Posted On by &filed under Allahabad High Court, High Court.

Allahabad High Court
Bankey Lal vs Nattha Ram And Anr. on 18 October, 1927
Equivalent citations: AIR 1929 All 199
Author: Ashworth


Ashworth, J.

1. This appeal arises out of a suit brought by the plaintiff-appellant against the defendant-respondents for setting aside a deed of sale executed by defendant 2, Shyam Lal, father of the plaintiff, in favour of Nattha Ram, defendant 1. The admitted facts are that Chiranji Lal, grandfather of the plaintiff and father of defendant 2 carried on the business of publisher and bookseller in conjunction with Nattha Ram, defendant 1. On the death of Chiranji Lal the partnership was maintained by Nattha Ram along with Shyam Lal. At the end of that time Shyam Lal having no inclination to continue the partnership arranged with Nattha Ram to terminate the same and divide some of the assets and sell other of the assets to Nattha Ram. The plaintiff’s contention is that the disposal of the assets by Shyam Lal was for a price and consideration which was prejudicial to his interest as minor son of Shyam Lal.

2. The lower Court dismissed the suit. It held that nothing in Hindu law could compel Shyam Lal to continue the partnership merely because he had a minor son who along with himself, was interested in his (Shyam Lal’s) share of the assets of the business. This decision of the lower Court has been impugned by counsel for the appellant but, in my opinion, on no valid ground. The manager of a joint Hindu family who is partner in a business cannot be required to continue the partnership when he no longer desires to do so and especially when, as in this case, he considers that he is incapable of giving assistance as partner. It may be remarked that in the plaint the allegation was made by the plaintiff that Shyam Lal was a man Without capacity or ability. This admission in itself furnishes a solid ground for Shyam Lal deciding not to continue the partnership. There were two houses among the assets of the partnership. When the partnership was dissolved between defendant 2 and defendant 1, the more valuable of the houses went to Shyam Lal and the other to Nattha Ram. A value was put on each house and the difference was taken into account in the disposal of the other assets of defendant 2 to defendant 1. It is said by the plaintiff-appellant’s counsel that the sale of the other assets to Nattha Ram was for an insufficient amount. I consider it open to doubt whether when once it is shown that a sale by a Hindu father and manager is necessary, any suit will lie against the vendee on the ground of insufficiency of price inasmuch as the father is empowered to make arrangements for the sale and the vendee can scarcely be expected to see that the price is inadequate. At any rate it is clear to me that no such suit would lie against the vendee in the absence of fraud or collusion being proved against the vendee. No such fraud or collusion has been proved in this case.

3. The main point made by counsel for the appellant is that in the sale-deed which, it is desired to set aside, various mortgage bonds were included as sold to defendant 1. The rate of interest borne by these bonds is not entered in the sale-deed. The failure to enter the particulars of interest does not amount to any fraudulent concealment. Appellant’s counsel suggests that the failure to enter this rate of interest amounted to fraudulent concealment. He says that if this rate of interest were shown it might be obvious that these bonds were handed over by defendant 2 to defendant 1 for an insufficient consideration. It appears to me sufficiently clear that these mortgage bonds must have been registered and it was easy for any person who was interested in the matter to get copies of these bonds and find out the interest. The mere fact that the sale-deed did not go into the particulars of the interest accruing on these mortgage bonds did not amount to any fraudulent concealment. The consideration for these mortgage bonds was, it appears, the amount due as principal on them according to the bonds. Nattha Ram would have to spend money in suing on them. It is conceivable that although they were secured, the security might in some cases be inadequate. It was open to the appellant to produce in Court the mortgage bonds in order to show the interest due. He did not think it desirable to do so. In these circumstances I would hold that no insufficiency of price for these bonds is proved and that certainly no such insufficiency is proved as to justify the conclusion that the sale by defendant 1 to defendant 2 was fraudulent or collusive. We have to look at the state of affairs at the time of the date of the sale. It seems obvious that no outsider would have been likely to give to Shyam Lal for his and his son’s share in the assets of the partnership, dissolved or not dissolved, as good a price as was given by defendant 1. Defendant 1 was continuing the business and obviously the stock, the book debts and the good will would be more valuable to him than to an outsider. No attempt has been made to prove that these assets would have fetched a larger sum if offered to any one else and the contrary seems to me to be a certainty. This being so, it cannot be said that the sale was for an insufficient sum, and the suit of the plaintiff was rightly dismissed. I would note that the plaintiff asks for compensation from defendant 1 in respect of moveable property purchased by him from defendant 2 and disposed of to others. In my opinion Hindu law would not afford any such relief. Whether an action in tort would lie is also doubtful, but it is certain that it would only lie on the ground of collusion or fraud by the vendee. None such has been proved.

4. For the above reasons I think that the lower Court was quite right in dismissing the suit and I would dismiss this appeal with costs on the higher scale.

Sulaiman, J.

5. I concur in the conclusion arrived at by my learned brother. The contention that there was no legal necessity for the transfer is, in my opinion, without any force. Relations of strangers with joint Hindu families, when they enter into transactions of partnership, are not governed strictly by the Hindu law but by the Contract Act. If a manager of a joint Hindu family has power on behalf of the family to enter into partnership with strangers, he has equally powers to dissolve such partnership. It is, therefore, impossible to accept the contention that the father was not competent to put a stop to this business, particularly when it was admitted in the plaint that he was wholly incompetent to carry it on. When the father decided that the business was not profitable and that he could not carry it on with profit, there was full justification for his dissolving it. There was thus necessity for the transaction.

6. The next question is whether the son can challenge the sale on the ground that the consideration was grossly inadequate. I am not prepared to say that once necessity has arisen for the transfer of ancestral property the sale by the father is always binding on the minor members no matter whether the consideration is grossly inadequate or not. In cases of mortgages their Lordships of the Privy Council have frequently laid down that there may be necessity for the transfer at a certain rate of interest but there may not be necessity for the high rate charged. I am, therefore, not prepared to hold that the plaintiffs’ suit would fail automatically as soon as it is found that there was necessity for putting a stop to the business.

7. If the transaction, as is contended on behalf of the respondents, amounted to nothing more than a mere winding up of the business, it would certainly be doubtful whether the minor son can have the whole thing re-opened. Assuming, however, that it was a sale pure and simple I agree with my learned brother that it is not established that the consideration paid for the sale is inadequate.

8. The property transferred consisted of moveables and immovables. In view of the cases referred to in Nand Ram v. Mangal Sen [1903] 31 All. 359, I am bound to assume that the restrictions on the power of a Hindu father to alienate immovable property are equally applicable to transfers of moveables.

9. It has, however, been suggested that inasmuch as the sale took place several years ago and there is no likelihood that the moveable properties now exist, his suit ought to fail because in Hindu Law no equitable relief for compensation can be granted. I choose to reserve my final opinion on this question as no authority either way has been cited before us. 1 am, however, inclined at first sight to hold that equitable relief of compensation can be granted even where the goods have been disposed of by the defendant-vendee. If this were not so, the position would be anomalous. The result of a suit brought by the minor member to avoid the alienation would depend not on the merits of the case but on the conduct of the defendant, whether he has or has not, by the time the suit is brought, disposed of the moveable properties. In many suits for setting aside alienations by limited owners equitable doctrines have been invoked and compensations have been awarded by the Courts. I would, therefore, not be prepared to dismiss the suit on the mere ground that moveable properties which were transferred under the deed might have been disposed of by the defendants. As a matter of fact, this question has not been gone into and we cannot be sure that all the moveable properties that were transferred are not now in the possession of the defendant. I however, agree that the appeal must fail.

10. The appeal is dismissed with costs including in this Court fees on the higher scale.

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