Minor can own any property but cannot sell
Selling of minor’s property is a tricky issue. The reason is that a minor person of less than 18 years of age can own any property but cannot take a decision on selling of it or sign a document relating to sale as per Section 11 of the Indian Contract Act, 1872, despite the urgency for selling it for his or her welfare needs.
Therefore, a minor person cannot independently sell any property or a share in any joint property owned by him but the property can only be sold by his/her natural guardian with the permission of the District Court.
The concept of guardianship
A guardian is a person who has powers and the concomitant responsibility to act for the welfare of the minor and his property.
The legal concept of guardianship of property stems from the idea that minors or infants are incapable of managing their own property-related matters.
The two laws governing it are the Guardians and Wards Act, 1890 (GAWA) and The Hindu Minority and Guardianship Act 1956 (HMGA).
Who is a minor as per law?
A minor is a person who has not attained his majority, under the provisions of the Indian Majority Act, 1875. As per section 3(1) of the act every person domiciled in India shall attain the age of majority on completion of 18 years.
A minor, as per HMGA, means a person who has not completed the age of eighteen years.
The GWA specifies that there is a guardian for both a minor and his property.
Disposal of property must be as per HMGA & GAWA
The disposal of property of a minor or creating a charge on it, by the natural guardian under Hindu law is governed by Section 8 of HMGA and Section 29 of the GAWA.
The natural guardian of the minor will have to file a petition under Guardians and Wards Act in the District Court to seek its permission to sell the share of the minor. The court should give permission to sell or create any charge on the property only when there is necessity or for an evident advantage of the minor.
The act, as per its Section 8(2)(a), restricts the natural guardian from mortgaging, charging, selling, exchanging or gifting any part of the immovable property of the minor, without prior permission of the District Court.
The natural guardian also has to obtain the permission of the court, for leasing out the property owned by the minor to any person.
Therefore, the permission of the District Court is necessary for the guardian to sell minor’s property as per Section 8 (2) of the HMGA, within the limitation period of three years under Article 60 of the Limitation Act.
The sale of minor’s property done in violation of Section 8(2) of the HMGA is voidable by the minor or any other person claiming under him, as per Section 8(3) HMGA [Murugan & Others v Kesava Gounder ( Dead) through LRs& Others].
Therefore, the sale remains valid until it is set aside by the court. A document which is voidable need to be set aside, so as to avoid it remains as a legally valid document.
The form and procedure for applying for guardianship
The form and procedure for applying for guardianship of a minor is described in GAWA, particularly in its Section 10 and 11.
The HMGA is a later law that codifies in detail certain aspects relating to minority and guardianship among Hindus. It is a supplementary law of the GAWA pertaining to Hindus alone.
No guardian needed for minor’s undivided interest
If the minor has an interest in the undivided joint family property and the property is under the management of an adult member of the family, then there is no need for appointing a guardian for the minor’s undivided interest.
No permission needed in selling a Hindu minor’s undivided interest
In case of the undivided property of a Hindu minor, the Allahabad High Court in Smt Preeti Arora v Subhash Chandra Arora & Another says, no permission of the District Court is needed by the adult head of Hindu family for disposing of the undivided interest of the minor in joint family property, on a combined reading of Sections 6, 8 and 12 of the HMGA.
The Section 6 of the act provides that for a Hindu minor and the minor’s property (excluding their undivided interest in joint family property), the father shall be the natural guardian and after him the mother is the natural guardian.
The Section 8 of the HMGA describes the powers of a natural guardian including the power to dispose of the property of the minor with due permission.
The Section 12 of the act provides that where the minor has undivided interest in joint family property which is managed by an adult member of the family, no guardian may be appointed in respect of such undivided interest.
Therefore, the previous permission of the District Court under its Section 8 is not required for disposing of the undivided interest of the minor in the joint family property.
De facto guardian cannot deal with minor’s property
A de facto guardian of a minor, as per Section 11 of the HMGA, is not entitled to dispose of or deal with the property of a Hindu minor merely on the ground of his or her being the de facto guardian. If a de-facto guardian transfers a minor’s property, that is void and can be repudiated. A void deed need not be set aside but a voidable deed need to be set side. [Madhegowda (Dead) by LRs v Ankegowda ( Dead) by LRs & Others : (2002) 1 SCC 178].
Parents can buy property in minor’s name
However, there is no legal impediment to registering a property in the name of a minor by his guardian.
The guardian of the minor can buy property in name of the minor by signing the contract by the natural or legal guardian of the minor. The purchase deed can be executed by the natural or legal guardian and after which it can be registered under the Registration Act, 1908.
Anyone can bequeath property to a minor
Any person can bequeath property to a minor by way of a Will. The law governing the Will is the Indian Succession Act, 1925, which is applicable to all communities except Muslims.
The law of succession determines the manner of devolution of property in case a person dies without making a Will. When a person dies intestate without executing a Will, his legal heirs including minors will be entitled to the share in his/her properties as per the law of succession applicable to the religion of the deceased person.
A person belonging to Hindu religion would be governed by the Hindu Succession Act, 1956, a Muslim would be governed by the Muslim Personal Law and a Christian would be governed by the Indian Succession Act, 1925.
Minor when attains majority can repudiate a sale deed
However, when the minor attains the age of 18 years, he/she can repudiate or validate the sale deed, if the transfer was done without District Court’s prior permission.
He must exercise such an option within the limitation period of three years from the date on which he attains majority.
A minor cannot accept any gift carrying liability
A minor cannot accept an immovable property as an onerous gift, which carries some liability.
However, if the minor acquiesces to the onerous gift after becoming competent to contract either expressly or by conduct, he cannot repudiate the gift later on.
Value of the gift will be treated as income
In case a minor receives a property worth more than Rs 50,000/- in the form of gift, the market value of such property has to be treated as his income, in the year in which the property is received.
The income of the minor is to be clubbed with that of the parent, as per Section 64(1A) of the Income Tax Act. The parent in whose income the income of the minor is clubbed is given an exemption of allowance of Rs.1500/- per child u/s 10(32) of the Act.
If the gift is received from some specified relatives like parents, maternal and paternal uncles and aunts, as well as grandparents, the gifts are fully tax-free in the hands of the minor.
Minor can purchase immovable property
A minor can acquire immovable property out of his own funds. Any agreement for the purchase of an immovable property, has to be executed by his natural or legal guardian on behalf of the minor, as the minor is not competent to contract. While acting on behalf of a minor, the guardian has to act in utmost faith, for the benefit of the minor.
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