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Madras High Court
The South Indian Export Co. Ltd. vs T.N. Viswanatha Iyer And Ors. on 2 March, 1914
Equivalent citations: 24 Ind Cas 398
Author: Wallis


Wallis, J.

1. This is a suit brought by the South Indian Export Company on certain mortgages one of which was executed by one T. Krishna Iyer, who carried on business in Trichinopoly, in favour of Best & Co., and was after wards transferred to the plaintiff Company and the others in favour of the plaintiff, Company. The plaintiff also sues upon a mortgage created by Krishna Iyer’s widow Pattammal after his decease by a deposit of title-deeds.

2. These transactions with the exemption of the last are set out at great length in the plaint, and form the subject of issues 1 to 5. There is no real dispute about these issues. The plaintiffs case has been proved as to them, and those issues must be found for the plaintiffs.

3. The real questions in the case are as to what was done after the death of T. Krishna Iyer in March 1909. The first issue which 1 propose to deal with is No. 8 : “Had Pattammal attained her majority prior to 19th March 1911 and, if so, on what date”? The allegation made by the defence is that at that time she was a minor. The evidence as to majority adduced by the plaintiff is distinctly weak.

4. On the whole, coming to the best conclusion I can on the balance of evidence, I am constrained to hold that she was a minor. That is also the conclusion which was come to by the District Judge–of course, that has not influenced my finding–on the question of the grant of a Succession Certificate.

5. The next important question is, if Pattammel was a minor, is the 1st defendant estopped by his conduct from denying her minority? As to that, the first question is, was he aware that she was a minor? According to the documents executed by both sides in the case before any quarrels arose, Viswanatha Iyer was the adopted son of Narayana Iyer, the divided brother of Krishna Iyer : and he lived in the next house to Krishna Iyer all along. And according to some of the defence witnesses, everybody knew all along that this woman was a minor : and I have no hesitation in finding that if she was a minor the first defendant Viswanatha Iyer knew all about it. If the defence evidence is accurate that she was really born in 1894, it is absurd to suggest that he did not know all about that. But he had not the courage to go into the box and say that he did not know the fact. I have, therefore, no hesitation in holding that he knew she was a minor. If he knew that she was a minor, then the question is, is he estopped by his conduct from setting up defence? We have a letter, Exhibit JJ., which he wrote to the South Indian Export Co. on 28th March 1909 very shortly after the death of Krishna Iyer in which, after dealing with his own tannery business, he adds a postscript with reference to the tannery business which had been carried on by Krishna Iyer. With regard to the business of my uncle, the late Mr. T. Krishna Iyer, I beg to state that myself and Mr. Ponnuswami Pillay have the power of attorney from Mrs. Krishna Iyer. It has been duly registered and is in office.”. That is to say, he had taken a power of attorney from this minor to deal with the plaintiff Company in the tannery business. On receipt of the same it will be despatched to your office for future reference. As we have to clear his outside debts we are in need of Rs. 20,000 in this connection. I beg to state that your Company has previously once advanced Rs. 20,000 as a special case. So now I take the same opportunity and approach you with the same hope that you will comply with my request.” This is important with reference to a subsequent advance of Rs. 10,000 which the Company made in June 1909. “The amount which you will give in advance may be deducted from Mr. T. Krishna Iyer’s surplus. If any re-draft occurs the Company need : not fear, because the Company have already sufficient security. With regard to the Company’s standing advance you have sufficient stock in the tannery. It is known to your dubash.” Considering that this man certainly claims to be the sole reversioner of Krishna Iyer and, therefore, the only person interested except the widow herself, what follows is exceedingly important. In conclusion, I beg to state that you will render your help in the affair of Mr. Krishna Iyer since his business has been a long-standing one which I do not like to give up. Awaiting your favourable reply.” It seems to me that the effect of 1st defendant’s conduct in taking a power of attorney from this minor widow whose minority he knew all about and sending it to the plaintiff Company to be acted upon and writing to the plaintiff Company requesting them to help him by going on doing business with this woman of whom he was the nearest reversioner, is certainly, such as to estop him from afterwards denying her minority : but, as I said,, he did not go into the box to explain his conduct under this head. Probably he knew that, if he did he would be forced to make more damaging statements. It is, however,, suggested that though he may be estopped, the estoppel does not apply to transactions after October 1909 when he opposed the grant of the Succession, Certificate to the widow on the ground that she was a minor as that was sufficient notice to the plaintiffs, and that they cannot plead the estoppel as enuring for their benefit any longer. 1 am unable to accept that contention. The plaintiff Company knew nothing-of the internal affairs of this family. Having regard to the readiness with : which false allegations are made when quarrels break out in families like this,, the fact that the nearest reversioner asserted that the widow was a minor was of no probative value whatever. The plaintiff Company had no means of knowing whether she was at minor or not. It was very difficult even for this Court to arrive at a decision whether she was a minor or not. By that time the plaintiff Company in consequence of the representations of the 1st defendant had become involved in dealings with this woman Pattammal. The mere fact that they heard of those proceedings in which her majority was being questioned would not enable them to put then selves in the same position as when they began to deal with her. The 1st defendant was not able to make what is called restitutio in integram,, i. e., to put them back in the same position as they were before, and I do not think the cases cited for the defendants at all go to establish the proposition that the fact, that the majority of the widow came to be questioned before all these transactions were over, operates so as to take away the effect of the estoppel. I think the case reported as Arnison v. Smith (1888) 41 Ch. D. 348 : 61 L.T. 63 : 37 W.E. 739 : 1 Meg. 338. cited for the defence is quite as near to the facts of this case as those cited for the plaintiff. I hold that the 1st defendant is estopped from setting up the minority of Pattammal.

6. There remains another very important question from a general point of view as to whether the widow Pattammal, assuming that she was a major, was justified in carrying on this tannery business after her husband’s decease, and, whether while she was so doing she was entitled to mortgage the property which she had inherited from her husband. In Amarnath Sah v. Achan Kuar 14 A. 420 : 19 J.A. 106 : 6 Sar. P.C.J. 197., the Allahabad High Court had doubted whether a widow was justified in carrying on the business of her husband. Their Lordships of the Privy Council say at page 428 : “The view of the High Court is that the widow ought to have wound up the business at once, and that not having done so, she could not allege necessity to mortgage the inheritance in order to keep the money business going. But they do not lay down any general rule for such cases, and they feel the difficulty of a decision in the entire absence of authority. Their Lordships also feel great difficulty, and they would require to know much more about the nature of the business in question, and of the condition and fluctuations of this particular business before venturing to endorse the opinion of the High Court.” So that the effect of that is that their Lordships by no means countenance the position that a widow is not entitled in proper cases to carry on the business of her husband. A family business may be carried on on behalf of a minor, Sanka Krishnamurthi v. Bank of Burma 14 Ind. Cas. 389 : 35 M. 692 : 11 M.L.T. 56., and a widow’s case seems even stronger. With reference to the Privy Council decision a reference to the terms of the mortgage in Amarnath Sah v. Achan Kuar 14 A. 420 : 19 J. A. 106 : 6 Sar. P.C.J. 197. which is set out in the Indian Appeals report, will show that in that case the money was borrowed expressly for the purpose of paying the debts incurred for marriage expenses and for litigation. It was only as an afterthought that they set up that that money was borrowed for the purposes of business. The same family curiously enough gave rise to the next case which was cited and reported in Sham Sundar Lal v. Achhan Kunwar 21 A. 71 : 25 I.A. 183 at p. 192 : 2 C.W.N. 729 : 7 Sar. P.C.J. 417. That was an appeal from the judgment of the High Court of Allahabad which is reported as Achhan Kuar v. Thakur Das 17 A. 125 : A.W.N. (1895) 24. and a perusal of the judgment of Sir John Edge, C.J., in Achhan Kuar v. Thakur Das 17 A. 125 : A.W.N. (1895) 24., shows that there was absolutely no evidence that the money had been borrowed for the business at all or for any purpose of necessity. When, however, the case came before the Privy Council, finding that on the facts there was absolutely no case whatever, the learned Counsel for the appellant relied upon a proposition of law which was this, that when a family business is being carried on, there is an implied authority on the part of those carrying it on to pledge the family property for the purpose of the business, that is to say, without any proof of necessity at all, and no proof of necessity being called for. That, as I understand the case is the proposition which Lord Davey in delivering the judgment of their Lordships refused to assent to. At page 82 their Lordships say : The second point made by the appellants is unsupported either by reason Or authority. The owner of the business at the time of the execution of the bond of 1877 was Hulas Kunwer, and Lalji was managing it, as her agent only and for her benefit, and she could not of course confer on her agent any larger power than she had herself, and there is no exception from, the restriction on alienation by a Hindu widow when the estate consists of or includes a business.” That is to say, the alienations made by a Hindu widow with regard to her business rest on the same footing as other alienations made by a Hindu widow, that is to say, they must be shown to be made for a necessary purpose. The authorities quoted by Mr. Cowell” (for the appellants) “have no application to the case. They were cases of a family business being carried on by the manager of an undivided family estate. In that case the manager of a family business has a certain power of pledging assets for the requirements of the business. But the position of a Hindu widow or daughter is not by any means the same as that of the head of an undivided family and even in the latter case the validity of a mortgage by the manager of a family business without the concurrence of the other members of the family, or when some of those members are minors, depends on proof that the mortgage was necessarily entered into in order to pay the debts of the business. This is clear from the cases cited, including that of Daulat Ram v. Mehr Chand 14 I.A. 187 : 15 C. 70 : 11 Ind. Jur. 435 : 5 Sar P.C.J. 84 : 1 P.R. 1888. To use the language of Mr. Justice Pontifex in a judgment quoted in that case, “the touchstone of the authority is necessity.” I do not think that case goes further than laying down that with regard to the alienations made by a widow properly carrying on the business of her husband which has descended to her, the alienations must be shown to be made for necessary purposes. The proposition which was contended for by Mr. Cozens-Hardy for the appellants was that where a family business was carried on there was an implied power to pledge similar to that which exists in the case of partnership. That I think was the proposition which their Lordships were dissenting from. This subject has been again most carefully considered by Sir Lawrence Jenkins, C.J., in Sahrabhai Nathubhai v. Maganlal Mulchand 26 B. 206 at p. 219 : 3 Bom.L.R. 738. where he points out that a family business is descendible according to the Hindu Law. The decisions in Amarnath Sah v. Achhan Kuar 14 A. 420 : 19 J.A. 106 : 6 Sar. P.C.J. 197. and Sham, Sundar Lal v. Achhan Kunwar 21 A. 71 : 25 I.A. 183 at p. 192 : 2 C.W.N. 729 : 7 Sar. P.C.J. 417. were also considered. With regard to the 14 Allahabad case, Sir Lawrence Jenkins says at page 214 : It would seem, then, that their Lordships thought there might be cirumstances under which a business debt could form the basis of a charge by a widow that would prevail against the title of the reversioners, and they give an indication of what those circumstances would be.” Latter on he says at page 219 : The cases show that the manager of a family business can make its assets liable for a trade debt, without a specific charge, and Kames-war Pershad v. Run Bahadur Singh 6 C. 843 : 8 I. A. 8 : 8 C.L.R. 361 : 4 Shome L.R. 81 : 4 Sar. P.C.J. 210 : 5 Ind. Jar. 157. shows that the ability of a widow to charge “the inheritance so as to affect it in the hands of the reversioners is judged by the same principles as are applicable to a charge by a manager.” And he refers to the case of Sham Sundar Lal v. Achhan Kunwar 21 A. 71 : 25 I.A. 183 at p. 192 : 2 C.W.N. 729 : 7 Sar. P.C.J. 417. and says I do not think that it was intended to disturb that principle when it was said in Sham Sundar Lal v. Achhan Kunwar 21 A. 71 : 25 I. A. 183 at p. 192 : 2 C.W.N. 729 : 7 Sar. P.C.J. 417. that the position of a Hindu widow or daughter is not by any means the same as that of the head of an undivided family.’ for it appears from the rest of the judgment that, as in the ease of a manager, so in relation to a widow the touchstone is necessity.” I respectfully adopt that interpretation of Sir Lawrence Jenkins of the judgment of their Lordships in Sham Sundar Lal v. Achhan Kunwar 21 A. 71 : 25 I. A. 183 at p. 192 : 2 C.W.N. 729 : 7 Sar. P.C.J. 417.

7. These being the principles, it remains to apply them to the facts of this case. First, as to the propriety of a widow carrying on business, that of course is a question of fact. No doubt there is a certain amount of speculation in the tannery business as spoken to by Mr. Chambers : at the same time it is one of the largest and most important sort of business carried on in this presidency. On this point it seems to me that the letter of the 1st defendant is conclusive, claiming himself to be the sole reversioner. And he says in that letter “I do not want to let this business stop.” There is evidence that it was a business which had acquired a very good reputation and its mark is well known in the London market. There is no reason for suggesting that there were not competent people to assist the widow or that the business was not properly carried on during the two years that elapsed before her death. Guided very largely by the fact that the person who was most interested in the business, the reversioner, approved of its being carried on, I have no hesitation in holding that it was a proper business for the widow to carry on. I should add that according to the evidence to close the business would have involved the estate in heavy loss, for there were large debts besides those due to the plaintiff and some of the outstandings were had debts.

8. That being so, the question remains as to whether the plaintiffs can claim under these mortgages. What happened was that a new agreement was drawn up between the widow and the Company to replace an agreement which had existed between her husband Krishna Iyer and the Company in which she bound herself to carry on the business under the supervision of the Company in the same way in which he carried it on and with money advanced by the plaintiff Company. An indebtedness of a sum of Rs. 41,000 owing by the deceased to the Company was written oft’ and was debited against the widow in his estate, that is to say, the widow took over from her husband’s estate an indebtedness to the Company of Rs. 41,000. It is said that the whole indebtedness of Krishna Iyer was secured by mortgages executed in his lifetime and that the same properties which he had mortgaged were to stand security for further advances made by the Company to Pattammal : and in the ordinary course of business the advances which had been made to Krishna Iyer during his life-time were cleared off by realizations, and fresh advances took their place to enable the business to be carried on. The course of business was for the plaintiff : to make advances on skins consigned to them for sale on the security of the goods themselves and of the immoveable and other property mortgaged to them as security for any indebtedness that might arise on the transaction and I have no hesitation in finding that if the business was to go on at all it could only go on these terms which appear to have been customary and usual to the trade.

9. Having held that the business was properly conducted by the widow, it seems to me to follow that the mortgaged preperties are liable for the indebtedness incurred in the ordinary course of business under the terms of the agreement with the Company. There is, however, a further advance of Rs. 10,000 which was made by the Company in June 1909. Applying the rules laid down by their Lordships of the Privy Council to this case, it appears to me that it is necessary for the plaintiff Company to show that that was an advance made for necessary purposes. The onus is on them to show that it is a question of fact. As to that we have the fact that the nearest reversioner, in the letter Exhibit JJ., which I have read, asked for an additional advance of Rs. 20,000 to be made by the Company for the purpose of this business. That is some evidence that it was a proper and necessary advance.

10. Then we have also the fact that a new tannery was before October erected by this Pattammal at a cost of Rs. 15,000 with money advanced by the Company and we have evidence–it is not disputed I think-that the whole of this Rs. 10,000 was spent on the business. The evidence is that during the two years of her life-time Pattammal drew very little indeed out of the business–Rs. 3,000 or 4,000 I think–and the whole of the other money was devoted to the business. Possibly the evidence might have been put in, but I am not sure that the plaintiff was fully alive to the necessity of proving necessity. On the whole I think that the money borrowed in the ordinary course of business for the purpose of the business was honestly put into the business and expended, on the business and must prima facie be taken to have been properly borrowed, and I hold that this advance of Rs. 10,000 was made to the widow for proper and necessary purposes. That follows, in my opinion, largely from my findings that the business was a proper one to carry on. This case is entirely different from the money lending business in Sham Sundar Lal v. Ashan Kunwar 21 A. 71 : 25 I. A. 183 at p. 192 : 2 C.W.N. 729 : 7 Sar. P.C.J. 417. which does not necessarily involve borrowiug money to the same extent.

11. The next question which arises is as to whether the mortgage for this further advance in June 1909 was put an end to by the return of the title deeds to Pattammal in November 1910. The evidence for the plaintiff is that she asked for the return of the title-deeds, because she was anxious to secure a purchaser for the property and that they were returned to her for the purpose of negotiations : but when she found it difficult to find a purchaser they were given back to the plaintiff’s dobash Ramanjulu Naidu who deposited them in Madras. Now there is a letter asking for the return of these title-deeds which is consistent with either case, because it says, will you please give the title-deeds for the purposes which I have mentioned?” or something of that sort. The deposit of title-deeds is mentioned in a book of the plaintiff firm called the deposit book and the withdrawal is mentioned in another book, the despatch register, as follows : The title-deeds of new tannery (i. e., the Sembathur Tannery) given us instead. Returned and redeposit-ed”. The suggestion for the defence is that the Sembathur title-deeds, that is to say, those of the new tannery were deposited in replacement for the Madras title-deeds and the entry in the despatch book would seem to show that that was the business of the clerk who made the entry in the despatch book. This is denied by Mr. Simpson who says that the deposit of the new tannery deeds was insisted on because it had been constructed with the Company’s money and it was the invariable practice of the Company to have a mortgage on tanneries in respect of which the Company was making advances. I see no reason to doubt this. The return of the title-deeds is also posted in the despatch book and not in the deposit book and at first it struck me as somewhat odd that when the title-deeds were given out and returned the return was posted in the despatch book and not in the original deposit book. An examination of the despatch register, however, showed that this same thing had occurred in several other cases. Ramanjulu Naidu in his oral evidence speaks to taking back these title-deeds and mentions that one reason for getting them back was the indebtedness of the firm had increased. I see no reason for doubting this in the absence of any other reason for the way in which the title-deeds were returned. The suggestion which was made on the other side is that these title-deeds were never re-deposited at all with the consent of Pattammal during her lifetime but taken possession of fraudulently after her death. This is a Very curious suggestion indeed, and I have no hesitation in rejecting that suggestion as it does not appear to be supported by anything in the evidence. Another point was made that the mortgage was had because the deposit was in Trichinopoly and not in Madras. That does not seem to be a fact. They were sent to be deposited in Madras and were given even on the second occasion to the dubash to be taken back and deposited in Madras. I have no hesitation in holding that there was a sufficient deposit of the title deeds in Madras.

12. The last point raised is with reference to jurisdiction. The suit was for balance of account for the realisation and for the enforcement of certain mortgages in respect of that account on property both in and out of Madras and leave to sue was obtained. I hold that there was jurisdiction. The balance of indebtedness claimed by the plaintiff has been proved to be due.

13. By some oversight the question of estoppel of 1st defendant had not been raised in the issues and I framed an additional issue after notice had been given to the other side, that an application would be made to raise it. Mr. Grant also applied that a similar issue should be framed as to Ramier, the father of Pattammal, who has purchased the right of the other reversioners. I reserved the question of framing this issue until I had heard more of the case : but having heard it I am not satisfied that there was any estoppel on that point. He simply purchased the rights of the reversioners other than the 1st defendant and it seems to me that he stands in the shoes of the people whose rights he has purchased–the defendants Nos. 2 to 8. It is not suggested they were in any way estopped, and I cannot see how his ‘own conduct in the matter is to affect the rights which he acquired by purchase from the reversioners, defendants Nos. 2 to 8. And no authority was cited for this purpose. If this issue is considered to have been raised, I find the issue against the plaintiff.

14. There will be a judgment for the plaintiff for Rs. 26,032-13-2 with interest at 6 per cent. and costs as against defendants Nos. 1 and 9. Costs on the higher scale. Two Counsel.

15. During the course of the suit Mr. (Irani for some reason or other withdrew his case against the 2nd defendant. The 2nd defendant is entitled to his costs–to be paid by the plaintiff.

16. The costs of the guardian ad litem will be taxed and his Vakil’s fees will be paid on the ad valorem scale on the amount claimed–to be paid by the plaintiff and recovered later from the 1st and 9th defendants.

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