Skip to content


Lachhmi Prasad and ors. Vs. Bahraich Ram and anr. - Court Judgment

LegalCrystal Citation
SubjectFamily
CourtAllahabad
Decided On
Reported inAIR1941All31
AppellantLachhmi Prasad and ors.
RespondentBahraich Ram and anr.
Excerpt:
- cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional board or the state board. the school tribunal constituted under section 8 of the maharashtra act cannot entertain appeals filed under section 9 by the employees working in schools which are established and administered by the cantonment board. teacher employed in the school run by cantonment board being covered under.....braund, j.1. this suit is a mortgage suit brought upon a mortgage dated 11th january 1930. the mortgage was made by one bechu ram, in favour of the plaintiff-respondent, who is the mortgagee. bechu ram was himself the first defendant to this suit, but he at no point defended it and suffered a mortgage decree to be passed against him by default. ha died during the pendency of this appeal to which he was not a party but the defendant-respondent, hari kishan, is in fact his heir.2. the question involved in this appeal is, subject to a preliminary point, the old, but troublesome one relating to the power of the manager of a joint hindu family to dispose of the assets, so as to bind the interests of the members of the family. it is sufficient for the purposes of this appeal for me to say that.....
Judgment:

Braund, J.

1. This suit is a mortgage suit brought upon a mortgage dated 11th January 1930. The mortgage was made by one Bechu Ram, in favour of the plaintiff-respondent, who is the mortgagee. Bechu Ram was himself the first defendant to this suit, but he at no point defended it and suffered a mortgage decree to be passed against him by default. Ha died during the pendency of this appeal to which he was not a party but the defendant-respondent, Hari Kishan, is in fact his heir.

2. The question involved in this appeal is, subject to a preliminary point, the old, but troublesome one relating to the power of the manager of a joint Hindu family to dispose of the assets, so as to bind the interests of the members of the family. It is sufficient for the purposes of this appeal for me to say that the remaining defendant-respondents are all members of the family, who dispute their liability, or rather the liability of their shares in the mortgaged property, upon the mortgage. They put forward a two-fold defence, the first disputing that, at the date of the mortgage, the family was a joint Hindu family at all, and the other denying that there was any consideration for the mortgage and, if there was consideration, that it was a transaction for legal necessity or for the benefit of the estate or family. On the face of it the mortgage of 11th January 1936 purports in the clearest possible terms to have been made by Bechu Ram as the manager of the joint Hindu family, whatever his actual position may have been. It is important, I think, to begin by examining the terms of the mortgage itself. It is a unilateral document and starts with a number of recitals. It recites that Bechu Ram was indebted to various persons upon 'sarkhats' and promissory notes in respect of which he was being pressed and it asserts that '...the said amount was borrowed for a legal necessity--allowed under the Hindu Law...' but is silent as to what that 'legal necessity' was. It then goes on to explain that Bechu Ram had incurred obligations in the marriage of a daughter and a niece and asserts again : '.... I am the head of the joint Hindu family governed by the Hindu Mitakshara law.' Bechu Ram then proceeds to explain that he has borrowed Rs. 975 for these purposes at a rate of interest of 12 annas per cent, per mensem and again insists upon the character of the loan. He says:

The above-mentioned debt has bean borrowed for a lawful necessity allowed under the Hindu law and the entire members of the family have been benefited therefrom.

3. I have set out sufficient of the mortgage to leave no room for doubt, I think, that, whatever the position of the 'family' may actually have been at the date of the mortgage and whatever the character of the transaction really was, there can be no shadow of doubt that Bechu Ram purported to be exercising his power as the manager of the joint family. The matter can be somewhat shortened at this point because it is common ground between the parties and has been conceded, that, out of the aggregate principal sum secured by the mortgage Rs. 975 the sum of Rs. 746-5-0 was borrowed to pay off an outstanding 'sarkhat' in favour of one Mangru Ram, Rs. 218 were borrowed to pay off a promissory note held by one Jagmohan which represented the expenses of the two marriages referred to in the mortgage and Us. 10-11-0 represented a fee paid to a sub-registrar in connexion with the mortgage. As to the expenses of the marriage, I understand that no resistance is now offered by the defendant-appellants and this appeal has been argued before me on the footing that the sum of Rs. 218 is to be taken to have been raised 'for the benefit of the family.' The real bone of contention is the sum of Rs. 746-5-0 which represents the money borrowed to pay off the 'sarkhat' held by Mangru Ram. Beyond the bare recitals in the mortgage itself that 'the said amount was borrowed for a legal necessity allowed by the Hindu law,' I have been able to find only one solitary piece of evidence as to the actual purpose for which it was borrowed. I have read the whole of the evidence with some care and that is all I can find. It is a passage in the evidence of Mangru Ram the holder, presumably, of the 'sarkhat' for Rs. 746 in which he says:

He (Bechu Ram) had gone out to purchase goods and had taken this loan from me for that purpose. The shop of all the brothers was joint. The shop-keeping business of the executant and his brothers had been started by the executant himself. It did not come down to him from his ancestors. My amount has been shown in the khata (accounts) of the shop of the executant and his brothers.

4. That, I think, is the only evidence there is as to the character of the business or the purpose of the loan taken on the 'sarkhat' from Mangru Ram and paid off out of the proceeds of the mortgage. It is, I think, a remarkable circumstance of this case that Bechu Ram, who was better situated than anyone to explain the transaction, has given no evidence at all. He was alive at the date of the trial before the Munsif. In order that the appeal may be understood, it is necessary now to relate some further facts which are in evidence. The mortgage was executed on 11th January 1936. We then have a document of some importance in the case dated 1st May 1936, Ex. C. It is an agreement to refer to 'arbitration' certain unspecified disputes which had arisen and to submit to the arbitrators the duty to 'partition' the joint property. The parties to this instrument were Bechu Ram and his brother, Mannu Earn Kandu, who, it is sufficient to say, was the parent or grandparent of the other defendant members of the joint family who were not descended from Bechu Ram himself. Ex. C describes itself as being: '...for settlement of the dispute and for partition of the shop, property, etc. as between us the executants....' It then contains what is, in effect, a recital that some nine or ten months previously-obviously, prior to the execution of the mortgage:.We appointed Sheo Balak Ram Sahu Kandu, Mallu Ram Sahu Kandu and Ram Kishan Ram Sahu Kalwar as arbitrators and Ram Deo as umpire and stipulated that any partition, with respect to the property, etc. and shop, honestly effected by them would be admitted and accepted by us. But a period of nine or ten months has passed and the umpire or the arbitrators have not so far given any decision. We have now cancelled and invalidated the arbitration agreement aforesaid. We are now executing another arbitration agreement....

5. They then proceed to appoint a number of new arbitrators and say that:.Whatever they honestly effect would at all events, be admitted and accepted by us. None of the executants shall have any objection of any sort to it....

6. The previous 'arbitration agreement' of nine or ten months earlier is not itself in evidence. But it has not been argued in either of the Courts below or before me that the fact of its existence and its tenor as recited in Ex. C has not been strictly proved and this appeal has proceeded before me on the footing that there was an agreement to the effect recited. I shall therefore accept that position. It is common ground that the property covered by Ex. C includes the mortgaged property and that, in due course it was actually partitioned in pursuance of the agreement. When the case came before the Additional Munsif of Basti he framed two issues, the first, whether 'the mortgage deed in suit was executed for consideration and legal necessity,' and the second, whether Bechu Ram and the other defendants were at the date of the mortgage joint or separate. The second of these two issues was, at any rate, a question of fact. He dealt with the second issue first and concluded that at the time the mortgage was executed the family was still joint. He considered the recital to which I have drawn attention in Ex. C as to the previous agreement of nine or ten months earlier and discarded it as 'of no importance' on the ground that it was subsequently 'superseded' by Ex. C and that the parties had 'mutually agreed to cancel it.' Had it been material for me to consider the point, I am not sure that I could have agreed with his way of putting it. It is possible that another way of looking at Ex. C is that it expresses a 'reaffirmation' rather than a 'cancellation' of any intention to separate which might be found to be contained in the earlier agreement. However that may be, the Munsif did decide that at the date of the mortgage the family was still joint. He proceeded therefore to consider the other issue and he came to the following three conclusions of fact: First, that the business was not an 'ancestral' business; secondly, no case of 'necessity for the loan' had been 'strictly proved' nor that it was 'actually required for the family business' and, thirdly, that it had not even been shown that the money was actually spent on the business. The Munsif therefore dismissed the suit.

7. On first appeal to the civil Judge of Basti, he too considered first the question whether the family was still a joint Hindu family at the date of the mortgage and, relying upon a view that, if the previous agreement had really effected a 'partition of the assets of the family' prior to 1st May 1936, there would have been no need for the subsequent agreement of that date and also upon certain general statements made by the witnesses that the family were still joint in January 1936, he came to the same conclusion as had been reached by the Munsif, that the family continued to be a joint Hindu family. Again I am not altogether sure that I should agree with the learned Judge's reasoning, as it seems to me, upon the authorities, that a separation 'in status' may well be a different thing from an actual separation of assets. It is possible, I think, that a family may have divided 'in status' notwithstanding that the physical partition of the assets was not yet complete. If separation depends on 'intention,' as most of the authorities appear to agree, that is an arguable view. The learned Judge then went on to discuss the other issue. Here he took a different view of the facts from the Munsif. He agreed that the business was not an ancestral business, but came to the conclusion that:

In my opinion, the plaintiff is entitled to recover all the items of the mortgage bond with the exception of Rs. 10-11-0 because he has succeeded in proving that they were borrowed either for legal necessity or for the benefit of family members....

8. He found further, as a fact, that the firm was 'the mainstay of the family' and that the family had no other business than this. To put it briefly, he found as facts (a) that the money borrowed on the 'sarkhat' was borrowed and used for the purposes of the business and (b) that it was a transaction for the benefit of the family. There was evidence before the learned Judge to support such a finding. I have already drawn attention to that passage in Mangru Ram's evidence in which he says that the money borrowed from him was shown in the firm's books. There is evidence that this was the only business the family had. In conformity with these conclusions, the learned civil Judge gave the plaintiff a mortgage decree in respect of the full amount claimed by him, less only the sum of Rs. 10-11-0.

9. That is the condition in which the appeal comes before me in second appeal. The first point taken by the defendant-appellants in this appeal is that both the Munsif and the learned civil Judge have wholly misconceived the legal effect of the former of the two agreements for arbitration. I have already said that the existence and contents of this document have been accepted throughout and here. An able argument has been addressed to me by the learned advocate appearing for the appellants to the effect that, once there is found a definite and unambiguous indication by a member or members of a joint Hindu family of an intention to separate and to enjoy his or their share or shares in severalty, then from that moment a severance 'in status' takes place quite independently of the physical division of the joint property which may take place later. It would necessarily follow as the logical outcome of this argument that, once the severance in status has taken place, the powers of the manager would lapse and not less so in a case, such as this one, in which the manager himself is one of the persons severing his connexion with the joint family. I think there may be great force in this argument that 'intention is the real test' : see Syed Kasam v. Jorawar Singh ('22) 9 A.I.R. 1922 P.C. 353, Balmakund Lal v. Mt. Sohano Kueri ('29) 16 A.I.R. 1929 Pat. 164 at p. 173 and Harkishan Singh v. Partap Singh . Interesting as this question is, however, I do not feel it necessary to determine it in this appeal because the point, as it arises here, can, in my opinion, be effectively disposed of on another ground altogether.

10. The plaintiff-respondent has contended that the question is not open at all in second appeal, inasmuch as the finding that the joint Hindu family was in existence at the date of the mortgage is a pure finding of fact. He relies upon the well-known observations of the Judicial Committee of the Privy Council in Durga Chowdharani v. Jewahir Singh ('91) 18 Cal. 23 in which it is said that there is no jurisdiction to entertain a second appeal on the ground of an erroneous finding of fact, 'however gross or inexcusable the error may seem to be.' I need only say as to this that, had the matter been material to the decision of this appeal, I should have found it difficult to agree with the appellants' contention that the Munsif and the learned Judge in the Courts below had completely misapprehended the legal effect of the proved fact of the previous agreement having challenged an erroneous finding of fact at all. The error alleged is, I think, not one in the finding of the facts, but in the appreciation of the legal consequences of the facts which have been found and remain unchallenged. This however is again only of academic interest in view of the conclusion I have reached and I only mention it in deference to the arguments which have been addressed to me. For the most complete answer to this contention of the appellants we have, I think, to go back to the case which has always been accepted as the locus classicus in questions of this nature and of which a Bench of two Judges of this Court once found it necessary to say that we are 'bound and wholly bound' by it : Hunooman Pershad Pandey v. Mt. Babooee Mundraj Koonweree (1854-57) 6 MIA 393. Though occasions have arisen from time to time to explain the classic passage at the end of Knight Bruce L.J.'s judgment in that case, no one has yet, I think, improved upon it. The particular passage of the judgment however which is material to the point with which I am now dealing is that which is to be found at p. 412:

Upon the third point, it is to be observed that under the Hindu law, the right of a bona fide incumbrancer who hag taken from a de facto manager a charge on lands created honestly for the purpose of saving the estate or for the benefit of the estate is not (provided the circumstances would support the charge had it emanated from a de facto and de jure manager) affected by the want of union of the de facto with the de jure title....

11. In my judgment, this completely disposes, in the present circumstances, of the appellants' first contention. Whatever may have been the legal effect of the first agreement to separate upon the status inter se of the members of the joint Hindu family of which Bechu Ram was up to that time admittedly both the de jure and the de facto manager, it is plain that no actual or de facto dissolution of the family, nor any distribution of the family property, took place until long after the mortgage of 1st January 1936. Whatever his de jure position may have been, there is nothing whatever in the evidence to suggest that he did not remain the de facto manager of all the family properties until they were actually divided. Nor is there any suggestion made that the mortgagee was aware even that proposals for a separation were on foot or that he dealt with Bechu Ram who was the ostensible and de facto manager for the family, otherwise than in good faith and in the belief that he was also the de jure manager. It is a salutary principle and, I think, a principle which in view of the observations of Knight-Bruce L.J., admits of no doubt that a person dealing in good faith with the de facto manager of a joint Hindu family should not be affected with notice of any defect in his de jure title for otherwise dealings with such a family would become almost impossible. For these reasons, I think that the appellants contention that the family was not a joint Hindu family at the date of the mortgage even if that contention is well-founded does not assist them in this appeal. That brings us therefore to the second part of the case - whether the mortgage being one made by the manager of a joint Hindu family, it was within his power to make it.

12. It will be convenient to be reminded of the few material facts which have been found and are not now open to challenge. First, the business for which the original loan on the 'sarkhat' was taken was not an 'ancestral' business. It was a 'new' business in the sense that it had not descended from the ancestors of the present members of the family, but had been started by Bechu Ram and his brother or brothers within a comaparatively recent period. Secondly, the business was the 'mainstay' of the family which had no other business to look to for its support. Thirdly, it has been found as a fact (by the learned civil Judge) that the money borrowed on the 'sarkhat' was actually received by the firm and credited in its books and that it was borrowed and received for the purposes of the firm's business. Those, I think, are the established facts with which we have to deal and to which we have to apply the law.

13. The principles to be applied in cases in which dispositions by managers of joint Hindu families are called in question have been the subject of a long series of judicial decisions both of the Judicial Committee of the Privy Council and of this and other High Courts in India. Almost without exception they have taken as their point of departure the short passage at the end of the judgment of Knight-Bruce L.J., in Hunooman Pershad Pandey v. Mt. Babooee Mundraj Koonweree (1854-57) 6 M.I.A. 393 to which I have already referred:

The power of the manager for an infant heir to charge an estate not his own, is under the Hindu law a limited and qualified power : see Jagat Narain v. Mathrua Das : AIR1928All454 . It can only be exercised rightly in a case of need or for the benefit of the estate. But where, in the particular instance, the charge is one that a prudent owner would make in order to benefit the estate the bona fide lender is not affected by the precedent mismanagement of the estate. The actual pressure on the estate, the danger to be averted or the benefit to be conferred upon it in the particular instance is the thing to be regarded. But of course, if that danger arises or has arisen from any misconduct to which the lender is or has been a party, he cannot take advantage of his own wrong to support a charge in his own favour against the heir, grounded on a necessity which his wrong has helped to cause. Therefore the lender in this case unless he is shown to have acted mala fide will not be affected though it be shown that with better management the estate might have been kept free from debt. Their Lordships think that the lender is bound to enquire into the necessities for the loan and to satisfy himself as well as he can with reference to the parties with whom he is dealing, that the manager is acting in the particular instance for the benefit of the estate. But they think that if he does so inquire, and acts honestly the real existence of an alleged sufficient and reasonably credited necessity is not a condition precedent to the validity of his charge and they do not think that under such circumstances, he is bound to see to the application of the money. It is obvious that money to be secured on any estate is likely to be obtained on easier terms than a loan which rests on mere personal security and that therefore the mere creation of a charge securing a proper debt cannot be viewed as improvident management; the purposes for which a loan is wanted are often future as respects the actual application, and the lender can rarely have unless he enters on the management the means of controlling and rightly directing the actual application. The Lordships do not think that a bona fide, creditor should suffer when he has acted honestly and with due caution, but is himself deceived.

14. It is clear from this that there are two separate and distinct grounds upon which the power of a manager of a joint Hindu family can be 'rightly exercised' either 'in a case of need' or 'for the benefit of the estate.' That these grounds are separate and alternative grounds has been emphasized time and again since then by the Courts. In 1926, Jagat Narain v. Mathrua Das : AIR1928All454 two Judges of this Court said in reference to Knight-Bruce L.J.'s judgment:

Here we have what is to us a quite unambiguous direction. The former to charge the estate can only arise 'in a case of need' or 'for the benefit of the estate'.... We have emphasized ourselves by placing the word 'or' in italics....

15. And again in a recent Full Bench case of the Court Ram Nath v. Chiranji Lal : AIR1935All221 it has been emphasized again. The late Sir Shah Sulaiman, C.J. says:

It seems to follow that the question whether the particular transaction in dispute was for legal necessity or was for the benefit of the estate and the joint family is something more than the mere question whether the money borrowed was required for the purposes of a new business. The fact that it was required for a new business would not be any justification. If in addition, thereto, it could be shown that there was either a pressure of necessity to continue that business, as it was the mainstay of the family or that the particular transaction was at the time of benefit to the family and the family estate, the transaction would be supported but, of course, on the latter ground. The question whether the transaction was for such benefit or not is a question of fact depending on the circumstances of the case, and it is for the Court to decide whether it was so beneficial and was such as an ordinary prudent manager would have entered into in the interest of the family.

16. The distinction therefore between 'a case of need' and 'benefit to the estate' is a well recognized one and has an important practical application. The next thing which, in my view, it is necessary to understand is the rule which has been repeatedly laid down that, where a transaction is defended on the ground of 'benefit to the estate' or of 'benefit to the family,' the mortgagee must show in a case in which he is not prepared to show any actual benefit that he made reasonable enquiries. That follows from ordinary equitable principles of long standing. This rule also has been repeatedly recognized by, the authorities. It does not mean that the mortgagee is bound to prove 'actual' benefit. He may, of course, if he can or it may appear from other sources. It means only that the law allows a person who is dealing with a manager of a joint Hindu family to maintain a transaction, without showing positive benefit, if he can show that he has made 'reasonable' inquiries as to the purpose of the loans and has satisfied himself that the purpose was beneficial and has not been indifferent to whether the manager is committing a fraud on the family or not. In Ram Krishna Murarji v. Ratan Chand on appeal from this High Court, their Lordships have referred with approval to the statement of the law in this respect contained in Hunooman Pershad Pandey v. Mt. Babooee Mundraj Koonweree (1854-57) 6 MIA 393 in which it is said:

Their Lordships think that the lender is bound to inquire into the necessities for the loan, and to satisfy himself as well as he can, with reference to the parties with whom he is dealing, that the manager is acting in the particular instance for the benefit of the estate.

See too Benares Bank Lad. V. Hari Narain .

17. With the assistance of the long line of authorities which are available, I think that certain clear principles have emerged. The transaction in question may be supported either on the ground of 'need', or, as it is often called or miscalled, 'legal necessity' or on the ground of 'benefit of the estate or family.' 'Where the question involves the consideration of a transaction relating to a business, the following principles can, I think, be deduced from the authorities:

(1) If the business is merely the individual enterprise of any particular member or members of the family as distinct from a 'family' business, no question either of need' or 'benefit' can arise and the transaction can never bind the interests of the other members of the family.

(2) Where the business is strictly 'ancestral', then either 'need' or 'benefit' to the estate or family will be presumed : see Ram Nath v. Chiranji : AIR1935All221 , per Sulaiman C.J. at p. 183.

(3) Where the business is a 'family' business but is either new or 'newish' see Ram Prasad v. Bishambhar Nath : AIR1936All607 ; no such presumption in favour of the mortgagee arises but the question becomes one of fact whether there has been 'benefit to the estate or family.' In that case, when no actual benefit is positively proved, the mortgagee has to show that he made reasonable enquiries as to the purpose for which the loan was required and was reasonably satisfied that the purpose was beneficial. What are, in any given case, 'reasonable enquiries,' must, I conceive, vary but I do not think that a mortgagee can be required to do more than to satisfy himself that the manager is acting bona fide and he is not, I think, required to prove the actual application of the money borrowed, provided he has lent it in good faith. He could not, I think, be asked to scrutinise a judgment of the manager or to substitute a judgment of his own for any bona fide judgment of the manager upon a question of what are the technical needs of the business, and

(4) Finally, where it is shown that the business in question is the 'mainstay' of the family, in the sense that it is all, or practically all, the family has to depend upon, then, I think, the authorities justify the conclusion that the proposed mortgagee is entitled to accept that fact as prima facie evidence that a loan taken for the purposes of that business is a transaction for the benefit of the estate or family. I do not think he can be required to go further and to enquire into the technical business necessity for raising the money. In these observations, I have confined myself, of course, to those transactions which relate to money raised in relation to a business and have not considered those transactions which relate to the raising of money in connexion with specific property as for instance to rebuild or repair a particular house which are in the nature of cases of 'salvage' and which stand upon a different, and more obvious, footing.

18. Applying these principles to the present case, I think that the judgment of the learned civil Judge is conclusive. He has held, and held as a fact that the money borrowed on the 'sarkhat' from Mangru Ram was to use his own words 'borrowed for the benefit of the family.' That to my mind is the end of the matter. It is the central fact in the whole case and the finding upon it is one which there was evidence to support. It is, I think, binding on me in the second appeal, even if I had been disposed to disagree with it. The learned Judge has not, I think, in any way misled himself upon the law. He had already held that the family was in existence, as a joint Hindu family and I agree with him to the extent of thinking, at any rate, that the mortgagee was, in the circumstances, entitled to treat Bechu Ram as both the de facto and de jure manager of a subsisting joint Hindu family.

19. He has found that the money was borrowed for the business, which was a 'family' business and not an 'individual' business. He has found that it reached the business. And he has found that that business was the 'mainstay' of the family. I am bound to accept it, therefore that the loan in question was for the 'benefit of the family' that is an 'actual' benefit to the family. No question of enquiring on the part of the mortgagee can therefore arise, as when the mortgagee accepts the onus of proving, and does prove, 'actual' benefit, it does not matter whether he inquired or not. There was benefit and that is the end of it. I do not say for a moment that he was legally required to go so far as to have proved actual benefit. It would have been, I think, quite enough, if ha had said 'I dealt with the borrower in good faith, believing that the money was required for the needs of the family and my belief was based upon proper and. bona fide inquiries made by me. I am not concerned with whether there was actual benefit or not.'

20. In my judgment, therefore, for the reasons I have expressed, the plaintiff-respondent in this case is entitled to the mortgage decree which he succeeded in obtaining in the Court of the civil Judge and the appeal must be dismissed. The question of the Rs. 10-11-0 has not been pressed before me nor has there been any controversy as to the sum which was raised to defray the marriage expenses of Bechu Sam's daughter and niece. The appeal must be dismissed with costs.

21. I desire, before parting with the case, to indicate very briefly, and in the hope that I may assist subordinate Judges who have to try such cases as these, what the general issues, in my opinion, are which ought, subject to the requirements of each particular case, to be framed in suits of this kind. In a case, such as the present, in which the existence of a joint Hindu family is denied, that, of course, is a distinct issue. Where that is not disputed, the general issues which appear to me to arise are these:

(1) Whether the business was 'ancestral', because, if it was, a presumption may be drawn in favour of the mortgagee that the money he lent was for the 'needs' of the business or. for the 'benefit of the estate'.

(2) If the business was not 'ancestral', then whether it was a 'family' business at all or whether it was merely an 'individual' business. If it was merely an 'individual' business no question of 'need' or 'benefit' can arise.

(3) If the business was not 'ancestral', but was a 'family' business, then: (a) Was there any 'actual' benefit or 'actual' need, bearing in mind that the mortgagee is under no legal obligation to prove this, if he acted bona fide and made reasonable inquiries. If no 'actual' benefit is proved, then, (b) whether the business was the 'mainstay' of the family; and (c) whether the mortgagee advanced the money in the bona fide belief that it was borrowed for the purpose of the 'needs' of the business or for the purpose of the 'benefit of the estate or family', and (d) whether such belief, if any, was the result of bona fide inquiries which were reasonable and sufficient in the circumstances of the particular case, bearing in mind that the mortgagee is, in my opinion, under no obligation to substitute any technical judgment of his own for that of the manager of the business in any matter relating to the needs of that business. If either of the last two issues are answered in the negative, then, I think, the case is concluded against the mortgagee.

22. I have been asked for leave to appeal under the Letters Patent. In my view, this case raises no new, or doubtful, question of law nor are the authorities governing it either scarce or conflicting. Indeed, they set out the principles with singular uniformity. This is not, in my view, a case in which an appeal under the Letters Patent is justified.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //