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1918 Supreme(SC) 26
Privy Council
Bart, Sir Walter Phillimore, Ameer Ali , Sir John Edge, Justice Viscount Haldane, JJ.
Basudeo Roy and others -Appellant
Versus
Jugal Kishwar Das and others -Resopndent
Decided On : 21-03-1918
Hunter, Watkins , T.L. Wilson and Co., B. Dube, DeGruyther , W. Garth
Property of a monastic institution is held in trust by its head. Alienation of such endowed property by a head or guardian is invalid unless a legal necessity is proven, specifically that the debts being discharged were incurred for the benefit of the institution.
Headnote:(A) Religious and Charitable Endowments - Nature of Monastic Institutions - A monastic institution established for the service of a particular cult and the observance of its rites is a trust where the head of the institution manages the property and assets are vested in him as the owner in trust for the institution itself. Any property acquired with the income of such an institution is also subject to the same trust.
(B) Alienation of Endowed Property - Power of Guardian - The validity of transactions involving endowed property by a guardian or the head of the institution is governed by the rules of legal necessity. In the absence of a necessity that makes the debts binding on the institution, the head of the institution or their guardian has no power to alienate its properties to discharge such debts.
Facts of the case:
The plaintiff, who succeeded to the office of the head of a monastic institution while a minor, had a guardian appointed to manage the institution's property. The predecessor of the plaintiff had executed several mortgages to secure debts. The guardian entered into compromises regarding these mortgages and subsequently, after obtaining sanction from the District Judge, sold portions of the institution's property to discharge these liabilities. The plaintiff sought to set aside these sales on the grounds that the property was endowed (debuttar) and that there was no valid legal necessity for the alienation, as the debts were not binding on the institution.
Findings of Court:
The court found that the property was acquired with the funds of the institution and was therefore endowed property subject to the trust established by the original grant. It was further determined that the defendants failed to establish a justifying legal necessity for the sales, as there was no evidence that the debts incurred by the predecessor were for the benefit of the institution rather than for personal purposes.
Issues: The main issues were whether the property in question was debuttar property subject to the rules governing religious and charitable endowments, and whether there existed a justifying legal necessity under Hindu law to render the alienation of said property valid.
Ratio Decidendi: The head of a monastic institution holds the assets as a trustee for the institution. A guardian or the de jure head of the institution cannot alienate endowed property to pay off debts unless it is proven that the debts were incurred for the benefit of the institution, thereby creating a legal necessity. If the debts are personal to the individual and not binding on the institution, the alienation is invalid.
Result: Appeals dismissed
These two consolidated appeals from a judgment and two decrees of the High Court of Calcutta, bearing date the 22nd July, 1913, arise out of two suits brought by the plaintiff-respondent in the Court of the Subordinate Judge of Darbhangah on the 8th July, 1907. The object of both suits was to recover possession of certain landed property alleged to have been improperly alienated during the plaintiff's minority by one Chatter Pandey, purporting to act as his guardian.
The facts on which the two actions are based are fully set forth in the judgment of the High Court, It is not necessary therefore to give more than a bare outline.
The plaintiff-respondent is admittedly the present Mahant of the Bairagi Asthal of Lowthwa, in the district of Darbhangah. His predecessor, Janki Das, died in 1894. Before his death he appears to have appointed the plaintiff (his nephew by blood relationship) his successor to the office of Mahant, and it is alleged, and not controverted, that his nomination was confirmed, in accordance with the custom governing the succession to the Mahantship, by the Mahants of the neighbouring Asthals. It is not disputed that at the time of Janki Das' death the plaintiff was a minor and that in consequence thereof Janki Das had, by a testamentary document executed shortly before, appointed Chattar Pandey as his guardian. Chattar obtained probate of Janki's will on the 6th February, 1894, and from that time purported to act as the guardian of the minor and manager of the Asthal property.
It is quite clear that for some years before his death Janki Das was heavily involved in debt. On the 29th January, 1885, he had executed a mortgage in favour of one Tej Narain Roy in respect of six annas of the village of Majhowra for Rs. 5,500. On the 31st May, 1889, he had created a mortgage in favour of one Ram Narayan Roy, in respect of four annas of Majhowra for a sum of Rs. 3,500 and a third also in favour of Ram Narayan for Rs. 2,605 on the 17th May, 1892, in respect of another share of the same village. All three mortgagee were outstanding at the time of his death, though on the first a sum of Rs. 9,000 is said to have been repaid, leaving a balance of something like 6,000 rupees. For the realisation of this amount, the defendants to the first action, who are representatives of Tej Narain Roy, the mortgagee under the first deed, brought a suit on the 20th February, 1899, against the present plaintiff as the legal representative of Janki Das. The plaintiff (defendant to that action), being a minor at the time, was sued as such under the guardianship of Chattar Pandey. Before, however, any defence was entered, Chattar entered into a compromise with the mortgagees by which, in consideration of the remission by them of Rs. 600, he consented on behalf of the minor to a mortgage decree against the six annas share of the village of Majhowra that had been mortgaged to Tej Narain Roy. The decree of the Subordinate Judge embodying the terms of the compromise bears date the 27th April, 1899.
Three years later, on the 16th June, 1902, Ram Narayan Roy brought a suit on the second mortgage for the realisation of this debt, which ended similarly in a decree based on a compromise entered into by Chattar Pandey. This decree bears date the 21st July, 1902. Subsequently Ram Narayan Roy obtained a decree absolute for sale, and in fact initiated proceedings to have the mortgaged property sold under process of the Court.
It is stated that, although no proceedings had actually been taken to enforce the third mortgage, an action was threatened and in consequence thereof an agreement was arrived at between the creditors and Chattar Pandey.
In order to pay off these liabilities Chattar Pandey, on the 19th July, 1905, applied to the District Judge of Tirhoot for leave to sell an eight anna share of the village of Majhowra to the two sets of purchasers whose sales are impugned in the present suits, one of whom was in fact the representative of
