A mortgage right held by a joint Hindu family is presumed to be the joint property of the family unless there is evidence to the contrary.

Headnote:
PARTITION - Mortgage right - Whether kept undivided - Evidence - Appreciation - Adverse inference - Non-joinder of proper party - Effect.
Fact of the Case:

A joint Hindu family consisting of three branches, namely, Rachappa, Shivappa, and Basavanappa, possessed lands, houses, and an extensive money-lending business. In 1929, Bashettappa, the brother-in-law of Rachappa, executed a mortgage deed in favor of Rachappa to secure a loan of Rs. 1,73,000/-. The family partitioned in 1939, and the mortgage right was not specifically allotted to any branch. The plaintiffs, representing the branch of Basavanappa, filed a suit to enforce the mortgage, claiming that the mortgage right was the joint property of the family and that they were entitled to a third share. The defendants, representing the branches of Rachappa and Shivappa, contested the claim, arguing that the mortgage right was the separate property of Rachappa and that it was not kept undivided at the partition.
Finding of the Court:

The trial court held that the mortgage right was the joint property of the family and that it was not allotted to any branch at the partition. The High Court confirmed this finding. The Supreme Court upheld the findings of the lower courts, holding that there was sufficient evidence to support the conclusion that the mortgage right was kept undivided.
Issues: 1. Whether the mortgage right was the joint property of the family or the separate property of Rachappa? 2. Whether the mortgage right was kept undivided at the partition in 1939?
Ratio Decidendi: 1. The mortgage right was executed in favor of Rachappa, who was the manager of the joint family at the time. The family had an extensive money-lending business, and the mortgage transaction was for the benefit of the family. 2. The partition of 1939 was supported by evidence, including entries in the record of rights and the testimony of witnesses. The mortgage right was not specifically allotted to any branch, and there was evidence that the family intended to keep it undivided.
Final Decision: The Supreme Court dismissed the appeal, holding that the mortgage right was the joint property of the family and that it was not allotted to any branch at the partition. The plaintiffs were entitled to enforce the mortgage and recover their share of the mortgage amount.

Judgment

SHAH, J. : The genealogy which sets out the relationship between some of the principal parties in this litigation is as follows :

2. Mallappa had four sons Balappa, Sivappa, Basavanappa and Chanamalappa. These four sons formed a joint Hindu family. Chanamalappa separated himself from the joint family sometime in the year 1909 and his other three brothers continued to remain joint. Shivappa was the Manager of the joint family after the death of Mallappa. Shivappa died in 1928 and Rachappa became the Manager of the family. The joint family possessed lands in seventeen villages and many houses in Khanapur. The family had also an extensive money-lending business. One Bashettappa Neeli - hereinafter referred to as Bashettappa - was married to the sister of Rachappa. On July 29, 1929, Bashettappa executed a deed of simple mortgage in favour of Rachappa in respect of certain parcels of lands and houses belonging to him to source repayment of Rs. 1,73,000/-, Rs. 76,700/- out of which were received in cash and the balance represented amounts which Rachappa agreed to pay to Bashettappa s creditors. To one Gurappa, Bashettappa owed Rs. 8,000/- as an unsecured debt and Rachappa agreed to any that debt. In Insolvency Application No. 22 of 1939 of the file of the First Class Subordinate Judge, Dharwar, Bashettappa was adjudicated an insolvent and receivers were appointed by the insolvency Court to administer his estate. The receivers applied for a declaration that the mortgage deed in favour of Rachappa was a fraud of creditor and was accordingly void. The Assistant Judge, Dharwar, in Appeal No. 25 of 1934 from the order of the Insolvency Court held that Rachappa was entitled out of the mortgage amount to recover Rs. 45,700/- as a secured debt and Rs. 31,000/- as unsecured debt Gurappa - creditor of Bashettappa - in the meanwhile filed Suit No. 84 of 1932 against Rachappa and other members of his family in the Court of the First Class Subordinate Judge, Dharwar, for a decree for Rs. 8,000/- claiming that Rachappa had, acting on behalf of the joint family of which he was the manager, undertaken under the deed of mortgage to pay that amount and that he - Gurappa - had accepted that undertaking. A decree ex parte was passed in that suit against Rachappa on February 28, 1933, and the claim against the other members of the family was either withdrawn or rejected. On July 23, 1939, the three branches of the joint family by mutual agreement served the joint status and properties movables and immovables belonging to the family were divided. Pursuant to this division lands and houses which fell to the shares of the three branches were mutated in the Revenue and Municipal records in the names of the managers of the respective branches. Movables were also divided. The mortgage amount recoverable form Bashettappa and a claim against one Desai were, it is the case of the plaintiff in the suit out of which this appeal arises, kept joint. Gurappa after making certain infructions attempts to execute the decree filed dharkhast No. 176 of 1940 to recover Rs. 11,061-6-9 and prayed for an order of attachment and sale of the rights of Rachappa under the mortgage bond dated July 29, 1929. One Ganpatrao N. Madiman - hereinafter referred to as Madiman - offered the highest bid at the Court auction and the mortgage bond was sold to him for Rs. 20,000/-. An application filed by Rachappa for setting aside the sale pleading that the sale was vitiated by material irregularities and fraud in publishing and conducting the sale was rejected.

3. The mortgage bond was delivered by the executing Court to Mandiman and orders were issued against Bashettappa and the receivers of his estate prohibiting them form making payments of the dues under the mortgage or any interest thereon to any person or persons except the purchaser Madiman. In Miscellaneous Application No. 57 of 1944, Madiman applied to the Insolvency Court to be recognised as an unsecured creditor of Rs. 3100

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