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Karnati Munayya Vs. Mitta Krishnayya, Minor by His Guardian, Mitta Balanna and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported in84Ind.Cas.949; (1924)47MLJ737
AppellantKarnati Munayya
RespondentMitta Krishnayya, Minor by His Guardian, Mitta Balanna and ors.
Cases ReferredIn Webb v. Macpherson
Excerpt:
.....that, if, in these circumstances, a court would have sanctioned a transaction, it must be deemed to be a transaction which no court of law would or should set aside. even applying this principle, i am satisfied that in this case the circumstances were such that, if an application had been made to the court for sanctioning the sale of the two-thirds share of the minor in this property, a court of law would have sanctioned it. there was no purchaser and all the circumstances indicate that by the sale of this property the necessary amount was sought to be raised as it was the best thing to do, the elder brother of the minor, the mother and the maternal uncle, all of them admittedly acting bona fide in the interests of the minor, concerned in the sale......of the sale price with the vendee indicates that there was no immediate necessity for selling the minor's share and that it was an imprudent transaction as the minor's guardian ran the risk of the vendee becoming insolvent before the minor came of age. the subordinate judge has carefully considered the circumstances of the sale and he has found on the first issue that the sale was not an imprudent alienation, that the price was reasonable, and that the vendee acted bona fide. an important consideration in this case is that the minor not having become divided by metes and bounds from his stepbrother had only an undivided share in this house. some property had to be sold in order to raise money to pay off the debts, instead of allowing them to increase by accumulation of interest. owing.....
Judgment:

Charles Gordon Spencer, C.J.

1. The plaintiff, whose suit was dismissed in the lower Court, appeals. The suit was brought to set aside a transaction of sale entered into by the plaintiff's guardian during his minority. The plaintiff's guardian was his mother and it appears that his maternal uncle, Narayya, assisted his mother in business transactions. The sale deed (Ex. VII), which is attacked, is a sale of a house in Proddatur for Rs 4,300 in which the minor has a one-third share. Owing to the death of his father, after division had taken place between the plaintiff's step-brother on one side and the plaintiff and his father on the other side, during the lifetime of the father, the plaintiff's share of the house, at the time of the sale, was two-thirds. The price being Rs. 4,300, two-thirds of this amounts to Rs. 2,866. The Judge has found that there was justifiable necessity for about half the sum, Rs. 770 being due upon a mortgage incurred by the plaintiff's father, Rs. 93, being due on a simple debt, Rs. 40 for the plaintiff's father's funeral expenses, and about Rs. 450 for the marriage expenses of the plaintiff's sister. It is not now suggested that any fraud on the part of the plaintiff's guardian has been proved. But it is argued by Mr. Krishnaswami Aiyar that there was no justification for selling this property when the debts due by the family might have been defrayed by a mortgage or by other means; and secondly, it is argued that the deposit of Rs. 1,433 of the sale price with the vendee indicates that there was no immediate necessity for selling the minor's share and that it was an imprudent transaction as the minor's guardian ran the risk of the vendee becoming insolvent before the minor came of age. The Subordinate judge has carefully considered the circumstances of the sale and he has found on the first issue that the sale was not an imprudent alienation, that the price was reasonable, and that the vendee acted bona fide. An important consideration in this case is that the minor not having become divided by metes and bounds from his stepbrother had only an undivided share in this house. Some property had to be sold in order to raise money to pay off the debts, instead of allowing them to increase by accumulation of interest. Owing to the house being undivided it had to be sold as a whole as nobody would give a proper price for an undivided share. The plaintiff's half-brother joined in the sale and it is not suggested that he was unmindful of his own interest or was ready to accept a smaller price than what the house was worth for his share of the purchase-money. More than one attempt was made to sell the property. On the first occasion the plaintiff's maternal uncle himself offered bids in order to raise the price and when it was sold for a price that was considered insufficient, he bought it back again, and again put it up for sale. All these are circumstances which indicate that the sale was a bona fide transaction arranged by the plaintiff's guardian to meet the necessities of paying her husband's debts. Simultaneously with the sale, the purchaser executed a bond (Ex. B.) to pay Rs. 1,433 in all on the plaintiff's demand immediately after he attained majority; the interest meanwhile was fixed at 6 per cent which was the rate of interest secured by the discharged mortgage document.

2. It is argued that it was an improper act on the part of the minor's guardian to leave any part of the purchase-money in the hands of the purchaser. One consequence of so doing was that the minor's guardian was prevented from embezzling or wasting the cash which ought to come to the minor. The question has been considered in several cases, whether in such a case where a purchaser separately covenants to pay the purchase-money or part of it at a future date, the vendor loses his lien for the unpaid purchase-money. In the case reported in Krishnaswami Aiyangar v. Subramania Ganapatigal (1917) 35 MLJ 304 two promissory notes were executed as part of the consideration for the sale and it was held by the learned Judges who decided that case that the vendor lost his lien for the unpaid purchase-money. Phillips, J., who delivered the judgment of the Court, observed that when there is a separate agreement for payment of part of the purchase-money in lieu of actual cash, it is a question of the intention of the parties whether the agreement is accepted as a collateral security or whether it is a substitution for the statutory right, which every vendor has by reason of Section 55(4) of the Transfer of Property Act, to have a lien for the unpaid purchase-money. On the facts of the case it is not for us now to say that it was wrongly decided because that must have been upon the view which the Court took of the intention of the parties. In Webb v. Macpherson ILR (1903) IC 57 : 13 MLJ 389 the Privy Council pointed out that under Section 55 of the Transfer of Property Act it is only in the absence of a contract to the contrary that the seller does not retain his lien upon the property for recovery of the purchase-money. Therefore the question in every case is whether the contract excludes the operation of the charge. This will be so whether the charge is one created by a statute as in India or arises out of equity as in England. Halsbury's Laws of England, Vol. XIX, page 30, makes it clear that everything depends upon the intention of the parties. I can find nothing in the transaction under Ex. B to indicate that there was any understanding between the plaintiff's guardian and the purchaser Venkatasubbayya that the latter should get the property unencumbered by any lien for the unpaid purchase-money. The parties seem to have considered it necessary that there should be some collateral agreement, like Ex. B, in order to make it clear that the unpaid portion of the purchase-money should be payable to the minor after he attained majority. There is nothing in the terms of this document or in the sale deed to indicate an intention to put an end to the vendor's statutory lien. The guardian's conduct in entering into the transaction was not such as to justify any reflection being cast upon it on account of this arrangement. I am of opinion that the Subordinate Judge was right in upholding the transaction and dismissing the suit. The appeal must be dismissed with costs.

Srinivasa Aiyangar, J.

3. I agree with my Lord the Chief Justice. I only wish to add that the strongest ground or which Mr. Krishnaswami Aiyar relied for asking us to set aside the sale was that as part of the transaction between the guardian of the minor and the purchaser it was agreed that the purchaser should withhold one-third of the entire purchase-money and keep it in his hands till the minor should attain majority. This he argues is clear and cogent evidence that there was no necessity for the alienation at any rate to the extent of the amount that was agreed to be detained in his hands. If it stood alone, undoubtedly a Court of law would have hesitated before it refused to set aside such a transaction. It is not merely evidence that there was no necessity for the amount which was agreed to be detained by the purchaser but it was argued that it also showed that the amount that was necessary might have been raised otherwise. However, in this case, there are various circumstances which weigh on the other side. To begin with, the mortgage of Rs. 770 was not only upon the suit house but also upon all the other immoveable properties of the minor. The release of the other properties from this encumbrance was undoubtedly a benefit to the estate of the minor. This house itself barely 15 feet in breadth though not actually divided by metes and bounds was divided into three parts, the elder son's share being the middle, and the two-thirds that accrued to the minor being on either side of this share. Therefore, there was a house which had necessarily to be sold at some time or other. The elder brother was willing there and then to join in the sale. It is also clear that some moneys were required to pay off the unsecured debts and a sum of Rs. 400 for meeting the expenses of the marriage of the minor's sister. I do not think it would have been a prudent transaction to seek to sell only one share of the minor's property. Nobody would have purchased it. No doubt a Court has to decide not only with regard to the kind of alienation but also with regard to the quantum of alienation. But considering all the circumstances, it seems to me to be perfectly clear that this transaction was not such as should be set aside. We should also bear in mind that the purchaser was a stranger and not a relation of the parties. No fraud or collusion has been alleged or proved. The circumstances clearly show that the guardians of the minor were not anxious to handle any moneys of the minor. No doubt it may be argued, as it was, that the mere fact that for his own protection the pur-chaser stipulated to retain in his hands a sum of Rs. 1,400 and odd showed that he was conscious that the transaction was questionable or was capable of being questioned. But having regard to the large number of claims in Courts every day to set aside alienations we cannot accuse any purchaser, if he was overcareful. It has often been said that the test for a Court in considering whether a transaction by a guardian on behalf of the minor should be set aside or not would be to see whether the transaction was such as a man of ordinary prudence would have had in respect of his own property. That undoubtedly is not an accurate statement of the law. It is too broadly stated. But at any rate, that clearly indicates one limit, namely, that no Court will uphold a transaction which it considers that a man of ordinary prudence would not have had, in respect of his own property. The other limit I should like to lay down somewhat in this way. Suppose at the time of the transaction the guardians, who acted actually, were guardians appointed by the Court and they made an application to the Court for sanctioning a particuluar transaction, were the circumstances such as the Court would consider justifiable for the purpose of sanctioning the transaction It is perfectly clear that, if, in these circumstances, a Court would have sanctioned a transaction, it must be deemed to be a transaction which no Court of Law would or should set aside. Even applying this principle, I am satisfied that in this case the circumstances were such that, if an application had been made to the Court for sanctioning the sale of the two-thirds share of the minor in this property, a Court of Law would have sanctioned it. It is in evidence that for three days public auctions were held and this property was attempted to be sold. There was no purchaser and all the circumstances indicate that by the sale of this property the necessary amount was sought to be raised as it was the best thing to do, the elder brother of the minor, the mother and the maternal uncle, all of them admittedly acting bona fide in the interests of the minor, concerned in the sale. I, therefore, agree that the sale sought to be set aside should not be set aside. The appeal, therefore, fails, and I agree to the order proposed by my Lord the Chief Justice.


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