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Bonthi Damodharam Chetti, Minor by His Mother and Guardian Bonthi Ethirajan Vs. Bansilal Abberchand, Rai Bahadur and ors. - Court Judgment

LegalCrystal Citation
SubjectFamily;Property
CourtChennai
Decided On
Reported in(1928)55MLJ471
AppellantBonthi Damodharam Chetti, Minor by His Mother and Guardian Bonthi Ethirajan
RespondentBansilal Abberchand, Rai Bahadur and ors.
Cases ReferredThe Official Assignee of Madras v. Palaniappa Chetti
Excerpt:
- - it is, however, well known that in the piece-goods market at madras the seventy days' credit generally signifies merely that the price payable carries interest at the rate that may be stipulated from the expiry of seventy days, and that if the purchaser should make the payment earlier he would be entitled to a discount also at a stipulated rate calculated proportionately for the unexpired period of credit before which the payment is made......evidence whatever on behalf of the plaintiff or on the record to show that they can be regarded as debt borrowed for paying off any antecedent debts. there is no doubt some room for such a contention. but at the same time it must be remembered that the appellant became a party to the suit on his own application and it was only on the pleas raised by him that the issues were raised. in this connection it must be observed that on behalf of the fourth defendant no such question was raised or even suggestion made either in the defence filed or in the cross-examination of the plaintiff's witnesses. the learned vakil for the appellant strenuously contended that the onus is on the plaintiff supporting the alienation to establish affirmatively the circumstances under which the father, the 1st.....
Judgment:

1. The suit from which this appeal arises was instituted by the 1st respondent to recover the amount due under an equitable mortgage made by deposit of title deeds and evidenced by a registered instrument. The amount to secure which the equitable mortgage was made had admittedly been advanced to a business carried on in partnership by defendants 1 to 3, the original defendants in the action.

2. The property over which the equitable mortgage was given as security belonged, however, to the first defendant or his family. The 4th defendant in this suit, the appellant before us, was added as a party on his own application apparently with a view to have determined in this action itself the question whether or not the equitable mortgage made by the 1st defendant was binding on his half share in the property.

3. It has thus come about that the pleadings in the case, so far as the liability of the 4th defendant was concerned, were not as accurate as otherwise they might have been. On behalf of the 4th defendant, it being denied that the mortgage was binding on him, the parties went to trial on that issue generally, and Mr. Justice Krishnan, who tried the case, found it was so binding and granted a decree accordingly. It is from that judgment that the 4th defendant has filed the present appeal.

5. In appeal it has been contended before us that the learned Judge was wrong in holding that the mortgage was binding on the 4th defendant's share in the property. The argument was based on two grounds by the learned vakil for the appellant. The first was that the property, the subject of the mortgage, being admittedly joint family property of the 1st and 4th defendants, the 1st defendant had no right to alienate the property inclusive of the son's share except for purposes properly binding on the family or for bona fide antecedent debts of his own. It was contended that, at the time when the suit mortgage was created, though there was a personal debt of the 1st defendant for goods purchased for the business to the extent of Rs. 25,000, still that debt had not yet become payable, the goods having been purchased on credit and the credit period of seventy days not having then expired.

6. It was argued that if goods should be purchased by a person on credit there is no debt due till the expiry of the credit period. This argument was obviously due to a confusion between debts due and debts due and demandable. A debt may conceivably be both due and payable even though not demand-able or enforceable at law. It is, however, well known that in the piece-goods market at Madras the seventy days' credit generally signifies merely that the price payable carries interest at the rate that may be stipulated from the expiry of seventy days, and that if the purchaser should make the payment earlier he would be entitled to a discount also at a stipulated rate calculated proportionately for the unexpired period of credit before which the payment is made. The contention, therefore, cannot be accepted that there is no debt due by the father before the expiry of the credit period and in any case it would have been obviously to the interest of the first defendant to pay up the amount due even before the expiry of the credit period and earn a discount.

7. The learned vakil for the appellant referred in this connection to the case of Bandhu Ram v. Ramkishun Sonar (1923) 21 A.L.J. 354. It was held in that case that the amount secured by a mortgage not being payable for some considerable time could not be regarded as a pressure on the estate or the family so as to justify an immediate alienation for the purpose of discharging it. But a trade debt cannot possibly be regarded in the same light and more especially when it is really payable even though not demandable and when on such payment being made proportionate discount can also be obtained.

8. The second contention argued on behalf of the appellant was that the amount now sued to be recovered was really not the original debt of Rs. 15,000 borrowed for paying off an antecedent debt of the father but represents only moneys borrowed subsequently from time to time by the father and that, as regards the purposes for which these later amounts were borrowed, there is no evidence whatever on behalf of the plaintiff or on the record to show that they can be regarded as debt borrowed for paying off any antecedent debts. There is no doubt some room for such a contention. But at the same time it must be remembered that the appellant became a party to the suit on his own application and it was only on the pleas raised by him that the issues were raised. In this connection it must be observed that on behalf of the fourth defendant no such question was raised or even suggestion made either in the defence filed or in the cross-examination of the plaintiff's witnesses. The learned vakil for the appellant strenuously contended that the onus is on the plaintiff supporting the alienation to establish affirmatively the circumstances under which the father, the 1st defendant, was entitled in law to effect a valid alienation. The argument put forward was as follows : No doubt the original sum of Rs. 15,000 may be held to have been borrowed for paying off antecedent debts, but that is only the first item in the account; since then the 1st defendant has paid in to the credit of the account several sums of money; these payments would, according to the rules relating to the appropriation of payments, have reduced considerably the amount of the original debt; the amount now sued to be recovered, therefore, represents only moneys borrowed by the 1st defendant subsequently; there is no evidence with regard to the purposes for which these later amounts were borrowed and therefore the suit mortgage cannot be supported in the absence of any evidence to show that these later borrowings were for the purpose of discharging the father's antecedent debts. There would have been considerable force in this argument and great difficulty in deciding in favour of the plaintiff on the evidence before us, if the original contract between the parties had not been one of security by way of mortgage, having been intended in the very first instance to be security for a floating account. In the case of a floating account where security is intended to cover the maximum contemplated by the parties it is not possible, as pointed out by the learned Judge in the Court below, that after the maximum amount is once borrowed and drawn, subsequent payments in, can be regarded as. payments made to reduce the maximum amount of liability, without any reference to or any contemplation of subsequent drawings or borrowings.

9. After all, all the rules relating to appropriation of payments and the rule formulated by the Master of the Rolls in Clayton's case (1816) 1 Mer. 572 is a rule based on the intention of parties, actual, presumed or even imputed. If so, the payments in, made by a debtor who has already drawn the maximum amount, cannot be attributed to any intention on his part either to reduce the maximum available or even permanently to reduce the liability but are only ascribable, as pointed out by the learned Judge, to keep down the interest and make the amount available for being drawn out again.

10. It follows from this that the decision of the learned Judge could not be held to be wrong on any such hard and fast application of the rule relating to appropriation of payments.

11. The view that we have thus taken on the two points argued before us would be sufficient to dispose of the appeal. But it seems to us that the decision of the learned Judge can be supported on a much broader ground.

12. It is admitted that the first and fourth defendants belong to a caste or community of traders and that the first defendant's father was himself during his lifetime carrying on business in piece-goods. It is not contended before us that if the deceased father of the first defendant had carried on such business till his death and the first defendant had continued it subsequently, he would not have been entitled to borrow moneys for the purposes of such business. But it appears that the business which was carried on by the father was stopped by him for some years before his death and that the first defendant did not begin such business till a few years after his father's death. On this it was strenuously contended on behalf of the appellant that a business would cease to be a family business if it should cease to be carried on for such a considerable time. But it seems to us that there is no warrant for any such contention, much less for such a contention based on the length of the period of suspension.

13. After all, trade and commerce are largely dependent on time, place and condition and it seems to us monstrous to require that a person should be under an obligation to continue his business under any condition whatsoever and even though loss may be anticipated or certain under the penalty of the business carried on by him ceasing to be regarded as ancestral or family business. Such a requirement would obviously not be in the interests of family estates. Having regard to the general principles of Hindu Law it must be held that the substance and subsistence of family are interrelated and that the family estate and the family business or profession, that is the 'kulachara', are closely related and almost interdependent. On the one hand it is the family business or profession that is the origin of the wealth and the means by which it continues to be maintained and improved. On the other hand it is the family estate or wealth that makes the conduct of the family business or profession possible.

14. From this it would also follow that too narrow a construction should not be allowed to be placed on such expressions as 'family trade or business' and that with changes of civilizations and conditions what should be applied is not a rigid rule of law but the principle on which it is based. It seems to us absurd to suppose that if a family business should be found to have consisted in the purchase and sale of one commodity, purchase and sale of another commodity should be held to be outside the scope of the family business. The reductio ad absurdum of such a rigid rule may be seen if the rule is pushed to its logical extreme and it should be sought to be contended that the ancestral business consisted only in the purchase and sale of 100 bags of rice per year and that, therefore, the purchase and sale of 150 bags of rice was a speculative extension of such business. Generally speaking, therefore, each case will have to be determined only with regard to its particular facts. The question to be determined in each case should be whether having regard to the recognized 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. In this connection we may state that we entirely approve of the dictum of Sadasiva Aiyar, J., in the case of The Official Assignee of Madras v. Palaniappa Chetti 35 M.L.J. 473 which is as follows:

I think that the right of a Hindu father belonging to a trading community to begin a lawful and ordinary trade business as a joint family business in which himself and his minor sons were partners cannot be disputed.

15. In this case it being not disputed that the family business has been one of purchase and sale of piece-goods the mere circumstance that the father of the first defendant ceased for some reason to carry on such business for a few years before his death is not sufficient to make a similar business started by the son some time afterwards any the less a family business. If it be a family business, it cannot be argued that the first defendant had no right to borrow the moneys, the subject of the claim, for the purposes of carrying it on.

16. The decree of the learned Judge is therefore right and the appeal fails and is dismissed with costs.


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