A GUIDE TO SALES TAX ON APARTMENT BUILDINGS

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Works Contract is most questioned and frequently litigated issue in the Court of Law,and also between the purchaser of the flat and promoter.The decision of the Hon’ble Supreme Court in Gannon Dunkerleys case stating that the expression “Sale of goods as used in Seventh Schedule of Constitution has the same meaning as in Sale of Goods Act made the law commission in its sixty first report to recommend to amend the Constitution of India.Accordingly 46^th amendment was passed in 1982.This empowered the states to legislate laws to levy tax on transfer of property.The goods involved in execution of works contract may be in the form of goods or in any other form. Article 269 of the Constitution provides for levy of tax on sale or purchase of goods other than news paper.In case of interstate trade and commerce, the tax is to be levied by Government of India,but assigned to the states in which tax is leviable.Article 286 of the Indian  Constitution works as restraint on the authority of the same.

WORKS CONTRACT

One has to distinguish the difference between contract of sale of goods and contract of work.The difference is very thin.It is terms of the contract and nature of the obligation to be discharged, which distinguishes works contract from contract for sale.

In case of sale of goods, goods are delivered as they are to the purchaser, whereas in case of works contract, the goods are delivered in a modified form.This may be well explained in the purchase of readymade house, which is sale of goods and contract to construct a house, which is a works contract. In purchase of ready made house, the house is delivered as it is, whereas in case of contract for construction, the house is constructed using various materials and delivered to the purchaser.This is well explained in case HAL Vs State of Karnataka (1984) 55 STC 314.

In another case HAL Vs State of Orissa, Hon’ble Supreme Court has observed that in contract of works there is a person performing or rendering service on property, where as in case of sale of property there is individual existence of the property as a whole, which is being delivered to the purchaser.

Types of Contracts

There is no well established formula by which contract for sale and contract of work can be distinguished.Any contract which contains not only the work but also requires goods to be used may be of the following three types;

q  Contract may be for works to be done for remuneration and also for supply of goods in execution of work.This is a composite contract.

q  It may be contract of work in which use of materials is incidental to the execution of the work. This is contract for work and labour not involving sale of goods.

q  It may be contract for supply of goods where some work is required as incidental to sale.  This is purely a contract of work.

Agreements, where in land and buildings are conveyed to the prospective purchaser and proper stamp duty is paid on such conveyance are transfer of immovable property and are not liable to tax under sale tax laws.

AGREEMENT WITH BUILDER

However we shall examine cases, where developer executes General Power of Attorney in favour of builders for valuable consideration such contracts may be any of the following types;

q  Power of attorney for valuable consideration.

q For valuable consideration in part and partly by way of constructed property.

Hon’ble Supreme Court in Raheja Development Corporation Vs State of Karnataka (Appeal [Civil]) 2766 of 2000 5/5/2000 observed that “the definition of works  contract under Karnataka Sales tax is very wide and not restricted to works contract, it also includes “any agreement for carrying out either for cash or for deferred payment or for any valuable consideration, the building and construction of any movable or immovable property.

Land being immovable property is not liable for payment of sales tax.But when any construction takes on land through an independent contractor on behalf of the builder, contractor executing the work is liable to pay works contract tax.

DUAL ROLE OF DEVELOPER

We may also visualise a situation where a builder himself acts as contractor.In such situation the sales tax department considers the builder in dual capacity as contractor and as owner/builder.The department is subjecting the builder to sales tax.The relevant case is Mittal investments corporation Vs. State of Karnataka which was decided by Hon’ble high Court of Karnataka.It was held as follows;

q  If the building was first constructed and there after agreed to be sold, then it was a sale of immovable property for which no sales tax is attracted.

q  According to the agreement, some advance has been taken at the time of executing agreement and the balance amount to be paid in 15 instalments.

q It has not been established that at the time of agreement, whether construction has started by the builder.

q  The purchaser has to purchase the land from the purchaser and not from the builder.

q  It is not clear whether plans were approved, before the execution of agreement.

It was held that there is transfer of property in goods and liable for tax.  On review petition it was held, the builder would not be liable to pay sales tax under section 5B in respect of buildings which have been completed before entering into an agreement and also in respect of agreements which have been entered after the construction of the building was started.However, this was overruled by Hon’ble Supreme Court in case of K. Raheja Development Corporation Vs. State of Karnataka

INFERENCE 

The question whether a particular contract is for sale of goods or contract for work or labour is very difficult to determine. The distinctions and terms specified by various courts are not exhaustive. They mainly dwell on one or two points which have come in the cases, which are rigid and can be made applicable to all cases. The deciding factor would be the contents of contract, the circumstances of the transaction of the prevailing custom of the trade.The levy of the works contract tax is on the materials used in execution of particular contract, the property which is ultimately transferred.

KARNATAKA SALES TAX ACT

The provisions relating to works contract under Karnataka Sales Tax Act were inserted with effect from 01.08.1985 but were given effect from 1986.Section 2(29)(b) of KVAT Act deal with the Works Contract, which refers to theproperty in goods involved in execution of works contract for cash or deferred payment.Section 2 (37) defines “Works Contract” as works contract includes any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection,installation,fitting out, improvement modification, repair, or commissioning of any movable or immovable property.

The contractor has to include the sales tax in the quotation itself, so that he can collect it from the principle and pay same to the Department, if not he has to pay the sales tax on his own profit. The developer has to include this clause in the agreement to sell and collect the tax from the purchaser of flat and remit the same to the Commercial Tax Department.

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AGREEMENTS FOR SELLING OF IMMOVABLE PROPERTY

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

The pre requirement of sale of immovable property is agreement to sell. The agreement to sell contains, terms of sale, consideration, time limit, the complete description of property agreed to be sold, terms of payment, handing over possession and rights of both the parties to enforce the agreement, and penalty for not performing the contract.Generally, the purchaser pays some amount as advance amount,earnest money to seller, which is acknowledged by the seller in the agreement.

Importance of Sale Agreement:

The sale deed is a document, which contains general terms, which are similar in most of the deeds.

But the agreement to sell is a specialised document, which conceptualises the terms of contract. The skill, knowledge, experience of the advocate is reflected in drafting the agreement to sell and the clauses inserted to protect the interest of the purchaser, who has parted with his money.

There is a practise among many to avoid the sale agreements and to go directly for sale deeds. This is very risky. Agreement to sell is required to avail the bank finance. Apart from availing finance without a sale agreement nobody is bound to execute sale deed and convey the property, who may back out at the last moment. Though the purchaser had made all the arrangements for the consideration amount and stamp duty the vendor may back out if he finds another purchaser for better consideration. Likewise, even the purchaser may also back out if he finds similar property for lesser consideration. The sale agreements bind all the parties to perform the contract.

The process of sale is governed by the provisions of Transfer of Property Act. If there is any conditions in agreement to sell which vary from the rights and obligations of the seller,purchaser as detailed in Transfer of Property Act,the terms which are agreed in agreement to sell shall prevail over.If no conditions, are mentioned in agreement, the rights and obligations of seller,purchaser as detailed in Transfer of Property Act comes into force.Having paid the advance amount,earnest money, will the purchaser have any charge, lien over the property for the amounts paid. The Transfer of Property Act governs the rights and obligations of vendor and purchaser.

Rights of Agreement Holder:

In case of sale, the purchaser gets title and ownership to the property only if the transfer is affected in accordance with the law u/s 54 of T.P. Act, dealing with sale of immovable property. Sec 54 of T.P. Act states that“Sale how made – such transfer in the case of tangible immovable property of the value of one hundred rupees and upwards,--- can be made only be registered instrument.”So registration of the sale deed is mandatory and only thereafter the purchaser gets title. It also states that the agreement to sale itself does not create any interest in or charge on such property. In this kind of situation if the seller refuses to transfer the property under agreement to sale then the questions that arise for consideration are:

Ø  Whether purchaser under agreement to sale is entitled to only damages or else immovable property as per agreement?

Ø  If the purchaser under agreement to sale is in possession of immovable property can he be disposed of immovable property?

So far as first question is concerned Sec 40 of Transfer of Property Act states that “Where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property but not amounting to interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof

Ex: – “A Contracts to sell a house to ‘B’ while the contract is still in force he sells the same house to ‘C’ who has notice of the contract.  ‘B’ may enforce the contract against ‘C’ to the same extent as against ‘A’.From this we find that, the purchaser with notice of a previous contract for sale of the same property is in the eye of the law is a trustee of the prospective purchaser of previous agreement of the property so purchased.Even u/s 91 of the Trusts Act, the title of the subsequent purchaser with notice of the prior agreement is subject to the obligations created by the agreement to sell. So, the agreement holder may proceed against a purchaser of the property who had notice of contract prevailing. Sec 27(b) of the Specific Relief Act entitles the purchaser under agreement to sell to compel subsequent purchaser to execute a sale deed in his favour. 

In order to have better hold on the property agreed to be purchaser the agreement to sell may be registered, and a paper notification may be released to notify the general public about the agreement.

Purchaser in possession of the property:

For the second question as said earlier i.e.,if the purchaser under agreement to sale is in possession of the property, can he be dispossessed of the immovable property?

In this regard Sec. 53-A of the T.P, Act 1882, provides that:-

1. The transferor i.e., seller has agreed to sell for consideration any immovable property.   
2. Such agreement is in writing and signed by him.
3. The contract provides for taking possession of the property before execution and registration of sale deed.
4. In part performance of the contract, the seller has put the purchaser in possession of the property agreed to be sold.
5. The purchaser under agreement being already in possession continues in possession in part performance of the contract, provided that the purchaser has done some act in furtherance of contract.
6. The purchaser under agreement has performed or is wiling to perform his part of the contract.

Then purchaser under agreement is entitled to protect his possession of immovable property.  While agreement of sale is subsisting; some one who purchases the property with notice of prior agreement of sale his right; is subject to such prior agreement to sale.

It is to be noted this benefit can be availed of only by those who were put into possession by virtue of a legal document. A person seeking protection of doctrine of part performance has to prove that he has in part performance of the contract has taken possession of the property and in case he was already in possession he continues to be in such possession in part performance of the contract and had done some act in furtherance of the contract. In addition the purchaser under agreement has to show that he is willing to perform his part of the contract.The only course for seller in such cases is to see for payment of balance consideration.

The maximum stamp duty payable on agreement to sell without possession in Karnataka is Rs.200/- and registration charges are Rs.1,000/-

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CHOOSING HOME FINANCER

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Choosing home loan lender is a difficult task.In this competitive and aggressive home loan market, companies are all set to give you a rosy picture.Let’s see the parameters which influences in deciding your home loan lender.

Personal Relations

It is not personalised services but personal relations you have with your lender.After all,in long period of loan repayment say 15 years, you may default any EMI due to illness or social commitment or job shifting.Your financer just waiting for a chance to slap fines, interest, legal notice charges,late payment charges, and compound interest on defaulting period besides harassing with its recovering agents.

Thus giving you mental agony and force you to take extreme steps to repay it at once.Normally, it is advisable to take loan from your banker who knows you for years and some times co-operate while giving you extra time, with any obligation, to pay due EMI.Yours bankers, specially with conservative approach will give you best figure which you can repay easily.Aggressive banks will tempt you to take big loan which are not within your reach to repay in future.

Interest Rates

Often floating rates and fixed rates are taken into account while taking home loans.To take maximum advantage, you take floating rates, expecting to go further down.  Which bank announce and notified that you have been charged less from this month onwards and now your new EMI is less because of floating rates have decreased?The probability of interest rates may go up since RBI and finance ministry have cautioned banks for increasing NPA, hence banks have increased their basis points on all interest schemes.

Now even fixed rates have increased because of the notification besides floating rates.Fixed rates are easy to calculate the EMI for entire period of loan.When the rates are falling it is advisable to go for floating  interest rate but fixed rates are always better to make a commitment from your lender for entire loan period.

If you are in negative list

Some of the home loan financers have undeclared rule for disbursement.They do not finance film artist,TV artist, police, journalist, politician their own employees, self employed who do not have bank statements or any person which they feel that he can influence his position to not to repay the loan.They will entertain you and take all the papers and administrative fees and will give a stupid reason for regret.So it is better you approach banks who have no income proof scheme or no guarantor scheme.

Elephant tusk

Many home loan financers will advertise for less interest rates, but when you approach them they will ask for more interest rates giving reason that you have weak income generation plan.And there is high level risk if they finance you.

Documentation

Some of the financers have their own model set of documents which they want you to fulfill.For example,NOC from society.Often society refuses to give one sided NOCs drafted by so called learned advocates, who wants nothing but everything standing on the society’s land.Leave the financer immediately because it will never finance you without the papers.Check their list of documentation before you pay the processing fee or administration fees.

How far DSAs are responsible

DSAs are responsible till they give you cheque from their principles.After that they simply forget you since their role is over after handling you over the loan amount.They are just agents who want to solicit business and make every attempt to satisfy their principle company.After sales service cannot be expected from DSAs.It is just you and your financer, then.

Specific requirements

If you want to purchase property from your relatives or purchase rights of your co-successor then it is very difficult to make financer understand the need.Often, businessmen mortgage the property and take business loans to pay their commitments.  Home extension and improvement loans also require same type of documentation with higher interest rates.

Past record of the financers

You must have read about the re-possession of vehicles or credit card recovery by some of the banks employing notorious elements for the purposes.The management is the same for all types of loans.The  policy of the financers and goodwill among the borrowers must be rated before you shake hands for a long period of loan.

Early repayment

If you are paying early or shifting to another structure of low interest rates or just shifting your loan borrower itself then there are charges levied by the lenders.It goes up to 5% of the loan amount.Shifting of loans from one lender to another also is very cumbersome process.Your old lender will never want you to leave hence delay tactic will be applied to give back your documents or missing important documents from the file.

Make sure to take acknowledgement of all the original documents you hand over to the lender.

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COMPULSORILY REGISTERABLE PROPERTY DOCUMENTS

(Advocates,Property advocates in Bangalore,Property lawyers in Bangalore)

Registration of any document acts as notice to the public. But the registration of all the documents is not compulsory.The transfers of Property Act 1882, the Indian Registration Act 1902 have made the registration of certain documents compulsory, and others optional.

Section 54 of Transfer of Property Act 1882, stipulates that sale of immovable property value of which is one hundred rupees or more should be registered.If the value of immovable property is less than one hundred rupees,the registration of sale deed is not mandatory.But this is for academic interest only, since, the value of any immovable property will be generally more than one hundred rupees.Even the value is less than one hundred rupees; it is advisable that the deed be registered.

Section107 of Transfer of Property Act 1882,prescribes that,lease of immovable property “from year to year” or for a term exceeding one year or reserving a yearly rent must be done only by registration.The phrase from year to year, refers to a continuous lease from year to year, that is, where the landlord have no option to terminate the lease at the end of the year without notice.

Similarly the phrase,“reserving yearly rents” means that the lease has no definite period, but the annual rent is determined.The word yearly means that the lease should run year after year or atleast more than a year.In general any lease in excess of year and above should be registered.

Section 17 of Indian Registration Act 1902, deals with the documents, which require registration compulsorily.

1.  A document of gift of immovable property:Gift as everybody knows, is given in consideration of love and affection and no monetary consideration is involved.So any gift deed irrespective of the value of the gifted property needs registration.

2.     All non-testamentary documents:

a)Which create interest, right, title in immovable property the value of which is more than one hundred rupees.

b)Which extinguishes any right, interest title in the immovable property value of which is one hundred rupees or more for present or future.

c)Which declare,assign,limit or restrict the interest, title, right in immovable property, value of which is one hundred rupees or more.

3.  All non-testamentary documents which acknowledge the receipt or payment of any consideration on account of the transactions pertaining to right, title, interest in the immovable property.

4.   All non-testamentary documents transferring or assigning any decree or order, award of a court, which affect the interest, rights and title in a immovable property the value of which is one hundred rupees and above.

The documents may create, extinguish, assign, declare, limit or restrict the interest, right title in the immovable property for the present or for future, but if the value of such immovable property is one hundred rupees or more, the deed need to be registered.

Though all types of mortgages needs registrations,the mortgages created by depositing of title deeds,called as equitable mortgage,is not compulsorily registerable.Mostly, banks and financial institutions use this mode of mortgages.However memorandum of deposit of title deed should be registered

Testamentary means, relating to the WILL and non-testamentary means documents not connected with WILL.The WILL is a document, which states that who has to succeed to the assets, properties of the person, who writes the WILL (testator) after his death. WILL is not compulsorily registerable, but it is advisable to get it registered.Indian Registration Act empowers the State Government to exempt the registration of any document of lease the period of which does not exceed five years and annual rent does not exceed fifty rupees.

The important point is,what is the effect,if the document, which is compulsorily registerable, is not registered,Section 49 of Indian Registration Act deals with this situation.It states clearly that such non-registered documents do not convey transfer legally valid title to the transferee and such documents are not admitted as evidence of any transaction affecting the property referred in the document.Thus, the purchaser will not get legally valid title by a unregistered sale deed.

However,it also provides an exception, that such unregistered documents may be received as evidence in a suit for a specific performance under Specific Relief Act or as evidence of part performance of the contract as per Section 53A of Transfer of Property Act 1882 or in any other related transaction, not required to be affected by a registered instrument.It is always advisable to register any document connected with immovable property as it creates a permanent record, which are reflected in encumbrance certificates. Further such registered documents have higher value of evidence than unregistered documents.

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LITIGATION IN PROPERTY MATTERS

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Scrutiny of property documents is a very technical job which only experts in the matter can correctly carry out. If scrutiny of property documents is not carried out in a scientific way there is every likelihood of the purchaser being trapped into litigation.

The first and foremost thing to be considered by a prospective buyer of an immovable property before finalization of any deal is to get scrutinized the property documents to know about the marketable title of the property, genuineness of the document, enforceability of the title and whether the provisions of the laws, rules and regulations of the revenue authorities are complied with.Origin of the property, flow of title and present status of the property are to be verified in a systematic manner.

On being satisfied with the title of the property, the purchaser can enter into a sale agreement with the vendor.It may be noted that the property transactions are not executed through oral agreements or understandings.These transactions are executed underwritten documents which require compulsory registration. While drafting property documents, be it a sale agreement, sale deed, gift deed, mortgage deed, will, etc., every minute care is to be taken to protect the interests of the parties which in turn requires considering and dealing with the various aspects of the matter to bring out all the relevant information leaving no scope for ambiguity leading to interpretation and disputing.Failure to adhere to this golden principle would lead to misunderstanding between the parties. The fact that a large number of cases relating to property matters are filed for adjudication of the courts would itself go to show that there is a great scope for improvement in the scrutiny and drafting of property documents.

Disputable Issues

Precisely, it is not possible to categorically state as to the type of disputes which could arise from out of a property transaction.It may relate to the valid title of the vendor, time schedule for payment of sale consideration, handing over possession of the property, non- compliance of the conditions detailed in the agreement to sell by either of the parties to the transaction, share of a coparcener on partition of HUF, interpretation of the recitals of a will, and the like. Failure on your part to take care of tracing the title of the property in a proper way will lead to various types of litigation.

When disputes arise, at the first instance people try to resolve their disputes amicably and when they fail to reach an amicable settlement they knock the doors of the competent court for resolving the disputes.Readers may kindly note that when once the matter becomes sub judice, it will take very long period to get the disputes resolved by the courts and the litigants are generally prevented to deal with the property without the permission of the concerned court when the matter is sub judice.

There could be different type of relief sought from a court of law. The relief may be for specific performance,restraining the opposite party from interfering with the peaceful possession and enjoyment of the property, compensation for the loss,recovery suits, eviction suits, interpretation of a Will, declaratory suits, partition of joint family property and so on.

Types of suits/action

When the vendor of a property though initially has agreed to sell his property to the purchaser at an agreed sale consideration backs out of his commitment, the purchaser can file a suit against the vendor for specific performance of the agreement and the court on being satisfied with your claim, as a purchaser, may adjudicate and pass an order for execution of the sale deed in your favour.On failure of the vendor to transfer the property in your name despite the court's order, you may file an execution petition.On the basis of the execution petition, the court will take necessary steps to get the property registered in your name as per court's order.

Declaratory suits

Under certain circumstances, when your title to the property is challenged or found to be doubtful or defective, it is necessary for you to get an order from the court on your title for which purpose you may need to file a declaratory suit in a court of law.

Injunction

Filing suit for permanent injunction restraining the opposite party from interfering with your peaceful possession and enjoyment of the property may be necessary when your property is under the threat of interference by some third party.

Partition Suit

Similarly, when you are a co-owner of a property and when you desire to get your share in the property to be enjoyed by you separately and independently, you may have to file a suit for partition.

Money Suit

For realization of the money lent on the security of an immovable property by way of mortgage, you may have to file a suit for recovery of the money due from the Mortgagor and on his failure you may have to proceed, according to law, for realization of the money due by selling the property mortgaged.

Disputes before quasi-judicial authorities

Different types of litigations concerning the land revenue,land acquisitions, title documents etc.,are heard and disposed of by several quasi judicial authorities such as Tahsildars,Assistant Commissioners, Deputy Commissioners, Survey Settlement Commissioners. Therefore, knowledge of authority of these officers would help you a lot in your property matters.

Disputes concerning stamp duty and under valuation

District registrars of Registration and the Inspector General of Registration adjudicate the disputes concerning the stamp duty payable and under valuation of property. In case you have any grievance with regard to the valuation and the payment of stamp duty on your property transfer, you may approach these authorities for remedy to your grievance.

Landlord and Tenant disputes

In respect of disputes between the landlord and tenant falling within the jurisdiction of the Rent Controller, you may have to file petition only before the Rent Controller for relief.The disputes may relate to non-payment of rent, enhancement of rent, fixation of fair rent, eviction of the tenant, etc.

Criminal cases

To initiate cause of action for forgery and fraud in property transactions, you may have to file at the first instance a police complaint or file a complaint before the Magistrate.Criminal courts have a different structure and if you lodge a complaint, the State will prosecute the matter. In criminal matters, there is no suit valuation.

Writ jurisdiction

You may invoke writ jurisdiction against the decisions of the Government affecting your property rights by filing writ petition in the concerned High Court or in the Supreme Court for appropriate relief.

The type of legal remedy explained above is only illustrative and not exhaustive.In addition to these remedies,there are other relief/remedies available to a party.The relief is to be sought from a court of competent jurisdiction and for this purpose having knowledge of the jurisdiction of various courts is necessary.An experienced advocate dealing with property matters could render very useful service in the matter who may guide you properly and protect you from unnecessary litigations.

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LAW SAFEGUARDS THE MINORS’ PROPERTY RIGHTS

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

A minor is legally is not eligible to enter into any contract, nor can he sell or purchase immovable property.Minors are mentally and physically unable to manage their properties, which they may acquire by way of inheritance, gift or settlement.He has to be represented by another person who is a major.So, many people use power of Attorney to deal with the property of minor, which is not correct. In infancy they require care, there after proper education. There are laws that govern the rights of the minors, and also duties, responsibilities and rights of the person who looks after them.

Hindu Minority and Guardianship Act 1956 (Act 32 of 1956) is one such legislation which is applicable to all Hindus. It is worthwhile to deliberate who is a Hindu as per the provisions of the Act. It may be generally said all persons other than Mohammedans, Christians and Jews are Hindus. According to the definition a person is considered as Hindu by religion in any of its forms or developments including Veerashiva, Lingayat, followers of Brahmo, Prarthana or Arya Samaj, Buddhists, Jain and Sikh.

Minor

Minor is a person who has not completed eighteen years of age. It should be carefully read and understood, that a person will be minor until he completes eighteen years of age.A person who completes seventeen years and enters eighteenth year is a minor. Even a person who has completed 17 years and 364 days is a minor. A person attains majority on completion of eighteen years of age and enters nineteenth year, that after eighteenth birthday as per English calendar.

GUARDIAN

Guardian is a person who is a major and having the care of the minor, or minor’s property or both. There are four types of guardians; (1) Natural Guardian (2) Guardian appointed by a will of natural Guardian (3) A Guardian appointed or declared by Court (4) A person empowered to act as guardian by or under any enactment relating to any court of wards.

Natural guardians – Parents are the natural guardians who take care of the minor children. Father is the natural guardian of a boy or unmarried girl and in the absence of father; the mother is the natural guardian. But in case of a child who has not completed five years of age mother is the natural guardian. In case of an illegitimate boy or illegitimate unmarried minor girl, the mother would be the natural guardian and thereafter the father.

In case of married minor girl, husband would be the natural guardian. It may be generally questioned as to the provision for minor unmarried girl, as the marriage of a minor is an offence. Though the law prohibits child marriage, still it is practiced as a custom. urther any offence invites penalty/punishment only, but a minor married girl cannot be left to fend for herself. The guardian of Hindu minor is entitled to take care of minor’s property except minor’s share in joint family property. Kartha is entitled to the care of a minor’s share in joint family property.The natural guardian ceases to be the guardian if he converts from Hindu religion or becomes ascetic (Hermit Sanyasi, Vanaprastha.

The expressions father and mother does not include step-father or step-mother. In case of adopted son, the natural guardian is the adoptive father and there after the adoptive mother.

POWERS OF NATURAL GUARDIAN

Section 8 of the Hindu Minority and Guardianship Act defines the powers of a natural guardian. The natural guardian of a Hindu minor has powers to do all acts, which are necessary and reasonable for the benefit of minor and realization or protection of minor’s estate/property. However, there are restrictions on his powers, which are imposed by the Act. The natural guardian requires prior permission of the court in case of mortgage, charging, transferring the property by sale, gift and exchange or by any other mode.

In case of leasing also, he cannot lease the property beyond five years or a term extending more than one year beyond the date on which minor attains majority without prior permission of the court. Thus the natural guardian can lease the property of minor for a maximum period of five years provided the minor do not attain majority during the lease period. In case of a minor who has completed 13 years of age, the property may be leased for five years. In case of minor who has completed 17 years of age, the property may be leased for 2 years only so that lease would expire within one year after the minor attains majority. Any transfer of property without the prior permission of court can be set aside at the instance of minor or any person claiming under him. Such transactions are voidable. It is left to the option of the minor to agree or not to agree for such transfers without the prior permission of the court. He may, exercise his option on attaining majority and within three years of coming to know of such transfer.

The courts will grant the permission for any disposal of immovable property or leasing beyond the period mentioned above by natural guardian only in case of necessity or for an evident advantage of minor.The application for such permission has to be made as per the provisions of the Guardians and Wards Act 1980, (sections 29 and 31). The competent court is City Civil Court, District court or a court empowered under section 4A of Guardians and Ward Act 1980, which is within the jurisdiction of where the immovable property is situated. There is a provision for appeal.

TESTAMENTARY GUARDIAN

Testamentary Guardians mean the persons appointed through Will as guardians of minor and his property.They function when both the natural guardians have expired.

The father may appoint any other person as guardian by a Will, if the mother has expired earlier. In case the father appoints a guardian by Will even if the mother is alive it is not operative as the mother succeeds as natural guardian. Mother may also appoint a guardian by Will, who succeeds her. In case if she does not appoint any guardian by Will, the guardian appointed by the father through Will succeeds as guardian after the death of the mother.

A Hindu mother may appoint any other person as guardian. The guardian so appointed shall act as natural guardian of the minor subject to the restrictions imposed in the Act and the Will. In case of minor being a girl, the powers of the appointed guardian will end on the marriage of minor girl and her husband will be the natural guardian thereafter. Only person who has attained majority is competent to become a guardian and not another minor.

As stated earlier, no guardian should be appointed for the undivided interest in the joint family property of the minor.However, in the jurisdictional High court may appoint a guardian for undivided interest in joint family property. The court is the final authority to decide whether any guardianship will benefit the welfare of the minor or not.

The sale of any property in which minor as interest requires prior permission of the court. If not, such transactions are voidable at the instance of minor. Minor may enforce his right to such properties after he attains majority. As such while purchasing the property of a minor it is very important to insist on the permission of the court for such transfer.

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