1. These two appeals may be conveniently dealt with together as the main question is common to both cases. It happened that the suits out of which these appeals arise were heard by different Judges who have come to opposite conclusions on that question. A.S. No. 8 of 1934 arises out of a suit (O.S. No. 11 of 1931) to enforce a mortgage for Rs. 10,000 executed on 21st December, 1923, by the first defendant for himself and as guardian of his minor younger brother the second defendant and his minor son the third defendant. The mortgagee being dead, the plaintiff, his son issuing to recover the balance due under the mortgage, some amounts having already been paid in part payment of the mortgage debt. A.S. No. 222 of 1934 arises out of a suit for partition instituted by the younger brother, who is the second defendant in the other case, against the elder brother who is the first defendant in the other case and against certain alienees from the elder brother.
2. The only question which arises for decision in A.S. No. 8 of 1934 relates to the liability of the second defendant, that is, the younger brother for the mortgage debt. The learned Subordinate Judge held that the second defendant's share in the family property was liable only to the extent of Rs. 6,607-2-4. It is contended before us in the appeal that the liability of the second defendant-appellant should be further reduced and that he should not have been held liable for a sum of Rs. 1,100 with interest thereon from the date of the mortgage making a total of Rs. 2,964-11-9 up to the date of the filing of the appeal. In respect of the balance of the decree against the second defendant, no appeal has been preferred.
3. In A.S. No. 222 of 1934 one question has been raised by the fourth defendant-appellant, who is one of the alienees impleaded as a defendant and another question has been raised by the first defendant who has filed a memorandum of cross-objections. The fourth defendant-appellant purchased two items of the family property (houses) under Ex. VII on 10th July, 1922. The sale purports to have been made in satisfaction of the claim of the vendee under an earlier mortgage for Rs. 4,000 dated 6th September, 1921, and for a cash payment of Rs. 496-12-0. The younger brother--the plaintiff - contended that this sale-deed and the mortgage preceding it were not executed for purposes binding on the joint family and that he was therefore entitled to recover a half share in the property. The learned Subordinate Judge held that out of the consideration for Ex. VII, a sum of Rs. 1,800 was binding on the family and he accordingly directed the plaintiff to be put in possession of a half share in these properties subject to a charge for Rs. 900 in favour of the fourth defendant. He also gave directions for award of mesne profits in respect of the properties covered by Ex. VII. The fourth defendant has appealed against so much of the decree as has declared the sale under Ex. VII not binding on the plaintiff. The first defendant was directed to account to the plaintiff for a sum of Rs. 700 in connection with the katnam or dowry said to have been paid to the plaintiff at the time of his marriage. The correctness of this direction is challenged by the first defendant by the memorandum of cross-objections.
4. The validity of the sale-deed marked Ex. VII in the partition suit and the binding character as against the second defendant of the suit mortgage in A.S. No. 8 of 1934 to the extent of the sum of Rs. 1,100 depend on the determination of one and the same question, namely, whether a business in yarn which the first defendant conducted between 1917 and 1919 was an ancestral family business in connection with which it was open to the first defendant to contract debts binding upon his minor brother's share. Lakshmayya, the father of the two brothers, died in 1909 and the evidence shows that he was doing business, mainly as a commission agent, in various goods including indigo and cotton. After Lakshmayya's death, the first defendant who was a major at the time seems to have continued for some years to do the commission business in partnership with his cousin Basavayya. In 1917 the first defendant (without Basavayya) began to do independent business in yarn and cloth in partnership with one Guntur Subramaniam. In the course of two or three years, this business ended in heavy loss and to pay off his share of the loss the first defendant had to borrow partly under the mortgage which forms the subject-matter of A.S. No. 8 of 1934 and partly under the mortgage which led up to the sale Ex. VII in the partition suit. It appears from the evidence that about two years after the younger brother attained majority, he joined his elder brother in executing four sale-deeds of portions of the joint family property for the purpose of paying off a portion of the mortgage debt. It is in respect of the balance that remained unpaid that the mortgage suit has been instituted.
5. In the mortgage suit, the second defendant sought to repudiate liability for the whole of the mortgage debt, but, as stated already, we are concerned in this appeal only with a part of the consideration for that document, namely, a sum of Rs. 1,100 which admittedly relates to losses incurred in the yarn business. The learned Subordinate Judge who heard the mortgage suit was of opinion that there was no satisfactory evidence to show that the father of these parties ever traded in yarn but he thought nevertheless that the business started by the first defendant did not become a new business simply because there was a change in the commodity in which the first defendant traded. He wound up his discussion of this question by observing that the yarn business was not altogether a different business and that therefore the younger brother was liable for debts incurred in that connection. A point had also been raised by the mortgagee that by joining his elder brother in the subsequent sales of family property made with a view to pay off a portion of the mortgage debt, the younger brother must be deemed to have ratified the mortgage even if it was otherwise not binding on him. On this question the learned Subordinate Judge was of opinion that according to the decisions of this Court, there could not in law be any ratification in a case of this kind; and, on the facts, he held that the younger brother's conduct did not amount to ratification. In the partition suit, however, another learned Judge who had to deal with the question of the younger brother's liability for the debts incurred by the elder brother in connection with the yarn business was of opinion that the yarn business was in all probability the individual business of the elder brother that in any event it was an entirely new one, and that it was also a speculative one unlike the father's commission business. In this view, he came to the conclusion that the younger brother was not liable for debts incurred by the elder brother in that connection.
6. Having heard arguments in both the appeals on this question, we have come to the conclusion that the younger brother cannot be held liable for the debts incurred by the elder brother in connection with this yarn business. Our attention has been drawn to a number of decisions. We do not think it necessary to notice them in detail because the general result of the discussion in those cases is that it has to be decided on the facts of each case whether the particular business which the elder brother f in a joint Hindu family carries on is or is not an ancestral family business in connection with which the minor member's interests in the family property can be made liable for the trade debts. There may perhaps be some difficulty in reconciling all the dicta found in the relevant authorities. Some of them have laid down a stricter test than other cases; it has sometimes been said that except where the business carried on by the elder brother relates to the same commodity in which the father traded and is carried on in the same place and on the same lines, the business carried on by the elder brother cannot be regarded as a continuation of the ancestral business cf. Krishnadhan Banerji v. Sanyasi Charan Mandal 23 C.W.N. 500 Sanyasi Char an Mandal v. Krishnadhan Banerji and Sri Thakur Ram Krishna Muraji v. Ratan Chand . A more liberal test has sometimes been adopted cf. Ramalinga Chetty v. Vellore Mercantile Bank, Ltd. : AIR1930Mad136 and in all probability the observations in Damodaram Chetti v. Bansilal Abeerchand (1926) 55 M.L.J. 471 : I.L.R. 51 Mad. 711 will be found to lay down the test in terms most favourable to the creditor who lends money to the business. As we have come to the conclusion that even according to the test laid down in Damodaram Chetti v. Bansilal Abeerchand (1926) 55 M.L.J. 471 : I.L.R. 51 Mad. 711 it is not possible to hold the younger brother bound by the yarn trade debts in this case, we have thought it unnecessary to refer to the other decisions.
7. It is no doubt true that the parties here belong to the Vaisya community and trade is ordinarily their kulachara. This fact may enable the Court more easily to come to a conclusion in favour of the trade being a family trade than when dealing with families belonging to other communities cf. Palaniappa Chetty v. Official Assignee of Madras (1916) 36 I.C. 787. But it cannot be laid down as an independent rule of law that in the case of people belonging to this community, the managing member must be held entitled to bind the other coparceners by debts incurred in connection with a trade carried on by him, without any investigation as to the nature and antecedents of the business. In Damodaram Chetti v. Bansilal Abeerchand (1926) 55 M.L.J. 471 : I.L.R. 51 Mad. 711 the learned Judges observe:
The question to be determined in each case should be whether having regard to a recognised business, profession, means of livelihood or what is called the 'kulachara' of the family, the particular enterprise or embarking was only within the reasonable limits of the exercise thereof or really, having regard to its nature or extent, a new speculative enterprise.
8. In the present case, it is not disputed that the business in yarn started by the elder brother was a wholly new line. The partner with whom he carried on that business was also a stranger and not one with whom the family has been associated in business before. There is a marked difference between the commission business carried on during the father's lifetime and even by the elder brother for some years after the father's death and the yarn business now in question. In the very nature of things, there could be no serious loss sustained in the commission business even during years when it might not prove very profitable. The circumstances of this yarn trade, especially at the time when the elder brother started that line, that is, in the years 1917 to 1919, were clearly such as to make it a highly speculative line of business. We are accordingly of opinion that the yarn and cotton business of the first defendant cannot be regarded as an 'ancestral' business and that the second defendant cannot be held liable for debts incurred in connection with it. The elder brother who is supporting the plaintiff has no doubt deposed that he was doing this business for the benefit of the family and that he has brought all profits earned by him in the different lines of his business as well as losses incurred by him, into the joint family account. But it is clear from his evidence that he brought these items into the family account only in 1930, that is, after disputes had arisen between the brothers and it had become obvious that on the whole the first defendant had sustained heavy losses. On the other hand, it also appears that at the time when the business was being conducted by him, he had separate accounts for the various businesses and one of them, namely, his insurance business, he carried on in the name of his wife. On these facts, we have come to the conclusion that the younger brother cannot be held bound by the mortgages or sales executed by the elder brother so far as they were effected to pay off debts incurred by him in connection with the yarn trade or to pay off losses incurred in that trade.
9. In A.S. No. 8 of 1934, the learned Counsel for the respondent has pressed the plea of ratification. We do not wish to express any opinion as to the correctness or otherwise of the view taken by the learned Subordinate Judge that as a matter of law there could be no ratification in such a case; but we agree with him that on the facts no ratification by the younger brother has been made out. At the time when the sale deeds relied on in this connection were executed, the younger brother was still a student at school and was living with his elder brother; there is nothing to show that he had sufficient knowledge of all the facts with reference to which the question of his liability or non-liability for the debts incurred by the elder brother had to be decided. Whether or not the younger brother is speaking the truth when he says that he signed the sale deeds without even reading them it is quite probable that he signed the sale deeds as desired by the elder brother, without knowing what exactly the effect of that conduct would be on his liability for the remainder of the mortgage debt. The question of ratification must be decided with reference to the facts of each case; and we do not feel that the decision in Palaniappa Chettiar v. Subramania Aiyar (1933) 39 L.W. 131 on which Mr. Somayya relies in this connection, compels us to come to the conclusion that the younger brother's conduct in this case also amounts to a ratification. The learned Judges were there dealing with an alleged admission or inference of admission of liability and not with a plea of ratification.
10. The result is that A.S. No. 8 of 1934 must be allowed and the liability of the second defendant's share for the suit mortgage debt further reduced by the sum of Rs. 1,100 and interest to be calculated thereon on the basis adopted by the learned Subordinate Judge. The appellant will be entitled to recover from the plaintiff his costs of the appeal. A.S. No. 222 of 1934 must, for the same reasons, be dismissed with costs of the plaintiff-respondent. There is however one variation in the lower Court's decree in A.S. No. 222, which seems to us desirable to make to avoid further litigation. In paragraph 3 of its decree, the lower Court has directed that the plaintiff be put in possession of a half share of the properties covered by Ex. VII, subject to a charge in favour of the fourth defendant for Rs. 900. On the language of the clause as it stands, the fourth defendant may be obliged to file a separate suit for recovery of this sum. We do not think it necessary or desirable to leave the parties in this position. It is better - and the, learned Counsel for the plaintiff agrees - that in place of this direction, a direction in the following terms is substituted, namely, that the plaintiff shall be put in possession of a half share on payment of Rs. 900 to the fourth defendant. The provision in respect of interest and mesne profits contained in that clause is not very clear. Under the law, the plaintiff will be entitled to mesne profits in respect of his half share but the fourth defendant will be entitled to interest on the sum of Rs. 900 which has been found to be the portion of the debt binding on the plaintiff. The proper direction will, therefore, be that the plaintiff will have mesne profits from 6th April, 1931, to date of delivery of possession, such mesne profits (including interest) to be fixed by the lower Court under Order 20, Rule 12, Civil Procedure Code. The fourth defendant will be paid interest on the sum of Rs. 900 above referred to at six per cent, per annum from 6th April, 1931, to date of payment.
11. On the point raised by the memorandum of cross-appeal, we think that the decree of the Court below cannot be sustained. Assuming, as the learned Judge observes that the katnani paid to the plaintiff at the time of his marriage should be treated as belonging solely to the plaintiff, a point which is by no means free from doubt, it does not follow that the first defendant can be called upon to account to the plaintiff for it unless he has appropriated it. The judgment of the Court below proceeds on the footing that this sum of Rs. 1,400 found its way into the family chest and that the first defendant made a gift to the bride out of the joint family funds. The evidence of P.W. 1 does not justify this assumption. He states that what happened at the time was that the bride's people placed on a plate, the sum of Rs. 1,400 which was meant as katnam, that the first defendant in turn placed on it a sum of Rs. 300 and a jewel meant for the bride and that the bride's people took the plate with all its contents back. We are not in this litigation called upon to say whether the money which the bride's people took back is with the plaintiff or with his wife and what their respective rights to the same are. It is obvious that the sum of Rs. 1,400 never went into first defendant's hands or into the family chest and the first defendant cannot therefore be called upon to account for it. The result is that Clause (2) of the first Court's decree must be modified by omitting the sum of Rs. 700 therefrom. The first defendant will recover his costs of the memorandum of cross-objections from the plaintiff.