This article is written by Dhiya Sadanandan pursuing Diploma in Business Laws for In-House Counsels from LawSikho.

Introduction

The Hindu Undivided Family or HUF is a business form recognized only in India. Partition of a HUF results in dividing or splitting up the HUF so that the property can be divided into shares of the individual coparceners (i.e. members in the family entitled to a share) instead of being held jointly by the entire family. HUF has been and still to a large extent continues to be a validly recognised form of holding ancestral property, assets, common funds, businesses, and other forms of property in a common pool by the family. Partition whether partial or complete materially changes the nature and character of a HUF. This appears to be a simple, straight-forward concept in the abstract sense. However, it can get rather messy and chaotic in the real world. 

Very simply, in this article, we will first look at what is a HUF, then what is ‘partition’, what are the laws applicable to the partition of HUF, and what are the methods by which a partition is done so that it is recognised as a valid partition. 

What is a Hindu Undivided Family or HUF?

Religion

At the outset, it is important to note that a HUF as the name indicates is limited to only Hindus, Buddhists, Jains, and Sikhs. Other communities i.e. Christians, Muslims, Parsis, Jews may live in a joint family but this is not recognised under Indian law and hence not entitled to any of the benefits available to a HUF.

Family and coparceners

The joint family consists of the head i.e. the Karta, all lineal descendants of the family – male descendants, female descendants (since the 2005 amendment to the Hindu Succession Act) who are the coparceners and other relatives. The eldest male of the family is generally recognized as the Karta(head). All members of the family entitled to a share in the assets or ancestral property of the family are recognized as coparceners. Every coparcener is entitled to an equal share of the HUF property or assets. Only a coparcener has a right to demand a partition of this property. Hence, in order to validate a partition of a HUF, the consent of all coparceners is required. However, a coparcener who is a murderer and converts are disqualified from their inheritance in the joint family property.

Property 

A HUF would normally hold the following kinds of property:

1. Ancestral property (property inherited by a Hindu from his father, father’s father, or father’s fathers’ father, is ancestral property.);
2. In addition to the common pool of property made by the individual members;
3. Property purchased from the proceeds of the sale of joint family property;
4. Property acquired by the family through a will or by way of a gift.

Recognition of HUF under the Income Tax Act 

As a person recognised under the Income Tax Act, a HUF has a Permanent Account Number (PAN) separate from that of its individual members and files separate annual tax returns under the said PAN. The biggest advantage of being recognised as a HUF is that the contribution to the capital assets of the HUF will be counted separately from income as an individual and in this manner minimizes the tax burden on the individuals in a HUF. If an individual coparcener separates from the joint HUF but forms a separate HUF with his wife and children, he will be assessed as a HUF and not an individual. 

What is the partition of a HUF?

1. Partition is a process in which property that is jointly held is divided into individual shares for each of the coparceners. 
2. This is initiated when an individual coparcener requests the Karta and the other coparceners to allot/give him/her their individual share with the intention that in future, he will be recognised as an individual and not as part of a unit. Partition begins with the definite, unequivocal statement of intention from the individual coparcener and member of the joint family to separate himself from the family and have sole use/control over his share. 
3. Partition results in the disruption of the joint family status. The remainder of the joint family may choose to continue as joint family minus the individual coparcener. The coparcener himself and his own heirs will no longer possess any right to survivorship in the joint family. 
4. The division of the joint family property into the clearly defined share (e.g. a parcel of land is divided up and the boundaries of the individual share cleared marked and recorded in the land records) is the visible evidence of the partition, which is noticed by society at large. 
5. Only the physical division of the property, along with the division of the income is recognised as partition under the Income Tax Act. A mere change of the status of the HUF and the individual coparceners not accompanied by any division of property is not recognised. Partial partition of property is not recognised by the Income Tax authorities after December 1978. (It was found to be a ploy to evade taxes in many instances). 

Which laws are concerned with the partition of HUF?

Customary law

From the customary law standpoint – the prominent schools of Hindu Law are; the Mitakshara school and the Dayabhaga school. In south India, Murumakkattayam, Aliyasantana, and Nambudri Systems were observed. The Mitakshara school is prevalent across most of India. The Dayabhaga school is only prevalent in West Bengal and Assam. It is important to note that in Mitakshara school; the coparcener gets the right to a share of the property at birth. The partition of property may be demanded by coparceners at any time and on the death of the Karta, the partition will occur according to the will or if intestate then according to the Hindu Succession Act, 1956. In the Dayabhaga school; the right to the property arises only when the last owner of the property dies. There is no concept of partition during the lifetime of the Karta.

Statutory law

The formal codified laws relating to partition include the following:

• The Partition Act, 1893

This Act was enacted to resolve a gap in the existing law viz., to enable the court to give a share to each of the parties and in instances where there are “inseparable practical difficulties in the way of making an equal division” to enable the court, “under proper safeguards, a discretionary authority to direct a sale where a partition cannot be reasonably made and a sale would, in the opinion of the court be more beneficial for the parties.”  

• Indian Stamp Act,1899 

Under the Indian Stamp Act,1899; stamp duty is applicable on the instrument or deed which formally acknowledges the factum of partition of the HUF and the division of property that has been agreed upon, that is recorded by the court order and the revenue authority, or the arbitration award. The amount of stamp duty payable varies across states and depends on the manner in which the shares in the HUF are allotted. Some states have their own stamp acts.

• Indian Registration Act, 1908

Family arrangements that affect a transfer of property are required to be registered. Thus, partition deeds recording the family settlement by mutual consent are required to be registered and the applicable stamp duty paid.

• Civil Procedure Code, 1908 

Disputes regarding partition fall within the purview of the regular civil court system. Specifically, the Civil Procedure Code, 1908 mentions ‘partition’ in Section 54 (wherein the execution of the decree for partition is to be done by a Collector), in Order 20 Rule 18 (wherein the counterpart of Section 54 is mentioned and also the provision for a preliminary decree, where the Court does not have enough information to pass a final decree) and Order 26- Commissions Rules 13 (court instructs a commissioner to carry out the preliminary decree) and Rule 14 (procedure to be followed by the commissioner i.e. to divide the shares, to write a report for the court and the decree to be passed by the court on the basis of the report, if the report is accepted).

As far as the states are concerned, most states have a mention of partition and its formal recognition by the revenue authorities in the respective states. However, in South India, the approach to partition has been slightly different. For reference, please see below:

1. The Tamil Nadu Aliyasantana Act, 1949: Aliyasantana is a system of inheritance in which descent is traced through the female line. Chapter VI of this Act dealt with Partition. This was subsequently overruled by sections 4 and 7 of the Hindu Succession Act 1956, in which the Kutumba(the group of persons forming a joint family with the community of property governed by the Aliyasantana system of inheritance) and kavaru (a group of persons consisting of the female, her children and all her descendants in the female line) would only become entitled to a share in the property on the death of the ancestor Kutumba and/or kavaru. However, the Karnataka Government amended this law in 1962 ‘to enable such Hindus to take their share in the Kutumba or kavaru properties by partition during their lifetime also’. 
2. Kerala Joint Hindu Family System (Abolition) Act, 1975: The joint family system was abolished and in place of partition of property, the undivided Hindu family is said to be holding the property as tenants in common.

How can the partition be affected?

A partition of a HUF may be done in any of the following methods, that is:

1. By a family settlement or arrangement.
2. By division of property done as per the Hindu Succession Act when a coparcener dies intestate and the family chooses to partition instead of continuing as a joint holding according to the custom of survivorship. 

Section 8 of the Hindu Succession Act – General Rules of Succession in the case of males – states as follows;

‘The property of a male Hindu dying intestate shall devolve according to the provisions of this Chapter {II-Intestate Succession}: —

(a) firstly, upon the heirs, being the relatives specified in class I of the Schedule;

(b) secondly, if there is no heir of class I, then upon the heirs, being the relatives specified in class II of the Schedule;

(c) thirdly, if them is no heir of any of the two classes, then upon the agnates of the deceased; and

(d) lastly, if there is no agnate, then upon the cognates of the deceased.’

For clarification, a person is said to be an ‘agnate’ of another if the two are related by blood or adoption wholly through males. A person to be a ‘cognate’ of another if such a person is related to the other by blood or through adoption but not wholly through males.

1. By a civil suit for partition. (A minor may file a suit for partition through his guardian but this may be dismissed if the court comes to the conclusion that granting such partition would not be in the best interest of the minor).
2. Vide an arbitration award (similar to the suit, only outside the courts). 

Partition is the coparcener wanting partition has only said so in the presence of the rest of the joint family or informed the rest of the family at different times, is not recognised. The factum of partition has to be formally recorded in a written document clearly recording the time when it is to take effect and the manner of division. 

Suit for partition

Any civil suit filed in the court having territorial or pecuniary (i.e. money) jurisdiction would go through the following stages:

• Legal notice 

Wherein the party who is unhappy or rather who raises the dispute formally serves notice on the parties against whom they are claiming relief/s and that they are prepared to take legal recourse if those demands are not met.

• Summons 

The party that seeks the intervention of the court (plaintiff/s) files the suit in the court registry. The court after scrutinizing the suit for clerical defects and accepting the payment of court fees as per the respective state court fees and suits valuation act, issues summons to the opposite parties/defendants to appear and explain as to why no order should be passed against them.

• Pleadings  

The plaintiff has filed a plaint, the defendant files a written statement and possibly a counterclaim, then the plaintiff may file a rejoinder and a defendant may file a reply to that rejoinder. Additionally, the parties may file separate applications for specific reliefs, most often a request for an interim injunction.

• Evidence 

At this stage, each party files their documentary or oral evidence in support of the claims made in the pleadings. The opposite party is given an opportunity to cross-examine, rebut the evidence, and if available, file evidence that contradicts the other party’s evidence.

• Arguments 

Each party is given the opportunity, to sum up, all submissions and documents placed on record, cite supporting case laws (precedents), and then convince the judge as to why relief should be granted or the suit should be dismissed.

• Judgement and decree 

The judge examines the records of the case, the written arguments (if submitted), evaluate the case laws (if binding or not), and then on that basis, passes the judgment and decree.

• Execution proceedings  

If the suit was partially or fully awarded in favor of the plaintiff and the judgment is not appealed within the prescribed limitation period, then the plaintiff is entitled to recover the relief/s granted from the defendant/s. To get court support in this matter, the plaintiff, now known as the decree-holder would have to file an execution petition against the defendants now known as the judgment debtors, within twelve (12) years from the date of the judgment.

Modifications for a partition suit

A suit for partition would follow these same stages with these modifications/deviations, that is:

1. A coparcener may institute the suit if s/he is unhappy with the family settlement or has requested partition and this request has not been acceded to. This would generally constitute the cause of action on the basis of which the suit may be filed.
2. The other parties to the suit would necessarily include all the coparceners.
3. The judge in the first instance would pass a preliminary decree, that is the decree would be limited to only the decision on whether or not the party or parties have a right to the property and other assets of the HUF and identify the properties that are being jointly held and which would be subject to division. 

This would happen immediately unless the case goes into storage for any reason such as an appeal being filed against the preliminary decree or other similar circumstances, in which case, the case will be revived by a member of the HUF filing an application requesting the appointment of a commissioner. 

1. The judge would then appoint a commissioner to inspect the property, evaluate and recommend the appropriate division of the property based on what is mentioned in the preliminary decree. This work of division of the physical property, most often the real estate is to be done by the revenue authority or tehsildar.
2. Once the report of the commissioner is received by the judge, the court may hear objections, if any to the report. Then if the report is accepted, the judge will pass the final decree based on the findings of the report and this final decree is registered with the land revenue authorities. If the report is rejected, then the judge will appoint another commissioner to make a separate report.

Conclusion

The Hindu Undivided Family is a unique business/family form in India. The partition of a HUF can be done without complications if it is clear to all concerned parties as to who is considered a part of the family, what are the rights of coparceners, what exactly are the property and assets of the family, and the Karta keeps all records updated and in order. Further, the legal process for partition in itself is not complicated and the authorities are very clear as to how a partition is to be recorded and recognised. 

Reference

• https://theprint.in/judiciary/daughters-equal-right-to-ancestral-property-heres-what-landmark-sc-judgment-says/479728/
• https://www.incometaxindia.gov.in/pages/i-am/huf.aspx
• https://www.lawyersclubindia.com/articles/partition-suit-principles-practices–10449.asp

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