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Kailash Nath Vs. Tulshi Ram and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty ;Civil
CourtAllahabad
Decided On
Reported inAIR1946All349
AppellantKailash Nath
RespondentTulshi Ram and ors.
Excerpt:
- - 80,000 and that the agreement was a good agreement. money also was needed for payment of other trade debts that had accrued, as well as for the development of the family cloth business then recently initiated. in these circumstances, a transaction even involving the disposal by gopal das of this entire immovable family property might well be justifiable and be binding on the whole family, provided the property was not sacrificed for an inadequate price and provided the consideration was calculated to relieve the necessity, the existence of which called for the disposition......an auction sale. the learned counsel for the respondents, however, contends that it might mean any sale, a sale at an auction or one by private treaty or a sale in pursuance of a decree in a suit for specific performance of the contract. the point is not free from difficulty, but the case can be decided on another basis. even in the case of an auction sale, their lordships of the judicial committee have drawn a distinction between the purchaser, who is a stranger to the suit or the decree, and the purchaser who is a party. in muddun thakoor v. kantoo lal ('74) 14 beng. l.r. 187 and suraj bansi koer v. sheo ('80) 5 cal. 148 at p. 171 their lordships have drawn a clear distinction between the two classes of cases. the broad proposition has been put in these terms by mulla in his hindu law.....
Judgment:

Sinha, J.

1. This is an appeal by the plaintiff whose suit for a declaration that the decree in suit No. 49 of 1989 is null and void as against him, was dismissed by the learned Civil Judge of Cawnpore. The property in dispute is a house in the city of Cawnpore. The plaintiff is the son of one Ram Narain, who is the son of Maiku Lal. Maiku Lal had admittedly purchased the house for Rs. 40,000 in the year 1925. On 8th December 1938, Ram Narain entered into an agreement of sale with Ajodhiya Prasad for a sum of Bs. 30,000. A suit for the specific performance of this agreement was brought and decreed by the learned Civil Judge. The decree was put in execution and the formal delivery of possession was made on 17th September 1941. Before, however, actual delivery of possession could take place, the present suit was instituted on that very day, i.e., 17th September 1941, with the relief mentioned above.

2. The plaintiff's case, in brief, was that the house was worth about Rs. 40,000 and his father had entered into this transaction without any legal necessity or justification. He charged his father with immorality, but, as the learned Counsel for the appellant has not pressed this point, we might dismiss it from our consideration. The learned Civil Judge has held that the value of the house, on the date of the agreement to sell, was Bs. 80,000 and that the agreement was a good agreement. In this view of the case he dismissed the suit. The plaintiff has come before us in appeal. The first question is whether he can put the defendants to proof of legal necessity or he can succeed if he proves illegality or immorality of the debts which formed the consideration of the agreement to sell. It was held in Jagdish Prasad v. Hoshyar Singh : AIR1928All596 , that if a suit is brought before the sale, it is for the alienee to prove legal necessity. It is, however, not clear whether by sale their Lordships intended an auction-sale or a sale by private treaty or a sale of the character of the sale in the present case. The learned Counsel for the appellant contends that 'sale' must mean an auction sale. The learned Counsel for the respondents, however, contends that it might mean any sale, a sale at an auction or one by private treaty or a sale in pursuance of a decree in a suit for specific performance of the contract. The point is not free from difficulty, but the case can be decided on another basis. Even in the case of an auction sale, their Lordships of the Judicial Committee have drawn a distinction between the purchaser, who is a stranger to the suit or the decree, and the purchaser who is a party. In Muddun Thakoor v. Kantoo Lal ('74) 14 Beng. L.R. 187 and Suraj Bansi Koer v. Sheo ('80) 5 Cal. 148 at p. 171 their Lordships have drawn a clear distinction between the two classes of cases. The broad proposition has been put in these terms by Mulla in his Hindu Law (9th Edn.), Section 294B, at p. 348:

Purchasers at an execution sale, being strangers to the suit, if they have not notice that the debts contracted for an immoral purpose were so, are not bound to make inquiry beyond what appears on the face of the proceedings.

3. The present is not a case of a stranger to the suit or a decree. Indeed, the sale has been made in pursuance of a decree. A somewhat similar question arose before their Lordships of the Privy Council in Ram Charan v. Bhagwan Das ('26) 13 A.I.R. 1926 P.C. 68. The facts briefly were these : One Gopal Das and four of his sons made a mortgage in favour of one Manik Chand for a sum of Rs. 10,500. On 16th July 1912, Gopal Das entered into an agreement of sale with Mt. Muhammad-un-nisa with respect to a 16-anna share of one of the villages mortgaged. This sale was to be completed in a month and Rs. 502 were paid to Gopal Das by way of deposit. The contract remained inoperative up to July 1915, when it was brought to an end by an order made at the instance of the purchaser for return of her deposit and interest. On 3rd September 1912, Gopal Das and four of his sons entered into an agreement of sale with Earn Charan Lonia. This agreement related to the entire mortgaged property and the purchasers were to retain the money due on the mortgage of 10th July 1909, and were to account to the vendor for the balance of the purchase price. The sale deed was to be executed in 30 days and Rs. 500 were paid in advance. Neither of the two agreements materialised. On 31st August 1915, Earn Charan brought a suit for the specific performance of his contract of sale. It was decreed by the Subordinate Judge on 10th February 1917, and his decree was affirmed by the High Court on 6th March 1919. Pending the appeal in the High Court, possession was delivered to Earn Charan under an order of the Subordinate Judge, dated 12th May 1917, and a formal sale deed was executed by the Judge on 1st November 1917. According to the terms of deed a sum of Rs. 21,818-14-0 was due on 1st November 1917, on the mortgage of loth July 1909, and after deducting this amount and Rs. 500, paid to Gopal Das in advance, Rs. 189-12-10 alone remained for payment to Gopal Das. Bam Charan, however, did not pay off the mortgage of 10th July 1909 until 4th September 1919, when he deposited in Court a sum of Rs. 23,200 due on that mortgage and it was paid off. On 7th September 1916, the sons of Gopal Das, who had not joined the sale, brought a suit for a declaration that the agreement to sell was not binding upon them. The Subordinate Judge dismissed the suit. The High Court, on appeal, decreed it subject to certain conditions, as it was of opinion that the agreement to sell was not justified by legal necessity. Their Lordships of the Privy Council affirmed the decision of the High Court though for different reasons, even though they found that

Manik Chand had not so far begun to press for payment either of principal or interest, but the amount charged upon the property was automatically increasing at a great rate. No funds were available to stay the no longer remote possibility of all value in the equity of redemption being extinguished; money also was needed for payment of other trade debts that had accrued, as well as for the development of the family cloth business then recently initiated. In these circumstances, a transaction even involving the disposal by Gopal Das of this entire immovable family property might well be justifiable and be binding on the whole family, provided the property was not sacrificed for an inadequate price and provided the consideration was calculated to relieve the necessity, the existence of which called for the disposition. (The italies are ours.)

4. It is, therefore, obvious that the adequacy of the price was a factor emphasized by their Lordships and that it was not merely enough that the consideration was calculated to relieve the necessity. Both conditions were to co-exist. Even though the consideration was devoted to the payment of the just debts of Maiku Lal and Ram Narain it was not open to the latter to sacrifice the family property for an inadequate consideration. In the case before their Lordships the vendees had, under a sale deed executed under the orders of the Court, been placed in possession. This did not prevent their Lordships from setting aside the transaction on the ground that it was an improvident transaction.

5. It is, therefore, open to us to take into consideration the market value of the property and to see whether Earn Narain agreed to sell it for its proper value or sacrificed it for an inadequate consideration. As for the market value of the property on the date of the agreement to sell, i.e., on 8th December 1938, a number of witnesses were examined by both parties. The defendants examined two witnesses, Gauri Shankar and Earn Charan. Gauri Shankar said that the property was, on the date of the agreement, worth only Rs. 28,000 or Rs. 30,000. Earn Charan said that it was worth BS. 80,000. He, however, had to concede that it was in the occupation of Tatas and some other tenants. The former paid Rs. 150 and the latter Rs. 25. The total rent fetched by this house was, therefore, Rs. 175.

6. The plaintiff, on the other hand, examined a number of witnesses. Sumer Earn said that the house was worth about RS. 50,000 and that he was prepared to purchase it for that amount. Kirpa Shankar also gives the same as the value of the house, i.e., Rs. 50,000. Bindeshri is yet another witness who also says that its value is Rs. 50,000 and that there has been no increase in the rent of houses between the date of the agreement and the date of his examination, i.e., 1st December 1941. Gokal Ohand has definitely stated that Rs. 40,000 was the value of the house two and a half or three years before the date of the examination, i.e., 2nd December 1941, which means that this was the value about the time of the agreement itself. The truth must, therefore, lie somewhere between the two estimates - the plaintiff's and the defendant's. What, however, is important is that Maiku Lai had purchased it for Rs. 40,000 in the year 1925 and on 1st or 2nd December 1941, two of the witnesses examined by the plaintiff were prepared to purchase it for Rs. 50,000. Bearing these offers in mind and making every allowance for the fluctuations in the market, it is impossible to say that the value of the property in December 1938 was only Rs. 30,000. It is, therefore obvious, that the transaction was an improvident transaction and could not bind the sons. Earn Narain, therefore, had no right to enter into such a transaction and any decree passed on the basis of the agreement of sale is not binding upon the present plaintiff. We, therefore, allow the appeal, set aside the decree of the Court below and decree the plaintiff's suit. It now remains to consider the precise form of the decree which should be passed by us. As their Lordships of the Privy Council re. marked in the case noted above at p. 628:

the Court, being seized of the whole matter, should make such an order as may terminate the controversy and do justice between the parties.

As a result of this decree the sum deposited by Ajodhiya Prasad in the Court of the Civil Judge of Cawnpore, viz., Rs. 27,500 will be available to the defendants and they can take the necessary steps for its withdrawal. If that sum is not available to the defendants, this amount will constitute the first charge upon the house in dispute. They are entitled to a further sum of Rs. 2500. Mr. Sri Narain Sahai, the learned Counsel for the plaintiff-appellant, agrees that he shall pay this sum of Rs. 2500 to the defendants within three months from this date. In the circum-stances of the case, we think that this is a fit case in which the parties should bear their own costs throughout.


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