(1) Appeal No. 217 of 1961 arises out of O. S No. 25 of 1956 and Appeal No. 253 of 1961 out of O. S. No. 11 of 1956 on the file of the District Judge, West Godavari. Both the appeals though arising out of different suits, raise common points of law and fact. Both the suits are based on pronotes executed by 1st defendant, the father of defendants 2 and 3. The 1st defendant had borrowed Rs. 25,000 from Mothey Gangaraju and executed Ex. A. 1 on 9-10-1937. That note was renewed by him from time to time. The first renewal was in 1940 (Ex. A. 2) and thereafter in 1943 and 1946 (Exs. A. 3 and A. 4). The amount was payable with compound interest at 7 1/2 percent per annum. It may be noted at this very stage that the joint family of which the 1st defendant was the karta became divided even prior to the date of Ex. A. 3. But the promisee rested content with getting renewals from the 1st defendant alone. These renewals augmented both the principal and interest, After Ex. A. 3, Mothey Gangaraju died.
The pronote was renewed in favour of his minor adopted son who is the plaintiff in O. S. No. 11/1956. Some payments were made thereafter by the 1st Defendant. He paid a sum of Rs. 5,000 on 15-11-1946 and a further sum of Rs. 400 on 14-7-1957 as evidenced by Ex. A. 6. After a further renewal for a sum of Rs. 40,286-8-5 in 1949 (Ex. A. 7) and payment of Rs. 3,000 as borne out by Ex. A. 8 dated 1-11-1951, the suit pronote was executed on 22-9-1962 for a sum of Rs. 46,846. Interest stipulated this time was at the rate of 12 percent per annum compound, as against the previous usual rate of 7 1/2 per cent per annum compound. However, on 1-3-1953 the 1st defendant persuaded the plaintiff into an agreement to the effect that on payment of the amount due under the suit pronote with interest at 9 percent on or before 1-3-1953, the entire debt shall stand discharged. The condition stipulated could not, however, be fulfilled.
Then, on 19-9-1955 the 1st defendant paid a sum of Rs. 5 towards interest and gave a letter to the plaintiff acknowledging his liability under the pronote. As no further payment was made, the suit was brought against him in 1956. Building this time, the status of the 1st defendant's family had already undergone a through change. At the time of the original debt, the 1st defendant was the karta of the joint Hindu family of which defendants 1, 2, and 3 were members. Defendant 2 got a registered notice issued on 30-6-1941 to the 1st defendant indicating his unequivocal intention of separate himself form the joint Hindu family. he demanded partition of the joint family properties forthwith. The important items of family properties were in fact divided and with the help of a lawyer a registered partition deed was executed on 18-7-1942. This partition deed embodies the entire arrangement with regard to the allotment of various properties making a provision as well for discharge of the family debts.
In addition to the properties which duly fell to his share the father was allotted further properties mentioned in Part II of Schedule A properties ear marked for discharging the family debts. The total extent of family debts shown was Rs. 5, 70, 000. The properties earmarked for the purpose comprised valuable lands in Krishna, West Godavari and Visakhapatnam districts. The 2nd defendant, after a second thought, came to the conclusion that the properties earmarked actually exceed far in value the total extent of the family debts. He further found that the provision made for the unmarried daughter in the partition deed as also that made for certain alienations, prejudicially affected his interest. he therefore, brought a suit, in C. S. No. 210 and 1942, for re-opening the partition on the Original Side of the Madras High Court alleging inter alia that the properties allotted to the father and earmarked for payment of debts were not less than Rs. 9 lakhs in value and thus exceeded considerably the extent of debts due.
The suit was eventually decreed. a preliminary decree was decreed was drawn. Both 2nd defendant and defendants 1 and 3 preferred their appeals O. S. A Nos. 2 and 11 of 1944. These appeals finally ended in a compromise decree. Ex. B-20 is a copy of the compromise decree. The effect of the compromise decree inter alia was that the debts mentioned in the list Ex. B-21 aggregating to Rs. 5,70,000 were confirmed as debts payable by the joint family at the time of its partition and defendants 1 to 3 were declared entitled in Part II of Schedule A of the partition deed to equal shares in what was found to be over and above the value of Rs. 5,70,000 and the floating charge in Sobhanachala Pictures. The share of charge in Sobhanachala Pictures. The share of the 2nd defendant in the excess so determined in fact was found to be of the value of Rs. 1,50,000. Towards this excess share, the given certain properties from out of part II of A Schedule to the partition deed.
The original partition of all the partible properties as in the partition deed was given effect to immediately after the deed and prior to the suit of 2nd defendant, itself. In pursuance of that partition, the villages were separately registered in the names of the father and sons under the sanction of the district collectors of, Krishna and West Godavari etc., thereafter all the defendants started separately managing their properties. Such a partition made under a formal registered deed and made under a formal registered deed and implemented where ever necessary under the authority of the District Collectors could not remain a secret. Similarly , the arrangements with regard to payment of pre-partition debts as made in the deed could not remain a sealed book to the creditors who must be anxious to get their money. The plaintiff even after this was content with obtaining renewals from defendant only in 1946, 1949 and 1952. After abolition of estates, the Government has deposited some amounts in the Estates Abolition tribunal towards compensation in respect of certain villages, the plaintiff filed a claim petition in O. P. No. 607/1953. of course his application was in relation to the shares of all the defendants. But he pressed his claim only against the share of the 1st defendant. He got a sum of Rs. 25,792-10-7. thereafter he was content with an endorsement on the suit pronote made by the 1st defendant alone which was made on 15-9-1954. Even the suit that he brought was against the 1st defendant 2 and 3 were added under the order of the High Court dated 26-2-1960 in C. R. P. No. 1194/1958. The suit was for recovery of a sum of Rs. 39,000 even though the original debt was only Rs. 25,000 and a total sum of Rs. 37,792-10-7 was paid towards it. this was due to the fact that interest charged was compound interest and a sufficiently high rate.
(2) The plaintiff in O. S No. 25/ 1956 Sri Vegunta Hanumayya is an old man in his nineties. He had originally advanced a sum of Rs. 10,000 to the 1st defendant and got a pronote in 1940. The next pronote that he got executed is Ex. A. 29 dated 2-11-1944 and that for a sum of Rs. 14,000. The 1st defendant renewed this pronote first on 1-11-1947, then on 30-10-1950 and again on 29-10-1953. The last mentioned is the suit pronote. The payments made on behalf of the 1st defendant total upto Rs. 145-4-0. the action as laid is for a sum of Rs. 7, 759-12-0.
(3) The 1st defendant admitted both the pronotes. But he disputed the right of the plaintiff in O. s. 25/1956 to bring a civil action. His contention seems to be that since the plaintiff had approached the Estates, Abolition Tribunal and got the money available, he cannot bring a civil suit. His further contention was that only a sum of Rs. 44,714-7-5 was found to be due by the Tribunal. So then after payment of Rs. 44,714-7-5 was found to be due by the tribunal. So then after payment of Rs. 25,000 and odd, a sum of Rs. 18,921-10-10 only must be payable to the plaintiff . As regards interest, he claims that he is entitled to the benefits under the Usurious Loans Act and also the Agriculturists Relief Act.
(4) The case of the 2nd defendant as also the 3rd defendant was that at the time of the partition which actually took place on 18-7-1942 certain properties were earmarked for payment of family debts and given in possession of the 1st defendant. As the provision made was adequate and sufficient , defendants 2 and 3 cannot any longer be held liable for those debts. The second contention is that as the suit pronotes were executed long after partition by the 1st defendant alone and the 2nd and 3rd defendants were not parties thereto the suit based on such pronotes cannot stand as against the 2nd and 3rd defendants and at any rate the suits are barred by limitation.
(5) The pass taken by the 2nd 3rd defendants in the other suit are almost identical. The trial Court after due enquiry found that the suit promissory notes were true; but it held at the same time that the 2nd and 3rd defendants are not bound by the same as they were executed by the father after partition. it is further held that though the original debt was contracted for purposes binding on the family in view of the fact that adequate and sufficient arrangement was made at the time of partition for discharge of these debts and further as under the arrangement 1st defendant was made liable to pay off the debt with the help of the property earmarked at the time of partition for this purpose, the 2nd and 3rd defendant's liability ceased therewith. it also held that the suit was barred by limitation as against defendants 2 and 3.
(6) the two main points on which alone the arguments have been advanced in these appeals are :
1. Whether there was any adequate or sufficient arrangement made with regard to the payment of debts at the time of partition and
2. Whether the renewals of pronotes made by father alone after partition for debts incurred before partition would bind defendants 2 and 3
(7) We take up the second point first. it is clear law that where the sons are joint with their father, and debts have been contracted by the father in his capacity as manager and head of the family for family purposes, the sons who are members of the joint family are bound to pay the debts to the extent of their interest in the co-parcenary property. Even if the debts were contracted for the personal benefit of the father by him, the sons are still liable to pay the same provided only that the debts are not tainted with immorality or illegality. The liability to pay the debts contracted by the father, thought for his own benefit, arises from an obligation of religion and piety which is placed upon the sons under the Mitakshara law to discharge the father's debts. it is also well settled that a son is liable, even after the partition, for the pre-partition debts of his father which are not immoral or illegal and for the payment of which no arrangement was made at the time of the partition.
But the question is, when adequate and sufficient arrangement has been made for payment of such debt at the time of partition or when the creditors even after the severance of status stayed their hand from enforcing the original debt, and took renewed pronote from the father alone, with the result that new obligation has arisen, whether the liability of the sons would still continue.
(8) There is a catena of cases decided by the Madras High court which is clearly to the effect that the father has no authority after partition to renew his debts so as to make it binding upon the sons. of course different consideration may arise where the debt is not thus renewed but only acknowledgment is taken by the father to save the bar of limitation for in that event the suit would be based on the original debt and not on a new obligation arising from the renewed pronote. The earliest of the cases in this line is P. Venkanna v. Sreenivasa Deekshitulu, ILR 41 Mad 36 at p. 143 : (AIR 1919 Mad 1175 at p. 1179). This was the case decided in 1917. There Wallis, C. J., observed that the father had no authority after partition to renew the note so as to bind his sons and Kumarasawami Sastri, J. expressed thus :
'In the case of renewal by the father alone after partition of a note executed before partition the case is much stronger as I can see no equity in allowing a Hindu father to renew and keep alive a debt (Increased by the addition of interest and principal at each renewal) so as to throw upon the son the duty of paying it out of he further observed : 'The renewed note must in my opinion be treated as a new obligation incurred after partition.'
(9) The next case is Subramania Aiyar v. Sabapathi Aiyar, 54 Mad LJ 726 : (AIR 1928 Mad 657) (FB). This was a case mainly concerned with acknowledgment and not with renewal and the incidence of the two are indeed different. Beasley, C. J. in Munnaswami Goundan v. Kutti Moopan, ILR 56 Mad 833 : (AIR 1933 Mad 708), cited with approval the observation of Wallis, C. J. and Kumaraswami Sastri J. in ILR 41 Mad 136 : (AIR 1919 Mad 1175) (supra) and referred to the full Bench case in 54 Mad LJ 726 :(AIR 1928 Mad 657) (FB) (supra) where in Anantakrishna Aiyar, J. after review of the authorities observed that the trend of judicial decisions has been to the effect, amongst others, that , if the cause of action for the suit be not the original debt incurred before the partition but a promissory note executed by the father alone after partition though in renewal of a promissory note executed by him before partition, the sons are not liable to any extent if the suit be based on the renewed promissory note only.
This opinion of Anantakrishna Aiyar, J. as may be noticed is quite in conformity with the observations of Wallis, C. J. and Kumaraswami Sastri, J. ILR 41 Mad 136 : (AIR 1919 Mad 1175) (supra). Beasley, C. J. further pointed out the distinction between the cases of acknowledgment, and renewal : whereas in cases of acknowledgment, the suit is on the original debt for which the sons are held liable but in the case of a renewed promissory note the suit is not open the original debt at all but upon the renewed promissory note and further in case of renewal the original debt is wiped out. The learned Chief Justice again in Ramacharyulu v. Dorayya, (1937) Mad WN 1306, clearly brought out the distinction between acknowledgment and renewal and their legal incidence. Referring to the case of renewal he observed thus.
In my opinion no claim in such a case as this can be based on the original debt by reason of the fact that my making Ex. A, which was in renewal of the debts owing under the other promissory notes the original debt was entirely wiped out and a new liability undertaken and undertaken by the father alone and not by the sons who had previously become divided. Even if is it had been permissible to fall back upon the original debt as against the sons, their liability was clearly barred by limitation and pious obligation does not extend the period of limitation in favour of third parties . . . . the father has no authority after partition to renew a debt so as to make it binding upon his divided sons.'
In another Full Bench case Mohana Reddi v. Gangaraju, 91941) 2 Mad LJ 311 at p. 324 : (AIR 1941 Mad 772 at p. 780), also a distinction was made between acknowledgment and renewal of debt made by the father and their legal incidence. It was pointed out that the execution of a fresh pronote would amount to giving a fresh cause of action. It was further observed thus :
'It is a well established rule of Hindu Law that a son is under pious obligation to pay his father's debts, provided that they have not been incurred for nay illegal or immoral purpose, but it has been held that the rule does not apply to a debt incurred subsequent to partition.'
(10) To the like effect is the dictum in Subba Naicker v. Subbaraman Naicker, 1949 Mad 876), where it was ruled that if the pre-partition debt loses its identify and merges in a new promissory note after the partition, there would be no pre-partition debt at all and, therefore, family property in the hands of the son obtained on partition could not be made liable for such debt. This is short is the trend of the Judicial opinion of the madras High Court which has a binding effect on this Court. The Madras decisions in clear and unequivocal terms lay down the established principle that the father after partition has no authority to renew pre-partition debts so as to make them binding upon the sons. We respectfully agree with this view.
To our mind, the instant case is governed by this dictum. As already noticed, the father after partition had renewed the previous notes and further the renewed notes on which the suits are based are for sums much larger and bearing interest at a higher rate. Such renewals after partition by the father alone, without any authority from his sons would not in law bind the sons and the creditors, therefore, cannot render the sons liable for the debt or follow the property that has come to their share in the family partition. The suits even if regarded as based on the original debts, are clearly time-barred. They must, therefore, fail as against defendants 2 and 3 . Of course, the father is bound by his own acts. The trial court has rightly decreed the suits only against the father.
(11) There is a further ground also on which these suits as against defendants 2 and 3 must fail. It is indisputable that at the time of family partition, due arrangement for payment of family debts including the debts in question was made as evidenced by the registered partition deed. Ex. B-21 is the list of such debts and items 6 and 16 are the original debts of which the suit pronotes are renewals. Sufficient property was ear-marked for payment of all these debts. the said property was allotted to the 1st defendant and he was made liable to pay the same. the property allotted, as already noticed, comprises in the valuable landed estate situate in several districts. Of course, the creditors were not parties to this arrangements that should make no difference, for it is clear law that the responsibility of the sons ceases as they make reasonably adequate and sufficient arrangement for payment of the debts at the time of partition.
As observed by the Supreme Court in Pannalal v. Mst. Naraini, : 1SCR544 , the liability of the sons for the pre-partition debts of his father which are not immoral or illegal dies not come to an end as a result of partition unless due arrangement was made at the time of partition for payment of the same debts. This was also the view taken by the Full Bench of the Allahabad High court in Bankey Lal v. Durga Prasad, ILR 53 All 868 at p. 876 : (AIR 1931 All 512 at p. 519), which was cited with approval by their Lordships What is meant by an arrangement for payment of debts is the question that was answered by their Lordships thus :
'We desire only to point out that an arrangement for payment of debts does not necessarily imply that a separate fund should be set apart for payment of these debts before the net assets are divided, or that some additional property must be given to the father over and above his legitimate share sufficient to meet the demands of his creditors. Whether there is a proper arrangements for payment of the debts or not, would have to be decided on the facts and circumstances of each individual case. We can conceive of cases where the property allotted to the father in his own legitimate share was considered more than enough for his own necessities and he under took to pay off all his personal debts and release the sons from their obligation in respect thereof that may also be considered to be a proper arrangement for payment of creditors in the circumstances of a particular case. After all the preliminary liability to pay his debts is upon the father is more than adequate for the purpose. If the arrangements made at the time of partition is reasonable and proper, an unsecured creditor cannot have any reason to explain.'
(12) This view was reiterated in Sidheshwar v. Bhubaneshwar Prasad, : 1SCR177 , Jakati v. Borkar, : 1SCR1384 , and in Virdhachalam Pillai v. Chaldean Syrian Bank, Ltd., Trichur, : 5SCR647 . What is contended for on behalf of the appellants is that there is no evidence on record to prove that the provision made adequate and sufficient and that the trial Court was under an erroneous impression that Chandrasekhara Iyer, J. in the original suit filed by defendant No. 2 had held that the property earmarked was of a larger value. Notwithstanding that the defendant had contended was adequate, no specific issue was raised in the suit. Therefore, evidence was not specifically focussed on this point. However, there is a clear and unequivocal statement in D. W. 2's testimony which stands unrebutted that the provision was quite adequate. Apart from the fact that the partition deed leaves no room for doubt in regard to the same the indirect evidence is conclusive on the point.
The debts in question obviously are unsecured debts and the father in addition to his share in the joint family property was allotted property of considerable value to pay off the debts. He as a result, undertook to pay off the debts himself. The partition deed bears testimony to it. The property earmarked and allotted to the father for this purpose comprises in Part Ii of partition deed Schedule A property. No doubt the original provision as made under went some changes by reason of the suit that proceeded on the basis inter alia that the property earmarked for payment of debts exceeded far in value the total extent of debts. That suit was brought by 2nd Defendant for re-opening the partition. Eventually after a good deal of contest where in the services of eminent lawyers of the Country were utilised, a compromise was entered into between the parties. As a result of this compromise, provision originally made for payment of debts was to a certain extent curtailed being far in excess of the due requirement.
It cannot be said the property that was still left was of meagre value. At any, rate, it is clear that the father who not only got his due share but also additional property by way of provision for payment of all family debts, under-took the liability of clearing off all the debts undertook the liability of clearing off all the debts which amounted to more than Rs. 5,50,000 Thus the creditors could have access not only to the property earmarked but to the entire property that fell to the share of the father. It cannot be contended that this entire property far in excess of father's necessities was not sufficient to meet the demands of the creditors and to spare. After all the plaintiff in O. S. 25/1956 has claimed Rs. 39,400 and the other plaintiff in O. S. 11/1956 only Rs. 7,759-12-0. These amounts could be recovered easily from a portion of the property earmarked itself. This position, however, has not been disputed. There was besides the vast property of the 1st defendant.
It is significant that no other creditor has ever raised any dispute as regards insufficiency of the provision. It cannot be contended either that the plaintiff s had no knowledge of partition or of the arrangement entered in the registered partition deed as modified by the compromise decree. They were in constant contact with the 1st defendant. they were accepting payments made by him and getting the pronotes renewed by him from time to time. They could not remain ignorant of the fact that in pursuance of the partition arrangement embodied in a registered deed, the defendants got the properties falling to their share duly entered in the registers with the sanction of the Collectors of more than two districts and were in fact separately managing them. In any event it is difficult to presume that the plaintiffs could remain ignorant of the partition in these circumstances. It is significant that after the partition of the impartible estate, when the compensation amount was deposited by the Government in the tribunal, the plaintiff insisted on payment of compensation amount that fell to the share of the 1st defendant only.
This fact, coupled with the fact that the plaintiffs always sought to get the pronote renewed by the 1st defendant alone must be a pointer that the plaintiff were aware of the arrangement that the 1st defendant alone was liable to pay off the debts. When the conduct of the plaintiffs raise a clear inference as to their knowledge of the arrangement and their consequent decision that the debt should be recovered from the 1st defendant alone and their further acts in that behalf suggest implementation of such decision it is not open to the plaintiffs to say now that the provision was inadequate or that arrangement is not binding on them. As observed by the Supreme Court in : 1SCR544 (supra) whether the creditors are parties to the arrangement or not, it makes no difference. It would be sufficient if an adequate and sufficient provision is made for the payment of these debts. When the father had undertaken to clear off the debts
and for this purpose in addition to his share which also must be liable for the debts, a further provision for payment of debts was made whcih comprise valuable property in several districts, it is impossible to hold that reasonably adequate and sufficient arrangement was not made for payment of debts.
The material on record at all events furnishes sufficient context for the presumption that there was in a fact an adequate and sufficient arrangement. Above all the very fact that from 1945 to 1956 the plaintiffs did not choose o bring an action against the defendants must show that they aware satisfied that the arrangement was sufficiently. adequate. In these circumstances the court below was right in dismissing the suits against defendant 2 and 3. The suits in our judgment should fail noot only on the ground that the of partition for payment of debts due to the family was adequate and sufficient, but also because the pre-partition debts have become time barred against defendants 2 and 3 and the renewals on which the suits are brought cannot bind defendant 2 and 3.
(13) No other point remains for consideration. In this view, both the appeals stand dismissed with costs.
(14) Appeal dismissed.