SITAL PRASAD SINGH Vs. AJABLAL MANDER

JUDGEMENT

(1.) THIS is a defendants appeal from a decree of the learned Subordinate Judge of Bhagalpur decreeing the plaintiffs claim in a mortgage suit. The plaintiffs brought the suit out of which this appeal arises to enforce a simple mortgage dated 21st February 1921, which had been executed by defendant 1 for himself and as guardian of his minor sons, defendants 4 to 7, by defendant 2 for himself and as guardian of his minor son, defendant 8, and by Deo Narain Singh, since deceased, for himself and as guardian of his minor sons, Anant Lal Singh and Sital Prasad Singh, defendant 3. The mortgage was for a sum of Rs. 2000 which was to carry interest at the rate of 12 per cent, per annum compoundable yearly. The mortgagee was Saukhi Mandar, deceased father of plaintiff 1 and grandfather of plaintiff 2 and great-grandfather of plaintiffs 3 and 4. The consideration for this mortgage, namely Rs. 2000, was required for the payment of part of the purchase price of certain property purchased on behalf of the defendant family and to pay an antecedent debt and househeld expenses. Certain payments were made from time to time and the suit was brought to recover Rs. 6838-12-0 being the amount of principal and interest then due. The learned Subordinate Judge held that the plaintiffs were entitled to a mortgage decree, but he was of opinion that the rate of interest, namely 12 per cent, per annum compoundable yearly, was excessive. He allowed simple interest at 12 per cent, per annum and accordingly decreed the claim for Rs. 4402. Against this decree the defendants other than the executants of the mortgage bond have preferred the present appeal. The defendants form a joint Hindu family and by way of defence it was pleaded by the minor members of the family that the mortgage bond in suit was not for legal necessity and such has been the contention before us today. 3. In the first place it was argued that the part of the consideration for this mortgage, viz. Rs. 1425, which was applied towards the payment of the purchase price of property bought by the family, could not possibly be regarded as money borrowed for legal necessity. It appears that on the day before this mortgage was executed, i.e. the 20 February 1921, the three adult members of the family, who executed the mortgage deed, purchased certain property from Pareyag Kapri in Mauza Kenuar and Rs. 1425, part of the money borrowed from the plaintiffs, was applied in paying Pareyag Kapri for this property. Both the sale deed and the mortgage were registered on the same day, namely the 23 February, 1921. It has been urged on behalf of the defendant-appellants that the plaintiffs wholly failed to prove that there was any need whatsoever for the family to purchase this property and that mortgaging the ancestral property in order to pay the purchase price was a speculative and risky transaction. The learned Subordinate Judge held that it was a transaction beneficial to the estate and family and such as a reasonably prudent manager of an estate would enter into. Before us it has been contended that there is no evidence whatsoever to support this finding. Plaintiff 1 himself gave evidence and stated that the holding purchased by the defendant family was a productive holding and yielded more paddy than did the plaintiffs own holding which was contiguous to it. 4. According to the plaintiffs, their own land yielded 4 to 5 maunds of paddy per bigha. If the purchased property was more productive, then it is clear that it would yield some 90 maunds of paddy at the rate of about 6 maunds per bigha, the purchased property being 15 bighas odd. If 90 maunds of paddy could be raised from the purchased land, then it would yield approximately a profit of about Rs. 180. Such would be more than sufficient to cover the interest at the rate allowed by the Subordinate Judge. Counsel for the appellants argued strenuously that the Court should not rely upon a general statement such as that made by the plaintiffs in this case. He has argued that the plaintiffs should adduce definite evidence of the actual amount of produce raised by the defendants yearly from the land in suit. Clearly the plaintiffs can never be in a position to give such evidence. All the plaintiffs can do is to produce the best evidence they can to show that the purchase of the property by the defendant family was a transaction which at the time it was entered into was beneficial to the estate. 5. In the present case they have shown that the produce of the land is more than sufficient to pay the interest; but that is not all. The transaction was entered into by the three adult members of the family, and a Court may safely assume that these three members would not act unreasonably. Clearly, they must have thought at the time that the transaction was for the benefit of the family, and it appears to me that subsequent events have abundantly established this. The family has retained this property and actually owns it today. 6. In these circumstances, it is very difficult for any Court to hold that the transaction was not for the benefit of the estate. Further, the defendants held land in this village and at the time they entered into the transaction under discussion they also purchased shares in the village from other persons. In short, the defendants were increasing their holding in this village, presumably, with a view to making it more productive and economic. In those circumstances, the learned Judge accepted the plaintiffs contention that this transaction was for the benefit of the family. 7. The only evidence adduced by the defendants is hardly worthy of notice. One so-called independent witness was called to state that the purchased property was not productive. The witness held property near by, and when he was asked how many maunds of paddy he raised per bigha, he wanted the Court to believe that he did not know. When a witness of that kind is put forward, it is impossible to say that the learned Judge was wrong in rejecting the defendants evidence. 8. Reliance has been placed by counsel for the appellants upon a case of this Court, Ram Bilas Singh V/s. Ramyad Singh A.I.R (1920). Pat. 441. In that case it was held that actual compelling necessity was not the sole test of the validity of an alienation by a manager acting without the express consent of the other members and a Bench laid down that when it could be shown that the transaction was one which was clearly beneficial to the interests of the family as a whole, such was valid, and the consent of the other members would be implied though not expressly given. In this particular case it was eventually held that a purchase of property was not beneficial to the estate and that money borrowed to finance the purchase was not borrowed for legal necessity. Certain observations of Dawson Miller C.J. have been relied on by the appellants; but in my view those observations must be confined to the particular facts of the case. At page 627 the learned. Chief Justice observed: It is not desirable to lay down any general proposition which would limit and define the various oases which might be classed under the term beneficial as above used. It is clear however that all transactions of a purely speculative nature would properly be excluded. 9. The Court appears to have thought upon the evidence that the transaction was a risky and speculative one and nowhere does the learned Chief Justice lay down that facts such as established in this case do not prove that the transaction was beneficial to the estate and the family as a whole. THIS case to which I have referred was cited in Jan Mahammad V/s. Bikoo Mahto (1929) 16 P.L.T. 811 where a Bench of this Court held that a manager of a joint Hindu family has power to charge ancestral property by loan or mortgage in case of need or for the benefit of the estate. The test in each case is whether it was a transaction into which a prudent owner would enter in the ordinary course of manage, ment in order to benefit the estate. In this case the case in Ram Bilas Singh V/s. Ramyad Singh A.I.R (1920) . Pat. 441 was closely considered and the effect of the decision discussed. It is pointed out that the earlier case laid down no general proposition and was a decision upon the facts of that particular case. 10. The question has been very recently considered by this Court in Baijnath Prasad V/s. Binda Prasad Singh A.I.R (1939) . Pat. 97 in which it was held that the karta of a joint Hindu family being merely a manager and not an absolute owner, the Hindu law has, like other systems of law, placed certain limitations upon his power to alienate property which is owned by the joint family. The Hindu law givers however could not have intended to impose any such restriction on his power as would virtually disqualify him from doing anything to improve the conditions of the family. The only, reasonable limitation which can be imposed on the karta is that he must act with prudence, and prudence implies caution as well as foresight and excludes hasty, reckless and arbitrary conduct. The manager is not allowed to enter into any transaction which is speculative or fraught with risks or which may involve a possibility of loss to the family and the Court will not encourage him either to part with the joint family property or to encumber it merely in order to increase the immediate income of the property, because a prudent person will not sacrifice a certain and stable income in favour of the mere prospect of a better income. 11. In exceptional circumstance however, the Court will uphold the alienation of a part of the joint family property by a karta for the acquisition of new property, as for example where all the adult members of the joint family with the knowledge available to them and possessing all the necessary information about the means and requirement of the family are convinced that the proposed purchase of the new property is for the benefit of the estate. 12. These authorities make it abundantly clear that this Court does not confine legal necessity to transactions of a purely defensive nature. If transactions are entered into which benefit the family and the estate and are such as a reasonably prudent man would enter into, such can be said to be supported by legal necessity. The view taken by this Court has been consistently held of late by the Allahabad High Court--see the Full Bench decisions in Jagat Narain V/s. Mathura Das and Amrej Singh V/s. Shambu Singh . These two cases were later considered in the Full Bench case in Ram Nath V/s. Chiranji Lal in which it was especially laid down that the expression "for the sake of the family" occurring in the text of the Mitakshara or the expression "benefit of the estate" has a wider meaning than mere compelling necessity, and is not limited to transactions of a purely defensive nature. 13. The Full Bench further held that the authority of the case in Jagat Narain V/s. Mathura Das had not been overruled or shaken by the Privy Council decision in Benares Bank Ltd. V/s. Hari Narain . In this latter case their Lordships of the Privy Council held that a mortgage securing a loan to finance a business which was not ancestral was not binding on the minor members of the joint family and Mukerji J. in his judgment in Amrej Singh V/s. Shambu Singh was of opinion that this decision of their Lordships overruled the earlier Allahabad case, Jagat Narain V/s. Mathura Das . Sulaiman C.J. and King J. took a contrary view and this latter view was accepted in the most recent Full Bench case, Ram Nath V/s. Chiranji Lal . 14. A contrary view appears to have been taken by Wort J. in Ramkaran Thakur V/s. Baldeo Thakur A.I.R (1938) . Pat. 44. He held that although no precise definition of what is a benefit to the joint family estate can be given, it is well established that jeopardizing a property, which is already the property of the joint Hindu family, for the purpose of purchasing another property can never, under any circumstance, be considered a benefit to the estate. Rowland J, who was also a member of the Bench, did not agree with the proposition laid down by Wort J. In that particular case the transaction was such as no reasonably prudent man would have entered into, and Rowland J. held upon that ground that the transaction was not supported by legal necessity. In my judgment the observations of Wort J. are not in accordance with the authorities of this Court supported as they are by the decisions of the Allahabad High Court to which I have referred, which have laid down that an alienation of family property may be supported by legal necessity if the transaction was at the time when it was entered into for the benefit of the family and was such as a reasonably prudent man would enter into at that time. 15. In the present case, as I have stated, all the adult members joined in this transaction. The property purchased was in the village in which the family already owned property, and from the evidence of the plaintiff coupled with the fact that this property has been retained, it is clear that the purchase was from the financial point of view a profitable transaction. It was a transaction for the benefit of the estate and family and eminently one which a reasonably prudent manager would enter into. In these circumstances, the adult members of the defendants family were entitled to raise money and to charge the family property with the repayment of that money. That being so, the learned Judge was right in holding that legal necessity had been established for this item. 16. I have some doubt whether the plaintiffs were bound to prove legal necessity with regard to the item which I have discussed. The adult members of the family negotiated with Pareyag Kapri for the purchase of his property, and on 18 February 1921 had made a contract with him and paid a certain sum as earnest money. The sale deed was executed on 20 February 1921, and on that day the family owed Pareyag Kapri a sum of Rs. 1425. On the following day this money was borrowed from the plaintiffs and the mortgage executed. It may be argued that this mortgage was entered into in order to obtain money to pay an antecedent debt, and if that be the true view of the transaction no question of family necessity arises. On behalf of the appellants however, it could be contended that the borrowing was in fact a part of the transaction of purchasing this property. THIS aspect of the case however was not pressed before us. The matter is not of great importance, because, however the borrowing is regarded, the mortgage, in my view, was a valid one which was binding on the property. If the money was bor. rowed to pay an antecedent debt, clearly the mortgage bound the property. On the other hand, if the borrowing was part of the transaction of purchasing the property, then the mortgage is a valid one for legal necessity by reason of the fact that the transaction was one which was beneficial to the estate and the family and was one which a prudent manager would have entered into. Ho argument has been addressed to us upon the evidence as to the other item which goes to make up the total sum of money advanced. The learned Judge held that legal necessity was established for this item and with that view I agree. The interest given in the decree exceeds the principal sum by Rs. 402. It has been contended by the appellants that Secs.9,10 and 11, Bihar Money-lenders Act, apply to this case; but this Bench is bound by the Full Bench decision in Sadanand Jha V/s. Aman Khan A.I.R (1939) . Pat. 55. THIS point involves a construction of various Secs.of the Government of India Act, and that being so, it appears to me to be a fit case in which a certificate should be granted under Section 205 of that Act. Manohar Lall J. 17. I agree. The very nature of the question, which requires to be answered in the present case, namely whether the mortgage of the ancestral property of the defendants in order to pay the purchase price of Pareyag Kapri's land was a speculative and risky transaction, indicates to my mind that this is eminently a question of fact and must be answered on the findings of facts and circumstances of this particular case. THIS view is in accord with the quotations from several judgments of this Court given by my Lord the Chief Justice in the judgment just delivered. But the learned advocate for the appellants relied strongly on the observations of Wort J. in Ramkaran Thakur V/s. Baldeo Thakur A.I.R (1938) . Pat. 44 where the learned Judge states at p. 172: I have no hesitation in going so far as to say that jeopardizing a property, which is already the property of the joint Hindu family, for the purpose of purchasing another property can never under any circumstances be considered a benefit to the estate. 18. The facts found in that case were that the money was taken by a joint family on the security of a mortgage bond, in order to obtain a usufructuary mortgage of certain property. The final Court of fact had found that the income of the property which the ancestors of the defendants took in usufructuary mortgage from the plaintiffs was Rs. 60 per annum only out of which Rs. 9 was payable as Government revenue with the result that the profit was only Rs. 51 a year excluding the collection charges: but the interest payable to the mortgagees was about Rs. 75 a year calculating at a simple rate although interest in arrears was agreed to be compounded. The learned Subordinate Judge put the question to be answered in this form: "the question is whether on these facts the transaction was for the benefit of the joint family." He after a review of the entire evidence in the case came to the conclusion that the transaction appeared on the face of it to be of a speculative character and disadvantageous to the interest of the joint family. I am of opinion, therefore, that it was not necessary for Wort J. to lay down the proposition in the broad form which is enunciated in the quotation referred to, because the finding of fact was quite sufficient to dispose of the appeal. But as the observation in quotation is couched in a general form I, with great respect, give my reasons why I do not agree with it. In the very decision of the Judicial Committee referred to by the learned Judge at p. 171 of Palaniappa Chetty V/s. Devasikamony Pandarasannadhi A.I.R (1917) . P.C. 33 it is stated that in their Lordships view it is impossible to give a precise definition of it (benefit to the estate) applicable to all cases. In the case of Ram Bilas Singh V/s. Ramyad Singh A.I.R (1920) . Pat. 441 also referred to by Wort J., the learned Chief Justice at p. 627 states: It is not desirable to lay down any general proposition which would limit and define the various oases which might be classed under the term beneficial as above used. It is clear however that all transactions of a purely speculative nature would properly be excluded. 19. In my opinion these two authorities amply justify the view that it is impossible to lay down any hard and fast rule as to what should be and what should not be regarded as a purely speculative transaction in a particular case. In every case the Court of fact will consider prominently and accurately whether the transaction which is sought to be enforced in a particular case was for the benefit of the estate and this must be decided not from any a priori arguments but upon the facts of each case. 20. I agree with the doubting opinion expressed by Rowland. J., that it is impossible to endorse the proposition that it can never be beneficial to an estate to acquire a fresh property by hypothecating ancestral property for the purpose. 21. It is to be noticed that Rowland J. was able to dispose of the case upon the clear findings of facts in the case which were that the transactions in question were not such as a prudent manager would or should have entered into on behalf of the family estate.