1. Appeal No. 119 of 1933 : - This appeal arises out of a suit instituted for obtaining a declaration that certain transactions entered into by plaintiff 1 were void and for incidental reliefs. In the Court below, plaintiffs attacked three transactions evidenced by Exs. H, J and I. The lower Court dismissed the plaintiff's suit. Plaintiff 1 died pending the suit and the other two plaintiffs filed this appeal against the decree of dismissal. In the appeal the attack had been confined to Exs. H and I. Plaintiff 2 died during the pendency of the appeal and his legal representatives who were in the first instance added as respondents have since been transposed as appellants to continue the appeal along with plaintiff 3.
2. Plaintiff 1 was the father and plaintiffs 2 and 3 were his sons. Starting with little or no means, plaintiff 1 seems to have earned substantial sum by working for a number of years in Rangoon and he acquired some immovable properties both in Rangoon and in the Chingleput District here. About the middle of 1927, when he was about 58 years old, plaintiff 1 is said to have developed symptoms of unsoundness of mind. The exact nature of his malady will be discussed presently; but, notwithstanding this state of health and mind,' he does seem to have taken part in some transactions in the latter part of 1927 and in the first part of 1928. Amongst them are Exs. H and J, two sale deeds dated 19th December 1927 and 5th May 1928 executed by defendants 1 and 2 respectively in favour of plaintiff 1. On 26th April 1928 plaintiff 1 executed a deed of settlement (Ex. I) in favour of defendant 4 who is his daughter. This suit was instituted in March 1929 by plaintiff 1 represented by plaintiff 2 as his next friend and by the two sons as plaintiffs 2 and 3. The father died a few months after the institution of the suit. The case made in the plaint was that from about the middle of 1927 plaintiff 1 who was an old man was suffering from senile dementia and was as such incapable of managing his affairs, that, taking advantage of that condition defendants 1 and 2 who took moneys from plaintiff 1 purported to sell their properties to him partly in repayment of the moneys thus taken and also in consideration of a promissory note executed by plaintiff 1 for the balance of the purchase money. As regards Ex. H, the plaint prayed that defendant 1 should be directed to repay the sums of money which he had received from plaintiff 1 and that the promissory note executed for the balance of the consideration should be declared void. As regards the settlement deed (Ex. I), it was alleged in para. 14 of the plaint that defendant 4 and her husband, defendant 3, had managed with the help of certain other persons to benefit themselves at the expense of the plaintiffs' family and got the settlement deed executed by the demented plaintiff 1. It was also contended that the property thus settled was joint family property and that plaintiff 1 was on this ground also incompetent to make the settlement.
3. The defendants denied the alleged incapacity of plaintiff 1. They also denied that the properties settled by Ex. I on the daughter were joint family properties. Defendant 1 in his turn instituted a suit (out of which the connected appeal arises) for recovery of the amount due under the promissory note which had been executed by plaintiff 1 for the balance of the consideration. The two suits were tried together and the learned Subordinate Judge dismissed the suit to set aside the transactions and passed a decree in plaintiff's favour in the promissory note suit. The learned Subordinate Judge was of opinion that though plaintiff 1's mental condition was probably not quite all right in or about July 1927, there could be no presumption that the lunacy continued; and in view of the evidence furnished by other transactions alleged to have been entered into by plaintiff 1 after this date, he held that the evidence was not sufficient to hold that Exs. H and I were brought into existence at a time when plaintiff 1 was actually of unsound mind.
4. was also alleged in the plaint that the price fixed for the sale under Ex. H was extravagant and this was itself evidence of the advantage taken by defendant 1 of plaintiff 1's condition. On this part of the case, the learned Judge was inclined to think that perhaps the price was a bit high but he was not prepared to say that it was so disproportionately high as to lead one to think that defendant 1 took advantage of the mental condition of plaintiff 1 and brought about the sale on very advantageous terms to defendant 1. The evidence bearing on the question of price is to the effect that about three years before the sale, defendant 1 purchased the lands for Rs. 1500 and retaining 10 cents of the lands for himself he sold the remainder under Ex. H for Rs. 2375. As we propose to rest our decision in this appeal on the evidence as to plaintiff 1's mental capacity, we do not propose to pursue further the question of the fairness or otherwise of the price fixed for Exhibit H.
5. Dealing with the question of plaintiff 1's mental capacity, we would observe at the outset that one remark of the learned Judge in para. 31 of his judgment is open to question, i.e. the statement that assuming that plaintiff 1 was of unsound mind in July, August 1927 'there could be no presumption that the lunacy continued.' It was contended on behalf of the appellants that this was opposed to the decision in Seshamma v. Padmanabha Rao A.I.R. (1917) Mad. 265. That case is perhaps capable of being distinguished on the facts, on the ground that it was a case of a person found lunatic by inquisition, whereas here all that happened was that certain proceedings were taken under Sections 13 and 14, Lunacy Act, with a view to avoid danger from the lunatic to himself and to others. Whether the presumption laid down in Seshamma v. Padmanabha Rao A.I.R. (1917) Mad. 265 should be limited to cases of lunacy found by inquisition need not be dealt with as an abstract question. Having regard to the nature of the mental incapacity proved in this case, namely senile dementia in the Case of an old man, we think it more reasonable to presume its continuance than its discontinuance and the onus will be upon persons who wish the Court to uphold transactions entered into by the patient subsequent to this date to prove that the transactions were not vitiated on the ground of his incapacity.
6. There is some evidence in the case consisting not merely of oral testimony but of at least one document (Ex. B) suggesting that plaintiff 1 was even violent and dangerous; but as P.W. 2, the Sub-Inspector who made the report Ex. B, admits that the statements in Ex. B relating to acts of violence committed by plaintiff 1 cannot be vouched by him on his own personal knowledge, but were merely inserted on the strength of statements made before him by others, we are not prepared to accept the oral evidence relating to such acts as reliable, particularly in view of what is contained in the certificate (Ex. A) given by P.W. 1. P.W. 1 was the District Medical Officer in Chingleput in August 1927. On receipt of the report (Ex. B), he was asked by the Joint Magistrate to examine plaintiff 1 and report on his mental condition and Ex. A is a certificate given by him on 4th August 1927. It says that after keeping plaintiff 1 under observation for some days P.W. 1 came to the conclusion that plaintiff 1 was a lunatic and a proper person to be taken charge of and detained under care; but it was added that he could betaken care of by his relatives. It is stated in the certificate itself that the patient was 'not inclined to be violent or boisterous,' that he is quite rational in his talk but when one talks to him about his wealth, he goes at a tangent and 'says that he has thousands of acres of lands and hundreds of houses.' On this certificate, orders were passed by the Joint Magistrate (Ex. T) directing plaintiff 1 to be entrusted to the care of his son, plaintiff 2, who executed a bond Ex. D.
7. A suggestion has been made by the learned Counsel for the respondent that these proceedings under the Lunacy Act must in all probability have been put through with some ulterior purpose, namely to avoid criminal proceedings against plaintiff 1 for some criminal acts committed by him. We see no warrant either direct or indirect for this suggestion. P.W. 2 says that he himself saw plaintiff 1 and examined him and that he made the report Ex. B on receipt of a report from the Village Munsif who is himself defendant 1 in this case and has been examined as D.W. 1. Though D.W. 1 denies having made any report and suggests that P.W. 2 is ill-disposed towards himself, we prefer to accept the testimony of P.W. 2. No suggestion of ill-will was put to him during his cross-examination and it was not elicited either from P.W. 2 or from D.W. 1 that there was any danger of criminal proceedings being taken against plaintiff 1 and it was with a view to avoid the same that this device of proceedings under the Lunacy Act was adopted. The Medical Officer who gave the certificate, Ex. A has been examined as P.W. 1 in the case and nothing has been elicited in his cross-examination to suggest that Ex. A is not reliable or that he was a party to any conspiracy to hush up a criminal case. Another medical witness who was examined on commission in Burma speaks also to the fact that in his opinion plaintiff 1 was suffering from senile dementia. It is true that his evidence is not very full and he has not been asked to state the grounds of his opinion or the symptoms which he saw. The defendants did not appear before the Commissioner to cross-examine him and this is perhaps the reason why his evidence is so short. In view however of the medical certificate Ex. A and the evidence of P.W. 1, we are not left in much doubt about the mental condition of plaintiff 1 in or about July-August 1927.
8. It is true that even after this period plaintiff 1 was a party to certain transactions, but on close examination it will be found that his part in them is not such as to displace the effect of the medical evidence. For instance, another sale deed similar to Exs. H and J was executed about the same time for a sum of Rs. 4000. But it is significant that this was executed in favour of plaintiff 1's wife and not in favour of plaintiff 1, like Exs. H and J. The contract had DO doubt been entered into by plaintiff 1 but it is explained that the other members of the family did not think fit to repudiate it because the bargain was a good one and they preferred to retain it. Again, it is significant, that a promissory note which was taken in July 1927 was taken not in plaintiff 1's name but in favour of his wife. This cannot be a bogus transaction or device because it is attested by defendant 3 who is now contesting the suit on behalf of his wife, defendant 4. When he was questioned in the witness-box about it, he did not seek to explain it away but merely fought shy of it and avoided any questions relating to it. The other transaction of this period which the learned Subordinate Judge has strongly relied is a hypothecation bond executed in Rangoon in favour of a Chettiar; but its value in support of the defendants' case is very much diminished by the fact that it was not merely brought about by the sons, plaintiffs 2 and 3, but that they also joined in its execution. It is nothing strange if to satisfy the creditor they also got their father to join in executing it. Some point has been made of the fact that plaintiff 1 was a careful business man and kept a notebook in which his money transactions were entered and he even had the good sense to take the signatures in the book of persons to whom he lent moneys. This no doubt proves that in Spite of his mental incapacity he continued a habit which he presumably must have formed in his better days; but having regard to the nature of the incapacity spoken to by the medical witnesses, this conduct is not inconsistent with the continuance of that kind of incapacity.
9. We may also point out in this connexion that it is not the case of the contesting defendants that plaintiff 1 was at one stage of unsound mind but that he subsequently recovered his mental capacity. They and their witnesses totally deny that plaintiff 1 was at any time of unsound mind. We are unable to believe that defendant 3 who is the son-in-law of plaintiff 1 would have been ignorant of the proceedings under the Lunacy Act. As regards defendant 1, we have no hesitation in believing that he was not only aware of the proceedings but that it was his report which initiated the proceedings. We may at this stage also refer to an attempt made by the plaintiffs to have defendant 1's report placed on the record. The lower Court denied them an opportunity to do so and a petition has been filed before us in that connexion. In the circumstances disclosed in the affidavit, we think that the learned Subordinate Judge would have done better to have given the opportunity to the plaintiffs. We do not however think it necessary to admit the documents in evidence at this stage because its admission would necessitate a further examination of defendant 1. We are prepared to proceed on the footing that Ex. B substantially represents the contents of the report made by the Village Munsif and this is sufficient for the purpose of this case. There being on record no evidence of the proved incapacity having terminated, we are unable to agree with the learned Subordinate Judge that it was for the plaintiffs to prove that on the dates of Exs. H and I, plaintiff 1 was not of sound mind. We may however add that there is some evidence on record even to that effect. If it merely depended upon the evidence of plaintiff 2 we should have hesitated to act upon it. But both the medical witnesses 1 state that having regard to the nature of the infirmity, it would, in all probability, have continued during the rest of the patient's lifetime.
10. We have not had the benefit of any argument before us on behalf of defendant 1. His counsel has reported no instructions. It has been argued by the learned Counsel for defendants 3 and 4 that on the medical evidence, there is not enough to invalidate Ex. I. In view of the finding of the lower Court that the properties settled under Ex. I were the self-acquired properties of plaintiff 1 it was contended that except on the ground of mental incapacity, the transaction could not be impeached; it was also argued that unless it is shown that the mental incapacity was such as to affect the particular transaction, Ex. I should be upheld. Reliance was in this connexion placed upon the observations in Jenkins v. Morris (1880) 14 Ch. D. 674. That judgment does not seem upon careful examination to lay down any general rule applicable to all cases. The Court of Appeal was more concerned with the question whether there had been a misdirection and they merely affirmed the correctness of the direction which had been given at the trial by Lindley L.J. who had referred the question to the jury as a practical question,
whether the party was so insane as to be incompetent to manage his own affairs in the sense of disposing of his property and even of property believed by him to be full of sulphur.
11. The test applicable to a case like the present is, in our opinion, sufficiently indicated in Section 12, Contract Act, which requires that the person whose act is challenged should be capable of understanding it and of forming a rational judgment as to its effect upon his interests. If, as Ex. A states, plaintiff 1 was under a delusion in the sense that he thought that he possessed thousands of acres of land when in fact he had about 100 acres of land at Rangoon and about 15 or 20 acres in India, we find it difficult to say that he could have formed a rational judgment as to the effect of the gift deed Ex. I upon his interests. The evidence of D.Ws. 3, 4 and 5 is not of much help to defendant 4 because, as explained by P.W. 1, plaintiff 1's malady was not such as could have been detected by laymen in the course of an ordinary conversation. We are free to confess that we would have gladly upheld Ex. I as a reasonable transaction, reasonable even if the property dealt with had been the ancestral property of the family; but dealing with the question not as one of reasonableness, but of the mental capacity of the settlor we regret we are unable to uphold it in spite of our view that it is not an unreasonable transaction.
12. As regards defendant 1, we may add that his knowledge of plaintiff 1's condition is proved not merely by the report which he is said to have signed but by Ex. F a notice sent by him about the end of August 1927 wherein he was specifically warned against entering into any transaction with plaintiff 1. In the reply Ex. E-l he preferred to deny the charge and it is after Ex. F-1 that he entered into the sale deed Ex. H. The learned Subordinate Judge has laid some stress upon the fact that the plaintiffs are in possession of the property conveyed under Ex. H. The transfer of pattah is more or less a matter of course once a sale deed is registered, and, as defendant 1 was the Village Munsif, it is not unlikely that the other village records were so prepared as to be in conformity with Ex. H. Even assuming that the taking of possession by plaintiff 1 was a voluntary act, it cannot improve the validity of the transaction having regard to the grounds on which we have set aside the transaction.
13. The result is that Appeal No. 119 of 1933 must be allowed and the sale deed Ex. H, and the settlement deed Ex. I, declared void and inoperative. Out of the sale price under Ex. H, Rs. 850 has admittedly been paid to defendant 1. This money is liable to be returned to the appellants and there will be a decree against defendant 1 for the same. It was brought to our notice that a small cause suit for the recovery of a sum of Rs. 450 out of this Rs. 850 had been dismissed for default. If the subsequent sale had not come about, that dismissal would no doubt bar any further suit on the original promissory note. But the dismissal is explained by the execution of the sale deed and after that date the amount was no longer claimable as a debt due under the promissory note. The refund now ordered is only on the principle of Section 65, Contract Act. Before the plaintiffs can recover this sum of Rs. 850, they must deliver up possession of the land conveyed to them under Ex. H. As they have been in possession, they will not be entitled to claim any interest. Prom the time that they notify defendant 1 of their abandonment of possession of the land they will be entitled to interest on this sum of Rs. 850 at 6 per cent. per annum till date of payment. As regards the properties covered by Ex. I, we were informed that during the pendency of the suit in the lower Court the plaintiffs themselves had been appointed receivers and had taken possession of the land. But we are also told that at a subsequent date defendant 4 has taken back possession of these lands. There will accordingly be a decree for possession in plaintiffs' favour. The appellants will be entitled to a decree for mesne profits against defendant 4 at Rs. 75 per annum from 1st July 1936 till date of delivery of possession. As regards the costs of the appeal, we think that in the peculiar circumstances of the case the parties will bear their respective costs. The memorandum of objections filed by respondents 2 and 3 in Appeal No. 119 of 1933 necessarily fails and is dismissed.