Gift of property by father - terms of grant determine whether it acquires ancestral character

C. N. Arunachala Mudaliar vs C. A. Muruganatha Mudaliar & Ors 1953 AIR 495, 1954 SCR 243

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Supreme Court laid down the following tests to determine the character of self-acquired property gifted by father to his son(s) :

1. Whether power of alienation of the gifted property vested in the donee ? Such vested power implies the donee is absolute owner of the property and therefore donor did not intend the gift to become coparcenary property to the children of donee. Property so received by the donee remains self-acquired in his hands and does not become coparcenary property.

2. If there are no such clear words in the gift deed, it is to be constructed from the document by gathering the intention of the donor together with the surrounding circumstances. Decision to be arrived at by established rules of construction whether testator intended the property to pass as a gift to the donees or it was an integral part of partition of his properties.

3. There is no presumption that he intended either the one or the other as the testator is absolute owner of his self-acquired property and has absolute power over its dispensation.

Apex court referred to previous decisions on the subject and settled the law in view of contradictory decisions earlier. The court considered the question "what kind of interest a son would take in the self-acquired property of his father which he receives by way of gift or testamentary bequest from him, vis a vis his own male issue. Does it remain self-acquired property in his hands also untrammelled by the rights of his sons and grandsons or does it become ancestral property in his hands, though not obtained by descent, in which his male issue become co-owners with him? 

Calcutta High Court held in Muddan v. Ram 6 W.R. 71, that such property becomes ancestral property in the hands of his son as if he bad inherited it from his father.

Madras High Court held in Nagalingham v. Ram Chandra, I. L.R. 24 Mad. 429, that it is undoubtedly open to the father to determine whether the property which be has bequeathed shall be ancestral or self-acquired but unless he expresses his intention that it shall be self-acquired, it should be held to be ancestral.

Bombay High Court held it self-acquired property in the hands of the donee unless there is clear expression of intention on the part of the donor to make it ancestral.

Mitakshara law was examined in Rao Balwant v. Rani Kishori 25 I.A. 54 and the court held "father of the joint Hindu family governed by Mitakshara law has full and uncontrolled powers of disposition over his self-acquired immovable property and his male issue could not interfere with these rights in any way." This is settled law.

After considering the aforesaid decisions, Supreme Court held :

"The property of the grandfather can normally vest in the father as ancestral property if and when the father inherits such property on the death of the grandfather or receives it by partition, made by the Grandfather himself during his lifetime. On both these occasions the grand father's property comes to the father by virtue of the latter's legal right as a son or descendant of the former and consequently it becomes ancestral property in his hands. But when the father obtains the grandfather's property by way of gift, he receives it not because he is a son or has any legal right to such property but because his father chose to bestow a favour on him which he could have bestowed on any other person as well. The interest which he takes in such property must depend upon the will of the grantor. .. To find out whether a property is or is not ancestral in the hands of a particular person, not merely the relationship between the original and the present holder but the mode of transmission also must be looked to; and the property can ordinarily be reckoned as ancestral only if the present holder has got it by virtue of his being a son or descendant of the original owner."

Definition of self-acquired property by Yagnavalkya "whatever is acquired by the coparcener himself without detriment to the father's estate as present from a friend or a gift at nuptials, does not appertain to the co-heirs." Father's gift is also included in definition of self-acquired property in Section 4, placitum 28 of the first chapter in Mitakshara.

Supreme Court settled the law as under :

1.  A property gifted by a father to his son could not become ancestral property in the hands of the donee simply by reason of the fact that the donee got it from his father or ancestor.

2. Towards his self-acquired property, a father is quite competent to provide expressly, when he makes a gift, either that the donee would take it exclusively for himself or that the gift would be for the benefit of his branch of the family. If there are express provisions to that effect either in the deed of gift or a will, no difficulty is likely to arise and the interest which the son would take in such property would depend upon the terms of the grant. If, however, there are no clear words describing the kind of -interest which the donee is to take, the question would be one of construction and the court would have to collect the intention of the donor from the language of the document taken along with the surrounding circumstances in accordance with the wellknown canons of construction.