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Anantha Pattar Vs. Padmanabha Panikkar and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1938Mad468; (1938)1MLJ79
AppellantAnantha Pattar
RespondentPadmanabha Panikkar and ors.
Excerpt:
.....which it was necessary for the karnavan to enter into an onerous transaction like membership in a kuri chit and that therefore the transaction as a whole including the security bond ex. these kuri chit transactions are well known in malabar and so far as we have been able to understand, karnavans seem to be freely entering into them on behalf of their tarwad. 3. the evidence in the case clearly establishes that the karnavan entered into this kuri chit as representing the tarwad and not in his personal capacity, such members of the tarwad as have given any indication of their view in the matter have also treated this transaction as having been entered into on behalf of the tarwad. venkatarama sastriar who appeared for the contesting junior members placed strong reliance on the fact that..........tarwad properties with the payment of monies due for sixteen future instalments in respect of a kuri chit in which the first defendant had taken one share and successfully bid at an auction. the kuri was started on 17th february, 1924 and was to run for 23 chits of rs. 300, payable half yearly. the tarwad was undoubtedly possessed of substantial properties which, it is agreed, yielded an annual income of about 10,000 paras of paddy. the greater portion of the lands was held by various people on kanom and it also appears that substantial amounts used to be received from time to time by way of renewal fees in respect of those kanoms. the above circumstances relating to the financial position of the tarwad have been relied on by the parties in this case as supporting different points of.....
Judgment:

Varadachariar, J.

1. This appeal arises out of a suit to enforce a security bond (Ex. A) dated 15th December, 1926, executed by the first defendant as the karnavan of a tarwad, charging the tarwad properties with the payment of monies due for sixteen future instalments in respect of a kuri chit in which the first defendant had taken one share and successfully bid at an auction. The kuri was started on 17th February, 1924 and was to run for 23 chits of Rs. 300, payable half yearly. The tarwad was undoubtedly possessed of substantial properties which, it is agreed, yielded an annual income of about 10,000 paras of paddy. The greater portion of the lands was held by various people on kanom and it also appears that substantial amounts used to be received from time to time by way of renewal fees in respect of those kanoms. The above circumstances relating to the financial position of the tarwad have been relied on by the parties in this case as supporting different points of view in respect of the question of law raised in the case.

2. On behalf of the contesting defendants, who are some of the junior members of the tarwad, it has been argued that the financial position of the tarwad was not one in which it was necessary for the karnavan to enter into an onerous transaction like membership in a kuri chit and that therefore the transaction as a whole including the security bond Ex. A is not binding on the tarwad. On the other hand, it has been suggested on behalf of the plaintiff (the stake-holder) that when a tarwad is possessed of sufficient means to make it likely that the karnavan can spare some monies from time to time, it is a prudent act of management on his part to enter into a kuri chit transaction for the benefit of the tarwad. We recognise that there is something to be said in favour of both these points of view, but it seems to us that neither point of view should be exclusively insisted on in dealing with the question of the propriety of transactions of this kind. These kuri chit transactions are well known in Malabar and so far as we have been able to understand, karnavans seem to be freely entering into them on behalf of their tarwad. In none of the cases arising out of such transactions has the Court applied the test applicable to a loan borrowed by a karnavan or by the managing member of a Hindu family. There are at least two cases which have been brought to our notice in which learned judges with considerable experience of such transactions on the west coast have judged of the transaction more from the point of view of considering whether it was prudent exercise of discretion on the part of the karnavan to enter into the chit transaction. One of them is a judgment of Benson and Sundara Aiyar, JJ., in A.S. No. 218 of 1911 and the other is a judgment of the Travancore High Court reported in 2 Trav. L.J. 443. The result of the discussion before us inclines us to the view that these transactions should be viewed not with reference to the rigorous test applied when determining the validity of a borrowing but with reference to considerations of prudence and an honest exercise of discretion by the karnavan in the light of all the circumstances of the case. The learned Subordinate Judge who dealt with this case in the lower Court is himself a gentleman of considerable experience of the west coast and his judgment also had proceeded on the same lines.

3. The evidence in the case clearly establishes that the karnavan entered into this kuri chit as representing the tarwad and not in his personal capacity, such members of the tarwad as have given any indication of their view in the matter have also treated this transaction as having been entered into on behalf of the tarwad. Mr. Venkatarama Sastriar who appeared for the contesting junior members placed strong reliance on the fact that the first three subscriptions for the kuri chit were not even paid in cash by the karnavan but were treated as amounts lent by the plaintiff to the first defendant and that the same thing happened in connection with the sixth instalment also. There might be some force in this argument if it was Mr. Venkatarama Sastriar's suggestion that the tarwad had no means to pay the kuri instalments as and when they fell due, but that certainly was not his argument. It may be an accident that the karnavan had no cash on hand at the time or it may be an act of misconduct on his part that though he had the resources to pay the instalments in the ordinary course from out of his income, he did not pay. But we do not see how the plaintiff can be held not to have acted bona fide in admitting the first defendant as a representative of his tarwad to membership in the kuri chit, when he knew that the tarwad was possessed of substantial means to enable the first defendant to pay the instalments regularly. It also appears that about the time the kuri chit was started, the first defendant had to repay some loans borrowed for what the evidence shows to be tarwad purposes. A sum of about Rs. 1,100 was due under Ex. H for monies said to have been borrowed for a kattukalyanam in the tarwad celebrated in 1919; and about Rs. 300 had to be paid as subscription to another kuri which the tarwad admits to be a tarwad transaction. These amounts were first included in the promissory note (Ex. L) executed by the first defendant in favour of a shop run by the plaintiff and another partner. Ex. L-l includes subscriptions lent by the plaintiff to the first defendant to meet the first three instalments of the kuri chit and Ex. L-2 is a consolidation of the previous loans and this document was discharged out of the amount which the first defendant obtained by his successful bid at the auction held on payment of the seventh instalment. The balance of the bid amount, namely, about Rs. 1,450 was paid over in cash to the first defendant, and the evidence shows that at least Rs. 300 out of this amount was paid in discharge of Ex. M another promissory note loan due by the first defendant. The record discloses nothing as to what happened to the balance of Rs. 1,100 and odd. On these facts, the lower Court has come to the conclusion that having regard to the friendly relations subsisting between the first defendant and the other members of the tarwad at the time when he entered into this kuri chit transaction, there is no reason to suspect that it was a misuse of his powers or that he intended to defraud the tarwad by throwing upon it a liability for money which he ultimately intended to use for his own personal benefit. After a careful discussion of the probabilities and of the risk said to be involved, the learned Judge has come to the conclusion that it was on the whole a prudent transaction for the first defendant to enter into and that the plaintiff acted bona fide in admitting the first defendant into this kuri chit as representing the defendants' tarwad. We see no reason to differ from this conclusion. The mere fact that the mortgage bond Ex. A recites that a sum of Rs. 4,715-3-0 was paid to the first defendant in cash instead of setting out the appropriation made therefrom towards the amount due under Ex. L-2, does not seem to us to suggest any want of bona fides because the details are fully recited in the endorsement on Ex. L-2 as well as in the plaintiff's accounts.

4. The learned Judge has, however, taken into account the onerous terms of Ex. A and has come to the conclusion that there was no justification for making the tarwad properties liable to the full extent imposed by the terms. It is well within the power of the Court when dealing with a mortgage executed by a person in a representative capacity, to investigate the necessity for imposing onerous terms upon the family or the tarwad which the executant represents and to reduce the terms to what may seem reasonable in the circumstances. It is in the exercise of this power that the learned Judge has reduced the liability of the tarwad and it's property. Against this reduction, the plaintiff has preferred the appeal and against the main decree the contesting defendants, that, is, the junior members have filed a memorandum of objections.

5. For the reasons above stated we do not think there is much substance either in the appeal or in the memorandum of objections so far as the question of the liability of the tarwad property is concerned. Mr. Krishna Aiyar, however, raised a special point in support of the appeal in so far as the personal liability of the first defendant as per the terms of Ex. A is concerned. He invited our attention to the line of cases where the Courts, in dealing with bonds executed by members of a kuri chit to secure punctual payment of future instalments, have frequently declined to regard the provisions relating to interest as penal. With respect to this argument, it is sufficient for us to say that at this stage we are not dealing with the question of the first defendant's personal liability under the covenants in Ex. A. It is perhaps possible to read the decree of the first Court as fixing even the quantum of his personal liability. We wish to make it clear that that question is left open and all that we are deciding now is the extent of the liability of the tarwad and its properties. It will be open to the lower Court, when dealing with the plaintiff's application for a personal decree against the first defendant, to deal with the question whether or not the plaintiff is entitled to enforce against the first defendant all the stipulations in Ex. A in respect of payment of interest. With these observations we dismiss the appeal as well as the memorandum of objections with costs to be paid to and to be received by defendants 3 to 7 and the plaintiff.


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