1909 Supreme(Cal) 286
CALCUTTA HIGH COURT
Mahraja Sir Rameshwar Singh Bahadur, K.C.I.E. - Appellant
Versus
Dhanpat Singh & Ors. - Respondent
Decided On : 16-12-1909
Headnote:
Guardians and Wards Act - Mortgage - Minor's Property - Permission of Guardian - Section 31 - Necessity or Advantage - Fraud - Consideration - [Guardians and Wards Act, 1890, Sections 27, 29, 31] - The court held that the mortgagee was not bound to go behind the order of the court granting permission to the guardian to execute the mortgage, even if the order was based on inaccurate facts, unless fraud was alleged. The court also held that the mortgagee was entitled to rely on the order as the basis of his right to claim satisfaction from the minor's estate, even if the consideration for the mortgage was not paid or applied in the way the mortgagee had undertaken to pay or apply it. The court remanded the case for an account to be taken of the money due on the mortgage.
Fact of the Case:
The plaintiff, a mortgagee, sued to recover the amount due on a mortgage executed by the guardian of certain minors. The lower courts dismissed the suits on the ground that the mortgages were created on the property of minors and that the permission granted to the guardian to execute the mortgages ought not to have been granted because the debt for which the money was borrowed was one for which the minors were not liable.
Finding of the Court:
The court found that the order granting permission to the guardian to execute the mortgages was not obtained by fraud and that the mortgagee was entitled to rely on the order as the basis of his right to claim satisfaction from the minor's estate. The court also found that the mortgagee was not bound to go behind the order and inquire whether the order ought to be made or not, even if the order was based on inaccurate facts. The court remanded the case for an account to be taken of the money due on the mortgage.
Issues: Whether the mortgagee was bound to go behind the order of the court granting permission to the guardian to execute the mortgage, even if the order was based on inaccurate facts. Whether the mortgagee was entitled to rely on the order as the basis of his right to claim satisfaction from the minor's estate, even if the consideration for the mortgage was not paid or applied in the way the mortgagee had undertaken to pay or apply it.
Ratio Decidendi: The court held that the mortgagee was not bound to go behind the order of the court granting permission to the guardian to execute the mortgage, even if the order was based on inaccurate facts, unless fraud was alleged. The court also held that the mortgagee was entitled to rely on the order as the basis of his right to claim satisfaction from the minor's estate, even if the consideration for the mortgage was not paid or applied in the way the mortgagee had undertaken to pay or apply it.
Final Decision: The court allowed the appeals, set aside the judgment dismissing the plaintiff's suit, and directed that a decree be made in favor of the plaintiff directing that an account be taken of what is due on the mortgage in question.
JUDGMENT
Harington, J. - These two appeals are preferred by the plaintiff against decrees passed by the District Judge of Durbhanga, affirming the decisions of the Subordinate Judge of that District dismissing the suits brought in respect of certain mortgages. The ground on which the suits were dismissed was that the mortgages were created on the property of some minors and that the permission granted to the guardian to execute those mortgages ought not to have been granted because the debt for which the money was borrowed was one for which the minors were not liable; that as the permission ought not to have been granted, the mortgage could not be executed under the Guardians and Wards Act and the plaintiff, therefore, was not entitled to recover the amount.
2. Against the decision of the lower Court, the mortgagee has appealed and the appellant contends that the order having been made permitting the guardians to execute the mortgages in question, the mortgagee was not bound to go behind the order and enquire whether the order ought to be made or not and as an authority for that proposition, the judgment of the Judicial Committee of the Privy Council in the case of Ganga Pershad Sahu v. Moharani Bibi 11 C. 379 : 12 I.A. 47, is relied upon. The particular passage is on page 50. In answer, the respondents rest their case in support of the judgment of the lower Court on three grounds. First, that the order does not comply with the provisions of Section 31 of the Guardians and Wards Act, because the order does not recite the necessity for which the loan was required, and, secondly, that the petition on which the order was passed contained a statement which was untrue, namely, that the minors were liable for the decree which the guardians intended to pay off. Now, with regard to these contentions, although it is stated that the statement in the petition was in fact inaccurate, no case of fraud was set up or proved in the lower Court; and it is conceded in the course of the argument in this Court that even if the minors are not liable on the decree, they might possibly be liable in a suit for contribution in respect of the liability covered by that decree. Then, the third point, which is taken by the learned Vakil, is that consideration for the mortgage was not paid or applied in the way in which the mortgagee had undertaken to pay or to apply it. With regard to the first two points arising out of the provisions of Section 31, the case stands thus. A certificated guardian appointed over the property of the minors, u/s 27 of the Act, is, subject to the provisions of the Act, bound to deal with the property as carefully as a man of ordinary prudence would deal with it if it were his own, and he is empowered to do all acts which are reasonable and proper for the realisation, protection or benefit of the property. Now it may become reasonable or proper to mortgage or charge or transfer the property, and in order to protect the interest of the minor. The Act goes on to say that "permission to the guardian to do any of the acts mentioned in Section 29 (i.e., mortgage, charge or transfer the property) shall not be granted by the Court except in case of necessity or for an evident advantage to the ward." Then having enacted this, the section goes on to provide that the order shall recite the necessity or advantage as the case may be, describe the property with respect to which the act permitted is to be done "and so on." In the present case a petition was put in before the District Judge applying for leave to mortgage the property and pointing, out that there was a decree against the minors and others, that the minors' property had been advertised for sale and that they would suffer great loss if the property was put up to auction sale and that it was impossible to satisfy the debt. Then, on that petition the District Judge gave the permission and that constituted the order on which the mortgage was executed. It has been pointed out that does