Inspector Singh And Anr. vs Kharak Singh And Ors. on 9 March, 1928

Allahabad High Court
Inspector Singh And Anr. vs Kharak Singh And Ors. on 9 March, 1928
Equivalent citations: AIR 1928 All 403
Author: Mukerji


Mukerji, J.

1. The appellants before us were the plaintiffs in the suit out of which this appeal has arisen. The plaintiffs are two in number and are the sons of defendant 1 Kharak Singh. Defendant 1 made a simple mortgage of a portion of the ancestral joint family property in favour of the remaining defendants by a document dated 19th September 1921 for the sum of Rs. 7,000. The plaintiff’s case was that their father was immoral and within three years of the death of their grandfather had squandered away a sum of Rs. 20,000 left in cash by the grandfather and had created charges to the amount of Rs. 20,000 on the family property. The plaintiffs sought a declaration that the mortgage of 19th September 1921 was executed for a purpose which was immoral and which did not benefit the family and that therefore the family property was not liable under the mortgage.

2. Defendant 1 did not enter an appearance. The other defendants who are father and sons, contended that the mortgage was executed in order to raise money to purchase a motor lorry, that the motor lorry was meant to be plied on hire between two stations in the district and that the transaction was meant “for the improvement of the business and benefit of the family” and that, therefore, the transaction was binding on the plaintiffs. It appears that in the Court below it was contended by the defendants that the property mortgaged was the exclusive property of defendant 1. In the bond itself it recited that the property hypothecated was the exclusive property of the executant, but this contention was given up at a later stage, and it is now common ground that the property hypothecated was the joint ancestral property of the father and the sons. On the issue as to how the mortgage was executed and whether the same was binding on the plaintiffs, the learned Subordinate Judge arrived at the following findings. He held that although it was true that the father, Kharak Singh, was given to drinking and was also in the habit of visiting prostitutes, the transaction could not be impeached upon the ground of immorality and that his intention was to supplement the income of the family property which amounted to about Rs. 1,600 a year, that in making such an attempt by running a motor lorry he was following the example of some others in the neighbourhood, that a part of the income from the hire earned by the lorry was spent for the maintenance of the family and that for all those reasons given the mortgage was binding on the plaintiffs.

3. It has been contended on behalf of the appellants that the learned Judge has taken an entirely erroneous view of the position of a Hindu father. It was said that a Hindu father’s rights to interfere with the family property and to raise loans on the same were strictly limited and that, in any case, he could not hypothecate the family property in order to start a new venture, such as the plying of a motor lorry for hire. On behalf of the respondents, the creditors, it has been contended that the family property did not yield the sum of Rs. 1,600 a year as found by the learned Judge, that the income from the property was hardly sufficient for the maintenance and support of the family, that the father was acting within his rights and authority if he sought to supplement the family income by the new venture and that the Court below was right in upholding the mortgage. It being the fact that the learned Counsel for the respondents is prepared to challenge the finding of the learned Subordinate Judge as to the income from the landed property, it is necessary to arrive at a finding of fact on this point.

4. It appears that Man Singh, the father of defendant 1 and grandfather of the plaintiffs, died about three years ago. In his lifetime he had a large cultivation and he cultivated a good deal of land besides sir. According to Gendan Lal, one of the patwaris examined in the case, Man Singh and his brother Lal Singh together cultivated land and the annual income from this cultivation alone was about Rs. 800 in the share of Man Singh. It is clear on the evidence that Kharak Singh gave up cultivation not only of the lands which were not sir but also of the sir lands. The result is that all the lands are now sublet to tenants. In the circumstances it was possible to have a clear estimate of the income from the landed property as it is recorded in the village papers. Certain copies of khewat and khataunis have been filed, but it is not pretended that the khataunis are complete and that any fair inference cart be deduced from them. The solid fact which we have got is this: that the land revenue paid by Kharak Singh and his sons is Rs. 470-9-0 a year. That being so we can very fairly estimate the net profit from the property at the figure Rs. 600 a year.

5. The family of Kharak Singh consisted of himself, his mother, his wife and the two minor children, the plaintiffs. The first question that arises in the circumstances is whether the income from the property was such as would suffice for the maintenance of the family without it being necessary to raise money for the support of it. It is clear that although Kharak Singh had given up the cultivation which in itself yielded a fair return, an income of Rs. 600 a year would, ordinarily, be sufficient for a family of the status and position of Kharak Singh. The family lived in a village and were by caste Rajputs. We find it impossible to hold that the mortgage is supported by “legal necessity” as that term is usually understood.

6. The contention, however, of the learned Counsel for the respondents was that although the income from the family estate may have been just sufficient for the support of the family, the father was not bound to remain contented with the income of the estate and he was in every way entitled to augment the income of the family by engaging in a reasonable trade and to give the family the full benefit of the augmented income.

7. There can be no doubt that, generally speaking, every man, especially one who has a family to support, is entitled to embark upon any recognized trade and to make every effort to augment his income for the benefit of himself and his family. But the question that we have to answer is whether under the Hindu law a father may be permitted to utilize not only his share, but also the shares of his minor sons for the above-mentioned object. We cannot decide the case on our abstract notions of a right of a man to improve his position in life. The property involved is the property of three persons. If ordinary rules applied the owner of a third share has no right to utilize the shares of the owners of the remaining two thirds, even if it be with the laudable object of doing benefit to the owners of the two-thirds share. It appears to us to be, therefore, clear that the right (if any) of a Mitakshara father to jeopardize the family property, consisting not only of his own share but also the shares of his minor sons, must be sought for within the four corners of the texts of the Hindu law. On general principles the mere fact that Kharak Singh is the father of his sons will not authorize him to hazard property in which his sons have rights.

8. The text on which the father’s right to use the whole of the family property is based in the text of Brihashpati quoted by the author of the Mitakshara. It will be found translated by Colebrooke in his translation as Chap. 1, Section 1 and placitum 28. The author of the Mitakshara having laid down that the property in the ancestral estate arose by birth and having further laid down the equality of title in the sons with the father, he quotes a text of Brihaspati as an exception to the general rule. Colebrooke’s translation runs as follows:

An exception to it is as follows: Even a single individual may conclude a donation, mortgage or sale of immovable property during a season of distress, for the sake of the family and especially for pious purposes.

9. It is clear that the case before us is neither a case of distress nor a case of pious purposes. The only question is then whether the transaction was entered into “for the sake of the family,” within the meaning of the text quoted. The original expression in Sanskrit is “kutumbarthe” which would perhaps be better translated as “for purposes of the members of the family.” Vijnaneswar, in the few sentences, following the text of the sage, Brihaspati, explains what it means: see placitum No. 29, Colebrooke’s book. He says distinctly that the transfer would be justified
if a calamity affecting the whole family required it, or the support of the family render it necessary, or indispensable duties such as the obsequies of the father or the like, make it unavoidable.

10. The question then is whether this authority of a single individual to conclude a mortgage of immovable property for purposes of the family will include a transaction of raising money at the expense of the family property to engage in a new undertaking. The texts, we find, do not help the respondents.

11. The powers of a head of a joint Hindu family and the powers of a manager of an estate belonging to an infant have been laid down in a number of cases by their Lordships of the Privy Council. The most famous of the dicta of their Lordships, a dictum which is often quoted, is to be found in the case of Hunooman Pershad Pandey v. Mt. Babuooee Munraj Kunwaree [1857] 6 M.I.A. 393 and runs as follows:

The power of the manager of an infant heir to charge an estate not his own is under the Hindu law, a limited and qualified power. It can only be exercised rightly in case of need or for the benefit of the estate.

12. The words “for the benefit of the estate” are evidently meant to be a substitute for the words “for the purposes of the members of the family” to be found in this text of Brihashpati, quoted by the author of the Mitakshara. It has been necessary to define what amounts to a “benefit of the estate.” The question has arisen whether a benefit to the estate would include using the estate in a more or less speculative manner in the hope that the income of the property would increase and possibly the estate itself would be enlarged. It has however been held that the benefit to the estate contemplated by their Lordships of the Privy Council and by the text of Brihaspati must be a benefit of a “defensive nature” calculated to protect the estate from possible danger or destruction. In the case of Palaniappa Chetty v. Devasikamoni Pandara Sannadhi A.I.R. 1917 P.C. 33 the head of a math raised money by granting leases and employed the money raised in banking. The question arose, how far the action was justifiable. The principle to be applied in this case was the same as has to be applied in the case of the powers of a head of a joint family in which there are minor members. Their Lordships said at p. 718, speaking of “benefit to the estate,”

It is impossible, their Lordships think, to give a precise definition of it applicable to all cases, and they do not attempt to do so. The preservation however of the estate from extinction, the defence against hostile litigation affecting it, protection of it, the or portions from injury or deterioration by inundation, these and such like things would obviously be benefits. The difficulty is to draw the line as to what are in this connexion to be taken as benefits and what not.

13. Although their Lordships found it impracticable to give a precise definition of the expression “benefit to the estate,” they said enough to indicate that the benefit to the estate was to be of a protective character. Their Lordships quoted three cases in which it was held that it was not open to a shebait to lease out in perpetuity a portion of the endowed property at a fixed rent, however adequate such rent might be at the time of the granting of the lease. The reason given was that, by that means, the estate was deprived of the chance it would have, if the rent were variable, of deriving benefit from the enhancement in value in future. In the result, their Lordships hold that it was not open to a shebait to raise money by obtaining premium by leasing out lands for purposes of starting a banking business with the Proceeds. Similarly, in this Court there is a long string of cases in which it was held that it is not open to a father governed by the Mitakshara law to encumber joint ancestral property to acquire necessary funds to pre-empt other properties. This was held in one of the latest cases on the point, viz., Shankar Sahi v. Baichu Ram A.I.R. 1925 All 333), to which one of us was a party. It is true that a Bench of this Court in another case upheld a transfer of family property by a father to raise money to pre-empt another property, but that case was sought to be brought within the four corners of the principle on which, in order to avoid a danger, the manager is permitted to alienate family property. The case we are referring to will be found in the Allahabad section of the All-India Reporter for 1927 at p. 219. That judgment recognizes the fact that the powers which are given to a manager of a joint Hindu family are strictly limited and are to be exercised within definite rules.

14. No authority has been cited on behalf of the respondents which goes to the extent of establishing that the manager of a Hindu family can start a new business, and in doing so charge the shares of the minor members, should necessity arise to finance that business. The case where an ancestral family business exists and has been inherited by the minors with other properties must be distinguished from the case where a head of a family with minor members wants to start a business for himself and the members of the family. In the former case the business is there as a part of the family assets, and it may be carried on in the customary and usual manner in which businesses are conducted. The manager must have all such powers as will enable him to conduct the business. It has accordingly been held in many cases that a manager has power to raise money on the security of the family estate for the maintenance and improvement of an ancestral business and in doing this the manager is not, in our opinion, acting beyond the rules laid down in the text of Brihaspati or by their Lordships of the Privy Council in the well-known case of Hunooman Pershad Panday v. Mt. Babooee Munraj Kunwaree [1857] 6 M.I.A. 393. When the manager of a trading family raises money for the purposes of carrying on the business, he is really acting “for purposes of the family” even if there be no question of “danger.” In the case of Sanyasi Charan Mandal v. Krishna Dhan Banerji A.I.R. 1922 P.C. 237 the adult managers of a joint Hindu family, which possessed, among other property, two separate businesses, started a third one. The business, which flourished for some time, ended in a loss and the question was whether the fifth share of the minor brother could be realized by the creditors for payment to themselves. Their Lordships of the Privy Council held that the minor’s share could not be proceeded against. The reason given by their Lordships applies to all cases, irrespective of whether the family is governed by the Dayabhaga or Mitakshara law. Their Lordships approved of the remarks of the learned Judges of the Calcutta High Court made in the case as to the risk involved in a manager starting a new venture, In the High Court judgment in Krishna Dhan Banerji v. Sanyasi Charan Mandal [1919] 23 C.W.N. 500, after quoting the remark of Lord Atkinson in the case of the transfer of endowed property in Palaniappa Chetty v. Devasikhamoni Pandara Sannadhi A.I.R. 1917 P.C. 33, already quoted by us, the learned Judges expressed the opinion that
the embarking of a new and speculative trade by the karta of a family cannot be said to be for the benefit of the estate.

15. This is a definite pronouncement by their Lordships of the Calcutta High Court on the very point which we have to decide, and their Lordships of the Privy Council expressed approval of the opinion. Their Lordships of the Privy Council then proceeded to give additional and more decisive reasons as to why a karta cannot be allowed to start a new venture Their Lordships pointed out that a minor cannot be made a partner of a firm where a new business is going to be started by several members. The members constitute a firm and the question would be whether a minor can be made a partner. Their Lordships say that a minor could not be made a partner. Then they examine the provision of the Contract Act, Section 47, as to the meaning of a minor being admitted to the benefit of a partnership and explained that section did not mean that a karta could create a liability on the property of the minor, other than the property belonging to the partnership. As already stated, the arguments employed by their Lordships are applicable to all kinds of family, irrespective of whether they are governed by the Mitakshara or the Dayabhaga law.

16. In this Court a few cases have been decided in recent years which may be taken as possibly going to the length of laying down that a manager of a joint family may start a new venture. Closely examined, the cases, possibly do not profess to lay down such a proposition. We shall presently examine them, but if, they do go to the length aforesaid, they must be taken as laying down a law contrary to the express decision of their Lordships of the Privy Council in Sanyasi Charan’s case A.I.R. 1922 P.C. 237. One of these cases is Mahabir Prasad v. Amla Prasad Rai A.I.R. 1924 All. 379. In this case a father of a joint family started a trade in elephants and carried it on for seven or eight years before his death. In the course of this business he wanted money and raised it by a mortgage of joint family property. While the decree was under execution, the father died and the sons objected to the execution on the ground that the property was not liable to be taken, as the mortgage was beyond the competence of the father. The Court of first and second instance held in favour of the sons, but this Court allowed the appeal. The learned Judges, at p. 296, put before themselves the proposition of law to be decided by them as follows:

The point which we have to consider is whether the amount borrowed by the manager of a Hindu family in connexion with a family business is such as is binding on the other members of the family.

Sulaiman, J., who delivered the judgment of the Court, remarked:

It is well understood that the manager of a Hindu family has power to contract debts for the purposes of a family business and this power is well recognized. It is not necessary that such business should be an ancestral one.

18. For the proposition that
it is not necessary that such business should be an ancestral one

certain cases are quoted. The passages quoted talk of “family business,” an expression which would imply that it was a business in which the minor members, if there are any, are interested by right of inheritance. Two of the cases quoted from the Bombay series of the Indian Law Reports related to ancestral business which was inherited. A case is quoted from Oudh and the remark is made that it was a case neither of an ancestral business nor of an ancient business but had been started only 9 to 10 years prior to the debt. It is not clear whether there was a minor in the family when the business was started and whether the share of the minor in the joint family property was sought to be charged onthe ground that the business out of which the debt arose had in previsous years benefited the minor. The other cases Johurra Bibee v. Sreegopal (1875) 1 Cal. 470, Ramlal v. Lakmichand 1 Bom. H.C.R. App. 51 and Bemola v. Mohun [1980] 5 Cal. 792 are all cases either of ancestral business or of business started by adult members without any minors in the family. A Calcutta case, D. Maclaren Morrison v. (1901) 6 C.W.B. 429, was quoted as laying down the rule (see p. 298 of 22 A.L.J.) that a new business started by the head of the family would not bind the other members. This case was sought to be distinguished. The Privy Council case of Sanyasi Charan Mandal v. Krishna Dhan Banerjee A.I.R. 1922 P.C. 237 was not quoted before their Lordships and was not considered.

In the case of Jagmohan Agrahri v. Prag Ahir A.I.R. 1925 All. 618 the facts were briefly these. There was a trading family which possessed a very small property situated some 16 miles away from where the family resided. The yield of the property was only Rs. 69 per year, and it was found that the income was not at all sufficient for the maintenance of the family. The property was sold and the proceeds were invested in the cloth business, which was being carried on by the family. It was held that, in the circumstances, the sale could not be impeached. The case is entirely different from the case before us and we need not express any opinion on that case. The decision of the Calcutta High Court, out of which the Privy Council case of Sanyasi Charan’s case A.I.R. 1922 P.C. 237 arose, was quoted before their Lordships, but was held to be inapplicable.

20. In the case of Jado Singh v. Natthu Singh A.I.R. 1926 All. 511 it was held that a transfer of joint property by the manager in order to acquire fresh properties might be justified if it is not a mare speculation but results in actual benefit to the estate. So far as the transfer was sought to be justified by the result, with all respect, the principle applied could not be supported on principle. It is immaterial whether the transaction entered into actually resulted in gain or loss. If the transaction, in its inception, was a justificable one and was within the competence of the manager, it mattered little whether it miscarried and resulted in a loss. Justification cannot be dependent on result. This case is perhaps in direct conflict with the case of Shankar Sahi v. Baichu Ram A.I.R. 1925 All 333 quoted above. So far as the remark,
the other members of the family cannot retain the benefit and at the same time repudiate the transaction by means of which that benefit has been acquired

went, the case was one of estoppel and has no application to the point that we have to decide. A minor member, if he wants to impeach a transaction entered into by the manager, cannot, certainly, retain the benefit received by the transaction. He must give up the benefit in order to succeed. Sulaiman, J., who delivered the judgment of the Court, examined a larger number of cases and came to the conclusion that the particular case before him was supportable on the ground of conferring “benefit to the estate.” At p. 638 his Lordship remarks as follows:

It is quite clear that the benefit to be conferred upon the estate was something distinct from mere need or the pressure upon it.

21. The need or pressure is a paraphrase of the words “apat kale” in the text of Brihashpati. But the next expression “kutumbarthe” which we have translated as meaning “for purposes of the members of the family” and which has been translated by Colebrooke as “for the sake of family” and which has been interpreted by their Lordships of the Privy Council as “the benefit to be conferred upon it (family or estate),” necessarily signifies an idea of “requirement” or “something called for.” The idea is best expressed, if we may say so with respect, in the case of Shankar Sahi v. Baichu Ram A.I.R. 1925 All 333 by the expression “defensive act.” Preservation of the existing estate would justify an expenditure, but the idea of transferring the property in order that something better may be obtained is wholly foreign to the text. We have already stated that Vignaneshwara, before he quoted the text of Brihashpati, laid down equal rights of the father and son and then stated that although that was the rule it had an exception. It must be noted that Brihaspati laid down that it was in the power of any single member of the family to act in the way he indicated and was not taking of the powers of a manager as such. In other words, he laid down that although all the members of the family had equal rights, and equal rights implied that nothing could be done without the concurrence of all the members, yet in certain cases of emergency one single member could act. Such a case would, necessarily, be an exceptional case, e.g., of danger or pressure or what may be properly described as the purposes of the family. The commentator’s own gloss, which we have quoted, on the text, is to the same effect. The benefit, therefore, contemplated by their Lordships of the Privy Council must not be extended so as to include an act which, according to the opinion of the manager of the family, might bring in more income. The reason is simple. The karta is not the owner of the entire property. He is not dealing with what is his own, but is dealing with something which is his own plus something which is other people’s property. This view is fully brought out in the judgment of their Lordships of the Privy Council in the case of Sanyasi Charan’s case A.I.R. 1922 P.C. 237. We note that this case was not quoted before the learned Judges who decided the case of Jado Singh v. Natthu Singh A.I.R. 1926 All. 511. The case of Sheotahal v. Arjun [1920] 1 Pat. L.T. 136 was decided before the Privy Council case of Sanyasi Charan’s case A.I.R. 1922 P.C. 237, and the reasons do not commend themselves to us. It takes the same view as the Allahabad case of Jado Singh v. Natthu Singh A.I.R. 1926 All. 511 discussed by us.

22. The judgment in Sanyasi Charan’s case A.I.R. 1922 P.C. 237 clearly shows that the result of the now venture has no bearing on the question whether the venture, in its inception, could bind a minor member of the family or not. In that case, the new business flourished for some time (p. 566). It would be therefore wrong in principle to say that the actual benefit conferred on the family should be a determining factor on the authority of the manager of a joint Hindu family. A father selling a small family property and by speculating with the proceeds in the share market, may become very rich indeed. But, certainly, there would be no justification in Hindu law for sale by him of the family property. In the case of T. Tamireddi v. T. Gangireddi A.I.R. 1922 Mad. 236 it was directly and clearly laid down that the manager of a joint Hindu family had no power to commence a new trade or business without the concurrence of the adult co-parceners living at the time and that such trade or business is not binding on them in the absence of evidence of their acquiescence. Their Lordships in the course of the judgment discuss how far it is open to a karta of a family to bind the minor co-parceners by starting a new business and express themselves clearly against the authority of the karta (see p. 290). They draw a clear distinction between an ancestral business and a business newly started by the karta of the family.

23. It was contended on behalf of the respondents that if the head of a joint family cannot start a new business, how could, possibly, there come into existence an “ancestral family business”? The answer is perfectly clear. A business may be started at a time when there is no minor member in the family and with the consent of the sole or all the adult members. Thereafter any minors that may come into the family will inherit or get an interest in the family business.

24. We have come to the conclusion that it was not open to Kharak Singh to raise money on the security of the family property in order to start a new business, namely, of plying a motor lorry for hire even if the new business was likely to bring large profits to himself and through himself to his sons.

25. The result is that we allow the appeal, set aside the decree of the Court below and grant to the plaintiffs a decree declaring that the mortgage of 19th September 1921 is not binding on the plaintiffs or any portion of the family property belonging to the plaintiffs and defendant 1 jointly.

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