1. This Second Appeal is preferred against the Decree and Judgment of the learned Subordinate Judge of Vellore in O.S. No. 101 of 1946 and confirmed by the learned District Judge of Vellore in A.S. No. 377 of 1950.
2. The facts are-Subramania Mudaliar, the father of the plaintiff, and Ponnuswami Mudaliar constituted an undivided Hindu joint family owning considerable properties. This Subramania Mudaliar was the Village Munsif of Veppur and he was also running a Mandi business at Vellore. On 16th December, 1926, Subramania Mudaliar executed the promissory note Exhibit B-2 for Rs. 20,000 in favour of Abdul Hakim Sahib. Inasmuch as this promissory note was engrossed upon a printed form usually employed by money-lenders on a large scale like Abdul Hakim Sahib, it does not recite the purpose for which the moneys were borrowed. There is no dispute, however, that this promissory note is fully supported by consideration. Towards this promissory note debt Rs. 5,000 was repaid on 17th July, 1927 and another sum of Rs. 5,000 on 25th April, 1928, along with a sum of Rs. 2,097-8-0 paid and credited towards interest. This Subramania Mudaliar died on 3rd May, 1929. On 24th June, 1929, Ponnuswami Mudaliar who had become the manager of the joint family borrowed a further sum of Rs. 10,000 from Abdul Hakim Sahib and executed a fresh promissory note Exhibit B-3 in renewal of Exhibit B-2 and extinguishing that debt, and a second promissory note Exhibit B-4 for a fresh loan of Rs. 10,000. This Exhibit B-4, like Exhibit B-2, is on a printed form and does not mention the purpose for which the loan had been taken. There is no dispute in the case of Exhibit B-4 that it is fully supported by consideration like Exhibit B-2.
3. On 5th August, 1931, Ponnuswami Mudaliar executed a mortgage for Rs. 24,000 (Exhibit B-5) with respect to the suit properties in favour of Abdul Hakim Sahib on behalf of himself and as guardian of the minor members of the joint family viz., the plaintiffs and the 3rd defendant. This sum of Rs. 24,000 has been made up as follows: The sum of Rs. 10,000 due under Exhibit B-3 and another sum of Rs. 10,000 due under Exhibit B-4, deducting a sum of Rs. 5,600 already paid, and amounting with interest due thereon to Rs. 17,000. Then on the date of the mortgage Ponnuswami has borrowed another sum of Rs. 7,000 for discharging the debts due to Arcot Annamalai Chettiar and Vellore Doraisami Mudaliar as well as for family expenses. It may be noted here that it is in this mortgage for the first time a reference is made to the borrowing under Exhibit B-2 by Subramania Mudaliar as having been made for purchase of lands and family needs. In regard to the borrowing under Exhibit B-4 it was mentioned in Court for the first time that the borrowing thereunder was for the purpose of Mandi business which is said to have been carried on at Vellore and for the maintenance of the family.
4. By 1933 the affairs of Ponnuswami Mudaliar's family had not run smooth and not to put too fine a point on it the family had come to look upon this Ponnuswami Mudaliar as an utterly useless joint family steward. Therefore the joint family has thought up a device for preserving the share of Ponnuswami Mudaliar as well as the shares of the other members of the coparcenary, making provision for the discharge of joint family debts which were binding on all the members of the coparcenary as well as those debts contracted by Ponnuswami Mudaliar and not binding on the coparcenary. This device took the form of a document styled as a trust deed (Exhibit B-8). Ponnuswami Mudaliar executed this trust deed in favour of one Balakrishna Mudaliar. Ponnuswami Mudaliar is described in Exhibit B-8 as the ' appointer and author of the trust'. His wife, Mangalakshmi Ammal and his minor son, Saminathan, the 3rd defendant are described as the beneficiaries, while Balakrishna Mudaliar is described as the trustee. The properties of the family are described in Schedule A and it is recited that they are ancestral properties acquired by the common ancestor, Amirthalinga Mudaliar. After stating that himself and his uncle Subramania Mudaliar's sons constitute a joint family, Ponnuswami Mudaliar, the author of the trust, in his capacity and position as a member of the joint family, declares that he is entitled to a fourth share in the joint family and ancestral properties and deploring that he had been indiscreet, contracted various debts on his responsibility and for his own purposes and independent of the joint family and wanting to safeguard the interests of the minor members of the family and to save them from further liability declares the ' trust' and vests his share in the properties in Balakrishna Mudaliar for benefitting his wife, Mangalakshmi Animal and his minor son Saminathan. Next follows a direction given to the trustee to discharge the debts of the family amounting to Rs. 38,486. In the trustee is vested the right, title and interest of Ponnuswami in all properties set forth in the schedule i.e., share and the trustee is directed to take steps as a prudent man will do to discharge the liabilities from the income of the properties or by sale of such of the properties as may be necessary with the co-operation of the author of the trust. There is a specific direction that, if and when necessary, both the author of the trust and the trustee shall join in the execution of documents, acting also on behalf of the minor members of the family. The trustee is to make to the author of the trust a suitable provision for out-of-pocket expenses not exceeding Rs. 20 per month till all the liabilities are discharged and Rs. 35 per month thereafter and the trust deed is declared irrevocable and to be in force until V.P. Saminatha Mudaliar, one of its beneficiaries, continues to be a minor.
5. On 19th September, 1934, Ponnuswami Mudaliar has executed a sale of the suit properties under Exhibit B-1 in favour of Abdul Hakim Sahib for Rs. 24,000 to extinguish the mortgage debt under Exhibit B-5. This sale deed has been executed by Ponnuswami Mudaliar for himself and as guardian of his sons, defendants 3 and 4 and the plaintiffs who were all minors then. The document recites that as Ponnuswami Mudaliar was unable to pay even the interest or any part of the principal on the prior mortgage and as the mortgaged properties were depreciating in value, the sale deed was being executed.
6. The plaintiffs viz., the sons of Subramania Mudaliar have filed the present suit impleading the legal representatives of Abdul Hakim Sahib and the sons of Ponnuswami Mudaliar, for setting aside the sale deed dated 19th September, 1934, on the foot that it is not binding upon their share in their properties and for division of their half share.
7. Two main contentions upon which the plaintiffs sought to set aside the sale deed so far as their shares were concerned were (1) that the sale deed was not supported almost wholly by binding consideration in the sense that almost the entire consideration did not relate to necessity or for discharge of family debts; and (2) that the trust deed Exhibit B-8 effected a severance in the joint family status and Ponnuswami Mudaliar had divested himself of the status of the manager of the joint family and that therefore Ponnuswami Mudaliar could not validly enter into any alienation on behalf of the joint family in 1934.
8. Both the learned Subordinate Judge and the District Judge came to the conclusion in regard to the first contention that the prior mortgage Exhibit B-5 and the sale deed Exhibit B-1 were supported by binding consideration only to the extent of Rs. 5,900 vis-a-vis the plaintiffs and with regard to the 3rd defendant there was binding consideration to the extent of Rs. 9,050 and secondly, that in so far as the trust deed was concerned it effected a severance in status and constituted a relinquishment of Ponnuswami Mudaliar of his position as joint family manager and which disentitled him to validly effect an alienation in 1934 which he is purported to have done on behalf of the divided coparceners. The partially defeated defendants appeal.
9. The points urged before us are threefold viz., whether the trust deed operated as a severance in status between the members of the family and that thereafter Ponnuswami Mudaliar ceased to represent the family as manager; secondly whether the senior member Ponnuswami Mudaliar had relinquished his position as manager of the joint family under the trust deed Exhibit B-8 and if so whether he could do so; and thirdly, if the answer to the first and second points is in the affirmative, to what extent, if any, would the sale deed be binding upon the minor members of the joint family on whose behalf also this Ponnuswami Mudaliar has purported to effect this alienation.
10. It is now well established law that the coparceners in a joint family can by agreement amongst themselves separate and cease to be a joint family, and on separation are entitled to partition the joint family property amongst themselves: Palaniammal v. Muthuvenkatachela (1924) 48 M.L.J. 83 : L.R. 52 I.A. 83 : I.L.R. 48 Mad. 254 (P.C.). In Hindu law, partition does not mean simple division of property into specific shares. It covers, as pointed out by Lord Westbury in Appovier v. Ramasubba Ayyar (1866) 11M.I.A. 75 both a division of right and a division of property. So, when the members of an undivided family agree among themselves either with respect to a particular property or with reference to the entire joint estate that it shall thenceforth be the subject of ownership in certain defined shares, then the character of the undivided property and joint enjoyment is taken away from the subject-matter so agreed to be dealt with; and in the estate, each member has thenceforth a definite and certain share which he may claim the right to receive and to enjoy in severalty although the property itself has not been actually severed and divided. In other words, as mentioned in Ramanna v. Jagannatha , if there be a conversion of the joint tenancy of an undivided family into a tenancy in common of the members of that undivided family, the undivided family becomes a divided family with reference to the property that is the subject of that agreement and that is a separation in interest and in right, although not immediately followed by a de facto actual division of the subject-matter. This may, at any time, be claimed by virtue of the separate right. This severance of joint status may result not only from an agreement between the parties but from any act or transaction which has the effect of defining their share in the estate though it may not partition the estate.
11. It is now also well settled that if a coparcener desires to sever his joint family status, it is not necessary for him to give a notice to the other coparceners of his severance or indicate his desire to them. A declaration made by him in a document or any other proceeding showing his unequivocal intention to become separated from the family or treat himself as a separated member from a particular date is enough to create a division in status. Separation in status, with all the legal consequences resulting therefrom, is quite distinct from de facto division into specific shares of the property held jointly. The former is a matter of individual decision, and is effected by the unequivocal expression of a desire on the part of any one member to sever himself from the joint family and to enjoy his hitherto undefined and unspecified share separately from the others without being subject to the obligations which arise from the joint status. The latter is the natural resultant from his decision, the division and separation of his share, which may be arrived at either by private agreement of the parties or, on failure of that, by intervention of the Court. Once the decision has been unequivocally expressed, and clearly intimated to his co-sharers, his right to obtain and possess the share to which he admittedly is entitled, is unimpeachable; neither the co-sharers can question it, nor can the Court examine his conscience to find out whether his reasons for separation are well founded or sufficient. The Court has simply to give effect to his right to have his share allocated separately from the others. Girija Bai v. Sadhasivam (1916)31 M.L.J. 455 :1916 L.R.43 IndAp 151 : I.L.R. 43 Cal. 1031, Bal Krishna v. Ram Krishna ; Sahu v. Makhna (1939) 2 M.L.J. 569 : I.L.R. (1939) All. 680, Ramasubbayya v. Ganapathy : AIR1940Mad217 , Ramjugheswar v. Jagadhar L.R. (1951)Pat. 980; Gundayya v. Srinivas A.I.R. 1937 B. 51.
12. In Katheesumma v. Beechu : (1949)2MLJ268 the point which arose for decision was whether a member of a Mithakshara Hindu joint family can become divided in status by issuing a notice of his intention to separate, to the manager of his joint family. Satyanarayana Rao, J., held that the communication must be to all the coparceners and in the case of minors to their natural guardian, for effecting a division in status. Bat Panchapagesa Sastri, J., held that the communication to the manager alone is sufficient to bring about a division in status. On a reference to a third Judge, Visvanatha Sastri, J., held that a member of a Mithakshara Hindu joint family can become divided in status by merely issuing a notice of his intention to separate to the manager of the joint family. As observed in page 289, a severance in status can be brought about by conduct and notice or communication of an individual's intention to divide to the other members of the family is neither a condition nor a pre-requisite of the severance in status though it may be of beneficial value and importance. When, as in this case, an adult of the family wants to effect a severance in status and all the other coparceners are minors, the question as to how the severance can be effected is discussed at page 290 and the following pages. At page 292 the learned Judge observes:
The only logical rule furnished by the texts of Hindu Law as interpreted by the decisions of the Privy Council appears to me to be that a unilateral declaration of an intention to become divided on the part of a member of joint Hindu family effects a severance in status. The declaration must be clear, unequivocal and unambiguous. There must be some manifestation, indication, intimation or expression of that intention to become divided so as to serve as authentic evidence in case of doubt or dispute. What form that manifestation, expression or intimation of intention should take will depend upon the circumstances of each case, there being no fixed rule or rigid formula. The despatch to or receipt by the other members of the family of a communication or notice announcing the intention to divide on the part of one member of the family is not essential. Nor its absence is fatal, to a severance in status.
13. Bearing these principles in mind if we examine the recitals in Exhibit B-8 there cannot be the slightest doubt, as concluded by both the lower Courts, that Ponnuswami Mudaliar has in explicit terms declared his intention to separate from the family and that Ponnuswami Mudaliar on that date became divided in status.
14. Point 2-In a Hindu family the Karta or manager occupies a position superior to that of the other members in so far as he manages the family property or business or looks after the family interests on behalf of the other members. This managership of the joint family property comes to a person by birth and he does not owe his position as manager to the presumed consent of his coparceners. So long as the members of a joint family remain undivided, the senior member of the family is entitled to manage the family properties, and the father, and in his absence, the next senior most male member of the family, is its manager provided he is not incapacitated from acting as such by illness or other sufficient cause. The father's right to be the manager of the family is the survival of the patria potestas, and he is in all cases naturally, and in the case of minor sons necessarily, the manager of the joint family property Suraj Bunsikoer v. Sheo Prasad But in the absence of the father, or if he resigns, the management of the family property devolves upon the eldest male member of the family provided he is not wanting in the necessary capacity to manage it: Mudit v. Ranglal L.R. (1902) C. 797. Where the seniormost member is physically incompetent or has resigned his office, even the junior member can be chosen as such manager. Krishna v. Krishnaswami I.L.R. (1899) M. 597; Tara v. Hart I.L.R. (1927) All. 447 : 1928 A. 251; Ramsingh v. Sridharan : AIR1938All147 ; Mahadev v. Shankar A.I.R. 1943 B. 387; Sidappa v. Lingappa 16 Mys.L.J. 32 : 42 Mys, H.C.R. 669. In the absence of an adult member to take up the position of Karta, it is open to the concerned coparcenary to create a trust providing for the management. In other words, the position of a Karta which is acquired by birth and regulated by seniority, subject of course to his capacity to act, is terminable by resignation or relinquishment and is not indefeasible.
15. Bearing these principles is mind, if we examine the terms of the trust deed, we find clear recitals, which have been extracted in paragraph 24 of the judgment of the learned Subordinate Judge and which need not be repeated, showing beyond doubt that Ponnuswami Mudaliar feeling that he was incompetent to manage further the affairs of the family, divested himself of his power of management of the joint family after vesting his share in the trustee Balakrishna Mudaliar and handing over to that Balakrishna Mudaliar the joint managership and enjoining on him in consultation with the author of the trust to devise means for the purpose of discharging all the debts incurred by Ponnuswami Mudaliar when he was the manager of the family. This resignation of his Kartaship was a genuine affair is clearly seen from the fact that the terms of the trust deed have been acted upon. The trustee Balakrishna Mudaliar has executed documents under the powers of management vested in him under Exhibit B-8 : see Exhibit A-4, the sale deed dated 27th December, 1934, and Exhibit A-5, the sale deed executed on the same date in favour of this very Abdul Hakim Sahib and the usufructuary mortgage deed Exhibit B-33 executed in favour of this Abdul Hakim Sahib reciting the trust deed.
16. Point 3:-On our finding that Ponnuswami Mudaliar had got separated from his sons and nephews and relinquished his office of managership of the joint family, it follows that the sale deed, constituting the subject-matter of the controversy, executed by him subsequently during the subsistence of the trust deed and by assuming a managership to which he was not entitled, will certainly not be binding on the plaintiffs. The sale deed has therefore got to be set aside except as regards the share of Ponnuswami Mudaliar concerning which there is no dispute. In regard to the shares of the other coparceners, they cannot naturally take back the properties repudiating the binding liabilities. These binding liabilities would be part of that consideration under the sale deed which had been spent for family purposes. These liabilities will naturally fall under two heads viz., liabilities which will be binding on the sons of Subramania Mudaliar and the sons of Ponnuswami Mudaliar. The Karta being ordinarily in sole charge of the management of the family affairs there is an implied authority in him to contract debts for family purpose in his capacity as the manager so as to make the debts binding on the other members to the extent of their interest in the family property, whether they be adult or minors. But the mere fact that a certain person is the manager of a joint family is not enough to make his acts binding on the other members, and it must be shown by the party relying on those acts and seeking to bind the other members that the borrowings made by the manager either for the benefit or for some necessity of the family i.e., family purposes. In addition to his power to contract debts for family purposes, a manager can alienate joint family property for the family benefit or for family necessity even without the consent of the other adult members of the family. The power of the manager to alienate the family property for legal necessity is analogous to that vested on the head of a religious endowment or in the guardian for an infant. His power is a limited and a qualified power and can only exercised rightly in a case of need, or for the benefit of the estate. Actual pressure on the estate, the danger to be averted, or the benefit to be conferred upon it in the particular instance, is the thing to be regarded. The lender is bound to inquire into the necessities for the loan, and to satisfy himself as well as he can, with reference to the parties with whom he is dealing, that the manager is acting in the particular instance for the benefit of the estate. But if he does so enquire, and acts honestly, the real existence of an alleged sufficient and reasonably credited necessity is not a condition precedent to the validity of his charge and he is not bound to see to the application of the money. The purposes for which a loan is wanted are often future as respects the actual application, and a lender can rarely have, unless he enters on the management, the means of controlling and rightly directing the actual application, and a bona fide creditor ought not to suffer when he acted honestly and with caution, but is himself deceived. In addition, the sons of Subramania Mudaliar, so long as the antecedent debts recited in the sale deed are not tainted by illegality or immorality, are under a pious obligation to discharge the same, of course to the extent of the assets devolving upon them. But if the alienation itself is one which cannot be upheld because it was not justified by necessity or benefit or was one beyond the powers of the alienor and it is found that a portion of the consideration has been spent for family purposes or is a Vyavaharika debt regarding which the doctrine of pious obligation applies the transaction will be set aside at the suit of the objecting coparceners to the extent of their interests on their paying the proportionate share of the amount found binding on them: Vadivelam v. Natesan : (1912)23MLJ256 . Both the lower Courts have approached the examination of the debts for which the sale deed had been executed bearing these principles in mind and have come to the conclusion concurrently that in addition to the share of the properties sold and which would not be disturbed and which are now in the possession of the legal representatives of Abdul Hakim Sahib, the plaintiffs are bound to pay Rs. 5,900 out of the sale consideration of Rs. 24,000 and that the 3rd defendant is bound to pay half of the balance, viz., Rs. 9,050 as he is entitled to an share in the properties sold. These concurrent findings are unassailable as nothing was placed before us to show that these findings have been come to upon an inadequate or incorrect appreciation of the oral and documentary evidence exhibited in this case. Therefore, we unhesitatingly confirm these findings of fact.
17. The net result is that both the lower Courts having correctly decided all the issues, we affirm the Decree and Judgment of the lower Courts and dismiss this appeal with costs.