Report No. 110
II. Survivorship and the Question of Shares
34.5. Section 211(1).-
We may now take up the sections for detailed consideration. Section 211(1), provides that the executor or administrator of a deceased is his legal representative for all purposes, and all the property of the deceased person vests in him as such. But, as regards Hindus, Mohammedans, Buddhists, Sikhs, Jains, Parsees and other persons, sub-section (2) provides that nothing in the section shall vest in the executor or administrator any property of the deceased person which would otherwise have passed by survivorship to some other person.
34.6. Survivorship in respect of shares.-
This naturally raises the question whether letters of administration can be obtained in respect of property passing by survivorship to coparceners in a Hindu undivided family. Much of the case law on the subject relates to shares in companies1. In general, property passing by survivorship is distinguished from property passing by succession. The distinction, in fact, is elementary and sound.
But this theoretical distinction creates certain practical difficulties, because of the fact that under the statutory provisions applicable1 to shares in companies, shares are registered only in the name of a particular person, and only the person registered is recognised as the "legal owner" of those shares so far as the company is concerned. This does not of course, mean that the rights of the other persons against, the 'legal' owner are affected as between the 'legal' owner and those other persons. But, as between the company and the share-holders, this is the position.
1. Paras. 34.8 and 34.9, infra.
2. The Companies Act, 1956.
34.7. Shares standing in the name of the manager.-
Now, these statutory provisions create some problems in regard to shares belonging to the coparceners of a Hindu undivided family and standing in the name of one coparcener-the manager. When the registered "legal" owner-i.e. the manager-dies, how is the title of the surviving coparceners to be established on his death?
34.8. Applicability of sections 211-213 to shares.-
Where, as a matter of general law, the right to shares passes by survivorship, the provisions of sections 211 to 213 would not, if construed literally, be applicable to the situation. But if such a rigid view of the law is taken, then there remains no machinery for establishing, to the satisfaction of the company, the title of the persons succeeding by survivorship.
By and large, courts have, taking a realistic view, construed sections 211 to 213 widely for the purpose. There is, no doubt, some conflict of views on the question as to the basis on which court-fees are to be calculated1 in respect of petitions for letters of administration filed by the surviving coparceners. That conflict, however as it pertains to the Court Fees Act, is not material for our purpose.
1. Section 19D, Court Fees Act.
34.9. Letters of administration regarding shares.-
Our primary concern is with the question whether letters of administration can be granted in respect of shares in joint stock companies where the shares stand in the name of the karta of a Mitakshara Joint Hindu family. On that question, most High Courts take the view1 that in the case of such shares the Companies Act, (and usually, the Articles of Association of the Company) make it abundantly clear that vis-a-vis the company, the local title in the shares is in the registered holder of the shares, viz. the karta of the joint family in whose name the shares stand.
He is the only person recognised by the company as having the shares. The position, therefore, is that on the death of the karta who was the registered holder of the shares, the title to the shares vis-a-vis the company, does not, on death of the karta, without the grant of letters of administration, pass by survivorship to the surviving members of the coparcenary of which the deceased was the karta.
So far as the company is concerned, the exceptions in cases of Hindu dying intestate, provided in sections 211(2) and 212(2) of the Indian Succession Act, 1925, do not, therefore, apply in such cases. At the same time, neither the principles of Hindu law nor the provisions contained in the Succession Act, stand in the way of the grant of the Letters of Administration limited to the shares held by the karta of a Joint Mitakshara Hindu family, in the event of his dying intestate.
1. The case law is reviewed in
(a) Sri Ram v. Collector, Lahore, AIR 1942 Lah 173.
(b) Sew PraSad Saraf (in re:), AIR 1954 Cal 444 (445, 446).
34.10. View of most High Courts.-
The conclusion on the question, as expressed in a Calcutta case1, represents, in broad terms, the view of the most High Courts, namely, that where shares in a joint stock company belonging to an undivided family governed by the Mitakshara school of Hindu law stand in the name of the karta of the family, letters of administration limited to the shares can be granted to legal representatives in the event of the karta dying intestate, and, in particular, to the next karta of the family.
1. Sew Prasad Saraf (in re:), AIR 1954 Cal 444 (445, 446), para. 24 (G.N. Das and S.R. Das and S.R. Das Gupta, 11.).
34.11. Need to add an Explanation to section 211 regarding shares.-
It is desirable that this interpretation, which takes a practical view of the matter, should be incorporated in the section by adding a specific Explanation.1
1. See para. 34.75, infra.
34.12. Section 211-Disposal by will of property which would pass by survivorship.-
In connection with section 211, the next important point is concerned with the Explanation to section 30 of the Hindu Succession Act, 1956. To state the gist of that Explanation broadly, it confers, for the first time1, a right to dispose of (by will) property in the nature of the interest of a male Hindu in a Mitakshara Coparcenary property or the interest of the specified persons in the specified property.
1. Section 30(1), Explanation, Hindu Succession Act, 1956.
34.13. Section 6, Hindu Succession Act.-
Section 6 of the same Act also provides that such interest shall, in certain cases, pass by succession, and not by survivorship1. The scope of sub-section (2) of section 211 of the Succession Act has thus become limited. Customary law prohibiting the disposition by will of certain property, of course, still continues in force, section 30 of the Hindu Succession Act having no application in such a case.
The Punjab case of Jat Hindu belonging to an agricultural tribe and governed by Punjab Customary Law may be cited2-3 in this context, as an illustration of the judicial view as to customary law. This position does not, of course, necessitate any amendment in the section in the Succession Act.
1. Section 6, Hindu Succession Act, 1956.
1. Kaur Singh v. Jaggar Singh, AIR 1961 Punj 489.
2. Joginder Singh v. Kehar Singh, AIR 1965 Punj 407 (Full Bench).
It was decided in a Madras case1 that the expression "legal representatives" and "successors" may not be applicable to persons taking by survivorship, but it does not necessarily follow that such persons are not entitled to obtain a succession certificate by calling themselves legal representatives.2-3
We are of the view that not only is there need for a specific provision4 to cover shares in the context of letters of administration, but there is also need to cover5 all cases of survivorship in the context of succession certificate.
1. Krishnammal v. Laxmi Ammal, ILR 1950 Mad 718 (726, 727, 728, 735):
2. Compare Banwari Lal v. Maksudan Lal, (1929) 1 LR 52 All 252: AIR 1930 All 99.
3. See para. 48.8 (section 370), infra.
4. See para. 34.15, infra.
5. See para. 49.3 (section 370), infra.
34.15. Recommendation as to section 211.-
In the light of what we have stated above1, we recommend that the following Explanation should be added to section 211.
"Explanation.-Where shares in a joint stock company belonging to an undivided family governed by the Mitakshara school of Hindu law stand in the name of the karta of the family, letters of administration limited to the shares may, in the event of the karta dying intestate, be granted to the legal representatives of the karta (including, in appropriate case, the next karta of the family2".
This amendment will cover letters of administration. The amendment as to Succession Certificate will be dealt with later3.
1. Para. 34.14, supra.
2. Para. 34.14, supra.
3. Para. 48.8, infra.