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PETITIONER: INSPECTOR ASSISTANT COMMISSIONER OF AGRICULTURAL INCOME  TAX

       Vs.

RESPONDENT: V.K. RAMUNNI PANIKKAR, RECEIVER OF ZOMORINESTATE

DATE OF JUDGMENT05/10/1971

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. GROVER, A.N.

CITATION:  1971 AIR 2513            1972 SCR  (1) 934

ACT: Hindu Succession Act, 1956, s. 7(3) and Kerala  Agricultural Income-tax  Act,  1950, s. 24(1)-Sthani liable to  pay  tax- Death of Sthani--Liability of other members of Tarwad.

HEADNOTE: Section 7(3) of the Hindu Succession Act, 1956, by a fiction deems  that the Sthanam property stands divided amongst  the sthani and the :members of his tarwad, a split second before the death of the sthani.  The members of the tarwad took the property  as  co-owners and not as heirs  ,of  the  deceased sthani.  The purpose of the fiction was to gradually abolish the  sthanams  and  to provide for  the  devolution  of  the sthanam properties on the members of sthani’s tarwad  except as regards one per capita share which the personal heirs  of the sthani are to inherit as the heirs of the sthani. On May 2, 1958, the Zamorin of Calicut died.  In respect  of the  agricultural income-tax under the  Kerala  Agricultural Income-tax  Act,  1950, which he was liable to pay  for  the period  November 1, 1956 to March 31, 1958, the  person  who took  possession of the sthanam property claiming to be  the succeeding  sthani  was  assessed to tax  as  the  sursthani After   his  death,  the  Agricultural  Income-tax   Officer attempted to collect the tax from the successive senior most members  of  the  Zamorin’s family.   The  validity  of  the assessment  was challenged and the High Court held that  the liability  to pay the tax and penalty imposed was only  that of  the personal heirs of the person who took possession  of the  properties immediately after the death of the  Zamorin, and  that, only to the extent of the assets of  that  person which  had come into their possession.  Thereafter,  it  was ordered  by  the  Department that,  as  the  entire  Sthanam property  bad devolved on the 693 members of the tarwad  all those  persons were liable to pay the tax and  penalty,  but the order was made without notice to the parties.  When  the authorities threatened to proceed against the properties  in the  hands of the Receivers, who were appointed in the  par- tition  suit in the Zamorin’s family, the Receivers filed  a writ  petition  challenging the right  of  the  Agricultural Income-tax Officer to collect the arrears of tax and penalty from  out of the properties in their hands.  The High  Court quashed  the demand holding that the only persons  who  were liable to pay the tax were the personal heirs of the Zamorin

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as it was they who had received the income. Dismissing the appeal to this Court, HELD:Under the law relating to sthanams the sthani was alone entitled to the income of the sthanam properties.  Therefore the  income  of the sthanam property in  the  present  case, during November 1, 1956 to March 31, 1958 was the  exclusive property of the Zamorin who has the sthani.  Hence, he alone was  liable to pay the tax.  Under the Agricultural  Income- tax Act, no charge is created on property in respect of  the arrears  of agricultural income-tax.  Under s. 24(1) of  the Act the liability to pay 935 the arrears of tax due from the deceased sthani fell on  his personal  heirs and that, only to the extent  they  received any  of his assets.  The assessment made of the  person  who took possession of the properties after the Zamorin’s  death as the successor sthani was an invalid assessment,  because, legally  he  never became the sthani.  On the death  of  the Zamorin the sthanam came to an end and the only persons  who could  have represented the estate of the Zamorin  were  his personal  heirs who, however, were not made parties  to  the assessment. [938 F-H; 939 A-B] Income-tax Officer, Kozhikode v. Mrs. Susheela Sadananda, 57 I.T.R.  168,  K.  K. Kochuni v. State of  Madras,  [1960]  3 S.C.R.  887  and  M. K. B. Menon v.  Asstt.   Controller  of Estate Duty, C.A. No. 1137/1969 dt. 5-10-1971, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1397 of 1969. Appeal from the judgment and order dated January 1, 1968 of theKerala High Court in O. P. No. 2413 of 1965. V.A.Seyid  Muhammad and A. G. Pudissery, for the  appellant. alias A.   R. Somanatha Iyer and P. Kesava Pillai          for the respondent. The Judgment of the Court was delivered by Hegde  J. One K. C. Sreemanavikraman alias Eattan  Raja  was the Zamorin of Calicut.  He was a Sthanamdar.  In respect of the  sthanam  property, he was liable  to  pay  agricultural income-tax  under  the Kerala Agricultural  Income-tax  Act, 1950 (in brief the Act) for the period from November 1, 1956 to  March  31, 1958.  Sreemanavikraman Raja died on  May  2, 1958.   Thereafter on May 12, 1958, Sthanam Properties  (As- sumption  of  Temporary Management and  Control)  and  Hindu Succession  (Amendment Act 1958), Act 28 of 1958  came  into force.   After  the  death  of  Sreemanavikraman  Raja,  the sthanam property was taken possession of by Kunhammaman Raja claiming to be the succeeding sthanamdar.  In respect of the assessment due for the, period November 1, 1956 to March 31, 1958, Kunhammaman Raja was assessed to tax as the  successor sthanamdar.  The said Kunhammaman Raja died on December  23, 1960 without making any payment.  Thereafter the next senior most  member  in the Zamorin family, P. C.  Cheria  Kunjunni Raja took possession of the sthanam property.  He also  died soon  after.  During the life time of P. C. Cheria  Kunjunni Raja, the Agricultural Income-tax Officer imposed a  penalty of  Rs.  5,000/-  for non-payment of  the  tax  referred  to earlier.   P.  C.  Cheria Kunjunni Raja paid a  sum  of  Rs. 20,100/out   of  the  tax  and  penalty  due,  as   coercive proceedings were threatened to be taken against him.  On the death  of P. C. Cheria Kunjunni Raja, the next  senior  most member in the Zamorin family was K. C. Cheria Kunjunni Raja. When the

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936 Agricultural income-tax Officer attempted to collect the tax imposed under the assessment order mentioned earlier from K. C.  Cheria  Kunjunni Raja, he filed a petition  before  that officer  representing  that he had nothing to  do  with  the sthanam  property  and the sthanam  property  stood  divided under s. 7(3) of the Hindu Succession Act, 1956 on the death of  Sreemanavikraman on May 2, 1958.  The  Hindu  Succession Act,  1956 had come into force on June 18, 1956.  After  the receipt of that representation, the Agricultural  Income-tax Officer  passed an order on March 25, 1963 stating  that  as the  successors  of  the Zamorin who died  on  2-5-1958  had designated  themselves  as  Zamorin  Rajas,  they  have  the liability  to  pay the arrears due to  the  Government.   He directed  K.  C.  Cheria Kunjunni Raja to pay  the  tax  and penalty  imposed.   Aggrieved  by that order  K.  C.  Cheria Kunjunni Raja filed a writ petition in the Kerala High Court challenging  the  validity  of  the  threatened  proceedings against  him.  The  High Court quashed  the  demand  notices issued  by  the  Agricultural Income-tax Officer  to  K.  C. Cheria  Kunjunni Raja.  It held that the  assessment  having been made on Kunhammaman Raja, his share alone was liable to be  proceeded against.  It further held that the  liability’ to  pay that tax and penalty was that of the personal  heirs of  Kunhammaman Raja and that only to the extent,  they  had come into possession of the assets of the said Raja. Thereafter the Inspecting Assistant Commissioner,  Kozhikode ordered that as the entire sthanam property had devolved  on the  693 members, all those persons were liable to  pay  the arrears of the tax and penalty.  This order was made without notice to the parties. Meanwhile in the partition suit in the Zamorin’s family, the court appointed two joint receivers.  The receivers objected to the order of the Assistant Commissioner  demanding  the arrears  of  tax  referred  to  earlier  from  them.    They represented  to  him that the estate in their hands  is  not liable to pay the arrears of tax and penalty demanded.   But those representations were not accepted by the  authorities. They  threatened to proceed against the assets in the  hands of  the receivers.  At that stage, the receivers  filed  the writ  petition from which this appeal arises.  Therein  they challenged the right of the Agricultural Income-tax  Officer to  collect the arrears of tax and penalty from out  of  the properties  in  their hands.  The question before  the  High Court  was  whether the tax due from Manavikraman  Raja  was realisable  from the assets in the hands of  the  receivers. The writ petition was heard by a full bench of three judges. By  a majority, the High Court came to the  conclusion  that the only persons who were liable to pay the tax in  question were the personal heirs 937 of  Sreemanavikraman Raja who had received the income.   The Court  held that in view of s. 7(3) of the Hindu  Succession Act,  the sthanam property stood divided at the time of  the death of Sreemanavikraman Raja into 693 shares, out of which 692 shares went to members of the Tarwad of the deceased and one  share  to  his Personal heirs-wife  and  children.   It opined  that the tax due from Manavikraman Raja  could  have been  levied and collected only from his personal  heirs  as they alone were liable to pay that tax.  As a result of that conclusion, it quashed the impugned demand. Section 7 of the Hindu Succession Act provides for the devo- lution  of  interest in the property of a  tarwad,  tavazhi, kutumba, kavaru, or illom.  Section 7(3) provides :               "Notwithstanding anything contained in  sub-s.

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             (1)   when   a  sthanamdar  dies   after   the               commencement of this Act, the sthanam property               held by him shall devolve upon the members  of               the  family to which the  sthanamdar  belonged               and  the  heirs of the sthanamdar  as  if  the               sthanam  property had been divided per  capita               immediately before the death of the sthanamdar               among  himself  and  all the  members  of  his               family  then living and the shares falling  to               the  members of his family a the heirs of  the               sthanamdar  shall  be held by  them  as  their               separate property."               "Explanation-For  the  purposes of  this  sub-               section  the  family  of  a  sthanamdar  shall               include  every branch of that family,  whether               divided  or  undivided, the  male  members  of               which  would have been entitled by any  custom               or  usage  to  succeed  to  the  position   of               sthanamdar if this Act had not been passed." We have considered the scope of this section in Civil Appeal No.  1137 of 1969.  Hence it is sufficient for  our  present purpose  to  state  that in view of s.  7(3)  of  the  Hindu Succession  Act,  it  must  be held that  on  the  death  of Sreemanavikaraman  Raja, each of the members of  his  tarwad took a per capita share in the sthanam property as co-owners and  not  as his heirs.  His personal heirs took  the  share which the deceased was deemed to have got as his share  when he  was taking his last breath.  Section 7(3) of  the  Hindu Succession  Act  embodies a fiction.  The  purpose  of  that fiction was to gradually abolish the sthanams and to provide for the devolution of the sthanam properties on the  members of  sthani’s tarwad except as regards one per  capita  share which the personal heirs of the sthanamdar are to inherit as the heirs of the sthanamdar. 938 The  nature of a sthanam was considered by this Court in  K. K.  Kochuni  and ors. v. The State of Madras  and  ors.  (1) Therein  this Court observed that according to  the  custom, Sthanam  means  a position of dignity and  respect  and  for maintaining that position, properties were attached to  that office  and  the  same was held by the  "stani".   Stani  is solely  entitled to the income of that property  during  his life  time.   The  senior most member of  a  tarwad  usually became  the  sthanamdar  of the  sthanam  attached  to  that tarwad.   On  his succession to stanom. he  stood  separated from  the rest of the family.  He solely became entitled  to the  stanom property but he gave up his right in the  tarwad property.  All the same he and the members of his tarwad had the same right of succession to the properties of each other as if his severance from the family had been the result  not of  his succession to the stanom, but a  voluntary  division between him and the rest of the family. Whatever  might have been the customary law, s. 7(3) of  the Hindu Succession Act-the validity of which was not in  issue before us-by a fiction deems that the sthanam property stood divided  amongst the stani and the members of his tarwad,  a split  second  before his death.  From the language  of  the section. it is clear that the members of the tarwad took the property  as co-owners and not as the heirs of the  deceased stani.   This  fiction  was  created  for  the  purpose   of providing for the devolution of the sthanam properties.  The Act  28  of  1958  came into force only  on  May  12,  1958. Therefore  that  Act cannot have any effect on  the  sthanam with which we are concerned in this case because that stanom stood destroyed on May 2, 1958.  Hence we need not refer  to

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the provisions of that Act. The  income of the sthanam property during November 1,  1956 to  March 31, 1958 was the exclusive property  of  Sreemana- vikaraman  Raja.   He  was alone entitled  to  that  income. Therefore  he  alone was liable to pay the tax.   Under  the Agricultural  ,Income-tax  Act,  no  charge  is  created  on property  in respect of the arrears of agricultural  income- tax.  That being so, the liability to pay the arrears of tax due  from the deceased stani fell on his personal heirs  and that  only  to the extent they received any of  his  assets. This  position  is  clear from S. 24(1)  of  the  Act  which provides   that   "when  a  person   dies,   his   executor, administrator or other legal representative shall be  liable to  pay  out  of the estate of the deceased  person  to  the extent to which the estate is capable of meeting the charge, the  agricultural  income-tax assessed as  payable  by  such person  or any agriculture income-tax which would have  been payable by him under this Act, if be had not died". (1)  [1960] 3 S.C.R. 887. 939 The assessment made on Kunjunni Raja in his capacity as  the successor sthanamdar was an invalid assessment.  Legally he, never  became  the sthanamdar.  There was no  sthanam  after the,  death  of  Manavikraman  Raja.   With  the  death   of Manavikraman  Raja  the sthanam came to an  end.   The  only persons   who   could  have  represented   the   estate   of Sreemanavikraman  Raja were his personal heirs.   They  were not  made  parties  to the assessment.   No  notice  of  the assessment proceedings was given to them.  Kanjunni Raja was not  one  of  his  legal representatives.   Even  if  it  is considered  that the sthanam properties had devolved on  the members  of the tarwad by succession.  Kanjunni  Raja  alone could  not  have represented the entire body  of  successors numbering  692.   There  was no question of  any  bona  fide enquiry  by the assessing authority.  It was clearly a  case of  misunderstanding the legal position.  Further,  it  does not  appear  that Kunjunni Raja was assessed  as  the  legal representative  of the deceased stani.  He appears  to  have been assessed as the successor stani liable to pay the debts due  from the estate.  Hence the assessment was not made  in accordance  with law, see Income-tax Officer,  Kozhikode  v. Mrs.  Susheela  Sadananda and anr.(1). In this view  of  the matter  it  is not necessary for us to  consider  the  other provisions  of  the  Act providing for  the  assessment  and collection of the tax due from a deceased person. In  the result this appeal fails and the same  is  dismissed with costs. V.P.S.                                                Appeal dismissed. (1) 57 I.T.R. 168 940