Skip to content


Maharaja of Bobbili Vs. Raja Kaminayini Bangaru and ors. - Court Judgment

LegalCrystal Citation
SubjectFamily
CourtChennai
Decided On
Reported in(1911)21MLJ593
AppellantMaharaja of Bobbili
RespondentRaja Kaminayini Bangaru and ors.
Cases ReferredRaghunatha v. Sri Brozo Kishore
Excerpt:
.....or the infant heir or other person whose manager he or she may happen to be, and in such cases reasonable enquiry should not be limited to the representations of the borrower, and section 38 of the transfer of property act seems to require, in addition to good faith, reasonable care in ascertaining the existence of circumstances alleged by the transferor of immoveable property. see section 2, clause (d). but it may well be taken to indicate that ordinarily something more than the mere representation of the borrower is necessary to constitute reasonable enquiry on the part of the lender. it is perfectly clear that at the time of the suit loan, there was a debt due of a lakh and a half recoverable from the estate. before the date of the loan the defendant's agent bad been sent to the..........due and proper enquiry the learned judge proceeds to add : 'the same principle applies to a simple loan or debt. in each case the manager acts as agent of the family and his acts are subject to the same consideration and question. in point of principle and law, the simple loan and the express charge require he same foundation to bind the family and the estate' (pages 148 & 149). mr. justice muthusawmi aiyar observed at page 161, with reference to a debt not secured upon the estate by the de facto poligar but sought to be recovered from tin rightful successor : 'it is true that though there was no real necessity for the debt, the plaintiffs should not fail if their claim were within the equity recognised by hanuman pershad panday v. mussummut baboot munraj koonweree (1856) 6 m.i.a. 393.'.....
Judgment:

1. The late Zemindar of Chundi, which was an impartible estate descendible according to the rule of primogeniture, died in 1892. On his death disputes arose between his brother the 1st defendant and his widow the 2nd defendant as to the succession. There was litigation between the parties. A compromise was entered into and embodied in Exhibit A, dated the 13th April 1901. Under it both were to enjoy the zemindari in common and, in case a son was born to the 1st defendant, the 2nd defendant was to adopt him. A son was born to the 1st defendant in February 1903 and adopted by the 2nd defendant on the 27th of June 1903. The adopted son is the 3rd defendant, represented by the Court of Wards. The plaintiff sued to recover a sum of Rs. 7,000, with interest thereon under the promissory note, Exhibit C 2, dated the 16th September, 1901, executed by defendants Nos. 1 and 2 on the lability of the Chundi estate in the hands of the 3rd defendant. The 3rd defendant admitted a part of the claim. The District judge passed a decree in respect of it and dismissed the suit as regards the zemindari as against the 3rd defendant. The present appeal by the plaintiff relates to the amount disallowed. The District Judge based his decision on the authority of the judgment in Nachiappa Chettiar v. Chinnasami Naicker I. L. R. (1906) M. 453 which held that in the case of an impartible zemindari, the unsecured debt of the zemindar not incurred for family necessity was not recoverable from the estate in the hands of the next heir taking by survivorship' The principle of the decision must be held to be no longer good law. See Raja of Kalahasti v. Achigadu I. L. R. (1907) M. 454 and Zamindar of Karvetnagar v. Trustees of Tirumalai, Tirupathi, etc., Devasthanams I. L. R. (1909) M. 429. The ground of the District Judge's judgment being erroneous, it becomes necessary to consider the 3rd issue which raises the question whether a debt contracted by the 1st and 2nd defendants not secured upon the estate is nevertheless binding upon it. The District Judge has given no finding but he has recorded the evidence. We think it unnecessary to send the case back as both sides have agreed that we may deal with the issue.

2. Before, however, going into the evidence, it is necessary to deal with the legal contentions that were raised in connection with this issue. The first point to be noticed is whether the debt not having been secured upon the estate by the 1st and 2nd defendants, the estate in the hands of the 3rd defendant who has, on adoption, divested them of the zemindari, under the Hindu Law, can be made liable. The learned Advocate-General, who appeared for the 3rd defendant, admitted that Reyalle Jogayya v. Venkatarathnamma : (1910)20MLJ412 was against him and did not seriously dispute its authority. Although the execution of a promissory note by the 1st and 2nd defendants might suggest prima facie that the creditor looked to their personal credit, it would be competent to him to show that the estate was intended to be bound as well in the circumstances of the case. In the case of the present loan, the estate was heavily involved and the very fact of the 1st and 2nd defendants being both required to execute the promissory note shows, that, if the loan was made after the due enquiry as to the purpose being of a character binding upon the estate, there can be no difficulty in coining to the conclusion that the creditor looked to the estate for repayment and not merely to the personal credit of the 1st and 2nd defendants. Mr. Sundara Aiyer for the appellant has argued that apart from the evidence of the actual application of the loan, he is entitled to a decree binding upon the estate because the loan was made after reasonable enquiry as to the purpose. The Advocate General, however, raised a question that the decision in Hanuman Pershad Panday v. Mussummut Baboo Munraj Koonweree (1856) 6 M.I.A. 393, as to the sufficiency of a reasonable enquiry to validate a claim against the estate in the hands of a manager should not be extended to loans unsecured upon the estate. His argument was that ii is only where the widow or other limited owner of an estate of the manager of a joint family or guardian of an infant hen alienates the estate in some form that bona fide, enquiry and the satisfaction of the creditor as to reasonable necessity have been held sufficient to justify the alienation. But we see no ground to limit the decision in that case in this manner There is nothing in principle to confine the observation of their lordships as to the sufficiency of a bona fide and reasonable enquiry to the case of alienation.

3. In the case of Kotta Ramasawmy Chetty v. Bangaru Seshamma Nayanivaru I. L. R. (1878) I M. 145 both Mr. Justice Kernan and Mr. Justice Muthuswami Iyer were of opinion that the dicta of the Privy Council applied with equal force to a simple loan as well as alienation. Mr. Justice Kernan observed of Hanuman Pershad Panday v. Musammut Babool Munraj Koonweree (1856) 6 M.I.A. 393 : 'The case dealt with was one of ah express charge and so it was in very many other cases. The principle, however, to be applied, whether in respect of an express charge, in writing, or by deposit, or of a loan of money to or other debt created by, a manager without such express charge, is the same.' After referring to the sufficiency of due and proper enquiry the learned Judge proceeds to add : 'The same principle applies to a simple loan or debt. In each case the manager acts as agent of the family and his acts are subject to the same consideration and question. In point of principle and law, the simple loan and the express charge require he same foundation to bind the family and the estate' (pages 148 & 149). Mr. Justice Muthusawmi Aiyar observed at page 161, with reference to a debt not secured upon the estate by the de facto poligar but sought to be recovered from tin rightful successor : 'It is true that though there was no real necessity for the debt, the plaintiffs should not fail if their claim were within the equity recognised by Hanuman Pershad Panday v. Mussummut Baboot Munraj Koonweree (1856) 6 M.I.A. 393.' This being the law, the only question that we have to consider in the case is, whether, as contended by the learned vakil for the appellant, there was a reasonable and bona fide enquiry by the lender as to the purpose of the loan. The learned Advocate-General contended that the enquiry contemplated by the Privy Council is one independent of the representations of the borrower, in that such representations, even if evidence, are not in themselves sufficient to discharge the burden which rests upon the creditor of showing a reasonable enquiry as to the binding nature of the purpose for which the loan is contracted. In Hanuman Pershad Panday v. Mussummut Babool Munraj Koonweree (1856) 6 M.I.A. 393, the Privy Council said at pages 419 and 420 of the report : 'The representations by the manager accompanying the loan are part of the res gestee and as the contemporaneous declarations of an agent, though not actually selected by the principal, have been held to be evidence against the heir : and as their Lordships are informed that such prima facie proof has been generally required in the Supreme Court of Calcutta between the lender and the heir where the lender is enforcing his security against the heir, they think it reasonable and right that it should be required.' The foregoing extract from the judgment of their Lordships makes it abundantly clear that the representations of the borrower are not merely evidence but may, in particular circumstances, be sufficient to shift the onus from the lender to the person impeaching the debt or alienation. The above principle has been accepted by the courts in India. In Sarat Chandar Banerjee v. Bupendra Nath Basu I. L. R. (1898) C. 103, Chief Justice Maclean applied the rule above enunciated to the case of a loan to an executor not governed by the Succession Act. We wish, however, to guard ourselves from being supposed to lay down the rule that the representations by the borrower are generally sufficient. In many cases the interests of the borrower are likely to be opposed to those of the reversioner or the infant heir or other person whose manager he or she may happen to be, and in such cases reasonable enquiry should not be limited to the representations of the borrower, and Section 38 of the Transfer of Property Act seems to require, in addition to good faith, reasonable care in ascertaining the existence of circumstances alleged by the transferor of immoveable property. This section, if deemed to enact a rule as to reasonable enquiry, in excess of what is required by the Privy Council in Hanooman Pershad's case (1856) 6 M.I.A. 393, cannot override the Hindu Law as settled by the Privy Council. See Section 2, Clause (d). But it may well be taken to indicate that ordinarily something more than the mere representation of the borrower is necessary to constitute reasonable enquiry on the part of the lender.

4. Taking the law to be as above indicated, we have to Sfce how the facts stand in this case. It is perfectly clear that at the time of the suit loan, there was a debt due of a lakh and a half recoverable from the estate. The Advocate-General did not practically dispute this. Exhibit A, G 2, which is a draft mortgage-deed dated 8th of October, 1901, is sufficient evidence of the liability. By the letter Exhibit D dated 10th September, 1901, the 1st defendant asked for a loan of a lakh and a half. There can be no doubt that this loan was applied for to meet the liability which was enforceable against the estate. In the same letter the 1st defendant applied for an immediate loan of Rs. 7,000 on account of urgency to meet a decree debt and other debts out of the debts amounting to a lakh and a half that were recoverable from him. Before the date of the loan the defendant's agent bad been sent to the plaintiff to represent the urgency. The 2nd defendant, examined as the plaintiff's witness No. 3, says that the loan of a lakh and a half was absolutely necessary and that the amount of the suit pro-note was also comprised in the said loan. The witness also adds : 'As I told him (Narasimmayya) that money was urgently needed, he spoke to Maharaja of Bobbili at Madras on my behalf about the urgency and caused money to be advanced.' The 2nd witness for the plaintiff, his second manager, says : 'From my enquiries I came to know that defendants Nos. 1 and 2 had a necessity to borrow and I was satisfied with the necessity for borrowing money.'

5. It is true he is now unable to give any details of the debts. But we are on the whole satisfied, in the circumstances of this case, that even apart from the representations of the borrower, there was enquiry under Section 38 of the Transfer of Property Act by the lender which was reasonably sufficient to justify the loan so as to make it recoverable from the estate. It is unnecessary to consider the contention of Mr. Sundara Aiyar that, as the 1st defendant was, at the time of the loan, the full owner of the estate, the amount is recoverable from the estate in the hands of his successor apart from any necessity or reasonable enquiry as to the purpose of the loan. It is difficult to treat the 1st defendant's estate, which was liable to be divested on adoption by the 2nd defendant and which has, as a matter of fact, been so divested, as an absolute estate for purposes of validating loans or alienations by the holder of the estate. (See the judgment in Second Appeal No. 92 of 1908). It is, however, unnecessary to express any opinion on this point But we cannot agree with the learned Advocate-General's argument that the estate of the 1st defendant should be treated on the same footing as that of the holder of a life estate. If that were the true view, an alienation for whatever purpose would be inoperative beyond the date on which the estate was divested. This is not in accordance with the tenor of the observations of the Privy Council in Raghunatha v. Sri Brozo Kishore (1878) I.L.R. 1 M. 69 (P.C.). (See also Mayne's Hindu Law, Section 198.) The analogy of the 1st defendant's estate is rather to that of a limited owner like a widow than that of a life owner. There is a vested reversion or remainder where there is the life estate. But both in the case of the widow and the case of a person in the position of the 1st defendant, the holder for the time being represents the estate completely. If a debt or alienation by a widow for purposes would bind the reversion, it stands to reason that a debt contracted or alienation made by the 1st defendant must be dealt with on the same footing. We, therefore, allow the appeal with costs here and in the court below.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //