A manager of a Mitakshara joint family can bind minor members for debts of a continued ancestral business. A lender who honestly and cautiously inquires into the legal necessity of a loan is not required to monitor the actual application of the funds.

Judgement

Appeal (No. 128 of 1929) from a decree of the High Court (April 2, 1928) reversing a decree of the Subordinate Judge of Cawnpore (January 31, 1924).

The suit was instituted by the first respondent, a minor suing by his next friend, against the appellant idol. The plaintiffs adoptive brother Gulab Chand was also made a defendant, and was joined as a pro forma respondent. The plaintiff claimed a declaration that a decree made upon a mortgage dated December 5, 1920, of the property of his Mitakshara joint family was invalid against him. The appellant by his written statement contended (inter alia) that the mortgage and decree were binding upon the plaintiff.

The facts appear from the judgment of the Judicial Committee.

The Subordinate Judge dismissed the suit.

An appeal to the High Court was allowed, and a declaration made as prayed.

The learned judges (Lindsay and Sulaiman JJ.) found on the facts that the business the debts of which were discharged with the money advanced was a new business and not an ancestral business. Following Inspector Singh v. Karak Singh (( 1928) I. L. R. 50 A. 776.) they consequently held that Gulab Chand as manager could not incur debts binding upon the plaintiff in carrying on the business. They were also of opinion that the defendant mortgagee had not made sufficient inquiries as to the existence of legal necessity to render the mortgage valid. Although Sulaiman J. thought that the Court should follow its decision above mentioned, he was doubtful whether the rule laid down by the Privy Council in Sanyasi Charan Mandal v. Krishnadhan Banerji (( 1922) L. R. 49 I. A. 108.), that a minor member of a joint family is not bound by debts incurred in carrying on a new family business, applied in the case of a joint family governed by the Mitakshara, not by the Dayabhaga. Upon that question he referred to previous decisions to which he had been a party, particularly Mahabir Prasad Misir v. Amla Prasad Rai . (( 1924) I. L. R. 46 A. 364.)

1931. Jan. 19, 23. Dunne K.C. and Dube for the appellant. The business as carried on after the partner retired in 1919 was not a new business but a continuation of the business carried on by the plaintiffs father. It was continued on the same day on the same premises, dealt in the same commodities, and presumably with the same customers. The dissolution of the partnership necessarily involved taking the account, altering the firm name, and opening new books ; that did not make the business a new business. The trial judge found that the debt was not due to gambling, and there was not material upon which the High Court could properly find otherwise. Even if at a later date speculative transactions were entered into that did not retrospectively make the business a new one, or the business a gambling one. If the business was a continuation of the old business it is not necessary to determine whether in the case of a Mitakshara joint family a minor is liable in respect of the debts incurred in carrying on a new business. It is submitted that the decision to the contrary in Inspector Singh v. Karak Singh (( 1928) I. L. R. 5a A. 776.) was wrong. That decision was based chiefly upon the judgment of the Board in Sanyasi Char an Mandal v. Krishnadhan Banerji (( 1922) L. R. 49 I. A. 108.), which related to a Dayabhaga joint family. The reasoning there was that the provisions of the Contract Act as to partnership applied in that case to the joint business, that liability in respect of a new business could be founded only upon contract, and that therefore, apart from s. 247, a minor could not be liable. That reasoning is inapplicable to a Mitakshara joint family, as it is not a partnership within the Contract Act. The money advanced by the appellant was admittedly applied to discharge the debts incurred ; apart from it the business must have been wound up, and loss inflicted. The evidence shows that the appellant acted honestly and with due caution, and that ample inquiries were m