Daughter can be “Karta” of HUF and represent HUF before Competent Authorities including Tax Depts: Delhi HC [Read Order]

The Delhi High Court has held that daughters can be “Karta” of Hindu Undivided Family (HUF) and represent the HUF before the competent authorities like tax departments. The present Appeal has been preferred by the appellant/Manu Gupta against the Judgment dated whereby the Suit for Declaration for declaring the respondent No.1 as the Karta of Late Shri D.R. Gupta and Sons, HUF, has been allowed. The appellant and the respondents, being Hindus and governed by the Mitakshara Law, are the descendants of Late Shri D.R. Gupta, son of Late Shri Sunder Das Gupta, who expired on 01.10.1971. Admittedly, Late Shri D.R. Gupta constituted a Hindu Joint Family (HUF) known as D.R Gupta and Sons (HUF) since 05.01.1963 comprising himself and his five sons. “D.R. Gupta & Sons HUF” is assessed to Income Tax and has been filing Returns for the HUF property and a PAN Number was allotted to the HUF. All the assets belonging to the HUF, barring the immovable property, were disposed of in the 1980s. Over a period of time all the sons of late Shri D.R. Gupta expired. Shri R.N. Gupta was the last Karta of “D.R. Gupta & Sons HUF”, who expired on 14.02.2006. The question thus arose as to who would acquire the status of the Karta of the HUF after his demise. The respondent No.1 as well as other members of the “D.R. Gupta & Sons HUF”, exchanged various e-mails regarding respondent No. 1, Sujata daughter of Late K M. Gupta becoming the Karta of the HUF, who in view of the law as amended in the Hindu Succession (Amendment) Act, 2006, claimed to be the next Karta of the “D.R. Gupta & Sons HUF” being the eldest Coparcener. Other members of the HUF have not raised any objection to Ms. Sujata Sharma being the Karta of the HUF except Manu Gupta (appellant), Mr. Vasu Gupta (respondent No. 2), Ms. Gita Lal (respondent No. 3) and Ms. Aditi Desai (respondent No. 17), the coparceners who have opposed respondent No. 1 becoming the Karta. The appellant/Manu Gupta, in objection to respondent no.1’s claim, declared himself as the Karta of HUF and had correspondence in this capacity with the Defence Estate Officer. This led to filing of the present Civil Suit in 2006 by respondent No.1/Sujata Sharma seeking a Declaration that she is the Karta of “D.R. Gupta & Sons HUF”. It was held that the Amendment, brought in Section 6 of the Act, 1956 by the Amendment Act, 2005, does not impose any restriction on the right of a woman of being coparcener and she cannot be denied a status of Karta to manage the affairs, including the property of HUF. The Suit was decided in favour of the plaintiff/respondent No.1 and she was declared the Karta of “D.R. Gupta & Sons HUF”. The challenge to the Judgement by the appellant/Manu Gupta is essentially premised on the ground that his cousin sister i.e., respondent No. 1 admittedly, was married on 28.02.1969 and had become an active member of the HUF in her marital home. It was claimed that Kartaship owes its provenance to Hindu customs and laws, which cannot be outmaneuvered by the opinion or acts of the members of the family. It was further stated that Section 6 of the Act, 1956 (as amended in 2005) only recognises the right of daughters to have an interest in the coparcenary and the same cannot be equated with her right to become a Karta. Barring this right to be recognised as a coparcener, no other change has been brought with respect to HUF which is still governed by the Mitakshara School of Hindu Law. It is further argued that a Karta takes decisions on behalf of the family which has a binding effect on them. He has the right to represent the family in litigations, arbitrations and settlements by way of compromise and it is thus, imperative for the Karta to be an integral member of the family. The role of a Karta is multifaceted and not limited to a managerial role. Along with being a financial head of the family, he is also their religious, social and spiritual head. The petitioner counsel contended that, “In extension to this rationale, it is submitted that a married woman can be required to perform a managerial role in the HUF in her matrimonial home. However, any right to become a Karta in her father‟s family would clash with the rights in her matrimonial home resulting in a conflict of interest and a moral dilemma on where her loyalties should lie”, while submitting that it is a settled position of law that in case of the unfortunate demise of the father, the wife, who is the mother of minor sons, can be the manager of the HUF until her sons attain majority. This, however, does not mean that the mother becomes the Karta of the HUF. The Amicus Curiae submitted that, “On the basis of the recommendations of the Law Commission of India in its 174th Report on “Properly Rights of Women: Proposed Reforms under the Hindu Law”, the Legislature has not included the distinction drawn in State Amendments between a married and an unmarried daughter in the 2005 Amendment. Thus, all daughters of Coparceners are entitled to become a Coparcener, which also entitled them to become a Karta.” In the absence of partition in respect of Section 171 of the Income Tax Act, it was observed by the High Court of Delhi that, “Mere physical division of the income without a physical division of the property, cannot be treated as a partition.” In result, it was observed that, “Therefore, having concluded that the severance of status had taken place in the year 1977 and that a partition of the suit property which was till then in the nature of Joint Hindu property has also been affected by the parties vide Memorandum of Family Settlement dated 01.04.1999, but it has still not been partitioned by metes and bounds, but it would still continue to be assessed as a Hindu Undivided property in the Government records/Income Tax records and for that purpose one of the family members has to represent himself on behalf of an HUF.” It was thus noted that, “This is exactly what has been stated by the appellant in his testimony that it is only for the purpose of communication with the Government authorities that the suit property was being reflected in the name of “D.R. Gupta & Sons HUF”. Furthering the observation, it was reaffirmed that, “the position of Karta is a legal entitlement that has no bearings on the person who actually performs the managerial functions. In the present case, though there is no express delegation by respondent No.1 or other members on the appellant, the status of a Karta and his acts of performing managerial functions do not confer him with the title of Karta for the “D.R. Gupta & Sons HUF”. Finally, it was held by the Division Bench of Neena Bansal Krishna and Justice Suresh Kumar Kait that, “The respondent No. 1 is hereby declared as the Karta for the purposes of representing the “D.R. Gupta & Sons HUF” before the Competent Authority.” In conclusion, the Delhi High Court's groundbreaking ruling affirming a daughter's eligibility as 'Karta' for HUF heralds a new era of empowerment and representation. This pivotal decision not only redefines traditional roles but also underscores the evolving legal dynamics within family structures. As daughters now possess the authority to represent HUF before Competent Authorities, including Tax Departments, this landmark judgment paves the way for increased inclusivity and equality in familial, managerial and legal spheres alike. Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates