M.R. Sharma, J.
1. The following pedigree table will be useful for understanding the facts arising out of this second appeal:--
JANGIRI LAL____________________|_____________________ | |Han Rai Brij Lal (defendant No. 2)|___________________________________________|_____________________________________________| | | | | | |Bhisham Basti Ram Ved Prakash Shivsharan Ram Gopal Mohan Lal SudhChand Dass (Def.No.3) Parkash(Def.No.2)
2. I have not indicated to the names of two daughters and wife of Brij Lal, who also joined as plaintiffs in the suit filed before the learned trial Court. It was held that they had no locus standi to bring this suit and this matter was not challenged in this appeal. The facts giving rise to the litigation may briefly be stated as follows.
3. Brij Lal now a respondent and defendant No. 2 before the learned trial Court, mortgaged a house mentioned in the body of the plaint with the appellant for a sum of Rs. 10,000/- vide registered deed dated February 21, 1947. The respondents brought the suit in the learned trial Court on the ground that his house formed part of the coparcenary property and the mortgage effected by Brij Lal, their father, being without any valid necessity, was not binding upon them. Since they were in possession of the house, they prayed that a declaration in that behalf may be granted in their favour. Brij Lal had been declared insolvent and the Insolvency Court vide its order dated February 18, 1960, directed that the house be sold subject to the charge of the appellant and the proceeds thereof be placed at the disposal of the receiver for being utilized in accordance with law. The appellant in his written statement denied that the house was a joint Hindu family property qua the plaintiff-respondents and further stated that the mortgage was for legal necessity. He also submitted that the suit was barred by limitation and the two daughters of Brij Lal, namely, Tara Wati and Shimla Devi, and Bhagwanti wife of Brij Lal, had no locus standi bring in the present suit. The learned trial Court raised two preliminary issues regarding its jurisdiction to try the suit and also whether the plaint disclosed any cause of action. These issues were decided against the respondents vide order dated February 26, 1962, passed by the learned trial Court. On merits the parties went on trial on the following on the following issues:--
(1) Whether the receiver is necessary party to the suit?
(2) What is the effect of the orders dated the 23rd November, 1955, and 18th February, 1960, passed by Insolvency Court on this case?
(3) Whether the plaint was properly valued for purposes of court-fee?
(4) Whether the suit in the present from is maintainable?
(5) Whether the suit is collusive ?
(6) Whether plaintiffs have no locus standi to sue?
(7) Whether the property in suit is joint Hindu family property)
(8) Whether the mortgage in question was for legal necessity?
(9) Whether the suit is barred by time?
4. The learned trial Court held that the official receiver was not a necessary party and the orders dated November 23, 1955, and February 18, 1960, did not have the effect and calling upon the plaintiffs to prove that the mortgage debt was immoral in nature. The plaint was held to properly valued and on the question to locus standi it was held that the respondents Nos. 1 to 5 had a right to file the suit and their two sisters and mother were incompetent to do so. The house was held to belong to the joint Hindu family and the mortgage in dispute, according to the learned trial Court, was not proved to have been made for that the suit was collusive and also barred by limitation. As a result of these findings, the learned trial Court dismissed the suit filed by the respondents.
5. In appeal, the learned lower appellate Court came to the conclusion that the suit was not collusive and on the question of limitation it held that the suit was within time. The issue regarding legal necessity was also decided against the appellant. In view of these findings, the learned lower appellate Court accepted the appeal, decreed the suit of respondents but left the parties to bear their own costs.
6. Shri Pitam Singh Jain, learned counsel for the appellant, has urged before us that the receiver was a necessary party to the suit and in view of the orders passed by the Insolvency Court dated November 23, 1955, the respondents were bound to prove that the debt incurred by Brij Lal was tainted with immorality. In support of this contention, he has relief on a Full Bench decision of this Court reported as Faqir Chand v. Sardarni Harnam Kaur, AIR 1961 Punj 138(FB) wherein it was held that the sons could challenge the mortgage and decree only on the ground that the debt was incurred for illegal or immoral purposes and not on the ground of absence of legal necessity. The learned counsel also submitted that the mortgage deed in dispute was executed Brij Lal and Sudh Parkash and Ram Gopal sons of Brij Lal, who were the only adult members of the family at the time of the execution of the mortgage deed. This fact coupled with other evidence on the record showed that the suit filed by the plaintiffs was collusive. On the question of legal necessity, it was submitted that Jangiri Lal, the grandfather of the plaintiff-respondents, had also left debts. The house in dispute along with other property of the family was mortgaged with the family of Sunder Dass P.W. 3, which was redeemed sometime in 1946. The family was carrying on extensive business. Exhibit D-1, statement of account of the firm Messrs. Jangiri Mal Brij Lal opened with the Central Bank of India Limited, Ludhiana Brach, showed that during the year 1946 the firm had made deposits to the tune of Rs. 2,44,512/- in certificate issued by the Central Bank of India Limited, Ludhiana Branch, showed that the approximate worth of this firm was estimated at Rs. 4,65,000/-. It was allowed a stock limit of Rs. 2,50,000/- and a clean demand bills limit of Rs. 10,000/-. The learned counsel submitted that this evidence, when taken along with the oral evidence on the record, showed that the respondents' family was a trading family to which even a Bank of standing allowed a clean demand bills limit of Rs. 10,000/-. Brij Lal and his two adult sons, namely, Sudh Parkash and Ram Gopal, who joined the former in the execution of the mortgage deed, did not enter the witness-box to give evidence about the circumstances under which they realised this loan as also the circumstances under which they utilized it later on. The cumulative effect of this evidence, according to the learned counsel, was that the mortgage had been proved to be one for legal necessity. On the question of limitation, it was urged that the suit was covered by the residuary Article 120 of the Indian Limitation Act and the limitation started when the debt was raised because that was the time when the interests of the coparceners were put in jeopardy.
7. I shall now proceed to consider these points in the order in which they have been mentioned.
8. It is well settled that necessary parties are those in whose absence the Court cannot pass an effective decree. Furthermore, a receiver is entitled to receive the assets of the insolvent which at the material time really belong to him. Section 28(6) of the Provincial Insolvency Act (Act V of 1920) lays down that even after an order of adjudication is passed against an insolvent a secured creditor of the insolvent a secured creditor of the insolvent is entitled to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it is Section 28 of the said Act had not been passed. A perusal of the orders passed by the Insolvency Court shows that it had ordered the sale of the property subject to the charge. The respondents in this suit are merely questioning the legality of the charge. In these circumstances. I am of the view that the receiver was no a necessary party and the suit.
9. It is not doubt true that the orders dated November 23, 1955, and February 18, 1960, passed by the Insolvency Court were final between the creditors and the estate of the insolvent fact of a decree, but in view of the latest pronouncements of their Lordships of the Supreme Court the Hindu sons in a suit for declaration to the effect that the sale made by the Karta was without legal necessity were entitled to have a decree unless the mortgagee proved to the satisfaction of the Court that the mortgage was for legal necessity. In Faqir Chand v. Sardarni Harnam Kaur, AIR 1967 SC 727, the Court expressly over-ruled the decision given in AIR 1961 Punj 138(FB) with the following observations:--
'In the present case, the Full Bench of the High Court, AIR 1961 Punj 138(FB) took the view that while the first and third propositions n Brij Narain's case, 51 Ind App 129 = AIR 1924 PC 50 were generally applicable to the managing members of the joint families, the second proposition was self-contained and was intended to lay down an exception in the case of joint families consisting of father and sons only. The view taken was that third proposition did not apply where the joint family consists of father and sons. We are unable to agree with this view. The first proposition power of the managing member of a joint family to alienate or burden the estate. The second and third propositions lay down the special rules applicable when the managing member is the father, and deals specially with his power to mortgage the estate for payment of his antecedent debt. Reading the first and third propositions together, it will appear that a father who is also the manager of the family has no power to mortgage the estate except for legal necessity or for payment of an antecedent debt.'
10. In view of this authoritative pronouncement of their Lordships of the Supreme Court, it cannot be held that the respondents were bound to prove that the mortgage debt in dispute was tainted with illegality or immorality before a decree could be passed in their favour. Consequently, I overrule the submissions made by the learned counsel in relation to issues Nos. (1) and (2).
11. The next question to be considered is whether the suit is collusive in nature. It is in the evidence of P.W. 3 Sunder Dass that the property in dispute along with other property was mortgaged by Jangiri Lal and his sons in favour of this witness and his brother. These properties were redeemed in the year 1946 after the death of Jangiri Lal which occurred on December 17,1944(para No. 6 of the plaint). P.W. 5 Girdhari Lal has stated that Brij Lal's sons are good persons and after Jangiri Lal's death Sudh Parkash, Brij Lal's son, started a coal depot. P.W. 1 Kesar Dass has stated that Sudh Parkash opened an electricity shop which is a family concern. The two plaintiffs, namely, Basti Ram and Ved Parkash, also work on this shop. It has already been noticed that the mortgage deed was executed by Brij Lal, Sudh Parkash and Ram Gopal respondents. There might be something to say about Brij Lal's habits but it is undisputed that two of his aforementioned sons were men of good character. It is really unfortunate that none of these three persons entered the witness-box to give evidence regarding the needs of the family when they realised this loan or regarding the manner in which they utilized this money. In the event of their absence from the witness-box, it would be legitimate to draw a presumption under Section 114 of the Evidence Act against them and to assume that had they entered the witness-box the appellant would have been able to prove that it was this sum of Rs. 10,000/- which the family utilized for establishing another business which continues to be the mainstay of the family. In Jagannath v. Shri Nath, AIR 1934 PC 55, their Lordships observed as under:--
'In Masit Ullah v. Damodar Prasad AIR 1926 PC 105, where the plaintiff sought to set aside as sale of joint family property by his great grandfather and his father was impleaded as a defendant and did not give evidence, though as the man who had used the largest part of the consideration money for the disbursement of ancestral debts he could have told in his evidence how the sum of Rs. 2,000/- was applied, it was held, as stated in the headnote, that the suit should be dismissed, as the plaintiff was liable for his great grandfather's ancestral debts, and the father, who was in collusion with his son, had deliberately withheld his evidence, which would have shown how the rest of the consideration was applied. The present case is even stronger. Ram Partap and Bhairon Nath, defendants 4 and 5, are the eldest members of the family and heads of their respective branches, which are entitled to nearly one-half of the joint family properties. They were Mathura's right-hand men and borrowed practically all the money which has been disallowed by the High Court, and are therefore in a better position than anyone else to say whether it was applied for the necessary purposes of the family. They have allowed their children, who are all minors but one, to figure as plaintiffs and have themselves been impleaded as defendants 4 and 5. They have not gone into the box in support of the plaintiff's case in which they are so largely interested. * * *.' In these circumstances their Lordships have no hesitation in holding that this also was a collusive of suit, and that the conduct of defendants 4 and 5 affords ample corroboration 'of the other evidence that the this sale was effected for necessary family purposes.'
12. The observations made by their Lordships apply with greater vigour to the instant case. The family of the respondents' was a trading family. Jangiri Lal had left debts which were wiped out in 1946 after his death. The running account of the family with the Bank run into lacs or rupees. When Brij Lal was declared insolvent, it is quite possible that the family might have thought of setting up a new business in the name of other adult members. Sudh Parkash and Ram Gopal have not entered the witness-box to depose about the source from which they acquired the necessary funds of setting up this new business. The entire family is being benefited by the business. In this situation, it is legitimate to infer that the family, including the respondents, after having received the benefit of this loan, has set up the minor members to challenge the same. In view of these circumstances, I have no hesitation to hold that the suit brought by the plaintiffs was a collusive one. The learned counsel for the respondents has relied on Sukhnandan Singh v. Jamiat Singh, 1971 Pun LJ 278 = (AIR 1971 SC 1158) in which it was held by their Lordships of the Supreme Court As follows:--
'Collusion in judicial proceedings is normally associated with secret arrangement between two persons that the one should initiate a suit against the other in order to obtain the decision of a judicial tribunal for some sinister purpose. In such a proceeding the claim put forward is fictitious, the contest feigned or unreal and the final adjudication a mask, designed to give false appearance of a genuine judicial determination, and this is generally done with the object of confounding third parties. In such a proceeding the contest is a mere sham. In the case of pre-emption it is open to the plaintiff to find financial aid from any source he likes. He has a statutory right to pre-empt the sale and it no concern of the vendees whether he borrows money from someone or otherwise arranges for finances for pre-empting the sale. It is true that is personal right and is not capable of being transferred. And the right of pre-emption being a right of substitution, the vendor also cannot in the garb of a benamidar pre-empt his own sale. But merely because the plaintiff-pre-emptors are helping their sons to exercise the statutory right conferred on the sons cannot, without more, deprive them of the right to be substituted for the vendees in exercise of their right of pre-emption.'
13. The above observations made by their Lordships of the Supreme Court do not help the respondents inasmuch as they relate to a suit for pre-emption and do not supply to the fact and circumstances of the present case. As has been said already here in this case, the debt was utilized for setting up a new business which is the mainstay of the family.
14. In view of this discussion, I would decide issue No. (5) in favour of the appellant.
15. It was next argued by the learned counsel for the appellant that the mortgage in question was for legal necessity. Before I advert to this issue, I would like to add that the question whether the alienation made by a Hindu father was one for valid necessity or not is a question of fact. This matter stands concluded by a Full Bench judgment of the Lahore High Court in Mt. Mauli v. Lala Brij Lal, AIR 1943 Lah 33(FB). But this does not mean that even in those cases in which the learned lower appellate Court decides the question of legal necessity by ignoring or disregarding settled principles of law the finding arrived at by it cannot be challenged in second appeal. Where the lower appellate Court fails to raise a presumption under Section 114 of the Evidence Act a second appeal will be competent on that ground alone. See in this connection-
'Sita Ram v. Nanku, AIR 1928 All 16 and Udey Singh v. Hari Ram, AIR 1930 Lah 443.'
16. This consideration apart, I am of the view that the learned lower appellate Court in coming to the impugned conclusion has also failed to take a proper notice of the authoritative pronouncement made by the Privy Council in Nagendra Nath Dey v. Suresh Chandra Dey, AIR 1932 PC 165. It has already been noticed that the respondents' family was a trading family having an account with a well-known bank. The deposits made in their account for the year 1946 were over Rs. 2,40,000/-. The Bank had granted the firm the facilities to make overdrafts. The property mortgaged by Jangiri Lal, father of Brij Lal, was redeemed in the year 1946, whereas the instant mortgage was created on February 21, 19478. Looking to the extent and the nature of the business transactions of the family, as evidenced from their bank account, it can safely be inferred that the business was being carried on an extensive scale. Bhagwan Dass appellant entered the witness-box as his own witness and stated that since the respondents had an extensive business he felt no need to investigate whether Brij Lal actually needed the money for the business or not. It is also in evidence that the two adult sons of Brij Lal, who joined him in executing the mortgage of which were being utilized by the entire family. In these circumstances, the learned Courts below should have decided, because of the absence of Brij Lal, Sudh Parkash and Ram Gopal from the witness-box, that a presumption could be raised that the money raised by the respondents was utilized for the business of the family. It is matter of common knowledge that when the head of the family is declared insolvent, then the other members of the family try to set up a new business so as to save it from the clutches of the official receiver. This is precisely what appears to have been done by Sudh Parkash in this case. The existence of family business which was considered credit worthy by a bank of repute and the peculiar situation created by the insolvency of Brij Lal which called for new business to be set up in the name of other members do indicate some prima facie evidence of necessity. Whatever lacuna remained was filed in by the absence of the alienors from the witness-box, as held by the Privy Council in Nagendra Nath Dey's case, AIR 1932 PC 165. Taking into consideration the cumulative effect of all these circumstances. I am of the view that the alienation in question was made for valid legal necessity.
17. The last point regarding the plea of limitation remains to be considered. The learned counsel for the respondents submitted that the case is covered by Article 126 of the Limitation Act. I find it impossible to agree with this submission because this Article applies only to those cases in which alienees from a Hindu father take actual possession of the property. The mortgage in this case was not one with possession and a suit challenging the same would be governed by the residuary Article 120 of the Limitation Act. The period of limitation would start from the date when the right to sue accrues. When the interests of coparceners are burdened by a loan raised by its manager against the provisions of Hindu Law, then every coparcener gets a right to challenge the same immediately on the day when such a loan is raised. The mortgage deed in this case was executed on February 21, 1947, and the suit was brought on July 22, 1961. Prima facie, the suit filed by the respondents is barred by limitation. When faced with this situation, the learned Complainant for the respondents submitted that it would be wholly inequitable to apply Article 120 of the Limitation Act. According to the learned counsel, if the coparceners are divested of the possession of the property, then they can get joint possession within 12 years under Article 126 of the Limitation Act and it could never be the intention of law to restrict the period of limitation in case the joint property continues to remain in their possession. This submission loses sight of the fact that the Articles of the Limitation Act are somewhat arbitrary in nature. They have to be interpreted in accordance with the principles of literal interpretation as laid down in Nagendra Nath Dey's case, AIR 1932 PC 165(supra). The learned counsel for the respondents then relied on Riasat Ali v. Iqbal Rai, AIR 1935 Lah 827. In the case a Hindu father had made a gift to some land belonging to the joint family in favour of another. Though the mutation of gift of some land belonging to the joint family in favour of another. Though the mutation of gift was valid, yet the donee never entered into the possession of the property which continued to be enjoyed by the family. The donee filed an application for partition of the land before the revenue authorities who directed the members of the family of the donor to get their title established in a Civil Court. The alleged gift was made on January 18, 1917, and a suit to challenge the same was filed on August 6, 1928. It was alleged before the Court that the suit was barred by time because it had been filed more than six years after the mutation of gift had been sanctioned. The Bench hearing the case repelled this contention on the ground that where a rightful owner is in possession of the property he is not obliged to sue for declaration so long as his rights add that a Hindu father has no right whatsoever to make a gift of coparcenery property. Such a gift is wholly void and so long as the donee does not take steps to dispossess the members of the joint family it would not be necessary for them to bring in a suit. These considerations do not be necessary for time bring in a suit. These considerations do not apply to a case in which the estate of the coparcenery is burdened with a debt. In such a suit the cause of action will arise in favour of the Hind undivided family on the day when the Karta or the manager under the provisions of Hindu law. In my opinion, the case is covered by a Single Bench decision of this Court reported as Behari Lal v. Dal Chand. AIR 1951 Punj 341, Kapur, J., as his Lordship then was, observed as follows:--
'In a case where the alienee never gets possession no limitation can arise under Article 126, and in such cased the only right of the son will be to obtain a declaration that the deed is invalid and the limitation prescribed for such a suit is that of six years under Article 120. In Hunia Goundan v. Ramasami Chetty, AIR 1918 Mad 19, Sadasiva Ayyar, J., interpreting Article 126 said-
'The Legislature has clearly fixed an overt and patent fact, namely, the taking of possession of the property by the ailenee as the event from which the period has to be calculated so as to avoid as far as possible difficult questions as to notice.' With this view I most respectfully agree. This view also finds support from the judgment of Addison J., in Luta Ram v. Shiv Ram, AIR 1929 Lah 14. In my opinion, therefore, Article 126 has no application to the facts of this case but the Article which would apply would be the residuary Article 120.'
18. I am in respectful agreement with the above observations. The result of the foregoing discussion is that the suit of the respondents is held to be barred by time.
19. It may, however, be noticed that Basti Ram, one of the respondents, died on July 15, 1970. His legal representatives were not brought on record within the period of limitation. A Bench of this Court vide its judgment dates September 20, 1971, has dismissed the appeal so far as Basti Ram's share is concerned.
20. In view of my findings that the suit was a collusive one, the mortgage was for valid legal necessity and the suit of the respondents was barred by time, this appeal reserves to succeed qua respondents other than Basti Ram and his legal representatives and I order accordingly. The appellant will be entitled to have his costs throughout.
S.S. Sandhawalia, J.
21. I agree.
22. Appeal allowed.