A mortgage executed by a father on family property for business debts is binding on minor sons if it's not speculative; family customs allow new business ventures under Hindu law.

1. The plaintiff has appealed against the judgment of the Court of the Subordinate Judge, Visakhapatnam, in O. S. No. 29 of 1955, by which the mortgage, which the plaintiff was enforcing, was held to be not binding on the minor sons of the mortgagor and consequently restricting the plaintiff - mortgagee's right to proceed against the mortgagor's share in the hypothecated properties. The cross - objections relate to the costs of the 2nd defendant - alienee who contested the suit, the 1st defendant being the mortgagor himself.

2. The facts are these - A simple mortgage. Ex. A - 1 was executed by Perla Satteya Chetty in favour of the Hindustan Ideal Insurance Co., Ltd., on 18-2-1950 for Rs. 30,000/-. 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/- 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 'annexure' 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 Ramanujulu Naidu to whom the mortgagor was indebted on a pronote in a sum of Rs. 10,000/- 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 himself 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 of Rs. 30,000/- thereunder and pleaded for a year's 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 wag 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