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1926 Supreme(SC) 57
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD PHILLIMORE, LORD BLANESBURGH, LORD SALVESEN, AND SIR JOHN WALLIS.
KRISHN DAS - Appellant
Versus
NATHU RAM - Respondents
On appeal from the High Court at Allahabad.
Decided On : Dec. 10. 1926.
Solicitor for appellants: H. S. L. Polak.
Solicitors for respondents: Douglas Grant & Dold.
A bona fide purchaser of ancestral property is not bound to ensure the precise application of the purchase money; if the sale is justified by legal necessity and the bulk of the proceeds are accounted for, the sale remains valid despite a small unaccounted surplus.
Headnote:(A) Hindu Law - Alienation of ancestral property by manager - Legal necessity - Bona fide purchaser - Application of purchase money - Where a manager sells ancestral property for the discharge of debts, and the purchaser, after due inquiry, acts in good faith, the sale is not invalidated if the bulk of the proceeds are applied to legal necessity, even if a small part remains unaccounted for.
(B) The validity of the sale depends on whether the transaction itself was justified by legal necessity, rather than a strict arithmetical calculation of the application of the purchase price.
(C) A bona fide purchaser is not bound to ensure the precise application of the purchase money and is not required to make repayment of a surplus if the sale was justified.
Facts of the case:
A manager of a joint family sold ancestral property to discharge debts. The majority of the purchase price was used to pay off these debts, which constituted legal necessity. A small portion of the total consideration remained unaccounted for. The purchaser had conducted inquiries into the necessity of the sale and acted in good faith. The High Court had previously held that the sale should be set aside conditionally because the unaccounted portion was not a trifling sum.
Findings of Court:
The sale was made after due inquiry into legal necessity, which was proved for the bulk of the purchase price. The consideration was adequate. The inability to establish the application of the surplus after a long interval is not sufficient ground in law to set aside the sale.
Issues: Whether the failure to account for a small portion of the purchase price invalidates a sale of ancestral property when the bulk of the proceeds were used for legal necessity and the purchaser acted in good faith.
Ratio Decidendi: A purchaser who acts in good faith and after due inquiry is not obligated to monitor the application of the purchase money. If the sale is justified by legal necessity, the failure to account for a small surplus does not invalidate the sale, as it is presumed that such funds were used for the benefit of the family.
Result: Judgment and decree of the High Court set aside and the plaintiffs' suit dismissed with costs.
Legal Category Hierarchy
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family law
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hindu law
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joint family property
- alienation by manager
- legal necessity
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joint family property
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hindu law
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property law
- sale of ancestral property
Judgement
Appeal (No. 183 of 1924) from a decree of the High Court (May 30, 1921) reversing a decree of the Additional District Judge of Aligarh which reversed a decree of the Subordinate Judge of Aligarh.
The suit was brought by the respondents in 1918 to set aside a sale of joint property made in 1902 by their father; he was made a defendant but did not contest the suit.
The facts, which were no longer in dispute, appear from the judgment of the Judicial Committee.
The Subordinate Judge set aside the sale, but an appeal to the District Court was allowed and the suit dismissed.
On a second appeal to the High Court (Lindsay and Kanhaiya JJ.) the decree of the District Court was set aside and a decree made for possession conditionally upon the plaintiffs paying into Court the sum of Rs.3000. The reasons of the learned judges are stated in the present judgment.
1926. Nov. 1. Dube for the appellant.
Hyam for the respondent.
[In addition to the cases referred to in the judgment reference was made to Phool Chand Lal v. Rughoobuns Suhaye (( 1868) 9 Suth. W. R. 108.); Mutteeram Kowar v. Uopaul Sahoo (( 1873) 11 Ben. L. R. 416.); Jainarain Pande v. Bhagwan Pande . (( 1922) I. L. R. 44 A. 683.)]
Dec. 10. The judgment of their Lordships was delivered by
LORD SALVESEN. This is an appeal from a judgment and decree dated March 30, 1921, of the High Court of Judicature at Allahabad which on second appeal reversed a judgment and decree dated February 1, 1919, of the Additional District Judge of Aligarh who had set aside a judgment and decree dated August 30, 1918, of the Subordinate Judge of Aligarh.
The petition of plaint was at the instance of Nathu Ram and his brothers, sons of one Dungar Mai, and was directed against Kanhaiya Mal who had purchased ancestral property from the plaintiffs father in the year 1902, and the main relief sought was that the sale deed dated December 23 in that year should be declared invalid, and the plaintiffs awarded proprietary possession of the property thus alienated by their father. The property sold consisted of (1.) One moiety share in a 6 biswa, 5 biswansi zamindari share of a property in mauza Daulatpur. (2.) A proportionate share in 51 bighas, 18 biswas, 13 biswansis " pukhta " of a zamindari property in the same mauza both situated in the district of Aligarh.
The plaintiffs were members of a Hindu joint family of which their father Dungar Mal was manager, and were minors at the date of the sale deed, and the eldest of them only attained majority some short time before the suit was brought. The plaintiffs father, Dungar Mal, was made a party to the action but did not defend. He was alive at the date of the trial, but has since died.
The facts found by the District Judge of Aligarh, which are admittedly conclusive, may be summarized as follows (1.) The sale deed in favour of the defendant No. ls father was executed in December, 1902, and the consideration therein stated of Rs.3500 was paid in cash. (2.) The property in question had been previously sold by auction, but on January 5, 1902, Dungar Mal paid Rs.1300 to get this sale set aside, and shortly before that he had spent a sum of about Rs.4000 on his sisters wedding. (3.) In order to meet part of his indebtedness thus incurred Dungar Mal had borrowed on promissory notes from Kewal Ram, a moneylender, two sums of Rs.1000 and Rs.1600. (4.) These two sums, with interest, bringing the total up to Rs.3000, were discharged out of the consideration money paid by the vendee, and the promissory notes delivered up. (5.) Before purchasing the property from the Hindu father the vendee ascertained the facts above mentioned. (6.) There was no evidence as to how Dungar Mal applied the Rs.500, the balance of the purchase price, and he did not tender himself as a witness. (7.) The Additional Judge accepted the conclusion of the Subordinate Judge that the sale was made for adequate consideration, and indeed, that the seller got a good price for it. (8.) He appears a
