(1) This second appeal raises the question whether a Hindu minor is bound by a deed of family arrangement entered into on his behalf by his natural guardian in bona fide settlement of claims against the minor's estate and for his benefit.
(2) One Arunachalam Pillai married two wives, Ammalammal and Sengamalathachi. By his first wife, Ammalammal, he had no issues. He had a daughter named Dhanalakshmi and a son named Palani by his second wife Sengamalam. One Rathnaswami Pillai was the son of his first wife's younger brother. Arunachalam Pillai desired that his daughter. Dhanalakshmi should be given in marriage to Rathnaswami Pillai. He executed a settlement deed on 17-2-1936 in and by which he settled the A schedule properties attached to that deed absolutely in favour of Dhanalakshmi and Rathnaswami Pillai. Items 1 and 2 of the B schedule properties attached to that settlement deed were to be enjoyed by Arunachalam Pillai himself during his lifetime and after him they were to be taken absolutely by Rathnaswami and Dhanalakshmi. Item 3 of the B schedule therein was directed to be enjoyed by his first wife Ammalammal without any right of alienation and after her lifetime that property was to be taken by Dhanalakshmi and Rathnaswami absolutely. On the date of that settlement deed the settlor's second wife, Sengamalam, was enciente and she gave birth to the son Palani on 5-4-1936. The second wife Sengamalam, did not like the settlement made by her husband as aforesaid and dissentions arose between her and her husband.
Acting as the guardian of her minor son, Palani, she filed the suit O. S. No. 11 of 1937 on the file of the District Munsif's court of Thiruvayyaru against her husband Arunachalam Pillai and Rathnaswami Pillai challenging the validity of the settlement deed. During the pendency of this suit Arunachalam Pillai died and the suit itself was withdrawn and dismissed on 18-8-1938. But the dispute between Rathnaswami and Sengamalam was not resolved and there was mediation between them by persons interested in the welfare of the minor's family. A deed of family arrangement dated 23-2-1940 was brought about between Rathnaswami and Sengamalam by which Rathnaswami obtained 3 items of properties absolutely for himself and relinquished all his claims under the settlement deed in his favour executed by the late Arunachalam Pillai. The items of properties obtained by Ramaswami Pillai under the family arrangement were R. S. 506/5 : 12 1/2 cents, R. S. 523/1 : 1-39 1/2 cents; R. S. No. 456/8-27 1/2 cents, all situated in the village of Peramur Tanjore district. These three items were numbers 3, 8 and 9 of the schedule properties attached to the settlement deed of Arunachalam Pillai.
The net result of the family arrangement was that Rathnaswami Pillai who got about 1 1/2 acres of land under the settlement from Arunachalam Pillai gave up his claim for a good portion of those lands and was content to receive 80 1/2 cents under the family arrangement between him and Sengamalam. Rathnaswami Pillai did not marry Dhanalakshmi as proposed and wished for by Arunachalam Pillai. He sold ass the three items of properties to one Sivakolunthu Pillai under a registered conveyance dated 17-2-1941. Sivakolunthu conveyed one of the items to one Natesa Moopanar and another item to Ramaswami Pillai. Ramaswami Pillai died and Dhanalakshmi married one Subbaraya Pillai in 1944.
(3) Palani, the son of Arunachalam Pillai, filed O. S. No. 86 of 1957 on the file of the District Munsif's court of Tiruvayyaru for recovery of possession of the three items of properties which Rathnaswami Pillai took under the family arrangement executed on his behalf by his mother Sengamalam. To that suit he impleaded his mother as the first defendant. Sivakolunthu Pillai, the alienee from Rathnaswami as the second defendant and Natesa Moopanar and Ramaswami Pillai the alienees from Sivakolunthu Pillai as defendants 3 and 4. Defendants 1 and 3 were ex parte and defendants 2 and 4 contested the suit. The plaintiff's case was that the properties comprised in the settlement deed of his father and in the deed of family arrangement by his mother were all ancestral properties incapable of being disposed of either by his father or by his mother. The case of contesting defendants was that the properties were the self-acquired properties of Arunachalam Pillai that the settlement by Arunachalam was valid and binding upon the plaintiff and that in any event the family arrangement entered into by the first defending on behalf of the plaintiff being a bona fide settlement of disputes between the members of the family cannot be challenged by the plaintiff.
(4) The learned District Munsif of Thiruvayaru who tried the suit upheld the plaintiff's claim and granted a decree in his favour as prayed for. On appeal by the second defendant, the judgment and decree of the trial court were reversed and the suit was directed to be dismissed. This second appeal has been preferred by the plaintiff. The learned Subordinate Judge of Tanjore has found that the suit properties were the self-acquired properties of Arunachalam over which he had full powers of disposal. The finding was challenged before me by learned counsel for the appellant. It is not necessary to record any finding on the nature of the properties whether they were joint family properties in which the plaintiff had a right by birth or the self-acquired properties of Arunachalam as I am clearly of opinion that the deed family arrangement entered into by the first dependent on behalf of the plaintiff is valid and binding upon the plaintiff.
(5) The recitals in Ex. A-3, the deed of family arrangement show that after the withdrawal of the suit O. S. No. 11 of 1937 in the Tiruvayaru Munsif's Court, by the defendant and after the death of Arunachalam Pillai, Rathnaswami put forward claims under the settlement deed in his favour by Arunachalam and the first defendant Sengamalam resisted those claims. The deed of family arrangement came into existence as a result of mediation by persons interested in the minor's family and in Rathnaswami who wanted to avoid a protracted and costly litigation which may prove to be ruinous to the interests of the minor. It is not disputed that the first defendant acted bona fide and in the interests of his minor son and compromised a claim against his estate in a manner beneficial to the interests of the minor. The only question raised on behalf of the appellant is that a natural guardian of a Hindu minor can under no circumstances bind the ward by a family arrangement so called which in effect and in substance is nothing but a gift of the minor's estate by the guardian to another. It must be pointed out that a family arrangement is not a pure gift as it is in settlement of conflicting disputes relating to the minor's estate and a compromise by the guardian on behalf of the minor and a buying off of a claim against the estate.
(6) The family arrangement or a compromise of claims against the estate cannot be worse than an alienation by a guardian on behalf of a minor. If the natural guardian of a Hindu minor can alienate the estate of the ward for purposes of necessity and benefit as has been recognised by a long course of decisions commencing from Hunooman Pershad Pandey v. Mt. Babooee Mundraj Koonweree, 6 Moo-Ind Ap 393, it stands to reason that the guardian can also bind the minor by a family arrangement provided such an arrangement is for his necessity or benefit.
(7) In Baboo Lekhraj Roy v. Baboo Mahtab Chand, 14 Moo Ind App 393, the guardian compromised a suit launched against the minor's estate for recovery of money. The deed of compromise was confirmed by the court, 16 years after the compromise the minor came of age and brought a suit against the guardian to recover the amount paid under the deed of compromise. The quondam minor challenged the compromise as being fraudulent and collusive between the guardian and the third party. The Judicial Committee held that the guardian was justified in making the compromise to protect the infant's estate. As page 399 their Lordships observed,
'It is undoubtedly the duty of Guardians scrupulously to regard the interest of minors in dealing with their estates, and the court will, when necessary, enforce the performance of this duty. But the interests of infants would seriously suffer if a motion were to prevail, that Guardians were bound for their own security to contest all claims against an infant's estate, whether well or ill founded; and such a notion might prevail if the compromise of a claim of debt confirmed by a decree of a court were to be set aside after sixteen years without distinct proof of fraud.'
In Venkaraghava v. Rangamma, ILR 15 Mad 498, the daughter of a deceased Hindu brought a suit in the court of the District Munsif for a declaration that the defendant was not the adopted son of her father, as he claimed to be. It was found in that suit that the alleged adoption was valid and the suit was accordingly dismissed. The adoptive mother conveyed a certain item of property by way of gift to the daughter, who brought the suit. There was evidence to show that the adoptive mother made the gift bona fide to her daughter with a view to adjust the litigation about the validity of the adoption. The adopted son challenged the gift and sought to recover possession of the gifted property from the donee. A division Bench of this court consisting of Muthuswami Aiyar and Parker JJ., held that the gift as a family arrangement will bind the minor provided it was bona fide and was brought about for his benefit. At p. 500 the learned Judges observed,
'the next question considered by the Subordinate Judge is as to the validity of the gift made to the respondent. If, as observed, by him, the transaction was substantially not a mere voluntary act, but one concluded bona fide by the appellant's mother, as his guardian, in view to adjust the litigation then pending about his adoption, it might be valid.'
In Annapurnamma v. Seetha Ramanjaneyaratnam, : AIR1959AP40 it was held by a Division Bench, Subba Rao C. J., and Manohar Pershad, J., that an avoidance of family disputes is only one of the main grounds which go to validate a family arrangement, and that the essential test of the validity of a family arrangement is whether it amounted to a bona fide settlement of conflicting claims. In that case a family arrangement entered into by a de facto guardian on behalf of a minor was upheld as valid and binding upon the minor.
(8) Mr. T. S. Kuppuswami Iyer, learned counsel for the appellant relied upon the decision of this court in Ramaswami Chettiar v. Karuppaya Thevar 1954 1 MLJ 548 as an authority for the proposition that a main or can never be bound of a family arrangement entered into on his behalf of his or her natural guardian. The facts of that case were as follows : There were two brothers Karuppayya Thevar and Velayutha who were members of a joint undivided Hindu family. They executed an usufructuray mortgage on 4-9-1921 in favour of one Ramaswami Chettiar. They executed another mortgage on 29th November 1932 in favour of the same individual. On 17th May 1944 one of the brothers Velayutha Thevar executed a settlement deed, Ex. B. 1, conveying his undivided share in the family properties to Ramanatha the son of his brother, Karupayya Ramanatha was a minor on the date of the transaction, and he was represented by his father, Karuppayya Thevar as his guardian.
The mortgagee Ramaswami Chettiar instituted the suit. O. S. No. 48 of 1946 on the file of the District Munsif Court Pattukottai to enforce the mortgage dated 4-9-1921. The suit was decreed Karuppayya Thevar filed an application E. A. No. 174 of 1949 for scaling down the two mortgages. Ramaswami Chettiar contended that there had been a partition between Velayutha and Karuppayya, that Velayutha had transferred his interest in the properties to Ramanatha under a settlement deed and that therefore the terms of Sec 9-A(7) of Madras Act IV of 1938 came into operation, and that no relief should be granted by way of setting down in respect of that half share. One of the contentions raised was that Ex. B.1, the settlement by Velayudha should be construed as an alienation of the joint family properties in favour of Ramanatha. It was also contended that Ex. B. 1 can be upheld as a family settlement. These contentions were repelled Venkatarama Aiyar, J in dealing with the contention of family settlement observed thus at p. 550 :
'Nor can Ex. B. 1 upheld as a family settlement because one of the parties to the settlement was a minor. The principle on which family settlements are upheld is that persons who solemnly agree to a settlement of rights on a particular basis are precluded from setting up any rights in opposition thereto as against persons who are parties to that settlement or their representatives. But an essential condition for the enforcement of this principle is that the parties sought to be bound by the arrangement, should have the capacity to enter into it; and as Ramantha was a minor on that date. Ex. B. 1, cannot be upheld as a valid family arrangement.'
It is quite clear on the facts of that case that the impugned transaction could not operate as a family arrangement as there was no situation of contest between the parties, no settlement of conflicting claims and no preservation of the minor's estate saved the freed from a claim made against sit. I do not understand the observation of the learned Judge quoted above as laying down the proposition of law that the natural guardian of a minor is incompetent to enter into a compromise on his behalf bond fide and for the benefit of the minor.
(9) Under the Guardians, and Wards Act which of course applies only to certificated guardians Sec. 27 prescribes the duties of property guardian. The guardian of the property of a ward is bound to deal with the property as carefully as a man of ordinary prudence would deal with it if it were his own. Mayne in his Hindu law, 11 th Edn., at p. 296 observes thus :
'The rule laid down in S. 27 of the Guardians and Wards Act (VIII of 1890) that a guardian may do all acts which are reasonable and proper for the realisation, protection and benefit of the property and is bound to deal therewith as carefully as a man of ordinary prudence would deal with it, if it were his own, would cover all acts of the guardian on behalf of the minor other than alienations of the infant's property, as to which the test of necessity or demonstrable benefit as explained by Lord Atkinson in Palaniappa Chetty v. Devasikamony Pandara Sannadhi, ILR 40 Mad 709 : AIR 1917 PC 33 must apply.'
(10) Reference may be made to S. 8 of the Hindu Minority and Guardianship Act, XXXII of 1956 which is as follows :
'(1) The natural guardian of a Hindu minor has power, subject to the provisions of this section to do all acts which are necessary or reasonable and proper for the benefit of the minor or for the realisation, protection or benefit of the minor's estate; but the guardian can in no case bind the minor by a personal covenant.
(2) The natural guardian shall not, without the previous permission of the Court-
(a) mortgage or charge, or transfer by sale, gift, exchange or otherwise, any part of the immoveable property of the minor, or
(b) lease any part of such property for a term exceeding five years, or for a term extending more than one year beyond the date on which the minor will attain majority.
(3) Any disposal of immoveable property by a natural guardian, in contravention of sub-sec (1) of sub-section (2) is voidable at the instance of the minor or any person claiming under him.' The natural guardian of a Hindu minor no doubt occupies a fiduciary position. The duties of the guardian are in the nature of a sacred trust. So long as the guardian acts bona fide in the interests and the welfare of the minor and the transactions on behalf of the minor result in benefit to the minor and so long as the transactions are free from any taint of fraud, malpractice, or abuse of power and yard-stick of a prudent man's conduct in respect of his own property to test the validity of the guardian's transactions can well be applied. Otherwise no guardian can manage the estate of a minor effectively and efficiently.
(11) In my opinion, Ex. A. 3 is a valid family arrangement binding upon the plaintiff.
(12) Learned counsel for the appellant next contended that as the second defendant alone has preferred an appeal to the lower appellate Court the judgment and decree of the trial Court should not have been set aside in regard to items of properties conveyed by the second defendant in favour of defendants 3 and 4. The memorandum of appeal to the lower appellate Court included all the suit items and of course the second defendant was interests and entitled to maintain the appeal with regard to all the items of the suit properties. There is no substance in this contention.
(13) In the result, the second appeal fails and is dismissed with costs. No leave.
(14) Appeal dismissed.