Sunday, October 23, 2011


The Supreme Court (SC) has clarified the nominee of a depositor in a bank does not get ownership of the money in the account after death of the depositor. The nominee gets exclusive right to receive the money lying in the account. It gives him all the right of the depositor as far as the depositor’s account is concerned, according to Section 45ZA of the Banking Regulation Act. But the banking law is not concerned with the succession. The money in the account will form part of the estate of the deceased depositor and devolve according to the rules of succession. In this case, Ram Chander vs Devender Kumar, one son was the nominee of his mother. After her death, he claimed he was the owner of the money in the account, to exclusion of his brother. The same rule will apply to government savings and other investments

Friday, October 14, 2011



Legal experts analyzing Tuesday's Supreme Court order barring the sale of properties through general power of attorney (GPA) and sale agreements (SA) said the ruling could reduce black money component in deals and bring down legal disputes. However, they added that it would hit liquidity in the real estate market, bringing down the number of transactions in the short term. 

Legal experts and property consultants said the judgment would cause hardship to owners who have bought dispute-free properties on GPA and SA simply because paperwork wasn't complete for a proper sale registration. Such owners will have problems selling these properties.
The SC had ruled that, effective prospectively from October 11, registered sale deed will be the only valid instrument of transaction of property in the country. 

The verdict is likely to affect a large number of property owners and  property sales in Delhi take place through GPA and SA. 

Apartment owners in societies which have not got a completion certificate will find themselves on a sticky wicket because these flats cannot be converted into freehold. Until now, these properties could be sold through GPA and SA. The new ruling will effectively mean such apartments cannot be sold. Experts also say the verdict will raise the market value of freehold real estate while depressing the price of leasehold properties. 

Those holding properties on GPA and SA will have to get a sale deed registered if they wish to sell the property in future. But lawyers pointed out that many of the owners may face problems getting sale deeds because their properties do not have a clean title. They said city authorities must share part of the blame for the current state of affairs. "Take the erstwhile unauthorized colonies. Even after regularization, a large number of properties here are still owned through power of attorney because the authorities have never actively facilitated their conversion to freehold. With the SC ruling, these properties cannot be sold as the owners do not have property titles," a lawyer said. 

In 2004, the government had made registration of the sale agreement mandatory-requiring payment of 90% of stamp duty and corporation tax-for a property transaction to be deemed complete. Therefore, the government will not gain additional revenue following the SC order. The registrar's office also keeps track of sale agreements which show all transactions related to a particular property. So, a lawyer argued, a GPA and a registered SA were good enough for sale and purchase of property. 

As the GPA and SA will not be considered sale documents any more, bank loans will not be available for property transactions which, for some reason, take place through this route. 

The various Governments be it xxxxxxxxxxxxxxx  etc all lacked the will to curb black money and the windfall il-legal profit Goons and Politicians made by looting general public by means of Real Estate Deals. The Honorable Supreme Court waited for too long and hence decided to pass an order where-in all Real Estate Deals by means of General Power of Attorney, Special Power of Attorney or Agreement for Sale to curb Black Money and weed out all the agents who artificially jacked up the prices.

Modus Operandi – A Goon / Property Agent usually backed by local Corporator / MLA lures a property seller and gets an Agreement for Sale or GPA on the said property by paying a paltry sum as advance. Then the Goon starts looking for a client who will BUY this property and if he doesn’t get one he has locked in the Seller by means of Agreement for Sale.
The Agent then finds a BUYER say Naryan at higher price than what is agreed between the Seller and the Agent. Seller is forced to directly registers property in the name of Naryan [Any resistance from Seller, Politicain will interfere with Police and extra Forces] while the Agent / Goon takes the difference in CASH and walks away proudly as if he has created value to the society or done something worthwhile. By doing so, they evade Stamp Duty and Capital Gains Tax. (FRAUDLENT AND ILLEGAL ACTIVITIES)

If the Seller takes legal approach, Courts in India take 3 or more years to resolve this case by then the price of property would have appreciated, mental agony and don’t forget corruption in judiciary as well as lawyers eating at both ends. The Supreme Court order now leaves little scope for such practice and eliminate bad elements of the Society usually Goons / Corporators, MLAs, etc.

The Supreme Court in an order passed in Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana & Anr. Has discussed the ill effects of transfer of property by means of a General Power of Attorney / Will / Agreement to Sell, and the practical problems the same is causing. The Bench, while dealing with the legal validity of such transfers, has observed as under;

By an earlier order dated 15.5.2009 [reported in Suraj Lamp & Industries Pvt.Ltd. vs. State of Haryana & Anr. - 2009 (7) SCC 363], we had referred to the ill - effects of what is known as General Power of Attorney Sales (for short `GPA Sales') or Sale Agreement/General Power of Attorney/Will transfers (for short `SA/GPA/WILL' transfers). Both the descriptions are misnomers as there cannot be a sale by execution of a power of attorney nor can there be a transfer by execution of an agreement of sale and a power of attorney and will. As noticed in the earlier order, these kinds of transactions were evolved to avoid prohibitions/conditions regarding certain transfers, to avoid payment of stamp duty and registration charges on deeds of conveyance, to avoid payment of capital gains on transfers, to invest unaccounted money (`black money') and to avoid payment of `unearned increases' due to Development Authorities on transfer. 

2. The modus operandi in such SA/GPA/WILL transactions is for the vendor or person claiming to be the owner to receive the agreed consideration, deliver possession of the property to the purchaser and execute the following documents or variations thereof: 
(a) An Agreement of sale by the vendor in favour of the purchaser confirming the terms of sale, delivery of possession and payment of full consideration and undertaking to execute any document as and when required in future. Or An agreement of sale agreeing to sell the property, with a separate affidavit confirming receipt of full price and delivery of possession and undertaking to execute sale deed whenever required. 
(b) An Irrevocable General Power of Attorney by the vendor in favour of the purchaser or his nominee authorizing him to manage, deal with and dispose of the property without reference to the vendor. Or A General Power of Attorney by the vendor in favour of the purchaser or his nominee authorizing the attorney holder to sell or transfer the property and a Special Power of Attorney to manage the property. 
(c) A will bequeathing the property to the purchaser (as a safeguard against the consequences of death of the vendor before transfer is effected). 
These transactions are not to be confused or equated with genuine transactions where the owner of a property grants a power of Attorney in favour of a family member or friend to manage or sell his property, as he is not able to manage the property or execute the sale, personally. These are transactions, where a purchaser pays the full price, but instead of getting a deed of conveyance gets a SA/GPA/WILL as a mode of transfer, either at the instance of the vendor or at his own instance. Ill-Effects of SA/GPA/WILL transactions 

3. The earlier order dated 15.5.2009, noted the ill-effects of such SA/GPA/WILL transactions (that is generation of black money, growth of land mafia and criminalization of civil disputes) as under: 
"Recourse to `SA/GPA/WILL' transactions is taken in regard to freehold properties, even when there is no bar or prohibition regarding transfer or conveyance of such property, by the following categories of persons: 
(a) Vendors with imperfect title who cannot or do not want to execute registered deeds of conveyance. 
(b) Purchasers who want to invest undisclosed wealth/income in immovable properties without any public record of the transactions. The process enables them to hold any number of properties without disclosing them as assets held. 
(c) Purchasers who want to avoid the payment of stamp duty and registration charges either deliberately or on wrong advice. Persons who deal in real estate resort to these methods to avoid multiple stamp duties/registration fees so as to increase their profit margin. 
Whatever be the intention, the consequences are disturbing and far reaching, adversely affecting the economy, civil society and law and order. Firstly, it enables large scale evasion of income tax, wealth tax, stamp duty and registration fees thereby denying the benefit of such revenue to the government and the public. Secondly, such transactions enable persons with undisclosed wealth/income to invest their black money and also earn profit/income, thereby encouraging circulation of black money and corruption. 

This kind of transactions has disastrous collateral effects also. For example, when the market value increases, many vendors (who effected power of attorney sales without registration) are tempted to resell the property taking advantage of the fact that there is no registered instrument or record in any public office thereby cheating the purchaser. When the purchaser under such `power of attorney sales' comes to know about the vendors action, he invariably tries to take the help of musclemen to `sort out' the issue and protect his rights. On the other hand, real estate mafia many a time purchase properties which are already subject to power of attorney sale and then threaten the previous `Power of Attorney Sale' purchasers from asserting their rights. Either way, such power of attorney sales indirectly lead to growth of real estate mafia and criminalization of real estate transactions." 

It also makes title verification and certification of title, which is an integral part of orderly conduct of transactions relating to immovable property, difficult, if not impossible, giving nightmares to bonafide purchasers wanting to own a property with an assurance of good and marketable title. 

4. This Court had therefore requested the learned Solicitor General to give suggestions on behalf of Union of India. This Court also directed notice to States of Delhi, Haryana, Punjab, Uttar Pradesh to give their views on the matter. The four states have responded and confirmed that SA/GPA/WILL transfers required to be discouraged as they lead to loss of revenue (stamp duty) and increase in litigations due to defective title. They also referred to some measures taken in that behalf. The measures differ from State to State. In general, the measures are: 

(i) to amend Registration Act, 1908 by Amendment Act 48 of 2001 with effect from 24.9.2001 requiring documents containing contract to transfer for consideration (agreements of sale etc.) relating to any immoveable property for the purpose of section 53A of the Act, shall be registered; and 

(ii) to amend the stamp laws subjecting agreements of sale with delivery of possession and/or irrevocable powers of attorney in favour of non-family members authorizing sale, to the same stamp duty as deed of conveyance. These measures, no doubt, to some extent plugged the loss of revenue by way of stamp duty on account of parties having recourse to SA/GPA/WILL transactions, instead of executing deeds of conveyance. But the other ill-effects continued. Further such transaction which was only prevalent in Delhi and the surrounding areas have started spreading to other States also. Those with ulterior motives either to indulge in black money transactions or land mafia continue to favour such transactions. There are also efforts to thwart the amended provisions by not referring to delivery of possession in the agreement of sale and giving a separate possession receipt or an affidavit confirming delivery of possession and thereby avoiding the registration and stamp duty. The amendments to stamp and registration laws do not address the larger issue of generation of black money and operation of land mafia. The four States and the Union of India are however unanimous that SA/GPA/WILL transactions should be curbed and expressed their willingness to take remedial steps. 

5. The State of Haryana has however taken a further positive step by reducing the stamp duty on deeds of conveyance from 12.5% to 5%. A high rate of stamp duty acts as a damper for execution of deeds of conveyance for full value, and encourages SA/GPA/WILL transfers. When parties resort to SA/GPA/WILL transfers, the adverse effect is not only loss of revenue (stamp duty and registration charges) but the greater danger of generation of `black' money. Reducing the stamp duty on conveyance to realistic levels will encourage public to disclose the maximum sale value and have the sale deeds registered. Though the reduction of the stamp duty, may result in an immediate reduction in the revenue by way of stamp duty, in the long run it will be advantageous for two reasons: 

(i) parties will be encouraged to execute registered deeds of conveyance/sale deeds without any under valuation, instead of entering into SA/GPA/WILL transactions; and 

(ii) more and more sale transactions will be done by way of duly registered sale deeds, disclosing the entire sale consideration thereby reducing the generation of black money to a large extent. When high stamp duty is prevalent, there is a tendency to undervalue documents, even where sale deeds are executed. When properties are undervalued, a large part of the sale price changes hand by way of cash thereby generating `black' money. Even when the state governments take action to prevent undervaluation, it only results in the recovery of deficit stamp duty and registration charges with reference to the market value, but the actual sale consideration remains unaltered. If a property worth `5 millions is sold for `2 millions, the Undervaluation Rules may enable the state government to initiate proceedings so as to ensure that the deficit stamp duty and registration charges are recovered in respect of the difference of `3 millions. But the sale price remains `2 millions and the black money of `3 millions generated by the undervalued sale transaction, remains undisturbed. 

6. In this background, we will examine the validity and legality of SA/GPA/WILL transactions. We have heard learned Mr. Gopal Subramanian, Amicus Curiae and noted the views of the Government of NCT of Delhi, Government of Haryana, Government of Punjab and Government of Uttar Pradesh who have filed their submissions in the form of affidavits. 

Relevant Legal Provisions 

7. Section 5 of the Transfer of Property Act, 1882 (`TP Act' for short) defines `transfer of property' as under: 

"5. Transfer of Property defined : In the following sections "transfer of property" means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself [or to himself] and one or more other living persons; and "to transfer property" is to perform such act." 

xxx xxx 

Section 54 of the TP Act defines `sales' thus: "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Sale how made. Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument. In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property. 

Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property. Contract for sale.-A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties. It does not, of itself, create any interest in or charge on such property." 

Section 53A of the TP Act defines `part performance' thus : 

"Part Performance. - Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract : Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof." 

8. We may next refer to the relevant provisions of the Indian Stamp Act, 1999 (Note : Stamp Laws may vary from state to state, though generally the provisions may be similar). Section 27 of the Indian Stamp Act, 1899 casts upon the party, liable to pay stamp duty, an obligation to set forth in the instrument all facts and circumstances which affect the chargeability of duty on that instrument. Article 23 prescribes stamp duty on `Conveyance'. In many States appropriate amendments have been made whereby agreements of sale acknowledging delivery of possession or power of Attorney authorizes the attorney to `sell any immovable property are charged with the same duty as leviable on conveyance. 

9. Section 17 of the Registration Act, 1908 which makes a deed of conveyance compulsorily registrable. We extract below the relevant portions of section 17. . 

"Section 17 - Documents of which registration is compulsory- (1) The following documents shall be registered, namely:-- xxxxx 

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property. 


(1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A. 

Advantages of Registration 

10. In the earlier order dated 15.5.2009, the objects and benefits of registration were explained and we extract them for ready reference : 
"The Registration Act, 1908, was enacted with the intention of providing orderliness, discipline and public notice in regard to transactions relating to immovable property and protection from fraud and forgery of documents of transfer. This is achieved by requiring compulsory registration of certain types of documents and providing for consequences of non-registration. Section 17 of the Registration Act clearly provides that any document (other than testamentary instruments) which purports or operates to create, declare, assign, limit or extinguish whether in present or in future "any right, title or interest" whether vested or contingent of the value of Rs. 100 and upwards to or in immovable property. Section 49 of the said Act provides that no document required by Section 17 to be registered shall, affect any immovable property comprised therein or received as evidence of any transaction affected such property, unless it has been registered. Registration of a document gives notice to the world that such a document has been executed. Registration provides safety and security to transactions relating to immovable property, even if the document is lost or destroyed. It gives publicity and public exposure to documents thereby preventing forgeries and frauds in regard to transactions and execution of documents. Registration provides information to people who may deal with a property, as to the nature and extent of the rights which persons may have, affecting that property. In other words, it enables people to find out whether any particular property with which they are concerned, has been subjected to any legal obligation or liability and who is or are the person/s presently having right, title, and interest in the property. It gives solemnity of form and perpetuate documents which are of legal importance or relevance by recording them, where people may see the record and enquire and ascertain what the particulars are and as far as land is concerned what obligations exist with regard to them. It ensures that every person dealing with immovable property can rely with confidence upon the statements contained in the registers (maintained under the said Act) as a full and complete account of all transactions by which the title to the property may be affected and secure extracts/copies duly certified." 
Registration of documents makes the process of verification and certification of title easier and simpler. It reduces disputes and litigations to a large extent. 

Scope of an Agreement of sale 

11. Section 54 of TP Act makes it clear that a contract of sale, that is, an agreement of sale does not, of itself, create any interest in or charge on such property. This Court in Narandas Karsondas v. S.A. Kamtam and Anr. (1977) 3 SCC 247, observed: 

A contract of sale does not of itself create any interest in, or charge on, the property. This is expressly declared in Section 54 of the Transfer of Property Act. See Rambaran Prosad v. Ram Mohit Hazra [1967]1 SCR 293. 

The fiduciary character of the personal obligation created by a contract for sale is recognised in Section 3 of the Specific Relief Act, 1963, and in Section 91 of the Trusts Act. The personal obligation created by a contract of sale is described in Section 40 of the Transfer of Property Act as an obligation arising out of contract and annexed to the ownership of property, but not amounting to an interest or easement therein." In India, the word `transfer' is defined with reference to the word `convey'. The word `conveys' in section 5 of Transfer of Property Act is used in the wider sense of conveying ownership... ...that only on execution of conveyance ownership passes from one party to another...." 

In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) SCC 614] this Court held: 
"Protection provided under Section 53A of the Act to the proposed transferee is a shield only against the transferor. It disentitles the transferor from disturbing the possession of the proposed transferee who is put in possession in pursuance to such an agreement. It has nothing to do with the ownership of the proposed transferor who remains full owner of the property till it is legally conveyed by executing a registered sale deed in favour of the transferee. Such a right to protect possession against the proposed vendor cannot be pressed in service against a third party." 
It is thus clear that a transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred. 

12. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under section 53A of TP Act). According to TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of TP Act enacts that sale of immoveable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject matter. 

Scope of Power of Attorney 

13. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see section 1A and section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee. In State of Rajasthan vs. Basant Nehata - 2005 (12) SCC 77, this Court held : 
"A grant of power of attorney is essentially governed by Chapter X of the Contract Act. By reason of a deed of power of attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power of attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power of attorney is, as is well known, a document of convenience. Execution of a power of attorney in terms of the provisions of the Contract Act as also the Powers-of-Attorney Act is valid. A power of attorney, we have noticed hereinbefore, is executed by the donor so as to enable the donee to act on his behalf. Except in cases where power of attorney is coupled with interest, it is revocable. The donee in exercise of his power under such power of attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power of attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee." 
An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.


(Arising out of SLP (Civil) No. 9586 of 2010)
Ganduri Koteshwaramma & Anr. …. Appellants
Chakiri Yanadi & Anr. ….Respondents
R.M. Lodha, J.
Leave granted.
2. The question that arises in this appeal, by special leave,
is: whether the benefits of Hindu Succession (Amendment) Act,
2005 are available to the appellants.
3. The appellants and the respondents are siblings being
daughters and sons of Chakiri Venkata Swamy. The 1st respondent
(plaintiff) filed a suit for partition in the court of Senior Civil Judge,

Ongole impleading his father Chakiri Venkata Swamy (1st
defendant), his brother Chakiri Anji Babu (2nd defendant) and his
two sisters – the present appellants – as 3rd and 4th defendant
respectively. In respect of schedule properties ‘A’, ‘C’ and ‘D’ –
coparcenary property – the plaintiff claimed that he, 1st defendant
and 2nd defendant have 1/3rd share each. As regards schedule
property ‘B’—as the property belonged to his mother—he claimed
that all the parties have 1/5th equal share.
4. The 1st defendant died in 1993 during the pendency of
the suit.
5. The trial court vide its judgment and preliminary decree
dated March 19, 1999 declared that plaintiff was entitled to 1/3rd
share in the schedule ‘A’, ‘C’ and ‘D’ properties and further entitled
to 1/4th share in the 1/3rd share left by the 1st defendant. As regards
schedule property ‘B’ the plaintiff was declared to be entitled to 1/5th
share. The controversy in the present appeal does not relate to
schedule ‘B’ property and is confined to schedule ‘A’, ‘C’ and ‘D’
properties. The trial court ordered for separate enquiry as regards
mesne profits.
6. The above preliminary decree was amended on
September 27, 2003 declaring that plaintiff was entitled to equal

share along with 2nd, 3rd and 4th defendant in 1/5th share left by the
1st defendant in schedule property ‘B’.
7. In furtherance of the preliminary decree dated March 19,
1999 and the amended preliminary decree dated September 27,
2003, the plaintiff made two applications before the trial court (i) for
passing the final decree in terms thereof; and (ii) for determination of
mesne profits. The trial court appointed the Commissioner for
division of the schedule property and in that regard directed him to
submit his report. The Commissioner submitted his report.
8. In the course of consideration of the report submitted by
the Commissioner and before passing of the final decree, the Hindu
Succession (Amendment) Act, 2005 (for short, ‘2005 Amendment
Act’) came into force on September 9, 2005. By 2005 Amendment
Act, Section 6 of the Hindu Succession Act, 1956 (for short ‘1956
Act’) was substituted. Having regard to 2005 Amendment Act which
we shall refer to appropriately at a later stage, the present
appellants (3rd and 4th defendant) made an application for passing
the preliminary decree in their favour for partition of schedule
properties ‘A’, ‘C’ and ‘D’ into four equal shares; allot one share to
each of them by metes and bounds and for delivery of possession.

9. The application made by 3rd and 4th defendant was
contested by the plaintiff. Insofar as 2nd defendant is concerned he
admitted that the 3rd and 4th defendant are entitled to share as
claimed by them pursuant to 2005 Amendment Act but he also
submitted that they were liable for the debts of the family.
10. The trial court, on hearing the parties, by its order dated
June 15, 2009, allowed the application of the present appellants (3rd
and 4th defendant) and held that they were entitled for re-allotment of
shares in the preliminary decree, i.e., they are entitled to 1/4th share
each and separate possession in schedule properties ‘A’, ‘C’ and ‘D’.
11. The plaintiff (present respondent no. 1) challenged the
order of the trial court in appeal before the Andhra Pradesh High
Court. The Single Judge by his order dated August 26, 2009
allowed the appeal and set aside the order of the trial court.
12. 1956 Act is an Act to codify the law relating to intestate
succession among Hindus. This Act has brought about important
changes in the law of succession but without affecting the special
rights of the members of a Mitakshara Coparcenary. The Parliament
felt that non-inclusion of daughters in the Mitakshara Coparcenary
property was causing discrimination to them and, accordingly,
decided to bring in necessary changes in the law. The statement of

objects and reasons of the 2005 Amendment Act, inter alia, reads as
under :
“…….The retention of the Mitakshara coparcenary property
without including the females in it means that the females
cannot inherit in ancestral property as their male
counterparts do. The law by excluding the daughter from
participating in the coparcenary ownership not only
contributes to her discrimination on the ground of gender
but also has led to oppression and negation of her
fundamental right of equality guaranteed by the
Constitution. Having regard to the need to render social
justice to women, the States of Andhra Pradesh, Tamil
Nadu, Karnataka and Maharashtra have made necessary
changes in the law giving equal right to daughters in Hindu
Mitakshara coparcenary property.”
13. With the above object in mind, the Parliament substituted
the existing Section 6 of the 1956 Act by a new provision vide 2005
Amendment Act. After substitution, the new Section 6 reads as
follows :
“6. Devolution of interest in coparcenary property.—
(1) On and from the commencement of the Hindu
Succession (Amendment) Act, 2005, in a Joint Hindu family
governed by the Mitakshara law, the daughter of a
coparcener shall,—
(a) by birth become a coparcener in her own right in the
same manner as the son;
(b) have the same rights in the coparcenary property as
she would have had if she had been a son;
(c) be subject to the same liabilities in respect of the
said coparcenary property as that of a son,

and any reference to a Hindu Mitakshara coparcener shall
be deemed to include a reference to a daughter of a
Provided that nothing contained in this sub-section shall
affect or invalidate any disposition or alienation including
any partition or testamentary disposition of property which
had taken place before the 20th day of December, 2004.
(2) Any property to which a female Hindu becomes entitled
by virtue of sub-section (1) shall be held by her with the
incidents of coparcenary ownership and shall be regarded,
notwithstanding anything contained in this Act or any other
law for the time being in force in, as property capable of
being disposed of by her by testamentary disposition.
(3) Where a Hindu dies after the commencement of the
Hindu Succession (Amendment) Act, 2005, his interest in
the property of a Joint Hindu family governed by the
Mitakshara law, shall devolve by testamentary or intestate
succession, as the case may be, under this Act and not by
survivorship, and the coparcenary property shall be
deemed to have been divided as if a partition had taken
place and,—
(a) the daughter is allotted the same share as is allotted
to a son;
(b) the share of the pre-deceased son or a predeceased
daughter, as they would have got had
they been alive at the time of partition, shall be
allotted to the surviving child of such pre-deceased
son or of such pre-deceased daughter; and
(c) the share of the pre-deceased child of a predeceased
son or of a pre-deceased daughter, as
such child would have got had he or she been alive
at the time of the partition, shall be allotted to the
child of such pre-deceased child of the predeceased
son or a pre-deceased daughter, as the
case may be.
Explanation.— For the purposes of this sub-section, the
interest of a Hindu Mitakshara coparcener shall be deemed
to be the share in the property that would have been

allotted to him if a partition of the property had taken place
immediately before his death, irrespective of whether he
was entitled to claim partition or not.
(4) After the commencement of the Hindu Succession
(Amendment) Act, 2005, no court shall recognise any right
to proceed against a son, grandson or great-grandson for
the recovery of any debt due from his father, grandfather or
great-grandfather solely on the ground of the pious
obligation under the Hindu law, of such son, grandson or
great-grandson to discharge any such debt:
Provided that in the case of any debt contracted before the
commencement of the Hindu Succession (Amendment)
Act, 2005, nothing contained in this sub-section shall affect
(a) the right of any creditor to proceed against the son,
grandson or great-grandson, as the case may be; or
(b) any alienation made in respect of or in satisfaction
of, any such debt, and any such right or alienation
shall be enforceable under the rule of pious
obligation in the same manner and to the same
extent as it would have been enforceable as if the
Hindu Succession (Amendment) Act, 2005 had not
been enacted.
Explanation.—For the purposes of clause (a), the
expression “son”, “grandson” or “great-grandson” shall be
deemed to refer to the son, grandson or great-grandson, as
the case may be, who was born or adopted prior to the
commencement of the Hindu Succession (Amendment)
Act, 2005.
(5) Nothing contained in this section shall apply to a
partition, which has been effected before the 20th day of
December, 2004.
Explanation. —For the purposes of this section “partition”
means any partition made by execution of a deed of
partition duly registered under the Registration Act, 1908
(16 of 1908) or partition effected by a decree of a court.”

14. The new Section 6 provides for parity of rights in the
coparcenary property among male and female members of a joint
Hindu family on and from September 9, 2005. The Legislature has
now conferred substantive right in favour of the daughters. According
to the new Section 6, the daughter of a copercener becomes a
coparcener by birth in her own rights and liabilities in the same
manner as the son. The declaration in Section 6 that the daughter of
the coparcener shall have same rights and liabilities in the
coparcenary property as she would have been a son is unambiguous
and unequivocal. Thus, on and from September 9, 2005, the daughter
is entitled to a share in the ancestral property and is a coparcener as if
she had been a son.
15. The right accrued to a daughter in the property of a joint
Hindu family governed by the Mitakshara Law, by virtue of the 2005
Amendment Act, is absolute, except in the circumstances provided in
the proviso appended to sub-section (1) of Section 6. The excepted
categories to which new Section 6 of the 1956 Act is not applicable
are two, namely, (i) where the disposition or alienation including any
partition has taken place before December 20, 2004; and (ii) where
testamentary disposition of property has been made before
December 20, 2004. Sub- section (5) of Section 6 leaves no room for

doubt as it provides that this Section shall not apply to the partition
which has been effected before December 20, 2004. For the
purposes of new Section 6 it is explained that `partition’ means any
partition made by execution of a deed of partition duly registered
under the Registration Act 1908 or partition effected by a decree of a
court. In light of a clear provision contained in the Explanation
appended to sub-section (5) of Section 6, for determining the nonapplicability
of the Section, what is relevant is to find out whether the
partition has been effected before December 20, 2004 by deed of
partition duly registered under the Registration Act, 1908 or by a
decree of a court. In the backdrop of the above legal position with
reference to Section 6 brought in the 1956 Act by the 2005
Amendment Act, the question that we have to answer is as to
whether the preliminary decree passed by the trial court on March 19,
1999 and amended on September 27, 2003 deprives the appellants
of the benefits of 2005 Amendment Act although final decree for
partition has not yet been passed.
16. The legal position is settled that partition of a Joint Hindu
family can be effected by various modes, inter-alia, two of these
modes are (one) by a registered instrument of a partition and (two) by
a decree of the court. In the present case, admittedly, the partition

has not been effected before December 20, 2004 either by a
registered instrument of partition or by a decree of the court. The
only stage that has reached in the suit for partition filed by the
respondent no.1 is the determination of shares vide preliminary
decree dated March 19, 1999 which came to be amended on
September 27, 2003 and the receipt of the report of the
17. A preliminary decree determines the rights and interests
of the parties. The suit for partition is not disposed of by passing of
the preliminary decree. It is by a final decree that the immovable
property of joint Hindu family is partitioned by metes and bounds.
After the passing of the preliminary decree, the suit continues until
the final decree is passed. If in the interregnum i.e. after passing of
the preliminary decree and before the final decree is passed, the
events and supervening circumstances occur necessitating change in
shares, there is no impediment for the court to amend the preliminary
decree or pass another preliminary decree redetermining the rights
and interests of the parties having regard to the changed situation.
We are fortified in our view by a 3- Judge Bench decision of this

Court in the case of Phoolchand and Anr. Vs. Gopal Lal 1 wherein
this Court stated as follows:
“We are of opinion that there is nothing in the Code of Civil
Procedure which prohibits the passing of more than one
preliminary decree if circumstances justify the same and
that it may be necessary to do so particularly in partition
suits when after the preliminary decree some parties die
and shares of other parties are thereby augmented. . . . ..
So far therefore as partition suits are concerned we have
no doubt that if an event transpires after the preliminary
decree which necessitates a change in shares, the court
can and should do so; ........... there is no prohibition in the
Code of Civil Procedure against passing a second
preliminary decree in such circumstances and we do not
see why we should rule out a second preliminary decree in
such circumstances only on the ground that the Code of
Civil Procedure does not contemplate such a possibility. . .
for it must not be forgotten that the suit is not over till the
final decree is passed and the court has jurisdiction to
decide all disputes that may arise after the preliminary
decree, particularly in a partition suit due to deaths of some
of the parties. . . . .a second preliminary decree can be
passed in partition suits by which the shares allotted in the
preliminary decree already passed can be amended and if
there is dispute between surviving parties in that behalf and
that dispute is decided the decision amounts to a decree….
………… .”
18. This Court in the case of S. Sai Reddy vs. S. Narayana
Reddy and Others2 had an occasion to consider the question
identical to the question with which we are faced in the present
appeal. That was a case where during the pendency of the
proceedings in the suit for partition before the trial court and prior to
1 AIR 1967 SC 1470
2 (1991) 3 SCC 647

the passing of final decree, the 1956 Act was amended by the State
Legislature of Andhra Pradesh as a result of which unmarried
daughters became entitled to a share in the joint family property.
The unmarried daughters respondents 2 to 5 therein made
application before the trial court claiming their share in the property
after the State amendment in the 1956 Act. The trial court by its
judgment and order dated August 24, 1989 rejected their application
on the ground that the preliminary decree had already been passed
and specific shares of the parties had been declared and, thus, it
was not open to the unmarried daughters to claim share in the
property by virtue of the State amendment in the 1956 Act. The
unmarried daughters preferred revision against the order of the trial
court before the High Court. The High Court set aside the order of
the trial court and declared that in view of the newly added Section
29-A, the unmarried daughters were entitled to share in the joint
family property. The High Court further directed the trial court to
determine the shares of the unmarried daughters accordingly. The
appellant therein challenged the order of the High Court before this
Court. This Court considered the matter thus;
“………A partition of the joint Hindu family can be effected by
various modes, viz., by a family settlement, by a registered
instrument of partition, by oral arrangement by the parties, or
by a decree of the court. When a suit for partition is filed in a

court, a preliminary decree is passed determining shares of
the members of the family. The final decree follows,
thereafter, allotting specific properties and directing the
partition of the immovable properties by metes and bounds.
Unless and until the final decree is passed and the allottees
of the shares are put in possession of the respective
property, the partition is not complete. The preliminary
decree which determines shares does not bring about the
final partition. For, pending the final decree the shares
themselves are liable to be varied on account of the
intervening events. In the instant case, there is no dispute
that only a preliminary decree had been passed and before
the final decree could be passed the amending Act came into
force as a result of which clause (ii) of Section 29-A of the
Act became applicable. This intervening event which gave
shares to respondents 2 to 5 had the effect of varying shares
of the parties like any supervening development. Since the
legislation is beneficial and placed on the statute book with
the avowed object of benefitting women which is a vulnerable
section of the society in all its stratas, it is necessary to give a
liberal effect to it. For this reason also, we cannot equate the
concept of partition that the legislature has in mind in the
present case with a mere severance of the status of the joint
family which can be effected by an expression of a mere
desire by a family member to do so. The partition that the
legislature has in mind in the present case is undoubtedly a
partition completed in all respects and which has brought
about an irreversible situation. A preliminary decree which
merely declares shares which are themselves liable to
change does not bring about any irreversible situation.
Hence, we are of the view that unless a partition of the
property is effected by metes and bounds, the daughters
cannot be deprived of the benefits conferred by the Act. Any
other view is likely to deprive a vast section of the fair sex of
the benefits conferred by the amendment. Spurious family
settlements, instruments of partitions not to speak of oral
partitions will spring up and nullify the beneficial effect of the
legislation depriving a vast section of women of its benefits”.
19. The above legal position is wholly and squarely applicable
to the present case. It surprises us that the High Court was not

apprised of the decisions of this Court in Phoolchand1 and S. Sai
Reddy2. High Court considered the matter as follows:
“In the recent past, the Parliament amended Section
6 of the Hindu Succession Act (for short ‘the Act’),
according status of coparceners to the female members of
the family also. Basing their claim on amended Section 6
of the Act, the respondents 1 and 2 i.e., defendants 3 and 4
filed I.A. No. 564 of 2007 under Order XX Rule 18 of
C.P.C., a provision, which applies only to preparation of
final decree. It hardly needs an emphasis that a final
decree is always required to be in conformity with the
preliminary decree. If any party wants alteration or change
of preliminary decree, the only course open to him or her is
to file an appeal or to seek other remedies vis-à-vis the
preliminary decree. As long as the preliminary decree
stands, the allotment of shares cannot be in a manner
different from what is ordained in it.”
20. The High Court was clearly in error in not properly
appreciating the scope of Order XX Rule 18 of C.P.C. In a suit for
partition of immovable property, if such property is not assessed to
the payment of revenue to the government, ordinarily passing of a
preliminary decree declaring the share of the parties may be required.
The court would thereafter proceed for preparation of final decree. In
Phoolchand1, this Court has stated the legal position that C.P.C.
creates no impediment for even more than one preliminary decree if
after passing of the preliminary decree events have taken place
necessitating the readjustment of shares as declared in the
preliminary decree. The court has always power to revise the

preliminary decree or pass another preliminary decree if the situation
in the changed circumstances so demand. A suit for partition
continues after the passing of the preliminary decree and the
proceedings in the suit get extinguished only on passing of the final
decree. It is not correct statement of law that once a preliminary
decree has been passed, it is not capable of modification. It needs no
emphasis that the rights of the parties in a partition suit should be
settled once for all in that suit alone and no other proceedings.
21. Section 97 of C. P.C. that provides that where any party
aggrieved by a preliminary decree passed after the commencement
of the Code does not appeal from such decree, he shall be precluded
from disputing its correctness in any appeal which may be preferred
from the final decree does not create any hindrance or obstruction in
the power of the court to modify, amend or alter the preliminary
decree or pass another preliminary decree if the changed
circumstances so require.
22. It is true that final decree is always required to be in
conformity with the preliminary decree but that does not mean that a
preliminary decree, before the final decree is passed, cannot be
altered or amended or modified by the trial court in the event of

changed or supervening circumstances even if no appeal has been
preferred from such preliminary decree.
23. The view of the High Court is against law and the
decisions of this Court in Phoolchand1 and S.Sai Reddy2.
24. We accordingly allow this appeal; set aside the impugned
judgment of the High Court and restore the order of the trial court
dated June 15, 2009. The trial court shall now proceed for the
preparation of the final decree in terms of its order dated June 15,
2009. No costs.
…. …………………………….J.
OCTOBER 12, 2011

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