PERIA KARUPPAN CHETTIAR v. COMMISSIONER OF STAMPS

039-NLR-NLR-V-38-PERIA-KARUPPAN-CHETTIAR-v.-COMMISSIONER-OF-STAMPS.pdf


Peria Karuppan Chettiar v. Commissioner of Stamps.
201
1936
Present: Moseley J. and Fernando A.J.
PERIA KARUPPAN CHETTIAR v. COMMISSIONEROF STAMPS.8—D. C. Colombo, 6,447.
Estate duty—Hindu joint family—Business carried by a member—Districtproperty—Separate acquisitions—Burden of proof—Liability to estateduty.
A member of a Hindu joint family may carry on business by himselfin such a way as to make that business or the profits of it his ownproperty as distinct from the property of' the family. The burden ofproving that any particular property is joint family property rests onthe party asserting it.
In order to establish that the property is joint it must be proved thatit was purchased with joint family funds or that it was produced out ofthe joint family property or by joint labour.
Money received from an ancestor by way of gift or loan is not ancestralproperty as the term is understood in Hindu law.
T
HIS was an appeal from the assessment of estate duty made by theCommissioner of Stamps on the estate of one M. R. P. L. P. R.
Muttu Karuppan Chettiar. The deceased, who left an estate consistingof movable and immovable property in Ceylon, carried on business atColombo and Kandy. It was claimed for the deceased that he was themember of a Hindu joint family and that with regard to his movableproperty, the Hindu law applied. The learned District Judge held thatthe deceased was the owner and proprietor of the business carried on inColombo under the vilasam M. R. P. L. P. R. and a half share of thebusiness carried on at Kandy under the vilasam of M. R. P. L. M. T. T.;that the immovable property in Ceylon passed to his heirs on his deathin accordance with the law of Ceylon and that the estate was liable topay duty on its full value. With regard to movable property also heheld that the estate duty was payable in respect of the entire interestwhich stood in the name of the deceased at the time of his death.
N. Nadarajah (with him E. B. Wikramanayake), for administrator,appellant.—Money that found nucleus of the capital of the firm inquestion was ancestral property. Income was assessed on that basis inIndia for the purpose of Income Tax. See documents A 5 to A 12.Returns were made on the basis that this firm was the property of a jointHindu family. This system has been recognized in Ceylon. (AdaicappaChetty v. Cook & Sons1; also Annamalai Chetty v. Thornhill'.)
[Basnayake C.C. objects that the Court cannot consider Hindu lawwithout evidence of that law being properly placed before the Court.]Section 38 and 45 of the Evidence Ordinance deal with questions offoreign law. Any report purporting to be a ruling of a Court of suchcountry would be relevant.
> 31 N. L. R. 385 at 405.
* 29 N. L. R. 225 at 229.
202
Peria Karuppan Chettiar v. Commissioner of Stamps.
[Basnaydke C.C.—The report must be duly produced. Section^ “^38merely says it is relevant. It must also be proved. The only method ofproving it must be by production. Foreign law is not a question of law.It is a question of fact (Rex v. Baba').]
No production is necessary. (10 Calcutta 140 ; 38 Madras 466.) Whocan produce such a document except a witness ? Crown Counsel himselfcited Mulla in the lower Court. Our law is different from the English lawin this respect.
[Moseley J.—Is not the objection purely technical ?]
Basnaydke C.C. —No. It is a question of evidence. Foreign law isa question of fact. The trial Judge should consider it and give his opinion.
The characteristics of the joint-family system are laid down in11 Moore’s Indian Appeals 75 at 89. No member can say that hehas a certain definite share except where the property is partitioned.There is community of interest and unity of possession. (40 Calcutta 784.)Where a member of such a family dies he does not die possessed of anyproperty. The remaining members take by survivorship and not bysuccession. (9 Moore’s Indian Appeals 539 at 611.) The deceased was amember of a joint Hindu family. Member of such a family can make adonation. Firm started with a donation from family funds
Basnaydke C.C., for respondent.—Evidence shows conclusively thatdeceased traded on his own and not as a member of a joint family.Conduct of deceased for the last twenty years shows it. It is not opento the appellant to plead that he made statements in ignorance of the law.See section 115 of Evidence Ordinance. If the appellant is a member of ajoint Hindu family his position is not even now correctly put because hehad some children living before his father died and they would also havesome interest in the property. The contents of A5 to A12 have not beenproved.
[Moseley J.—What was the object of the deceased in representingin India that he was a member of a joint Hindu family ?]
There is no evidence that he did so. There is evidence that the IncomeTax authorities treated him on that basis. A Hindu is not necessarily amember of a joint family. Even if he is, he may hold property that is notjoint property. (Mulla 237.) He may have self-acquired property. Theevidence in this case is that the property was self-acquired. (Mulla 243,s. 223 (5).) A person cannot alienate the joint property without the con-sent of the other members of the family. Ceylon Income Tax Ordinancecontemplates property of joint family. (Section 2.) No such represent?tion was made to the Ceylon Income Tax authorities. There was apartition of the ancestral property in 1918. Joint family does not raisea presumption of joint family property. (Mulla p. 228, ss. 212 and 213.)No evidence that property of this business was ancestral property.Evidence on the contrary is that appellant’s father left no propertyin Ceylon. Appellant gave notice to the Registrar of Business Namesof cessation of business. A joint Hindu business cannot cease. Nopresumption that a business carried on by a member of a joint familyis a joint family business.
« 6 N.L. R. 35
f’ERNANDO A.J.—Peria Karuppen Chettiar v. Commissioner of Stamps. 203
Nadarajah, in reply.—Indian Income Tax returns are not only admis-sible but relevant under section 13 (1) (a) of the Evidence Ordinance(Lebbe v. Lebbe'). (Amir Ali, 9th ed., at 177.) Section 32 (7) refers tosection 13 (1). This is a statement by a person who cannot be calledbecause he is not subject to the process of the Court. This is an instance ofan assertion of a right. Father and manager of joint family can donate.(Gout, para. 1267.) An admission on a point of law does not bind aparty in appeal. (Eliatamby v. Gabriel'.)
Cur. adv. vult.
October 23, 1936. Fernando A.J.—
This is an appeal against the assessment of e'state duty made by theCommissioner of Stamps, on the estate of M. R. P. L. P. R. MuttuKaruppan Chettiar who died in India on February 9, 1933. He leftan estate consisting of movable and immovable property, and his heirsare said to be his two sons, Peria Karuppan Chettiar the administratorand Kumarappan Chettiar. The deceased carried on business in Ceylon,and it was stated by the appellant that he was entitled to a one-thirdshare of the business carried on in Colombo under the vilasam M. R. P.
P. R., and to one-sixth of the business carried on in Kandy under thevilasam M. R. P. L. M. T. T., and the case for the appellant was that thedeceased was a member of a Hindu undivided joint family, whereas theCommissioner of Stamps appears to have made his assessment on thefooting that the deceased was the sole proprietor of the business inColombo and had a half share in the business carried on in Kandy.
The two firms M. R. P. L. P. R. and M. R. P. L. M. T. T. owned propertyin Ceylon both movable and immovable, and with regard to the immovableproperty it was admitted in appeal that that property would devolve onthe heirs of the deceased according to the law of Ceylon, and the claimthat the deceased was a member of a Hindu joint family was pressed onlywith regard to the movable property of the deceased, which it wassubmitted would be governed by the Hindu law.
At the inquiry in the District Court, it was proved that there was abusiness in Ceylon carried on by the deceased’s father ‘under the vilasam
M.R. P. L. and that that business was wound up in 1918. The proprie-tors of that business according to the appellant were Periannan, thefather of the deceased, and three uncles of the deceased named, MuttuRaman, Murugappa, and Muttu Karuppan, and the appellant’s case isthat in 1918 the business of M. R. P. L. was wound up and the fourbrothers started four separate firms one of which was M. R. P. L. P. R.,which was started by Periannan the father of the deceased. The appellantthen submits that the firm of M. R. P. L. P. R. started business with capitalderived from the firm of M. R. P. L., and the assets taken from the firmof M. R. P. L. were ancestral property in the hands of the deceased, withthe results that the business of M. R. P. L. P. R. must itself be regarded asancestral property. He then submitted that Muttu Karuppan was themanager of a Hindu joint family and that his two sons the administratorand Kumarappan became entitled to share in the joint family businessnot by succession to Muttu Karuppan, but immediately on the dates of
> 2 C. A. C. I.* 25 N. L. R. 374.
n/38
204 FERNANDO A.J.—Peria Karuppan Chettiar v. Commissioner of Stamps.
their respective births, that is to say, long before the death of MuttuKaruppan. At the time Muttu Karuppan died there were not only thetwo sons, the administrator and Kumarappan, but three grandsons of thedeceased, namely, the sons of the administrator and Kumarappan who onthis footing would all be entitled to shares in the business from the time oftheir respective births.
Even if we were to assume that Muttu Karuppan was a member of aHindu joint family, it does not follow that all his property must necessarilybe the property of that family, for it is admitted that a member of aHindu joint family can carry on business by himself in such a way as tomake that business, or the profits of it, his own property as distinct fromthe property of the family, and it was to meet this difficulty that theappellant contended that the assets with which the deceased startedbusiness in Ceylon as M. R. P. L. P. R. and M. R. P. L. M. T. T. wereassets derived by him from his father and therefore ancestral property.
It was contended on the other hand for the Commissioner of Stamps thatthe appellant himself in his original application to this Court for the grantof sole testamentary jurisdiction did not suggest that the deceased wasa member of an undivided joint Hindu family, and that the deceasedhimself had transferred the business in Kandy apparently on the footingthat it was his sole property. It was also proved that in D. C. No. 49,541,the appellant himself had given evidence on the footing that the businessof M. R. P. L. P. R. was the sole business of his father, and it was con-tended for the Commissioner of Stamps that the conduct of the appellantand of his father indicated that the business in Ceylon was the soleproperty of the deceased. As far as the appellant was concerned, hisCounsel relied on certain returns made by the deceased to the Income TaxDepartment in India during the years 1927 to 1934. After consideringall the evidence placed before him, the learned District Judge held thatthe deceased was the owner and proprietor of the business carried on inColombo under the vilasam M. R. P. L. P. R., and of a half share of thebusiness carried pn in Kandy under the name of M. R. P. L. M. T. T.He then proceeded to hold that the immovable property in Ceylon passedto the heirs of the deceased on his death in accordance with the law ofCeylon and that the estate was liable to pay estate duty on the full valueof the immovable property owned by the deceased. With regard to themovable property, he held that estate duty was payable in respect of theentire interest which stood in the name of the deceased at the time of hisdeath in the two firms M. R. P. L. P. R. and M. R. P. L. M. T. T.
With regard to the law that governs an undivided Hindu joint-familysubmissions were made by Counsel for the appellant in the District Courtbased on Gout's Commentary on the Hindu Code, and Counsel for theCommissioner of Stamps appears to have relied on certain passages inMulla’s Hindu Law. At the same time an objection appears to have beentaken under section 38 and 45 of the Evidence Ordinance. Section 38provides that when the Court has to form an opinon as to the law of anycountry any statement of such law contained in a book purporting to beprinted or published under the authority of the Government of suchcountry and to contain any such law, as well as any report of a ruling ofthe Courts of such country contained in a book purporting to be a report
FERNANDO A.J.—Peria Karuppan Chetiiar v. Commissioner of Stamps. 205
of such rulings is relevant, and section 45 provides that with regard toforeign law, the opinions on the point of persons specially skilled in suchforeign law are relevant facts. Counsel for the appellant referred to thecases of Anamalai Chetty v. Thornhilland Adaicappa Chetty v. Cook &Sons In Anamalai Chetty v. Thornhill {supra) Schneider J. deals withsome aspects of a Hindu joint family, and at page 229 he says that a NattuKottai Chetty is born into business and for business alone. At birth heacquires rights in his father’s business as a member of a joint Hindufamily. At an early age he takes an active part in the old business, andoften also when quite young, starts a business of his own. In AdaicappaChetty v. Cook & Sons (supra) Drieberg J. also appears to have recognizedthe existence of the joint Hindu family system among the Chetties, “ theyare Hindus from South India ”, he says, “ among whom joint familysystem prevails ”. It is clear that the respondent and his father do notconstitute a firm as it is defined in the Ordinance, that is to say, two oYmore individuals who have entered into partnership with one anotherwith a view to carrying on business for profit. Such interest in thebusiness as the respondent has was acquired at birth. It cannot be saidthat he and his father entered into partnership. In view of the provi-sions of the Evidence Ordinance and of these decisions and having regardto the fact that the learned District Judge appears to have examined theauthorities that were cited before him, we indicated to Counsel during theargument that we would allow the passages in Gour and Mulla, whichhad been referred to in the District Court, and the reports of any cases inthe Indian Courts on the joint Hindu family system to be cited before usfor the purposes of this case, because it appeared to us necessary that weshould consider the Hindu law on this point in order to see whether theappellant is entitled to succeed in his contention that the movableproperty in Ceylon of the deceased was not his sole property but theproperty of the joint Hindu family of which he is said to have been amember.
Now the contention for the appellant is that the deceased was amember of a joint undivided Hindu family. The learned District Judgewhilst holding that the burden of proving that he was a member of a jointfamily was on the appellant, appears to have held or perhaps assumedthat the deceased was a member of a joint Hindu family. The nextquestion that arises is whether the property in question in this case, thatis to say, the movable property of the firm M. R. P. L. P. R. and a halfshare of the property of the firm M. R. P. L. M. T. T. was the property ofthat joint Hindu family, and on this it is clear from the authorities thatthere is no presumption. “ Assuming ”, says Gour, “ that a family isnormal and that as such it is presumably joint, it does not thence followthat it has joint property, since there is no presumption that every jointfamily necessarily possesses joint property. Consequently unless thenucleus of family property is admitted or proved the burden of provingthe existence of joint property lies on the claimant. If in any case theplaintiff alleges that any property is joint property, it is for him to proveit, which he may do either by direct evidence proving that fact, or by theindirect evidence of establishing a nucleus and by the application of the
1 3J N. L. S. 385.
1 29 X. L. R. 225.
206 FERNANDO A.J.—Peria Karuppan Chettiar v. Commissioner of Stamps.
rule of the Hindu law that whatever has been acquired with the help ofthe nucleus becomes impressed with its own character (Page 685,paragraph 1375.) Mulla adopts the same view at page 256. “ There isno presumption that a family because it is joint possesses joint propertyor any property. The burden of proving that any particular propertyis joint family property rests on the party asserting it. To render theproperty joint, the plaintiff must prove that it was purchased with jointfamily funds, or that it was produced out of the joint family property,or by joint labour. None of these alternatives is a matter of legal pre-sumption ”. He also states at page 257, that “ a member of a jointfamily who engages in trade can make separate acquisitions of propertyfor his own benefit; and unless it can be shown that the business grewfrom a nucleus of joint family property or that the earnings were blendedwith joint family estate, they remain his self-acquired property ”.
Assuming then that the deceased was a member of a joint Hindufamily, the burden is on the appellant to show that the property inquestion was joint property, and for this purpose he must prove, eitherthat it was purchased with joint family funds, or that it was producedout of the joint family property. Counsel for the appellant contendedthat there was proof in this case that the business of M. R. P. L. P. R.was started with funds that the deceased obtained from his father, andthat the nucleus of the business was therefore ancestral property. Theevidence seems to show that there were four brothers, Periannan, MuttuRaman, Murugappa, and Muttu Karuppan, who at one time carried onbusiness together in Ceylon under the vilasam M. P. R. L. Of these four,Periannan was the father of the deceased Muttu Karuppan, and theevidence indicated that the joint business of the four brothers was Woundup in 1918. Muttu Karuppan then started the business of M. R. P. L.P. R. by himself, and Counsel also referred to the fact that in the accountbooks of the firm, there is an entry dated February 1, 1919, showing asum of Rs. 31,091.45 as “ credit from M. R. P. L.”. He argued fromthis that M. R. P. L. was a business of four brothers who were all sons ofPalaniappa Chettiar, and that the property with which Muttu Karuppanstarted business was his ancestral property ; but the appellant in hisevidence started that his grandfather died 10 or 12 years ago either in 1923or in 1924, and left no property in Ceylon, so then when Muttu Karuppanstarted the business of M. R. P. L. P. R. in 1918, his grandfather Periannanwas alive, and even assuming that Periannan allowed some of the moneybelonging to him as a member of M. R. P. L. to be used for the businessthat money must have been given to Muttu Karuppan by Periannan asa gift or possibly as a loan. In either event it is clear, that it was notancestral property as that term is understood in the Hindu law. Afterconsidering the authorities, Gout at page 610 submits that an acquisitionby gift from the father can no more be reasonably regarded as ancestralproperty than an acquisition from a stranger, and such an acquisitionshould then be presumed to be the son’s self-acquired property, unlessthe gift is merely a mode of partition of the patrimony. According toMulla, it may be said that the only property that can be called ancestralis property inherited by a person from his father, father’s father, orfather’s father’s father, excluding the doubltful case of property inherited
FERNANDO A.J.—Peria Karuppan Chettiar v. Coimmissioner of Stamps. 207
from a maternal grandfather. I would therefore hold that the appellanthas failed to prove that the money with which the business of M. R. P.L. P. R. was started was ancestral property within the meaning of theHindu law.
It seems also clear that both the appellant and his father dealt with thebusiness in Kandy as the sole and exclusive property of Muttu Karuppan.The appellant is 33 years old and has been in Ceylon since 1918, except forseveral short periods in which he went back to India, but he says that hecame to know that he and his father were members of an individual jointfamily only recently within the last year. It is true that on being pressedon this point he said, “All along in India I knew that my father andgrandfather were members of an undivided joint family ”, but it is signi-ficant that in the application for letters of administration, he set out thedetails of the property of his father on the footing that that property washis sole property. Questioned with regard to his application and affidavitin connection with the testamentary case, he said, “ I did not disclosethat my father was a member of a joint Hindu family. I was not awareof it at that time ”. It is also admitted that the deceased Muttu Karup-pan shortly before his death transferred his Share of the business inKandy to his two sons, a transaction which is inexplicable if MuttuKaruppan himself believed that that was the property of this jointfamily. As I have already stated there was nothing to prevent MuttuKaruppan carrying on business by himself, and if he did so that businessAvould be his sole property. It is impossible to believe that his son whowas his attorney in Ceylon for a number of years was not aware that thebusiness was a joint family business, if in fact that was its character.Nor is it possible to understand how Muttu Karuppan could have dealtwith his share of the Kandy business before his death, unless it is that herealized that the business was his sole business and could be dealt with byhim at his will.
The documents A 5 to A 12 are copies issued by an officer of the IncomeTax Department in India over certain assessment orders made in Indiawith regard to the deceased Muttu Karuppan. In each of these copiesthere is a statement with regard to the status of Muttu Karuppan, andthe status is given as a Hindu undivided family. The documents appearto have been tendered in the District Court on the footing that they werestatements made by Muttu Karuppan himself, but an examination of thedocuments shows conclusively that they were not statements of MuttuKaruppan. Counsel in appeal suggested that they were admissible asstatements made by the deceased against his own interest, and thereforeadmissible as statements under section 32 of the Evidence Ordinance,but I cannot see how these documents can be proved under section 32.It was then suggested that they were copies of a public record, and thatthe statement with regard to the Hindu undivided family must have beentaken from a statement made by Muttu Karuppan, but there is the•difficulty that assuming the statements to have been made by MuttuKaruppan, there is no proof that the statement was against his interest•at the time he made it. We are not in a position to say whether in fact
208
The King v. Seneznratne.
such a statement if made by Muttu Karuppan would or would not resultin the tax payable by him in India being reduced, because the propertyassessed was the property of a Hindu undivided family, and if the positionis that by such a statement Muttu Karuppan tried to secure a lower rateof tax than otherwise, when the statement if made by him would be in hisown interest, and not against it. It is extremely doubtful whether thedocuments are admissible at all, but even if they are'admissible, they onlyprove that the immovable property in India in respect of which certainfigures are entered as income for a year was the property of a Hinduundivided family, and that certain remittances made from Ceylon toIndia have also been accounted for as part of the income of that family,fhey do not in themselves enable us to decide whether in fact the businessin Ceylon with which alone we are concerned was itself the property of ajoint Hindu family or not.
Considering all the evidence in the case and the authorities, I come tothe conclusion that the conduct of Muttu Karuppan and of the appellanthimself proves conclusively that the business of M. R. P. L. P. R. and ahalf share of the business of M. R. P. L. M. T. T. was not a joint familybusiness of Muttu Karuppan, but his sole business. I would accordinglydismiss this appeal with costs.
Moseley J.—I agree.
Appeal dismissed.