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Andhra Pradesh High Court
Judges : NARASIMHAM, P.SATYANARAYANA RAJU
Hindustan Ideal Insurance Co.Ltd.represented by S.Rangarajan - Appellant
Versus
Perla Satteyya Chetty representing himself and other members of his joint family as father manager - Respondent
Decided On : 03-25-60
MORTGAGE - BINDING NATURE - ALIENATION FOR DISCHARGE OF ANTECEDENT DEBTS - POWER OF FATHER - SCOPE - BURDEN OF PROOF - TRANSFER OF PROPERTY ACT (IV OF 1882), SECS. 59-A, 65 (A), 130, 132.
Fact of the Case:
A simple mortgage was executed by Perla Satteya Chetly in favour of the Hindustan Ideal Insurance Co. , Ltd. , on 18-2-1950 for Rs. 30,000. 00. The items hypothecated were a house in Visakhapatnam, a house in Vizianagram and two policies of life insurance taken by the mortgagor on his own life -- one for Rs. 10,000. 00 and another for Rs. 20,000. It was stipulated under the mortgage deed that the amount borrowed under the mortgage was payable with interest at 7 p. c. per annum with two months notice but not earlier than 20-2-1953. It was further stipulated under the deed that the mortgagor should pay the premiums as and when they fell due. There were other provisions with which We are not immediately concerned beyond noticing that the mortgagor agreed not to alienate the hypothecated properties without the consent of the mortgagee in writing and until the repayment of the mortgage debt. It was expressly recited in the mortgage deed that the amount was borrowed for repayment of the debts incurred by the mortgagor for his business. Subsequently, without notice to the mortgagee, the mortgagor executed a sale deed (Ex. B-1) for a portion of the house in Visakhapatnam referred to as the annexe in favour of the 2nd defendant on 20-10-1954 for Rs. 12,999/. It was recited in the sale deed that a mortgage in favour of the Hindustan Ideal Insurance Co. , Ltd. , the plaintiff, was subsisting and that the mortgagor would redeem the mortgage.
Finding of the Court:
The court held that the mortgage was binding on the minor sons of the mortgagor and that the mortgagee could proceed against all the hypothecated properties for the realization of his dues. The court also held that the mortgagee was not accountable for the moneys due under the policies as there was no default on his part in paying the premiums.
Issues: 1. Whether the mortgage was binding on the minor sons of the mortgagor? 2. Whether the mortgagee was accountable for the moneys due under the policies?
Ratio Decidendi: 1. The court held that the mortgage was binding on the minor sons of the mortgagor on the following grounds: a) The 2nd defendant, who purchased the Vizagapatam house subject to the mortgage, cannot be heard to plead against the validity of the mortgage as she is estopped from disputing the title to the hypothecated property under Sections 59-A and 65 (a) of the Transfer of Property Act. b) The family of the 1st defendant is a trading family and he was entitled to start a new business in Austin motor cars and the debts incurred for the business are binding on the sons as the business was not speculative and risky. c) The mortgage was executed for the discharge of antecedent debts of the father, and as such binding on his sons. 2. The court held that the mortgagee was not accountable for the moneys due under the policies as there was no default on his part in paying the premiums. The mortgage deed expressly provided for the mortgagor to pay the premiums as and when they fall due.
Final Decision: The appeal was allowed with costs here and in the court below. Time for redemption six months from the date of the judgment.
( 2 ) THE facts are these -- A simple mortgage. Ex. A-1 was executed by Perla Satteya Chetly in favour of the Hindustan Ideal Insurance Co. , Ltd. , on 18-2-1950 for Rs. 30,000. 00. The items hypothecated were a house in Visakhapatnam, a house in Vizianagram and two policies of life insurance taken by the mortgagor on his own life -- one for Rs. 10,000. 00 and another for Rs. 20,000. It was stipulated under the mortgage deed that the amount borrowed under the mortgage was payable with interest at 7 p. c. per annum with two months notice but not earlier than 20-2-1953. It was further stipulated under the deed that the mortgagor should pay the premiums as and when they fell due. There were other provisions with which We are not immediately concerned beyond noticing that the mortgagor agreed not to alienate the hypothecated properties without the consent of the mortgagee in writing and until the repayment of the mortgage debt. It was expressly recited in the mortgage deed that the amount was borrowed for repayment of the debts incurred by the mortgagor for his business. Subsequently, without notice to the mortgagee, the mortgagor executed a sale deed (Ex. B-1) for a portion of the house in Visakhapatnam referred to as the annexe in favour of the 2nd defendant on 20-10-1954 for Rs. 12,999/. It was recited in the sale deed that a mortgage in favour of the Hindustan Ideal Insurance Co. , Ltd. , the plaintiff, was subsisting and that the mortgagor would redeem the mortgage.
( 3 ) THE 2nd defendant is the widow of one Venkata Ramamnulu Naidu to whom the murtgagor was indebted on a pronote in a sum of Rs. 10,000. 00 borrowed thereunder. After the death of the said promisee, his widow filed a suit, obtained a decree in O. S. No. 39 of 1954, Sub-Court, Visakhapatnam and purchased the house in Visakhapatnam in entirety in execution proceedings, E. P. No. 217 of 1954 subject to the mortgage in favour of the Hindustan Ideal Insurance Co. , Ltd.
( 4 ) THE Insurance Company brought the suit on to recover Rs. 34,283-11-8 with further interest and costs. The mortgagor was impleaded as the 1st defendant as representing himseif and his undivided sons as father and manager of the Hindu joint family. The purchaser of the Visakhapatnam house was impleaded as the defendant.
( 5 ) THE 1st defendant, mortgagor, admitted the execution of the mortgage and the borrowing ot Rs. 30,000. 00 thereunder and pleaded for a years time for payment. He admitted the sale deed that he executed in favour of the 2nd defendant and the subsequent execution proceedings instituted by her for realisation of the money-decree in her favour.
( 6 ) THE 2nd defendant contested the suit advancing two main pleas: firstly, that the hypothecated properties were coparcenary properties of the 1st defendant and his four minor sons and as such the mortgage executed by the 1st defendant was not binding on his minor sons as the mortgage debt was not contracted for any family business or for family necessity or for the discharge of any antecedent debts; secondly, that the plaintiff as mortgagee has to account for the hypothecated insurance policies which had been allowed to lapse. Alternatively she prayed for an equitable relief that item 2 may be proceeded against in the first instance.
( 7 ) THE Subordinate Judge accepted the plea that the suit mortgage was not binding on the minor sons of the mortgagor and therefore confined the mortgagees remedy against the mortgagors s
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