1. This- special appeal by a defendant under Section 16, Rajas-than High Court Ordinance, 1949, is directed against the judgment and decree passed by a learned Single Judge of this Court on May 13, 1970, thereby affirming the judgment and decree passed by the court of first instance (Senior Civil Judge, Ajmer) in Civil Suit No. 1 of 1961, on April 30, 1962.
2. Civil Suit No. 1 of 1961 was instituted by Gyan Chand Jain (hereinafter to be referred to as the plaintiff) against Magna Bar Bir Chand and Nasirabad Urban Co-operative Bank Ltd. (hereinafter to be referred to as defendant 1, defendant 2 and defendant 3, respectively) for declaration that the mortgage deed executed by defendant 1 in favour of defendant 3, in respect of a bungalow and a factory, described in detail in para 3 of the plaint, is null and void, and, as such, does not bind the plaintiff or the said property and that the said property is not liable to be sold in execution of the award obtained by defendant 3, and for a perpetual injunction restraining defendant 3 from getting the said property sold in execution of the said award. The plaintiffs averment in the plaint may be recapitulated here. The plaintiff and defendant 2 are sons of one Paras Das Jain, who died in 1941. Defendant 1 is the widow of Paras Das Jain. Paras Das and his two sons were coparceners in a Hindu Coparcenary consisting of three branches, headed respectively, by Paras Das and his two brothers, namely, Kishanlal and Bishan-lal. Paras Das filed a: suit (No. 10 of 1939) for partition, and for allotmentof one-third share in the entire coparcenary property both movable ' and immovable. He died on May 4, 1941, when the suit was still pending. The plaintiff and defendant 2, who, as already stated, are his sons and who were apparently minor at the material time, were brought on the record as legal representatives of the deceased through their mother (defendant 1 herein) acting as their next friend. Eventually, a final decree for partition was passed in that suit on May 19, 1951. The bungalow and the factory which is the property in dispute in the instant case were among the properties allotted to the branch of Paras Das deceased. The plaintiff's case is that as a consequence of the final decree for partition, the properties so allotted became the coparcenary property of the joint Hindu family consisting of the plaintiff and defendant 2 as coparceners.
3. The plaintiffs grievancee is that on May 19, 1952, when he was still a minor, defendant 1 contracted a loan of Rs. 10.000/- from defendant 3, charged the coparcenary property in suit for the repayment of the loan and executed mortgage deed for this purpose on the even date. On the failure of defendant 1 to repay the amount, defendant 3 obtained an award from an arbitrator appointed under the Co-operative Societies Act, 1912, and the rules framed thereunder on Sept. 11, 1954. The said award is deemed to be a decree of a civil court and can be executed as such. The plaintiff attained the age of majority on December 9, 1954. He instituted the present suit on December 20, 1960, challenging the validity of the mortgage. He pleaded that he came to know about the mortgage only on Dec. 17, 1959, and that thus the suit was within limitation. He described the mortgage and the award in question as null and void on the ground that defendant 1 was not competent to alienate the coparcenary property.
4. Defendants 1 and 2 did not contest this suit. It was however contested by defendant 3 who filed a written statement in answer to it. Defendant 3 denied the plaintiff's allegation that defendant 1 was not competent to mortgage this property. It pleaded that Paras Das deceased was a contractor by profession who conducted his business under the name and style of Paras Das and Sons during his lifetime and that the said business was continued by defendants 1 and 2 after his death. Thefamily needed funds for the said business. Defendant 1 opened a cash-credit account with defendant 3 to finance that business. Defendant 3 which is Co-operative Bank agreed to allow over-draft to defendant 2 with a limit of Rs. 10,000/- carrying interest at the rate of 9% per annum. Defendant 1 mortgaged the property in suit as security for the loan. She agreed that the mortgaged property shall remain charged to defendant 3 till the cash-credit agreement subsisted. Defendant 3 further pleaded that apart from the security of the mortgaged property, defendant 2 who is son of defendant 1, and two other sureties guaranteed the repayment of the loan along with interest. In other words, defendant 3 pleaded that the mortgage is valid, having been created for legal necessity. Without prejudice to these pleas, defendant 3 further pleaded that the plaintiff is not entitled to any relief in respect of the one third share of defendant 1 in the mortgaged property. The defendant described the suit as a collusive one instituted by the plaintiff at the instance of defendants I and 2,
5. The parties were taken to trial on the following issues:
1. Did the defendant No. 1 execute the mortgage in question for the needs of the joint family business carried on in the name of 'Paras Das & Sons'. If so is the mortgage duly binding upon the plaintiff?
2. Is the suit within limitation?
3. Was the mortgage of the suit property accepted on defendant No 2 standing surety for the amount? If so how does it affect the suit ?
4. Is the suit collusive?
5. Has defendant No. 1 one-third share in the suit property and, therefore, the plaintiff cannot question the mortgage deed in question to that extent?
6. What relief?
6. By its judgment, dated, April 3f, 1962, the trial court held that the suit was within limitation: that the mortgage was made without legal necessity; that defendant 2, who could not validly alienate his undivided interest in this property as a coparcener, without the consent of other coparce nears, could not possibly bind the estate, not even his own interest therein, by standing surety for a loan raised without legal necessity; that the suit is notcollusive and that the mortgage is bad as a whole and must therefore be de-clared as such. Consequently the plaintiff's suit was decreed in its entirety.
7. In appeal by defendant 3 from the aforesaid judgment and decree, learned Single Judge of this Court affirmed the finding of the trial court on issue 1 and expressed his conclusion in these terms:--
The mortgage of joint family properties by Magna Bai without legal necessity or for the benefit of the estate is invalid in its entirety and cannot be held valid even to the extent of Magna Bai or Beer Chand's interests in the property.
Learned Single Judge, therefore, dismissed the appeal with costs. Hence this special appeal by defendant 3.
8. After hearing both sides, and going through the record of the case, we may straightway point out that the mortgaged property is the coparcenary property of the joint Hindu family, at one time headed by Paras Das deceased. Paras Das, who was earlier a coparcener in the larger Hindu coparcenary consisting of himself and his two brothers and their sons brought about severance of the joint status by filing a suit for partition (No. 10 of 1939) and for allotment of one-third share for himself and his sons. The Supreme Court reiterated in Raghavamma v. Chanchamma, AIR 1964 SC 136 that 'it is settled law that a member of a joint Hindu family can bring about his separation in status by a definite and unequivocal declaration of his intention to separate himself from the family and enjoy his share in severalty. 'Paras Das had thus brought about his separation in status and that of his minor sons by bringing the suit for partition and demanding the allotment of one-third share for themselves in 1939. He had thereby carved out a smaller joint Hindu family consisting of himself, his wife and minor sons in 1939, although the coparcenary property of the larger joint Hindu family had yet to be divided by metes and bounds. The suit for partition culminated in the passing of a final decree on May 19, 1951. Paras Das had already died before the passing of that decree, The plaintiff and defendant 2 who were minor at the time of the death of Paras Das and continued to be so till the passing of the final decree were brought on the record as the legal re-presentives of Paras Das deceased,through their mother (defendant 1 in this suit) acting as their next friend. The property in dispute in the instant case which was subsequently mortgaged by defendant 1 to defendant 3 was among the properties which were allotted to the branch of Paras Das deceased represented by the plaintiff and defendant 2 as the surviving coparceners in the branch. In other words, the property allotted to this branch, including the property subsequently mortgaged by defendant 1, retained its character of a coparcenary property in the hands of the surviving coparceners.
9. We are proceeding herein on the assumption that Nasirabad, the place to which this joint Hindu family belongs is governed by the Mitakshara School of Hindu Law. In the absence of averments and proof to the contrary, as in the instant case, this would be a wholly correct assumption to make. We may in this connection refer to the Nanak Ram v. Lalit Kumar, 1972 Raj LW 213 wherein this court held that, by and large, Rajasthan is governed by the Mitakshara school of Hindu Law. That being so, defendant 1, being the widow of Paras Das deceased, acquired, on his death, the same interest in the codarcenary property of this branch as Paras Das himself had. Under the Hindu Women's Rights to Property Act, 1937, she even acquired the right of claiming partition as a male owner. But 'in spite of all these improvement brought about in her legal status, qua the coparcenary property, by the aforementioned piece of legislation, it is settled law that the status conferred upon her still fell short of making her a coparcener as such. It is now well settled (see for example Commissioner of Income-tax v. G.S. Mills, AIR 1966 SC 241 that coparcenership is a necessary Qualification for the managership of a joint Hindu family. As already explained, defendant I notwithstanding her interest in the coparcenary property and her right to demand partition was not a coparcener. She did not therefore possess the necessary qualifications to become the manager of the joint Hindu family consisting of herself and her two minor sons on May 19, 1951, when the final decree for partition was passed in favour of her sons through her as their next friend.
1ft. It appears that defendant 2 had already attained the age of majority by the time defendant l executed themortgage-deed in question In favour of defendant 3 on May 19, 1952. That is why, he furnished guarantee to defendant 3 for the payment by defendant 1 to defendant 3 of the mortgage amount along with interest thereon. The plaintiff was still a minor at that time. This means that the joint Hindu family consisted of three members at that time. One of them was defendant 1 who had acquired her deceased husband's undivided interest in this property. The second member was defendant 2 who had already attained the age of majority and was therefore competent to act as manager of the joint Hindu family. The third member was the plaintiff who was still a minor. The last two were of corse the coparceners, unlike their mother who could not be and was not a coparcener.
11. The mortgage., as already stated, was made by the mother. She appears to have made it out of sheer habit, for she had been managing the coparcenery property ever since the death of her husband little realising that one of her two sons had since attained the age of majority and thus automatically acquired the status of a Karta or Manager of the joint Hindu family. We may in this connection refer to the evidence of D. W. Jaskaran who testified that after the death of Paras Das in 1941, his widow Magna Bai (defendant 1) kept her deceased husband's business as a contractor, running for sometime, Jaskaran further stated that the the business came to a standstill after some time to be revived again in 1951. He testified in this context that on the eve of restarting the business, she approached him for help representing that on account of the minority of her sons including defendant 2, she would need his help in making the business a success, Jaskaran's evidence would clearly show that in anticipation of defendant 1 coming of age, defendant 1 had started giving serious thought in 1951 to the revival of her husband's business as a contractor,
12. On a careful perusal of the evidence on record, it can scarcely be doubted that Paras Das deceased had started his own business as a contractor under the name and style of Paras Das and Sons in 1936-37 while he was still a coparcener in the larger coparcenary consisting of himself and his brothers and their sons, Kesarimal, Pokarmal, Onkar Nath, Manoharlal and Jaskaran, each a respectable and reli-able witness in his own right, all stated with one voice, that Paras Das had started his own business as a contractor under the name and style of Paras Das and Sons during his lifetime. Even Cyan Chand, the plaintiff, had to admit that besides the family business, his father, was carrying on his own business as a contractor. Learned trial Judge as well as learned single Judge seem to be agreeing that Paras Das and Sons was a venture of Paras Das alone which he started in 1936-37. A reference to the judgment of learned single Judge would reveal that the main reason why he held Paras Das and Sons to be a separate business of Paras Daa was the absence of its mention in the inventory of the coparcenary properties of the larger coparcenary, consisting of Paras Das and his brother and their sons, as given in the final decree for partition passed on May 19, 1951. We find ourselves in entire agreement with the learned single Judge that Paras Das and Sons was a contractor's business which had been started by Paras Das in 1936-37 as his own business, separate from the joint family business. In that sense, this business may not be regarded as family or ancestral business in the hands of Paras Das. But as soon as Paras Das died, this business devolved upon the surviving members of his family as a family or ancestral business. It must therefore be regarded as a family business in the hands of the plaintiff, defendants 1 and 2, on the death of Paras Das in 1941. The witnesses examined on behalf of the defendant 3 testified that since her sons were infants in 1941, defendant 1, herself, carried on the business of Paras Das and Sons for sometime after the death of Paras Das. They further stated that defendant 1 could not carry on that business for long and that it came to a standstill soon after the death of Paras Das.
13, Now it is fully established on the record that defendant 1 took this loan from defendant 3 on the security of a portion of the coparcenary property with a view to investing it in the old business of her husband knows under the name and style of Paras Daa and Sons. As already stated, the evidence of D. W. Jaskaran shows that she started giving serious thought in 1951 to the revival of that business in anticipation of her son (defendant 2) coming of age. She actually raised the loan in 1052, and by that time defendant 2had already attained the age of majority. Jaskaran also testified that the only source of livelihood of the joint Hindu family headed by Paras Das after he had filed the suit for partition and till his death was the income derived from the contract business carried on by Paras Das under the name and style of Paras Das and Sons.
14. D. W. Kesarimal, an employee of the defendant bank, deposed that the cheque, Ex 2, for Rs. 10,000/- made by the bank to defendant 1 on the basis of the transaction of mortgage was endorsed by her in favour of her son (defendant 2) and that defendant 2 got the amount credited in the account of M/s. Paras Das and Sons which had been opened with the defendant bank since 1949. This goes a long way to show that the amount was raised to revive the family business of Paras Das and Sons as contractors which had perforce become dormant soon after the death of Paras Das.
15. D. W. Onkar Nath, one of the sureties who guaranteed the repayment of this loan by defendant 1 to defendant 3 testified that both defendants 1 and 2 had told him that they had taken the loan for carrying on their business as military contractors. Jaskaran and Manoharlal D. Ws. recalled that after this transaction defendants 1 and 2 revived their business under the name and style of Paras Das and Sons and resumed supplies to the military in 1952.
16. It will thus be seen that defendant 3 produced evidence of an unimpeachable character to prove that Paras Das and Sons was a business of con-tractors and suppliers started by Paras Das in 1936-37 and that it was kept up for a short time after his death by his widow, defendant 1, as natural guardian of her minor sons. It is also abundantly proved that she revived this business as soon as her older son attained the age of majority; and in fact she launched him into this business instantaneously with a fund of Rs. 10,000/- which she had raised as loan by executing the mortgage deed. Defendant 3, as mortgagee, acted in good faith since among the sureties of this transaction, it obtained a deed of guarantee from defendant 2 as well. The very fact that the mortgage amount was under-written by defendant 2 and two others, as sureties, affords ample assurance of the fact thatthis alienation was made for a necessity. No person would come forward to offer himself as a surety guaranteeing the repayment of loan to widow unless and until he was fully satisfied that the loan was being raised for legal necessity. Any lack of care on the part of a surety in such a transaction is bound to be detrimental to his own interest.
17. Learned single Judge has struck down this mortgage because he seems to think that in the absence of any evidence to show that Paras Das deceased had left behind any job of a contractor, as unfinished, any fresh work undertaken by the surviving members of the family as contractors after a lapse of more than 10 years of the death of Paras Das must be regarded as a new business, and that since the starting of a new business cannot be regarded, under decisional law, as something for the need of the family or to the benefit of the estate, the mortgage must be held to be an alienation made without legal necessity and therefore null and void. With all respect, we arc unable to accept this view. A contractor's business does not become a new business merely because after the execution of the earlier job, a new job is undertaken for execution. Similarly, if such a business came to' a standstill after the death of the father who died leaving him surviving infant sons and a widow, it does not become a new business if the widow, or one of the sons, on attaining the age of majority, revives the same business.
18. Before closing discussion on this aspect of the case, we would like to emphasise that defendant 1 who mortgaged this property and defendant 2 who stood surety for her have not cared to appear as witnesses and explain the circumstances under which this transaction was entered into. The plaintiff has indeed produced no evidence worth the name in rebuttal of the evidence produced by defendant 3 to prove that this alienation was made by defendant 1 for legal necessity and that defendant 3 acted in good faith in advancing this loan. It must be borne in mind when we are considering the question of good faith of the mortgagee that the mortgagee is a co-operative bank not a usurious money-lender and that the loan was advanced only after as many as 3 persons including the son of the mortgagor came forward to offer themselves as sureties. Moreover,the alienation in question was not an absolute alienation. It was only a simple mortgage with the result that the mortgaged-property was kept intact and safe, for the benefit of the family including the plaintiff. Defendant 1, as mother and natural guardian of the plaintiff, could certainly be depended upon to have acted in a manner which was best calculated to serve the plaintiffs interest. Defendant 2 who on attaining majority had automatically become the Karta of the family endorsed this mortgage by standing surety for the repayment of the mortgage amount.
19. We may now refer to a decision of the Supreme Court dealing with the question of legal necessity, having a bearing on the fact-situation as presented by the instant case. In Balmukund v. Kamlavati, AIR 1964 SC 1385, their Lordships made it clear that for a transaction to be regarded as one of benefit to the family it must not necessarily be only of a defensive character and that what transaction would be for the benefit of the family must necessarily depend upon the facts of each case. The test to be applied is whether the transaction was one into which a prudent owner would enter in the ordinary course of management in order to benefit the estate. We have no doubt whatever that this mortgage was a transaction which any prudent owner would have entered in the ordinary course of management in order to benefit the estate. This mortgage made it possible for the family business of contractors, the only source of livelihood of the family, to be revived. We must, therefore, hold that this was an alienation made for a legal necessity.
20. Consequently, this, appeal is allowed, and the judgment and decree passed by the learned single Judge are set aside. Instead the plaintiff's suit is dismissed with costs throughout.