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Tadi Bulli Tammireddi, and Tadi Harinarayanareddi, Minor by Father and Next Friend, the First Appellant Vs. Tadi Bulli Gangireddi - Court Judgment

LegalCrystal Citation
SubjectFamily
CourtChennai
Decided On
Reported inAIR1922Mad236; (1922)42MLJ570
AppellantTadi Bulli Tammireddi, and Tadi Harinarayanareddi, Minor by Father and Next Friend, the First Appell
RespondentTadi Bulli Gangireddi
Cases Referred and Ramalinga Chetti v. Sivachidambara Chetti I.L.R.
Excerpt:
.....- it is now well settled that, when an account has to be taken with a view to make a partition of joint family properties, the account is merely an enquiry into the existing assets and that the head of the family cannot in general be called upon to defend the propriety of his past transactions of the family except in cases of fraud, misappropriation or gross reckless waste. rangachari for the appellants that the business in opium was being carried on by the relations of the plaintiff and the 1st defendant, that the 1st defendant as managing member of the family after making enquiries was satisfied that it was a profitable business and that he did the opium business bona fide and for the benefit of the family. his position cannot be better than that of a partner and whatever may be the..........to account for his management of the family properties from six months prior to the death of gangi reddi, i.e. from october 1916. he held that the business in opium carried on by the 1st defendant was his exclusive business and not joint family business and that the plaintiff was not bound to bear any part of the loss incurred in that business. as regards the choultry founded by gangi reddi, he held that there was no endowment in respect of the usufructuary mortgage in favour of gangi reddi relating to chengondapalli estate. he held that the 1st defendant did not make out his case that the jewels in his possession were his wife's jewels. as regards the 2nd defendant and his sister, he allowed a sum of rs. 2,000 and rs. 1,000 mentioned in the will for the purpose of making jewels on.....
Judgment:

1. This appeal arises out of a suit for partition tiled by the respondent against the appellants. One Gangi Reddi died in May 1917 leaving a widow Subbamma (the 3rd defendant). He had two sons, Thammayya, and Bulli Tammireddi, the 1st defendant. The plaintiff is the son of Thammayya and the 2nd defendant is the son of the 1st defendant. Plaintiff's father died in 1902. The plaintiff who attained majority in 1916 lived with the 1st defendant till about July 1919. The Subordinate fudge passed a decree for partition directing the 1st defendant to account for his management of the family properties from six months prior to the death of Gangi Reddi, i.e. from October 1916. He held that the business in opium carried on by the 1st defendant was his exclusive business and not joint family business and that the plaintiff was not bound to bear any part of the loss incurred in that business. As regards the choultry founded by Gangi Reddi, he held that there was no endowment in respect of the usufructuary mortgage in favour of Gangi Reddi relating to Chengondapalli estate. He held that the 1st defendant did not make out his case that the jewels in his possession were his wife's jewels. As regards the 2nd defendant and his sister, he allowed a sum of Rs. 2,000 and Rs. 1,000 mentioned in the will for the purpose of making jewels on the occasion of their marriages but did not fix the amount to be spent for their marriages. The appeal relates to the above point and it is contended for the appellants that the decision of the Subordinate Judge is incorrect: As regards the accountability of the 1st defendant, the Subordinate Judge bases his decision on the ground that the 1st defendant had not been maintaining proper accounts for sometime prior to Gangi Reddi's death and that the plaintiff is consequently entitled to claim an account from October 1916. The case for the plaintiff as laid in the plaint is that the 1st defendant with the object of defrauding the plaintiff 'showed differences in the accounts, reduced considerable amounts, and in order to deprive the plaintiff of a share, he converted a considerable amount as jewels worn by women and showed under stridhanam, and even though profit was derived in some transactions, he concealed the same and showed heavy loss, concealed some account books and has been conducting himself in such a way as to cause loss to this plaintiff in all ways', that the 1st defendant misappropriated the properties and that he has a right to demand the 1st defendant to furnish an account from the year 1902 when his father died. The Subordinate Judge has found that the charge as regards the jewels has not been made out and that the 1st defendant was not guilty of secreting any accounts. He, however, is of opinion that the proper accounts were not maintained. As regards the accounts, it is admitted that the 1st defendant filed a criminal complaint against one Subbarayudu on the 24th of April, 1917, of misappropriation of a sum of about Rs. 6,000. Exhibit R is the judgment of the Magistrate in that case. In connection with that complaint a warrant was issued by the Magistrate and the account books of the family were seized and taken to the Police Court, The books were not returned till about October, 1918, The plaintiff filed his plaint in December 1918 and a commissioner was appointed who made an inventory of all the account books in the family, After the seizure of the account books by the Police the 1st defendant did not open regular account books but, according to the evidence, he was making entries on loose sheets of paper which were subsequently entered in the account books, Exhibits III, IV and V filed in the suit. Exhibit V is the rough day book, Exhibit III is the fair day book and Exhibit IV is the ledger. These account books were not kept in the regular course of business from day to day, and so far as the proof of any of the entries in these books is concerned, it is clear that these account books cannot have the same effect as account books kept from day to day in the regular course of business. The question, however, is whether the 1st defendant's not keeping the books from day to day can be said to be such misconduct as would make him accountable during the period that the accounts run. it is not shown that any of the entries in these account books are wrong or that there has been any suppression of entries, It is explained for the 1st appellant that he expected the books in the Magistrate's Court to be returned soon, that he therefore thought he could continue the accounts in those books when they were returned and that during the interval he did not open regular account books. We do not think the mere fact that regular books were not kept would, in the absence of any evidence to show that the accounts now produced are false in any particular, render the 1st defendant accountable especially as the most serious charges made in the plaint as regards the suppression of account books, making of false entries in the account books and misappropriation of jewels, have not been made out. It is now well settled that, when an account has to be taken with a view to make a partition of joint family properties, the account is merely an enquiry into the existing assets and that the head of the family cannot in general be called upon to defend the propriety of his past transactions of the family except in cases of fraud, misappropriation or gross reckless waste. We need only refer to Balakrishna Ayyar v. Muthuswami Aiyyar 19 M.L.J. 70 Narayan Bin Babaji v. Nathaji Durgaji, I.L.R(1904) . 28 Bom. 201 Parmesh-war Dube v. Govind Dube I.L.R. (1916) Cal. 459 , Bhowani Prasad v. Jagarnath Shaha, 4 and Kristnayya v. Guravayya (1909) 9 Cal. L.J. 133. All that a coparcener seeking partition is entitled to is an account of the properties which exist at the date of partition or at the date when, owing to a demand for partition, there has been a severance of status and accounts will have to be taken in so far as they relate to the ascertainment of what the properties in existence are. The manager of a joint family being the accounting party has to file an account as to the properties available for partition but, as pointed out in Parameshwar Dube v. Govind Dube : AIR1921Mad443 and Kristnayya v. Guravayya I.L.R. (1916) Cal. 459 the other members of the family are not bound to accept the statement of the manager as to what the properties consist of and the enquiry directed by the Court should be conducted in the manner usually adopted to discover what in fact the property consists of and not what the manager says it is. In such a case it is open to the members of the family to show that expenditure which the manager says has been incurred has not been incurred or that the savings out of joint family funds have not been entered in the accounts. We are therefore of opinion that the direction of the Subordinate Judge that the 1st defendant is to account for the management from October 1916 cannot be supported. The direction ought to be that the 1st defendant should file an account of the properties existing and available for partition at the date of the plaint, the plaintiff being entitled to surcharge the accounts and to show that items of expenditure said to have been incurred were not, as a matter of fact, incurred or were not incurred to the extent mentioned in the accounts filed by 'the 1st defendant or that more properties are available for partition than those mentioned in 1st defendant's accounts.

2. As regards the opium business which the 1st defendant carried on, it appears from the evidence that he entered into partnerships with those who got licenses from Government to vend opium and that large amounts were sent by him for financing the business. Gangi Reddi, the grandfather of the plaintiff, died in 1917 and the case for the defendant and the evidence adduced by him is to the effect that, though he was bed-ridden for about six months before his death, he was giving instructions for the management of the family affairs and that the 1st defendant was transacting business after informing Gangi Reddi and getting his directions. An attempt was made by the 1st defendant to show that this opium business which he carried on was carried on with the consent and under the directions of Gangi Reddi: but this evidence has been rightly discredited by the Subordinate Judge. The evidence is that in 1901 and 1902 Gangi Reddi did business in opium but that he stopped that business and that, although he subsequently carried on extensive business in other directions, he did not do any business in opium. It is suggested that it was because he thought it was morally wrong to do so, but the probabilities are that he stopped business because, as the plaintiff's vakil contends, the business ended in a loss,

3. It is argued by Mr. Rangachari for the appellants that the business in opium was being carried on by the relations of the plaintiff and the 1st defendant, that the 1st defendant as managing member of the family after making enquiries was satisfied that it was a profitable business and that he did the opium business bona fide and for the benefit of the family. The contention for the plaintiff is that the managing member of a family while he is entitled to carry on an ancestral business has no right to embark on a new and speculative venture, that the business would not bind the other members of the family, that in the present case the business which the 1st defendant entered into, was illegal as it contravened the provisions of the Opium Act and that the managing member who enters into unlawful transactions has no right to saddle the family with the losses incurred therein. The business was commenced by the 1st defendant on the 26th of March 1917 as evidenced by Exhibit A, the deed of partnership between the 1st defendant and others. Gangi Reddi died in May 1917. The plaintiff had at that time attained majority and it is not suggested that he was taking any part in the management of the family affairs. He was a student before and, although he was living with the 1st defendant and his grand-father Gangi Reddi, it is not shown that he was aware of the business that was being carried on in opium. The 1st defendant in his evidence admits that he did not consult the plaintiff before he began the business. The finding of the Subordinate Judge is that the 1st defendant was managing the family affairs for at least 6 months prior to the death of Gangi Reddi though the case for the 1st defendant is that Gangi Reddi was himself managing the family affairs till the date of his death. Even assuming that the 1st defendant was managing the family affairs at the date when the opium business began, we do not think he had power to commence a new business without the concurrence of the plaintiff who was an adult member of the family and living with him at the time. As between the members of a joint family inter se, whatever may be the powers of the manager as regards the minor members of the family, there is no authority for holding that he can start a new venture without the concurrence of the adult co-parceners. His position cannot be better than that of a partner and whatever may be the rights of third persons dealing with the family, as between the members of the family inter se a new trade or business commenced by one member, even though he is the managing member, without consulting the adult co-parceners would not bind them in the absence of evidence of acquiescence. It is argued by Mr. Rangachari that no new business can be carried on by the managing member unless he was given a discretion in the matter : but it seems to us that the remedy is obvious. He should get the consent of the adult co-parceners. In the case of minor members, the position of the Kartha is that while he has power to carry on an ancestral trade that has devolved on the joint family he cannot bind the minors by embarking on new ventures. In D. McLaren Morrison v. Verschoyle (1901) 6 C.W.N. 429, it was held that the Kartha of a joint family possessing an ancestral business has an implied power to pledge the credit and property of the family but only for the ordinary business of the family and that he cannot do so for the purpose of embarking on a business which is not the ancestral business. The power of the manager to bind the family by embarking on a new business was considered by Abdur Rahim and Spencer, JJ. in Kadiri Kanakkappillantapath Abdur Rahiman Kuttti Haji v. Kochipalli Hussain Kunhi Haji : (1919)37MLJ316 and it was held that the junior members of a Malabar Tarwad are not liable for the debts contracted by the karnavan in the course of a trade carried on by him unless it is shown either that the trade was a family business or that it was carried on by the karnavan with the consent of the junior members. So far as trading families are concerned, there is not much difference between the position of a karnavan in his relations with the junior members and that of a manager of a joint family under Mitakshara with his co-parceners. We do not think that in the present case the trade carried on in opium by the 1st defendant is binding on the plaintiff who was an adult member at the time when it was commenced and who admittedly was not consulted about it and who, on the evidence, is not shown to have acquiesced in the business or to have known that it was being carried on. The business was of a highly speculative character, the 1st defendant financing the various renters of opium in consideration of a share of the profits. According to the ledger, Exhibit IV, between February and December 1917 over Rs. 55, 442 were advanced out of the family funds in respect of the opium business of 1917--1918.

4. Turning to the legality of the opium business carried on by the 1st defendant, we are of opinion that the partnership entered into by him for 1917--1918, as evidenced by Exhibit A, is not legal. The effect of the transaction was that the 1st defendant entered into a partnership with a number of people some of whom had obtained licenses to sell opium, he agreeing to finance the business and retaining the control of the whole business in his own hands. One of the terms in the license, Exhibit B, which is typical of the other licenses, runs as follows:--'You shall not sell, relinquish or sub-lease to others your right to supply or sell opium without obtaining the previous sanction of the District Collector in that respect. Even after obtaining orders of the District Collector in the said respect, no agent shall be appointed to exercise any such right without previously obtaining the approval of the District Collector in regard to such appointment.' Exhibit A. which is the deed of patnership between the 1st defendant and some others who had obtained licenses to vend opium, begins by stating that for the benefit of the 1st defendant and 12 others mentioned therein, five of them bid at the auction for the sale of opium in the villages mentioned in the schedule annexed thereto from the 1st of April 1917 to the 31st of March 1918, that it was agreed that the capital required for the business should be advanced by the 1st defendant who should get interest at Rs. 1-0-6 per cent per mensem and that each of the other partners was to deposit with the 1st defendant Rs. 125 for each share they had in the business, they getting similar interest. Clause 3 runs as follows : 'It is settled that Tadi Bulli Tammireddi, 1st defendant, out of us, should be writing all proper and necessary accounts, such as chittas, ledgers, etc, for this joint business and that Bulli Tammireddi should appoint, as he pleased, proper persons for selling opium in the villages specified in the schedule annexed hereto according to Government rules and get the work done by them and that a monthly report clearly showing purchase of opium, sadar sale, etc., should be made to Bulli Tammireddi once in a month from all stations and that the amount also should be sent (to him) then and there.' It was arranged that the profits should be divided in 64 shares and that the 1st defendant should get 20 shares and the others the various shares mentioned in the document. The effect of the transaction is that whereas under the licenses the only persons who can deal in opium are the licensees, a partnership is formed which gives to persons, who are not licensees, an interest in the business, the shares being determined by the terms of the agreement. It is also clear that, as regards the vending of opium, clause 3 makes the 1st defendant, who is not a licensee under any of the licenses, the sole person entitled to the right to appoint agents for the sale of opium. We are of opinion that the present case falls within the decision reported in Nalam Padmanabham v. Sait Badrinadh Sarada 21 M.L.J. 425, where two persons who were farmers of opium revenue under the Government entered into a partnership with a third person by which they admitted him as a partner in the opium business, and it was held that the partnership agreement was void and the suit not maintainable as the effect of the agreement was to enable a person, who was not entitled to sell opium, to sell it, and as it also amounted to a transfer to the person, who was not a licensee, of an interest in the business which was in violation of the conditions subject to which the license was granted. We are of opinion that clause 3 of the agreement set out above gives the 1st defendant, who is not a licensee, a right to sell opium through his agents, and prevents the licensees from having any voice in the matter of the appointment of agents to sell opium.

5. As regards the trade for 1918--1919, it is clear from Exhibit VII and the evidence of the 1st defendant that it was wholly illegal. The 1st defendant states that the persons who bid at the auction sale for that year and who were, under the Act, licensees for the vending of opium were merely benamidars for the 1st defendant and that 'the business was solely for the benefit of the 1st defendant, there being no partners in the business. Exhibit VII states that the persons who bid for the right to sell opium in 38 villages were merely benamidars and bid for the 1st defendant. The agreement proceeds as follows : 'Therefore you may lease out the said shops as you please and vend the opium. Because of the said shops standing in our names we shall always be ready to sign any papers you might require to be signed by us in connection therewith for any purpose at your request. We shall not claim any remission whatever from you for the same. Further you shall yourself recover the profit or loss accruing from the trade of the said 38 shops as you please and we shall have nothing to do therewith.' As the partnership for 1917--1918 was illegal and as the benami purchase by the 1st defendant in 1918--1919 was also illegal, it is clear that the 1st defendant cannot make the other co-parceners liable. It is not open to one co-parcener to enter into illegal transactions and to saddle the other co-parceners with the loss arising from them especially where it is not shown that the other co-parceners consented to it.

6. It is argued by Mr. Rangachari that, whatever may be the rights of third persons, as between co-parceners themselves the 1st defendant cannot be called to account for the monies he spent on this business, because it will really be calling him to account for his past transactions. No authority has been cited for the proposition that the immunity of a manager to account for his past transactions entitles him to enter into illegal transactions and use joint family properties for the purpose, We think it will be gross misconduct sufficient to entitle the co-parceners to require the managing member to bear the loss incurred in such transactions and to put back in the family any money that he may have taken out of the family for such transactions. Both on the ground that the business was unauthorised and that it was also illegal, we are of opinion that the decision of the Subordinate Judge is right. In taking an account of the joint family properties, the 1st defendant will pay the plaintiff one-half of the monies of the joint family which he has used for the opium business. The opium business for 1917--1918 and 1918--1919 will be treated as the sole separate property of the 1st defendant, he being entitled to the profits, if any, and liable to bear the loss.

7. As regards the choultry started by Gangi Reddi, there is little doubt on the evidence that it was started by him with the approval of his two sons. In his deposition given on the 16th October 1903 Gangi Reddi states : 'I endowed a choultry at Samarlakota for Rs. 10,000. I gave a leasehold right of the annual value of Rs. 1,200 for 25 years for a chatram in my village. My son asked me to endow the chatram for lame and blind people with the interest accruing on Rs. 10,000 funded capital. I am going to do so hereafter '. In his second will, Exhibit I-a dated the 13th day of May 1906 he states : 'From after my death, interest accruing on a sum of Rs. 10,000 shall be paid once a year for the Dharma Chatram (charity house) situate in Gollala Mamidada'. In his third will, Exhibit 1-b, dated the 8th day of October 1913, he states that he advanced a loan to Muchilika Appalaraju and others of Chegondapalli and took a usufructuary mortgage of Chegon-dapalli and its hamlets which form a Muttah and continues as follows : 'The net profits realised from the said Muttah annually I have been giving away for the expenses of feeding etc, of the choultry which I built in Gollala Mamidada and have been making credit and debit entries accordingly in the accounts also. So long as the said Chegondapalli Muttah is in our possession according to the term, the net profits annualy realised therefrom shall be paid for the expenses of the said choultry even after my death and Bulli Tamireddi shall look after the whole management needed for it. Besides this, the interest that may annually be realised on a sum of Rs. 10,000 out of my own funds shall either be spent to meet the expenses of the charity choultry at Gollola Mamidada once a year or shall be kept in deposit for the said purpose'. It appears from the accounts that the income from the Muttah was utilised for the expenses of the choultry from the date of its opening. The evidence shows that there was a dedication of the income from the Muttah for the purpose of the up-keep of the choultry and we see no reason to doubt the truth of the statement made by Gangi Reddi in his deposition given so early as 1903, already referred to, that he had already given the leasehold right he had in the Muttah as an endowment for the choultry. The Subordinate Judge upholds the provision in the will regarding the setting apart of Rs. 10,000 as funded capital for the choultry but thinks that the dedication of the income from Chegondapalli Muttah which is also referred to in the same will is not binding on the plaintiff. He observes : 'there is no doubt of the fact that in the Chegondapalli Khata the income was being shown as having been taken on to the account of the choultry in the account books maintained during the time of the late Gangi Reddi'. Relying on the decision in Govinda Doss v. Rajah Venkata Perumal : AIR1915Mad145 he is of opinion that the mere fact that the income was used by Gangi Reddi is no ground for holding that there was a dedication of the corpus. It is, how. ever, clear on the findings of the Subordinate Judge that Gangi Reddi and his sons were members of an undivided family and that the trade carried on by Gangi Reddi, was a joint family business in which the father and the sons were interested. The will executed by Gangi Reddi by itself cannot bind the plaintiff but the contention for the appellants is not based on the will but on an anterior dedication by Gangi Reddi and the will is only used as evidence of dedication. There seems to be no adequate reason for disbelieving the statement made by Gangi Reddi so long ago as 1903 that he had endowed the choultry with the income of Chegondapalli Muttah, especially as the account books also support his statement. So far as the dedication is concerned, no document is necessary. We need only refer to Pallayya v. Ramavadhanulu : (1903)13MLJ364 and Ramalinga Chetti v. Sivachidambara Chetti I.L.R. (1918) Mad. 440. We are of opinion that the income from Chegondapalli Muttah was dedicated to the choultry and that it is not joint family property liable for partition.

8. The next question is as to the marriage expenses of the 1st defendant's son and daughter. So far as the daughter is concerned, the will of Gangi Reddi directs that a sum of Rs. 10,000 should be given for the purpose of making jewels for hen She is clearly entitled to the expenses of the marriage being provided for out of the joint family funds and, having regard to the status of the family, we are of opinion that a sum of Rs. 3,000 should be set apart for the expenses of her marriage in addition to the sum of Rs. 1,000 provided for jewels.

9. As regards the marriage expenses of the 2nd defendant, no claim was made in the written statement for any such provision. No issue was raised on the point. The only point raised was as to the setting apart of Rs. 2,000 for jewels to be made for the girl he might marry as to which provision was made in Gangi Reddi's will. This has been allowed. The question as to the provision to be made for his marriage expenses was raised for the first time by Mr. Rangachari during the course of his argument. Under these circumstances we are not prepared to go into the question and direct any provision to be made.

10. As regards the jewels which form the subject matter of the 10th issue and which are claimed by the 1st defendant, we think the Subordinate Judge was right in deciding against the 2nd defendant. He set up the case that some jewels were pledged by strangers with the family and some were lent to the family by others. He offered to file a list stating which jewels were pledged and which jewels were lent but did not do so. It is not proved that the jewels are the jewels of the 1st defendant's wife and we do not think that, having regard to the contentions raised by the 1st defendant, he should now be given an opportunity of adducing evidence that the jewels belong to his wife, a case which was never set up by him in the written statement or at the time of trial in the lower Court.

11. This disposes of all the points raised in appeal. The decree of the lower Court will be modified in the light of the above observations. As the appellants have failed substantially they will pay respondent's costs.

12. This appeal having been set down to be spoken to this day on the minutes of decree.

13. In a case where a manager of a joint family is made to account for monies expended by him we do not think there is any general rule that he should pay interest on the sum which he has to make good, but each case must be dealt with in the circumstances peculiar to it. In the present case we think that the defendant should be made to pay interest from the date of the plaint which corresponds to the date when the demand was made and that the rate should be six per cent till payment. Decree accordingly.

14. The objection as to the dedication of the income of Chegondapalli estate being limited to 25 years is not pressed.


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