 254. Alienation by father.— A Hindu father as such has special powers of alienating coparcenary property which no other coparcener has. In the exercise of these powers he may 1) make a gift of ancestral movable property to the extent mentioned in Article 223 and even of ancestral immovable property to the extent mentioned in Article 224 2) sell or mortgage ancestral property whether movable or immovable including the interest of his sons grandsons and great grandsons therein for the payment of his own debt provided the debt was an antecedent debt and was not incurred for immoral or illegal purposespayment of government revenue and of debts which are payable out of the family b) maintenance of coparceners and of the members of their families 314 SCC 445 Civil Appeal No. 70321 marriage expenses of male coparceners and of the daughters of coparceners d) performance of the necessary funeral or family ceremonies e) costs of necessary litigation in recovering or preserving the estate f) costs of defending the head of the joint family or any other member against a serious criminal charge g) payment of debts incurred for family business or other necessary purpose. In the case of a manager other than a father it is not enough to show merely that the debt is a pre existing debt The above are not the only indices for concluding as to whether the alienation was indeed for legal necessity nor can the enumeration of criterion for establishing legal necessity be copious or even predictable. It must therefore depend on the facts of each case. When therefore property is sold in order to fulfil tax obligations incurred by a family business such alienation can be classified as constituting legal necessity.” See Hindu Law by Mulla “22nd Edition” 26. Once the factum of existence of legal necessity stood proved then in our view no co coparcener son) has a right to challenge the sale made by the karta of his family. The plaintiff being a son was one of the co coparceners along with his father Pritam Singh He had no right to challenge such sale in the light of findings of legal necessity being recorded against him It was more so when the plaintiff failed to prove by any evidence that there was no legal necessity for sale of the suit land or that the evidence adduced by the defendants to prove the factum of existence of legal Civil Appeal No. 70321 necessity was either insufficient or irrelevant or no evidence at all.” The aforesaid being the legal position it has to be held that signatures 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. As noted above it is an accepted case of the respondents that K. Veluswamy did receive Rs.4 lakhs as advance from Beeredy Dasartharami Reddy as recorded in the agreement to sell On the question of satisfaction of the condition of legal necessity the stand of the respondents is contradictory for they have pleaded in the written statement and even before us that the joint Hindu family was in need of funds which shows legal necessity. In fact as recorded above the need for funds is duly reflected and so stated in the agreement to sell dated 8th December 2006 which states that the executants were in need of funds to meet domestic necessities and therefore had agreed to sell the suit property. It is also an undisputed position that the suit property was encumbered in favour of the State Bank of Mysore Adivala Branch and the executants had informed that the dues of the Civil Appeal No. 70321 bank would be cleared to release the mortgage before the date of registration. In Kehar Singhon the question what is legal necessity reference was made to Article 241 from Mulla’s Hindu Law which states that maintenance of coparceners family members marriage expenses performance of necessary funerals or family ceremonies costs of necessary litigation for recovering or preserving estate etc. fall and have been held to be family’s necessities. Further 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 and would depend upon facts of each case. Thus we are of the opinion that the agreement to sell cannot be set aside on the ground of absence of legal necessity. 10. Decision of this Court in Pemmada Prabhakar has no application being a case of intestate property inherited by wife three sons and three daughters as class I heirs under Section 8 of the Hindu Succession Act and the agreement to sell was not signed by wife one son and three daughters and therefore neither binding nor enforceable against the non executants. The ratio would not apply to a joint Hindu family property Civil Appeal No. 70321 11. Omission to frame an issue as required under Order XIV Rule 1 of the Code of Civil Procedure 1908 does not vitiate the trial where the parties go to trial fully knowing the rival case and lead evidence in support of their respective contentions and to refute contentions of the other sideby LRs. and Others v. V.S. Pandurangamby LRs. and Others4 and Nedunuri Kameswaramma v. Sampati Subba Rao5 12. We are informed that during the pendency of the present appeal the suit property has been transferred to a third person which transfer would obviously be subject to and hit by the doctrine of lis pendens. Therefore once we set aside the impugned judgment and restore the judgment of the trial court the respondents would be bound to perform their obligations under the agreement to sell dated 8th December 2006 and execute the registered sale deed notwithstanding any transaction which the respondents have In light of the aforesaid discussion we allow the present appeal and set aside the impugned judgment and decree and restore the judgment and decree passed by the trial court. The appellant would deposit the balance sale consideration of Rs.25 lakhs in the 415 SCC 157 5 AIR 1963 SC 884 Civil Appeal No. 70321 trial court within a period of eight weeks from today which amount once deposited 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 Beereddy Dasartharami Reddy. The appellant Beereddy Dasartharami Reddy will also bear necessary expenses like stamp duty registration charges for execution of the sale deed. Physical possession of the property would be handed over by the respondents to the appellant Beereddy Dasartharami Reddy along with the execution of the sale deed notwithstanding that the suit property has been sold to a third person during the pendency of the present appeal. 14. The appeal is disposed of in the above terms without any order as NEW DELHI DECEMBER 13 2021 Civil Appeal No. 70321 Page 1

Summary: A joint Hindu family is capable of acting through its Karta or adult member of the family in the management of the joint Hindu family property. A coparcener who has the right to claim a share in the joint Hindu family estate cannot seek an 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 the betterment of the estate. 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. Such an observation was made by the Hon’ble Supreme Court before Hon’ble Justice M.R. SHAH &amp; Hon’ble Justice SANJIV KHANNA in the matter of BEEREDDY DASARATHARAMI REDDY vs V. MANJUNATH AND Anr [CIVIL APPEAL NO. 7037 OF 2021]. 
The fact of the case was that an agreement to sell was executed by the Karta of a Hindu Undivided Family which was signed by him and his wife but not by his son. An amount of Rs. 4 lakhs out of 29 Lakhs were received in favor of the said agreement in advance. On 26.09.2007 Beereddy Dasaratharmi Reddy instituted the suit for specific performance of the agreement to sell which was allowed. Aggrieved the Karta’s Son preferred an appeal before the High Court and succeeded in his appeal by order dated 06.03.2021. Thus, the appellate has preferred the present appeal.

The Hon’ble Supreme Court referred to the case of Sri Narayan Bal and Others v. Sridhar Sutar and Others (1996) 8 SCC 54  wherein it was held that a joint Hindu family is capable of acting through its Karta or adult member of the family in the management of the joint Hindu family property. A coparcener who has the right to claim a share in the joint Hindu family estate cannot seek an injunction against the Karta restraining him from dealing with or entering into a transaction from the sale of the joint Hindu family property.

Additionally, the Hon’ble Supreme Court observed that signatures 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. The absence of signatures of V. Manjunath would not matter and is inconsequential.

Finally, the Hon’ble Supreme Court allowed the instant appeal with a direction to the appellate to deposit the balance sale consideration of Rs.25 lakhs in the trial court within a period of eight weeks from the date of the order.
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Judgment Reviewed by: Rohan Kumar Thakur
 The fact of the case was that an agreement to sell was executed by the Karta of a Hindu Undivided Family which was signed by him and his wife but not by his son. An amount of Rs. 4 lakhs out of 29 Lakhs were received in favor of the said agreement in advance. On 26.09.2007 Beereddy Dasaratharmi Reddy instituted the suit for specific performance of the agreement to sell which was allowed. Aggrieved the Karta’s Son preferred an appeal before the High Court and succeeded in his appeal by order dated 06.03.2021. Thus, the appellate has preferred the present appeal. 
The Hon’ble Supreme Court referred to the case of Sri Narayan Bal and Others v. Sridhar Sutar and Others (1996) 8 SCC 54  wherein it was held that a joint Hindu family is capable of acting through its Karta or adult member of the family in the management of the joint Hindu family property. A coparcener who has the right to claim a share in the joint Hindu family estate cannot seek an injunction against the Karta restraining him from dealing with or entering into a transaction from the sale of the joint Hindu family property.

Additionally, the Hon’ble Supreme Court observed that signatures 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. The absence of signatures of V. Manjunath would not matter and is inconsequential.

Finally, the Hon’ble Supreme Court allowed the instant appeal with a direction to the appellate to deposit the balance sale consideration of Rs.25 lakhs in the trial court within a period of eight weeks from the date of the order.
Click Here To Read The Judgment
Judgment Reviewed by: Rohan Kumar Thakur
 The Hon’ble Supreme Court referred to the case of Sri Narayan Bal and Others v. Sridhar Sutar and Others (1996) 8 SCC 54  wherein it was held that a joint Hindu family is capable of acting through its Karta or adult member of the family in the management of the joint Hindu family property. A coparcener who has the right to claim a share in the joint Hindu family estate cannot seek an injunction against the Karta restraining him from dealing with or entering into a transaction from the sale of the joint Hindu family property. 
Additionally, the Hon’ble Supreme Court observed that signatures 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. The absence of signatures of V. Manjunath would not matter and is inconsequential.

Finally, the Hon’ble Supreme Court allowed the instant appeal with a direction to the appellate to deposit the balance sale consideration of Rs.25 lakhs in the trial court within a period of eight weeks from the date of the order.
Click Here To Read The Judgment
Judgment Reviewed by: Rohan Kumar Thakur
 Additionally, the Hon’ble Supreme Court observed that signatures 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. The absence of signatures of V. Manjunath would not matter and is inconsequential. 
Finally, the Hon’ble Supreme Court allowed the instant appeal with a direction to the appellate to deposit the balance sale consideration of Rs.25 lakhs in the trial court within a period of eight weeks from the date of the order.