Alfred Henry Lionel Leach, C.J.
1. This appeal concerns a mortgage executed on the 12th March, 1919, in favour of the father of the first and second respondents by the third respondent, who is the father of the appellant. In executing the mortgage the third respondent signed for himself and also purported to be acting (a) as the guardian of the appellant and of his nephew, Krishnaji, and (b) as the manager of a joint family which he alleged consisted of himself, the appellant, his nephew, and his brother Balakrishna. The mortgagee having died, the first and second respondents, on whom his estate devolved, instituted the suit out of which this appeal arises in the Court of the Subordinate Judge of Chingleput to recover the sum of Rs. 9,213-12-0 claimed to be due as principal and interest under the mortgage. The defendants were the appellant, the third respondent, and Balakrishna who died during the pendency of the suit. Balakrishna's estate having devolved by will on the appellant the suit was continued against the appellant as the legal representative of Balakrishna as well as against him as a member of the joint family. The suit was defended by the appellant who averred that the property in suit constituted trust property and as such could not be mortgaged by the third respondent; that even if it were not trust property no necessity existed for mortgaging it; that the loan was in fact obtained by his father for immoral purposes; and that, in any event, the estate of Balakrishna was not bound by the deed as he had already separated from the family. The learned trial Judge lightly refused to go into the question whether there was a paramount title, as all that could be sold was the right, title arid interest of the defendants in the property. He rejected the plea that the loan had been obtained by the third respondent for immoral purposes, but held that the appellant was bound by the deed as the mortgagee had made reasonable inquiries with regard to the need for the loan and had satisfied himself that it was necessary. He was, however, of the opinion that liability did not extend to Balakrishna's estate. On these findings he passed a decree for the amount claimed and directed that in default of payment within the time allowed for redemption the interests of the third respondent, of Krishnaji, who had died before the suit, and of the appellant as the son of the third respondent should be sold. The appellant contends that on the evidence the learned trial Judge should have accepted the plea that the money was raised by the third respondent for immoral purposes and failing this should have dismissed the suit so far as the appellant was concerned on the ground that the loan was not required for family purposes and it had not been shown that the mortgagee made inquiries before lending the money. The first and the second respondents have filed cross-objections as they challenge the finding that the estate of Balakrishna is not bound by the mortgage.
2. In order to understand the position it is necessary to refer to certain events which happened before the mortgage deed was executed. Up to the year 1905 the family was joint. It then consisted of the appellant's great uncle (Gopinath) his father, his father's brothers (Rajaram and Balakrishna), Rajaram's son (Krishnaji) and himself. In January of that year Gopinath separated from the other members of the family, and on the thirty-first of that month a deed of partition was executed. The properties belonging to the family were a house in Tanjore, a house in Madras, and certain property on the outskirts of Madras known as 'Teeds Garden'. Under the terms of the partition deed Gopinath received the Tanjore house and Rs. 3,000 and the third respondent and his brothers the Madras house. Teeds Garden was not partitioned, but the effect of the deed was to make Gopinath a tenant-in-common with his nephews, who as between themselves remained joint. On the 28th April, 1905, Balakrishna separated from his brothers and executed a deed relinquishing his interest in the Madras house in consideration of a sum of Rs. 2,000. On the 24th July, 1910, Rajaram and the third respondent sold the Madras house. Shortly afterwards Rajaram died. The joint family then consisted of the third respondent, the appellant and Rajaram's son Krishnaji.
3. According to the recitals in the mortgage deed the money was required for the marriage of the appellant and for capital in the family business in precious stones. It will be necessary to consider whether these recitals were true, but I will first of all deal with the plea that the loan was raised by the third respondent for immoral purposes. It is the appellant's case that his father became addicted to drink many years ago and that drink led him to associate with woman of immoral character. He is supported by a number of relatives, some of whom hold good positions in life. It is said on behalf of the first and the second respondents that it is no uncommon thing in this country for members of a family, ostensibly respectable, to instigate and to assist a son in maintaining a plea that his father has lived an immoral life, when it is a matter of preventing a mortgagee from enforcing his rights. It is a regrettable fact that false pleas of this nature are not unknown. But each case must be considered on its merits, and the fact that other people have not hesitated to raise false pleas cannot be taken into account here. The learned trial Judge, having heard the appellant's witnesses, refused to believe their testimony on this point, and the learned Advocate for the first and the second respondents has shown that in another respect the defence evidence is not true. An attempt was made to prove that the third respondent had not lived with his wife and son for many years, but the falsity of this story is to be gathered from the evidence of Nana Tawker, the uncle of the appellant's mother and one of the defence witnesses. In these circumstances we are not prepared to hold that the learned trial Judge has failed to weigh the evidence on this point properly. But even if it were true that the third respondent did drink and associate with women of bad character this would not entitle the appellant to succeed, because there is nothing to show that the loan was raised for the purpose of enabling the third respondent to lead an immoral life or to discharge debts which had been incurred as the result of such conduct. To prove that the father has been immoral will not relieve the family from liability. It must be shown that there is some connection between the debt and the father's immorality, as the Privy Council pointed out in the case of Sri Narain v. Lala Raghubans Rai (1912) 25 M.L.J. 27 : 17 C.W.N. 124 (P.C.). In their judgment in Tulshi Ram v. Bishnath Prasad I.L.R. (1927) All. 1, Lindsay and Sulaiman, JJ., remarked that if this were not the correct law the position of the mortgagees would become wholly insecure and intolerable, and that even the payment of antecedent debts would be nullified by proof that the father was an immoral person. This disposes of the appellant's plea based on the alleged immorality of his father.
4. The more important question is whether the first and the second respondents have discharged the burden imposed upon them of showing that their father did make inquiries before lending the money and was satisfied that there was necessity for the loan. The learned Advocate for these respondents would have it that it is not necessary for his clients to go so far and that it is sufficient if they prove that he had a business, the argument being that this in itself would shift the burden. This contention, however, is opposed to settled principle and it is, therefore, necessary to state the law. It is set out in language which leaves no room for argument in the following passage from the judgment of their Lordships of the Privy Council in the case of Hunoomanpersaud Panday v. Mussumat Babooee Munraj Koonweree (1856) 6 M.I.A. 393:
Their Lordships think that the lender is bound 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. It is obvious that money to be secured on any estate is likely to be obtained on easier terms than a loan which rests on mere personal security, and that, therefore, the mere creation of a charge securing a proper debt cannot be viewed as improvident management; the purposes for which a loan is wanted are often future, as respects the actual application, and a lender can rarely have, unless he enters on the management, the means of controlling and rightly directing the actual application. 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.
5. These remarks were emphasised by their Lordships in Sri Thakur Ramkrishna Muraji v. Ratan Chand (1931) 61 M.L.J. 665 : L.R. 58 IndAp 173 : I.L.R. 53 All. 190 (P.C.), where they quoted the passage which I have just set out from their former judgment. We are asked to disregard these pronouncements, because their Lordships were not dealing with a loan required for the purposes of a business and the Bombay High Court placed a business loan in a different category in the case of Raghunathji Tarachand v. The Bank of Bombay I.L.R. (1909) Bom. 72. The answer is twofold. The remarks of their Lordships apply equally to the case of a loan sought for the purposes of a family business and a loan sought for any other family necessity and the opinion expressed in Raghunathji Tarachand v. The Bank of Bombay I.L.R. (1909) Bom. 72 did, not find acceptance by the Bombay High Court in the later case, Vithal Yeshwant v. Shivappa Mallappa I.L.R. (1923) 47 Bom. 637 and has not found acceptance in other High Courts. It is therefore clear that while a lender has not got to see to the application of the money he is put on inquiry and he must satisfy himself that the loan is necessary. It is not sufficient to accept the mere word of the manager of the family that a loan is required. The nature of the inquiries must depend of course on the particular facts of the case, but there must be inquiries which a reasonable man would make in the circumstances. A person who lends money to the manager of a Hindu family knows full well the risks he runs and he has only got himself to blame if he lends it without proper inquiry. And the fact that the lender is dead and, therefore, cannot state what inquiries he made does not relieve his heirs from the necessity of showing that there were proper inquiries. The death of the mortgagee increases the difficulty of deciding the question, but there must be on the record sufficient to justify the Court in forming the conclusion that the lender did what was reasonably incumbent upon him to do in the circumstances of the case.
6. I will now consider whether the evidence justifies the finding of the trial Court that the mortgagee did what was incumbent upon him to do to safeguard his position. The evidence on which the first and the second respondents rely is that of their father's clerk, Section Parthasarathy Aiyangar, but it is obvious that he is a witness on whom no reliance can be placed. In the first place he states that the mortgagee made inquiries and ascertained that the appellant was a minor. This is obviously false, because if he had made inquiries he would have found that the appellant was then in his twentieth year. It has been suggested on behalf of the appellant that the third respondent knew that he could not get his son to consent to join in the mortgage, and, therefore, told the mortgagee that his son was a minor. It is certainly very remarkable that the third respondent should describe the appellant as a minor in the mortgage-deed, because it cannot be denied that he knew his son's age. In the deed under which the Madras house was sold, Ex. XIII-c, dated 24th July, 1910, he described his son as being about 11 years of age and the mortgage-deed was not executed until more than 10 years later. In these circumstances there is foundation for the suggestion that the father did not wish the son to know what he was doing with the property. But be this as it may, the important point is that the mortgagee could not have made the alleged inquiries. Parthasarathy Aiyangar has been shown to be an untruthful witness in another respect. He said in the course of his evidence that he and the mortgagee received an invitation to the appellant's wedding in the year the mortgage was created. The marriage, however, did not take place until 1921, nearly two and a half years after the date of the mortgage and then only after the appellant had secured employment. It is not suggested that any other marriage was ever contemplated. The only reasonable conclusion to be drawn from the evidence is that the marriage of the appellant was not a reason for the loan, which means that here again the mortgagee could not have made proper inquiries.
7. The next question is whether the mortgagee made any inquiries about the need of a loan for the family business? The evidence does not prove that he did. On the other hand the indications are that he did not. The family had dealt in precious stones, but the business was at such a low ebb when the appellant's great grandfather died in 1903 that the stock-in-trade had to be sold to pay off debts. The appellant states that at the time of the mortgage the business had ceased to exist. Even if this is not true it is obvious that the business was a very poor one. There were no business premises and the family income was very small. That the mortgagee was reluctant to lend the money is shown by the fact that the negotiations for the loan continued for two or three months. The security offered consisted of nearly 42 acres of garden land lying on the outskirts of the city of Madras, and only Rs. 5,000 was wanted. If the money had been required for the purposes alleged it is very strange that the mortgagee should have taken so long to make up his mind. It would appear that he was persuaded to lend against his better judgment, and then tried to secure his position by the recitals in the deed. The recitals do not prove the statements contained therein and in one respect - the need of money in 1919 for the marriage of the appellant - there is obviously a false statement. In these circumstances it appears to me that the finding of the trial Court cannot be supported and the appellant is entitled to succeed on the ground that the first and second respondents have failed to show that there was any necessity for the loan or that the mortgagee made proper inquiries before lending the money.
8. With regard to the cross-objections of the first and the second respondents, I am of opinion that the learned trial Judge is correct in holding that Balakrishna had left the family in 1903. The deed of relinquishment of the 28th April, 1905, states:
I have executed the following deed of relinquishment of share as I am unwilling to live with you and as I wish to discharge the debts contracted without your permission. So in future I shall have no claim against you in connection with your properties As I have received this day from you the said sum (Rs. 2,000) in cash, I shall have no kind of interest in future in the family properties, movable and immovable.
9. It is true that this deed has reference only to the Madras house, but its terms show that Balakrishna had separated from his brothers and his interest in Teeds Garden was no longer that of a member of the joint family. Therefore the third respondent had no power as manager of his own branch of the family to charge Balakrishna's interest in the property.
10. The result is that the first and the second respondents are entitled to a mortgage decree as against the third respondent, but if a sale has to take place it will be confined to the third respondent's interest in the property, whatever that is. The appellant having succeeded will be entitled to his costs in this Court and the Court below, including costs on the cross-objections.
Madhavan Nair, J.
11. I entirely agree both on the question of fact and on the question of law; but having regard to the nature of the argument advanced, I would say a few words on the question of law. The contesting respondents seek to make the share in the joint family properties of the appellant, who was a minor at the time of the transaction, liable for the money borrowed by their father on a mortgage on the representation made by the appellant's father, the manager of a joint Hindu family, that the amount was required for family business. It has been proved that the business of the joint family was trade. The creditor has not been able to prove the existence of any actual necessity. But his learned Counsel contends that, once he proves the existence of a family trade or business, the burden of making the enquiry into the necessities of the loan placed on him by the Privy Council in Hunoomanpersaud Panday v. Mussumat Babooee Munraj Koonweree (1856) 6 M.I.A. 393 is discharged and a decree will have to be granted in his favour binding the minor's estate. The case in Hunoomanpersaud Panday v. Mussumat Babooee Munraj Koonweree (1856) 6 M.I.A. 393 has laid down the principle that 1 f the lender makes a reasonable enquiry as to the necessity for the loan, and the facts represented to him were such as, if true, would justify the loan, then he is protected even if he is not able to prove that actual necessity existed for the loan. This principle has been accepted and applied in all cases where its application is relevant without any modification. If the contention of the respondents' learned Counsel is accepted, it would mean that in the case of a trading family, that is, a family whose business is trade, all that is required of the lender in law to get a decree against the minor's estate, is to prove by evidence that by enquiries he found out that the family was a trading family, and it is not necessary for him to prove that he satisfied himself that there was necessity for the loan; or, in other words, the creditor is not bound to enquire into the purpose of the debt, nor prove that he believed that such purpose existed. This argument if accepted would involve the grafting of an exception upon the rule laid down by the Privy Council. Except the single decision of the Bombay High Court in Raghunathji Tarachand v. The Bank of Bombay I.L.R. (1909) Bom. 72, the counsel has not been able to put before us any other decision or any special texts of Hindu Law in support of his proposition. No doubt the observations of Chandavarkar, J., in that decision support him, but, as pointed out by my Lord, those observations have been dissented from in Vithal Yeshwant v. Shivappa Mallappa I.L.R. (1923) Bom. 637. In that case, after referring to Raghunathji Tarachand v. The Bank of Bombay I.L.R. (1909) Bom. 72 and the arguments based upon it, Macleod, C.J., pointed out:
But I do not think that the argument holds good that an exception can be grafted to the rule laid down by the Privy Council. When the manager of a joint Hindu family mortgages joint estate, it must still be incumbent on the parties supporting the mortgage to prove that the money raised on the mortgage was required for family purposes. No doubt if the family is carrying on a trading business, it would be very much easier to prove that the money was required for the purposes of that trade, and so for family purposes, than if the family were mere agriculturists. But it is not a necessary inference that, because Krishnaji (the borrowing party) was carrying on two shops dealing in iron and groceries, and because he raised moneys by mortgaging family property, the money was necessarily required for the purposes of the joint family business.
12. These observations make it clear that the creditor, besides showing that the family is a trading family, has further to prove that he made enquiries with regard to the necessities of the loan and bona fide believed in the representations made to him that the loan was required for family business. The obligation resting upon the creditor in cases where the principle of Hunoomanpersaud's case (1856) 6 M.I.A. 393 applies is the same in all cases and the lender in all such cases must satisfy himself that he made a reasonable enquiry as to the necessity for the loan and that he bona fide believed in the representations made to him. Of course, the nature of the enquiry to be made would depend upon the particular circumstances of each case. The Privy Council in Sri Thakur Ramkrishna Muraji v. Ratan Chand (1931) 61 M.L.J. 665 : L.R. 58 IndAp 173 : I.L.R. 53 All. 190 (P.C.) has, without any modification, restated the principle of Hunoomanpersaud Panday v. Mussumat Babooee Munraj Koonweree (1856) 6 M.I.A. 393. I have ventured to add these words because of the insistence with which the argument was pressed before us by the learned Counsel.