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Vinayak Ganesh Malwadkar Vs. Shantabai Bapu Bayaji - Court Judgment

LegalCrystal Citation
SubjectProperty;Civil
CourtMumbai
Decided On
Case NumberFirst Appeal No. 259 of 1934
Judge
Reported in(1938)40BOMLR180
AppellantVinayak Ganesh Malwadkar
RespondentShantabai Bapu Bayaji
DispositionAppeal allowed
Excerpt:
guardian and ward-mortgage of ward's property by guardian-sanction of court -guardian applying bulk of mortgage money to sanctioned purpose-small amount applied to purpose not sanctioned-mortgagee can show legal necessity for such alienation.;where the certificated guardian of a minor's property obtains sanction of the court to mortgage the property to pay off a decree against the property and there is no fraud or underhand dealing on the part of the person who lends the amount sanctioned on the mortgage, such person is entitled to rely upon the sanction itself for the validity of the mortgage for the entire amount lent by him.;in such a case, if the guardian applies the bulk of the mortgage money to the sanctioned purpose and a small portion of it to a purpose not permitted by the..........loan is not found to be authorized by the order granting the sanction, the person dealing with the minor's guardian is not prevented from showing that the loan was advanced for necessity, and if he is able to establish the existence of the necessity for the amount and if he is able to show that he has acted bona fide, the application of the loan so advanced for the particular purpose will not have to be shown by him, as he is not bound to see to the application of the moneys, even under the general hindu law. this being my view, without conceding that in this particular case the loan was not authorized by the sanction accorded by the district court, i should hold having regard to the bona fides of the plaintiff, and the existence of the decree which is proved in the case, and also the.....
Judgment:

Thakor, J.

1. This is an appeal by the plaintiff-mortgagee against that part of the decree of the learned First Class Subordinate Judge of Poona wherein he declined to award to the plaintiff relief to the extent of an item of Rs. 683-12-0, which was part of his mortgage.

2. The circumstances under which the suit came to be brought were these : The defendant Shantabai was a minor who had inherited certain properties. A guardian was appointed by the District Court of Poona both of her person and property, the guardian being one Bapu Bayaji Hendre, whom the minor Shantabai appears to have subsequently married. The estate had certain debts and decrees. The guardian Bapu applied to the District Court on June 3, 1925, that he should be permitted to mortgage one of the houses to the present plaintiff for Rs. 5,500 at one per cent, per mensem. The necessity for the mortgage recited in the application was that one Baloba had obtained a mortgage decree for sale against the suit house and was executing it in darkhast No. 1284 of 1924 of the District Court, and that the house had been put up for sale, and the decree had to be paid. The District Court on this application made an English endorsement over its signature saying ' permission granted ' on June 10, 1925. A separate order was also drafted by the office in the vernacular, and signed by the District Judge. Exhibit 50 in the case is a copy of it. The order is dated June 16, 1925. That is referred to as the sanction of the District Court in the case. It embodied the terms under which the sanction to mortgage was given to the guardian. It stated that permission was granted to the guardian on his application to mortgage the house in suit for Rs. 5,500, that he (guardian) should first pay out of that money the amount due in the above darkhast, and the balance he should invest in Government securities, and that he was not to spend that money without the Court's orders.

3. It appears that on August 14, 1925, the guardian executed in favour of the present plaintiff-appellant a mortgage on which the suit has been brought. It was for an amount of Rs. 5,500 which admittedly is the amount sanctioned by the Court. It has been found that the plaintiff paid Rs. 4,750 out of the amount to satisfy the darkhast No. 1284 of 1924 which has since been satisfied. Some amount was expended towards stamps, etc., i.e., about Rs. 41-4-0 or so. Rs. 683-12-0 are found to have been paid before the Sub-Registrar by the plaintiff. So that the whole amount sanctioned has in fact been found to have been paid by the present plaintiff.

4. It appears that after this date Shantabai, the defendant, married the guardian. It also appears that the guardian was removed. The proceedings relating to the removal not being before us, we are not in a position precisely to say on what grounds he was removed. Another guardian was appointed and on Shantabai having attained majority that guardian was also discharged. Bapu who had married Shantabai died in 1931. The present suit was filed by the plaintiff on November 15, 1932, to recover about Rs. 11,000 being the amount due on the mortgage with the interest thereon.

5. There were several defences to this suit, the principal one being whether the sanction given by the District Court is invalid and of no effect (issue No. 3). On this issue the finding of the Court was that the sanction was not invalid. On the other issues the Court found that the mortgage was proved and that its consideration also was proved. On a subsidiary issue, being issue No. 5, the Court held that the mortgage was within the sanction to the extent of Rs. 4,791-4-0 only, and not for the balance. By reason of its holding that the mortgage was within the sanction to this extent only, the relief that the Court awarded to the plaintiff was limited to that extent, the rest of the plaintiff's claim being refused. It is against that part of the decree which refused to award the full claim that the plaintiff has preferred the present appeal No. 259 of 1934.

6. The principal ground of appeal urged by Mr. Kelkar for the appellant is this : there was a sanction by the District Court which has been held to be a valid sanction by the lower Court itself; the guardian mortgaged the suit property to the present plaintiff for an amount of Rs. 5,500 only; which amount is the amount sanctioned by the District Court; the plaintiff having advanced Rs. 5,500 under the authority of that sanction to the guardian, whether the balance was invested in Government securities as directed in the vernacular order of sanction by the learned District Judge, or was otherwise utilized by the guardian, is not a matter which the appellant-plaintiff was bound to consider, that it was not his duty to see to the application of the money by the guardian, and that even if, as the recital in the mortgage-deed shows, he was made aware that the guardian was going to apply the balance towards payment of another decree obtained against the minor at Sholapur, that fact cannot alter the validity of the mortgage for the whole amount which admittedly was the sanctioned amount. The view taken by the lower Court and urged by the respondent's learned advocate is that as the sanction authorising the mortgage itself gave a direction to-the guardian to invest the balance in Government securities and not to apply it for another purpose without the order of the Court, and as the plaintiff admits that the representation made to him by the guardian was that he was going to apply the balance towards payment of another decree at Sholapur, the plaintiff was a party to the violation by the guardian of the terms of the sanction itself, and, to that extent his mortgage must be held to be without sanction although the full amount of Rs. 5,500 was found to-be covered by the sanction itself. No authorities are cited by either side.

7. It may be stated at the outset that there has been no suggestion before us, and no evidence has been relied upon to show that the plaintiff-mortgagee was in any sense a party to a fraud. The utmost that has been stated to be against him is that he allowed himself to be a party to a violation by the guardian of the terms of the order, and that he did not make sufficient enquiries as to whether the representation made to him by the guardian-about the darkhast pending in the Sholapur Court was literally true. In our opinion there being no suggestion of fraud, or even of any underhand' dealing, made against the plaintiff in this Court, the decree of the lower Court refusing to grant relief to the plaintiff for the balance should not be-upheld.

8. The lower Court itself in recording its reasons for the finding on issue No. 3 has stated as follows :-

Ordinarily the de jacto guardian has limited authority to alienate his ward's property, only in case of necessity or benefit of the estate. In the case of certificated guardian, the duty of inquiring into these matters is thrown on the District Court by the Guardians and Wards Act, and when the sanction contemplated by Section 29 of that Act is granted by that Court, the alienee is free from the liability of making any inquiry in that respect. It is sufficient if he sees that the alienation is in accordance with the sanction, I therefore hold that the sanction is valid, and even if it can be attacked by the minor, the mortgagee-plaintiff is not affected by the grounds of the said attack, so far as the mortgage is in accordance with the sanction...

I am however not prepared to hold that the sanction is invalid, and that the mortgage transaction entered under it is voidable in toto.

Now if this finding be correct, as we do hold it is, in our opinion the whole of the amount of the mortgage must be decreed in favour of the present plaintiff. There was on the facts admitted for the respondent, as also on the statements made by the guardian in the application, a clear necessity to mortgage the property in suit. The lower Court has found that necessary-facts were brought to the notice of the District Court on which it granted the requisite sanction which the lower Court itself rightly holds to be a valid sanction. The sanction in terms authorized the borrowing of an amount of Rs. 5,500 from the plaintiff on the security of the house in suit. The mortgage does not exceed the amount sanctioned by the Court to be raised on the security of the house. There being thus legal necessity as proved before the District Court and as in effect admitted before us for a mortgage for an amount of Rs. 5,500 on the security of the house, and there being also further the sanction accorded by the District Court to the mortgage for this amount in express terms, it is difficult to see how this mortgage, with the double support at its back of legal necessity on the one hand and the Court's sanction on the other, could be successfully avoided either in whole or in part by the minor. On this ground alone, in the absence of any suggestion as to underhand dealing or mala fides on the part of the present plaintiff, I should have been inclined to support the mortgage for the whole amount, it being admitted that the balance of the amount was paid by the mortgagee before the Sub-Registrar to the guardian of the defendant, for the purpose of paying off a decretal debt. The only ground urged that by reason of the representation made by the guardian himself to the plaintiff, the plaintiff became aware of the fact that the guardian was not going to invest the balance in Government securities and that he would in so doing be contravening the terms of the sanction, is, in my opinion, erroneous as it assumes that the guardian was not going to consult the Court or obtain its order and that this also was known to the mortgagee. This ground, by itself, is therefore not sufficient to invalidate a mortgage, which was both for legal necessity and was effected with the sanction of the Court.

9. In the decision of Raman Chettiar v. Tirugnmasambatndam Pillai I.L.R. (1926) Mad. 217 the head-note runs as follows :-

Where an alienation by way of mortgage or sale has been made by the guardian of a minor, appointed under the Guardians and Wards Act, with the sanction of the District Court, the alienee can rely upon it and the alienation must be upheld unless the alienee has been a party to a fraud or collusion or has been guilty of any underhand dealing.

In the body of the judgment at p. 221 the learned Judge states that the alienee's title to the property stands on a better footing than if there had been no sanction as the question of the beneficial nature of the transaction cannot be re-opened. The judgment in the case very properly relies upon the observations made by the Privy Council in Gangapershad Sahu v. Maharani Bibi where it is said that (p. 50) :-

When an order of the Court has been made authorizing the guardian of an infant to raise a loan on the security of the infant's estate, the lender of the money is entitled to trust to that order, and that he was not bound to enquire as to the expediency or necessity of the loan for the benefit of the infant's estate. If any fraud or underhand dealing is brought home to him, that would be a different matter; but apart from any charge of that kind, their Lordships think he is entitled to rest upon that order. It is sufficient for the plaintiff to say, I have got the order of the Court'.

If this principle is accepted, as we do, then, where there is a sanction authorizing a transaction, as here, followed by the transaction so authorized, and no fraud or underhand dealing is alleged, the person who enters into the transaction with the guardian would be entitled to rely upon the sanction itself for the validity of the transaction. The lender is not bound to go behind the order of the District Judge sanctioning the loan, is entitled to rely or it, and if he acted bona fide, he is not bound to see to the application of the money or any part of it.

10. But I am prepared to put, on the facts of the present case, my decision on another ground, also. In the present case in the mortgage-deed in question there is a recital which refers to the darkhast No. 1284 of 1924 and to the. auction-sale of the property in suit announced therein. It also recites the sanction granted by the District Court. In the details of the consideration making up Rs. 5,500, however, the item of Rs. 5,500 is divided into three parts : Rs. 4,775 are stated to be required for payment to the holder of the decree who had brought the darkhast No. 1284 of 1924 ; Rs. 41-4-0 are stated to have been taken for stamp, etc. ; whereas Rs. 683-12-0 are stated to have been taken for payment to the decree-holder who is represented as having attached house No. 456 in execution of his decree in suit No. 205 of 1916. It is not disputed that a decree had been obtained against the minor's estate or against the minor's mother in suit No. 205 of 1916 as recited in the mortgage-deed. The only thing that is contended for the respondent is that the statement that the house was actually attached made by the guardian in this document was not strictly correct as admitted by the plaintiff in the suit. I do not feel quite sure in the absence of other evidence that there was no darkhast pending at that date as stated in the mortgage-deed. However, during the cross-examination of the plaintiff it has been brought out as an admission that there was no darkhast pending at the time he advanced the money under the decree against the defendant's mother. Reliance has been placed on this admission alone for the suggestion that the representation made by the guardian was false, that as a matter of fact there was no such darkhast or attachment pending, and that in so far as the present plaintiff did not make sufficient enquiry about the pendency of the darkhast, and as this particular item of Rs. 683-12-0 was not authorized by the sanction of the Court to be paid in execution of that particular decree, the mortgage must be held to be not only beyond the terms of the sanction but without legal necessity as well. It has not been contended before us that where an amount is not covered by the sanction, even if legal necessity is proved, the minor's estate could not be held bound for that amount. In my opinion, even where a particular amount is not sanctioned as being payable in discharge of a particular debt by the sanction of the District Court, it would be still open to the person advancing that amount to establish that there was legal necessity for the amount also. This view is in consonance with the dictum of the Privy Council in the case just referred to. At p. 50 their Lordships have observed as follows :-

And if he chooses to lend his money without an order that binds the infant's estate, then it is for him to show that the matter was one of necessity or of clear expediency for the benefit of the infant's estate.

11. No authorities have been cited before us in this case on either side. But in a decision of the Allahabad High Court in the case of Ram Bhajm v. Matbar Ram : AIR1935All41 it is stated as follows in the head-note :-

Alienation in contravention of the directions of the Court sanctioning the alienation, is not protected by the sanction. Hence when the guardian alienates the property in utter disregard of the directions in the order the transferees cannot claim that they are protected by the sanction. As soon as the sanction goes out, the case has to be decided like any other case between the Hindu minors who are members of a joint family and their creditors who have granted a loan to their guardian. The mortgagees have then to show that the loan was taken for family necessity and the amount so taken was paid in satisfaction of the loan due by the father of the minors.

Now without going so far as to endorse every word of the last few lines quoted from this judgment, the correct opinion is that even where a particular loan is not found to be authorized by the order granting the sanction, the person dealing with the minor's guardian is not prevented from showing that the loan was advanced for necessity, and if he is able to establish the existence of the necessity for the amount and if he is able to show that he has acted bona fide, the application of the loan so advanced for the particular purpose will not have to be shown by him, as he is not bound to see to the application of the moneys, even under the general Hindu law. This being my view, without conceding that in this particular case the loan was not authorized by the sanction accorded by the District Court, I should hold having regard to the bona fides of the plaintiff, and the existence of the decree which is proved in the case, and also the representation made to the plaintiff by the guardian, a responsible guardian appointed by the District Court, that the entire loan made in this case is proved to have been made for legal necessity. The circumstance that the guardian may not have subsequently applied it for the purpose for which he borrowed it, is irrelevant because the lender acting bona fide is not bound to see to the subsequent application of the monies. In this particular case, therefore, even if it be assumed for a moment that by reason of the direction to the guardian to invest in Government securities the balance of Rs. 683-12-0 which was lent on the representation that it was required for being paid to the decree-holder in the Sholapur suit, that balance must be held to have been advanced for legal necessity and that the minor's estate must be held liable for the same. In either view of the case, therefore, I hold that the entire amount of the mortgage, namely, Rs. 5,500, bona fide advanced by the present plaintiff to Shantabai's guardian can be claimed by the plaintiff as a mortgagee, and that the lower Court was wrong in refusing him relief to the extent of Rs. 683-12-0, on the ground that that was an amount which was not within the sanction.

12. I may add that so far as the facts of this case are concerned they are peculiar. As I have said already, Shantabai married this Bapu who was once her guardian and lived with him. It is admitted that after she attained majority, no steps were taken, while Bapu was alive, by Shantabai to have this mortgage declared not binding upon her in part or as a whole and it is after Bapu's death, when the mortgagee, not having been repaid the amount or any part of it, brings a suit on the mortgage, that defences of all kinds have been taken, of which all except one minor defence as to the small item of Rs. 683-12-0 have failed. In my opinion, the plaintiff was a person who was acting bona fide on the representations made by the guardian, as well as on the authority of the sanction which had been obtained from the District Court, and it is unjust that he should be made to-suffer merely because the guardian Bapu may have applied this amount of Rs. 683-12-0 to purposes not expressly authorized by the sanction.

13. We, therefore, allow the appeal, and direct the lower Court to make up fresh accounts, either by itself or through a Commissioner, on the basis of the whole amount having been rightly advanced to the minor on the date of the mortgage. The appellant will have his costs of this appeal and also full costs in the trial Court.

Wassoodew, J.

14. I agree.


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