1. The suit which has given rise to the present appeal was instituted by the Benares Bank, Limited, against the defendants-appellants and certain other members of their family for recovery of Rs. 27,261-9-4 on foot of a mortgage, dated 1st September 1911.
2. The mortgage in suit was executed by Babu Jagdish Narain for himself and as guardian of his minor sons, Parsotam Narain, Hari Narain and Maharaj Narain, and by Babu Raghubir Narain for himself and as guardian of his minor sons, Gopal Narain, Prahlad Narain and Narsingh Narain. Suraj Narain and Dip Narain, two adult sons of Jagdish Narain also joined in the mortgage. Substantial zemindari and house property was mortgaged to secure a debt of Rs. 28,000, and the stipulated rate of interest was twelve annas per cent. par mensem with half yearly rests. The mortgagors agreed to pay the mortgage money in five years. In the year 1913 the mortgagors paid two sums of money, viz., Rs. 3,500 and Rs. 628 4-9, to the plaintiff bank. In 1919 the mortgagors sold one of the mortgaged villages, viz., Sheodaspur, for Rs. 29,700. This amount was also paid to the plaintiff Bank. Sheodaspur has been released from the present claim. The total sum received by the bank up to the date of the suit is Rs. 33,828-4-9.
3. The present action was commenced on 2nd day of August 1923. Jagdish Narain one of the mortgagors had died a few years before the institution of the suit.
4. Babu Suraj Narain, Babu Dip Narain and Babu Raghubir Narain, the adult mortgagors, did not contest the suit. The remaining defendants raised a variety of pleas, all of which were repelled by the Court below, which granted a decree to the plaintiffs for the amount claimed.
5. Only three pleas were urged on behalf of the defendants in the appeal to this Court: (1) That the mortgage-bond was not executed by each of the adult mortgagors in the presence of any two of the three attesting witnesses, and that the document, therefore, did not fulfil the requirements of Section 59 of Act 4, 1882. (2) That of the sum secured by the mortgage, Rs. 10,000 was not borrowed either for payment of antecedent debts or for legal necessity, and thus the adult members of the family were not competent to charge the joint ancestral property for the said sum of Rs. 10,000. (3) That there was no reason for borrowing money at as high a rate of interest as twelve annas per cent. per mensem with six monthly rest. (Judgment then discussed evidence and holding that the bond was validly attested and that Jagdish Narain and others were not competent to mortgage the joint ancestral property to secure a loan of Rs. 6,342 from the bank proceeded.) It appears that about the year 1902 or 1903, Jagdish Narain started a business of taking contracts from the Public Works Department relating to buildings and also some plumber's business. Suraj Narain states that the balance of Rs. 10,000 (after excluding the sum required for payment of Rs. 6,342 to Bhagwati Prasad) was taken for the theka or contract business and was given to Jagdish Narain from time to time according as he required it. Jagdish's servant Ambika Prasad used to take the money; and Suraj Narain used to operate on his bank accounts by issuing cheques in favour of Ambika Prasad. The learned Subordinate Judge does not find that there was any ancestral trading business carried on by the family. He concludes that the business carried on was 'a family business,' and he bases his conclusion upon the hearsay statements of some of the plaintiff bank's witnesses, on the admission of Suraj Narain that he has been carrying on the Public Works Department contract business after the death of Jagdish, and upon the fact that the defendants have not produced their account-books at the trial of the suit. In our opinion this finding cannot be upheld. The hearsay evidence relied on by the learned Subordinate Judge was clearly inadmissible and ought to have been ruled out. There is nothing to prevent a member of a joint family from carrying on business for himself; and the admission of Suraj Narain does not prove that the business was carried on for or on behalf of the joint family of which he was a member. In fact, he denies that the business belonged to the joint family. No application was made by the plaintiff bank that the defendants be directed to produce the account-books relating to the business carried on by Jagdish and, after his death, by Suraj. We do not see how these account books could have been material for the purpose of the suit. Assuming that the business was carried on by the joint family, it was started for the first time about the year 1902, and, therefore, it was not an ancestral trading business. It was a speculative venture floated by Jagdish, within a few years of his death. Even on the assumption that it was a family business, we do not think that the case of the plaintiff bank is substantially advanced.
6. Where there is ancestral property held in coparcenary by a Hindu family governed by the Mitakshara, it is not competent to the father, the karta, or the adult members of the family to transfer the ancestral property to raise money to start or carry on a new business with the object of pecuniary gain for the family. In the present case this money was not borrowed for the continuance of a well-established ancestral trading firm. A karta in a joint family is not to be allowed to involve the joint ancestral property in the risk of loss through business ventures. We, therefore, hold that the sum of Rs. 10,000 borrowed from the plaintiff bank was not justified either on the ground of being required to satisfy an antecedent debt or to answer a joint family necessity.
7. It was argued by the respondent that a portion of the hypothecated property, (viz., Mauza Manjhiari and the house situated in Mohalla Chowk Ganga Das in the city of Allahabad) was non-ancestral property. It was said that originally the property belonged to the father of Jagdish Narain that he gifted the same to his wife Mt. Sheo Devi and the property devolved upon Jagdish Narain & Raghubir Narain through her; so that this property was, consequently, the acquisition of Jagdish and Raghubir, and was not the joint ancestral property of the appellants. The plaintiff bank alleges in para. 1 of the plaint that the property is owned 'by the defendants.' No issue was framed in the trial Court as to whether any portion of the mortgaged property was non-ancestral. No evidence was adduced by the plaintiff to prove that the property was other than joint ancestral property of the defendants. The mortgage bond in the clearest terms recites that the properties mortgaged belonged to all the executants. Reliance was placed upon the statement of Suraj Narain that the property had descended through Sheo Devi; but he stated that Sheo Devi bad died some ten years before the date of his deposition, so that in any event the property had not vested in the family or any of its members by inheritance from Sheo Devi at the date when the mortgage was executed. No attempt was made in cross-examination to prove that Sheo Devi had surrendered or made a gift of her property to her sons or grandsons. There is, therefore, nothing to suggest that any part of the property was non-ancestral. It is patent from the statement of Suraj Narain, coupled with the recitals contained in the mortgage bond, that Mt. Sheo Devi was never the owner of the property; that there had never been an operative gift in her favour, and that the property had always remained and been treated as the joint ancestral property of the family. The name of Mt. Sheo Devi was in all probability entered in the village papers (if it was entered at all) for the sake of her consolation. The plaintiff bank has, therefore, failed to prove that any portion of the mortgaged property was not the joint ancestral property of the family.
8. There now remains the question of the rate of interest. Since the mortgage-bond was executed before the Usurious Loans Act came into operation, we would not have any jurisdiction to re-open the transaction under the provisions of that Act. Interest at the rate of twelve annas per cent. per mensem compoundable six monthly does not appear to us to be unreasonable or unconscionable. It appears that Jagdish Narain had borrowed from Mt. Dwarka Bibi at the rate of eleven annas per cent. per mensem with six-monthly rests. The amount secured by the mortgage was considerably smaller than the amount of the mortgage in suit. We do not think that the appellants have made out any case to justify this Court in reducing the stipulated rate of interest.
9. Although the plaintiff Bank did not ask for it, we think that it is well entitled to a simple money-decree for Rs. 10,000, the amount of unsecured debt. In view of the payments made from time to time, and the clear acknowledgment of liability in a large number of documents, of which Ex. 34, dated 29th August 1919, may be cited as an example, the claim for a money-decree is amply within limitation. We pass a simple money-decree for Rs. 10,000 against Raghubir Narain, Dip Narain and Suraj Narain personally and against the heirs of Jagdish Narain, limited in the case of these heirs to the extent of the personal assets of Jagdish Narain in their hands, other than the mortgaged property together with simple interest at twelve annas per cent. per mensem from the date of the bond up to the date of realization, subject to the further direction, which we proceed to give.
10. The mortgage is valid to the extent of Rs. 18,000 with interest at twelve annas per cent. per mensem with six-monthly rests. The mortgagors have already paid to the plaintiff bank Rs. 33,828-4-9. We direct that an account be taken of the sums due and the sums received up to the date in 1919 when Rs. 29,700 was received by the plaintiff Bank. If after adjustment of the debits and credits, any sum of money be found due to the plaintiff bank a decree for the said amount be passed under Order 34, Rule 4, Civil P.C. If no amount be found due, the plaintiff's claim against the appellants and the mortgaged property be dismissed. If after adjustment of the debits and credits, a surplus be found in favour of the mortgagors, the same should be applied towards the reductoin of the simple money-debt and the simple money-decree be passed only for the balance.
11. We modify the decree of the Court below and allow the appeal to the extent indicated above. We do not allow the appellant any costs of this Court or of the Court below. In view of the peculiar circumstances of the case we order that the parties bear their costs throughout.
12. We have asked Mr. Damodar Das at the time of delivering judgment in this case as to whether the figure Rs. 29,700 said to have been received by the plaintiff Bank in 1919 is a correct figure or not. He says that the figure is correct.