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TMI Blog1963 (11) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1023 of 1961 states that he is the manager of a Hindu undivided family consisting of himself and his sons, and that he is an assessee on the file of the Wealth-tax Officer, Special Investigation Circle "A" Madras. The Wealth-tax Officer issued a notice dated 15th June, 1960, under section 14(2) of the Wealth-tax Act, 1957, calling upon the petitioner to file a return of his wealth, for the purpose of making an assessment under the Act for the assessment year 1960-61. The petitioner submitted his return. The Wealth-tax Officer next issued a notice dated 18th August, 1961, requiring the petitioner to furnish certain information necessary for making the assessment. Without furnishing that information, the present petition has been preferred, on the ground that the charging section of the Wealth-tax Act, 1957, section 3, is invalid and unconstitutional. The petitioner alleges that section 3 violates the equality clause of the Constitution. The point of attack is that section 3 is discriminatory, inasmuch as it singles out only the Hindu undivided family, leaving out from its ambit Marumakkathayam towards, particularly the Mappila tarwads governed by the Mappila Marumakkath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in so far as they relate to the levy of an expenditure-tax on Hindu undivided families, are discriminatory against Hindu undivided families and there by infringe the provisions of equal treatment guaranteed to every person under article 14 of the Constitution of India. The petitioners contention is again based upon the decision of the Kerala High Court rendered under the Wealth-tax Act, holding that the Hindu undivided families have been discriminated against by the legislature omitting tarwads, Hindu or Muslim, governed by the Marumakkathayam law. It may at once by stated that section 3 of the Expenditure-tax Act uses the expression, "Individuals or Hindu undivided family", the same as in the Wealth-tax Act; and whichever view we take regarding the vires of section 3 of the Wealth-tax Act would equally govern the charging provision in the Expenditure-tax Act. We do not proposed to discuss the question of the vires of the Expenditure-tax Act, 1957, separately. 4. We shall now take up for consideration the question whether section 3 of the Wealth-tax Act, 1957, is unconstitutional, on the ground that it is repugnant to the fundamental right guaranteed by the Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t;Hindu undivided families." It must be noted that "individuals" are exempt only for the first two lakhs, while a Hindu undivided family is more favorably treated because of the exemption up to four lakhs of rupees. He fairly conceded that the classification adopted by Parliament in dividing the assessees into three broad categories, as they originally stood, namely, "individuals, Hindu undivided family and company" would be reasonable and proper. His contention, however, was that there was discrimination against the Hindu undivided families, by reason of the omission of the Mappila tarwads and Nambudri illoms or any other Marumakkathayam tarwads, which are spread over large extents of territory in the State of Kerala. The argument was developed thus : The Malabar tarwads, Hindu or Muslim are also institutions akin to Hindu undivided families, and there is no reason why these institutions should not be placed on a par with the Hindu undivided families, which, in contrast with individuals, occupy a more favorable tax position. According to the learned counsel, Malabar tarwads are wholly outside the Act, as they could not be comprehended within the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asses of taxpayers are subjected to different systems of tax in connection with single type of tax, it cannot be aid that the stature manifests a difference in treatment. Nor can it be said that every little unevenness should be dubbed as a inequality to condemn the heavier imposition. 9. Willoughby in his Constitutional Law of the United States, second edition, observed thus at page 836 : ....while the legislature may, within its discretion, determine freely what occupations, or classes of property, or persons are to be taxed, it may not select out from the general mass of property, or general citizen, body, particular pieces of property or particular individuals to bear the burden of the tax. When, therefore, a tax is laid upon certain classes of property or of persons, there must be some reasonable basis for the classification adopted. By this is meant, that there must be some substantial reason why the units, whether of property or of individuals, should be treated as distinct groups. The American Supreme Court has always been of the view that, though the guarantee of equal protection extends to taxing laws, the legislature would not be offending the fundamental right of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e discrimination was intentional or was a result of hostile animus. Discrimination in the context only means difference in treatment, and unjustified difference would be a difference whether it be by design or by accident, or whether it is caused wilfully or inadvertently. It is not the state of mind of the legislature but the piece of legislation and its operational effect that determines the constitutional validity. What satisfies equality has not been and probably never can be precisely defined. (Magoun v. Illinois Trust The power to make distinctions exists with full vigour in the field of taxation; there is no iron rule in the matter, Government being free to exercise a wide discretion in salivating the subjects of legislation. Inequality or hardship resulting from tax burden, provided the standard is uniform, is not a mischief of unequal treatment of similar subject, but something which is inherent in Government by law instead of Government by edict (vide Fox v. Standard Oil Company). 11. The learned Advocate-General, appearing for the department, cited a decision of the Judicial Committee in Colonial Sugar Refining Company Limited v. Irving and submitted that the degrees o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Mukerji J. in State of West Bengal v. Anwar Ali deals with this aspect of the matter : If it is established that the person complaining has been discriminated against as a result of legislation and denied equal privileges with others occupying the same position, I do not think that it is incumbent upon him, before he can claim relief on the basis of his fundamental rights, to assert and prove that in making the law the legislature was actuated by a hostile or inimical intention against a particular person or class. We are, therefore, unable to agree with this contention of the learned Advocate-General. 14. The XIV Amendment of the american Constitution reads, so far as it is material in the present context, as follows : No State shall make or enforce any law which shall abridge the privileges or communities of citizens of the United States; nor shall any State deprive any person of life, liberty or property, without due process of laws, nor deny any person within its jurisdiction the equal protection of the laws. Article 14 of the Indian Constitutions states : The State shall not deny to any person equality before the law or the equal protection of the laws within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld invalid unless the classification is clearly unreasonable and arbitrary. That the was will work a hardship is not enough. Many laws have that effect and the greater part of all legislation is discriminatory in the extent to which it operates, the manner in which it applies or the objects sought to be attained by it.... What classification is reasonable, natural or substantial rests in the discretion of the legislative body in the first instance and it is the province of the courts of adjudicate when it should be classed as arbitrary, artificial or evasive. Willis in his book on Constitutional Law observes as follows at page 587 : A State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, method, and even rates for taxation if it does so reasonably. 16. Now the question is whether the omission of the Mappilla Marumakkathayam tarwad, as an entity to be taxed, would amount to an undue preference to such tarwards resulting in discrimination against the Hindu undivided families such as to violate the equality clause of the Constitution. Though, at the commencement of the argument, Mr. M. K. Nambiar submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Malabar, the Muhammadan law was their general law, the Marumakkathayam rules in regard to Mappillas who followed them being rules of later adoption. In support of this view, the learned judge referred to a passage in Mr. Logans Malabar Manual. Sundara Aiyar in his book on Malabar Law at page 231 states : The Mohamadans of North Malabar also mostly follow the Marumak-kathayam low of inheritance and adopt the rule of non - division. This was due to the fact that a large portion of the Sundara community follow in Marumakkathayam law embraced Mohamadanism en masse. Mr. Logan is not correct in his statement that the Mohamadans settled in North Malabar, changed the rule of inheritance previously prevalent among them and adopt the Marumakkathayam rule. This seems to be prima facie extremely improbable. On the other hand it is very natural and very probable that when a large section of a community adopts a new religion the converts should retain the rules of inheritance to which they were previously subject, and it is also extremely likely that the heads of the new religion should encourage conversion by making the change as easy and agreeable as possible to the new converts. 20. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from a family governed by ordinary Mohamadan law and the wife belongs to a family governed by the Marumakkathayam system or vice versa ? Then the property of the father would descent to his children and others according to the Mohamadan Law. It is therefore clear even from a cursory examination of these Mappilla tarwads bin North Malabar governed by the Marumakkathyam law that there was no one system of devolution of property or inheritance which would govern them. Sometimes it was the Muslim law and sometimes it was the Marumakkathayam law. That depended upon the question whether the adult male of a tarwad was himself a Marumakkathayee or a follower of Muslim law. It must be noted that as regard marriage and divorce, even the Marumakkathayam Mappilla tarwad was governed only by the rule of Mohamadan law. Sundara Aiyar observes at page 236 : The recognition of the Marumakkathayam rule of inheritance and at the same time of the Mohamadan rule as to marriage has led to the growth among Mappillas of certain customs. For instance in Bappan v. Mukki I. L. R. [1883] Mad. 259 it was found that among the Mappillas of North Malabar there existed a custom according to which the junior memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily governed by the Mitakshara Law furnishes a very close parallel. In Moithiyan v. Mammali (1928) 55 MLJ 208 , Chakkra Kannans case 1 was followed. Venkatasubba Rao J. observed : ... the Marumakkathayam law recognises a tarwad as a unit and a tavazhi being a sub-division of a tarwad, the courts have also recognised it as a legal entity. 25. The nature of a Hindu joint family was considered by the Supreme Court in Bhagwan Dayal v. Reoti Devi [1962] 3 SCR 440 . His Lordship Subba Rao J. observed at page 304 as follows : The legal position may be stated thus. Coparcenary is a creature of Hindu law and cannot be created by agreement of parties except in the case of reunion. It is a corporate body or a family unit. The law also recognises a branch of the family as a subordinate corporate body. The said family unit, whether the larger one or the subordinate one, can acquire, hold and dispose of family property subject to the limitations laid down by law. The expression "corporate body", with reference to a Hindu joint family, was used by Bhashyam Ayyangar J. in Sudarsanam Maistri v. Narasimhulu Maistry I. L. R. 1901] Mad. 149, where the learned judge observed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regards the true nature of such families. Comparing the Mappilla Marumakkathayam tarwad with the Hindu undivided family, it seems to us that the word "corporation" is sometimes used to describe these tarwads with as much appropriateness as that word has been used as regard the Hindu undivided families. It is only a convenient description of grouping all persons. Mappilla Marumakkathayam 27. Tarwad is, of course, not an institution or corporate body, having a separate legal existence or having the attribute of a "legal person", distinct from the members of the tarwad. We have already pointed out that these Mappilla tarwads occupied the same position as the Nair tarwad in the Malabar area. We have to take it that, prior to the enactment of the Madras Marumakkathayam Act, I932, and the Mappilla Marumakkathayam Act, I939, the Mappila tarwad and the Nair tarwad stood more or less on the same position except as regard marriage, divorce, succession to separate property, etc. One distinction between a Hindu undivided family and the Malabar tarwad in general, Muslim or Hindu, is that these tarwads are governed by the Marumakkathayam law, that is, the matriarchal system, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ike the right of division and the quantum of share, the tarwad Hindu or Muslim in Malabar differs substantially from the Hindu undivided family. In fact, the very system of Marumakkathayam having a female propositus or ancestress is wholly foreign to the conception of Hindu Mitakshara family, inasmuch as it is based on a common ancestor. The Hindu family emphasises the agnatic relationship to such a large extent as to postpone even close relations to sapindas and samanodhakas. Agnatic relation of the fourth or the fifth degree is given precedence in the matter of succession to a bandhu like paternal aunt or maternal uncle. Till the Hindu Inheritance Act, 1929, even sister, sisters son, sons daughter and a daughters daughter only ranked as bandhus and were postponed even to samanodhakas. We are unable to hold that there is anything much in common between a Hindu undivided family and a tarwad, to say that they constitute similar subjects entitled to equal protection under the equality clause of the Constitution. 29. It will be convenient, at this stage, to refer to the provisions of the Mappilla Marumakkathayam Act, 1939, enacted by the Madras legislature which really governed, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the members of the tarwad desire to the contrary. In case of a division, the individual member or the members of the tavazhi, as the case may be, shall be entitled to such share or shares of the tarwad properties as would fall to such member or the members, if a division per capita were made among all the members of the tarwad then existing (section 17). Successions to the property obtained by an individual member on partition shall be governed by the Islamic law of inheritance. There is also a provision for registration of the tarwad as impartible. If within a year from the passing of the Act, not less than two-thirds of the rict, he shall register the tarwad present a petition to the collector of the District, he shall register the tarwad as impartible. On such registration, the tarwad estate would no longer be open to partition by metes and bounds at the instance of any member. If at any time after the registration of tarwad as impartible, not less than two-thirds of the members present a petition to the collector and desire cancellation of registration of tarwad as impartible, not less than two-thirds of the members present a petition to the collector and desire cancellatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily and a Mappilla tarwad are not similar subjects which are entitled to equal treatment, in the matter of enactment of laws by parliament. 32. The next question is whether the wealth of a Mappilla tarwad is altogether outside the ambit of the wealth-tax Act, or the expenditure of a Mappilla tarwad is beyond the scope of the Expenditure-tax Act. A karnavan of a Mappilla tarwad, no doubt holds the assets of the tarwad in a representative capacity, holding it not merely for himself but for the other member of the tarwad as well. But we do not envisage any legal disability on the part of the wealth-tax authorities or the authorities under the Expenditure-tax Act to deal with the Karnavan as an individual, for the purpose of assessment to tax. A karnavan is certainly an individual, and the properties sought to be assessed to tax are in his hands. If parliament did not recognise a Mappilla tarwad as a separate legal entity to be taxed like a Hindu undivided family, that would not lead to the inference that the subject-matter of the taxation in the hands of the Karnavan of the tarwad was not intended to be taxed. On a plain reading of the charging provisions of the enactments, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the term should not receive its ordinary meaning. The expression "Hindu undivided family" which follows the word "individual" is not to be read as importing a restriction upon the term "individual". The charging section has attempted a classification of the entity to be taxed, and for good and proper reasons, distinguished a Hindu undivided family from an individual. We have already expressed our view that it would be possible to bring the karnavan of a tarwad within the scope and meaning of the expression "individual" under the Acts. After discussing the question of the constitutionality of the charging section, velu, pillai J. has set out his conclusion thus : We, therefore, come to the conclusion, that Hindu undivided families of wealth have been singled out by the Act from other similar joint families in the country and that the state has thereby denied equal protection of the law to the former. The provisions in the Act relating to Hindu Families are severable and to that extent the Act has to be struck down. Earlier in the judgment, the learned judge has, however, referred to the argument of sri. K. V. Suryanarayana Iyer, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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