India: Dispute Resolution & Arbitration Monthly Update | January 2024

Manu Gupta v. Sujata Sharma

Delhi High Court | 2023 SCC OnLine Del 7722

Background facts

• The Appellants and Respondents of this case are the descendants of Late Shri DR Gupta, son of Late Shri Sunder Gupta, who expired on October 01, 1971. They are Hindus and are governed by the Mitakshara law. Late Shri DR Gupta had constituted a Hindu Undivided family (HUF) Business known as 'DR Gupta and Sons HUF' on January 05, 1963 comprising of himself and his five sons, namely Late Shri KM Gupta, Late Shri MH Gupta, Late Shri RN Gupta, Late Shri BN Gupta and Late Shri JN Gupta, as members.
• Late Shri DR Gupta had voluntarily executed an Affidavit dated January 05, 1963 declaring that all his properties shall belong to the HUF, of which he will be the Karta with right of survivorship and all other incidents of undivided coparcenary on his wife and his five sons. DR Gupta's properties included an immovable property which was in Delhi and moveable properties which consisted of shares of Motor and General Finance Ltd, deposits with Motor and General Finance Ltd, and bank accounts in Bank of India and Vijaya Bank, Ansari Road. All the moveable assets that belonged to the HUF were disposed of by the Gupta Family in the 1980s.
• All the sons of Late DR Gupta passed away over time and the last Karta of DR Gupta & Sons HUF was Shri RN Gupta who passed away on February 14, 2006. After the demise of Shri RN Gupta, Respondent No. 1 and other members of the 'DR Gupta & Sons HUF' corresponded via email regarding Respondent No. 01's claim to be the next Karta of the group because she is the eldest coparcener and the daughter of the late Shri KM Gupta. This claim was raised by her with regard to the laws amended in the Hindu Succession (Amendment) Act, 2005.
• Respondent No. 01 becoming the Karta was accepted by the majority of coparceners; however, Mr. Manu Gupta (Appellant), Mr. Vasu Gupta (Respondent No. 2), Ms. Gita Lal (Respondent No. 3), and Ms. Aditi Desai (Respondent No. 17) objected to her becoming Karta in HUF. Initially, they had filed an affidavit agreeing to the Court's decision of the Karta. Later on, they disputed Respondent No. 1's legal status as a coparcener in order to assert their eligibility for the Karta position.
• The Appellant, in response to Respondent No. 1's claims, identified himself as the Karta of HUF. This was the main reason behind Respondent No. 1, Sujata Sharma, filing the Civil Suit in 2006 in the Delhi High Court, seeking a declaration proving she is the Karta of 'DR Gupta & Sons HUF.'
• In this suit, Respondent No. 1 contended that being a lady cannot be a primary reason for her being denied the position of the Karta. She had also further contended that as per the new amendment, a coparcener's daughter can have the same rights as a coparcener's son in a HUF. The single-judge bench decided the case in favor of Mrs. Sujata Sharma.
• Subsequently, Manu Gupta filed an appeal challenging the decision of the single-judge bench, arguing that daughters do not obtain managerial powers over HUF property but rather coparcenary rights similar to those of male members under Section 6 of the Hindu Succession Act, 1956 (Act). In addition, the defendant contended that the Plaintiff was married and thus she cannot be deemed as an important part of the HUF.

Issues at hand?

• Whether the suit for declaration, is maintainable in its present form?
• Whether there exists any coparcenary property or HUF at all?
• Whether the Plaintiff is a member of DR Gupta and Sons HUF? And if so, to what effect?
• Whether the interest of the Plaintiff sep
• rated upon the demise of her father in 1984?
• Assuming the existence of a DR Gupta and Sons HUF, whether the Plaintiff can be considered to be an integral part of the HUF, particularly after her marriage in 1977, and whether the Plaintiff has ever participated in the affairs of the HUF as a coparcener, and its effect?
• Assuming the existence of DR Gupta and Sons HUF, whether the Plaintiff is a coparcener of and legally entitled to be the Karta?
• What is the effect of the amendment in the Hindu Succession Act, in 2005 and has it made any changes in the concept of Joint Family or its properties in the law of coparcenary?

Decision of the Court

• The Court, while dealing with the issue of the effect of the 2005 amendment in the Hindu Succession Act, delved into the concepts of Joint Hindu Family, coparcenary, and managership under the traditional Hindu Law. The Court rejected the appellant's argument that the legislative intent was solely to codify the law on succession and emphasized the explicit language of Section 6, which grants daughters the same rights as sons, including rights in coparcenary property. The Court concludes that the amendment redefines coparcenary, making it inclusive of all incidents, including the right to be a Karta.
• In essence, the Court holds that denying daughters the right to be Karta would be contrary to the legislative intent of providing equal property rights to women. Further, it opined that the right to manage property is intrinsic to ownership, and the amendment aims to rectify historical genderbased discrimination within the joint family system.
• The Court rejected the argument that spiritual efficiency is an indispensable requirement for becoming a Karta under Mitakshara law. It underscores that with the 2005 amendment conferring daughters with coparcenary rights, spiritual efficiency cannot be a prerequisite for Karta's position. The Court held that spiritual efficiency is only relevant when a question of preference arises, and in this case, overt seniority by age of Respondent No. 1 eliminates the need for such consideration.
• Moreover, the Court addressed the contention of the Appellant that the husband of the female Karta would have indirect control over the activities of the HUF of her father's family and opined that under Section 14 of the Act, women have absolute ownership in a property. Hence, she can't be denied a right to manage the property on this parochial mindset.
• The Court while dismissing the concerns raised by the Appellant about societal acceptance of a woman as Karta, held that the 2005 legislative amendment aimed to promote equality in society, and hence, Respondent No. 1 has every right to be the Karta of the HUF.
• Turning to the issue of the coparcener's status and entitlement to Karta, the Court rejected the Appellant's contention that Respondent No. 1 was not the daughter of a surviving coparcener when the 2005 amendment came into force and hence, she can't be the coparcener. The Court cited the clarifications made in the landmark case ofVineeta Sharma v. Rakesh Sharma¹ , where it was emphasized that the key factor is birth within the degrees of the coparcenary and not the survival of the father.
• The Court also stated that in cases of joint ownership, a Suit for Declaration on the status of being the Karta of HUF is maintainable without seeking consequential possession relief.
• The Court declared Respondent No. 1 as Karta for representing 'DR Gupta & Sons HUF' before the Competent Authority and dismissed the present appeal.

Hero Cycle Ltd v. Commissioner of CGST, Ludhiana

Customs, Excise and Service Tax Appellate Tribunal Chandigarh | Excise Appeal No. 59084 of 2013

Background facts

• The Appellant is engaged in the manufacturing of e-bikes and parts thereof and also imports ebike parts and e-bikes in completely knockdown unit (CKD) condition. Importation of such goods falls under the Central Excise Tariff Act, 1985. The e-bikes were chargeable to duty as per Section 4 of the Central Excise Act, and the e-bike parts on a MRP basis as per Section 4A of the Central Excise Act, 1944 (Act).
• A show cause notice dated November 19 2010 was issued to the Appellant, alleging that the Appellant imported e-bike parts and e-bikes in CKD condition, and the Appellant was supposed to show the production and clearance of e-bikes in the relevant columns of Form ER-1. Further, the allegation against the Appellant in the Show Cause Notice was that they did not file any mandatory return in the format prescribed under the Automobile Cess Rules, 1984, and suppressed the production, clearance, and value of e-bikes from the Department with intent to evade payment of automobile cess.
• The Appellant filed a detailed reply to the Show Cause Notice and submitted that they imported ebikes in CKD condition and e-bike parts, and that further, they assembled e-bikes from e-bike parts imported and also assembled e-bikes imported in CKD condition. The Appellant had submitted that e-bikes were exempted from the payment of excise duty vide a notification dated April 29, 2008 issued by the Government of India. It was further submitted that e-bikes imported in CKD condition, which were cleared after assembling without payment of central excise duty, as the goods imported and cleared from factory premises and the processes undertaken on the goods by the Appellant did not amount to 'manufacture' as per Section 2(f) of the Central Excise Act, as no new or distinct product came into existence.
• Moreover, the Appellant submitted that the clearance of e-bikes imported in CKD condition was not reflected in the ER-1 return as there was no manufacturing activity involved. In light thereof, the Appellant was of the view that the demand for automobile cess again was incorrect as the same had already been discharged at the time of the importation of e-bikes in CKD condition. The classification at the time of importation and at the time of clearance for home consumption are same.
• After due process, the Additional Commissioner, vide an Order dated May 30 2011 demanded the automobile cess of INR 13,15,692 from the Appellant under Section 11A. The Additional Commissioner did so by invoking the extended period of limitation along with interest under Section 11AB and also imposed equal penalty under Section 11AC of the Act.
• Aggrieved by the said Order, the Appellant filed an appeal before the Commissioner (Appeals), who, vide the impugned Order dated May 08 2013, held that there is need to work out automobile cess on amount of value addition and accordingly the matter will require a fresh computation to re-look, no finding with regard to the interest and penalty.
• Hence, the present appeal.

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Footnote

1. SLP (C) No.684 of 2016

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