1. The following pedigree will show the relation of some of the parties to this case:
| | Ram Prasad, Khairati Lal, | | | Keshab Deo, | | | Kashi Nath. | -------------------- | | Raghunath Das. Manohar Lal.
2. The plaintiffs Manni Lal and Chhedi Lal instituted this suit against Rarn Prasad, Raghunath Das, Manohar Lal, Keshab Deo, Kashi Nath, Ganpat Rai and Puran Chand on the following allegations: Ram Prasad, defendant No. 1, was the proprietor and Manager of firm styled Gordhan Das Ram Prasad at Agra. In order to carry on the business of the said firm he borrowed from the plaintiffs Rs. 16,000 by hypothecating the family property known as the Putaria Mahal in the city of Agra under a registered bond dated the 25th of January 1903. Out of the amount of principal and interest due on the mortgage, Rs. 13,170 were paid by Babu Puran Chand defendant No. 6, on the 4th of September 1906. The balance amounting to Rs. 6,585 has not been paid by the defendants. Keshab Deo, after the execution of the mortgage-bond dated the 25th of January 1903, in order to defraud the plaintiff and other creditors, sold a portion of the hypothecated property to Ganpat Rai by a deed dated the 14th of July 1905 alleging himself to be the adopted son of Khairati Lal. Keshab Deo and his representative-in-interest Ganpat Rai are bound to pay the balance due on the mortgage-bond inasmuch as the property of the family was mortgaged for the payment of debts contracted in the ordinary course of the business of the firm and for the benefit of Keshab Deo and his representative Ganpat Rai. The plaintiffs on the above allegations prayed for the recovery of the balance by sale of the property hypothecated. The pleas put forward by Ganpat Rai were to the effect that Keshab Deo was the adopted son of Khairati Lal; that the mortgage-deed dated the 25th of January 1903 was a fraudulent transaction; that no consideration passed for it; that the debts for the payment of which the mortgage-deed was executed were not contracted for any legal necessity nor were they of such a nature as to be binding on Keshab Deo or his representative, that Ram Prasad at the time of the execution of the mortgage-deed was not the Manager of the firm, and that he had no authority to transfer the joint family property nor did he in that capacity execute the mortgage-deed in question. The Court below framed the following issues: (1) whether Ram Pra9ad was the Manager and working agent of the firm Gordhan Das Ram Parsad and whether he in the same capacity executed the mortgage-deed, dated the 25th of January 1903t and whether the said deed was executed for consideration; (2) whether Keshab Deo is an adopted son of Khairati Lal and how far he and his representative Ganpat Rai are bound by the mortgage-deed in suit; (3) whether the plaintiffs are entitled to the interest claimed. Is there any mistake in the calculation of the amount? (4) whether two-thirds of the house purchased by defendant No. 6 are not liable for the plaintiffs’ claim 5 (5) to what reliefs are the plaintiffs entitled. The Court found as a fact that Ram Prasad was the Manager and working agent of the firm Gordhan Das-Ram Prasad; that he executed the mortgage-deed in his capacity of a managing member of the firm; that the deed was executed for consideration; that Keshab Deo was the adopted son of Khairati Lai; that there was no sufficient evidence of the fact that the debts for the payment of which the mortgage deed was executed were gambling debts, and that Ganpat Rai, the representative of Keshab Deo, was bound by the mortgage in suit. On these findings the Court below decreed the plaintiffs’ suit. Lala Ganpat Rai, the vendee under the deed of 14th July 1905, has appealed and the plaintiff is have filed objections. The substance of the pleas taken in the memorandum of appeal is that the mortgage-deed was executed without consideration; that it was a fraudulent transaction; that Ram Prasad was not competent to borrow the money; that he was not the Manager of the firm at the time of the execution of the mortgage-deed; that the mortgage-deed was not executed for the benefit of the firm or for legal necessity or for the benefit of Keshab Deo or with his consent, and that the share of Keshab Deo now in the possession of the appellant as a bent fide purchaser was not liable for the payment of the debt contracted by Ram Prasad. The substance of the objections taken by the plaintiffs is that the adoption of Keshab Deo is not proved nor is it proved that Khairati Lal authorized his wife to adopt a son. For the reasons stated by the learned Additional Judge in his judgment, we agree with him that Ram Prasad was the Manager of the firm styled Gordhan Das-Ram Prasad; that the mortgage-deed dated the 25fch of January 1903 is not a fraudulent transaction, and that it was executed for consideration. The only points which remain for determination are the following: Is Keshab Deo the adopted son of Khairati Lai? Are the debts for the payment of which the family property in question was mortgaged gambling debts? Is the share of Keshab Deo which was purchased by the appellant Ganpat Rai liable for the payment of the mortgage-debt? The finding of the Court below on the question of adoption is that Keshab Deo is the adopted son of Khairati Lal. The most important piece of documentary evidence on that point is a copy of the arbitration agreement dated the 10th of July 1903 paper No. 46(c) which is to be found in the paper book of First Appeal No. 302 of 1305. The opening words of that agreement are as follows: “We, Ram Prasad, son of Gordhan Das, the first party and Keshab Deo, adopted son of Khairati Lal, the second party, caste Bania Agarwal, residents of Belangunj, Agra, declare as follows: ‘A reference to this agreement is to be found in the judgment of the High Court dated the 18th of February 1908 in First Appeal No. 35 of 1906.’ The learned Judge of this Court in that judgment says ‘The suit was instituted on the 2nd of May 1904. Before its institution differences appear to have arisen between the members of the family as regards their interests in the ancestral property of Gordhan Das for we find that on the 10th of July 1903 Ram Prasad the head of the family and Keshab Deo, who claims here to be the adopted son of Khairati Lal, agreed to refer to arbitration all matters in difference relating to the moveable and immoveable property of the family. In that document Keshab Deo is described as the adopted son of Khairati Lal and in it is a recital that the parties to the agreement dealt in merchandise and hundis, in a shop called Lalji Mal-Gordhan Das at Kumer in the Bharatpur State, and another shop at Bharatpur Khas and another at Belangunj in Agra, and that they were equal partners in these shops.” Keshab Deo in his statement dated the 26th of February 1909 in respect of the arbitration agreement already referred to says as follows: “I had a dispute with Ram Prasad. Then we executed an agreement for arbitration. I do not know where that agreement is. The witness looked at the copy of agreement filed with the record of the said case paper No. 46 (c) and stated: An agreement was executed but I do not remember now the terms thereof. Shankar Lal, Chhete Lal and Khub Chand were the arbitrators. Two agreements for arbitration were executed but only one was registered. The agreement which was registered was executed before the suit was instituted. The other was filed in the suit. This statement of Keahab Deo is, in our opinion, sufficient to prove the agreement and the recital in the agreement that he was the adopted son of Khairati Lal at a time when there was no collusion between the parties is, in our opinion, a very strong piece of evidence in favour of the adoption of Keshab Deo by Khairati Lal. The mere fact that the mortgage-deed which is the basis of the suit, is of a prior date is, in our opinion, no sufficient reason for disregarding the recital in the above-mentioned document. In addition to that piece of evidence we have the entries in the accounts for Sambat 1947 to be found on pages 16 and 23 R. of the paper book in F.A. No. 35 of 1906. The entry on page 16 is as follows: Debited to the account relating to Tika (marking of forehead) ceremony of Chiranjin Keshab Deo. The entry on page 23 is in the following terms: A detail of the expenses relating to Tika, (ceremony) and adoption is given at page 102 of the cash book under date Magsar Badi 5th. The statement of Badri Prasad, a witness for Ganpat Rai, dated 23rd March 1909, proves, that the accounts from which the above entries have been extracted belong to the shop at Kamebar. He says: “My father who is dead was a Munieb of Gordhan Das. He worked at the Kamehar shop. He used to make entries in the account books. I can recognize his handwriting.” The witness having seen the writing is Hindi on page 102 of the cash book marked red for Sambat 1946 to 1948 relating to the shop at Kamehar stated: “This is in my father’s handwriting. My father was a Munieb for 12 years.” That being the documentary evidence of the, adoption of Keshab Deo the oral evidence of Chhote Lal and Kanhaiya Lal which has been believed by the learned Additional Judge is, in our opinion, reliable regarding the adoption of Keshab Deo as the son of Khairati Lal. Taking into consideration the facts that Ganpat Rai is an outsider to the family that the adoption took place about the year 1889 and that for a party in the position of Ganpat Rai it is difficult to produce any direct evidence relating to the adoption of Keshab Deo by Khairati Lal especially when we find that Keshab Deo in the case before us is siding with Ram Prasad we find that Keshab Deo’s adoption is proved. Besides, the treatment; by the member of the family of Gordhai Das extending over 20 years raises a strong presumption in favour of the adoption of Keshab Deo as the son of Khairati Lal. For the above reasons, we agree with the learned Judge of the Court below that Keshab Deo is the adopted son of Khairati Lal.
3. The next question is as to the nature of the debt for the payment of which the family property in dispute was hypothecated. After a careful consideration of the evidence on the record we have come to the conclusion that the bulk of the debts for which the mortgage was made were gambling debts. The transactions were similar to what is called betting on difference in England, i.e., betting on the price of a certain commodity or stock on a given date. The entries on pages 13 and 23 of the respondents’ book leave no doubt in our mind that they relate to badni or gambling transactions. The entry on page 13 has been translated as follows: Magh Badi 13th on account of loss in buying and selling Bengal cotton Rs. 7,824-11-0, Chait Badi 12th on account of loss in buying and selling ginned Bharaunch cotton Rs. 4,651-3-0. An expert who was produced on behalf of the respondents read the original of the 2nd entry as follows: Chait Badi baras rui jin Bharaunch ke differes ki. The last word differs is undoubtedly a corruption of the word difference: In substance, it means that on account of the difference in the price of the ginned Bharaunch cotton (so much will be paid), Jeth Sudi 6th on account of loss in the transactions of purchase and sale relating to the month of April. The original of this has been deciphered by the above-mentioned expert as follows: Jeth Badi Chhathrui Jehun April mahina ke differs ki, that on account of the difference in the price of cotton and wheat in the month of April. The entry on page 23 is to the same effect except that the words lent bechni are to be found in the entries of Magh Badi 13th and Chait Badi 12th. The entries on pages 13 and 23 relate to the same transactions. The learned Additional Judge is, however, of opinion that there is no sufficient evidence that the debt was a gambling debt. He remarks as follows: “The next objection, is that these debts were gambling debts similar to those which I believe are called differences in England, that is, gambling or betting on the price of a certain commodity or stock on a given day. To my mind, there is no sufficient evidence of this. It is said that the testimony of Goddar Mal and the condition of the firm’s books and also of the books of the Bombay firm Khatri Das-Lachhman Narain to whom the debts ire alleged to have been due show this. I nay remark, however, that if this point was intended to be seriously pressed it seems curious that no question was addressed in cross-examination to Munni Ram the firm’s Munieb who was examined on commission about the matter.” A reference to the record very clearly shows that interrogatories dealing with the nature of the debts were sent be Bombay at rather a later date and the case was taken up by the Court below for argument before the answers to those interrogatories came back. The learned Vakil for the defendant finding that it was for the plaintiffs to prove that the nature of the debt was such that it was binding upon Keshab Deo and his representatives and also finding that the evidence adduced on behalf of the plaintiffs fell short of proving that thought it was unnecessary to apply for an adjournment in order to got answers to those interrogatories. We find also that when one of the plaintiffs Munni Lal was examined several questions were asked in cross-examination by the Pleader for Ganpat Rai in respect of the so called badni transactions. Mauni Lal in his cross-examination says: “I lent the money to Ram Prasad alone and had the house hypothecated by him. During the life-time of Gordhan Das this firm dealt as commission agents for the sale of cotton grain hundis and parchas and made time bargains. I do not know when Gordhan Das died.” Further on he states: “There is an agreement as regards silver: The rate is Rs. 63. Profits and losses are taken into account on the due date. Ram Prasad used not to enter into badni contracts. His Gumastha used to do so. I do not know if these losses were sustained on account of badni (time bargains)”. This statement very distinctly shows that the Pleader for Ganpat Rai did ask questions relating to badni transactions. We, therefore, disagreeing with the learned Judge of the Court below hold that the debts for the payment of which the mortgage-deed of 25th January 1903, was executed by Ram Prasad were gambling debts. That being so, they cannot be regarded as the debts contracted by Ram Prasad in his capacity of a Manager of the firm in the course of the ordinary business of the firm, and if the statement of Munn Lal that he lent the money to Ram Prasad alone be taken into account it becomes evident that Ram Prasad was not raising funds for the ordinary business of the firm. There is no evidence to show that there was any urgent necessity for raising that money by the mortgage of the family property, nor is there any evidence that Keshab Deo was in any way benefited by that loan or that it was raised with his consent. In these circumstances, it is necessary to see what is the law applicable to the facts of the case. In Soiru Padmanabh Rangappa v. Narayan Rao bin Vithal Rao 18 B. 520 it is laid down that there is no presumption that a loan contracted by a Manager of a joint Hindu family has been contracted for the family purpose. In Sunkur Pershad v. Goury Pershad 5 C. 321 it is laid down: “The condition of a Hindu family is prima facie joint and, therefore, property held by the managing member of a Hindu family is prima facie joint; but as there is nothing to prevent an individual managing member from contracting debts on his own account there is no presumption that a debt contracted by him is joint.” In Nagendra Chandra Dey v. Amar Chandra Kundu 7 C.W.N. 725 it was held that in order to make the brother of the Manager liable it was necessary to find (1) whether the trading business was a joint family business, (2) whether the note given was for the purposes of the trading business of the family and (3) whether the amount covered by the note was appropriated to the purposes of such trading business. In Krishna Ramaya Naik v. Vasudev Venkatesh Pai 21 B. 808 at p. 815 it is laid down that there is no presumption that money borrowed by a Manager was borrowed for family purposes. The above cases are authority for the proposition that there is no presumption that a debt contracted by the Manager of the firm or family is contracted for the benefit of the firm or family and the plaintiff who seeks to bind the other members of the joint family will have to prove that it was a debt contracted for their benefit or with their consent or that there was an urgent family necessity therefor. During the coarse of his argument the learned Advocate for the respondents relied on Sheo Pershad Singh v. Sahib Lal 20 C. 453. But that case does not touch the points which we have to determine. In that case the debt was incurred in the ordinary course of business and a decree was passed in execution of which the family property in dispute in that case was sold and the plaintiffs as members of a joint Hindu family sued for a declaration that their shares were not liable. The Calcutta High Court, with reference to the facts of the case, came to the conclusion that the plaintiffs were not entitled to the declaration they sought. As, in the case before us, the plaintiffs have failed to prove that there was any real necessity for the loan or that the loan in question was taken with the consent of Keshab Deo or that he in any way was benefited thereby and as there is evidence that the debts for the payment of which the family property was mortgaged were gambling debts we are of opinion that the share of Keshab Dao which was sold to Ganpat Rai is not liable for the payment of those debts.
4. The result is that we allow the appeal and set aside the decree of the Court below in respect of the property which was sold by Keshab Deo to Ganpat Rai. The objections taken by the respondents are also dismissed with costs. The appellant will have his costs including in this Court fees on the higher scale.