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Vege Ramayya and anr. Vs. Avatapalli Suryanarayanamurthi - Court Judgment

LegalCrystal Citation
SubjectProperty;Family
CourtChennai
Decided On
Reported in(1927)53MLJ464
AppellantVege Ramayya and anr.
RespondentAvatapalli Suryanarayanamurthi
Cases ReferredBrij Lal v. Inda Kunwar
Excerpt:
.....for the benefit of the estate. no doubt, when a creditor seeks to justify on the ground that he made enquiries and was reasonably satisfied that there was necessity, he is not bound further to prove that the money borrowed was actually utilised for the purposes for which it was borrowed. if the evidence shows that the debt for which the money was raised was paid by other means and some time after, then the learned subordinate judge is perfectly justified in relying upon it for drawing the inference that there was no necessity justifying the transaction and that is what has been done by the learned subordinate judge in this case. 8 with a sentence like this: 7. as i am satisfied that the learned subordinate judge has found that there was no necessity to justify the alienation and that..........there was necessity for the loan. the plaintiff's suits were therefore dismissed. in appeal the learned subordinate judge held that there is no evidence that any portion of the sum of rs. 840 was utilised actually for either of the purposes mentioned in exs. c and d. he also found on the evidence that no enquiries of any kind were made by the vendee before entering into the transactions. an argument was put before him that though the sum obtained was not utilised for paying kanthamma's debt, it was utilised for the payment of other debts binding on the minor plaintiff. this was also found against by the learned subordinate judge. 1 may say that this justification for the sale was not put before me in argument. on these findings the learned subordinate judge set aside the decrees of.....
Judgment:

Madhavan Nair, J.

1. The suits in these two Second Appeals were instituted by the plaintiff to set aside the alienations of his property made by his father during his minority. The plaintiff, his two brothers and his father made a division of the family properties. The share that was allotted to the plaintiff was burdened with some debts. As the plaintiff was a minor at that time, his family affairs were looked after by his father as his guardian. To pay the debts due by the plaintiff, his father borrowed money from one Kanthamma under a mortgage, Ex. G-l, in 1906 and to pay off Kanthamma money was raised by executing sale deeds, Exs. C and D, of the plaintiffs property for a total consideration of Rs. 840. The defendants in the two suits who are the appellants in these Second Appeals represent the alienees.

2. The plaintiff's case is that these alienations are not binding on him. He contended that the debt due to Kanthamma under Ex. G-l was discharged later on in 1915 by selling property under Ex. G and as such the money got under Exs. C and D could not have been utilised for the purpose for which it is said to have been taken. The defendants contended that the amount taken under the sale deeds was appropriated for the purpose of discharging the debt due to Kanthamma. The purposes recited in both the sale deeds are the same. They are to the effect that money was required to discharge the debt due to Kanthamma and also for the expenses of the plaintiff's sister's marriage.

3. The learned District Munsif found that the money raised by these deeds was appropriated for discharging the debts as mentioned in the documents and that the defendants made enquiries sufficient to convince them that there was necessity for the loan. The plaintiff's suits were therefore dismissed. In appeal the learned Subordinate Judge held that there is no evidence that any portion of the sum of Rs. 840 was utilised actually for either of the purposes mentioned in Exs. C and D. He also found on the evidence that no enquiries of any kind were made by the vendee before entering into the transactions. An argument was put before him that though the sum obtained was not utilised for paying Kanthamma's debt, it was utilised for the payment of other debts binding on the minor plaintiff. This was also found against by the learned Subordinate Judge. 1 may say that this justification for the sale was not put before me in argument. On these findings the learned Subordinate Judge set aside the decrees of the District Munsif.

4. In second appeal, Mr. Raghava Rao for the appellants contends that it is not the duty of the bona fide creditor who lends money to the minor to prove that the money lent has been used for the purposes for which it was lent, that the Subordinate Judge's conclusions that the transactions are not binding is coloured by the view that it is the duty of the creditor to see to the application of the money and that he has set aside the decrees of the District Munsif because the defendants have not been able to show that the sum of Rs. 840 was actually utilised for the purposes mentioned in the sale deeds. He therefore argued that since the Subordinate Judge has not considered the real questions arising for decision. the case should he sent down for a fresh consideration of the evidence under two headings : (1) Was there necessity for the sales, and (2) Were the sales such as a prudent manager would make in the circumstances of the case? The finding that the defendants did not make any enquiries at all is one of fact and I may say that that was not challenged before me. The correctness of the finding that the debt due to Kanthamma was not paid by the money raised by Exs. C and D but was actually discharged only later on under Ex. G was challenged by Mr. Raghava Rao, but it was admitted by him after going through the grounds of second appeal that the question has not been raised therein. Even if he had raised the question, the conclusion being one of fact, that finding also cannot be questioned in second appeal.

5. It is well settled that, in order to justify the alienation by a guardian of the minor's property there must be either 'necessity' for the loan, or the creditor before lending money should have made reasonable enquiries to satisfy himself as to the existence of such necessity. In view of the findings, the question of bona fide enquiry does not now arise. In Hanuman Persaud Panday v. Mussumat Babooce Munraj Koonweree (1856) 6 MIA 393 their Lordships of the Privy Council stated the responsibility of a creditor in circumstances like these in the following terms:

Their Lordships think that the lender is hound to inquire into the necessities for the loan and to satisfy himself as well as he can, with reference to the parties with whom he is dealing, that the manager is acting in the particular instance for the benefit of the estate. But they think that if he does so inquire and acts honestly the real existence of an alleged sufficient and reasonably-credited necessity is not a condition precedent to the validity of his charge, and they do not think that, under such circumstances, he is bound to see to the application of the money.... Their Lordships do not think that a bona fide creditor should suffer when he has acted honestly and with due caution but is himself deceived.

6. Relying on the passage which I have underlined (italicised) in the above extract it is argued that the learned Subordinate Judge has allowed the plaintiff's suits because he thinks that it is the duty of the creditors to see to the actual application of the money and that such duty has not, in his opinion, been discharged by the creditors (vendees) in this case. I do not think that this argument can be supported. No doubt, when a creditor seeks to justify on the ground that he made enquiries and was reasonably satisfied that there was necessity, he is not bound further to prove that the money borrowed was actually utilised for the purposes for which it was borrowed. But that is not the case here. The learned Subordinate Judge nowhere says that it is the duty of the creditor to see to the application of the amounts borrowed. The justification for the loan based upon proper enquiry being out of the question, the ground of justification to be considered is 'necessity'. Whether there was necessity or not for a loan or sale would depend upon the circumstances of the case. In discussing such a question 1 think it would be relevant to consider with reference to the evidence whether the money was utilised for the purposes for which it was raised. if it was not, then at the time it was raised there could obviously have been no necessity for it. If the evidence shows that the debt for which the money was raised was paid by other means and some time after, then the learned Subordinate judge is perfectly justified in relying upon it for drawing the inference that there was no necessity justifying the transaction and that is what has been done by the learned Subordinate Judge in this case. In paragraph 8 of his judgment he deals with the question of necessity absolutely apart from the question of 'bona fide enquiry'. Having found in that paragraph that the debt was discharged not by the father but by the minor afterwards by other means, he finds in paragraph 9 that the defendant made no bona fide enquiries regarding necessity for the sale. The appellants' argument seems to be based upon a confusion. The finding given with regard to necessity as justifying alienation is used by him as if it was given in connection with the question whether the vendees made bona fide enquiries before entering into the transactions. I do not think that there would have been any scope for the plausible and ingenious argument put forward on behalf of the appellants if the learned Subordinate Judge has ended para. 8 with a sentence like this:

I therefore find that no 'necessity' has been proved in this case for the sale.

7. As I am satisfied that the learned Subordinate Judge has found that there was no necessity to justify the alienation and that the vendees did not make bona fide enquiries before entering into the transactions, I think the Lower Court's decree cannot be questioned. Recitals in deeds of sale with regard to the existence of legal necessity for an alienation are not of themselves evidence of such necessity without substantiation by evidence alinnde [see Brij Lal v. Inda Kunwar ILR (1913) A 187 : 1913 26 MLJ 442]. Except the bare mention of the purposes in the deeds, there is no other proof in this case of necessity, to justify the suit alienations. In the view that 1 take of this case as one concluded by the findings given by the Lower Court, it is not necessary to refer to and discuss the cases cited by either side in support of their respective contentions.

8. It has not been argued before me or in the Courts below that the alienations were for the benefit of the minor as distinguished from the other grounds justifying the alienations.

9. I dismiss these two Second Appeals with costs.


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