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Adapa Venkatachalam and ors. Vs. Vemalepathi Venkateswara Rao and ors. - Court Judgment

LegalCrystal Citation
SubjectFamily
CourtChennai
Decided On
Reported inAIR1944Mad33; (1943)2MLJ610
AppellantAdapa Venkatachalam and ors.
RespondentVemalepathi Venkateswara Rao and ors.
Cases ReferredLakshmi Naidu v. Gunnamma
Excerpt:
.....clearly indicates that a business could be started by the manager of a joint hindu family as a joint family business even though some members are minors. 9. this sentence clearly goes to indicate that there could be a joint family business founded during the minority of one of the members--in which the minor could acquire rights by virtue of his being a member of the family and that the acquisition of such a right does not depend upon any agreement on his part or on admission by the other members of the family to the benefits of the partnership. 605 the chief justice of the allahabad high court after pointing out that it has always been settled law that money borrowed for the purposes of an ancestral family business, is per se a good justification for alienation of family property..........necessity. defendants 3 to 6, 8 and 9 contended that the suit debt was not a debt binding on the joint family that the first defendant was not the manager and hence the payment made by him will not avail as against them. the other defendants were ex parte. the subordinate judge dismissed the suit so far as defendants 2 to 6 and 8 and 9 were concerned on the ground that the suit debt was not binding against defendants 3,4,5,6, 8 and 9 and on the ground that the payment by the first defendant would not save limitation as against defendants 2 to 9. he scaled down the debt and gave a decree against the first defendant for the amount scaled down. on appeal by the plaintiff the learned district judge of kistna found that the trade for which the debt was borrowed was a joint family trade and.....
Judgment:

Kuppuswami Ayyar, J.

1. Defendants 2 to 6, 8 and 9 in O.S. No. ,38 of 1933 on the file of the Subordinate Judge's Court of Masulipatam are the appellants in this second appeal, and the appeal arises out of a suit filed by the first respondent plaintiff for recovery of money due on a hypothecation deed for Rs. 2,000 executed by one the late Subbarayadu and his sons defendants I and 2 and the late Venkayya, the father of defendants 3 and 4. Defendants 5 and 6 are the undivided sons of the first defendant and 7 to 9 the undivided sons of the second defendant. Defendants ,10 and 11 are subsequent alienees and the 12th defendant is said to be the cousin of the plaintiff. The plaintiff's case was that the hypothecation deed was executed in favour of his grandfather and that in the partition in his family this outstanding fell to his share. A payment of Rs. 747-1-0 on 22nd January, 1921, endorsed on the document with the signature of the first defendant who was said to be in management of the business of the family for which the debt was borrowed was alleged as saving the suit from being barred by limitation. The first defendant admitted the claim but pleaded that the debt was liable to be scaled down under Madras Act IV of 1938. The second defendant denied that the first defendant was the manager of the family and that the debt was contracted for family necessity. Defendants 3 to 6, 8 and 9 contended that the suit debt was not a debt binding on the joint family that the first defendant was not the manager and hence the payment made by him will not avail as against them. The other defendants were ex parte. The Subordinate Judge dismissed the suit so far as defendants 2 to 6 and 8 and 9 were concerned on the ground that the suit debt was not binding against defendants 3,4,5,6, 8 and 9 and on the ground that the payment by the first defendant would not save limitation as against defendants 2 to 9. He scaled down the debt and gave a decree against the first defendant for the amount scaled down. On appeal by the plaintiff the learned District Judge of Kistna found that the trade for which the debt was borrowed was a joint family trade and that therefore Ex. A the suit hypothecation deed was binding on defendants 1 to 9. He also held that the first defendant was the manager of the business on the date of the endorsement of payment, Ex A-3, and as such he could pay and acknowledge the debt so as to bind the joint family, allowed the appeal and decreed the suit as against defendants 2 to 6, 8 and 9--the suit against the 7th defendant not having been pressed. Hence this second appeal by defendants 2 to 6, 8 and 9.

2. The only two points for consideration therefore in this second appeal are : (1) whether the suit hypothecation deed is binding on defendants 3 to 6, 8 and 9 to any and to what extent; and (2) whether the suit is not barred by limitation so far as defendants 2 to 6, 8 and 9 are concerned.

3. Point No 1. The learned District Judge has found that defendants 1 to 9 and Subbarayadu, father of defendants 1 and 2 and of Venkayya, father of defendants 3 and 4 were all members of a joint Hindu family till 1923. He also found that Subbarayadu and his sons were carrying on business since somewhere about 1909, that in the course of that business Ex. A was executed; that the sum of Rs. 2,000 was borrowed for the trade and that the business was jointly carried on till 1923 when there was a partition of the family. He held that the business was a joint family business and that even though two members who were alive at the time when the business was started namely, defendants 3 and 7, were minors, there was evidence that the family treated it as joint family business and that consequently the business must be considered to be a joint family business and the debt incurred for that business would be binding on all the members of that family.

4. It is urged for the appellants that inasmuch as even according to ,the finding of the learned District Judge the family on the date when the business was started, consisted of Subbarayadu and his sons, defendants 1 and 2, Venkayya, his grandsons the third defendant, minor son of Venkayya and the 7th defendant, the minor son of the second defendant, it was a new business started by the adult members of the family and as the minors could not give any consent for the starting of a business in which they could be treated as partners, the business must be considered to be a separate business of Subbarayadu and his sons in which defendants 3 and 7 could not have had legally any interest and that consequently it was not joint family business. It is true that if the business is considered to be a partnership business, on account of the fact that two members of the family were minors and could not therefore give their consent, there was no contractual partnership. But it is not the plaintifft case, that there was a partnership business of which all the members of the family were partners. His case is that it was a joint family trade and it is contended for the plaintiff respondent that there is no rule of law that in a joint Hindu family in which there are minors a joint family business could not be started.

5. In Nataraja v. Lakshman : AIR1937Mad195 , there is the following observation:

Assuming that defendant I was actuated by the motive of increasing the family income by adding to it the profits derived from the business, we do not think a family manager who is in charge of the estate of junior members, all of whom are minors, is either obliged to adopt or is justified in adopting a course of this kind with a view to give them more comfort than the normal income of the family properties would make possible. We are therefore unable to hold that Ex. C is operative against the shares of the appellants either on the ground of family necessity or benefit or on the ground that it was executed in connexion with an ancestral business in the sense in which the expression is known to the Hindu Law.

6. On the strength of these observations it is stressed that a joint family business cannot be started by a. family with minor members. But in that case, except the father who started the business, the other members of the family were all minors. In this case, out of the six members of the family four of them were adults, namely Subbarayadu and his sons, and it was only defendants 3 and 7 that were minors. The other defendants, namely, 4 to 6, and 8 and 9 were born subsequently and therefore they could not contend that Ex. A is not valid and binding on them, It is on the estate burdened with the mortgage evidenced by Ex. A that they obtained a right by birth. Vide Lai Bahadur v. Ambika Prasad (1925) L.R. 52 IndAp 443 : I.L.R. 47 All. 795 (P.C.) as also in Vasireddi Balachandrasekhara Varaprasada Bahadur v. Lakshminarasimham : AIR1940Mad9691 . In the latter case, it is pointed out that even if there were other members of the joint family on the date of the alienation who had not consented to and validated the alienation and could question it, the after-born son only took the joint family property subject to the alienation. Hence defendants 3 and 7 only could validly contest the validity of the mortgage. Out of them the claim against defendant 7 was not pressed.

7. So the only question is whether it is open to the third defendant to dispute the binding character of the debt. It is not an invariable rule of law that a joint family in which there are minors cannot start a fresh joint family business. In The Official Assignee of Madras v. Palaniappa Chetty (1917)35 M.L.J. 473 : I.L.R. Mad. 824 the learned Chief Justice begins his judgment with the following observation:

I agree with my learned brothers that on the facts of this case the business must be taken to have been started by the first defendant as the joint family business of himself and his minor son, defendant 2, who subsequently attained majority before the date of the insolvency.

8. This clearly indicates that a business could be started by the manager of a joint Hindu family as a joint family business even though some members are minors. At page 830 there is another observation,

The interest of a minor in a joint Hindu family business, whether existing at the date of his birth or founded during his minority, is acquired by virtue of his belonging to the family and does not depend on any agreement on his part or on his admission by the other members of the family to the benefits of the partnership.

9. This sentence clearly goes to indicate that there could be a joint family business founded during the minority of one of the members--in which the minor could acquire rights by virtue of his being a member of the family and that the acquisition of such a right does not depend upon any agreement on his part or on admission by the other members of the family to the benefits of the partnership. The question in that case was how far a minor member could be personally liable for the debts incurred for the business during his minority. There was no dispute as to the possibility of a joint family business coming into existence during the minority of a member of the joint family. In Ramnath v. Chiranjilal I.L.R.(1934) All. 605 the Chief Justice of the Allahabad High Court after pointing out that it has always been settled law that money borrowed for the purposes of an ancestral family business, is per se a good justification for alienation of family property and that where the new business is the separate property of individual members of a joint family an alienation of the family property would be wholly unjustified, observed with regard to a new business; though not ancestral, but which had become a joint family business,' that there might be circumstances in which money required for such business may either be for legal necessity or for the benefit of the family and family estate. Later, after referring to the observations of the Privy Council in Metharam Ramrakhiomal v. Rewachand Ramrakhiomal (1917) 34 M.L.J. 327 : 1917 L.R. 45 IndAp41 : I.L.R. 45 Cal. 666 (P.C.) the learned Judge concluded by saying, ' This undoubtedly implies that even an apparently new business carried on by a member of a family may be a joint family property,' and that ' in the case of a joint family business, where it is necessary for its proper conduct that money should be borrowed from time to time it is within the authority of the karta to borrow money for the purposes of the family business.' In Ramalinga Chetti v. Vellore Mercantile Bank, Ltd. : AIR1930Mad136 , the trade was carried on by two members of the joint family along with other strangers; and it was argued that the other members of the family also were liable for the reason that the trade was carried on by the family and that consequently it must be presumed that it was a trade carried on by the members of the joint family. But their Lordships pointed out that some of the important elements which were pointed out by the learned Judges in Lakshmiah v. Official Assignee, Madras 1928 M.W.N. 576 on which reliance was placed by the respondents were lacking in that case and observed, ' We think that case was more a decision on the particular facts than a decision which laid down any general rule, much less any general rule that would override the principles which govern the ratio decidendi of the cases which we have already cited.' It was further pointed out that in that particular case the eldest member was not shown to have executed any promissory note or taken part in any groundnut business.

10. In this case besides the fact that the business was started and carried on not only by the grandfather, Subbarayadu, but by his three sons as well, there are also a number of other circumstances. As pointed out by the learned District Judge, properties which have been dealt with as joint family properties in the subsequent partitions in the family evidenced by Exs. C and D were purchased with the funds realised in the trade, and as a matter of fact the business itself was treated as joint family asset and was dealt with in Exs. C and D documents evidencing a partition between the first defendant's branch and the second defendant's branch and a partition between all members of the family respectively after the third defendant became a major. It is true that the third defendant has not joined in executing Ex. C as a party to it but then he had become a major before the date of Ex. C and it is not shown or even stated in the memorandum of appeal that Ex. C was not acted upon. It is true that the business was started long before Exs. C and D, but then both the Courts have proceeded as if the business was the continuance of the original business that was started. It is true that in the Official Assignee of Madras v. Palaniappa Chettiar : (1918)35MLJ473 there was a ratification by the minors after they became majors, but that is not the only way in which a joint family business started when a member was a minor could be made binding on him. The fact that that branch of which the minor is a member obtained the benefit of the business by the business being treated as a family asset in the partition is an important circumstance which would justify the finding that it was a joint family business. I therefore agree with the learned District Judge in his finding that the business was started in its inception as a joint family business, the family had the benefit of the business, and the family also treated it as a joint family business and therefore a debt incurred for the purpose of the business will be binding on all the members of the family.

11. The next point for consideration is whether the suit is within time. The learned District Judge has found that although the first defendant was a junior member of the family, as he had some commercial education he was entrusted with the management of the business and was managing the business as such. This is a finding of, fact binding on this Court sitting in second appeal. If the first defendant,though a younger member, was in charge of the management of the family, then he will be entitled to act on behalf of the family. In Ramakrishna v. Manicka A.I.R. 1937 Mad. 375 it is pointed out that 'even a junior member if he is in charge of the family business will have all the powers of a managing member to the extent necessary for the proper conduct of the business of which he is in charge.' In view of. the fact that this particular debt was incurred for the business of which the first defendant was in charge as managing member he will be entitled to acknowledge the debt and make payments which would save limitation. It is true he has not signed Ex. A-3 as if he were a manager. In the case of a managing member his payment binds the other members on the ground he he an implied agent of the other members. In Chinnayya v. Gurunathan I.L.R.(1882) Mad. 169 it was held that the manager of a Hindu family has the same authority to acknowledge as he has to create debts on behalf of the family. In Lakshmi Naidu v. Gunnamma (1934) 68 M.L.J. 470 : I.L.R. Mad. 418 the managing member of a joint Hindu family consisting of himself and his brother made a part payment towards a mortgage executed by him and his brother but the endorsement relating to the payment was signed only by him. The question for determination was whether the part payment by the managing member was available to save limitation against the other member. At page 424 it was pointed out that the plaintiff relied upon the part payment as binding on the other brother as in making the part payment he was acting as the managing member of the family and as such was authorised to make the payment on behalf of the others as well; This was sought to be got over by relying on certain observations in Narayana Iyer v. Venkatarama Iyer I.L.R.(1902) Mad. 220 Varadachariar, J., pointed out that the facts of that case showed that those observations were obiter, because the Court came to the conclusion that the payments relied on were not true and that the entries were merely collusive. He also pointed out that those observations had been dissented from in Bajrangi Prasad Singh v. Kesho Singh I.L.R.(1927) Pat. 811. and that even in Narayana Iyer v. Venkatarama Iyer I.L.R.(1902) Mad. 220 the learned Judges there recognised that it may be possible to infer from the circumstances that the payment was made by the managing member on behalf of the other members as well and that in that connection the very fact of his being a managing member would itself be a factor of importance, and that that view received corroboration from the way in which Section 21(2) was interpreted by the Full Bench of this Court in Veeranna v. Veerabhadraswami : (1918)34MLJ373 and in Rangaswami Aiyangar v. Somasundaram Chettiar (1927) 54 M.L.J. l50. It is true that in that particular case their Lordships also relied upon Ex. T-I, but that was treated only as an additional circumstance. In this case, there is the significant fact that the first defendant who was only a junior member of the family was appointed as a manager only in respect of the trade alone as was found by the learned District Judge. This and the further fact found by the District Judge that the funds for making the payment evidenced by Ex. A-3 came from the joint family fund clearly indicated that he had implied authority as agent of all the other members to act in respect of the transactions relating to the business as if he were himself the managing member and that the payment in question was made by him as such and would hence bind the other members. The decision in Doraiswami Iyer v. Krishna Iyer (1919) 10 L.W. 466 was relied on by the appellant for the position-that where a document is executed by only some of the members of the family a, payment by only one of them would not be binding on the family even though he was the manager. The learned Judges rested their decision mainly on the observation in Narayana Iyer v. Venkatarama Iyer I.L.R.(1902) Mad. 220 as authority for the position, and Abdur Rahim J, specifically stated, ' We are however bound by the ruling of this Court in Narayana Iyer v. Venkatarama Iyer I.L.R.(1902) Mad. 220 and the present case comes within the exception enupciated therein.' The other learned Judge, Spencer, J., also observed that the law had not altered since Narayana Iyer v. Venkatarama Iyer I.L.R.(1902) Mad. 220 . was decided. The decision in Lkshmi Naidu y. Gunnamma 3, is a later decision of a Bench in which it-is pointed out that the observations relied on in Doraiswami Iyer v. Krishna Iyer (1919) 10 L.W. 466 were only obiter Agreeing with the opinion expressed in Lakshmi Naidu v. Gunnamma (1934) 68 M.L.J. 470 : I.L.R. Mad. 418 in which the question is discussed in full and which is binding on me, I find that the learned. District judge was perfectly justified in finding that the payment evidenced by Ex A-3, is binding on all the other members of the family and the suit is not barred by limitation.

12. in the result, the second appeal fails and is dismissed with costs. Leave refused.


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