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Maharaja Sree Rao Sir Venkata Swetachelapathi Ranga Rao, Bahadur Garu, K.C.i.E., Maharaja of Bobbili Vs. Raja Kaminayanl Bangaru Kumara Ankappa Nayanim Garu, Zamindar of Chundi - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtChennai
Decided On
Judge
Reported in(1912)ILR35Mad108
AppellantMaharaja Sree Rao Sir Venkata Swetachelapathi Ranga Rao, Bahadur Garu, K.C.i.E., Maharaja of Bobbili
RespondentRaja Kaminayanl Bangaru Kumara Ankappa Nayanim Garu, Zamindar of Chundi
Cases ReferredLakshminarayma Nainar v. Valliammal I.L.R.
Excerpt:
.....alleged by the transferor of immoveable property, this section, if deemed to enact a rule as to reasonable enquiry in excess of what is required by the privy council in hunooman persaud's case (1856) 6 m. see section 2, clause (d) but it may well be taken to indicate that ordinarily something more than the mere representation of the borrower is nacessary to constitute reasonable enquiry on the part of the lender. 4. taking the law to be as above indicated we have to see how the facts stand in this case it is perfectly clear that at the time of the suit loan there was a debt due of a lac and a half recoverable from the estate. ' the second witness for the plaintiff, his second maniger, siys 'from my enquiries i came to know that defendants nos 1. and 2 had a necessity to barrow and i..........due and proper enquiry the learned judge proceeds to add 'the same principle applies to a simple loan or debt. in each case the manager acts as agent of the family and his acts are subject to the same consideration and question. in point of principle and law, the simple loan and express charge require the same foundation to bind the family and the estate' (pages 148 and 149). mr. justice muthusamt ayyar observed at page 161 with reference to a debt not secured upon the estate by the de facto poligar but sought to be recovered from the rightful successor, 'it is true that though there was no real necessity for the debt, the plaintiffs should not fail if their claim were within the equity recognized by hunooman persaud panday v. mussamut koonweree (1856) 6 m.i.a. 393.' this being the.....
Judgment:

1. The late Zemindar of Caundi, which was an impartible estate descendible according to the rule of primogeniture, died in 1899. On his death disputes arose between his brother, the first defendant, and his widow, the second defendant, as to the succession. There was litigation between the parties A compromise was entered into and embodied in exhibit A, dated the 13th April 1901. Under it both were to enjoy the zamindari in common, and, in case a son was born to the first defendant, the second defendant was to adopt him. A son was born to the first defendant in February 1903 and adopted by the second defendant on the 27th of June 1903. The adopted son is the third defendant represented by the Court of. Wards The plaintiff sued to recover a sum of Rs. 7,000 with interest thereon under the promissory note, exhibit C-2, dated the 16th September 1901, executed by defendants N03. 1 and 2, on the liability of the Chundi estate in the hands of the third defendant. The third defendant admitted a part of the claim. The District Judge passed a decree in respect of it and dismissed the suit as regards the remainder as against the third defendant. The present appeal by the plaintiff relates to the amount disallowed. The District Judge based his decision on the authority of the judgment in Nachiappa Chettiar v. Chinnayasami Naiaker I.L.R. (1906) Mad. 453 which held that in the case of an impartible zaimindari the unsecured debt of the zamindar not incurred for family necessity was not recoverable from the estate in the hande of the nest heir taking by survivorship, The principle of that decision must be held to be no longer good law, See Rajah of Kalahasti v. Achigadu I.L.R. (1907) Mad. 454 and Zamindar of Karvetnagar v. Trustee of Tirumalai, Tirupati, etc., Devaslanams I.L.R. (1909) Mad. 429.

2. The ground of the District Judge's judgment being erroneous, it becomes necessary to consider the third issue which raises the question whether a debt contracted by the first and second defendants not secured upon the estate is nevertheless binding upon it, The District Judge has given no finding but he has recorded the evidence. We think it unnecessary to send the case back as both sides have agreed that we may deal with the issue,

3. Before, however, going into the evidence it is necessary to deal with the legal contentions that were raised in connection with this issue. The first point to be noticed is whether, the debt not having bean secured upon the estate by the first and second defendants, the estate in the hands of the third defendant, who has on adoption devested them of the zamindari, under the Hindu Law can be made liable. The learned Advocate General who appeared for the third defendant admitted that Reyelle Jogayya v. Venkataratnamma : (1910)20MLJ412 was against him and did not seriously dispute its authority. Although the execution of a promissory note by the first and second defendants might suggest prima facie that the creditor looked to their personal credit it would be competent to him to show that the estate was intended to be bound as well in the circumstances of the case. In the case of the present loan the estate was heavily involved and the very fact of the first and second defendants being both required to execute the promissory note shows that, if the loan was made after due enquiry as to the purpose being of a character binding upon the estate, there can be no difficulty in coming to the conclusion that the creditor looked to the estate for repayment and not merely to the personal credit of the first and second defendants. Mr. Sundara Ayyar for the appellant has argued that, apart from the evidence of the actual application of the loan, he is entitled to a decree binding upon the estate, because the loan was mads after reasonable enquiry as to the purpose. The Advocate Ganeral, however, raised a question that the decision in Hunooman Persaud Panday v. Mussamut Koonweree (1856) 6 M.I.A. 393, as to the sufficiency of a reasonable enquiry to validate a claim against the estate in the hands of a manager should not be extended to loans unsecured upon the estate, His argument was that it is only where the widow or other limited owner of an estate or the manager of a joint family or guardian of an infant heir alienate the estate in some form that bond fides enquiry and the satisfaction of the creditor as to reasonable necessity have been held sufficient to justify the alienation. But we see no grouads to limit the decision in that case in this manner. There is nothing in principle to confine the observations of their Lordships as to the sufficiency of a bond fide and reasonable enquiry to the case of alienation. In the ease of Kotta Ramasami Chetti v. Bangari Seshama Nayanivaru I.L.R. (1881) Mad. 145, both Mr. Justice Kernan and Mr. Justice Muthusami Ayyar were of opinion that the dicta of the Privy Council applied with equal force to a simple loan as well as an alienation. Mr. Justice Kernan observed 'In Hunooman Persaud Panday v. Mussamut Koonweree (1856) 6 M.I.A. 393, the case dealt with was one of an express charge and so it was in very many other cases, The principle, however, to be applied, whether in respect of an express charge in writing or by deposit, or of a loan of money to, or other debt created by, a manager without such express charge, is the same.' After referring to the sufficiency of due and proper enquiry the learned Judge proceeds to add 'The same principle applies to a simple loan or debt. In each case the manager acts as agent of the family and his acts are subject to the same consideration and question. In point of principle and law, the simple loan and express charge require the same foundation to bind the family and the estate' (pages 148 and 149). Mr. Justice Muthusamt Ayyar observed at page 161 with reference to a debt not secured upon the estate by the de facto Poligar but sought to be recovered from the rightful successor, 'It is true that though there was no real necessity for the debt, the plaintiffs should not fail if their claim were within the equity recognized by Hunooman Persaud Panday v. Mussamut Koonweree (1856) 6 M.I.A. 393.' This being the law, the only question that we have to consider in the ease is whether, as contended by the learned vakil for the appellant, there was a reasonable and bona fide enquiry by the lender as to the purpose of the loan. The learned Advocate-General argued that the enquiry contemplated by the Privy Council is one independent of the representations of the borrower and that such representations, even if evidence, are not in themselves sufficient to discharge the burden which rests upon the creditor of showing a reasonable enquiry as to the binding nature of the purpose for which the loan is contracted In Hunooman Persaud Panday v. Mussamut Koonweree (1856) 6 M.I.A. 393, the Privy Council said at pages 419 and 420 of the report.' The representations by the manager accompanying the loan as part of the res gestae, and as the contemporaneous declarations of an agent, though not actually selected by the principal, have been held to be evidence against the hair; and as their Lordships are informed that such prim facie proof has been generally required in the Supreme Court of Calcutta between the lender and the heir, where the lender is enforcing his security against the heir, they think it reasonable and right that it should be required.' The foregoing extract from the judgment of their Lordships makes it abundantly dear that the representations of the borrower are not merely evidence but may in particular circumstances be sufficient to shift the onus from the lender to the person impeaching the debt or alienation. The above principle has been accepted by the Courts in India. In Sarat Chandra Banerjee v. Bhupendra Nath Basu I.L.R. (1898) Cal. 103 Chief Justice Maclean applied the rule above enunciated to the case of a loan to an executor not governed by the Succession Act. We wish, however, to guard ourselves' from being supposed to lay down the rule that the representations by the borrower are generally sufficient. In many cases the interests of the borrower are likely to be opposed to those of the reversioner or the infant heir or other person whose manager be or she may happen to be and in such oases reasonable enquiry should not be limited to the representations of the borrower. Section 38 of the Transfer of Property Act seems to require, in addition to good faith, reasonable care in ascertaining the existence of circumstances alleged by the transferor of immoveable property, This section, if deemed to enact a rule as to reasonable enquiry in excess of what is required by the Privy Council in Hunooman Persaud's Case (1856) 6 M.I.A. 399 cannot override the Hindu Law so settled by the Privy-Council. See Section 2, Clause (d) But it may well be taken to indicate that ordinarily something more than the mere representation of the borrower is nacessary to constitute reasonable enquiry on the part of the lender.

4. Taking the law to be as above indicated we have to see how the facts stand in this case It is perfectly clear that at the time of the suit loan there was a debt due of a lac and a half recoverable from the estate. The Advocate-General did not practically dispute this. Exhibit Ag 2 which is a draft mortgage-deed, dated the 8th of October 1901, is sufficient evidence of the liability. By the latter, Exhibit D, dated the 10th September 1901, the first defendant asked for a loan of a lac ard a half. There can be no doubt that this loan was applied for to meet the liability which was enforceable against the estate. In the same letter the first defendant applied for an immediate loan of Rs. 7,000 on account of urgency to meet a decree-deht and other dehts out of the debts amounting to a lac and a half that were recoverable from him. Before the date of the loan the defend- < ant's agent had been sent to the plaintiff to represent the urgency. The first defendant examined as the plaintiff's witness No. 3 says that the loan of a lac and a half was absolutely necessary and that the amount of the suit promissory note was also comprised in the said loan. The witness also adds 'As I told him (Naras mhayya) that money was urgently needed, he spoke to the Maharajah of Bobbili at Madns on my behalf about the urgency and caused money to be advanced.' The second witness for the plaintiff, his second Maniger, siys 'from my enquiries I came to know that defendants Nos 1. and 2 had a necessity to barrow and I was satisfied with the necessity for borrowing money.' It; is true ha is now unable to give any details of the debts. But we are on the whole satisfied in the circumstances of this case that, even apart from the representations of the borrower, there was enquiry by the lender which was reasonably sufficient to justify the loan so as to mike it recoverable from the estate.

6. It is unnecessary to consider the contention of Mr. Sundara Ayyar that as the first defendant was at the time of the loan the full owner of the estate the amount is recoverable from the estate in the hands of the successor apart from any necessity or reasonable enquiry as to the purpose of the loan. It is difficult to treat the first defendants estate, which was liable to be de-vested on adoption by the second defendant and which has as a matter of fact been so davested, as an absolute estate for purposes of validating loans or alienations by the holier of the estate. [See the judgment in Lakshminarayma Nainar v. Valliammal I.L.R. (1911) Mad. 250]. It is, however, unnecessary to express any opinion on this point But we cannot agree with the learned Advocate General's argument that the estate of the first defendant should be treated on the same footing as that of the holder of a life estate. If that were the true view an -alienation for whatever purpose would be inoperative beyond the date on which the estate was devested. This is not in accordance with the tenor of the observations of the Privy Council in Sri Raghunadav. Sri Brozo Kishoro (1876) 3 I.A. 154 (See also Mayne's 'Hindu Law', Section 198), The analogy of the first defendant's estate is rather to that of a limited owner like a widow than to that of a life owner. There is a vested reversion or remainder where there is a life estate. But both in the case of the widow and in the case of a person in the position of the first defendant the holder for the time being represents the estate completely. If a debt or alienation by a widow for proper purposes would bind the reversion it stands to reason that a debt contracted, or alienation made by the first defendant must be dealt with on the same footing. We, therefore, allow the appeal with costs here and in the Court below.


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