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Ramamurthi Ayyar and ors. Vs. Kuppuswami Ayyar - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Case NumberAppeal Nos. 371 and 411 of 1946
Judge
Reported inAIR1950Mad621
ActsTransfer of Property Act, 1882 - Sections 35 and 55(2); Contract Act, 1872 - Sections 124; Hindu Law; Registration Act, 1908 - Sections 32 and 34
AppellantRamamurthi Ayyar and ors.
RespondentKuppuswami Ayyar
Appellant AdvocateM.S. Venkatarama Iyer and ;S. Swaminathan, Advs.
Respondent AdvocateG.R. Jagadeesan, Adv.
Cases ReferredLingayya v. Punnayya
Excerpt:
.....have been fully and authoritatively construed by various decisions of this court and of the judicial committee. the son can claim immunity only, when the father's conduct is utterly repugnant to good morals, or is grossly unjust or flagrantly dishonest. to ascertain whether the debt of a father is tainted with immorality or illegality, the extent of the burden cast on the son is not a relevant consideration at all most of the debts of a father held to be binding on his son are certainly oppressive and clearly detrimental to his interests......case law on the subject. the question in that case was whether the shares of the sons in the joint family property was liable to attachment and sale for realising the decree for mesne profits obtained against the father. at p. 613 the learned judges lay down the following propositions: '(1) if the debt is in its inception not immoral, subsequent dishonesty of the father does not exempt the son. (2) it is not every impropriety or every lapse from right conduct that stamps the debt as immoral. the son can claim immunity only, when the father's conduct is utterly repugnant to good morals, or is grossly unjust or flagrantly dishonest.' the same question was considered by the judicial committee in a decision reported in hemraj v. khem chand . the judicial committee approved the conclusion.....
Judgment:

Subba Rao, J.

1. The main question in these appeals is whether a son is liable to discharge the liability of his father in regard to a covenant of indemnity given by him. Defendants 1, 2 and 3 are the sons of one Venkatarama Iyer. Venkatarama Iyer for himself and acting as guardian of his minor sons, defendants 2 and 3, and defendant 1 as a major executed a sale-deed in favour of the plaintiff's father, Ramaswami Iyer on 12th August 1937 in respect of their joint family properties for a sum of Rs. 21,000. Out of the said amount, Ramaswami Iyer paid Rs. 9.000 for discharge of antecedent debts. Of the balance of the price, Ramaswami Iyer executed a promissory note in favour of Venkatarama Iyer for a sum of Rs. 5,250 with an understanding that out of the said amount Rs. 2,'250 was to be paid within one year and the balance of Rs. 3,000 to be paid on defendant 3 attaining majority and giving a release deed. The balance of the sum of RS. 6,000 was agreed to be paid to defendants 2 and 3 in equal moieties on their attaining majority and executing releases to the plaintiff's father. The sale-deed also contained a covenant that defendant l and his father would indemnify the plaintiff's father against any loss if any dispute arose in respect of the property conveyed and thereby the vendees sustained any loss. As per the terms of the sale-deed, defendant 2 received a sum of Rs. 3,000 on his executing a release deed but defendant 3 after he became a major instituted O. S. No. 42 of 1943 on the file of the Court of the Subordinate Judge of Tanjore for a declaration that the sale was not binding in regard to his share, and to recover the same. The suit was decreed but he was directed to pay a sum of RS. 2,146-4-0 being his share of the binding debts discharged. The vendee Ramaswami Aiyar died and his son the plaintiff having lost 1/4th share of the properties purchased by his father as a result of the aforesaid decree filed O. S. No. 19 of 1945 on the file of the Court of the Subordinate Judge of Tanjore for damages for a breach of the covenant of indemnity contained in the sale-deed. He assessed damages on the basis that the value of the share of the property lost by him by reason of the decree obtained by defendant 3 was a sum of Rs. 13,500. He added to that the coats decreed to defendant 3 and the coats incurred by him in that litigation and arrived at a total figure of the loss incurred by him at a sum of Rs. 13,260-6-0. He gave credit to the sum of Rs. 6,000 unpaid purchase money still left with him and also the sum of Rs. 2,146-4-0 deposited by defendant 3 in his suit. In the result he made a claim for a sum of Rs. 5,114-2-0 to be recovered from defendant 1 personally and from the family properties of the defendants.

2. The defendants contend inter alia that the claim for damages in respect of a liability to indemnify was not a debt and it was also not binding on them as it was a avyavaharik debt. They also pleaded that the quantum of damages claimed was excessive and in addition they set-up a counter claim for the recovery of a sum of Rs. 3000 with arrears of interest thereon being the unpaid purchase money. The learned Sub. ordmate Judge held that the covenant to indemnify the vendee contained in the sale deed was in the circumstances of the case a avyavaharika debt and therefore not binding on the defendants. He further decreed the counter claim of the defendants in part. In the result he gave a preliminary charge decree in favour of the defendants. The plaintiff filed A. S. No. 371 of 1946 against the judgment of the lower Court denying his right for damages on the covenant of indemnity whereas the defendants preferred A. S. No. 411 of 1946 against the decree of the lower Court claiming the full amount of their counter claims. For convenience of reference we shall refer to the parties in accordance to the rank assigned to them in the suit.

3. Two questions arise in the appeals. One is whether there is a clause of indemnity in the sale deed. The other is whether the liability to indemnify is a avyavaharika, debt as understood in Hindu law. The first question depends upon the construction of the relevant clauses in the sale deed, Ex.P-1. Exhibit P-1 is dated 12th August 1937 whereunder Venkatarama Iyer for himself and as guardian of his two minor sons, and Ramamoorthi Iyer as major sold the joint family properties in Kilakottagam village to the plaintiff's father. After describing the circumstances of the family which necessitated the sale, details of the debts to be discharged from and out of the consideration amount and the manner and the time in which the balance of consideration should be paid to the vendor it contains the following covenants:

'After having declared so as to be believed by you, that there is no encumbrance whatever, such as usufructuary mortgage, hypothecation and prior registration in respect of the above property excepting the debts, which are mentioned above and which have been directed to be paid by you, we have executed this deed of absolute sale. Should any dispute arise in respect of the above property, and should you thereby sustain any lose, we shall make good the loss on the liability of our family properties, and on our personal liability.'

The learned counsel for the plaintiff in A. S. No. 371 of 1946 contended that the latter covenant is absolute in terms and it provides against every possible contingency of the vendee sustaining loss in case of any dispute in respect of the property, whereas the learned counsel for the defendants argued that the said covenant is limited in scope and should only be read in connection with the earlier covenant and the loss provided against is the loss incurred on account of any of the encumbrances etc. found to be subsisting on the properties so conveyed. To our mind the contention of the learned counsel for the defendants gives a very narrow construction to the covenant and does not give full effect to the wide words used by the parties. The first covenant is an usual covenant which will be found in every sale deed whereunder the vendor declares that the property that is being sold is not subject to any encumbrances other than those that are disclosed in the sale deed. The second covenant would be redundant if it was intended only as consequential to the first covenant as even without that the vendee would be able to recover any loss incurred by him in case any mortgage or hypothecation was found to exist which was not disclosed. The argument of the learned counsel for the defendants becomes possible because in the earlier covenant the words used are 'encumbrance or similar kalan' and in the later covenant the word kalan is used to denote dispute. It is argued that because kalan means encumbrance, the word kalan in the second clause also means the encumbrance mentioned in the earlier covenant. As the learned Judge points out if that was the intention, in the second covenant the words 'if any such kalan' would have been found apart from that the word kalan is used to denote different meanings in different contexts, It is used ordinarily to mean 'encumbrances' but is also used in appropriate context to connote dispute. But having regard to the circumstances pointed out by us we are definitely of opinion that the second covenant is not confined to the encumbrance mentioned in the earlier covenant but is intended to cover every dispute which caused loss to the vendee. We therefore agree with the lower Court that the sale deed contains a specific covenant to indemnify the vendee in case he sustained loss on account of any dispute arising in respect of the property. If so, the loss now caused to the plaintiff in view of the decree obtained by defendant 3 is a loss covered by the said covenant.

4. The next question argued at some length by the learned counsel is whether the liability arising out of the said covenant is a avyavaharika debt in Hindu law. The law on the subject is well settled and it is not necessary to consider the original texts as they have been fully and authoritatively construed by various decisions of this Court and of the Judicial Committee. The English word 'debt' does not accurately express the content of the Sanskrit word rina. In Nachimuthu Goundan v. Balasubramania Goundan : AIR1939Mad450 , Krishnaswami Ayyangar J. considered the meaning of the word rina having regard to the original texts. In that case one of the questions was whether the un-ascertained liability in a partnership was a debt according to Hindu law. After pointing out that the word rina had a wider connotation than the word debt the learned Judge held that such an unascertained liability to account is rina as understood in Hindu law. In Rama-subramania Pillai v. Sivakami Ammal : AIR1925Mad841 Venkatasubba Rao J. and Madhavan Nair J., have elaborately considered the meaning of the words avyavaharika debt having regard to Hindu law texts and the previous case law on the subject. The question in that case was whether the shares of the sons in the joint family property was liable to attachment and sale for realising the decree for mesne profits obtained against the father. At p. 613 the learned Judges lay down the following propositions:

'(1) If the debt is in its inception not immoral, subsequent dishonesty of the father does not exempt the son.

(2) It is not every impropriety or every lapse from right conduct that stamps the debt as immoral. The son can claim immunity only, when the father's conduct is utterly repugnant to good morals, or is grossly unjust or flagrantly dishonest.'

The same question was considered by the Judicial Committee in a decision reported in Hemraj v. Khem Chand . The Judicial Committee approved the conclusion arrived at by the learned Judges in Ramashubramania Pillai v. Sivakami Ammal : AIR1925Mad841 in regard to the interpretation of the words avyavaharika debt and enunciated the principle in the following words at page 737 :

'This also makes clear the connection between the nature of the debt and the liability to pay it. That the duty cast upon the son being religions of moral, the character of the debt should be examined from the standpoint of justice and morality appears to be fairly clear from the decisions. In this connection regard may also be had to the debts mentioned in the texts which the son need not pay, most of which are of an objectionable character. It also appears to be clear on principle, and on authority, that examination of the nature or character of the debt should be made with reference to the time when it originated, In other words, when the liability was first incurred by the father. If on such examination, it is found that at its inception the debt was not tarnished or tainted with immorality or illegality, then it must be held that it would be binding on the son.'

Further discussion of the rule is found in Lingayya v. Punniyya, I. L. R. (1942) Mad. 602 A. I. R. 1942 Mad. 183. In that case the sons of a Hindu father filed a suit after the father's death to set aside a sale by him of the joint family property and in that suit it was found that the sale was not made for family necessity and therefore it was sat aside to the extent of the sons' interest in the property. The vendees subsequently filed a suit against the sons for the recovery of a proportionate part of the purchase price paid by him. The learned Judges held that the sons could be compelled by reason of the rule of pious obligation to discharge a liability incurred by the father to refund a proportionate share of the purchase consideration. The following principles may be gathered from that judgment; (l) the fact that the father has abused his powers does not taint his obligation to an extent which would justify the Court in holding that it is not avyavaharika; (2) the rule is not confined to a debt known to the English Common law but applies to other financial obligations incurred by the father and (3) it also applies where the father's liability is contingent and that the contingency arises only after his death as when the event has happened the liability becomes a present one. Applying the aforesaid principles we shall now proceed to consider the finding of the lower Court and the facts of this case.

5. The learned Judge came to the conclusion that a promise by a Hindu father to indemnify a vendee under an unauthorised sale of ancestral property against loss on his undivided sons repudiating the sale is, vis a vis such sons, an idle promise, and one made contrary to his duty and therefore avyvaharika. This conclusion was based upon his finding that what Venkatarama Iyer did was not only to sell for an undervalue ancestral property in which his sons had interest by birth but he also gave a promise to the vendee that his sons would not exercise their right of repudiating the unauthorised sale on pain not only of losing their share of the free 'unspent' portion of the price but on paying damages to the vendee if they dared to question their father's act in selling their property. Relying upon this finding he argued that a promise made by a father which was so much at variance with his duty and which, in any event, must be enforced only against the sons' share in the family properties, a3 the sale for consideration of the father's own share could not be disturbed, should be regarded as an idle promise in regard to the family estate and also as avyvaharika. The learned advocate for the defendants supported the conclusion of the learned Judge and also the reasoning on which he arrived at that conclusion. He did not dispute any of the principles stated above but argued that we should hold that the liability to indemnify incurred by the father was in the circumstances of the case grossly unjust or flagrantly dishonest. This contention he based upon the following facts; (l) the Court in O. S. No. 42 of 1943 set aside the sale on the ground that it was neither supported by necessity nor was it for the benefit of the estate and also that the properties were undervalued ;(2) by agreeing to indemnify the vendee against any possible loss by reason of any dispute raised in regard to the property the father bound over the sons not to question the alienation or in the event of their questioning the alienation to pay the vendee in the shape of damages what the son or sons so questioning would gain by filing the suit to recover his or their share of the joint family property; and(3) the result of the earlier litigation was not prejudicial to the plaintiff as he would be in possession of 3/4th share of the lands valued at Rs. 26,450/- and also a sum of Rs. 2146-4 0 paid by defendant 3 against payments totalling only Rs. 15,000/-. The finding of the learned Subordinate Judge and also the argument of the learned counsel ignore the distinction between the nature of the debt and the mode of its realisation. To ascertain whether the debt of a father is tainted with immorality or illegality, the extent of the burden cast on the son is not a relevant consideration at all Most of the debts of a father held to be binding on his son are certainly oppressive and clearly detrimental to his interests. Surety debts incurred by the father to help a third party whatever may be its magnitude is held to be binding on the son. See Thangathammal v. Arunachalam Chettiar, 41 Mad. 1071: A. I. R. 1919 Mad. 831. The amounts received by him as an agent or a trustee and later misappropriated by him are equally binding on the son: see Natesayyan v. Ponnuswami, 16 Mad. 99 : 3 M. L. J. 1., Venugopala Naidu v. Ramanadhan Chetty, 37 Mad 458: A. I. R. 1914 Mad. 654; Tirumalayappa Moodaliar v. Veerabadra, 19 M. L. J. 759 : 5 I. C. 921; Venkappayya v. Krishna, Chariya, 31 Mad. 161: 17 M. L. J. 613 and Gurunatham Chetty v. Raghavalu Chatty, 31 Mad. 472: Cri. L. J. 147. In either case a son's share in joint family property though he is not benefited by the debt is held to be liable even though the result is that his share of the joint family property is exhausted in discharging the debt. The son is made liable for a decree for damages against the father for injury done to the crops of a third party--see Chhakauri Mahton v. Ganga Prasad, 39 Cal. 862 : 12 I. C. :609. He would be liable for damages obtained against his father for cutting trees and demolishing a tank--see Chadrika Ram Tiwari v. Narain Prasad, : AIR1924All745 . In none of these cases the argument based on hardship availed the son. The only workable proposition and an easily ascertainable test is to find whether the liability of the father is tainted at the source. We will have to examine the nature and the character of the debt with reference to the time it originated, in other words, when the liability was first incurred by the father. So tested can it be said that the liability of the father is tainted by immorality or illegality or the incurring of the liability is grossly unjust or flagrantly dishonest. We must assume for the purposes of this case as the question was finally decided in the prior litigation between the parties that the sale was neither for necessity nor for the benefit of the family and therefore in excess of his powers. The transaction may be imprudent and it may be even in abuse of his powers. But it cannot be said that that fact in itself makes a debt a avyavaharika debt. If in the circumstances it was a avyavaharika debt the Full Bench decision in Lingayya v. Punnayya, I. L. R. (1942) Mad. 502 : A. I. R. 1942 Mad 183 should have been the other way. It cannot also be presumed that when the father gave an indemnity he was doing either a grossly unjust act or a flagrantly dishonest act. Indeed he was trying to be honest and straight, forward in his dealings with the vendee. He was selling a property in the circumstances he thought it was necessary to sell, to salvage the family estate. He intended to be honest by the vendee and gave an assurance to protect him against possible disputes in future. The covenant he gave was only personal to him. It is an accident in this case that the father had no self-acquired property or a share in joint family property other than the property conveyed to the plaintiff's father, if not, the creditor could have proceeded against the self, acquired property of the father or his share in other joint family property as the liability of the father at its inception was not vitiated by any of the reasons mentioned in the decided cases. The fact that the said liability if worked out would affect the interests of the other members of the family cannot be taken, in our view, as a relevant consideration and, therefore, we hold that the debt is not a avyavaharika debt. The plaintiff would, therefore, be entitled to recover damages for breach of covenant of indemnity against the interests of the defendants in the joint family property.

6. The learned. Judge found that the plaintiff would be entitled to recover a sum of Rs. 3600/- towards damages from and out of their ancestral and joint family properties. This finding is not attacked before us by the defendants.

7. It was argued by the learned counsel for the plaintiff that the finding of the lower Court that defendant l was a minor when he executed EX. p-1 was not correct in law. If he was a minor he could not be made liable personally on covenant. Both the counsel accepted the finding of the Court below that he was a minor at the time when he executed the document but became a major before it was registered. The learned counsel for the plaintiff contended that as he became a major by the date of registration the date when he admitted execution and got the document registered mustbe deemed to be the date when he executed the document. In support of his contention he relied upon paras 274 and 275 of Halsbury's Laws of England. The statement of law in those paragraphs relates to deeds required to be signed, sealed and delivered and they are governed by the laws obtaining in that country. The said paragraphs are not helpful for deciding the present case. There is an essentialdistinction between execution and registration. The admission of execution before the Registrar cannot in any sense of the term be equivalent or substitution for the signing of the document. We, therefore, hold that when the document was executed defendant 1 was a minor and, therefore, he could not be personally made liable for the covenant on the indemnity.

8. In view of our findings the other questions raised by the parties would not arise for consideration. In the result A. S. No. 371 of 1946 is allowed in part with proportionate costs here and in the Court below and A. S. No. 411 of 1946 is dismissed with costs.


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