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What is HUF Property & Partition?

Ancestral Properties are generally known as Hindu Undivided Family Properties (HUF Properties). Such properties are inherited by a male Hindu from his forefathers. Apart from this separate/individual property (including self acquired properties) of male member of HUF thrown into common stock of the family; and properties acquired or purchased with joint efforts of family using HUF properties may also be considered as HUF properties.

A HUF originates from a common male ancestor/forefather and consists of his descendants in male line, their spouses and unmarried daughters. Every male, even when he is a member of HUF, can constitute a HUF with his own descendants and spouse. There may be smaller HUFs (as branch) in larger HUF.  Through partition, their joint status comes to an end. In terms of the Apex court judgments, to affect a partition all that is necessary is a definite and unequivocal/clear indication of intention by the members of the HUF to separate themselves from the family. Partition can be done through agreement between the members which may be written or oral and partition can also be done through courts if there is any dispute relating to the share or allocation of properties.

What are the procedures to create a HUF and define the formation of HUF?

A larger joint Hindu family i.e. HUF may have small branches through their male members who may have their own descendants (children) and spouse. Such small families within large HUF, on partition when separated from the principal HUF, form new HUF. Some time there may be situation when a single male member get separated from the HUF, he will not constitute HUF as being sole member but when he gets married, he and his wife may constitute HUF.   A HUF also comes into being when previously partitioned members can reunite for formation of bigger HUF.  Therefore, partition, marriage and reunion are three modes of formation of HUF.

Who can own HUF property and does HUF include the wives and daughters in the property transaction?

Before coming into being of Hindu Succession Act, 1956 (1956 Act), HUF properties were owned by male members of the family. Females had no right as that of males in HUF properties. 1956 Act brought major changes to Female’s rights in ancestral/HUF properties under Mitakshara School. Females (daughter, wife and mother) have been given right equal to son of the deceased male to his self-acquired properties; and share of such deceased male in the undivided HUF properties were also opened to be shared with daughter, wife/widow and mother.  Idea behind this law was to give more social protection to females.

One thing that can be noted is that a daughter, wife or mother did not have directly any right in HUF properties. Their right accrued only after the death of related male member to them. Their right to the HUF property comes not in their direct individual capacity but this only arises (as heirs of the deceased) after the death of the male member with whom they are directly related to. Therefore, due to this reason they were also unable to claim partition during the life time of their related male member of the HUF family. And if, the male member executes a Will for his share in HUF property, female’s rights to inherit would also go. While, son having independent right can claim partition of HUF property during the lifetime of his father.

After the amendment brought in 1956 Act, in 2005, Section 6 recognizes daughter as coparcener as of son in joint Hindu family governed by Mitakshara law and now she has right by birth in HUF properties.

However, a married woman does not have right in properties of her husband’s family. She can only have right in such properties as widow i.e. after death of her husband. After divorce with her husband, this right also dilutes. Now, the Government is considering to introduce amendment in law to give the wife a clearly-defined share in the husband’s “immovable residential property” in case of a split.

Does HUF arise from a contract?

It cannot be created by contract of the parties except by adoption or marriage which are generally not known as contract in Hindus. Marriage is a contract in Muslim law, but, in Hindu law it is a sacrament. Through adoption and marriage a stranger may come to HUF and become member of the Hindu family.

Mention two principle schools of Hindu law.

Principle schools of Hindu Law are Mitakshara and Dayabhaga, however, some other systems are also prevalent in India.

Dayabhaga dominates State of West Bengal, in which father has the all power of joint family property and no member of the family can enforce to divided the property or to claim his share as long as the father is alive.

Mitakshara controls the rest of part of India.  Sons get interest in the family/ancestral property by his birth.  In this school, son can claim partition in ancestral property during the life time of his father.  After amendment done in 2005 in Hindu Succession Act 1956, daughters have also been given right like son. Now, they (daughters) can also claim partition in HUF property during life time of her father.

In how many ways HUF can acquire properties?

HUF acquires property through all general modes of acquisition of property like inheritance, partition, will, purchase, gift, individual property of male member thrown into joint stock, properties earned/purchased through joint efforts of members of HUF using existing HUF properties etc except in cases properties  falling under The Hindu Gains of Learning Act, 1930. In this category properties acquired by salaried class are not included. The HUFs are reduced to non-existent properties and person living in ancestral houses in remote areas have to entertain these coparceners (living and earning outside) but person living in ancestral property have no share in their (outsider’s properties) share.

Mention some important points one should know about HUF?

1. Generally senior male member of HUF acts as Karta(Head) of the joint family. Karta can sell the property owned in the name of HUF only in case of legal necessity for family needs and for benefit of the estate. However, it may be possible that, in future, such sale can be challenged.
2. A female can become a karta, but only when the male members are minors or are not in a position (like mentally sick) to manage the affairs of HUF.
3. Now daughters have same rights as of sons in HUF properties. Daughters can claim their right in ancestral agricultural properties as well as in urban properties.
4. If oral partition has been done, its memorandum should be made. However, better would be to do partition of HUF properties through registered instrument or through court of law.
5. Interest of all the members should be taken care of otherwise the partition done can be easily challenged in future.
6. If there is any record keeping agency like in case of agricultural land, revenue department; one should record its name against the HUF property.
7. Purchaser should be more vigilant while dealing such properties. They should enquire about the family tree and also with the neighbors and should also get Public Notice published in news papers.

What are the advantages and disadvantages of HUF property & partition?

Interest of members in HUF properties keep fluctuating and to some extent partition can fix this fluctuation. Therefore, legally, HUF property has not much significance. Rather most of the time it becomes very difficult to deal in rights of the interested parties. However, formation of HUF may be beneficial for tax planning.

On many occasions, the HUF property might be such which cannot be partitioned by metes and bound and courts generally ask for sale of entire property and to distribute sale proceeds in the family members. This looks rational, but, a member who does not want to sell such property and wants to live there, for reasons such as he may not have resources to buy such property or may have emotional attachment to such property, then this would amount to compelling him  to agree to such sales.

It is hereby suggested these properties should be recorded as HUF property (generally these properties were recorded in individual name of the Karta) otherwise karta will dispose of these properties without informing or safeguarding the interest of other coparceners.

Why HUF property is considered as a Pandora box?

It is not easy to know exact numbers of members who are having interest in the HUF property. The persons in possession of HUF Property; may represent that they are the only entitled ones to such property and have absolute authority to sale or deal with it, but there may be some more members not in possession and also not living nearby to such property. In such situation transaction done in such properties would be vulnerable to challenge in the court of law.

Names of female members (specially married daughters) and minors entitled in suchHUFproperty; are hardly disclosed in HUF properties sale transactions.  Therefore, there is always a possibility to challenge such transactions.

Generally, title documents of HUF property exist in name of ancestors; therefore, purchaser who is going to purchase such property rarely gets confidence about title of the property.

Mainly due to these reasons HUF property is considered as a Pandora box.

Through HUF the people avail tax benefits without showing the real source of fund. HUF has become a great source of legal avoidance of tax. This is the high time that while the sanctity of HUF should be maintained which is basic to the Indian ethos as reflected in Samriti and Dharmasharta, at the same time legal provisions should be made to make broader and more meaningful.