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1932 Supreme(SC) 27
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD BLANESBURGH, LORD RUSSELL OF KILLOWEN, AND SIR DINSHAH MULLA.
BENARES BANK, LIMITED - Appellant
Versus
HARI NARAIN (DEFENDANTS) - Respondents
On appeal from the High Court at Allahabad.
Decided On : May. 5. 1932.
Important Points
Subject
Hindu Law - Joint Family Property
Act Referred
Headnote
(B) Joint Hindu Family - New business - A new business started by the manager of a joint family, even if the manager is the father, is not to be regarded as ancestral business - The manager has no power to impose upon a minor member the risk and liability of a new business started by him - Such a mortgage is invalid as against the shares of minor members.
(C) Evidence - Statement by borrower to lender's agent - A statement made by a borrower to the agent of the lender regarding the indebtedness of the family is not hearsay and is admissible in a suit by the lender against the borrower.
Facts of the case:
The heads of a joint Hindu family governed by Mitakshara law mortgaged joint family properties to secure a loan for discharging previous mortgages and carrying on a business. The minor sons contested the mortgage, arguing there was no necessity and that the business was not a joint family business. The loan was used partly to pay off previous mortgages, partly to settle a debt with a third party, and partly to fund a contracting business.
Findings of Court:
The mortgage was held valid for the amount used to discharge previous mortgages and the amount used to settle a debt of the heads of the family, as these constituted antecedent debts. However, the mortgage was held invalid for the amount used to start a new contracting business, as such business is not ancestral and does not bind the shares of minor members.
Issues: Whether the mortgage executed by the father as guardian of minor sons was binding on the minors for the payment of a debt to a third party and for the purpose of starting a new business.
Ratio Decidendi: Under Mitakshara law, the manager of a joint family cannot bind minor members for the liabilities of a new business, as it is not ancestral. Conversely, a mortgage for the payment of antecedent debts of the heads of the family is binding on the sons. Furthermore, admissions made by a borrower to a lender's agent regarding family liabilities are admissible evidence.
Result: Appeal allowed in part; mortgage declared valid to the extent of Rs. 24,342; case remitted for accounting.
Legal Category Hierarchy
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family law
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hindu law
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mitakshara law
- joint family property
- manager's powers
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mitakshara law
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hindu law
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property law
- mortgage
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practice and procedure
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evidence
- hearsay
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evidence
Solicitors for appellants:Morgan, Price, Marley & Rugg. Solicitors for respondents: T. L. Wilson & Co.
Judgement
Appeal (No. 95 of 1930) from a decree of the High Court (August 8, 1928) varying a decree of the Subordinate Judge of Allahabad.
The appellant bank instituted a suit against the members of a joint Hindu family governed by the Mitakshara to recover the balance due on a mortgage of joint family property to secure an advance of Rs. 28,000. The mortgage deed was executed by Jagdish Narain and Raghubir Narain each on behalf of his minor sons ; the adult sons of Jagdish also joined in the deed. The deed recited that the advance was required to pay off two earlier mortgages and to carry on the mortgagors business. Only the respondents, who were minors at the date of the mortgage, appeared to defend the suit.
The facts appear from the judgment of the Judicial Committee.
The Subordinate Judge made a preliminary decree for sale for the sum claimed.
An appeal was heard by Sen and Weir JJ., who held that the mortgage was valid only as to Rs. 18,000, which sum had been used to discharge antecedent debts. As to the remaining Rs. 10,000, they found that it had not been proved that an alleged debt of Rs.6342 existed, and that the business for the purposes of which the balance of Rs.3658 had been applied was not an ancestral business, and that therefore there was no authority to bind the minor members in respect of it.
1932. April 7, 8. Dunne K.C. and G. D. McNair for the appellants.
Wallach for the respondents.
The arguments were mainly directed to the facts. Upon the questions of law which arose reference was made to Hunoomanpersaud’s case (( 1856) 6 Moo. I. A. 396, 424.) ; Sanyasi Charan Mandal v. Krishnadhan Banerji (( 1922) L. R. 49 I. A. 108.) ; Brij Narain v. Mangla Prasad (( 1923) L. R. 51 I.
A. 129.) ; Annabhat Shankarbhat v. Shirappa Dundappa (( 1928) I. L. R. 52 B. 376.) ; Inspector Singh v. Karak Singh (( 1928) I. L. R. 50 A. 776.) ; Niamat Rai v. Din Dayal (( 1928) L. R. 54 I. A. 211.); Ram Krishna Muraji v. Ratan Chand . (( 1931) L. R. 58 I. A. 173.)
May 5. The judgment of their Lordships was delivered by
SIR DINSHAH MULLA. This appeal involves questions which frequently arise in suits to enforce a mortgage against property which belongs to a Hindu joint family governed by the Mitakshara where the mortgage is executed by the father for himself and for his minor sons as their guardian.
The family in this case consisted of two brothers, Jagdish Narain and Raghubir Narain and their respective sons. Jagdish Narain had five sons, two of them, Suraj Narain and Dip Narain, being adults, and the other three minors. Raghubir Narain had three sons, all of whom were minors.
On September 1, 1911, the adult members of the family borrowed Rs. 28,000 from the Benares Bank, Ld., the appellants before this Board, and executed a deed whereby they mortgaged six properties belonging to the family, one situated at Allahabad, another at Manjhiari, and the rest in the Fatehpur district, to secure the debt and interest, each father signing as guardian of his minor sons. The mortgage deed recited that the mortgagors were in need of money to pay off two previous mortgages, one for Rs.7000 in favour of Dwarka Bibi, and the other for Rs. 11,000 in favour of Kishun Narain, and to carry on the mortgagors business.
In 1913 the mortgagors paid Rs.4128 to the bank. In 1919 they sold one of the Fatehpur properties, and paid a further sum of Rs.29,700. Jagdish Narain died in 1921. The balance not having been paid, the bank brought the present suit in the Court of the Subordinate Judge of Allahabad on April 27, 1923, against the surviving members of the family, who are respondents in this appeal, to enforce the mortgage against the remaining five properties.
The adult members of the family who had executed the mortgage did not defend the suit, but a written statement was filed on behalf of such of the sons of the two brothers as were minors at the date of the mortgage. The defence was that there was no consideration for the mortgage and no necessity fo
