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M.A.R.R.M. Viswanathan Chettiar Vs. Ramanathan Chettiar and ors. - Court Judgment

LegalCrystal Citation
SubjectFamily;Property
CourtChennai
Decided On
Reported inAIR1937Mad816; (1937)2MLJ559
AppellantM.A.R.R.M. Viswanathan Chettiar
RespondentRamanathan Chettiar and ors.
Cases Referred and Aukula Sanyasi v. Ramachandra Rao
Excerpt:
.....into the box. radhakrishnayya contends in the alternative that granting that the existence of the trade debts has not been proved, the plaintiff would still be entitled to a decree against defendants 2 to 4. he argues that we must hold on the evidence, first, that there was a representation by the first defendant that there were trade debts to discharge and, secondly, that egappa satisfied himself after due enquiry, that the representation was true and acted upon it. 3 says, the recital in the deed is the best evidence of it. the mortgagee who could have satisfied the court as to the enquiries made, is dead; radhakrishnayya's argument is, that the circumstances of the case are such, as to warrant the inference that the enquiry was in all probability made, and that the result of it was,..........according to the recital in the deed, the amount was borrowed for the purpose of paying off the trade debts of the family. the question that arises is, whether that recital is true; for, in the case of a trading family the lender is not called on to prove more than that such debts did in fact exist. what is a necessary or beneficial purpose is a question which, in the case of a trading family, is governed by considerations different from those that apply to an ordinary hindu coparcenary. the lender discharges his duty by showing that there were in fact trade debts in existence, that is to say, that the debts had been incurred in the course of or for purposes of the trade. there his duty ends and he is not called on to prove further that in the incurring of the debts the manager had.....
Judgment:

Venkatasubba Rao, J.

1. The question which this appeal raises is whether the mortgage debt is binding upon defendants 2, 3 and 4. The actual executant of the said bond was the first defendant, but he purports to have executed it not only on his own behalf but also as the 'family manager and guardian of his undivided younger brother', the second defendant, who was then a minor. All the defendants resisted the claim, even the receipt of the consideration having been denied by the first defendant. There was a further allegation that so far as defendants 2 to 4 were concerned the debt was not incurred for a purpose binding upon the joint family. The learned trial judge has come to the conclusion that consideration was paid, with which we unhesitatingly concur. The facts may be shortly stated. A person by name Chockalinga had three daughters by his first wife but no male issue. Thereupon he adopted the first defendant as his son. Subsequently he married a second wife and the second defendant was his son by her. Egappa Chetty the mortgagee is the husband of one of Chocka-linga's daughters by his first wife. The mortgage was granted in December, 1916, and it was assigned to the plaintiff, a relation of the parties, in January, 1924. Egappa died about the year 1926. The suit was filed in 1927 and was heard in 1930. Chockalinga was carrying on a family trade, which upon his death devolved upon his sons, and it is not disputed that on the date of the mortgage bond, the first defendant was conducting a family trade at two centres, namely, Devakottah and Colombo. There is a recital in the deed to the effect that the amount mentioned as the consideration, namely, Rs. 5,000, was borrowed for the purpose of discharging the debt due by the family firm at Colombo. At the trial the account books of Egappa were produced which show that the amount was paid to the first defendant by mesne profits of a hundi. Both the 1st and the second defendants were debited with Rs. 5,000, the drawee of the hundi having been credited with a like sum. The entries were made on the 15th January, 1917, the date on which the deed was registered and the credit entry recites that the drawee is entitled to interest from the 22nd December, 1916, the date of the mortgage bond. There is absolutely no ground shown for discrediting the accounts, and we must as already stated, hold that the lower Court's conclusion on this point is perfectly correct.

2. The learned trial Judge, however, has held that it has not been shown that the debt is binding upon the other defendants, and it is this finding that the plaintiff as the appellant here attacks. According to the recital in the deed, the amount was borrowed for the purpose of paying off the trade debts of the family. The question that arises is, whether that recital is true; for, in the case of a trading family the lender is not called on to prove more than that such debts did in fact exist. What is a necessary or beneficial purpose is a question which, in the case of a trading family, is governed by considerations different from those that apply to an ordinary Hindu coparcenary. The lender discharges his duty by showing that there were in fact trade debts in existence, that is to say, that the debts had been incurred in the course of or for purposes of the trade. There his duty ends and he is not called on to prove further that in the incurring of the debts the manager had acted prudently; nor is he required to prove that the debts could have been discharged otherwise than by borrowing the amount from him. To hold differently would be to throw upon the lender a duty so onerous that no ordinary man can be expected to perform adequately. Moreover, it would neither be reasonable nor in the interests of the borrowing family itself to require the lender to make an investigation and ascertain whether the manager could have carried on the trade more advantageously by pursuing a different course. As Mayne observes in his Hindu Law it is the same fundamental principle that is applied both in the case of a trading family and a non-trading family. Only in the application of the principle the considerations that are to be borne in mind are different. The incurring of debts is a necessity to a trading family, while it would not be to a non-trading family. Therefore it follows:

Even where the debts in fact are incurred merely for the personal purposes of the manager, they will bind the family if they are within the ostensible authority of the manager as conducting the family business. So it is an that those that deal with him and to whom he incurs debts are not put upon inquiry as to whether the debts were incurred for the benefit of necessities the family, so long as they are incidental to the family business.' (Mayne's Hindu Law, 9th Ed., pp. 398 and 399.)

3. With this statement of the law we entirely agree. Indeed, whatever doubts might have been once entertained on this question the point now seems concluded by authority. Their Lordships of the Judicial Committee point out that where there is a joint family business, the manager has authority1 to raise money not only for the payment of debts but also for the purpose of carrying on the business. It might be argued that it would be better to close down the business than to raise more money to carry it on. Their Lordships refute such an argument and declare that it would be unreasonable to require a lender or purchaser to go into questions of this kind as to which he would rarely be in a position to form a sound opinion. (Niamat Rai v. Din Dayal (1927) 52 M.L.J. 729 : L.R. 54 IndAp 211 : I.L.R. 8 Lah. 597 (P.C.).)

4. This being the correct view, the question that arises is as already stated, whether the recital in the mortgage deed is true, in other words, whether in point of fact there were trade debts to be discharged. Let us now turn to the written statement of the first defendant who making common cause with the second resisted the plaintiff's suit. He admits categorically that in the ancestral trade which he was conducting there were debts amounting to Rs. 5,000 or Rs. 6,000 which remained to be discharged on the date of the bond. He admits again that for the purpose of discharging those debts, the suit bond was executed, but goes on to say that for certain reasons the consideration was not actually received and that he was therefore obliged to utilise other monies for satisfying the debts. As regards this non-receipt of the consideration this case has been, as already stated, rightly disbelieved. So much for the first defendant's written statement. Now turning to the statement filed by the second defendant there is no suggestion made anywhere that there were no debts in existence. On the contrary he asserts:

No portion of the consideration of the suit bond was utilised for discharging the debts due by the said firm

5. Thereby implying that there were debts which had to be paid off. (See also another allegation to the same effect in paragraph 13.)

6. Egappa, as already stated, had died before the date of the suit. The plaintiff, with a view to prove that there were debts in existence, applied to the Court that defendants 1 and 2 should be directed to make discovery of their account books. His application was granted by the lower Court. And what is the result? The first defendant filed an affidavit stating that at sometime (when, it is not stated) the account books had been deposited with some persons and that he was not aware as to what had since happened to them. This is a most incredible statement to make, and so far as the second defendant is concerned, he was content with saying that he never had in his control any account books whatsoever. This happened more than two years previous to the trial, but the matter does not stop there. The plaintiff took out a subpoena against the first defendant for the production of the account books at the hearing and to this again he paid no heed; and the lower Court properly remarks that every presumption should be drawn against him from this suppression of material evidence. Then again, there is the further fact, that neither the first defendant nor the second defendant has chosen to go into the witness-box. From these circumstances which show that the defendants deliberately withheld from the Court the evidence bearing on this question which was peculiarly within their own knowledge, the inference is irresistible, that had it been produced, it would have been fatal to their case. Guruswami Nadar v. Gopalaswami Odayar : (1919)36MLJ568 decided by Sir John Wallis, C.J. and Ayling, J., on which Mr. Radhakrishnayya for the plaintiff relies bears a very close resemblance, to the facts of the present case. There, as here, the lender was dead; the defendants failed to produce their books and abstained from going into the box. Wallis, C.J., observed, relying upon the decision of the Judicial Committee reported in Murugesam Pillai v. Manickavasaka Desika Gnana Sambandha Pandara Sannadhi (1917) 32 M.L.J. 369 : L.R. 44 IndAp 98 : I.L.R. 40 Mad. 402 (P.C.) that the defendants were not entitled to lie by, trusting to the abstract doctrine of onus of proof and if they did so, the Court would rightly draw an adverse inference against them. Then the learned Chief Justice goes on to say (and this is a very important observation) that the Court would find against the defendants even though no evidence was adduced on behalf of the plaintiffs (Ibid,, p. 629). Turning to the present case, we have already referred to the first defendant's written statement where the existence of the debts was expressly admitted and to the second defendant's statement where, to say the least, there was no denial of that fact. The only witness examined for the defence was obliged to depose that the first defendant was saying that there were debts. On the whole it seems to us that the 'proper inference to make is that the existences of the debts has been made out. We may observe that the question does not depend upon the credibility of the witnesses, in which case the lower Court's opinion would have been entitled to great weight, but upon the correct principles to be applied. We have therefore no hesitation in coming to conclusion that the lower Court's decision is wrong.

7. Mr. Radhakrishnayya contends in the alternative that granting that the existence of the trade debts has not been proved, the plaintiff would still be entitled to a decree against defendants 2 to 4. He argues that we must hold on the evidence, first, that there was a representation by the first defendant that there were trade debts to discharge and, secondly, that Egappa satisfied himself after due enquiry, that the representation was true and acted upon it. That the representation was made to Egappa there can be no doubt, as apart from what P.W. 3 says, the recital in the deed is the best evidence of it. Then Mr. Radhakrishnayya puts his argument thus: The mortgagee who could have satisfied the Court as to the enquiries made, is dead; moreover he was the only person who could have told the Court whether any independent evidence was available. Therefore he contends that the rule applicable to ancient transactions, Banga Chandra Dhur Biswas v. Jagat Kishore Acharjya Chowdhuri (1916) 31 M.L.J. 563 : L.R. 43 IndAp 249 : I.L.R. 44 Cal. 186 (P.C.) Chintamani Bhatla Venkata Reddi Pantulu v. Rani Saheba of Wadhwan (1919) 38 M.L.J. 393 : L.R. 47 IndAp 6 : I.L.R. 43 Mad. 541 (P.C) Somayya v. Venkayya (1924) 48 M.L.J. 224 Kumaraswami Mudaliar v. Narayanaswami (1932) 36 L.W. 186 and Aukula Sanyasi v. Ramachandra Rao : AIR1926Mad692 should be applied here although the suit mortgage cannot be strictly described as old for according to him the principle underlying the rule is equally applicable to such transactions as the present one Mr. Radhakrishnayya's argument is, that the circumstances of the case are such, as to warrant the inference that the enquiry was in all probability made, and that the result of it was, that the lender was reasonably satisfied that the representation made to him was true. We do not think it is necessary, in view of the conclusion at which we have already arrived, to deal with this alternative contention.

8. In the result, the appeal is allowed and a mortgage decree is granted against the interests of all the defendants in the mortgaged property. Time for payment is extended by three months from to-day. The lower Court's order directing the plaintiff to pay the costs of defendants 2 to 4 is set aside. The plaintiff will get his costs both here and in the Court below from all the defendants.


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