The main legal point established in the judgment is that a transferee who deals with a transferor (who happens to be an executor) not as executor but as owner, is not entitled to the protection which the law affords to transferees from executors acting qua executors.

JUDGMENT

Ameer Ali, J. - I dismiss the application. Defendant 1 is the executor of the estate of his father, Ambikacharan De, who died on 2nd July 1925, leaving considerable property. He left him surviving defendant 1, Narendrakrishna De, a grandson and a grand-daughter; who by her next friend, her mother, the wife of defendant 1, is the applicant. In his will, the testator mentioned his debts. He also gave the present applicant a legacy of Rs. 8,000 to be spent for her marriage. Defendant 1 was residuary legatee, and also named as executor, in the alternative. He obtained probate in 1926, and according to the allegations in the petition, he has dissipated the property, with the result that even this sum of Rs. 8,000 cannot be found to satisfy the legacy of the applicant. Among other alienations made by the executor, which are set out in para. 8 of the petition, is the transaction, now challenged, viz., a mortgage, made in January 1927, of No. 11/1, Goabagan Street, Calcutta, for Rs. 30,000 in favour of the Co-operative Insurance Society, Ltd., defendant 2, and the sole respondent to this application. The mortgagee obtained preliminary and final decree, and the property was about to be sold when this application to stay the sale was made. I granted ad interim stay on terms. I do not propose to go further into the facts or to deal with the merits of the application, because, in my view, it is based upon a misconception of the law.

2. The mortgage in question (Ex. "B" to petition) was clearly by Narendrakrishna De, as executor. It is sought to affect the transferee on grounds set out in para. 10 of the petition, the material allegations being that defendant 2 had or ought to have had full knowledge that the said loan was required by Narendrakrishna De for his own personal and private purposes. That is an allegation of actual notice or constructive notice. Counsel for the applicant put his case of notice in the following way: that it was the duty of the mortgagee to scrutinize the will. Had the mortgagee so scrutinized the will he would have noticed that the amount of debts left by the testator, according to his own statement, was small though the estate was large; and, secondly, that there was a legacy or a bequest to the present applicant. It was argued from this that not only must notice be inferred, but also fraud of the mortgagee in accepting the mortgage and in bringing the suit. It was not suggested that the mortgagee had any actual notice. It was argued that, according to law, an executor cannot create a mortgage which is valid so far as outsiders are concerned, unless the amount raised was actually necessary and utilized for the purpose of the estate, and, in support of such argument, counsel relied upon the case of (Maharaja Sir) Manindra Chandra Nandi Vs. Sudir Krishna Banerjee and Others, AIR 1932 Cal 182 . Now, I think it necessary to point out that this decision establishes nothing of the kind. The question before the learned Judges was entirely one of unsecured loans to an executor continuing the business of the testator. On this question the judgment contains a most careful and complete summary of the law. The question of transfers by way of mortgage or sale by executors was in no way before them. In two places the learned Judges point that out. At p. 228 (of 59 Cal.) they say:

We are speaking here of simple cases of loans on promissory notes or hatchitas or other contracts, that is to say, cases where no charge has validly been created on the estate;

and, again, at p. 230, they refer to this aspect of an executor's activity, possibly, in language, too restricted. That however was a matter with which they were not dealing. In the case of Shishirkumar Kar v. Direndrachandra Kar OC No. 1838 of 1929, decided on 15th February 1932 by Ameer Ali, J. the two aspects of the matter fell to be dealt with: (a) unsecured loans and (b) transfers by executors. In giving judgment in that case I pointed out that in these two matters