Can Karta sell HUF property without the consent of other joint family members? Supreme Court answers

Supreme Court: In petitions challenging final judgment and order wherein, the Madras High Court relied on Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345 and dismissed the writ petition challenging sale proceedings of the Recovery Officer, Debt Recovery Tribunal (‘DRT’) under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’) on the ground of maintainability, the Division Bench of Sanjiv Khanna and S.V.N. Bhatti cleared the clouds around the entitlement of the Karta of a Hindu Undivided Family regarding right to sell/dispose of/alienate an HUF property.

The petitioner’s father was the Karta of the HUF. The petitioner claimed that a property of joint family/ HUF was mortgaged by his father as one of the guarantors.

The Court pointed towards the settled position of rights of Karta in relation with the HUF property. The Court cited Sri Narayan Bal v. Sridhar Sutar, (1996) 8 SCC 54 wherein, it was held that the Karta has the right to sell/dispose of/alienate an HUF property, even if a minor of the family has undivided interest. The Court explained that “an HUF is capable of acting through its Karta or an adult member of the family in the management of the HUF property.”

The Court held that the petitioner’s father being the Karta of the HUF was entitled to mortgage the HUF property. It further clarified that neither the son(s) nor the other members of the HUF need to be consenting parties to the said mortgage.

The Court cautiously expressed that post alienation of HUF property, a coparcener may challenge the act of a Karta in case the alienation was not done due to a legal necessity or for betterment of the estate, which was not the assertion established in the instant matter.

The Court refused to interfere with the High Court’s decision and dismissed the instant petitions.

[N.S. Balaji v. Debt Recovery Tribunal, 2023 SCC OnLine SC 1266, Order dated 3-10-2023]

Advocates who appeared in this case :

For Petitioner: Senior Advocate Ramakrishnan Viraghavan, Advocate on Record K. Krishna Kumar