SUPREME COURT HOLDS THAT BUSINESS RUN BY KARTA OF HINDU UNDIVIDED FAMILY CANNOT BE PRESUMED TO BE A JOINT FAMILY BUSINESS
The 3-Judges Bench of the Hon’ble #SupremeCourt of India in the case of Kiran Devi vs Bihar State Sunni Wakf Board & Ors. [CIVIL APPEAL NO. 6149/2015], vide its Judgment dated 05.04.2021 held that a business run by #Karta of Hindu Undivided Family (‘#HUF’) cannot be presumed to be a joint #familybusiness. It was also reiterated in this case that the nomenclature under which the petition is filed is not relevant and it does not debar the Court from exercising its jurisdiction.
In the present case, a dispute arose with respect to a premise, which was surrendered to the Bihar State Sunni Wakf Board (‘Wakf Board’). In this regard, a suit for declaration was filed in a Civil Court stating that a tenant in the Suit premises is entitled to continue as a tenant on payment of monthly rent. Initially, the said premise was rented for the purpose of running the hotel business. The Plaintiff was one of the coparceners along with the Appellant in this case. On account of disputes over the management of the hotel, it was closed and remained closed for several years. The Plaintiff wanted to resume the hotel business in the premises in question and thus communicated with the Wakf Board to continue the hereditary tenancy of the shop as Karta in his name.
However, the Suit was transferred to the Learned Wakf Tribunal under the provisions of the Wakf Act, 1995 (‘Wakf Act’), vide Order dated 04.02.2009. The said Order was challenged before the High Court of Patna but the same was dismissed.
The Suit was decided before the Wakf Tribunal and it was held that a business run by Karta of HUF cannot be presumed to be a joint family business therefore the Plaintiff cannot be entitled to continue as Karta with the Suit premises. A Writ Petition was filed before the High Court of Patna against the Order of the Wakf Tribunal.
The High Court, vide its Order dated 06.02.2013 set aside the Order of the Wakf Tribunal. The High Court held that the tenant in the Suit premises was representing a joint Hindu family. The High Court also held that the Karta was not competent to surrender the tenancy rights in favour of the Bihar State Sunni Wakf Board. Therefore, the induction of the Appellant as a tenant by the Wakf Board was illegal and it issued a direction to dispossess the Appellant from the Suit premises and to handover the vacant possession of the Suit premises to the Plaintiff.
As a result, an appeal was filed before the Supreme Court against the High Court Order dated 06.02.2013. The Appellant contended the following issues before the Supreme Court:
- That the Tribunal’s Order cannot be challenged through a Writ Petition before the High Court. It was also argued that the only remedy available is initiating a revision as per Section 83(9) proviso of the Wakf Act.
- The High Court could not have re-appreciated facts in a Petition under Article 227 of the Constitution.
- The surrender of possession of the tenanted premises by the Karta was not of a business of joint Hindu family but of the tenancy which was not been carried out for large number of years.
The Supreme Court observed and held that:-
- Just because a business was run by a Karta of a HUF in a tenanted premise, there is no presumption that it is a joint Hindu family business.
- There can be a presumption of Hindu joint family property if the property has been acquired by the male member or if the same has been treated as joint Hindu family. But no such presumption is attached to a business activity carried out by an individual in a tenanted premise
- The Supreme Court referred the case of S. Sairam & Anr. v. P.S.Rama Rao Pissey & Ors (2004) 11 SCC 320 wherein it was held that so far as immovable property is concerned, there would be a presumption that the same belongs to joint family, provided it is proved that the joint family had sufficient nucleus at the time of its acquisition, but no such presumption can be applied to a business.
- Thus, mere payment of rent by great grandfather or by the grand-father of the Plaintiff raises no presumption that it was a joint Hindu family business. The High Court has clearly erred in law and on facts.
- The Supreme Court observed that even if a male member had taken premises on a rent, he is tenant in his individual capacity and not as Karta of HUF in the absence of any evidence that Karta was doing the business for and on behalf of joint Hindu family.
- The Supreme Court pointed out that the High Court has presumed the existence of the joint family of which Plaintiff was said to be the Karta from perusal of the Ration Card. In this regard the Supreme Court observed that joint Hindu family cannot be presumed to be in existence only on the basis of Ration Card unless there is evidence that the funds of joint Hindu family were invested in the business in the tenanted premises.
- Therefore the Supreme Court held that the High Court has committed a basic error of law and fact that the payment of rent or the Ration Card proves that the tenant was carrying business as a joint Hindu family business.
- The Supreme Court further observed that Section 83(9) proviso of the Wakf Act, confers power on the High Court to call for and examine the records regarding any dispute, question, or other matter which has been determined by the Tribunal to satisfy itself as to the correctness, legality or propriety of such determination.
- The Supreme Court referred to the case of Pepsi Foods Ltd. & Anr. v. Special Judicial Magistrate & Ors. (1998) 5 SCC 749 wherein it was held that nomenclature under which the petition is filed is not quite relevant and it does not debar the Court from exercising its jurisdiction which otherwise it possesses.
Therefore, the Supreme Court finally held that the High Court has jurisdiction to examine the correctness, legality, and propriety of determination of any dispute by the Tribunal. It also clarified that when a petition is filed against an order of the Wakf Tribunal before the High Court, the Court exercises the jurisdiction under Article 227 of the Constitution of India.
In view of the above observations the Supreme Court set aside the Order passed by the High Court Order dated 06.02.2013 and restored the Order of the Wakf Board.
Senior Legal Associate
The Indian Lawyer & Allied Services