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Ram Prasad Vs. Bishambhar Nath - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1936All607
AppellantRam Prasad
RespondentBishambhar Nath
Excerpt:
.....partnership it might well be that har narain wanted some money to commence another business to replace this one or to enlarge the scope of a personal business which he might have had as well as the partnership business. chiranji lal 1935 alj 177, it was laid down that the mere fact that the money borrowed by a manager was required for the purposes of a new business would not by itself be any justification for the alienation of family property, but on the other hand if in addition thereto it could be shown that there was either a pressure or necessity to continue that business, as it was the mainstay of the family, or that the particular transaction was at the time beneficial to the family and the family estate, the transaction might well be valid and would be upheld. in those..........a part of the site upon which house no. 838/1 was built came to har narain upon a partition of the family property. further, har narain stated in evidence that the remainder of the site was purchased by him in 1911 and 1913 with money which he had obtained as his share of the family funds upon partition. there is no evidence whatsoever to contradict har narain and, it would appear established that at least the site of house no. 838/1 was partly ancestral property and partly property acquired by the mortgagor out of ancestral funds. however, from the evidence it is clear that very little, if any, of the building of house no. 838/1 can be regarded as ancestral property. har narain said that the lower storey of this building was built with funds acquired upon partition of the family.....
Judgment:

1. This is a first appeal by one of the defendants Ram Prasad against a decree passed by the learned Subordinate Judge of Agra, decreeing the plaintiff-respondent's claim for the enforcement of a certain mortgage. Amongst the original respondents to this appeal was one Brij Behari, a minor, who appeared through his mother Mt. Bangalo. Since the filing of the appeal Brij Behari has been declared to be a major and an application was made by counsel on his behalf to-day praying that he should be transferred from the array of respondents to the array of the appellant. Counsel for the respondents objected but we thought it proper that Brij Behari who is a son of the mortgagor and who, was a minor when the debt was incurred should have an opportunity of contesting before us the findings of the Court below. The appeal, therefore, now stands as the appeal of Ram Prasad and Brij Behari. The suit arises out of a mortgage bond dated 19th February 1921 which was executed in favour of the plaintiff-respondent by Har Narain, defendant 1, on behalf of himself and as guardian of his three minor sons. Defendants 2, 3 and 4 were the minor sons, one of whom, as we have stated, Brij Behari, has become major and is now an appellant. Ram Prasad is defendant 9 and is a transferee of the subject-matter of the mortgage. Certain other defendants are transferees of part of the mortgaged property, whilst defendant 13, Babu Lal, was a co-mortgagee with the plaintiff, but by reason of a partition between them the mortgage had been allotted entirely to the plaintiff who consequently brought these proceedings in his own name making his original co-mortgagee a pro forma defendant.

2. The property mortgaged consisted of two houses, Nos. 838 and 838/1. The mortgage recites that the mortgagor was under a necessity to raise a loan for the construction of balakhanas over his new house and for purposes of his business. By the mortgage-deed he borrowed a sum of Rs. 8,000 and agreed to pay interest at the rate of 11 as. per cent, per mensem compoundable quarterly. Interest having fallen in arrear the plaintiff has brought this suit impleading the original mortgagor and his family and subsequent transferees claiming a sum of Rs. 8,000 principal and Rs. 6,765 interest which the plaintiff has calculated at the rate of 11 as. per cent. per mensem simple. The minor sons of the mortgagor and Ram Prasad contested the validity of this mortgage in the Court below and took all possible grounds open to them. They denied due execution of the mortgage deed and the passing of consideration, but upon these issues the learned Subordinate Judge found in favour of the plaintiff. It is now conceded that the mortgage sued upon was duly executed and that the consideration named therein did pass from the plaintiff to the mortgagor Har Narain.

3. It was further urged on behalf of the defendants in the Court below that the property mortgaged was ancestral and that there was no legal necessity to support the loan. Upon these issues the learned Subordinate Judge found that at least part of the property was ancestral, viz. house No. 838. As to house No 838/1 it would appear that the learned Judge was of opinion that this was not ancestral property but was self-acquired by the mortgagor himself. The learned Subordinate Judge, however, was abundantly satisfied that there was legal necessity to support this loan. He finds that the money was borrowed for the purposes of completing an unfinished house and for financing an iron foundry business upon which the family was entirely dependent. Two points have been taken on behalf of the appellants before us and we shall deal with them very shortly.

4. It has first been contended that both the properties comprised in the mortgage must be regarded as ancestral. The evidence and documents seem to show that at least a part of the site upon which house No. 838/1 was built came to Har Narain upon a partition of the family property. Further, Har Narain stated in evidence that the remainder of the site was purchased by him in 1911 and 1913 with money which he had obtained as his share of the family funds upon partition. There is no evidence whatsoever to contradict Har Narain and, it would appear established that at least the site of house No. 838/1 was partly ancestral property and partly property acquired by the mortgagor out of ancestral funds. However, from the evidence it is clear that very little, if any, of the building of house No. 838/1 can be regarded as ancestral property. Har Narain said that the lower storey of this building was built with funds acquired upon partition of the family property, but having regard to the fact that he had spent nearly Rs. 2,000 out of these funds in buying this site there would be very little left before the commencement of the building. It may be that the building had been commenced by family funds, but the evidence suggests that the greater part of it was built by money borrowed from the present mortgagee.

5. It appears that at the time this mortgage was executed, viz. on 19th February 1921 the house No 838/1 was in an unfinished state. According to one witness for the plaintiff, part of it was unroofed and the building such as it was un-plastered. There were no door leaves in position and from his description there appears to be a little more than a shell consisting of one lower storey. To leave a building of this kind in such a condition would be disastrous. It would be a very risky thing to do in any country, particularly in India where owing to varying climate and torrential rain, a prudent owner of an unfinished house of this kind would hasten to raise the necessary funds; to make it weather-proof. The evidence is that the sum of Rs 6,000 or Rs. 7,000 was required to complete this building. On that account money was borrowed and the building was completed.

6. It has been urged before us by counsel for Brij Behari that this money could not have been needed because shortly before, viz. on 15th July 1920, Har Narain had borrowed another sum of Rs. 12,000 and in that mortgage the necessity for the i money is stated as being for increasing the height of the ceilings of the new house adjoining the ancestral godown and for adding to it a second storey by constructing balakhanas and also for the purpose of starting the business of casting iron weights and measures. From the evidence it would appear that all this money, viz., Rs. 12,000 and Rs. 8,000 was required for completing this building and in our view subsequent events have shown that this evidence is true. The present appellant Ram Prasad bought house No. 838/1 from Har Narain on 24th April 1924 and actually paid for it a sum of Rs. 23,000. The evidence discloses that before the loan there was merely a shell of a building but that after this loan, amounting altogether to Rs. 20,000, there was a building which was a few years later sold for Rs. 23,000. In those circumstances we can well believe that a considerable amount of money was spent upon house No. 838/1 round and about the years 1920 and 1921 and events have subsequently shown that this money was very well and prudently spent. In the year 1924, as we have pointed out, Har Narain by the sale of this house received back all the money he had borrowed and more. The learned Subordinate Judge has considered the evidence upon the question as to how this house came to be built and he was satisfied that it was very largely built by the money borrowed from the present plaintiff.

7. It has been urged before us that the site of this house at least was ancestral and that the first portion built was built out of ancestral funds. Consequently the remainder of the house became ancestral though it was built out of borrowed money. By what term the completed house could be properly described is really of no importance in this case because, whether the house No. 838/1 be properly described as ancestral or non-ancestral, matters not having regard to our view of the facts. We are satisfied upon the evidence that this sum of Rs. 8,000 which was advanced to Har Narain upon the security of the ancestral house No. 838 and upon the security of the house No. 838/1 was required by Har Narain for purposes which amount in law to legal necessity.

8. In the first place, as we have pointed out, the house No. 838/1 in an unfinished condition would very soon become worthless. One wet season and an asset may well become a liability. It was incumbent upon Har Narain as a prudent father or manager of a family to take steps to complete the house and thus make it into a real asset. To allow the house to remain unfinished and to crumble away would be a most imprudent thing to do and in the circumstances borrowing the money to complete the house was in our view a perfectly justifiable act on the part of the father. There was a real necessity for this money because, if it was not advanced, property which was valuable and which would tend to become more valuable, would be lost for ever to the family. The description of the house in its unfinished state given by some of the witnesses satisfies us that there was a real need for Har Narain to borrow this money to complete the house and thus bring into being a really valuable asset which eventually was sold for Rs. 23,000. Had he not borrowed the money the family would inevitably have suffered loss.

9. We are further satisfied upon the evidence that Har Narain was justified in borrowing money for his iron foundry business. It has been urged that this was a new business, but the defendants' evidence is to the contrary. Har Narain himself admits that the business was started as early as the year 1914, whereas his witness Sadho Ram stated: 'Har Narain had iron business since the time of his ancestors.' That would suggest that the iron business was ancestral. However, whether it was ancestral or not, it was not new in 1921 because on Har Narain's own showing it had then been in existence for at least seven years. It would appear that Har Narain had been concerned in the iron trade for some time because there is upon the record a document dated 29th February 1920 by which Har Narain relinquished his share in a partnership conducting an iron foundry to his partner, the present appellant Ram Prasad. Having relinquished his share in this partnership it might well be that Har Narain wanted some money to commence another business to replace this one or to enlarge the scope of a personal business which he might have had as well as the partnership business. The evidence upon this is not clear, but one thing is certain, that in so far as any part of Rs. 8,000 borrowed from the plaintiff went into an iron business it went not into a new business but into a business which had existed for some time. It might have been a new business in this sense, that it was a business started to replace an old one, but it is certain that Har Narain was a man who had been actively employed in the iron business for many years and very possibly had received this business from his ancestors. According to Har Narain he and his family had depended entirely upon the profits of the iron business and such rent as they could obtain from houses Nos. 838 and 838/1. It would therefore appear that the iron business was the mainstay of the family and was the only income-producing business or property belonging to them. In such circumstances we are bound to hold that a prudent man would be justified in borrowing a reasonable sum in order to keep such a business going, or in order to start a fresh business to replace an older one which he had previously conducted and disposed of at a profit. It has been urged before us that the present case is concluded by the case in The Benares Bank, Ltd. v. Hari Narain (1932) 30 ALJ 714. At p. 716 Sir Dinshaw Mulla who delivered the judgment of the Board stated:

Next it was argued that a business started by the father as manager, even if new, must be regarded as ancestral. Their Lordships do not agree. It is in direct opposition to the ruling of the Board in Sanyasi Charan Mandal v. Krishnadhan Banerji 1922 49 Cal 560. The judgment in that case proceeded on the broad ground that the manager of a joint family has no power to impose upon a minor member of the family the risk and liability of a new business started by him.... The power of the manager of a joint family governed by the Mitakshara law to alienate immoveable property belonging to the family is defined in verses 27 to 29 of Chap. 1 of the Mitakshara. The judgment of the Board in Hanooman Persaud Panday v. Mt. Babooee Munraj Koonweree (1856) 6 MIA 393, relied on by the bank, was founded apparently on those verses. A new business, their Lordships think, is not within the purview of those verses. It does not make any difference that the manager starting the new business is the father. Their Lordships find that the balance of authority in India is in accordance with this view.

10. As we have pointed out previously the iron business in question was certainly not new and was in all probability an ancestral business as stated by the defendants' witness Sadho Ram. In any event, whether ancestral or not, it was an oldish business which had been carried on by the father and which produced the income upon which the family in the main depended. Whether money can properly be borrowed for the purposes of such a business is not covered by the case to which we have previously referred. However, in a Full Bench decision of this Court, viz. Ram Nath v. Chiranji Lal 1935 ALJ 177, it was laid down that the mere fact that the money borrowed by a manager was required for the purposes of a new business would not by itself be any justification for the alienation of family property, but on the other hand if in addition thereto it could be shown that there was either a pressure or necessity to continue that business, as it was the mainstay of the family, or that the particular transaction was at the time beneficial to the family and the family estate, the transaction might well be valid and would be upheld. The question whether the transaction was for such benefit or not was a question of fact depending upon the circumstances of the case. In our view in the present case it was established that the iron foundry was the mainstay of the family and that it was necessary to borrow money for the purposes of business and also for the purposes of completing an incomplete house which would have suffered considerable damage if it was not immediately completed. In those circumstances we are satisfied that there was legal necessity for the loan in question and that being so the mortgaged property, whether ancestral or not, is bound, and so are all the members of this family.

11. In the result, therefore, we see no ground whatsoever for interfering with the finding of the learned Subordinate Judge in this case, and that being so this appeal must be dismissed with costs. In our view the costs of this appeal must be borne by Ram Prasad personally. His conduct in this case is outrageous. He is a subsequent mortgagee from Har Narain of house No. 838. By that mortgage Ram Prasad advanced a sum of Rs. 12,000 to the mortgagor. Out of this Rs. 12,000 Ram Prasad retained a sum of Rs. 9,775 in order to discharge the plaintiff's mortgage now sued upon. He never paid this sum to the plaintiff and now has taken every objection he possibly can to the enforcement of the mortgage of the plaintiff. The conduct of Ram Prasad has brought on this litigation, and in our view he should be made to pay the costs of this appeal personally.


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