1. These two appeals arise out of a decision or the Subordinate Judge, Berhampur, in Title Suit No. 23 of 1943, setting aside the alienations made by defendant No. 1 in favour of the appellants, to the extent of 12 annas interest in the properties alienated.
2. The suit was brought by one Kasinath Sahu, a member of the well known Sahu family of Berhampur which was a trading family having extensive business, and owning a sugar factory at Aska and a saw mill at Russellkonda in Ganjam district. In addition they had a shop at Berhampur. The suit was brought for partition of the joint family property. Other co-sharers were impleaded as defendants 11 to 22, 29 and 34 and their relationship with the plaintiff will be clear from a perusal of the genealogical tree filed by the plaintiff.
The plaintiff further impleaded defendants 23 to 28 and 30 to 33 who are strangers to the family, alleging that they were alienees from defendant No. 1, Damodar Sahu when he was-managing the business of the family. The alienations were challenged as not binding on the plaintiff and the other co-sharers on the ground that there was no legal necessity for the same. The properties which are the subject matter of the alienations were described in detail in schedule D attached to the plaint.
During the pendency of the Suit, all the members of the Sahu family compromised the same and the litigation was fought out only in respect of the alienations made by defendant No. 1 in favour of (i) Sri Mahant Narayan Das Babaji, (defendant No. 23) -- (after whose death his successor-in-interest Mahant Ramdas Babaji was substituted as defendant No. 33); and (ii) Srimati Rahasmoni Dei (defendant No. 24) and (iii) Srimati Rammamani Hota (defendant No. 28). Other alienee-defendants did not fight out the litigation, in the lower Court and were not represented there.
As regards the aforesaid three alienee-defendants, viz. defendants 24, 28 and 33, some evidence was led on the question of legal necessity for the alienations and other ancillary matters, and the learned Subordinate Judge held that the alienations were not for legal necessity and, as such not binding on the entire family. He however held the alienations to be binding to the extent of four annas interest in the family as much as defendants Nos. 1, 4, 9 and their sons had admitted, their binding nature and their interest in the family was only one fourth. Hence, while passing a preliminary decree for partition of the entire property on the basis of the compromise amongst the members of the Sahu family, he directed that the alienated properties should also be partitioned in accordance with the shares mentioned above.
3. The three unsuccessful alienees, filed appeals before this Court against the aforesaid judgment of the learned subordinate Judge. F. A. No. 32 of 1951 was filed by defendant No. 28, Srimati Rammamani Hota, F. A. No. 56 of 1951was filed by Srimati Rahasmoni Dei (defendant No. 34): and A.F. No. 64 of 1951 was filed by Mahant Sri Ramdas Babaji alias Ramchandra Das (defendant No. 33). (At the appellate stage defendant No. 24 and the contesting respondents entered into a compromise and F.A. No. 56 of 1951 was therefore disposed of in terms of that compromise by a separate order.) F.As. Nos. 32 and 64 of 1951 alone remained to be disposed of on merits and they will be dealt with, one after the other, in this judgment.
First Appeal No. 32 of 1951.
4. It is admitted by all the parties that defendant No. 1 Damodar Sahu was managing the trading business of the family including the sugar factory at Aska. Doubtless he was not the senior most member of the family, but for some reason or other all the other members of the family allowed him to manage and on various occasions they executed powers of attorney in his favour (vide Texts. 1/a, 1/5, 1 and B). The power of attorney with which we are concerned in this appeal is Ext. B dated the 15th February, 1939, the material portion of which are as follows :
'We authorise you to raise loans in any shape, to encumber, sell or otherwise alienate any of our properties either moveable or immovable, execute the documents on our behalf for the following among other purposes, that you, as the head of our joint Hindu family has to meet and act:
(i) To liquidate old and subsisting debts or liabilities incurred by you or your father on account of our joint family trade and business.
(ii) To undertake or carry on new concerns and enter into or conduct commercial and industrial enterprises within India or abroad.
(iii) To renew old debtor obligations.
(iv) For the furtherance of any other purpose that you consider in your discretion necessary, in the best interest of our family concerns. In addition to the payments that you have been making for our family expenses, occasions may arise to incur further expenditure for our individual domestic affairs of family members 1 to 5 herein. You will then be in proper cases advancing us loans in your discretion within your means to meet their wants.
You will be explaining to us annually or at such period you think proper, accounts of our family business and domestic affairs.
In the management generally of any family affairs you are empowered without any restraint, to use your full discretion in all transactions which we ratify and confirm and deem as effectually as we ourselves would have done.'
It is admitted that Damodar Sahu (defendant No. 1) borrowed the following sums from the appellant on the dates given below :
i.Handnote, ext. N/3 dated 14th April, 1941...Rs.6500.0.0ii.Handnote, ext. N/2 dated 17th April, 1941...'2100.0.0iii.Handnote, ext N/l dated 23rd April 1941...'3400.0.0iv.Handnote, Ext. N. dated 7th May, 1941...'5000.0.0.
Subsequently, on the 11th May 1941 the said Damodar Sahu sold the disputed property for Rs. 18,000/- for discharging the sums due on the aforesaid four handnotes plus cash of Rs. 929-4-0. Though in the handnotes it was stated that the loans were taken for the purpose of the Aska Sugar Factory, but in the aforesaid sale deed (Ext. N/4) it was further mentioned that the consideration for the same was not only for the purpose of carrying on the business but also for meeting family necessities.
But the husband of the appellant, namely Sitaram Hota (witness No. 2 for defendant No. 28) gave evidence to the effect that the money taken from him was spent for the Aska Sugar Factory, He claimed to have personal knowledge of the same, as he had accompanied the persons who carried the money to the Aska Sugar Factory from Berhampur. There is practically no rebutting evidence on the other side. None of the members of the Sahu family has cared to appear in the witness box to give any other version as to how the loan taken from this appellant was, spent.
The lower Court has made much of the so-called discrepancies between the recital in the aforesaid handnotes and the recitals in the sale deed (Ext. N/4). In fact there are no material discrepancies between the two. The entire loan amount, except for a small sum of Rs. 929-4-0 was spent for the purpose of the Sugar Factory. The small sum of Rs. 929-4-0 was spent for family-expenses at the time of the execution of the sale deed. This sum represents such a small proportion of the total consideration that it must beheld that the alienation was for the purpose of running the joint family sugar Factory at Aska.
5. In view of this conclusion the main question for consideration is whether the alienation is binding on all the members of the Sahu Family. The learned lower Court has discussed it in two aspects. Firstly, whether this alienation was within the power conferred on Damodar Sahu by the power of attorney (Ext. B) and secondly whether it can, in any case, be justified as an alienation for legal necessity by the manager of a joint Hindu family.
The latter aspect will be considered when F.A. No. 64 of 1951 is taken up later. But in the present appeal I think on a fair consideration of the power of attorney it must be held that Damodar Sahu had full powers to make the said alienation for the purpose mentioned above. The learned Lower Court appears to have looked into clause (i) only, of the power of attorney and held that as the handnotes were all recent handnotes executed in 1941 and not old and subsisting debts Damodar had no authority to make this alienation.
He completely over-looked clause (iv) which clearly authorised him to sell any of the properties of the family for the furtherance of any other purpose that you may consider in your discretion necessary in the best interest of the family concern'. This clause gives the power of attorney holder full powers to sell the properties of the family if in his discretion he thinks it necessary to effect such a sale in the best interests of the joint family concern.
The sugar factory was an important business of the family and on the unrebutted testimonyof Sitaram Hota, husband of defendant No. 28, it must be held that when Damodar Sahu incurred the loans under the handnotes there was a pressing demand for money for running the said business. This witness had seen the power of attorney, had also made bona fide enquiries from Damodar Sahu and was satisfied that the money was required for the sugar factory business and that Damodar Sahu had the necessary authority not only to incur the loans bat also to make the alienations.
The lower Court has also come to the finding that the money taken from the defendant No. 28 by the appellant must have been spent for the purposes of the sugar factory, but he thought that there was actually no pressure on the estate and no benefit to be conferred by making such an alienation. This question is really academic so far as this alienation is concerned in view of the wide authority given to Damodar Sahu in clause (iv) of the power of attorney (Ext. B). In the last paragraph of the power of attorney, the other co-sharers further empowered him, without any restraint to use his full discretion in all transactions dealing with the management generally of the family affairs.
6. Mr. R. Mohanty appearing for some of the contesting members of the Sahu family urged that a power o attorney should be strictly construed, that Clause (iv) of Ext. B should be read ejusdem generis with the first three clauses and that when so construed it will not confer such wide powers' on the manager of the trading family as to make an alienation of this type. It is true that a power of attorney should be strictly construed as pointed out in Anandravan v. Raman, AIR 1917 Mad 95 but ejusdem generis construction may not be applicable if it will be repugnant to the subject or context.
In the power of attorney though the purposes for which the manager may sell joint family property were specified in Clauses (i) (ii), (iii) and (iv) it was also stated as follows :
'among other purposes that you, as the head of our joint Hindu family has to meet and act.'
This shows that the specific purposes mentioned in Clauses (i) to (iv) were not exhaustive and that the manager's powers as the head of the joint family were expressly recognised by the use of the words 'among other purposes'. Again Clause (iv) is very wide in its terms and confers full discretion on the manager to make alienations of the property 'for any other purpose'' the only restriction being that such alienations must be' in the best interests of our family concern', that is to say, he cannot make any alienation for his own private interest. Moreover, in the last paragraph of the power of attorney the general powers were reiterated by saying;
''In the management generally of any family affairs, you are empowered without any restraint to use your full discretion in all transactions.'
In view of the aforesaid words used in the power of attorney the principle of ejusdem generis construction would not apply to Clause (iv) and the words must be given their natural dictionary meaning; I Would, therefore, hold that the impugned alienation came within the scope of the power conferred by Clause (iv) of the power of attorney and it is not open to the other members of the Sahu family to challenge the same.
7-8. First Appeal No. 64 of 1951. The impugned sale deed is Ext. R dated the 1st February 1938 executed by Damodar Sahu (defendant No. 1) in favour of defendant No. 23 (now represented by the appellant in this appeal, namely Mahant Ramdas Babaji alias Ram Chandra Das). The executant has signed both on his own behalf and on behalf of the entire Sahu family, alleging that he had general power of attorney from them.
On the 6th February, 1935, defendant No. (1) had taken a loan of Rs. 19,000 on Ext. p promissory note from defendant No. 23. It is mentioned in that promissory note that the loan was incurred for the trading and family necessities. On the 1st September 1934, Lokanath Sahu, grand-father of the plaintiff had executed a lease in favour of the defendant No. 23 (Ext. Q) agreeing to pay annually Rs. 2242-0-9 as rent in respect of certain lands in village Sapuapalli.
The total rent due under that lease deed came to RSection 6726.2.3. The sale deed Ext. Q was executed by defendant No. 1 in favour of defendant No. 23 in discharge of the dues on the promissory note as well as the arrears of rent due in respect of the said lease.
9. Apart from the recitals in the aforesaid documents there is the evidence of defendant No. 33 (D. W. 3) and of a servant of defendant No. 1 (D. W. 2), to prove legal necessity. D. W. 2 who is a gumastha of the Sahu family stated that the accounts books maintained by the family shows receipt of Rs. 19,000/- under the promissory note (Ext. P), for the purpose of discharging the previous dues and also for the purpose of meeting family necessities. D. W. 3 also claims to be an eye-witness to the payment of Rs. 19,000/-, by his Guru (original defendant No. 23) to defendant No. 1 on the 6th of February 1935.
He stated that the loan was incurred for the business of the Sahu family and also for domestic expenses and for discharging other public debts. He further claimed to have personal knowledge of the discharge of three loans for Rs. 4000/-, Rs. 4000/-and Rs. 6000/- respectively due from the Sahus to one Senayya and some members of the Pakinati family. He also stated that Rs. 3000/- out of the said loan was paid by defendant No. (1) to the Manager of the Aska Sugar Factory.
The lower court thought that the evidence of these witnesses should not be accepted as they were highly interested but it should be remembered that transactions of this type can be proved only by interested witnesses and because one cannot expect disinterested persons to be present when such loans were utilised for payment of the previous debts or for the joint family business. Moreover, there is absolutely no rebutting evidence on the other side. No member of the Sahu family cared to appear in the witness box and say that the money was not utilised for the family business of the Sahus. Under these circumstances the evidence of these two witnesses D. W. 2 and D. W. 3 should have been accepted.
10. Mr. R. Mohanty raised two contentions to show that this sale deed was not binding on other members of the family. Firstly, he urged that as defendant No. (1) executed a sale deed expressly stating that he did so as the holder of the power of attorney executed by the other members of the Sahu family his authority to bind them to this transaction must be considered with reference to the terms of the power of attorney and not with reference to the general powers of the manager of a joint Hindu trading family.
Secondly, he urged that even if it be held that defendant No. (1) executed a sale deed as the manager of the joint Hindu family the transaction was not one which a prudent man would have entered into and that there were other methods of discharging the previous liabilities of the Joint Hindy family.
11. In my opinion, neither of these arguments is tenable. Though defendant No. (1) expressly stated in the impugned sale deed that he signed on behalf of the other members of the Sahu family as the holder of the power of attorney, nevertheless the power of attorney shows that his position as the manager of the Hindu Joint family was clearly recognised by the other co-sharers. The main power of attorney is Ext-1-b, executed by the leading members of the other branches of the Sahu family in favour of the defendant No. 1, sometime in October 1933. Subsequently, Dasarathi Sahu father of the plaintiff executed another power of attorney (Ext. 1) dated 31st May 1937. In the earlier document Ext. 1/b dated October 1933 the main recital is as follows:
'For facility of administration of our joint estates and properties, we do hereby appoint Damodar son of late Parmananda Sahu, of ....... one ofthe coparceners of the above joint Hindu family to be our attorney in our name and on our behalf and to discharge the functions of the managing proprietor, to manage and cultivate or let upon lease for such period and upon such terms as he should think fit.'
In the latter portion specific powers were also given but nowhere was it stated that the powers of a manager of a Hindu family under the general Hindu law were abrogated and that the only powers conferred on him were those expressly mentioned in that document. On the other hand, the executants while admitting that they were members of the joint family, recognised Damodar Sahu (defendant No. 1) as the managing member of that family.
The necessity for such recognition by the other co-parceners arose because, admittedly, Damodar was not the eldest member of the family and unless all the co-parceners agreed he could not become the managing member. Similarly, Ext. 1 also authorises Damodar Sahu (defendant No. 1)) to 'discharge the functions of the managing proprietor of our manufactures and managing member of our joint family business'.
In the absence of express words in the two powers of attorney taking away the rights of the manager of the joint Hindu Trading family under the general Hindu Law, it must be held that these two documents by way of abundant caution specified the powers which may be exercised under the powers of attorney, but they did not take away the powers of the manager under the general Hindu Law. Hence, though these two documents did not expressly confer on Damodar Sahu the power to sell joint family property for legal necessity, nevertheless, the general power of the manager under the Hindu Law to make alienation was not abrogated.
12. The trial court has rightly pointed out that the managing member of a trading family has wider powers to incur debts on promissory notes than the manager of a non-trading family, as credit is the essence of business. He has further held that the debts incurred on the promissory note (Ext. P) would be binding on the entire joint family because the creditor had made bona fide enquiries about legal necessity while advancing the loan.
But he made a subtle distinction between legal necessity for incurring the loan for the purpose of the joint family business on the one hand and legal necessity for the purpose of making a sale of the joint family property towards discharge of previous dues on the other. He thought that instead of selling the properties outright defendant No. 1 might have, by making partial payments towards the loan (Ext. P) kept it alive for some more years. He also thought that there was not such a pressure on the estate as to justify the sale of the properties. One of the items of the properties sold is a house site in Puri Town which is now said to be somewhat valuable.
13. In this connection, certain facts must be recapitulated. It is admitted that for carrying on the joint family business debts to the extent of two lakhs of rupees had been incurred by Damodar Sahu (defdt. No. 1) on the basis of handnote. Defendant No. 33 had demanded from Damodar Sahu the payment of the debt due on Ext. P. Damodar replied that he had no cash in hand but that he was willing to sell some landed property belonging to the family. Thereupon defendant No. 33 made enquiries from some co-sharers of the Sahu family namely, Iswar, Shyam, Janhavi and Dasarthi who merely told him that as Dasarathi was the managing member of the family he would do what was considered proper on this occasion.
Then Ext. R was executed. At first defendant No. 33 wanted the other members of the family to join in the execution of the sale deed. Damodar had first agreed to persuade them to join him in the execution and when they did not turn up, he executed the sale deed on behalf of all of them,
14. The law regarding the power of the manager of a Hindu family, to make binding alienations has been settled in innumerable decisions commencing from the well known Hanuman Prasad Pande's case, Hunooman Pershad Pandey v. Mt. Babooee Mundraj Koonweree reported in 6 Moo Ind App 393 (PC). The manager cannot bind an estate without any compelling cause such as pressure on the estate and a danger to be averted.
Their Lordships of the Privy Council, further pointed out that the lender was bound to make enquiries into the necessity for the loan, as well as he can, with reference to the parties with whom he is dealing, whether the manager is acting in the particular instance for the benefit of the estate. On the question as to whether the alienation was for the benefit of the estate the lower court is undoubtedly right in pointing out that it is necessary for the Court to determine whether there was necessity for making the, alienation and whether there were any other funds in the family still to achieve the object aimed at without borrowing and without alienations.
In Ramcharan Lonia v. Bhagwan Das, 53 Ind App 142: (AIR 1926 PC 68) a contract entered into by a kartha of a Hindu joint family was scrutinised and it was held to be improvident and as such beyond the power of the Kartha, In Dharamraj Singh v. Chandra Shekhar Rao, AIR 1942 Nag 66 it was further emphasised that the alienation made by a non-father manager of a Hindu family must be not only to satisfy antecedent debts but that owing to the circumstances in which the family was placed there was no other reasonable course open to him. To a similar effect are the following observations of Rajasthan High Court in Bithal Das v. Chandra Tan, AIR 1955 Raj 39 (44) that legal necessity in cases of this type should be
'of a type which entailed a certain degree of pressure on the estate, some danger to be averted or some benefit to be conferred, or some other circumstances which would show that the alienation was eminently desirable or urgently called for to save a situation existing on the date of the transfer.'
Hence this Court has to see whether the alienation was improvident on the proved facts and circumstances. But a note of caution also should be sounded. As pointed out by the Privy Council in Niamat Rai v. Din Dayal, AIR 1927 PC 121 (123) when there are two or more alternative methods of satisfying an antecedent debt, it must be primarily left to the manager to choose one of them. In that case a sale deed by the manager was impugned on the ground that he could have raised money by a mortgage instead of by sale. Their Lordships rejected this argument in the following terms:
'As regards the latter question, it is not clear that borrowing, probably at a higher rate of interest, would have been more beneficial than sale. In any case this was a question for the manager to decide. It was equally a question for the manager whether it would be better to raise more money or to close down the business, and it would in their Lordships' opinion, be unreasonable to require a lender or purchaser to go into a question of this kind as to which he would really be not in a position to form a sound opinion'.
In my opinion, the impugned alienation clearly comes within the principle laid down above. Considering the large extent of the debts of the family and the absence of ready cash when this creditor pressed upon the manager (defendant No. 1) to repay the loan, it was entirely within the discretion of the manager to sell some properties outright with a view to discharge this loan and thus save the family from paying heavy interest on this loan.
The learned lower court thought that the manager could have kept the loan alive by making a nominal payment and extending the period of limitation and thus avoided an outright sale. But he over-looked the fact that unless the creditor was willing to accommodate the manager to that extent such token payment was not possible. No such question was put to the creditor Sita Ram Nota in cross-examination, with a view to ascertain whether he was willing to wait and accept token payment with a view to save limitation.
Doubtless if the property had been sold for an inadequate price there may be some justification for holding that the alienation was invalid but the finding of the lower court is that the property was sold for an adequate price. It is well known that in. 1938 the price of land values was rather low and at that time Damodar could not have anticipated the coming of World War II and the abnormal increase in the price of house sites.
In view of the adequacy of the price and also in view of the fact that a demand was made on to defendant No. 1 by his creditor at a time when he had no cash in hand, I think his discretion to pay off the dues by selling the joint family property was properly exercised. The creditor knew the family very well, had made careful enquiries from the other co-sharers and they had assured him that the matter was left entirely with the manager namely Damodar Sahu (defendant No. 1). The alienations must therefore be held to be binding on all the members of the family.
15. I should also point out that a substantial number of members of the Sahu family had admitted that this transaction was for family necessity and as such binding on the entire family. Damodar Sahu (defendant No. 1) and his two sons (defendants Nos. 2 and 3) are obviously bound by the transaction, Similarly, his brother Gopinath (defendant No. 4) and his sons (defendants 6, 7, and 8) are equally bound inasmuch as defendant No. 5 in his written statement admitted the legal necessity for these alienations and defendant No. 4 adopted the written statement of defendant No. 5.
Defendants Nos. 6, 7 and 8 are the sons of defendant No. 4. Similarly defendants Nos. 16, 17 and 18 adopted the written statements of defendant No. 1 thereby admitting that the alienations were for legal necessity. Defendants Nos. 11, 15, 16, 17, 18 and 34 also had in a previous compromise petition, (Ext. G. 1) dated the 11th August 1945 admitted the alienations to be binding on the family. It is true that this compromise was superseded and there was a subsequent compromise by all the Sahus on the 16th April, 1951 and 19th April, 1951 which was given effect to.
Mr. R. Mohanty therefore urged that the admissions in the earlier compromise should be taken as having been superseded by the later compromise. This argument does not appear to be correct. Though the terms of Ext. G-l were supported by the later compromise, nevertheless so far as the facts admitted in G-l are concerned, there has been no repudiation of the same by any of the parties in the later compromise. At any rate, none of them has appeared in the witness box to deny the correctness of the statement made in it.
Hence it must be held that the co-sharers of Sahu family having an interest of 12 annas in the family properties, have admitted the alienations to be for legal necessity. Notwithstanding this clear admission I thought it necessary to discuss the evidence on record bearing on this question.
16. I would therefore allow these two appeals with costs throughout, set aside the judgment of the lower Court and hold that the alienations of the properties covered by Exts. N/4 and P made by Damodar Sahu (defendant No. 1) in favour of defendant No. 28 and defendant No. 33 (originally defendant No. 23) respectively, were for legal necessity, and as such binding on the entire Sahu family.
These properties should be excluded from the properties available for partition amongst the members of the joint family and should be allotted exclusively to the alienees in the final decree. As the alienations were challenged by defendant Nos. 11 to 22, 29 and 34 who appeared through Mr. R. Mohanty and P. C. Chatterji, they alone should pay the costs both in the lower court and in this Court, to the appellant,
17. I agree.