The Private Client team at Cyril Amarchand Mangaldas shares their comments and opinions shared in an article which was published by Moneycontrol.com on 12th August, 2020 and the same can be found here.
The Indian judiciary continues to take progressive steps towards making succession law more women friendly. In the landmark case of Vineeta Sharma v. Rakesh Sharma (Judgment), a 3 judge Bench of the Supreme Court (SC), on August 11th, 2020, held that daughters would have equal coparcenary rights same as that of a son in a Hindu Undivided Family (HUF). The SC clarified two points:
- Coparcenary rights are acquired by a daughter at birth; and
- It is not necessary for the father to have been alive at the time of the 2005 amendment (Amendment) of the Hindu Succession Act, 1956 (HSA).
Who is a Coparcener? Who is a Member?
Before we talk about the impact of the Judgement, it may be helpful to first understand the parties involved. There are 2 categories of persons in an HUF – the Judgement only affects one category (coparceners). A coparcener is one (i) who acquires rights to their father’s property upon birth and (ii) can claim a partition of the coparcenary at any time. However, a ‘member’ is only entitled to maintenance, and would not be granted any inheritance or partition rights in the coparcenary.
What did the judgement change? Why is the 2005 amendment important?
The amendment was passed in 2005 to confer equal status to both sons and daughters of coparceners. Prior to the amendment, coparcenary rights were granted only to male descendants of a coparcener i.e. only sons. Whilst the Amendment sought to grant equal rights to both sons and daughters, the wording used left scope for various lacunae, which lead to contradictory views being taken by the SC on this issue.
Until the judgment, equal status was only granted on those daughters whose father (coparcener) was alive when the amendment came into force on September 9, 2005. This was upheld by the Supreme Court in Prakash and Ors vs Phulvathi and Ors. In 2015, but later contradicted in the case of Danamma v. Amar in 2018 where two daughters of a coparcener were given rights in their father’s property even though he had passed away in 2001.
The judgement has now clarified that the equal rights being given to daughters of coparceners would be granted at their birth, irrespective of the date of death of their father. The SC clarified that the Amendment would be applicable retrospectively, and not only to cases where the father is alive on the date of the Amendment.
This would be applicable subject to the condition that the coparcenary property should not have been partitioned by the father prior to December 20th, 2004. As long as the property remained coparcenary property and was not partitioned as of this date, a daughter can now claim interest in the same.
Does anything change for spouses/wives?
A daughter of a coparcener would benefit from the Judgment. However, the status of a wife of a coparcener (she is a member, as above) remains the same. She would only have limited rights of maintenance in certain cases, and cannot seek partition of her husband’s property, etc.
What can daughters do now?
Daughters will now be treated at par with sons of coparceners, and will be granted equal coparcenary rights in their father’s property upon birth itself. Even their marital status would not affect the rights being conferred by them by way of the Amendment – hence, they continue to be part of their father’s HUF post marriage.
Daughters can now seek partition of their father’s coparcenary property, seeking their equal share, same as their siblings and other coparceners. Upon acquiring a share in a coparcenary property, a female coparcener can bequeath her HUF share under her Will to any beneficiary she chooses (and to the exclusion of others).
What is the real impact of these changes?
Though this is a landmark judgement, cleaning up the earlier confusion, and helps in the forward march of women’s rights and law, its real world application is limited. To be clear, this judgement only applies to HUF property, and does not affect personal or self-acquired assets held individually.
These pass by a will or intestate succession law. In reality, most personal wealth, including ownership in valuable family businesses, are either held in personal names of the patriarch / promoters, or in private trusts or holding companies / LLPs. The ‘older’ business families may continue to hold some ancestral wealth in HUFs, but the scale and materiality of such holdings is usually limited. Almost no business family is setting up new HUFs, and actually most existing HUFs are being dissolved. Hence, this Judgement may not be very helpful in actually helping transfer real wealth into the hands of daughters. More needs to be done, but for now let’s celebrate this victory on behalf of daughters everywhere.