Mrs. Rekha Kapoor vs Dr. Pawan Chandra & Anr
2018 Latest Caselaw 6669 Del

$~OS-8
*     IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                            Date of Decision: 12.11.2018

+     CS(OS) 178/2017
      MRS. REKHA KAPOOR                            ..... Plaintiff
                         Through      Ms.Mala Goel, Adv.

                         versus

      DR. PAWAN CHANDRA & ANR              ..... Defendant
                   Through     Mr.Abhijat and Ms. Sanam Tripathi,
                   Advs. for D-1.
                   Ms.Manmeet Arora, Ms. Samapika Biswal and
                   Mr. Tarang Gupta, Advs. for D-2.
      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (Oral)

1. On 27.04.2018 this court had framed the following issues:-

"(i) Whether at all it is open to the defendants to lead evidence to the effect that notwithstanding the rent of the property being shown as income of the HUF, the property did not vest in the HUF? OPD1&2

(ii) If the above issue is decided in favour of the defendants no.l&2, whether notwithstanding the rent of the property being shown as income of the HUF, the property was not vested in - the HUF? OPDl&2.

(iii) Whether the HUF had any other assets, and if so, what all? OPP

(iv) Relief"

2. This court had also ordered that issue No. (i) is to be treated as a

preliminary issue, namely, as to whether it is open to the defendants to lead evidence to the effect that notwithstanding the rent of the property being shown as income of the HUF, the property did not vest in the HUF.

3. I have heard learned counsel for the parties on the above issue.

4. Learned counsel for the defendants have relied upon the judgments of the Division Bench of this court in Kewal Krishan Mayor vs. Kailash Chand Mayor, 2002 (95) DLT 115 and the judgment of the Rajasthan High Court in Madan Lal vs. Controller of Estate Duty, (1969) 74 ITR 84 (Raj.) to plead that the defendants would be entitled to lead evidence as mere showing of rental income of the property as HUF would not vest the property as an HUF.

5. In contrast, learned counsel for the plaintiff has relied upon the judgment of the Madras High Court in Commissioner of Income Tax Tamil Nadu-V vs. S.Sivaprakasa Mudaliar, (1983) 144 ITR 285 (Mad.) and Commissioner of Income Tax vs. Pushpa Devi, (1971)82 ITR 7 Delhi to pled that no particular steps have to be taken for converting an individual property into an HUF property and that the facts on record unequivocally demonstrate that the suit property, namely, D-227, Defence Colony, New Delhi is an HUF property. Learned counsel for the plaintiff has also relied upon the Will dated 07.05.1979 and codicil dated 04.06.2001 to contend that even as per the said documents filed by the defendants, the property has been shown as an HUF property. She also states that there are other properties, other than the immovable property in Defence Colony, which are subject matter of the present suit as spelt out in the plaint.

6. Some of the relevant facts are that late Brig. Brij Chandra was allotted a plot in Defence Colony in 1957. The construction of the house was

completed on 06.12.1961. On 01.01.1962, it is pleaded by the defendants that Brig. Brij Chandra HUF was created as a tax device. It was in these facts that this court had by its order dated 27.04.2018 had framed the above issues.

7. I may look at some of the judgments relied upon by the parties. The Division Bench of this court in Kewal Krishan Mayor vs. Kailash Chand Mayor(supra) held as follows:-

"33. As regards the other point about the deceased having thrown his two properties in common pool of the alleged joint Hindu family, learned Single Judge proceeded on the assumption that the law does not lay down that a separate property could not be impressed with the character of joint Hindu family in the absence of the existence of joint family or co-parcenary property. He further proceeded on the assumption that the existence of joint family property is not necessary before a member of the family throws his self acquired property in the joint stock. It is this erroneous assumption of law by the learned Single Judge, which in our view led him to incorrect conclusions.

34. Under the Hindu Law property may be divided under the two classes, namely, (a) Joint family property and (b) separate property. Joint family property may be further sub divided according to the source for which it comes into, namely, (a) ancestral property (b) separate property of co-parceners thrown into the common coparcenary stock and (c) property jointly acquired by members of a joint family with the aid of ancestral property. It is not the case of the plaintiff that the two properties were ancestral properties. His case is that these two properties (8/10 and 8/11 W.E.A. Karol Bagh, New Delhi) were separate properties of Lala Bai Mukand and were thrown by him into the common coparcenary stock by declaration (Ex. P.W.1/3) made by him. This is the case set up by him in the plaint and for that it is necessary for us to deal with the question that under what circumstances property, which originally is separate and self acquired property of a member of a joint Hindu family may

become joint family property.

36. xxx.

On blending of separate property with joint property, in a subsequent decision in Lakkireddi Chinna Venkata Reddi and Ors. v. Lakkireddi Lakshmama [1964]2SCR172 , the Supreme Court held:-

"Law relating to blending of separate property with joint family property is well-settled. Property separate on self- acquired of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by the owner into the common stock with the intention of abandoning his separate claim therein but to establish such abandonment a clear intention to waive separate rights must be established. From the mere fact that other members of the family were allowed to use the property jointly with himself, or that the income of the separate property was utilised out of generosity to support persons whom the holder was not bound to support, or from the failure to maintain separate accounts, abandonment cannot be inferred, for an act of generosity or kindness will not ordinarily be regarded as an admission of a legal obligation."

The basic requirements of the doctrine of blending namely, existence of coparcenary or coparcener property as well as existence of separate property were reiterated by the Supreme Court in Goli Eswariah v. Commissioner of Gift Tax, A.P. AIR 1970 SC 1722 wherein it was held:-

"To pronounce on the question of law presented for our decision, we must first examine what is the true scope of the doctrine of throwing into the 'common stock' or 'common hotchpotch'. It must be remembered that a Hindu family is not a creature of a contract. As observed by this Court in

Mallesappa Bandeppa Desai v. Desai Mallappa, [1961]3SCR779 that the doctrine of throwing into common stock inevitably postulates that the owner of a separate property is a coparcener who has an interest in the coparcenary property and desires to blend his separate property with the coparcenary property. The existence of a coparcenary is absolutely necessary before a coparcener can throw into the common stock his self acquired properties. The separate property of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by him into the common stock with the intention of abandoning his separate claim therein. The separate property of a Hindu ceases to be a separate property and acquires the characteristic of joint family or ancestral property not by any physical mixing with his joint family or ancestral property but by his own volition and intention by his waiving and surrendering his separate rights in it as separate property. The act by which the coparcener throws his separate property to the common stock is a unilateral act. There is no question of either the family rejecting or accepting it. By his individual volition he renounces his individual right in that property and treats it as a property of the family. No longer he declares his intention to treat his self acquired property as that of the joint family property, the property assumes the character of joint family property. The doctrine of throwing into the common stock is a doctrine peculiar to the Mitakshara School of Hindu law. When a coparcener throws his separate property into the common stock, he makes no gift under Chapter VII of the Transfer of Property Act. In such a case thee is no donor or donee. Further no question of acceptance of the property thrown into the common stock arises."

37. xxx

38. Thus the pre-requisite of the doctrine on blending being

existence of coparcenary or coparcener property as well as the existence of separate property, in case of any one of the basic requirement lacking there would be no question of applicability of the doctrine of blending. It was the case set up by the plaintiff and according to the plaintiff's deposition, who appeared as P.W.2, only two properties, 8/10 and 8/11, Western Extension Area were thrown into common hotch potch of the joint Hindu Family. Rest of the properties, owned by Bal Mukand were kept by him in his personal name. He deposed that there was no other property held or owned by the joint family. he further deposed that before 1963 the two properties belonged exclusively to Lala Bal Mukand and at the time when these were put in common hotch potch there was no other property of HUF existence. It has not been the case of plaintiff that there was any HUF headed by Lala Bal Mukand was formed in the year 1963. To be precise he stated that the return of income from HUF was not filed as the income from the HUF was not taxable. The HUF headed by Lal Bal Mukand was formed in the year 1963. Before 1963 the two properties belonged to Lala Bal Mukand. At the relevant time the said two properties were put in the common hotch potch, there were no other properties of HUF existing at that time.

8. Hence, according to the Division Bench of this court, one of the pre- requisites of the doctrine on blending is pre-existence of coparcenary as well as existence of a separate property. It is pleaded that in the present case, there was no coparcenary property in existence. Hence, keeping in view the judgment of the Division Bench, a coparcener property could not have existed.

9. Reference may also be held to the judgment of the Division Bench of the Madras high Court in Commissioner Commissioner of Income Tax Tamil Nadu-V vs. S.Sivaprakasa Mudaliar(supra) relied upon by the plaintiff where the court held as follows:-

"22. This argument is easily, met by observing that if a partner's

interest as a whole can be valid assigned or thrown into the family hotchopt, then a fractional share therein must, by definition, be capable of a similar process on the principle that what can be done with the whole can be done with its parts. Apart from this general consideration the answer is clear from the very peculiarity of the character and incidents of the process of conversion of separate property into joint family property Mitakshara law does not require any legal formalities for impressing the separate property of a coparcener with the characteristics of joint family property. All it requires is an effective intention of the coparcener to give up his separate dominion over his property and thenceforward treat it as joint family property. If the intention were to throw the whole of the partnership interest in the joint family property, well and good. But if, as in the preen case, the coparcener wishes to retain a moiety of the interest with himself, yet the law will give effect to his intention to abandon his dominion over the other moiety in favour of the family. So long as conversion into family property is not half-hearted, the half that is effectively impressed with the character of joint family property would get converted and become joint family property. There is no problem in such a case even as respects the partnership status of the coparcener concerned., We have earlier referred to the legal position that in no case can a joint Hindu family as such be a partner in a firm, and he alone of the family would be a partner who is nominee a party to the partnership relationship is concerned even though the treatment of that particular share in the family is governed by the rules of personal law applicable to Hindu joint family property. This position must hold whether coparcener enters into a partnership as representing the joint family or impresses his entire partnership interest with the character of joint family property or does so only as respects a moiety or other fraction of such an interest."

10. Hence, as per the Madras High Court, Mitakshra Law does not require any legal formalities for impressing the separate property of a coparcener with the characteristics of a joint family and that all it requires is an effective

intention of the coparcener to give up his separate dominion over his property and treat it as joint family property.

11. Similarly, reference may also be had to the judgment of the Rajasthan High Court in Madan Lal vs. Controller of Estate Duty(supra) where the court held as follows:-

"20. Now we take up the second circumstance into consideration. After the coming into force of the Indian Income Tax Act in the State of Rajasthan, for three years till the death of Sukhdeo in 1954, the income from the properties on which the estate duty is being levied was taxed on the basis of joint family property of the father and his four sons. The argument is that in getting the income so assessed, it must be inferred that after the Income Tax Act had come into force, Sukhdeo started treating the property as the property of the joint family. But the other side of the picture is that it may be that by treating the property as joint family property and filing the returns on the basis of joint family, there was to be a saving in the tax and Sukhdeo might have taken recourse to this only to secure this advantage. In our opinion, in the absence of any other circumstances, the filing of returns and getting his property taxed on the basis of joint family property were not sufficient to show an intention of abandonment of his claim on the part of Sukhdoo. It has been observed in Govind Narain Mathur v. Mohini Devi ILR [1960] Raj 1219 that a statement in connection with the assessment of Income Tax that certain property was joint family property may be made for the purpose of getting some advantage under the law relating to Income Tax and that it could not be evidence of any unequivocal intention on the part of the assesses to waive his interest in the self acquired property. We, therefore, cannot say as a matter of law that the Central Board of Revenue was in error in holding that these circumstances did not show on the part of Sukhdeo an intention to treat his separate property as joint family property. In this connection, we may further point out that on 3rd July, 1947, the deceased had a separate account in the account books of the firm, Messrs. Sukhdeo Gopinath, which was at that time the partnership concern owned by his four sons, This shows that the

father, even as late as 1947, had an intention to own some property separately. For the aforesaid reasons, our answer to the first question is in the affirmative.

12. Hence, as per the above judgement, in the absence of any other circumstances, mere filing of returns and getting property taxed on the basis of a joint family property would not be sufficient to show an intention of abandonment of the character of an individual property. The defendants are pressing this contention in this case to claim that the property has been shown of the late father as an HUF only as tax saving device. There was no intention to treat the said property as HUF property.

13. Keeping in view the legal position as stated above, it is manifest that what was the intention of late Brig. Brij Chandra when he started filing his income tax returns holding the rent as part of HUF would have to be gone into by leading of evidence by the parties. It is his intention which would be mattered and this could require evidence. Merely because the income tax was paid treating the property as an HUF would not be conclusive. In my opinion, Issue No. (i) as framed by this court on 27.04.2018 has to be answered in the positive noting that the defendants would be entitled to lead evidence to show that the suit property did not vest in the HUF. The issue is answered accordingly.

14. Let the parties file their list of witnesses within four weeks from today.

15. As the onus of issue No. 2 is on the defendants, it will be appropriate for the defendants to lead evidence first. Let the defendants file affidavit by way of evidence within four weeks thereafter.

16. List before the Joint Registrar on 08.02.2019 for fixing dates for

cross-examination of the defendants' witness.

JAYANT NATH, J NOVEMBER 12, 2018 rb