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Laxmi Narasingha Swami Mahapravu and anr. Vs. Patta Sahuani and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtOrissa High Court
Decided On
Case NumberSecond Appeal No. 2 of 1952
Judge
Reported inAIR1957Ori86
ActsCode of Civil Procedure (CPC) , 1908 - Sections 100 and 101; Hindu Law; Contract Act, 1872 - Sections 230, 235 and 237
AppellantLaxmi Narasingha Swami Mahapravu and anr.
RespondentPatta Sahuani and ors.
Appellant AdvocateB.K. Pal and ;A.K. Tripathy, Advs.
Respondent AdvocateB.S. Rath, Adv.
DispositionAppeal allowed
Cases ReferredNiladri Sahu v. Chaturbhuj Das
Excerpt:
.....clearly show that these alleged prior debts were only of a month's duration by the time the suit-debt was contracted and many of the lenders were persons holding mustajari leases of jogiapalli village belonging to the muth. taking all these things into consideration, the learned munsif came to the conclusion that the plaintiff signally failed to prove that the loan was supported by any legal necessity. in the well-known case of hunuman persaud panday v. babooee munraj koon-weree, 6 moo ind app 393 (pc) (a), it was held by the judicial committee of the privy council that a lender is bound to enquire into the necessities of 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..........in the first instance as curator and afterwards as receiver in the title suit and that as the suit debt was binding on the muth, a decree be passed against the assets of the said haradakhandi muth.alternatively the plaintiff prayed that in case the debt is held not to be binding on the muth, a decree might be passed against defendant 5 to pay personally the amount due together with costs. it may be noted that in the plaint there is absolutely no allegation as to why the fifth defendant can be made personally liable.it may also be noted that it is significant that though the allegation is made in the plaint that the promissory note was executed by the fifth defendant as agent and general power-of-attorney-holder of the then mahant sri ramanarayan das goswami, there is no prayer in.....
Judgment:

P.V.B. Rao, J.

1. The appellant is the Collector of Ganjam who was appointed Receiver in Title Suit No. 44 of 1948 which was a suit for succession to the Mahantship of Haradakhandi Muth. He filed the appeal as representing the Haradakhandi Muth. The first respondent who is the plaintiff is the widow of one Binayak Sahu in whose favour the 2nd respondent who is the plaintiff is the widow of one Bina Baikoli Panigrahi, defendant 5 in the case, as agent and power-of-attorney holder of the previous Mahant of Haradakhandi Muth, Sri Ramanarayan Das Goswami executed a promissory note for Rs. 1600/- as agent of the Mahant of the Muth.

The third respondent Sri Maithili Priya Das Goswami who is defendant 2 in the case is the successful claimant in Title Suit No. 44 of 1948 to succeed Mahant Ramanarayan Das Goswami and the fourth respondent was added as defendant 3 as he was one of the curators appointed by the District Judge with regard to the Haradakhandi Muth.

2. The plaintiff filed a suit on the said promissory note alleging in her plaint that the amount so borrowed by the manager and power-of-attorney holder of the late Mahant of the Muth was spent for the benefit and necessary purpose of the institution under instructions of the late Mahant, that the Mahant Ramanarayan Das died on 9-9-47 leaving as his Gurubhai and successor Mahant Sri Maithili Priya Das Goswami, defendant 2, that subsequently the Collector of Ganjam was appointed in the first instance as curator and afterwards as Receiver in the Title Suit and that as the suit debt was binding on the Muth, a decree be passed against the assets of the said Haradakhandi Muth.

Alternatively the plaintiff prayed that In case the debt is held not to be binding on the Muth, a decree might be passed against defendant 5 to pay personally the amount due together with costs. It may be noted that in the plaint there is absolutely no allegation as to why the fifth defendant can be made personally liable.

It may also be noted that it is significant that though the allegation is made in the plaint that the promissory note was executed by the fifth defendant as agent and general power-of-attorney-holder of the then Mahant Sri Ramanarayan Das Goswami, there is no prayer in the alternative that in case the amount borrowed is held not to be binding on the Muth property, a decree might be passed against the personal assets of the late Mahant in the hands of his successor.

3. The Collector of Ganjam filed written statement alleging that the fifth defendant was not authorised under any power-of-attorney to contract debts as he pleased, that he had no authority to contract the suit-debt. He denies the truth, validity and passing of consideration under the suit promissory note. He also alleged that there Was no necessity for the Mahant or the fifth defendant as his agent to borrow the suit-loan as there was large balance in hand by the date of the suit-loan and that the loan amount was not spent for any of the purposes binding on the Muth,

The fifth defendant Balkoli Panigrahi the power-of-attorney-holder admitted the borrowing of Rs. 1600/- from the plaintiff's late husband in his capacity as Manager and power-of-attorney-holder of the late Mahant of Haradakhandi Muth and that the amount was spent for the benefit and necessary purposes of the institution, and that no personal decree against him should be passed.

4. The learned Munsif held that the agent had exceeded his authority in incurring the suit-debt, that there was no legal necessity for contracting the loan so as to bind the Muth property, that the loans alleged to have been discharged by the amount borrowed under the suit promissory note were not pressing debts even if they were due and that there was a large cash balance in hand on the date on which the loan was contracted, but passed a decree making the fifth defendant personally liable for the suit promissory note.

5. On appeal by the fifth defendant, the learned Subordinate Judge held that the debt was binding on the Muth, and that the fifth defendant could not be made personally liable for the suit-debt. He passed a decree that the suit amount should be realised from the assets of the Muth.

6. Against this reversing judgment of the Subordinate Judge, the present appeal is filed by the Collector of Ganjam representing the Muth.

7. The learned counsel for the appellant Mr. B. K. Pal, contends that the learned Subordinate Judge erred in holding that there was legal necessity for the suit-loan, and that his finding to that effect is not a legal finding arrived at after discussion of the entire evidence in the case, and that he failed to give any cogent reasons to set aside the findings of the trial Court that the debt was not for legal necessity. He also contended that the fifth defendant exceeded the power given under the power-of-attorney executed by the late Mahant Rama Narayan Das Goswami and as such it was not binding on the Muth. He further contended that the learned Munsif rightly held that the fifth defendant was liable personally.

8. The power-of-attomey, Ex. A was executed on 18-6-42 by the late Mahant in favour of the fifth defendant appointing him as his agent on behalf of the Muth as well as on behalf of all the connected subsidiary Muths of which the deceased Rama Narayan Das Goswami was the Mahant. He authorised him to manga the affairs of all these institutions and Clause 13 of the said power-of-attorney is the relevant clause with regard to the authority to borrow moneys. It is to this effect:

'The agent can contract debts for purposes referred to in the previous paragraph in the case if there is any deficit after the collections of the Muths have been spent in full, and in case there will be surplus, the agent can discharge the debts.'

The suit promissory note is dated 22-4-45. The fifth defendant admitted in his evidence that the income of the Muth is about one lakh of rupees. The fifth defendant also admitted that the branch Muths contribute for the upkeep of the superior Muth of Haradakhandi.

The account-book of Sindurpur Muth which is a branch Muth has been exhibited. Exhibit B series are the entries in the account book of Haradakhandi Muth dated 22-4-45, and Exts. B-1 to B-9 are also entries in the said account-book. Exhibit C is the account-book of Sindurpur Muth. Exhibit C clearly shows that on 22-4-45 there was a cash balance of Rs. 3191-14-11 and the other entries in the said book show that certain amounts were from time to time remitted to the Haradakhandi Muth for its expenses. On the strength of these entries and the fact that the Sindurpur Muth was a subsidiary Muth and on the strength of the clause in the power-of-attorney that the agent could borrow only if there was a deficit after the collections of the Muths have been spent, the learned Munsif came to the conclusion that the fifth defendant cannot have any authority to contact the loan without first applying the cash in hand for purposes for which the loan is incurred.

There is no evidence on the plaintiff's side in the case by any of the witnesses as to the existence of legal necessity or that the promisee made any enquiry about the existence of legal necessity P. W. 1 is the brother of the late husband of the plaintiff and P. W. 2 who stated that he was present at the time of the suit promissory note, deposed that they did not know the purpose for which the loan was incurred. Defendant 5, however, stated that the loan was incurred for the discharge of certain hand-loans due to several creditors who threatened to sue the Muth on the date of the loan and that he was obliged to incur the suit-debt to discharge those debts. With regard to this, he relies on the entries. Exs. B-l to B-9 which are to the effect that certain debts of certain persons were repaid. The entries, by themselves, do not connect the amounts paid with the amount of Rs. 1600/- borrowed.

These entries clearly show that these alleged prior debts were only of a month's duration by the time the suit-debt was contracted and many of the lenders were persons holding Mustajari leases of Jogiapalli village belonging to the Muth. These entries were made in the account-book at a time when the fifth defendant was the Manager of the Muth. Taking all these things into consideration, the learned Munsif came to the conclusion that the plaintiff signally failed to prove that the loan was supported by any legal necessity.

9. Mr. B. S. Rath, the learned counsel for the respondent-plaintiff, vehemently contended that the finding of the appellate Court that the suit-loan is for legal necessity is binding on us. As far as the question of legal necessity is concerned, the learned Subordinate Judge did not take into consideration the evidence on the point, did not discuss the various aspects arising from that evidence and did not give cogent reasons as to why the finding of the trial Court which had the advantage of seeing the witnesses should be set aside. The only observation which he made in the judgment is in para. 19 of his judgment wherein he says:

'It is argued on behalf of the Receiver that there is absolutely no evidence of any necessity for incurring the suit-loan, but in the absence of convincing evidence to show that the entries in the account-book as to the existence and repayment of prior loans are all bogus, I do not think It may reasonably be urged that the suit-loan was not for necessity.'

Such a finding of the 1st appellate Court cannot be said to be a finding which is binding on us. As already stated the learned Munsif took the entire evidence into consideration and came to the conclusion that there is no proof of legal necessity. In the observations of the learned Subordinate Judge he also committed an error of law in holding that it is for the defendants to prove that the entries in the account-books were bogus. The entries were made by the fifth defendant who borrowed the money on 22-4-45 and subsequently was responsible to get these entries made in the account-books. None of the lenders was examined in the case and the learned Subordinate Judge was wrong in thinking that the entries in the account-books are corroborated by the evidence of the fifth defendant or vice-versa.

Such a finding cannot be accepted as a legal finding by us. In the well-known case of Hunuman Persaud Panday v. Mt. Babooee Munraj Koon-weree, 6 Moo Ind App 393 (PC) (A), it was held by the Judicial Committee of the Privy Council that a lender is bound to enquire into the necessities of 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. In this case, as already stated, there is absolutely no evidence that the lender made any enquiry as to the existence of any necessity for the loan. Therefore, I accept the finding of the learned Munsif in preference to that of the learned Subordinate Judge that the plaintiff failed to prove the existence of any legal necessity for contracting the suit-debt.

10. Mr. B. S. Rath, learned counsel for the respondent, also strongly contended that it is enough if it is shown that the amount borrowed was spent for some purposes connected with the Muth and that it is not necessary for the plaintiff to prove the existence of legal necessity so as to justify the borrowing. He contends that there is a difference between an alienation made by the head of a Muth and his contracting a loan. If an alienation is sought to be upheld, then alone it is necessary to prove the existence of legal necessity and pressure on the estate; but if it is a case of a debt, it is enough to show that the amount so borrowed was spent for some purposes of the Muth.

In support of his contention, he relied upon two decisions of the Judicial Committee of the Privy Council reported in Vibhudapriva Thirtha Swamiar v. Lashmindra Thirtha Swamiar 54 Ind App 228: (AIR 1927 PC 131) (B). In this case it was held by their Lordships that:

'Where the deceased head of a Muth has borrowed money for the purpose of discharging duties , for which he is responsible as head and the money has been legitimately applied to that purpose. It can be recovered from the head of that Muth and that the decree should provide as on default in payment by the successor, a Receiver be appointed for the income of the Muth so that his beneficial interest therein after payment of maintenance allowance to be fixed by the Court should be applied to discharge the decree.'

In the case of Niladri Sahu v. Chaturbhuj Das, ILR 6 Pat 139: (AIR 1926 PC 112) (C), it was held by the Judicial Committee that:

'To determine whether mortgage by Shebait of the Muth's property is binding on the Muth, it is the immediate and not the remote cause, the causa causans of the borrowing which has to be considered, and that where immediate cause of the borrowing was the Muth's need of money to carry on and pay for its services and the remote cause of the Muth's need was due to the profligate expenditure of the Shebait, a decree should be pronounced declaring that the debt should be paid by the Shebait personally or else be realised from the profits of the Debottar property of the Muth.'

In this case, though the debt sued upon was a mortgage debt, their Lordships directed passing only of a personal decree against the defendant, the Mahant, for payment of the debt failing which a Receiver should be appointed to realise the rents and profits of the Debottar estate and the Sheobait's share after payment of some allowances allocated for the payment of the plaintiff's debt.

In the other case, 54 Ind App 228: (AIR 1927 PC 131) (B), their Lordships held that: 'The money was borrowed for legitimate purposes in discharge of the duties under which the Mahant lay in the performance of the worship and the feeding of pilgrims' and following the principle laid down in Niladri Sahu's case, their Lordships directed that the debt be paid out of the income of the properties of the Muth. But in the present case, the money borrowed from the plaintiff's husband is alleged to have been spent for discharging certain debts contracted a month prior to the said borrowing. Even on the assumption that the money borrowed was so spent, there is no proof that those debts were contracted for any legitimate purpose on behalf of the Mahant of the Muth.

11. These two decisions, in my opinion, proceeded on the basis that the expenses incurred by the Mahants in those two cases were for legal necessity or for the benefit of the Muth. In the first case there is a clear finding that the debt was contracted for legal necessity inasmuch as it was contracted to discharge a debt bearing a higher rate of interest. In the second case, Ameer Ali, J. observed in the judgment thus:

'These Mutadhipatis have a difficult task to perform. Unaided by any established rule, they are expected to exercise control over the number of pilgrims who come to the temple in order to participate in the festivals and share in the food offerings. Even if it were permissible for the superior to exclude a certain number from being fed, their Lordships doubt whether the popular sentiment would sanction his so doing. Obligations under which they labour are regulated by custom which are long standing and have been observed for centuries.'

In an institution like a Muth observance of the religious ceremonies according to custom are no less necessary than preservation of property, and consequently, they come under legal necessity, though a distinction was pointed out in the Judgment of the Judicial Committee between alienation of Debottar property and debts contracted by the Mahant. Consequently, I do not think that the principle enunciated in these two cases supports the contention of the learned counsel for the plaintiff-respondent.

12. For the reasons stated above, the judgment of the learned Subordinate Judge to the effect that the assets of the Mahant are liable for the suit-debt cannot be upheld, and the suit-debt is not binding on the assets of the Muth.

13. Mr. R. N. Sinha, the learned counsel for the fifth defendant contends that the decree passed by the trial Court against the fifth defendant personally is not correct and that no decree can be passed personally against the fifth defendant. He submits that under Section 230 of the Indian Contract Act: 'In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them' and that no presumption of contract to the contrary can be drawn in this case as the agent disclosed thename of the principal and definitely purported to act under specific authority of the principal.

He also relies upon a decision of the Madras High Court reported in Sivagurunath v Padmavathi, AIR 1941 Mad 417 (FB) (D). This is a decision of the Full Bench of the Madras High Court consisting of five Judges. It was held in that case that :

'A Court-cannot look into the surrounding circumstances when deciding whether the maker of a promissory note has executed it as the agent or the representative of another, and it is the instrument alone which has to be looked at and that it is the duty of the Court to read the instrument and Judge its effect from the words used.' Patanjali Sastri J. (as he then was) in course of his judgment observed: 'The appending of the words 'agent under power-of-attorney, etc.' to the name of the executant is a well-known from commonly employed ia Tamil documents to indicate execution in a representative capacity and exclusion of personal responsibility. The words are almost invariably recorded as limiting and qualifying the liability and not merely as describing or identifying the executant. It is indeed difficult to see what descriptive or decorative significance can be ascribed to such words when they are added to a name already adequately described as in the present case.'

In the suit promissory note only did the fifth defendant sign as agent and power-of-attorney-holder of the Mahant but also in the body of the promissory note he expressly described himself as the agent and power-of-attorney-holder of Mahant Ramanarayan Das Goswami and that the debt was constructed on behalf of the Mahant for expenses of the Muth. Mr. B. S. Rath, for the plaintiff, then contends that the fifth defendant would be liable under Section 235 of the Contract Act. Section 235 of the Contract Act is as follows:

'A person untruly representing himself to be the authorised agent of another and thereby inducing a third person to deal with him as such agent, is liable if his alleged employer does not ratify his acts to make compensation to the other in respect of any loss or damage which he has incurred by so doing.'

He contends that this section refers not only to cases where a person representing to have authority whatsoever; but applies to cases where such persons have a different authority than what they represent to have, or where misrepresentation is only to the extent of authority. But there is absolutely no evidence in this case on the side of the plaintiff that the fifth defendant made any untrue representation as to the extent of his authority and that what he represented was that there was no cash balance in the Muth, and therefore, he was entitled to borrow.

Consequently, in my opinion, S 235 of the Contract Act does not in any way help the fifth defendant (plaintiff?). Mr. Rath then relied upon B. 237 of the Contract Act which is to the effect that:

'When an agent has, without authority done acts on behalf of his principal, or incurred obligations to a third person on behalf of his principal, the principal is bound by such acts or obligations, if by his words or conduct induced such third person believe that such acts and obligations were within the scope of the agent's authority.'

In this case, there is absolutely no allegation or proof that the principle either by his words or conduct induced such third person that such acts or obligations were within the scope of the agent's authority. Consequently, this section also does not help the plaintiff in claiming a decree against the fifth defendant.

Lastly, learned counsel for the plaintiff contended that he is at least entitled to a decree against the personal assets of the late Ramanarayan Das Goswami in the hands of his successor as the debt was contracted by his agent. No doubt, a Mahant can have property. designated as his 'personal property' apart from the property belonging to the Muth. The learned author of the Hindu Law of Religious and Charitable Trusts, the late Mr. Bijan Kumar Mukherjea who was the Chief Justice of the Supreme Court observed in his book at p. 373:

'As I have said already, there is nothing Unusual in a Hindu Sannyasi earning money or property for his own benefit. In many cases the pro-namis which he receives from the devotees and desciples become his personal property, and examples are not rare when he carries on money lending and other businesses on his own account.'

But in the present case, there is no claim made by the plaintiff for passing such a decree in the plaint, and no allegations are made regarding that claim. On the other hand she specifically prayed that in case a decree is not passed against the Muth properties, a decree should be passed against the fifth defendant personally. Under these circumstances, this question does not arise for our consideration and a decree cannot be passed against the personal assets in the hands of the successor.

14. In my opinion, therefore, the Judgment of the learned Subordinate Judge that a decree can be passed against the assets of the Muth is wrong and ought to be set aside. The decree passed by the trial Court against the fifth defendant personally is also wrong. In the result, therefore, this appeal is allowed. The decree and judgment of the learned Subordinate Judge as well as those of the Munsif are set aside and the suit dismissed. The appellant will have the costs of this appeal from the fifth defendant. The costs of the appellant in this appeal incurred by him as respondent in the lower appellate Court will be paid to him by the fifth defendant. The appellant Is also entitled to the costs of the trial Court to be paid to him by the plaintiff.

Narasimham, C.J.

15. I agree.


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