Rukmini Bai Rathor v. Commissioner of Wealth-tax

Narasimham, CJ.—These two references were made by the Appellate Tribunal under section 27 of the Wealth-tax Act, 1957, and the question for the opinion of this court has been formulated as follows :

"Whether, in the facts and circumstances of the case, the status of the assessee has been rightly determined as that of an 'individual' in the assessment to wealth-tax for the assessment years 1957-58 and 1958-59?"

The following genealogical tree of the assessee's family will be useful:

The parties are Hindus governed by the Mitakshara.

On October 18, 1944, the assessee's husband effected a partition with his father and was allotted a share of the assets belonging to the family. There-after, Jaisingh managed the business of his own family consisting of himself, his wife, Rukmini (assessee) and their minor unmarried daughter, Hemalata, till his death on August 14, 1949. Jaisingh was assessed as an individual by the income-tax authorities. After his death, his widow (assessee) was also assessed as an individual, in the income-tax proceedings since 1952-53. When the Wealth-tax Act was brought into force on April 1, 1957, the assessee contended that she must be assessed as a Hindu undivided family and not as an individual. This contention was rejected by the wealth-tax authorities and for the assessment years 1957-58 and 1958-59 she was assessed as an individual.

Though it is not expressly admitted, it may be taken as unchallenged that the properties which Jaisingh got by partition were ancestral properties in his hands even though he was the sole coparcener as he had no son. After his death in 1949 his widow (assessee) came into full possession of his properties as widow's estate and has been in possession since then, subject of course to the right of her minor unmarried daughter, Hemalata, to maintenance. Hence, by virtue of section 14 of the Hindu Succession Act, the assessee became the full owner of the property though her minor unmarried daughter's right of maintenance has been amply safeguarded by the provisions of the Hindu Adoptions and Maintenance Act, 1956.

The sole question of law that arises for decision now is whether a Hindu widow and her minor unmarried daughter should be considered to be a Hindu undivided family for the purpose of the Wealth-tax Act even though the properties of the family were originally possessed by the widow as widow's estate but of which after the coming into fore of the Hindu Succession Act, 1956, she became a full owner. This question of law may be discussed under the following two heads :

"(i)Did the widow and her minor unmarried daughter constitute a Hindu undivided family prior to the coming into force of the Hindu Succession Act ?

(ii)Did section 14 of the Hindu Succession Act have the effect of altering the status of the widow to that of an 'individual' for the purpose of taxation laws ?"

The expression "Hindu undivided family" is a familiar one in the Indian Income-tax Act—see section 2(9) of the Indian Income-tax Act, 1922. There are several decisions of the Privy Council and of the High Courts dealing with the construction of that expression. The same expression occurs in the Indian Income-tax Act, 1961—see section 2(31)(i). The same expression was also used in the Excess Profits Tax Act and it occurs in the Orissa Agricultural Income-tax Act also. It has been reproduced in the series of taxation laws enacted in 1957 and 1958, namely, the Wealth-tax Act, the Expenditure-tax Act and the Gift-tax Act.

One of the contentions raised by Mr. Sidhartha Roy for the assessee was that the expression "Hindu undivided family" need not have the same meaning in the Indian Income-tax Act and the Wealth-tax Act, inasmuch as the disposing power of the manager of a Hindu undivided family over income arising out of joint family properties is not the same as his power over the corpus of the joint family properties. In my opinion, this attempt to make a distinction between the meaning to be given to the aforesaid expression in the Income-tax Act and the Wealth-tax Act is artificial and is not tenable. There can be no doubt that the two Acts are in pari materia. Apart from substituting the word "wealth" for "income" and making other consequential and ancillary changes, many of the provisions of the Wealth-tax Act closely follow the language used in the corresponding provisions of the Indian Income-tax Act, When Parliament enacted the Wealth-tax Act in 1957, it was fully aware of the interpretation given to the expression "Hindu undivided family" in the Income-tax Act by the High Courts and the Privy Council. Hence, when they used the same expression in the Wealth-tax Act, the reasonable inference is that they intended that the same meaning should be given. This principle of statutory construction was stated by Blackburn J. in Mersey Docks v. Cameron [1866] 11 HL Cas. 443, 480 in the following terms :

"Where an Act of Parliament has received judicial construction putting a certain meaning on these words and the legislature in a subsequent Act in pari materia used the same words there is a presumption that the legislature used those words intending to express the meaning which it knew had been put upon the same words before; and unless there is something to rebut that presumption the Act should be so construed even if they were such that they might originally have been construed otherwise."

This principle of construction is based on the ground that as the legislature knows what the law is and has the power to alter it, any mistake on the part of the judges may at once be corrected and the absence of such correction specially during a long period of time indicates that the courts have rightly ascertained the intention of the legislature—see Jogendra Chandra Roy v. Shyam Das [1909] ILR 36 Cal. 543. To a similar effect is the observation of the Supreme Court in the Bengal Immunity Co. Ltd. v. State of Bihar AIR 1955 SC 661, 749, while construing certain words of a repealed statute when they are reproduced in a new statute:

"It is a well settled rule of construction that when a statute is repealed and reenacted and the words in the repealed statute are reproduced in the new statute, they should be interpreted in the sense which had been judicially put on them under the repealed Act, because the legislature is presumed to be acquainted with the construction which the courts have put upon the words, and when they repeat the same words, they must be taken to have accepted the interpretation put upon by them by the courts as correctly reflecting the legislative mind."

It must therefore be held that the expression "Hindu undivided family" used in the Wealth-tax Act must be given the same meaning as has been given to it in the Income-tax Act. If the intention of the legislature had been otherwise it would surely have added an Explanation to the appropriate section to make the position clear that, for the purposes of the Wealth-tax Act, the expression had a different meaning.

In the Indian Income-tax Act, 1922, there was no definition of the expression "Hindu undivided family". In Commissioner of Income-tax v. Gomedalli Lakshminarayan [1935] 3 ITR 367 , 368 the learned judges, while construing that expression, pointed out:

"The nature of a Hindu undivided family was perfectly well known to the legislature when the Income-tax Act was drafted and it was well known that the expression 'Hindu undivided family' includes females and is much wider than the expression 'coparcenery' which includes only the males in whom the joint family property is vested."

Though this decision was overruled by the Privy Council in Kalyanji's Vithaldas v. CIT [1937] 5 ITR 90 (PC) and in Commissioner of Income-tax v. A.P. Swamy Gomedalli [1937] 5 ITR 416 (PC) on other grounds, their Lordships proceeded on the assumption that the expression "Hindu undivided family" has the same meaning as is attributed to "Hindu joint family" in all schools of Hindu law, and that it would include not only male coparceners, but also females such as wives, widows of predeceased coparceners, and unmarried daughters.

In Dasharathrao Ganpatrao v. Ramachandrarao Vinayakrao AIR 1951 Bom. 141, 142 the meaning to be given to the expression "Hindu joint family" was explained as follows :

"A joint Hindu family consists of persons who are lineally descended from a common ancestor. Such a family includes the wives of the male members as well as unmarried daughters. As soon as the daughter marries, she leaves the family of her father and becomes a member of her husband's family. It is quite true that every member of a Hindu joint family is not a coparcener... Whether a member of an undivided family is a coparcener or not, would depend upon whether he is entitled to demand partition and that naturally would, in its turn, depend upon the question whether he has a right in the property of the coparcenery by his birth."

It may thus be taken as well settled by authority that the expression "Hindu undivided family" occurring in the taxation laws must be given the same meaning as has been given to the expression "Hindu joint family" in all schools of Hindu law and it would include not only male coparceners but also females such as a wife or widow of a coparcener, or an unmarried daughter.

Difficulty however arises in those instances where at a particular time there is no male member at all and the original Hindu family is reduced to female members only such as the widows of deceased coparceners and unmarried daughters. Can a family consisting only of such female members be regarded as a Hindu undivided family ?

In Anant Bhikkappa Patil v. Shankar Ramchandra Patil AIR 1943 PC 196 this question was answered in the affirmative. Their Lordships cited with approval the decision of the Nagpur High Court and the previous decisions of the Privy Council and held that the Hindu joint family cannot be at an end while there is still a potential mother if that mother in the way of nature or in the way of law brings in a new male member. As the law then stood the widow of a deceased coparcener had a right to adopt a son to her deceased husband, subject to certain restrictions which are not relevant here. It is true that in that decision their Lordships of the Privy Council were discussing the question of the continuance of the Hindu joint family while mainly dealing with the doctrine of relating back when a widow makes an adoption to her deceased husband. Nevertheless their observations about the continued existence of the Hindu joint family so long as there is a potential mother who can add a male member by adoption is clear and unambiguous and must be given due weight. In a recent decision of the Supreme Court in Srinivas Krishnarao Kango v. Narayan Devji Kango AIR 1954 SC 379, 386, though their Lordship overruled the view taken by the Privy Council in Anant Bhikkappa Patil v. Shankar Ramachandra Patil AIR 1943 PC 196, so far as the right of an adopted son to divest the property inherited by a collateral is concerned, nevertheless they reiterated the continuance of the joint family during the existence of the potential mother in the following terms :

"The Privy Council held that the coparcenery must be taken to continue so long as there was alive a widow of her deceased coparcener and that Gangabai's adoption had the effect of vesting the family estate in Anant, even though it had descended on Shankar as the heir of Keshav. The decision so far as it relates to joint family properties calls for no comment. When once it is held that the coparcenery subsists so long as there is a widow of a coparcener alive, the conclusion must follow that the adoption of Anant by Gangabai was valid and operated to vest in him the joint family properties which had devolved on Shankar."

It may therefore be taken as well established that a Hindu joint family continues to exist even though at a particular time there may be no male coparcener provided of course there is a "potential mother" in the family, that is to say, the widow of a deceased coparcener, who is capable of bringing in a male member by way of adoption.

To a similar effect is the observation of the Privy Council in the case of Attorney-General of Ceylon v. AR. Arunachalam Chettiar [1958] 34 ITR (ED) 42, which went up from Ceylon. There their Lordships, while endorsing the view taken in Anant Bhikkappa Patil' s case (supra), observed that if at a particular time a Hindu joint family consisted of a sole surviving coparcener, his wife, and his predeceased son's widow, then, at his death, the property will be considered to be the property of a Hindu undivided family for the purpose of section 73 of the Estate Duty Ordinance, 1938, of Ceylon because the widow had the right to adopt and thereby continue the line.

From these decisions it follows that, prior to the coming into force of the Hindu Succession Act of 1956, even though a Hindu family may consist of only the widow of a sole coparcener and his minor unmarried daughter, the family will continue to be a Hindu undivided family because the widow, being a potential mother, can always adopt a son to her deceased husband and thereby continue the line.

I may now review some decisions of the Privy Council and the High Courts under the Indian Income-tax Act. The leading decision is Kalyanji's case (supra). In that case their Lordships observed that if property devolves on a Hindu male as ancestral property and if he has a wife and daughter living with him and entitled to maintenance from that property nevertheless he should be assessed to income-tax as an individual and not as a Hindu undivided family. Hence they overruled the Bombay view in Commissioner of Income-tax v. Gomedalli Lakshminarayan [1935] 3 ITR 367 and held that the property in the hands of the sole surviving partner should be assessed as an individual and not as a Hindu undivided family. The correctness of this portion of that judgment has been doubted in subsequent decisions. Thus in Commissioner Of Income-Tax, Madras v. A.V.P Mr. M. Lakshmanan Chettiar [1940] 8 ITR 545 the Madras High Court pointed out that after the coming into force of the Hindu Women's Rights to Property Act of 1937, a Hindu undivided family may exist with a sole surviving coparcener and the widow of a deceased coparcener, and hence to that extent the aforesaid view taken by the Privy Council may not be correct.

In a later Allahabad case in Commissioner of Income-tax v. Sarwan Kumar [1945] 13 ITR 361 the same principle was reiterated and it was further held that an undivided Hindu family may consist of females only. Though these observations were wide, nevertheless in the actual case before their Lordships, they were dealing with a family consisting of a Hindu widow and her unmarried daughters. There, as the widow was a potential mother, the continuance of the joint family cannot be doubted in view of Anant Bhikkappa Patil v. Shankar Ramchandra Patil AIR 1943 PC 196.

In a Rajasthan case, Commissioner of Income-tax v. Dannalal Devilal [1956] 29 ITR 165, it was held that wives or widows of male members of an undivided Hindu family and unmarried daughters of such male members are members of such family though they may not be coparceners.

Following the same view, the Calcutta High Court also held in Sushila Devi Rampuria v. Income-tax Officer [1960] 38 ITR 316 , 323 that "a female can be a member of a Hindu undivided family which may even consist entirely of females."

In a recent judgment of the Mysore High Court in The Commissioner Of Wealth Tax, Mysore Bangalore,… v. D.C Basappa,…. [1964] 51 ITR 790 it was pointed out that the latter portion of the Privy Council judgment in Kalyanji's case (supra) may not be correct.

The Privy Council themselves, in the later case from Ceylon (already cited), after noticing Kalyanji's case( supra), took a different view and held that property in the hands of a sole surviving partner must be held to be joint family property for the purpose of estate duty—which is a law dealing with taxation like the Wealth-tax Act.

From the foregoing discussions, the following conclusions emerge.

If Kalyanji's case( supra), decided by the Privy Council in 1937, be held to lay down the law correctly as it was not expressly overruled either by the Privy Council or by the Supreme Court, the assessee's husband, Jaisingh's status was only that of an individual during his lifetime even though his wife and minor daughter were entitled to maintenance out of that property. His death would not make any difference to the status of his widow who will also continue to be assessed only as an individual. But in view of the observations of the Privy Council in Anant Bhikkappa Patil v. Shankar Ramchandra Patil AIR 1943 PC 196 and in the later Ceylon case (supra) and in the subsequent decisions of the High Courts endorsing the same view, it must be held that the principle laid down in Kalyanji's case (supra) may not apply and that both during Jaisingh's lifetime and after his death his assets may be held to be joint family property assessable as a Hindu undivided family. This is because the assessee as a "potential mother" could have adopted a son to him and thereby continued his line. Mr. Roy contended that apart from the existence of a potential mother the mere fact that there were certain females entitled to maintenance such as unmarried daughters, was itself sufficient to show that the joint family continued, even after the death of the sole surviving coparcener. For this purpose he relied on certain observations in the Allahabad case cited above [1945] 13 ITR 361 and also on the observations of the Privy Council in the Ceylon case ( supra), where their Lordships referred specially to the existence of "female members of the family whose members may increase having a right to maintenance out of the property and in some circumstances may be a charge for maintenance upon it". But he could not cite any authority for the proposition that the mere existence of female members, entitled to maintenance out of joint family property, is itself sufficient to continue the joint family, even though none of them may be a "potential mother" with a capacity to continue the line by adoption. This question did not arise in any of the decisions because in everyone of these decisions there was a Hindu widow with a right to adopt.

The observations of the Privy Council in Anant Bhikkappa Patil's case (supra) are quite clear. The joint family will come to an end after the death of the last surviving male coparcener if there is no potential mother who can continue the line by adoption. The very conception of a Hindu joint family known to Hindu law requires that there should be in existence at least one male coparcener (with or without females) or at any rate there should be potentiality of at least one male coparcener coming into existence at a future date by adoption. Mr. Roy could not cite a single case where, after the death of the widow and when only unmarried daughters of a deceased coparcener were alive, the property in the hands of those daughters was held to be joint family property. Obviously, a daughter cannot be a potential mother with a right to adopt a son to her deceased father. Moreover, these daughters would then cease to be maintenance-holders and be the next heirs of the deceased under the Hindu law. In the absence of clear authority I am not inclined to accept the extreme view put forward by Mr. Roy that a Hindu joint family may continue to exist even though there may be no potential mother solely because there were other females who had a right to be maintained out of the original joint family property.

In my opinion therefore prior to the coming into force of the Hindu Succession Act of 1956, there could be a Hindu undivided family consisting of a Hindu widow and her unmarried daughter, not because the daughter is entitled to maintenance out of the joint family property, but because the widow, being a potential mother, could continue the line of her husband by making an adoption.

The Hindu Succession Act, 1956, however, has completely changed the law on the subject, and introduced radical reforms in the Mitakshara law of joint family property. Though the joint family and the coparcenery are continued to a limited extent, the property in the hands of the female heirs has been made their absolute property with a separate law of devolution by succession. Those properties which were possessed by a widow as "widow's estate" became her absolute properties by virtue of section 14 of the Hindu Succession Act and succession to those properties was thereafter regulated not by the ordinary rules of Hindu law but by sections 15 and 16 of that Act. The assessee thus became the full owner of the entire properties of her deceased husband of which she was in possession. It is true that her minor unmarried daughter's right to maintenance is safeguarded by the provisions of the Hindu Adoptions and Maintenance Act, but that Act itself took away her previous right to make an adoption to her deceased husband and thereby continue his line. Doubtless, by section 8 of that Act, she could adopt a son to herself. But that son has no right, as a coparcener in the property of her deceased husband, of which she had become a full owner. From the date of adoption he could only be her next heir and cannot divest her of the property that has already vested in her. Section 14(4) further says that if the widow marries again, her second husband will be the stepfather of the adopted child, but the Act nowhere says that the adopted child shall be deemed to be the child of her deceased husband. Thus while the Hindu Succession Act conferred on her an absolute right over her deceased husband's property, the Hindu Adoptions and Maintenance Act completely deprived her of the power to adopt a son to her deceased husband. Hence, the main principles on which a Hindu family may be deemed to exist during the lifetime of a potential mother, as laid down in Anant Bhikkappa Patil v. Shankar Ramchandra Patil AIR 1943 PC 196 have ceased to apply to a Hindu widow after the coming into force of the Hindu Succession Act. The existence of an unmarried daughter or the conferment of a right on the widow to make an adoption for herself, cannot have the effect of continuing the line of her deceased husband, so as to justify a notional assumption that the original joint family continues to exist.

Mr. Roy then invited our attention to the following obervations of the Supreme Court in Munnalal v. Rajkumar AIR 1962 SC 1493, 1500.

"The Act confers upon Hindu females full rights of inheritance, and sweeps away the traditional limitations on her powers of dispositions which were regarded under the Hindu law as inherent in her estate. She is, under the Act, regarded as a fresh stock of descent in respect of the property possessed by her at the time of her death."

The Hindu Succession Act has introduced far-reaching changes in the structure of the Hindu law of inheritance and succession, and a Hindu widow, by virtue of section 14 of that Act, may become a "fresh stock of descent", but as she has become full owner of her husband's properties, her children, if any, by her first husband, her adopted son if she cares to adopt, and her children if she gets married again, will all be her heirs and in that sense she and her children may form one joint family but none of them can have any right, by birth, in her property; and hence, the Hindu joint family as ordinarily understood in Hindu law cannot be brought into existence. It is well known that there can be no Hindu joint family (except amongst Nairs in Malabar) consisting of persons descended from a female ancestress. If Parliament intended that this new type of Hindu joint family should also be recognized as a Hindu undivided family when it passed the Wealth-tax Act in 1957, it would surely have made its intention clear by giving separate definition in the appropriate section of that Act. Hence, in my opinion, the Hindu undivided family contemplated in the Wealth-tax Act must also be a Hindu joint family as generally recognised in Hindu law, namely, a family which must trace its descent to a male ancestor, and in which a coparcener may be brought into existence either by nature or by adoption.

The question is undoubtedly somewhat difficult and as the Wealth-tax Act was passed only in 1957, no case-law on the subject has yet grown up. Nevertheless, in the absence of clear indications in the Act or of sufficient authority, I am very reluctant to extend the meaning of the expression "Hindu undivided family" to a new type of family consisting of a female, with absolute rights over her property and her children either natural or adopted.

For these reasons, I would answer the question referred to this court in the affirmative. The respondents will be entitled to costs. There will be one set of hearing fee in both the references, which we fix at Rs. 200 (Rupees two hundred only).

Misra J.—I agree.