1. The action which has given rise to this appeal was brought by the Benares Bank, Ltd., Saharanpur, for the recovery of a sum of Rs. 6,268-4-0 due as principal and interest on a promissory note, dated 28th April 1927. The defendants to the suit were Dip Chand and Kirat Chand. The Court below has given a decree against Kirat Chand but has dismissed the plaintiff's suit against Dip Chand. The Bank has appealed and is represented by counsel. We have not had the advantage of hearing the respondent Dip Chand in this case, in the sense that counsel who appeared for him informed us that they had no instructions in the case. Mr. Dar on behalf of the appellant has taken us very fairly through the entire record and has placed the case for the appellant as well as the respondent.
2. The facts are that Kirat Chand was appointed a guardian to the person and property of Dip Chand minor and he acted as such guardian from 22nd May 1926, to 19th September 1928, when the natural mother, Mt. Bugli Kunwar, applied for being appointed as guardian and she was so appointed. While Kirat Chand was the guardian of the minor an application was made by him for sanction to raise a sum of Rs. 7,000 for certain purposes. The sanction was given on 25th August 1926, and it appears that a sum of Rupees 2,000 was advanced by the Benares Bank on the basis of a promissory note. This sum of Rs. 2,000 was spent and as the guardian anticipated certain other necessities he applied again on 8th March 1927, for a fresh sanction inasmuch as the Benares Bank was insisting that the name of the creditor should be specified in the sanction. On 9th March 1926 the District Judge passed the following order:
Permitted to borrow Rs. 5,000 from the Benares Bank.' Armed with this permission the guardian Kirat Chand went to the Bank and obtained an advance of Rs. 5,000 on 28th April 1927. On that date he executed a promissory note in favour of the Bank and he signed it as guardian of Dip Chand, minor. He also executed a receipt on the same day and there also he styled himself as guardian of the minor. There is yet another document of the same date which might be mentioned and it is a letter of guarantee by the guardian in his personal capacity to the Bank by which he made himself responsible for the due re-payment of the loan of Rs. 5,000 advanced to the estate of Dip Chand minor. The amount due under the promissory note was not paid and the Bank, therefore, on 30th August 1929, brought a suit for the recovery of the amount. Kirat Chand was absent, but Dip Chand contested the suit and he alleged that the income of the property of the minor was quite sufficient and Kirat Chand had no right to borrow the money for the defendant nor was any money borrowed from the Bank spent for the benefit of the minor. It was said that the sanction of the District Judge was obtained by misrepresenting facts. We might mention that Dip Chand was a minor even at the time of the institution of the present suit and he was impleaded under the guardianship of his mother Mt. Bugli Kunwar.
3. The plaintiff examined Harish Chandra, the head accountant of the Benares Bank, who stated that Kirat Chand was introduced to the Bank by Babu Anand Swarup, Vakil. He speaks of the interview and says that Kirat Chand represented that the money was required to meet the expenses of suits, to pay revenue and to meet the expenses of the minor's sister on which an enquiry was made from Babu Anand Swarup and the latter was asked to secure the order of the District Judge. It is clear from this that Babu Anand Swarup corroborated the statement of Kirat Chand regarding the necessities. It is true that in cross-examination Harish Chandra admits that no enquiry was made by the Bank about the income of the minor from his properties nor did the Bank make any enquiries as to the application of the money, but there can be no doubt that the Bank relied upon the facts that Kirat Chand was introduced by a respectable vakil and the necessity of obtaining the sanction of the District Judge was pointed out. 'We might recall at this stage that the sanction of the District Judge was obtained once on 25th August 1926, and again on 8th March 1927. Kirat Chand continued as a guardian till 19th September 1928, and then Mt. Bugli Kunwar applied that she should be appointed a guardian and, Kirat Chand, the former guardian, should be discharged. In her application which is printed at p. 22 of our record she says that she had understood the accounts from Kirat Chand and obtained a number of papers from him. Kirat Chand was actually discharged by the District Judge on 19th March 1929 as appears from Ex. 2. One Abdul Rahman was produced by the plaintiff to prove the above-mentioned application of Mt. Bugli Kunwar. This witness says that the accounts were explained in the sitting room of the minor and that the lady took certain documents from Kirat Chand and affixed her thumb impression on the application. It is also clear from the statement of Dip Chand that he made an application to the District Judge after the discharge of Kirat Chand for a direction that the accounts be explained again to Dip Chand. This application was, however, rejected by the learned District Judge who presumably had passed the accounts which had been submitted by the guardian before discharge.
4. On these facts it is pointed out by the appellant that a decree should have been passed against Dip Chand as well. It is conceded that there is no personal liability on the minor and a personal decree cannot be passed against him, but what is submitted is that the minor's estate is-bound and the money can be recovered from the estate. The Court below has held that
The loan was not borrowed for any legal necessaries for the minor or for benefit or protection of his estate and the minor's person or his estate was not legally bound to pay the loan.
5. It has come to the conclusion that the guardian made false representations to the Judge and that the expenses of the marriage of the minor's sister were defrayed by the mother of the minor and the expenses required for the appeal in the High Court were inflated. In order-to arrive at this finding the learned Judge has relied on the statement of Dip Chand who says that the mother spent a sum of Rs. 1,100 or Rs. 1,200 on the sister's marriage and that the appeal which was pending in the High Court against the minor was rejected as the other party could not deposit security and that no paper book was printed in the High Court.
6. It is contended before us that , Dip-Chand is not only an interested witness-but is also untruthful. It is pointed out that the mother has now incurred debts to the extent of Rs. 1,300 or Rs. 1,400 and that some decrees also have been obtained and it does not, therefore, stand to reason that the mother should have any money of her own in order to spend for the marriage of the sister. As regards the statement made by Dip Chand that the case in the High Court was rejected as the other party could not deposit the security, it is said that this-statement did not appear in the examination-in-chief but was introduced only in there-examination and it was not possible-for the Bank to cross-examine Dip Chand on that point. 'We agree with learned Counsel for the appellant that Dip Chand's testimony is not reliable, regard being had to the probabilities of the case. It appears that the estate was indebted even before Kirat Chand became a guardian and some property belonging to the minor was sold in execution of decrees; the account submitted by the guardian was passed by the District Judge, the mother, when assuming the superintendence of the minor's estate admitted the correctness of the account and the minor failed in his attempt to obtain a re-opening of the accounts. Mt. Bugli, who was the best person to speak about the expenses incurred in the marriage of the sister, was not produced as a witness in the case.
7. For all these reasons we are of opinion that Dip Chand is not a truthful witness and the burden, such as was upon the plaintiff to prove that the money was spent for necessities binding on the estate of the minor has been discharged. In the account that was submitted by the guardian it is said that Rs. 2,792-8-0 were spent on the marriage of the sister and Rs. 1,649-8-9 were spent in connexion with the High Court appeal and certain other sums were mentioned as having been spent in connexion with suits , relating to zamindari arrears of rent and bonds, etc. We are not prepared to say that these sums were in any way inflated or exaggerated, regard being had to the nature of the appeal in the High Court (we are not satisfied as to the statement of Dip Chand that the appeal was dismissed for failure to furnish security) and to the status of the family when considering the question of the expenses relating to marriage of the minor's sister. We are therefore of the opinion that the finding of the Court below that the loan was not 'borrowed for any legal necessaries for the minor or for benefit or protection of estate' is not a correct finding. In this view of the case it is not necessary for us to decide the question of law that was discussed in the Court below and also before us, because there can be no doubt that the creditor would be entitled to recover moneys advanced to a minor for his necessaries by invoking the principle laid down in Section 68, Contract Act. So far as this Court is concerned, there is a clear authority in Phat Ram v. Ayub Khan 1927 49 All 52 where it was held that when a loan is taken by a guardian on behalf of a minor for the purpose of some necessity or for the benefit of the minor's estate, the minor's estate is liable.
8. Coming to the question of law which was decided by the Court below against the Bank, the contention on behalf of the appellant is that it is not necessary for the Bank to prove that the money was actually applied for the necessities of the minor and that if there were reasonable enquiries as to the existence of the necessity and if after the sanction of the District Judge a loan was advanced to the guardian, the estate of the minor; would be bound to repay the loan. In the present case the promissory note was signed by Kirat Chand and he signed it as guardian of Dip Chand, minor. There was some discussion as to whether this was enough to show that Kirat Chand was borrowing for the minor. If the promissory note and the receipt stood by themselves, there might have been some room for controversy, but there is further, as pointed out before, a letter of guarantee-of even date which says that Kirat Chand bound himself to repay the loan in consideration of the Bank's advancing a sum of Rs. 5,000 to the estate of Dip Chand There can therefore be no doubt that Kirat Chand was borrowing money for the minor. The sanction of the District Judge was obtained on 25th August 1926;; and repeated on 9th March 1927. We can presume that such enquiries as, the law contemplates were made by the Judge before granting the sanction. So far as the Bank itself is concerned, it relied.-, upon the statement of Kirat Chand sup-ported by Babu Anand Swarup, Vakil We also know that the representations were in fact correct, because there was? an appeal pending in the High Court against the minor.
9. There were also certain suits which had to be instituted and the marriage of, the sister did take place about the same time. If the guardian instead of obtaining the sanction of the District Judge for a simple loan had applied for the alienation of a portion of the property and if the District Judge had after enquiries granted the sanction, the creditor could very well have taken his stand upon the sanction and unless fraud in obtaining the' sanction in which the creditor was a participant had been established, no further duty lay upon the creditor. It has,' been held by their Lordships of the Privy Council in Ganga Pershad Sahu v. Maharani Bibi (1885) 11 Cal 379 that when an order of the Court has been made authorising 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 is 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, he is entitled to rest upon the order. Is there any reason why the same principle should not apply when the guardian instead of raising a loan on the security of the minor's property obtains money on a simple bond? We can think of no ground on which to draw a distinction between the two cases; indeed under certain circumstances it might be more desirable to obtain money on a simple bond than on a hypothecation bond and in certain circumstances it might be impossible to avert the danger after undergoing the formalities of a regular deed of transfer. We can think of cases where the necessity is urgent, for instance the payment of Government revenue and where it might be impossible to obtain a creditor ready to advance money on the basis of a hypothecation bond where he would have to enquire as to the sufficiency of the security and the title of the proposed borrower. We can also think of cases where the minor may not be possessed of any immoveable property, for instance where he is the proprietor of a business concern and the said concern might stand in need of money to meet some pressing liabilities.
10. It might, however, be argued that the 'Guardians and Wards Act is a complete Code dealing with the powers of a guardian appointed under it and, as there is no provision in the Act for the guardian borrowing money on the basis of a promissory note, the guardian cannot bind the minor's estate by a simple bond nor can the Court give a sanction for such borrowing and if such a sanction is obtained the entire procedure is irregular and ultra vires. In answer to this our attention has been drawn to Sections 32, 33 and 34, Guardians and Wards Act. Under Section 32 the Court has the power from time to time to define, restrict or extend the powers of a guardian with respect to the property of the ward. Under Section 33 a guardian can apply to the Court for opinion, advice or direction on any present question respecting the management and administration of the property of the ward. Under Section 34, Clause (e) the guardian might, with the direction of the Court, apply for the maintenance, education and advancement of the ward and of such persons as are dependent on him a portion of the income of the minor's property or oven the whole of his property. The property in all these cases might be either moveable or immoveable property. The argument then is that the guardian could very well have applied to the Court for advice or direction regarding the management or administration of the minor's property in connexion with the appeal pending in the High Court and could have said that it was necessary to defend the appeal for which expenses would be required and that the proper way of meeting those expenses from the property was not by hypothecating or alienating any immoveable property but by taking a simple loan. The guardian could again with the permission of the Court apply the income of the property for the whole or part of the property, or the marriage of the sister of the minor under Section 34(e) and he could also at the same time under Section 33(1) say that the expedient method of meeting those expenses was by taking a simple loan and not by alienating the property. It is then said that the Court could under Section 33(1) give the necessary direction and this direction in the present case took the shape of giving permission to the guardian to borrow a sum of Rs. 5,000 from the Bank on a promissory note.
11. We are of the opinion that there is a great deal of force in these contentions and it cannot be said that the procedure adopted by the guardian and the Bank in moving the Court was irregular or the permission given by the District Judge was ultra vires. If therefore the permission given by the District Judge which is referable to Section 33(1), Guardians and Wards Act, stands on the same footing (and there is no reason why it should not be so) as the sanction given by the Court under Section 29, then in the words of their Lordships of the Privy Council the creditor can rest upon the order. In this case the utmost that has been even alleged by the respondent is that the guardian made falsa representations to the Court. It is not suggested that the Bank was a party to the fraud, if any, practised by the guardian. We have however in an earlier portion of our judgment said that we are not satisfied that any fraudulent representations were made by the guardian.
12. The Court below has relied upon certain cases, but it is not necessary, for us to notice them in detail. In Waghela Rajsangji v. Sheikh Masluddin (1887) 11 Bom 551 the Privy Council has laid down that a guardian cannot contract in the name of the ward, so as to impose on the latter a personal liability, but in the present case the appellant is not seeking to obtain a personal decree against the minor. That case therefore does not in any way hurt the appellant. In none of the other cases that were mentioned by the Court below, there was a permission obtained from the Court and therefore there is no mention nor a discussion in those cases of the provisions of Sections 32, 33 and 34, Guardians and Wards Act. To that extent, therefore, the cases are clearly distinguishable and it is not necessary for us to discuss the still larger question as to whether a guardian without obtaining the sanction of the Court can bind the ward's estate except by a document purporting to bind it, There might be a great deal to be said for the two contending views and they have been discussed by their Lordships of the Madras High Court in Ramajogayya v. Jagannadham 1919 42 Mad 185. We should not be deemed to have pronounced any opinion on that point.
13. For the reasons given above, we allow this appeal to this extent: that we modify he decree of the Court below and decree the plaintiff's suit against both the defendants with costs. So far as Dip Chand defendant 1 is concerned, the decree is limited to his estate and he will not be personally liable. The plaintiff will also be entitled to pendente lite and future interest up till the date of realization at the rate of six per cent.