State Bank of India v. Ghamandi Ram
AIR 1969 SC 1330 • Classroom-style explainer in simple English
Quick Summary
This case asks a simple but important question: when a Mitakshara joint family runs a firm, is it an “individual” or a “body of individuals” for a bank deposit exemption under a 1952 notification related to evacuee property? The High Court treated the deposit as an individual’s and allowed recovery. The Supreme Court reversed. It said a Mitakshara joint family firm acts like a corporate group for its ancestral property (“unobstructed heritage”). So, it is a “body of individuals,” not an “individual.” The exemption did not apply, and the deposit stood vested in the Custodian.
Issues
- Does Messer’s Ghamandi Ram Gurbax Rai (a joint family firm) fall within the exceptions to the 19-02-1952 Notification that exempts cash deposits made by “persons other than companies or associations or bodies of individuals whether incorporated or not”?
- Can a son of Hindu parents, married under the Special Marriage Act, still be considered a member of his father’s Mitakshara joint family?
Rules
Under Mitakshara law, “unobstructed heritage” flows to the joint family as a whole. The family, as a corporate-like unit, owns this property with its natural additions. Branches inside the larger family can also be treated as smaller corporate-like units with their own “unobstructed heritage,” owned by that branch collectively.
Facts (Timeline)
The joint family firm, Messer’s Ghamandi Ram Gurbax Rai, maintained a cash credit account in the Imperial Bank of India, Bhawalpur (now in Pakistan).
Balance of Rs. 2,541/11 remained in that account.
Cash deposits in banks vested in the Custodian of Evacuee Property. Notification dated 19-02-1952 exempted deposits “by persons other than companies or associations or bodies of individuals whether incorporated or not.”
Karta Ghamandi Ram applied under the Displaced Persons (Debt Adjustments) Act, 1951, to recover the balance with 6% interest, arguing it was not evacuee property.
Application dismissed: under Pakistan law, the deposit had become evacuee property and vested in the Custodian.
Allowed the application: treated the deposit as made by an individual and thus exempt under the notification.
Reversed the High Court: a Mitakshara joint family firm is a “body of individuals,” so the exemption does not apply.
Arguments
Appellant (State Bank of India)
- The firm is a joint family unit; not an “individual.”
- Notification excludes “bodies of individuals”; exemption cannot apply.
- Under Pakistan’s evacuee property regime, the deposit vested in the Custodian.
Respondent (Ghamandi Ram)
- Deposit should be seen as made by an individual (the Karta) for the family.
- Therefore, the notification’s exemption applies; liability of the bank continues.
- Family membership continues even with marriage under the Special Marriage Act.
Judgment
The Supreme Court allowed the appeal and set aside the High Court’s order. Having regard to the juristic character of a Mitakshara joint family, the firm cannot be called an “individual.” It is a “body of individuals,” whether incorporated or not, for the purpose of the 19-02-1952 notification. Hence, the exemption did not cover the deposit. The deposit accordingly vested in the Custodian under the applicable evacuee property law.
Ratio
A Mitakshara joint family—owning “unobstructed heritage” as a collective—functions like a corporate body. Such a family (or its branch) is not an “individual” for the notification. It fits the category “body of individuals,” so the individual-only exemption does not apply.
Why It Matters
- Classification clarity: Helps classify joint family firms for statutory exemptions and liabilities.
- Banking & custodian law: Guides how deposits are treated when evacuee property laws operate.
- Family law link: Confirms that Mitakshara concepts shape outcomes beyond pure personal law contexts.
Key Takeaways
- Mitakshara joint family ≠ individual; it is a body of individuals.
- “Unobstructed heritage” is owned by the family as a collective unit.
- Exemptions for “individual” deposits do not cover joint family firms.
- Marriage under the Special Marriage Act does not, by itself, break joint family membership.
Mnemonic + 3-Step Hook
Mnemonic “FIRM = FAMILY INC.” — In Mitakshara, the family acts like an incorporated body.
- Spot the unit: Is it a Mitakshara joint family firm?
- Classify correctly: Treat as “body of individuals,” not “individual.”
- Apply statute/notification: Only individual-specific exemptions are out.
IRAC Outline
Issue
Is a joint family firm an “individual” or a “body of individuals” under the 1952 notification on bank deposits?
Rule
Mitakshara joint family owns “unobstructed heritage” collectively; it functions like a corporate body, including branches.
Application
Since the firm is a collective unit, it falls under “body of individuals,” so the “individual” exemption is unavailable.
Conclusion
Deposit vested in the Custodian; High Court order set aside; appeal allowed.
Glossary
- Mitakshara
- A traditional Hindu law school where coparceners hold ancestral property jointly.
- Unobstructed Heritage
- Ancestral property that passes by birth to the family as a unit.
- Body of Individuals
- A collective of persons treated as one unit for certain legal or tax purposes.
- Custodian of Evacuee Property
- Authority in charge of property left by persons who migrated during Partition.
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