# TAX v. V. K. RAMUNNI PANIKKAR, RECEIVER OF ZOMORIN ESTATE

- **Citation:** [1972] 1 S.C.R. 934
- **Court:** Supreme Court of India
- **Decided:** 1971-10-05
- **Case number:** Civil Appeal No. 1397 of 1969
- **Bench:** K. S. Hegde, N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tax-v-v-k-ramunni-panikkar-receiver-of-zomorin-estate-5489
- **Pages:** 6

## Headnote

Hindu Succession Act, 1956, s. 7(3) and Kera/a Agricultural /ncome1«x Act, 1950, s. 24(1)-Sthani liable to pay t'flx-Death of SthaniLiabi/ity of other members of Tarwad.
Section 7(3) of the Hindu Succession Act, 1956, by a fiction deems
that the Sthanam property stands divided amongst the sthani and the
members of his tarwad, a split second before the death of the sthani. The
members of the tarwad took the property as co-owners and not as heirs
of the deceased sthani. The purpose of the fiction was to gradually abolish
the sthanams and to provide for the devolution of the sthanam properties
on the members of sthani's tprwcd except as regards one per capita share
which the personal heirs of the sthani are to inherit as the heirs of the
Sthani.
On May 2, 1958, the Zamorin of Calicut died. In respect of the agricultural income-tax under the Kerala Agricultural Income-tax Act, 1950,
which he was liable to pay for the period November I, 1956 to March 31.
1958, the person who took possession of the sthanam property claiming
10 be the succeeding sthani was assessed to tax as the successor sthani.
After his death, the Agricultural Income-tax Officer attempted to collect
the tax from the successive senior most membe'rs of the Zamorin's family.
The validity of the ~ssessment was challenged and the High Court held
that the liability to pay the tax and penalty imposed was only that of the
l'ersonal heirs of the person who took possession of the properties imme-
·diately after the death of the Zamorin, and that, only to the extent of the
assets of that person which had come into their possession. Thel-eafter,
it was ordered by the Department that, as the entire sthanam property
had cJ.evoh-ed on the 693 members of the tarwad all those persons were
liable to pay the tax and penalty, but the order was made without notice
to the parties.
When the authdrities threatened to proceed against the
properties in the hands of the Receivers, who were appointed in the partition suit in the Zamorin's family, the Receivers filed a writ petition
challenging the right of the Agricultural Income-tax Officer to collect the
arrears of tax and penalty from out of the properties in their hands. The
High Court quashed the demand holding that the only persons who were
liable to pay the tax were the personal heirs of the Zamorin as it was they
who had received the income.
Dismissing the appeal to this Court,
HELD : Under the law relating to sthanams the st1"'ni was alone
entitled to the income of the sthanam properties. Therefore the income
of the sthanam property in the present case, during November I, 1956 to
March 31, 1958 was the exclusive property of the Zamorin who ha\! the
sthani. Hence, he alone w.S liable to pay the tax. Under the Agl"icultural
Income-tax Act, no charge is created~ on property in respect .of. t!'e arrears
of agricultural income-tax. Under s. 24(1) of the Act the hab1hty to pay
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ASST. COMMR. AGRIC. v. v. K. RAMUNNI (Hegde, J.)
935
the arrears of tax due from the deceased sthani fell on his personal heirs
and tnat, only to the extent they received any of his asset's. The assessment
made of the person who took possession of the properties after the Zamorin'.1i
death as the successor sthani was an invalid assessment, because, legally
he never became the sthani. On the death of the Zamorin the sthanani
came to an end and the only persons who could have represented the
estate of the Zamorin were his pCrsonal heirs \vho, however, were not
made parties to the assessment. [938 F-H; 939 A-Bl
Income-tax Officer, Kozhikode v. Mrs. Susheela Sadananda, 51 l.T.R.
168, K. K. Kochuni v. State of Madras, [19601 3 S.C.R. 887 and M. K. B.
Menon v. Asst~. Controller of Estate Duty, C.A. No. 1137/1969 dt.
5-10-1971, referred to.

## Text

934
INSPECTOR
ASSISTANT
COMMISSIONER
AGRICULTURAL
INCOME
TAX AND
SALES
KOZHIKODE
OF
A
TAX,.
v.
V. K. RAMUNNI PANIKKAR, RECEIVER OF ZOMORIN
ESTATE
October 5, 1971
[K. S. HEGDE AND A, N. GROVER, JJ.J
Hindu Succession Act, 1956, s. 7(3) and Kera/a Agricultural /ncome1«x Act, 1950, s. 24(1)-Sthani liable to pay t'flx-Death of SthaniLiabi/ity of other members of Tarwad.
Section 7(3) of the Hindu Succession Act, 1956, by a fiction deems
that the Sthanam property stands divided amongst the sthani and the
members of his tarwad, a split second before the death of the sthani. The
members of the tarwad took the property as co-owners and not as heirs
of the deceased sthani. The purpose of the fiction was to gradually abolish
the sthanams and to provide for the devolution of the sthanam properties
on the members of sthani's tprwcd except as regards one per capita share
which the personal heirs of the sthani are to inherit as the heirs of the
Sthani.
On May 2, 1958, the Zamorin of Calicut died. In respect of the agricultural income-tax under the Kerala Agricultural Income-tax Act, 1950,
which he was liable to pay for the period November I, 1956 to March 31.
1958, the person who took possession of the sthanam property claiming
10 be the succeeding sthani was assessed to tax as the successor sthani.
After his death, the Agricultural Income-tax Officer attempted to collect
the tax from the successive senior most membe'rs of the Zamorin's family.
The validity of the ~ssessment was challenged and the High Court held
that the liability to pay the tax and penalty imposed was only that of the
l'ersonal heirs of the person who took possession of the properties imme-
·diately after the death of the Zamorin, and that, only to the extent of the
assets of that person which had come into their possession. Thel-eafter,
it was ordered by the Department that, as the entire sthanam property
had cJ.evoh-ed on the 693 members of the tarwad all those persons were
liable to pay the tax and penalty, but the order was made without notice
to the parties.
When the authdrities threatened to proceed against the
properties in the hands of the Receivers, who were appointed in the partition suit in the Zamorin's family, the Receivers filed a writ petition
challenging the right of the Agricultural Income-tax Officer to collect the
arrears of tax and penalty from out of the properties in their hands. The
High Court quashed the demand holding that the only persons who were
liable to pay the tax were the personal heirs of the Zamorin as it was they
who had received the income.
Dismissing the appeal to this Court,
HELD : Under the law relating to sthanams the st1"'ni was alone
entitled to the income of the sthanam properties. Therefore the income
of the sthanam property in the present case, during November I, 1956 to
March 31, 1958 was the exclusive property of the Zamorin who ha\! the
sthani. Hence, he alone w.S liable to pay the tax. Under the Agl"icultural
Income-tax Act, no charge is created~ on property in respect .of. t!'e arrears
of agricultural income-tax. Under s. 24(1) of the Act the hab1hty to pay
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A
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E
F
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ASST. COMMR. AGRIC. v. v. K. RAMUNNI (Hegde, J.)
935
the arrears of tax due from the deceased sthani fell on his personal heirs
and tnat, only to the extent they received any of his asset's. The assessment
made of the person who took possession of the properties after the Zamorin'.1i
death as the successor sthani was an invalid assessment, because, legally
he never became the sthani. On the death of the Zamorin the sthanani
came to an end and the only persons who could have represented the
estate of the Zamorin were his pCrsonal heirs \vho, however, were not
made parties to the assessment. [938 F-H; 939 A-Bl
Income-tax Officer, Kozhikode v. Mrs. Susheela Sadananda, 51 l.T.R.
168, K. K. Kochuni v. State of Madras, [19601 3 S.C.R. 887 and M. K. B.
Menon v. Asst~. Controller of Estate Duty, C.A. No. 1137/1969 dt.
5-10-1971, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1397 of
1969.
Appeal from the judgment and order dated January 1, 1968
of the Kerala High Court in 0. P. No. 2413 of 1965.
V. A. Sey id Muhammad and A. G. Pudissery, for 'the appellant.
alias
A. R. Somanatha Iyer and P. Kesava Pillai, for the responde1H.
The Judgment of the Court was delivered by
Hegde J. One K. C. Sreemanavikraman alias Eattan Raja
was the Zamorin of Calicut. He was a Sthanamdar. In respect
of the sthanam property, he was liable to pay agricultural incometax under the Kerala Agricultural Income-tax Act,
1950
(in
brief the Act) for the period from November 1, 1956 to March
31, 1958.
Sreemanavikraman Raja died
on May 2,
1958.
Thereafter on May 12,
1958, Sthanam Properties
(Assumption of Temporary Management and/
Control)
and
Hindu Succession
(Amendment Act 1958), Act 28
of
1958 came into force.
After the death of Sreemanavikrama1t
Raja, the sthanam property was taken possession of by
Kunhammaman Raja claiming to be the succeeding sthanamdar.
In respect of the assessment due for the period November 1, 1956
to March 31, 1958, Kunhammaman Raja was assessed to tax as
the successor sthanamdar.
The said Kunhammaman Raja died
on December 23, 1960 without making any payment.
Thereafter
the next senior most member in the Zamorin family, P. C. Cheria
Kunjunni Raja took possession of the sthanam property.
He
also died soon after.
During the life time of P. C.
Cheria
Kunjunni Raja, the Agricultural Income-tax Officer imposed a
penalty of Rs. 5,000/- for non-payment of the tax referred to
earlier.
P. C. Cheria Kunjunni Raja paid a sum of Rs. 20, 100/-
out of the tax and penalty due, as coercive proceedings were
threatened to be taken against him.
On the death of P. C.
Cheria Kunjunni Raja, the next senior most member in the
Zamorin family was K. C. Cheria Kunjunni Raja.
When the
936
SUPREME COURT REPORTS
[ 1972] [
S.C.R.
Agricultural Income-iax Officer attempte~ to
co~lect the tax
imposed under the assessment order ment10ned earher from K. C.
Cheria Kunjunni Raja, he filed a petition before that officer
representing that he had nothing to do with the sthanam property
and the sthanam property stood divided under s. 7 ( 3)
of the
Hindu Succession Act, 1956 on the death of Sreemanavikra_man
on May 2, 1958.
The Hindu Succession Act, 1956 had come
into force on June 18, 1956.
After the receipt of that representation, the Agricultural Income-tax Officer passed an order on
March 25, 1963 stating that as the successors of the Zamorin
who died on 2-5-1958 had designated themselves as Zamorin
Rajas, they have the liability to pay the arrears due to the Go\'.-
ernmeht.
He directed K. C. Cheria Kunjunni Raja to pay the
tax and penalty imposed.
Aggrieved by that order K. C. Cheria
Kunjunni Raja filed a writ petition in the Kerala High . Court
challenging the validity of the threatened proceedings against him.
The High Court quashed the demand notices
issue,!
by
th.e
Agricultural Income-tax Officer to K. C. Cheria Kunjunni Raja.
It held that the assessment having been made on Kunhammaman
Raja, his share alone was liable to be proceeded against.
It
further held that the liability" to pay that tax and penalty was
that of the personal heirs of Kunhammaman Raja and that only
to the extent, they had come into possession of the assets of the
said Raja.
A
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Thereafter the Inspecting Assistant Commissioner, Kozhikode
E
ordered that as the entire sthanam pr~perty had devolved on the
693 members, all those persons were liable to pay the arrears
of the tax and penalty.
This oraer was made without notice to
the parties.
Meanwhile in the partition suit in the Zamorin's family, the
court appointed two joint receivers.
The receivers objected to
F
the order of the Assistant Commissioner demanding . the arrears
oi tax referred to earlier from them.
They represented fo him
that the estate in their hands is not liable to pay the arrears of
tax and penalty demanded.
But those representations were not
accepted by the authorities.
They threatened to proceed against
the assets in the hands of the receivers.
At that stage,
the
receivers filed the writ petition from which this
appeal arises.
Therein they challenged the right of the Agricultural Income-tax
Ofricer. to collect the arrears of tax and penalty from out of the
properties in their hands.
The question before the High Court
was whether the tax due from Manavikraman Raja was realisable
from the assets in the hands of the receivers.
The writ petition
was heard by a full bench of three judges.
By a majority, the
High ~ourt came to the conclusion mat the only persons who
were liable to pay the tax in queStion were the personal heirs
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ASST. COMMR;AGRIC. v. V. K. RAMUNNI (Hegde, J.)
937
A oi Sree~anavikraman Raja who had received the income.
The
Court J\eld that in view of s. 7 ( 3) of the Hindu Succession Act,
the sthanam property stood divided at the time of the death of
Sreemanavikraman Raja into 693 shares, out of which 692 shares
went to members of the Tarwad of the deceased and one share to
his personal heirs-wife and children.
It opined 1that the tax
B due from Manavikraman Raja could have been levied and collected only from his p~rsonal heirs as they alone were liable to pay
that tax. As a result of that conclusion; it quashed the impugned
demand.
Section 7 of the Hindu Succession Act provides for the devolution of interest in the property of a tarwad, tavazhi, kutumba,
C kavaru, or illom.
Section 7 (3) provides :
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"Notwithstanding anything contained in sub-s. (1)
when a sthanamdar dies after the commencement of this
Act, the sthanam property held by hin1 shall devolve
upon the members of the family to which the sthanamdar belonged and the heirs of the sthanamdar as if the
sthanam property had been divided per capita immediately before the death of the sthanamdar among
himself and all the members of his family then living,
and the shares falling to the members of his family and
the heirs of the sthanamdar shall be held by them as
their separate property."
"Explanation-For the 1.mrposes of this sub-section
the family of a sthanamdar shall include every branch
of that family, whether divided or undivided, the male
members of which would have been entitled by any
custom or usage to succeed to the po~ition of sthanamdar if this Act had not been passed."
We have considered the scope of this section in Civil Appeal
No. 1137 of 1969.
Hence it is sufficient for our present purpose
to state that in _view of s. 7 ( 3) of the Hindu Succession Acl, it
must be held that on the death of Sreemanavikaraman Raja,
e~h of the members of his tarwad took a per capita share in
the sthanam property as co-owners and not as his heirs.
His
personal heirs took the share which the deceased was deemed to
have got as his share when he was taking his last breath.
Section 7(3) of the Hindu Succession Act embodies a fiction.
The
purpose of that fiction was to gradually abolish the sthanams and
to provide for the devolution of the sthanam properties on the
me!11bers of sthani's tarwad except as regards one per capita share
H
which the personal heirs of the sthanamdar are to inherit as
the heirs of the sthanamdar.
8~Lll9SupC£/72
938
SUPREME COURT REPORTS
[1972] l S.C.R.
The nature of a sthanam was considered by this Court
in K. K. Kochuni and ors. v. The State of Madras and ors.(1)
Therein this Court observed that according to the custom,
sthilnam means a position of dignity and respect and for maintaining that position, properties were attached to that office and the
same was held by the "stani". Stani is solely entitled to the
income of that property during his life time.
The senior most
member of a tarwad usually became the sthanamdar of the
sthanam attached to that tarwad. On his succession to stanom,
he stood separated from the rest of the family.
He solely became
entitled to the stanom property but he gave up his right in the
tarwad property. All the same he and the members of his tarwad
had the same right of succession to the properties of each other
as if his severance from the family had been the result not of his
succession to the stanom, but a voluntary division between him
aad the rest of the family.
Whatever might have been the customary law, s. 7 (3) of
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the Hindu Succession Act-the validil)' of which was not in issue
before us-by a fiction deems that the sthanam property stood
D
divided amongst the stani and the members of his tarwad, a
1-'plit second before his death. From the language of the section,
if is clear that the members of the tarwad took the property as
co-owners and not as the heirs of the deceased stani. This fiction
was created for the purpose of providing for the devolution of
the sthanam properties.
The Act 28 of 1958 came into force
E
-OD!y on May 12, 1958. Therefore that Act cannot have any
effect on the sthanam With whii:h we are concerned in this case
because that stanom stood destroyed on May 2, 1958. Hence.
we need not refer to the provisions of that Act.
The income of the sthanam property during November 1.
1956 to March 31, 1958 was the exclusive property of SreemanaF
vikaraman Raja. He was alone entitled to that income. Therefore he alone was liable to pay the tax. Under the Agricultural
Income-tax Act, no charge is created on property in respect of
the arrears of agricultural income-tax. That being so,
the
liability to pay the arrears of tax due from the dece.ased s•ani
fell on his personal heirs and that only to the extent they received
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.any of his assets.
This position is clear from s. 24 (1 ) of the
Act which provides that "when a person dies,
his executor,
administrator or other IC)gal representative shall be
liable
to
pay out of the estate of the deceased person to the extent to which
the estate is capable of meeting the charge, the agricultural
income-tax assessed as payable by such person or any agricultural
income-tax which would have been payable by him under this
H
A.ct, if he had not died".
(l) [1960] 3 S.C.R. 887.
ASST. COMMR. AGRIC. v. v. K. RAMUNNI (Hegde, J.)
939
A
The assessment made on Kunjunni Raja in his capacity as
the successor sthanamdar was an invalid assessment.
Legally he
never became the sthanamdar.
There was no sthanam after the
death of Manavikraman Raja.
With the death of Manavikraman
Raja the sthanam came to an end.
The only persons who could
have represented the estate of Sreemanavikraman Raja were his
B
personal heirs.
They were not made parties to the assessment.
No notice of the assessment proceedings was given
to
them.
K;μijunni Raja was not one of his legal representatives.
Even if
it is considered that the sthanam properties had devolved on the
members of the tarwad by succession, Kanjunni
Raja alone
could not have represented the entire ~dy of successors numberC
ing 692. There was no question of any bona fide
enquiry by
the assessing authority.
It was clearly a case of misunderstanl! ·
ing the legal position.
Further, it does not appear that Kunjunni
Raja was assessed as the legal representative of the deceased 5tani.
He appears to have been assessed as the successor stani liable
to pay the debts due from the estate.
Hence the assessment was
D
not made in accordance with law,
see Income-tax Officer,
Kozhikode v. Mrs. Susheela Sadananda and anr.(1). In this vie\\
of the matter it is not necessary for us to consider the other
provisions of the Act providing for the assessment and collection
of the tax due from a deceased person.
E
In the result this appeal fails and the same is dismissed with
costs.
V.P.S.
Appeal dismissed.
(I) 571.T.R. 168