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Loganathan Minor and anr., by Next Friend and Guardian A. Sundaram Vs. Ponnuswami Naicker and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberAppeal No. 377 of 1960
Judge
Reported inAIR1964Mad327
ActsContract Act, 1872 - Sections 23; Hindu Law
AppellantLoganathan Minor and anr., by Next Friend and Guardian A. Sundaram
RespondentPonnuswami Naicker and ors.
Appellant AdvocateR. Ramasubba Iyer and ;A.D. Sitaraman, Advs.
Respondent AdvocateC. Rangarajan and ;K. Chandrasekharan, Advs.
DispositionAppeal dismissed
Cases ReferredIn Venkateswara Temple v. Radhakrishna
Excerpt:
.....law and section 23 of contract act, 1872 - plaintiffs' suit to declare that they were not bound by promissory note executed by defendant plaintiffs' - defendant entered into property as intermeddler and collected amount - promissory note executed on account of suit for account preferred by lawful owner - amount so appropriated by defendant does not amount to criminal misappropriation - promissory note executed by defendant for lawful purpose and enforceable against plaintiff. - - when one of the defendants 3 to 5 became a major, he called upon defendants 1 and 2 to render an account of the income of the joint family property, and on their failure to do so, they filed a criminal complaint against them (defendants i and 2) alleging unlawful entry and possession of the suit property,..........was 'whether the debt under the promissory note was binding on the plaintiffs and whether the suit promissory note executed by their father was not opposed to public policy. the learned judge found that the promissory note was binding on the plaintiffs and that the suit o.s. 392 of 1955 was not collusive and fraudulent and that the decree was binding on the plaintiffs. it is against this finding that the present appeal is filed by plaintiffs 1 and 2.4. it is common ground that defendants 1 and 2 entered into possession of the suit properties. they were in possession of this property for over fix years. they admitted that they appropriated the income there from for their own use and enjoyment. it is also clear that the third defendant, when he became a major, called upon the.....
Judgment:

Venkatadri, J.

1. This appeal arises from the judgment and decree in O.S. No. 238 of 1958 on the file of the First Additional Subordinate Judge, Coimbatore. The appellants herein are plaintiffs 1 and 2. The plaintiffs filed this suit in forma pauperis for partition of the suit properties and for separate possession in the joint family property and to set aside the decree in O.S. No. 392 of 1955 on the file of the Sub Court, Coimbatore in favour of defendants 3 to 5, and to declare them not binding on the plaintiffs and also for maintenance for plaintiffs 3 and 4 at the rate of Rs. 30 per month.

2. Plaintiffs 1 and 2 are the son and daughter of the second defendant. The third plaintiff is the wife of the second defendant while the fourth plaintiff is the wife of the first defendant. The fifth plaintiff is the daughter of the first defendant. All of them are residing in Coimbatore. The plaintiffs and the first and second defendants form members of a joint Hindu family. Defendants 1 and 2 are the sister's sons of the deceased Kangaswami Naicker, the father of defendants 3, 4 and 5. After the death of Rangaswami Naicker, in or about 1946, defendants 1 and 2; according to allegations made in the plaint, entered into possession of the properties unlawfully and misappropriated the income therefrom. When one of the defendants 3 to 5 became a major, he called upon defendants 1 and 2 to render an account of the income of the joint family property, and on their failure to do so, they filed a criminal complaint against them (defendants I and 2) alleging unlawful entry and possession of the suit property, misappropriation of the income, threat to kill their mother and attempt to marry the sister by force.

In the meantime, there was also a panchayat wherein it was decided that the defendants 1 and 2 should execute a promissory note for a sum of Rs. 20,000/- and also give security of immovable property for the due repayment of the sum. Subsequently, the defendants 3 to 5 filed a suit O.S. No. 392 of 1955, and obtained a decree for a sum of Rs. 16,000/-. As the defendants 1 and 2 had been adjudged insolvents, the property was brought to sale. The plaintiffs filed the present suit for partition, separate possession, maintenance and also for declaring that the decrees obtained in favour of defendants 3 to 9 were not binding on them, on the ground that the debt contracted through, the promissory note was an avyavaharika debt and' hence not binding on the plaintiffs, and that the execution of the promissory note itself was against public policy, namely, that it came into existence, while criminal proceedings were pending against their fathers, defendants 1 and 2.

3. Defendants 1 and 2 have remained ex parte. The fourth defendant, in his written statement, which was adopted by the defendants 3 and 5, has stated that when his father died, defendants 3, 4 and 5 were minors, that he left considerable properties both moveable and immovable and that the second defendant taking advantage of the close relationship with their father entered into possession of their property and appropriated the entire income during the management. The fourth defendant further stated that when they became majors. they called upon the first and second defendants to render account. Subsequently there was a panchayat and the defendants agreed to abide by the decision arrived at. A muchilika was executed by them. It was decided that defendants 1 and 2 should pay Rs. 20,000/-, that as part payment they should pay within five days Rs. 5,000/- and execute a promissory note for Rs. 15,000/ and also give security for due payment of the balance of Rs. 15,000/-. The defendants 1 and' a did not abide by the terms of the Panchayat.

On the other hand, they were evading payment of the amount decided by the panchayat. Subsequently defendants 3, 4 and 5 filed a criminal' complaint against defendants 1 and 2 and alleged that they ill-treated their mother and also attempted to marry their sister in order to avoid the liability. They stated that this promissory note had' nothing to do with the criminal prosecution and' that it was an independent transaction. It was executed by them and they were responsible and liable for the amounts appropriated by their father during the management of the estate. When the suit was filed the defendants 1 and 2 did not contest the suit and submitted to the decree, and subsequently in order to defeat the fruits of their decree, they got themselves adjudged as insolvents and when the Official Receiver attempted to bring the property to sale, the first and second defendants set up the present plaintiffs to file a suit for partition of the joint family property and for cancellation of the decrees obtained against them.

On these pleadings, the parties went to trial. The important question that was considered by the learned Subordinate Judge was 'whether the debt under the promissory note was binding on the plaintiffs and whether the suit promissory note executed by their father was not opposed to public policy. The learned Judge found that the promissory note was binding on the plaintiffs and that the suit O.S. 392 of 1955 was not collusive and fraudulent and that the decree was binding on the plaintiffs. It is against this finding that the present appeal is filed by plaintiffs 1 and 2.

4. It is common ground that defendants 1 and 2 entered into possession of the suit properties. They were in possession of this property for over fix years. They admitted that they appropriated the income there from for their own use and enjoyment. It is also clear that the third defendant, when he became a major, called upon the defendants 1 and 2 to render account. There was a panchayat and it was decided by the panchayat that defendants 1 and 2 should pay Rs. 20,000/-. It was also decided that they should pay Rs. 5000 in the first instated and pay Rs. 15,000/- subsequently and also furnish security in immovable property for due payment of the sum of Rs. 15,000/-. This was on 6-6-1952. The defendants 1 and 2 did not either pay cash or execute a promissory note. Subsequently defendants 3, 4 and 5 filed a criminal proceeding alleging mismanagement of the properties. But he executed Ex. B-2 long before the arrest wherein he agreed to give immovable property as security for the sum of Rs. 20,000/-.

5. Learned counsel for the appellants raises two points for consideration. The first is that the promissory note came into existence while the criminal proceedings were pending against their father, and this is opposed to public policy. The second contention is that the debt itself incurred by their father is illegal and not binding on them being ayyavaharika debt. They contended that the liability arising out of the misconduct of their father will not make them liable to pay the debt under the rule of pious obligation.

6. Taking up the first point into consideration, it is the duty of the plaintiffs 1 and 2 to prove that the promissory note was executed under the circumstances stated in the plaint. The mother, who goes into the witness box on their behalf, does not even whisper a word about the circumstances under which the promissory note came into existence. She did not depose to any coercion; undue influence or pressure being brought upon her husband in the execution of the promissory note. On the other hand, the defendants proved beyond doubt that the promissory note had nothing to do with the withdrawal of the Criminal proceedings. The fourth defendant has spoken in detail about the management of the estate by the defendants 1 and 2, the father of the plaintiffs, the execution of the promissory note and the subsequent filing of the suit and the compromise decree passed in that suit. One of the panchayat dars who has been examined as D. W. 4 has spoken in detail about the execution of the promissory note. It is unfortunate that nothing was asked in the cross examination either about coercion or fraud by the defendants 3, 4 and 5, or defendants 1 and 2. There is very meagre evidence to warrant the conclusion that the promissory note was executed while the criminal Court proceedings were pending and that they are against public policy. There is no direct, evidence to connect the promissory note with criminal prosecution. In Bhowanipur Banking Corporation v. Durgesh Nandini Dassi . Lord Atkin has observed:

'......... to insist on reparation as a consideration for a promise to abandon criminal proceedings is a serious abuse of the right of private prosecution. The citizen who proposes to vindicate the criminal law must do so whole-heartedly in the interests of justice, and must not seek his own ad vantage.'

He has also observed:

'But it is also of course necessary that each party should understand that the one is making his promise in exchange or part exchange for he promise of the other not to prosecute or continue prosecuting.'

These observations are relied on in the latest decision of the Supreme Court in Narasimharaju v. Gurumurthi Raju, : [1963]3SCR687 . The short question which arose in that case was whether the Muchilika which was executed by the appellant and the four respondents in favour of another was invalid because its consideration was opposed to public policy under Section 23 of the Indian Contract Act. Justice Gajendragadhar, who delivered the judgment of the Bench, observed:-

'Section 23 provides that every agreement of' which the object or consideration is unlawful is avoid, and it lays down that the consideration on an agreement is lawful unless, inter alia, it is opposed to public policy.......... If a person sets the machinery of the criminal law into action on, the allegation that the opponent has committed a non-compoundable offence and by the use of this coercive criminal process he compels the opponent to enter into an agreement, that agreement would be treated as invalid for the reason that its consideration is opposed to public policy.'

In this case, there is absolutely no evidence to connect the criminal prosecution with the execution of the promissory note. The first point, there fore, fails.

7. The next point I have to consider is whether the debt in the pronote itself is Avyayaharika debt. What is an Avyavaharika debt was considered in a long catena of cases decided in the various Courts in India. In Jagannath Prasad v. Jugal Kishore : AIR1926All89 Avyavaharika debt is described as one involving an element of criminality, in Durbar Khachar v. Khachar Harsur, ILR 32 Bom 348, as a debt which the father ought not as a decent and respectable man to have incurred and which is attributed to be to his failings follies and caprices, in Chhakuri Mahton v. Ganga Prasad, ILR 39 Cal 862 as one which is not lawful, usual or customary and in Venugopala v. Ramanadhan, ILR 37 Mad 458 : AIR 1914 Mad 654, as one which is not supportable as valid by legal arguments and on which no right can be established by the creditor in a Court of justice. Therefore, we have to examine the nature of the debt - the character it when it was originated and, if on such examination it is found that at its inception the debt was not tarnished or tainted with illegality or immorality, then it must be held that the debt would be binding on the son and the subsequent dishonest conduct of the father in respect of such liability cannot take away the son's liability in respect of the debt. A number of cases have been decided in this Court on this aspect.

In McDowell and Co. v. Raghava Chetti, ILR 27 Mad 71 the father was cashier in McDowell and Co. He removed the cash while he was acting as cashier and when it was found out that he misappropriated the money, he executed a mortgage 'bond. And the sons later disputed that it was not binding on them. The Bench consisting of Sir Arnold White, C. J., and Subrabmania Aiyar, J., held that the sons of a Hindu father who committed criminal breach of trust were not liable for their father's debt. In this case even at the inception there was a criminality, namely, misappropriation of the amount. This case was distinguished in a number of subsequent cases decided in this Court. In Guruatham Chetty v. Raghavalu Chetti, ILR 31 Mad 472 a Bench consisting of Sir Arnold White, C. J., and Wallis, J., held that, where an undivided Hindu father acting as the administrator of a certain estate was made liable in respect of moneys received by him and not properly accounted for, the undivided sons could not escape liability for such claim on the ground that the debt was the result of a criminal act of the father, unless he showed that in respect of the particular amounts claimed the father had made himself amenable to the criminal law by doing or omitting to do anything. At page 474 the learned Judges observed :

'The evidence is not in our opinion sufficient to warrant us in holding that the failure by the third defendant to account as an administrator; amounted to a criminal offence.'

In Sanyasayya v. Murthenna, 35 Mad LJ 661 : AIR 1919 Mad 943 a Bench of this Court consisting of Sir John Wallis, C. J. and Seshagiri Aiyar, J., held that the legal representatives of the trustees could not escape the liability when their farther and grandfather collected the amounts in their -capacity as trustees but subsequently misappropriated them. In Venkatacharayulu v. Mohan Panda, AIR 1921 Mad 407 a, Bench of Spencer and Odgers, JJ., held that, where the principal filed a suit against his agent, who was appointed to collect the income from the two villages, his sons would be liable even though the agent had misappropriated the money subsequently. The learned judge (Spencer, J.,) who delivered the judgment on behalf of the Bench observed thus when the sons repudiated their liability on the ground that it was not a binding debt: -

'The first contention is a novel one and we have not been shown any authority for the theory that the sons are not liable upon contracts and quasi contracts entered into by their father or upon other similar obligations legally incurred ...... where there is a breach of civil duties, even though it, may involve some tort or crime, the sons are liable to make it good out of the family property.'

In Ramasubramania v. Sivakami Ammal, : AIR1925Mad841 , Venkatasubba Rao, J., in a well A. I. R. considered judgment made an observation that a debt which is not immoral at its inception is binding on the son, though subsequently it may be tainted by dishonesty and immorality. Improper, imprudent, unreasonable or dishonest debts are not necessarily immoral. But liability arising by the commission of offences by the father has been always held to be immoral. The test of benefit to the estate is not a material question for consideration as the liability of the son depends upon the nature of the debt. In Anandarao v. Co-operative Society, Pedatadepalli, AIR 1940 Mad 828, Leach, C. J., and Krishnaswami Aiyangar, J., had to decide a case whether the sons were liable when their father acting as Secretary of a Co-operative Credit Society collected money and subsequently misappropriated it. Leach, C. J., observed that their father had received the money lawfully on behalf of the society and the fact that he had at a later stage used it for his own purposes did not alter the liability of the sons. In Venkateswara Temple v. Radhakrishna, : AIR1963AP425 a Full Bench consisting of Chandra Reddy, C. J. Narasimhan and Gopal Rao Ekbote, JJ., reviewed the entire case law on this subject and they observed at page 427 -

'What emerges from these rulings is that a son could claim immunity only where the debt in its origin was immoral by reason of the money having been obtained by the commission of an offence, but not where the father came by the money law fully but subsequently misappropriated it. It is only in the former case that the debt answers the description of an Ayyavaharika debt. If originally the taking was not immoral i.e., if it did not have a corrupt beginning or founded upon fraud, it could not be characterised as an Avyayaharika debt and the son could not be exempted from satisfying that debt. The supervening event, namely, the misappropriation later on would not change the nature of the debt. The vices should be inherent in the debt itself.'

8. After reviewing the entire case law on the subject, I cannot say that when defendants 1 and 2 entered into possession, it is not lawful as they are trustees de son tort. They are intermeddlers of the estate and they are entitled to collect the amount. They are under a civil duty or obligation to render account to the lawful owners of the suit property. When they appropriated the income, it is not a criminal misappropriation. There is no element of criminality when they made use of the income from the properties for their own purpose and enjoyment. They become liable to the owners of the property. Therefore, the debt in the promissory note is not tainted with illegality or immorality at its inception. The pronote was executed for the amount due and liable by them to the owners. When the debt itself is thus lawful, the execution of the promissory note is binding on the minor plaintiff. The suit has to be dismissed and has been rightly done so by the learned Subordinate Judge.

9. The appeal fails and is dismissed. The parties will bear their respective costs throughout.


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