1. This is an appeal from a judgment of the Joint First Class Subordinate Judge, Poona, whereby the learned Judge accepted the respondent's claim for possession of a house No. 179 situate in Poona and passed a decree for possession in his favour against the appellant. The facts-material to the questions which arise in this appeal may be shortly stated as follows :-
2. One Pandurang Ramji Bari died on September 8, 1913, possessed of considerable movable and immovable property. Prior to his death he made a will, by which he appointed his widow Venubai and a son of his brother in his genitive family by name Kisan as his executrix and executor. Venubai and Kisan obtained probate of the will and carried on the administration of the testator's estate jointly until August 21, 1917, when Kisah died. It is common ground that thereafter Venubai as the sole surviving executrix continued to administer her Husband's property until her death. In 1920, Venubai executed a deed of mortgage in respect Of three of the houses belonging to her husband for a sum of Rs. 15,000 in favour of one Hukumchand. Hukumchand thereafter instituted a suit on his mortgage and obtained the usual mortgage decree in 1922. In 1923, in execution of the decree the three houses were sold by auction, and the house No. 179 was purchased by the appellant. In March, 1926, Venubai died. By her husband's will she was given a power of appointment to appoint to the testator's estate either the said Kisan or his brother Shankar or a son of either of them, and prior to her death Venubai in exercise of the power of appointment appointed the respondent, who was the son of Kisan, as the sole heir of her deceased husband. In 1929, the respondent brought three suits against the purchasers of these three houses including the appellant; and it is from the judgment in one of these suits, in which a decree was made for possession in favour of the respondent against the appellant, that the present appeal is made.
3. Mr. Abhyankar on behalf of the appellant contends, first, that the mortgage being executed by Venubai as an executrix of her husband, the sale held in execution of the mortgage decree in favour of the mortgagee is binding, under Section 307 of the Indian Succession Act, against the respondent as it was binding against the estate; secondly, that in any event the lower Court was wrong in disallowing evidence to prove that the mortgage was effected by Venubai for a legal necessity, and that the case should be remanded for a trial of that question in the event of his first contention being not accepted; and thirdly, that in any event the lower Court was wrong in disallowing the contention of the appellant to the effect that he was entitled to compensation for Improvements effected by him in the property, and for that purpose the case mast be remanded to the lower Court.
4. The answers made on behalf of the respondent to these contentions are these : first, that the mortgage effected by the widow was not effected by her as aft executrix or in her character as an executrix but in her personal capacity, and that on her death the title, if any, of the appellant as Court purchaser came to an end; secondly, that assuming that the mortgage was effected by Venubai as an executrix, she had no power to do so under the terms of the will and, therefore, the transaction was not binding on the respondent who is beneficially entitled to the whole of the property left by Pandurang; thirdly, that the question of legal necessity does not arise in this case and is irrelevant; and lastly, that if the appellant is entitled to compensation for improvements, the respondent is entitled equally to credit against him the rents or the mesne profits from the property realized by the appellant.
5. In our opinion, there is considerable force in the appellant's argument that the mortgage must be deemed to have been executed by Venubai in her capacity as an executrix; but we do not wish to express any definite opinion upon it as we think that upon the second contention raised on behalf of the respondents the appellant must fail.
6. Before dealing with it, however, it may be stated that it is difficult to see how any question of the transaction being made under a legal necessity is relevant on the facts of this case. The transaction made by Venubai was made by her either as an executrix or in consequence of or under the interest which she derived from the will. Now, it is clear from the terms of the will that Venubai had only a life estate, which is clearly distinct from what is ordinarily known as a Hindu widow's estate, where a Hindu widow succeeds to the property of her deceased husband as his heir on his intestacy; but if a Hindu widow claims any interest in her deceased husband's property under a will which he is competent to make, and which he did make then it is by the terms of that will that her rights to the property or over the property must be determined. If we are right in holding that she had a life estate, it is perfectly competent to her to alienate the whole of the life interest in any manner and for any reason she liked.
7. It is common ground that the real question in the case has to be determined upon the provisions of Section 307 of the Indian Succession Act (XXXIX of 1925). Under the English law, the entire estate of a deceased person vests in his executor, and he has absolute power to dispose of it either by sale or mortgage in any manner he likes in the course of administration; and any transaction of this nature effected by him is binding on the estate or the ultimate owner, except in three cases : (1) Where a transaction involves a breach of trust, to which not only the executor but the other person is a party; (2) Where the transaction has been effected as a result of fraud; and (3) Where there is a devastavit causing loss to the ultimate owner. These principles are well established, and Section 307 of the Indian Succession Act is based upon these principles. The section provides as follows :-
(1) Subject to the provisions of Sub-section (2), an executor or administrator has power to dispose: of the property of the deceased, vested in him under Section 211, either wholly or in part, in such manner as he may think fit.
Sub-section (2), which applies in this case as the parties are Hindus provides:-
If the deceased was a Hindu, Muhammadan, Buddhist, Sikh or Jain or an exempted person, the general power conferred by Sub-section (I) shall be subject to the following; restrictions and conditions, namely:-
(i) The power of an executor to dispose of immovable property so vested in him is subject to any restriction which may be imposed in this behalf by the will appointing him, unless probate has been granted to him and the Court which granted the probate permits him by an order in writing, notwithstanding the restriction, to dispose of any immovable property specified in the order in a manner permitted by the order.
This is the only part of the section which is material. It is clear that under this section a Hindu executor is entitled to deal with the property of his testator in the same manner as the owner himself would have dealt with it, unless his powers are restricted or limited by the terms of the will. If his powers are restricted by the terms of the will, then he cannot dispose of immovable property unless he obtains permission of the Court, and the Court may give such permission in a proper and fit case, notwithstanding any restriction which may have been imposed in that behalf by the terms of the will upon the executor. Now the restriction upon the powers of an executor to deal with immovable property of the testator may be either express or implied; and the real question which we have now to consider is whether, under the terms of the will, the view taken by the learned First Class Subordinate Judge that there was a clear restriction upon the powers of Venubai as an executrix to mortgage the house in question is justified.
8. Clause 1 of the will recites that the whole property which the testator was leaving behind him belonged to him. Clause 3 refers to two persons, Kisan and Shankar,- the two nephews in the genitive family. Clause 4 then contains the power of appointment which, as I have already pointed out, was to be exercised in favour of these two persons or a son of either. The clause directs :
As to the property that may remain over after giving the legacies which I have made as stated below and after paying off my debts, the whole of the same shall go to the person whom my wife may appoint as owner with full rights of wnership. He shall be absolute owner of the said property.
Clause 5 is important, and it is as follows:-
I have got trade and. there are my out standings which are to be recovered from people and some suits are pending. I have also to pay debts to other people. For carrying out all these things I appoint my wife Soubhagyavati Venubai husband's name Pandurangi Ramji Bari as executrix and my nephew Chiranjiv Kisan as executor. They shall make all arrangements for recovering my out standings and paying my debts, recovering the income of (my) property, and carrying out repairs to the property or building new structures. If for any reason any property has to be sold or mortgaged, the same may be sold or mortgaged with the consultation of them both and either out of the two should not do that (sale or mortgage) independently of the other and without consulting the other.
Then Clause 6 directs that Kisan's brother Shankar and his sister were to be married at the expense of the estate. Clause 7 provides that Kisan and Shankar and their sister Shantabai were to stay with Venubai and their expenses were to be defrayed out of the property, and in the event of there being any disagreement between Venubai and these people, each one of them was to be paid Rs. 50 per month till the death of Venubai. Clause 11 mentions the trade which he was carrying on and gives directions as to what should be done with reference to it and how the account should be made up. It is clear, however, that no power to carry on this trade was conferred upon the executors. Clause 12 deals with a sadavarta (institution) to be maintained out of the property. Clause 13 provides for a legacy to a cousin. Clause 14 refers to a shop dealing in vessels and pots, in which the deceased had a share and directs that the business should be wound up.
9. Coming back to Clause 5, it seeems to be plain upon that clause that the power to sell or mortgage the property of the deceased was limited to the purposes mentioned in that clause, namely, trade, out standings debts and litigation. The fact that the testator thought it important to include the power conferred upon his executors to dispose of his property in this particular paragraph is not without significance, and in our opinion a very strong implication arises that he never intended to give any power to his executors to sell or mortgage his property except for the purposes mentioned in this clause. The clause in the vernacular is not, according to Mr. Desai's contention, properly translated. We have looked at the original will, and we think that the proper translation of this clause should be: 'If an occasion arises for selling or mortgaging any property....' So that, what the testator really intended was that if it became necessary to sell or mortgage the property for any of these purposes or in connection with any of these purposes, then, and in that case only, the executors should be competent to sell or mortgage the same.
10. It is argued, however, that having regard to the fact that certain legacies are provided for and certain items of expenditure to be incurred by the executors are mentioned, the clause should be read as conferring a power to alienate the property of the testator for any act necessary to be done in the course of administration. It is difficult, in our opinion, having regard to the manner in which the whole will is drafted and the position where the clause referring to the executors' power to deal with the property is placed, to accept this contention; bat assuming this contention to be correct, in our opinion, it does not improve the appellant's case as the evidence is against it. The mortgage deed in favour of Hukumchand recites that the widow was borrowing moneys for the purpose of a cloth shop. The mortgagee admitted1 in his-evidence that it was for that purpose that he made the advance. The plaintiff's case is that these moneys were borrowed for assisting Shankar to open a cloth shop of his own, and that is clear also from the purshis put in on behalf of the appellant asking for permission to lead evidence on the question of legal necessity. The plaintiff's case is supported by Hukumchand's evidence? and by the recital in the mortgage-deed. So that the evidence seems to us to be one sided on this point. Now, it is clear, that the trade to which the testator refers in Clause 5 is the trade mentioned by him in Clause 11 and the shop in Clause 14. In Clause 11 he refers to the cast iron factory, and in Clause 14 he refers to the shop dealing in vessels and pots, and it is not contended that the testator was carrying on any cloth business. In our opinion, therefore, the widow had no power to mortgage the houses for borrowing moneys to be lent to Shankar, and the Mortgage was not binding upon the respondent who was the ultimate owner.
11. It is next argued that it is not alleged by the plaintiff, much less proved, that the mortgagee was aware of this restriction upon the powers of the executors: contained in the will; but it is clear from the mortgagee's own evidence', which is supported by the recital in the mortgage deed itself, that the mortgagee knew that whatever interest Venubai had in the property was the interest which she derived under the will of her husband and that Venubai had obtained probate of the will, and if the mortgagee-chooses to advance moneys without making any inquiries as to the contents of the will then it does not lie in his mouth to Say that he was: ignorant of the restrictions contained in the will. The position of the appellant is not any higher than that of the mortgagee. It is clear under the Civil Procedure Code that all that a Court purchaser obtains as a result of his purchase is the right, title and interest of the judgment-debtor, whatever it may be and subject to all infirmities in it. If, then, the mortgage was invalid, it must follow that any person claiming under the mortgagee would riot have a Siiperior claim. Sirnilarfy, if all that a Court purchaser gets is the right;, title and interest of the judgment-debtor, then, as Venubai was incompetent to effect a mortgage of this property by reason of the restrictions imposed' by the will upon her power, it must follow that the appellant is in no better position.
12. We think, therefore, that the conclusion reached by the First Class Subordinate Judge that the respondent was entitled to have the sale set aside is correct.
13. The question, then, is, upon what terms the sale ought to be set aside. Section 307 says that where a transaction is made by a Hindu executor, Which is not warranted by the terms of the will, the transaction is voidable and can be set aside at the instance of the person beneficially interested in the estate. It is too late in the day, in my opinion, to contest the position taken by Mr. Abhyankar that in any event his client is entitled to compensation in respect of improvements effected by the appellant in the property. It is a well settled principle that where an unauthorized sale by an executor or administrator is set aside, and a bona fide purchaser is deprived of the property purchased by him, then he is entitled in equity to be reimbursed for any expenditure incurred by him which has the effect of improving the permanent value of the property. The Indian Courts have recognized this equitable principle which is followed by the American Courts and also followed by the English Courts. If the transferee incurs expenditure out of caprice or mere whim or for luxurious purposes, the ultimate owner is not bound. But if the result of the improvement is to add to the permanent value of the property, then in equity a right for restitution or reimbursement arises in favour of such transferee in respect of the expenditure incurred by him in that behalf. This principle is recognized in Section 64 of the Indian Contract Act, in Section 51 of the Transfer of Property Act and in Sections 38 and 41 of the Specific Relief Act. No authority is necessary in support of this view, but if one is needed, it will be found in the observations in Dart on Vendors and Purchasers, 8th edn., Vol. II, p. 798, which are as follows :-
Where a purchaser1 for value is evicted in Equity, under a prior title, he will be credited with all moneys expended by him in necessary repairs or permanent improvements (except improvements made after he has discovered the defect of title); and will be debited with the rents which he has received.
14. We think, therefore, the learned. Judge was wrong in disallowing the contention raised in this respect on behalf of the appellant, and this is not seriously disputed.
15. We think, therefore, the case must be remanded to the trial Court to ascertain whether any improvements have been made by the appellant before 1926 which have increased the permanent value of the house, and, if so, what would be the value of those improvements, and how much compensation should be allowed to the appellant in that respect. In ascertaining the amount due, if any, to the appellant, the respondent will be entitled to credit against it the mesne profits for that period which the appellant received from the property. Parties will be at liberty to lead evidence on the point. Findings to be returned on or before September 15.
16. Costs will be reserved, and a final decree will be made after the findings are received.
17. I agree.