1. Appeal No. 189 of 1937. - This appeal arises out of a suit for partition between two brothers. The plaintiff is the second son of one Nagappa and defendant 1 is the elder son. Defendants 2 and 3 are the sons of defendant 1 and defendant 4 is the widow of Nagappa. Nagappa died in March 1921; and it is clear from the evidence that at his death, he left the family in very affluent circumstances. He was possessed of immovable properties of considerable value, of valuable jewels and of outstandings estimated at more than three lakhs of rupees, subject to payment of debts estimated at between Rs. 30,000 and Rs. 50,000. In the course of the evidence in this and the connected suits it has been suggested that out of the outstandings then due, considerable allowance must be made for bad debts ; but beyond the suggestion, there is little evidence to show what the extent of the bad debts might have been. The parties belong to the Vysia community; and for some generations at any rate the family has been carrying on trade. There has been some dispute as to the nature of the business carried on during Nagappa's lifetime, particularly as to whether it included anything speculative; the materials before us are not full or clear as to this matter.
2. Between Nagappa's death and October 1926, the parties to the suit continued to remain joint. In the course of 1926, the relations between the two brothers became progressively less cordial. The plaintiff is said to have been sickly and weak minded and had no issue; it is nothing strange if in these circumstances the elder brother who had male children expected that in due course all the family property would pass to his branch by survivorship; a demand for partition on behalf of the plaintiff would not have been agreeable to him, especially if as has been suggested he thought that the plaintiff was being set up to make that claim by people behind the scenes. Whatever the motives of the parties and their advisers might have been, it is admitted that on 31st October 1926 the parties executed Ex. I, a muchilika in favour of three arbitrators asking them to divide the family properties. The proceedings before the arbitrators do not seem to have made smooth or rapid progress. The account books of the family were produced before them, soma lists were prepared by them and the immovable properties seem to have been to a certain extent divided. It was only more than a year after the reference that one of the arbitrators died. It cannot therefore be that it was the death of one of the arbitrators that delayed the course of the arbitration proceedings. It appears from the evidence that soon after the execution of the muchilika the plaintiff thought fit to leave Bellary and he spent a considerable time at Sholingur. Par from attributing this step to any desire to give up the claim for partition the Subordinate Judge who heard the suit in the first instance held that the plaintiff whom he found to be a weak minded man must have resorted to this course with a view to avoid pressure from the elder brother and his friends to give up his claim for partition or come to terms with defendant 1. Seeing that the arbitrators did not effect a partition the plaintiff instituted this suit on 22nd March 1929.
3. The present appeal by the plaintiff is against the final decree passed in the suit and relates to two heads of claim, namely (1) jewels which must be treated as part of divisible property and (2) the liability of the plaintiff for debts incurred by defendant 1 or defendant 2 in connexion with the business conducted by them between the date of Ex. I and the institution of the suit and even subsequent to the institution of the suit. But in dealing with the arguments bearing upon these questions, it is necessary to refer in some detail to the course of the prior proceedings. The suit was in the first instance tried by the Subordinate Judge of Bellary, Mr. Venkata-ramayya Pantulu. Out of the issues framed in the case, it is sufficient for the present purpose to refer to issues 6 and 7:
Issue 6: what are the assets and liabilities of the family and from and up to what date is the account to be taken for effecting a division? and issue 7 : whether any of the suit properties are stridhanam.
4. Under issue 6, the plaintiff's contention was that as the execution of the muchilika for arbitration had effected a division in status in the family, accounts ought to be taken of the assets and liabilities as on that date and that defendant 1 should be made liable to account to the plaintiff for all the income subsequently realized by him by the use of the joint family property but that the plaintiff should not be held liable for debts incurred in the course of the business carried on by defendant 1 or defendant 2 after that date. The defendants' contention was that there was no division in status resulting from the mere execution of Ex. I, that in any event defendant 1 must be regarded as having been in the position of a manager of the family properties upto the date of the institution of the suit and that accounts ought to be taken of the assets and liabilities as on the date of the institution of the suit. With reference to issue 7, the plaintiff alleged that the family was possessed of jewels and gold and silver of very considerable value and that the defendants were suppressing many items out of them and suppressing documents which would prove their existence. The plaint did not give details of these jewels, but merely gave an approximate valuation. Immediately after the institution of the suit, the plaintiff applied for the appointment of a commissioner to prepare an inventory of the moveables in the house of the defendants, but in the circumstances stated in Mr. Venkataramayya's judgment no complete inventory was prepared. The commissioner produced a list subsequently marked Ex. B, which was found in the iron safe in the family house, and this list referred to 'a number of jewels. The bearing of this document on this part of the claim will be discussed later on. In the written statement defendant 1 referred to a list, which he had given to the commissioner, of jewels which he admitted to be liable to division, and in answer to the claim put forward in the plaint under this head, he pleaded that that claim was in substance one for division of the stridhanam jewels belonging to the ladies of the family.
5. On issue 6, the learned Subordinate Judge held that notwithstanding the execution of Ex. I, the plaintiff had no right to ask for accounts to be taken as on its date; he seems to have thought that as a matter of law defendant 1 continued to have all the powers of joint family manager till the date of the institution of the suit. He accordingly directed that accounts should be taken of the assets and liabilities of the family as they stood on the date of the plaint. In respect of liabilities incurred by defendant 1 after the institution of the suit, he took it for granted that the plaintiff could not be held liable therefor. Dealing with issue 7, he held that Ex. B might reasonably be taken as the basis to start from. The family admittedly maintained a book showing the jewels possessed by it from time to time; the learned Judge was of opinion that this book which had been produced before the arbitrators was suppressed by defendant 1 during the trial of the suit. He declined to accept the defendants' case that certain entries in Ex. B itself showed that all the jewels specified in Ex. B except those found in col. 3 must have been given away as stridhanam to the ladies in the family ; he observed that the three entries in Ex. B, relied on by the defendant, which refer to particular ladies being in possession of the specified jewels must have been interpolated by defendant 1 to serve as evidence in support of his contention. The rest of the document was admittedly in the handwriting of the father Nagappa; there was no reason why these entries alone should have been written by defendant 1; the entries are clearly in a different ink from the rest of the documents. As the learned Judge thought that an examination of the accounts might also be of use in dealing with the plaintiff's claim under this head, he left it to the commissioner, who was expected to determine the assets of the family, to determine also the jewels available for partition.
6. Against the directions given by the learned Subordinate Judge in his preliminary decree and judgment, both parties appealed to the District Court and the appeals were heard by Mr. Mackay. The learned District Judge did not agree with the lower Court as to the effect of Ex. 1 and he took the law as stated in Sri Ranga thatghachariar v. Srinivasa Thatha chariar (1927) 14 A.I.R. Mad. 801, namely, that when there has been a division in status, accounts must be taken as on that date and that in respect of subsequent transactions the person in possession of the family property will be bound to account for all receipts and expenses and can take credit for only such expenses as have been incurred for the benefit or necessity of the estate. But the learned Judge thought that where the family had a family business and the plaintiff who demanded partition did not object to the erstwhile manager carrying on business even after the demand for partition, the legal position would be different. We have had some difficulty - and the learned Counsel who appeared for defendants has also felt as much difficulty as ourselves in reconciling the observations in various portions of Mr. Mackay's judgment. As it was strenuously contended that this Court had accepted Mr. Mackay's findings when the case came before this Court on second appeal, we are obliged to refer to some portions of Mr. Mackay's judgment.
7. The basis of Mr. Mackay's decision seems to us to be contained in the following observation of the learned Judge:
After Ex. 1, undoubtedly defendant 1 ceased to be the manager of the joint family; but he did not cease to be manager.
8. With all respect we are not able to appreciate the antithesis contemplated. The judgment proceeds:
It is the plaintiff's own case that he had never taken any considerable share in the business, whether from indifference or incapacity and that since their father's death defendant 1 had been managing. The business had obviously to be carried on and defendant 1 continued it.
9. Stopping here for a moment we have to observe that the learned Judge was not right in saying that the plaintiff's case was that defendant 1 was managing, if he intended to suggest that the management of the business by defendant 1 after the date of Ex. 1 was admittedly on behalf of the plaintiff as well. All that the plaint said was that even after 1926 defendant 1 either in his own name or in defendant 2's name had been doing business and his complaint was that 'defendant 1 and his son were wasting recklessly large amounts of money in various undesirable concerns.' (See para. 10 of the plaint.) Our attention has not been drawn to anything in the plaintiff's evidence in the case which can be construed as any admission by him that after the date of Ex. 1, defendant 1 was carrying on business on behalf of the plaintiff. We may also observe that we are unable to see what the learned Judge seems to regard as something obvious, namely that the business had to be carried on and that therefore defendant 1 continued it. Lower down in the same paragraph, he observes:
It is not a case in which he (the plaintiff) was excluded from taking his part in conducting the business throughout that period. He abstained from taking any part as apparently he had done prior to Ex. 1. He allowed defendant 1 to continue the management as he had done before.
10. Having stated these facts, Mr. Mackay concluded:
Plaintiff by his conduct must be taken to have assented to defendant 1 continuing to transact business and defendant 1 must be held to have acted as his agent.
11. With all respect to the learned Judge, we are unable to agree that the facts set out in his judgment warrant the conclusion of law stated in the sentence last quoted. In the next sentence, he states the proposition that after separation, the family business resembles an ordinary partnership and as a corollary he holds that the plaintiff was bound by every act done by defendant 1 which was prudent and necessary in the transaction of the business and conduct of, the family affairs as if it had been his own. The proposition above stated will not be correct in law unless there was evidence to show an express or implied agreement between the former joint owners to continue as partners after the separation. The mere fact that after the division in status the old manager enters into business transactions and that the junior members do not inter, fere with him or take objection to his doing business will not justify the conclusion that they adopt the new business as one carried on on their behalf as well or that they become partners with the erstwhile manager. Even if the business transactions entered into after the separation are of the same kind or on the same lines as the previous transactions the business is in law a new business. In the result, the learned Judge directed accounts to be taken as on the date of the plaint.
12. Against the decision of Mr. Mackay the plaintiff preferred a second appeal (105 of 1932) which was heard by Krishnan Pandalai J. The directions given by this Court are contained in the concluding portion of the learned Judge's judgment. We have had elaborate arguments at the Bar as to the effect of those directions; we find it very difficult to accept the contention which seems to have prevailed in the lower Court that the effect of those directions was to leave defendant 1 practically in the position of the manager of a joint Hindu family even after the date of Ex. 1 and indeed even after the date of the institution of the suit and the application for the appointment of a receiver. The learned Counsel for the defendants contended that these directions ought to be interpreted in the light of certain observations of the learned Judge in the course of his judgment and particularly of one sentence in the paragraph setting out the substance of the argument in the second appeal. In the preceding paragraph the learned Judge has, if we may say so, rightly pointed out the inconsistency between Mr. Mackay's directions and that portion of his judgment which purported to follow the rule in Sri Ranga thatghachariar v. Srinivasa Thatha chariar (1927) 14 A.I.R. Mad. 801. He next states that the correctness of the proposition laid down in Sri Ranga thatghachariar v. Srinivasa Thatha chariar (1927) 14 A.I.R. Mad. 801, was not disputed before him. It is the next sentence after this that has formed the subject of discussion. The learned Counsel for the defendants contended that in that sentence the learned Judge of this Court must be taken to have accepted what he wishes to treat as a finding of fact by the lower Appellate Court to the effect that even after the date of Ex. 1 defendant 1 was carrying on business on behalf of himself and the plaintiff to the plaintiff's knowledge and with his assent. So read, it is difficult to reconcile that sentence with the directions actually given by the learned Judge nor does such a reading fit in with the way in which the next sentence is introduced with the words:
in these circumstances, I think it necessary to amend the direction given by the learned Judge in the decree on the point.
13. We may also point out that, as we have already observed, it was not on any evidence bearing upon the question of agreement that Mr. Mackay made the observations which we have already quoted. He seems to have thought that when the plaintiff did not interfere with defendant 1 carrying on business after the date of Ex. 1 it followed as a necessary consequence that defendant 1 must be taken to have carried it on behalf of both and the plaintiff must be taken to have authorised it or agreed to it. It is true that in the evidence recorded in a later suit before Mr. Stodart, defendant 1 attempted to suggest that the plaintiff expressly authorized him to carry on the business as before and the present plaintiff denied it; but there was no such evidence in the partition suit and the other evidence was given before Mr. Stodart long after Mr. Mackay's judgment had been pronounced. There was indeed no such allegation in defendant 1's written statement in the partition suit, nor even in defendant 1's evidence in the partition suit. We do not therefore see any basis for the argument that there was a finding of fact by Mr. Mackay and we think there is even less basis for the suggestion that Pandalai J. was accepting any such finding of fact. The particular sentence relied on is perhaps worded in a manner open to criticizm; this seems to be the result of a correction in punctuation made by the learned Judge in the transcript of the shorthand judgment without fully realizing the effect of the correction. It seems to us much more likely that in this sentence the learned Judge was stating the argument advanced before him. Even assuming for a moment that he was stating his own conclusion, this sentence ought to be read in the light of the directions which he had himself taken care to frame.
14. We invited Mr. Narasimhachar to draw our attention to anything on the record from which an inference of an implied partnership might be drawn or even of an agreement authorizing defendant 1 to carry on business as before or on behalf of the plaintiff. He was not in a position to point to anything in the evidence in support of that suggestion. He was therefore driven to contend that, whether the evidence on record supported it or not, the matter had become concluded between the parties by reason of Pandalai J.'s judgment. Hence the necessity for scanning that judgment carefully. One thing is certain, that the learned Judge differed from the view of the lower Appellate Court as to the date with reference to which the accounts should be taken, because in Clause (a) and (b) of the concluding paragraph of his judgment, he directs accounts to be taken as from 31st October 1926, the date of Ex. I. Clause (c) has been relied on in this connexion by the defendant's learned Counsel. It runs as follows:
In taking the said accounts let there be a direction that defendant 1 is entitled to all just allowances on the footing that he was authorized to act bona fide for the benefit or necessity of the estate on behalf of both the plaintiff and himself and bound to exercise the diligence of a person acting on behalf of a co-owner as well as himself.
15. Mr. Narasimhachar laid stress upon the use of the word 'authorise' and of the expression 'bona fide' in this paragraph and contended that the learned Judge proceeded on the footing that defendant 1 had authority from the plaintiff in fact and that he was not thinking of the authority which in law he would have as a co-owner to manage the property for the benefit of himself and his co-owner. He also contended that if the latter was intended, the reference to bona fide was unnecessary. As against this, we would point out that this clause was meant as a direction governing not merely the accounts of the business but also the accounts relating to the other properties of the family. So far as these other properties are concerned, obviously there was no question of contractual relationship or agency, but merely the ordinary obligation of a co-owner. What is more significant is that the learned Judge made the direction apply not merely (as the lower Appellate Court did) to the period prior to the institution of the partition suit but even to a subsequent period, that is, down to the date of the receiver taking charge (i.e.), to a period extending to 20 months after the institution of the suit and several months after the plaintiff had applied for the appointment of a receiver. We are unable to accede to the suggestion that the learned Judge must have intended to hold that even after the plaintiff had filed his suit for partition and even after he had asked for the appointment of a receiver making allegations against defendant 1 that he was wasting the property, defendant 1 had implied authority to carry on the business or management on behalf of the plaintiff as well. All that Mr. Narsimhachar could say was that the learned Judge might have lost sight of this aspect of the matter. We see no reason to make any such surmise. On the other hand, the direction in Clause (o) specifically refers to the privilege of a person acting on behalf of a co-owner as well as himself; likewise when the learned Judge refers to authorization, he refers to authorization to act on behalf of 'both the plaintiff and himself.' It cannot surely be said that the word 'authorized' when it refers to the defendants, was intended to refer to authority in fact. Taking the judgment as a whole, we hold that the learned Judge was giving effect to the law as stated in 50 Mad 866,1 and applying it to the circumstances of the case he so worded Clause (c) as to cover both the kinds of accounts directed in Clause (a) and (b). If the learned Judge had in his mind any idea that the business was being conducted on foot of a partnership or an implied agreement, this was certainly not the kind of account that ought to have been directed in respect of a business so conducted. One would have accepted a direction of the kind familiar in partnership actions or some reference to transactions in the usual course of business or incidental to the business and not a restricted provision in favour of acts done for the benefit or necessity of the estate - the very expression found in 50 Mad 866.1 We do not therefore accept the contention that there is anything in the judgment in Section A. No. 105 of 1932 which precludes the plaintiff from asking us to apply the ordinary law to the present case. On the other hand, the directions given in the second appeal are in conformity with the ordinary law, governing a family which had become divided in status.
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16. We now proceed to deal with the points arising for decision in the appeal. The defendants have filed a memorandum of objections, but the arguments have not been separately dealt with because the arguments bearing thereon are also part of the arguments in the appeal itself. Dealing first with the question of the assets available for division, the principal dispute under this head relates to the jewels which can be claimed by the plaintiff to form part of the joint family property.
17. There can be very little doubt that when there is prima facie proof that certain jewels were made or purchased with family funds or there is other proof that they are family jewels, the onus will be shifted on to those who deny their divisibility on the ground of their being stridhan, to prove that by reason of gifts as stridhanam they have ceased to be part of the family property. Issue 7 is rightly so worded as to throw the onus upon those who set up their stridhanam character. When he filed the plaint, the plaintiff was entitled to assume that the family account book in which admittedly the family jewels had been entered and which had been produced before the arbitrators would be available in the suit. That the family must have possessed jewels of considerable value has scarcely been disputed. D. W. 2 who was examined on behalf of defendant 1 says that even during Nagappa's father's time the family possessed jewels of the value of more than Rs. 30,000. Ex. B, whose genuineness is not disputed, also proves that during the last days of Nagappa, the family must have possessed jewels of considerable value. There is also the fact established by the account books produced in the case that year after year this family has been in the habit of purchasing gold and making jewels; and it is common knowledge that in this part of the country this is regarded as a method of investment or a convenient way of keeping money. When it was found that the family account book relating to jewels was not forthcoming, the plaintiff was obliged to fall back upon Ex. B. But as Ex. B was written so long ago as in 1920 and there was also the plea as well as the likelihood that some jewels must have been given as stridhanam to the various members of the family, the learned Subordinate Judge rightly left the matter to be determined by the Commissioner in due course with the aid of the accounts. The accounts produced go back only upto 1911, and the result is that barring Ex. B and a list marked Ex. AA., we have no documentary evidence as to the jewels possessed by the family prior to 1911; nor have we any documentary evidence as to the jewels given away as stridhanam either to defendant 4 or to the plaintiff's wife or defendant 1's wife.
18. Not merely the probabilities of the case but even the admissions of the plaintiff clearly establish that jewels of considerable value must have been given as stridhanam to the ladies, but the plaintiff has not chosen to give definite evidence as to what the stridhanam jewels given to his mother or to his wife or to his brother's wife are. Defendant 1's wife has not been examined; defendant 4 has given evidence, but though she is the mother of both the parties we are unable to accept her evidence without reserve, because she is obviously under the protection of defendant 1 and is attempting to support him as far as possible. Her sympathies are likely to be with him in the circumstances of the litigation already adverted to, namely that defendant 1 has children while the plaintiff has none and the family apparently suspects that the plaintiff is being set up by other person to make this demand for partition. It is certainly noteworthy that when she was asked to state what the jewels given to her were, she was unable and unwilling to enumerate more than four or five and merely stated that if the patti was read to her that she would be able to say what they were. We are unable to believe that any Hindu woman will be unable to say what the jewels presented to her by the husband's family are. That is the one thing they are keen about and they are sure to remember. A perusal of her evidence has left on us the impression that she was anxious as far as possible not to say anything that will conflict with the defendant's case that the entries interpolated by him in Ex. B represented the stridhana gifts to the various ladies and she therefore preferred not to enumerate the jewels given to her. The Commissioner has attached some importance to the circumstances that the jewels produced before him by defendant 4 and by defendant 1's wife seem to correspond to those specified in cols. 1 and 2 of Ex. B. This argument ignores the fact that defendant 1, his wife and defendant 4 are sailing together and defendant 1 can always persuade his wife and defendant 4 to produce these jewels, himself putting them in their possession at any time that he chooses. We are thus left without any positive evidence as to what the stridhanam jewels given by the family to defendant 4 and to the wives of the plaintiff and defendant 1 are. But in the nature of things these gifts must have been made quite a long time ago because such gifts would have been made either at the time of the marriage or in connexion with some other ceremonies of some importance. While we do not therefore rule out the possibility of stridhanam gifts to these ladies we are unable to decide what they are and when they were made.
19. In the circumstances, we are also unable to say positively what are all the jewels that came into defendant 1's possession after his father's death and what their value was. His learned Counsel rightly argues that mere proof of the existence of jewels during the father's time or grandfather's time will not suffice to make his client accountable for their value. But as we have already observed, if defendant 1 had produced the book, which admittedly existed showing the family jewels and presumably also showing what has been given away to the various members of the family as stridhanam, he could well have exonerated himself from liability to account for more than what actually came into his possession. But if he chooses to suppress that book, it certainly does not lie in his mouth to contend that the plaintiff should give positive proof as to what came into defendant l's possession after his father's death. Some confusion was caused by a statement of D.W. 2 that the arbitrators had prepared a copy from the jewels account book of the family. But it is clear from the evidence of D.W. 1 that this copy was merely prepared from the regular day books and ledgers and it only corresponds to the list which the commissioner has now made out from the account books available from 1911. In the circumstances, the commissioner was obliged to prepare a list from the day books and ledgers subsequent to 1911 in respect of jewels purchased by the family and jewels sold by the family or given away by the family. Some of the entries themselves state the purposes for which particular jewels were made or purchased; in other cases the entries are silent as to the purpose. The course finally adopted by the commissioner was to hold that the jewels shown in Ex. A and the jewels which he showed in Schedule H to his report as jewels found from the accounts to have been made or purchased between 1911 and 1930, would be prima facie available for division but that out of them the jewels shown in cols. 1, 2 and 4 of Ex. B, the jewels shown by the accounts entries themselves, as having been made for particular members of the family, and the jewels shown in Ex. 13 and 15 should be excluded on the ground that they represented stridhanam gifts. As regards the jewels stated in the accounts to have been sold by defendant 1, the commissioner refused, except in a few cases, to allow a. deduction in defendant 1's favour.
20. Before the lower Court, it was contended on behalf of the plaintiff that defendant 1 must be held accountable for all the jewels shown in Ex. B and the jewels shown in the commissioner's Schedule H. On behalf of the defendant, it was contended that the commissioner should have deducted the jewels shown by the accounts to have been sold away by defendant 1. The learned Judge substantially confirmed the commissioner's report in this respect except in respect of the jewels sold by defendant 1. It is this conclusion of the learned District Judge that has been challenged before us on behalf of the plaintiff. The learned Counsel for the appellant has asked us to make every presumption against defendant 1 because of his suppression of the jewels account book and because of the way in which he has inter, polated entries in Ex. B to support his defence that all the jewels in cols. 1, 2 and 4 of Ex. B have been given away as stridhanam to the ladies of the family. Mr. Somayya has even asked us to hold that the jewels shown in Exs. 13 and 15 as being the stridhanam property of the wives of defendants 2 and 3 may not be jewels given by the family at all and therefore no deduction ought to be made in defendant's favour on that account. He has also taken exception to the learned Judge's view as to the jewels sold by defendant 1.
21. We agree with the view taken by the learned Subordinate Judge who heard the case on the former occasion and with the view taken by the learned District Judge now that defendant 1 has suppressed the jewels account book and that his explanation for its non-production cannot be accepted. But while this may justify certain presumptions being drawn against him, it will not by itself justify the contention that none of the jewels shown in Ex. B could have been given away as stridhanam, nor will it enable us to give a decree in plaintiff's favour for an arbitrary amount under this head. It may be that defendant 1 acted foolishly in trying to insert into Ex. B evidence in support of the stridhanam plea. But it was open to the plaintiff to prove what really were the stridhanam properties ofs his mother, of his wife and of defendant 1's wife. Even his admission as to the stridhanam jewels of his wife clearly shows that jewels of considerable value must have been given as stridhanam jewels to the various ladies in the family. We are in these circumstances unable to go the length of holding that the jewels specified in Ex. B must necessarily have come into defendant 1's hands as part of the joint family property and still remained available for division, except to the extent admitted by him in Ex. A. We are however unable to concur in the view of the commissioner, which was confirmed by the learned District Judge, that even out of the jewels shown in the Commissioner's list, Schedule H, defendant 1 is entitled to claim that deduction ought to be made of the jewels specified in cols. 1, 2 and 4 of Ex. B. Merely from similarity or even identity or description or weight, it does not seem to us in a case like this reasonable to conclude that the stridhanam gift to the ladies must have been made out of the jewels specified in the Commissioner's Schedule H. As we have already stated, the stridhanam gift to defendant 4 and to defendant 1's wife must have been made long prior to 1911 and therefore could not have been made out of the jewels comprised in Schedule H of the Commissioner's report because these jewels were made or purchased only after 1911. If the defendants wished to maintain that even after 1911 stridhanam gifts were made in favour of defendant 4 or defendant 1's wife of any particular jewels it was open to them to prove such gift beyond doubt. The mere fact that stridhanam gifts in their favour are probable will not suffice in the circumstances to show that such gifts were made after 1911. On the other hand, we are unable to accept Mr. Somayya's contention that no deduction ought to have been made by the Commissioner even in respect of the jewels specified in Exs. 13 and 15. Defendants 2 and 3 were married only between 1922 and 1926 and it is not unlikely that the stridhanam gifts to their wives would have been made out of the jewels shown in the accounts as purchased or made between 1911 and 1930. The mere fact that it is not shown in the accounts that any particular jewel has been so given away or was made for such purpose is not by any means conclusive. Exs. 13 and 15 were allowed to be marked without any contest and no suggestion was made at the time, on the plaintiff's behalf, that the jewels shown therein were given to these ladies by the outsiders or were not given from out of the family properties. In these circumstances, we think the proper course will be to confirm the method adopted by the commissioner in this connexion except in respect of the exclusion which he made of the jewels specified in cols. 1, 2 and 4 of Ex. B.
22. As regards the jewels shown by the commissioner to have been sold by defendant 1, we are unable to agree with the view of the learned District Judge that they must be taken to have been accounted for by defendant 1 to the plaintiff. In the first place, that line of argument cannot be based on any presumption, because it was open to defendant 1 to show how these proceeds had been accounted for. If, for instance, he had applied the proceeds in payment of some debts not binding on the plaintiff, that would not be accounting to the plaintiff at all. Further there is no evidence that the jewels sold are jewels that were made or purchased subsequent to 1911. For aught one knows, they may be jewels or gold that were in existence in the family even prior to 1911 and we are not giving any decree to the plaintiff in respect of jewels that existed prior to 1911. We see no justification for the learned Judge excluding from the Commissioner's Schedule H, which only relates to jewels that were made or purchased subsequent to 1911, any items which have been sold by defendant 1. In respect of such jewels, we modify the decree of the learned Judge and restore the method of calculation adopted by the Commissioner. As we have already stated, the Commissioner's calculation must be further modified by disallowing the exclusion from his Schedule H of the items found in cols. 1, 2 and 4 of Ex. B.
23. Under the head of the assets, two more items remain to be dealt with. We have already referred to the fact that shortly before the receiver was appointed by the Sub-ordinate Judge and even for some time after the appointment of the receiver, defendant 1 collected outstandings to a considerable extent. The account books produced by him purport to show that out of these collections, payments had been made to various creditors. Apart from the plaintiff's allegation against the binding character of the debts thus sought to be discharged, the plaintiff has also challenged the genuineness of the alleged payments in some cases. It was contended that they were mere fictitious entries in the books, made with a view to enable defendant 1 to retain for his own benefit the outstandings collected by him. Dealing with this objection the Commissioner found that in certain instances the plaintiff's charge was well founded and he accordingly held that the amounts shown as paid to creditors in those instances must be treated as not paid to anybody but as remaining with defendant 1 and hence available for partition. Before the learned Judge, defendant 1 took exception to this conclusion of the Commissioner. The learned Judge agreed with the view of the Commissioner on this point except in respect of one item, a sum of Rs. 5000 odd, purporting to have paid on 14th October 1930 to one Moolchand for Marvadi Asalaji to settle a debt found in the accounts from 1923 as due to certain other persons but shown in 1926 as due to one Gomaji. The allowance of this item in the defendant's favour has been objected to on behalf of the appellant.
24. That the circumstances under which the collection as well as the disbursement was made by defendant 1 justify scrutiny is a point that can scarcely be disputed. In the objection list which the plaintiff filed after inspection of the accounts produced by defendant 1, specific reference was made to this item of Rs. 5000 odd and it was challenged as a fictitious debt and a fictitious payment; and yet defendant 1 did not choose to lead any positive evidence on the point or even go into the box to depose to his own knowledge and part in the transaction. The plaintiff examined two witnesses, P. Ws. 5 and 6, two Marwari dealers in Bellary, and elicited from them that no Marwari firm of the kind mentioned in the accounts in this connexion existed to their knowledge or had money dealings in Bellary. We have little hesitation in this state of the evidence in finding that the payment has not been proved to be a genuine payment. The learned Judge differed from the commissioner on two grounds: (1) that P. W. 5 admitted that there existed somewhere a person called Asalaji Gomaji who died 20 years ago and that his son came here about five years ago; (2) that in the circumstances it was difficult to see how the defendant could have produced any further direct evidence than his own statement. As regards the second ground, we are unable with all respect to the learned Judge to appreciate it. As we have already pointed out, defendant 1 never cared to make a statement on the point from the witness box. If the learned Judge merely intends to refer to the statement in the account book, it will be an extraordinary way of holding that the genuineness of the payment has been proved, particularly when one has regard to the circumstances in which the transaction is said to have been brought about. As regards the alleged admission of P.W. 5 we do not see how that admission lends much support to the defendant. Read in the light of the rest of the evidence given by the witnesses it only means that Asalaji Gomaji was not a fictitious person but the evidence taken as a whole establishes that that person who died 20 years ago in Mar-war never had money-lending transactions in Bellary; on that evidence it is impossible to hold that this Asalaji Gomaji became the transferee by an arrangement made in 1926 of debts due by defendant 1 to other persons in Bellary. It would certainly not have been difficult for defendant 1, if he so chose, to call the creditors in Bellary to whom on the face of the entries the original debt is said to have been due before it was transferred to Asalaji Gomaji. When it is remembered that the transactions are only of 1923 and 1926 we are unable to appreciate the reliance placed by the learned Judge upon presumptions in defendant 1's favour, when as already stated even defendant 1 did not care to go into the witness box to prove his story. The argument based by the learned Judge upon the non-inclusion of of this item in the list of liabilities, as it should have been if the discharge is not true, seems to us a non sequitur. In the situation in which defendant 1 stood at the time, it was not easy for him to arrange these things logically, whereas there was a strong temptation, if not necessity, to find some way of retaining for his own advantage as much as possible out of the collections which he undoubtedly made very improperly even after the Court had passed an order appointing the receiver.
25. Reference was made in this connexion to some statements contained in the evidence of defendant 1, when he was examined as a witness in one of the creditors suits, O.S. No. 15 of 1932. When he was cross-examined in that suit by the present plaintiff, questions were incidentally put to him in respect of this entry. These are his answers:
On 13th October 1930 there is a debit entry against one Asaji Aslaji of Bs. 5699. That man is a man of Bellary. He is a man who lends money and trades. I do not know if he is in Bellary now. He was not in Bellary. He sent a letter to a Kamsala man called Kesoji and I paid the money to Kesoji. That letter might be extant. It might be mislaid in the disturbance. Asaji Asalaji has his business in Bombay. He used to go to Bellary occasionally and lend money. I might have entered his address in my books.
26. Even Mr. Narasimhaohar was not prepared to go the length of asking us to take these statements seriously. It is obvious that defendant 1 was not in a position to give any definite information as to who this Asaji Aslaji was, whether he was a man of Bombay, Bellary or of anywhere else. He was not in a position to give his address or produce any correspondence that passed between them. A statement in re-examination that Asaji Asalaji had been having dealings with him from September 1929 and that he took on the debt that he owed to Gomaji does not advance the position very much because it merely repeats what' is found in the account books. The Court put a question to him what the address of Gomaji was; defendant 1 naturally said that he did not remember. When asked whether he had written any letters to him, he said 'yes,' and added that he had got letters from him, but none such has been produced. We must accordingly set aside the conclusion of the learned Judge as regards this item and restore that of the commissioner.
27. Mr. Somayya contended that in respect of items which according to the commissioner's report defendant 1 is found to have retained in his own hands notwithstanding the appointment of a receiver and even in defiance of orders passed from time to time as to paying the whole or portions thereof into Court, defendant 1 should be directed to pay interest as from the date of the collection or at least from the date of the Court's order appointing a receiver or directing defendant 1 to pay into Court. We do not find any justifiable ground for acceding to this contention. It may be unfortunate that defendant 1 thought fit to make in his accounts what we have held to be fictitious entries as to the disbursements of these amounts.
28. But as a co-owner he was entitled to collect the outstandings due to the family, and till the accounts are taken and the respective rights and liabilities of the parties are ascertained, it cannot be said that he is in the position of a debtor to the plaintiff or in the position of one who is liable to pay over any particular sum then and there to the plaintiff and as such liable to be called upon to pay interest in the event of nonpayment. The circumstances in which a co-owner who has collected moneys due to himself and to other co-owners can be held, liable to pay interest have been discussed in several cases. See for instance, Yasobadra Nainar v. Samatha Badarapm (1936) 23 A.I.R. Mad. 12 of. also Blogg v. Johnson (1867) 2 Ch. A. 225, though it did not relate to a co-owner. Mr. Somayya did not contest the general proposition as to the position of co-owners, but he contended that an exception has been made in cases where the co-owner who made the collection has been guilty of fraud. But we do not think that, the mere fact that in respect of an alleged disbursement of the amounts collected, the co-owner made fraudulent entries can be held to be fraud within the meaning of this principle. There is no doubt much force in the argument that it was the duty of the defendant to refrain from making any collection after the appointment of a receiver and that in any event he ought to have complied with the orders of the Court to the effect that part of the collections should be deposited in Court; but the consequence of any improper conduct of defendant 1 in this respect will be punishment by the Court for the alleged disobedience or contempt; it does not seem to warrant the award of interest in plaintiff's favour. Mr. Somayya is however right in his contention that in respect of whatever amounts defendant 1 might be found liable to pay over to the plaintiff under the final decree, defendant 1 is liable to pay interest to the plaintiff from the date of the final decree. This claim is supported even by the judgment in Blogg v. Johnson (1867) 2 Ch. A. 225. We are inclined to think that the omission of a direction for payment of interest in para. 1 of the learned Judge's decree was probably due to oversight. The decree will accordingly contain a direction that the amount which may be found to be payable by defendant 1 to the plaintiff will carry interest at six per cent, per annum from 10th April 1937 up to date of payment.
29. Out of the moneys that came into defendant 1's hands by way of income or collections between 1926 and 1930, it is found from the accounts that he had drawn large amounts for personal purposes. Dealing with these items, the Commissioner held that they could not be treated as drawings debitable to the common account but must be debited to defendant 1 and his branch. He rightly overruled the contention of defendants 1 to 3 that they were entitled to take moneys for maintenance and other personal expenses from the common purse even after the date of Ex. 1. In the same view he debited against the plaintiff the amounts which had been paid to him under the orders of the Court for his maintenance. The learned District Judge agreed with the Commissioner's opinion that the contention that defendants 1 to 3 are entitled to maintenance from out of the joint account was untenable both under the general law and on any construction of the directions given by this Court in Section A. No. 105 of 1932. He however was of opinion that under the terms of those directions, the defendants were entitled to claim remuneration for the period between the date of Ex. 1 and the date of the receiver taking charge; and he fixed it at Rs. 300 a month. Mr. Somayya takes exception to this award of the learned Judge. It may be, as the learned Judge states, that the mere fact of a business ending in a loss will not always be a defence to a claim for remuneration by a person who conducted the business. But it is not always that a person is entitled to claim remuneration for what he did in connexion with a businesss; the law also knows of instances in which a Court will allow remuneration if at all only out of profits, if any had been made.
30. We would point out at the outset that the way in which the learned Judge has attempted to base his conclusion on the reference to 'just allowances' in Pandalai J.'s judgment seems to us wholly foreign to the intention of the learned Judge of this Court. Either as a manager of a joint Hindu family business or even as managing partner or as a co-owner looking after the common business or property, defendant 1 would not ordinarily be entitled to remuneration at all. See Lindley on Partnership, Edn. 10, p. 468, as to partners and Freeman on Co-tenancy, Edn. 2, Section 260 as to co-tenants. It is only in very special circumstances, especially where a person who by contract has bound himself to give his services to the management of the business has in violation of his contract declined to do so, that remuneration has been allowed: vide Krishnachariar Sankara Sah. (1921) 8 A.I.R. P.C. 91, and Gpkul Krishna Das v. Sashimukhi Dasi 16 C.W.N. 299. In connexion with dissolved partnerships, the question has frequently arisen whether a partner who has continued to trade with the assets of the old firm before a settlement of accounts is entitled to claim remuneration when the former partner claims a share in the profits of the new business. In that class of cases it has been held in England, that, while it is fair that the former partner should not claim a share of the profits, without a deduction by way of reasonable remuneration for management of the new business, the partner who continued the business is not entitled to claim remuneration except when profits have been made by the new business: see In re Aldridge Aldridge v. Aldridge (1894) 2 Ch. 97. In the present case, what happened is, that without any definite arrangement with the plaintiff, who even according to the defendant's version left Bellary soon after Ex. 1, defendant 1 and defendant 2 merely continued to enter into new contracts for purchase and sale of grains, cotton, etc. and in the course of those contracts incurred enormous losses. We do not see any justification for the claim that in those circumstances defendants 1 and 2 are entitled to be remunerated at the rate of Rs. 300 per mensem out of the common account for the period subsequent to the date of Ex. 1. This allowance must accordingly be set aside and the commissioner's direction under this head will be restored. A point was raised before us that defendant 3 at least might be entitled to some remuneration. We do not see any difference in his position. If the business is to be regarded as a family business, he was equally a member of the family; but this is certainly a case in which he carried on business in his own interest and not for the benefit of somebody else. The mere fact that somebody else may be entitled to claim a share in the profits made by that business on the ground that his assets had been utilized in the business, will not give the person carrying on the business a right to remuneration. A familiar instance of this kind is the case of a trustee who utilizes the trust funds in carrying on a business. He may be subject to certain disabilities and to certain liabilities as the result of his conduct but he cannot claim any remuneration or advantage on that ground.
31. A further suggestion was thrown outs before us that even if the claim for remuneration as such should be disallowed, it might be possible to bring a claim for at least some portion of the amount within the formula given in Clause (c) of the directions given by this Court in S. A. No. 105 of 1932 on the ground that some moneys must have been spent for the preservation of the estate. We think this claim is more theoretical than well founded on the facts of the case. No such separate claim was formulated before the commissioner or before the lower Court. Mr. Narasimhachar has attempted to explain that this was due to the fact that sufficient time was not allowed by the Commissioner to his clients to work out an independent list on these lines. But having regard to the general course of defendant l's conduct and the way in which, far from preserving the family property, he has done his very best to ruin it so far as it lay in his power, we do not think it worth while to give any further opportunity to him or to his sons to see if any amount can at all be claimed under this new head.
32. Proceeding next to the liabilities to be provided for in the final decree, the learned Judge has directed that the plaintiff should be equally liable with defendants 1 to 3 for debts amounting to Rs. 1,11,938-4-9. The plaintiff takes exception to this direction. As shown by Schedule A to the Commissioner's report, the position on 31st October 1926, was that the family was indebted only to the extent of about Rs. 43,000, if we exclude item 3 therein which is really the amount set apart for charity which has been separately dealt with by the Judge and the outstandings due to the family at that time were as per Schedule 33 of the same report more than Rs. 1,80,000. The position in November 1930 was that taking the liabilities of the business carried on by defendant 1 and the liabilities of the business carried in the name of defendant 2, the total liabilities to outsiders, excluding the charity item, amounted to more than a lakh of rupees. In another part of his report it is pointed out by the Commissioner that between 1926 and 1930 the businesses carried in the names of defendants 1 and 2 brought on a loss of more than Rs. 75,000. Out of the outstandings due in 1926 some had been collected by defendant 1 even before the receiver took charge; of the remainder, it was stated that many had become bad debts; an auction sale of the debts between the plaintiff and defendant 1 realized only about Rs. 30,000. It is pointed out by the learned Judge that most of the debts which were found outstanding in November 1930 had been contracted in the course of that year itself and that the year 1930 was a year of particularly heavy loss in the business. On these facts, Mr. Somayya contends that the plaintiff cannot be held liable for any portion of the debts or at any rate he ought not to be held liable except to the extent to which it is shown that these debts were necessary or beneficial to the estate within the meaning of the direction in Clause (c) of the judgment in S. A. No. 105 of 1932.
33. It is no doubt theoretically possible that some of the existing debts might have been borrowed to pay off debts that existed even prior to 1926 and as such they might be binding on the plaintiff as well. But the investigation has not been directed to this aspect of the matter, in the view that the learned Judge took of the nature and effect of the directions in S.A. No. 105 which are no doubt binding as between the parties. The learned Judge recognised the significance of the circumstance that the directions then given by this Court do not make any distinction between the period anterior to the institution of the suit and the period subsequent to the institution of the suit. But he gives to that circumstance an effect and a significance which seems to us the very opposite of what must naturally be regarded as its effect or significance. As we have already observed, it surely could not have been the intention of this Court to make the plaintiff responsible for debts incurred by defendant 1 in carrying on business even after the institution of the suit. But because the learned Judge thought that it must have been intended to make the plaintiff liable for the business debt's of defendant 1 between the date of Ex. I and the date of the institution of the suit he goes further and holds that the order makes the plaintiff liable even for debts incurred after the institution of the suit. With reference to the direction confining the allowances in defendant 1's favour to what has been done 'for the benefit or necessity of the estate,' the learned Judge states that that must be interpreted in the light of decisions laying down the powers of the manager of a joint family carrying on a family business during the joint stage itself and he accordingly holds that whatever debts had been incurred by defendant 1 in carrying on the business in the way in which he used to do before the division will be binding on the plaintiff. Incidentally, he dwells on the practical difficulty of otherwise carrying on a business and also of tracing the connexion between debts that existed at one time and debts that have subsequently been contracted and utilized in the discharge of pre-existing debts.
34. In answer to an argument that between 1926 and 1930 defendant 1 was carrying on business of a very speculative kind and incurring heavy losses in that connexion, he observes that the manager must conform to the necessities of the business world in which speculation is the very essence and he must be able to borrow for the purpose of investment at risk. When his attention was invited to the decision of this Court in Ramsami Chettiar v. Srinivasa Iyer (1936) 23 A.I.R. Mad. 94, as to the position of the erstwhile manager in relation to the family business when once a disruption in status has taken place, the learned Judge explains it away by observing that it only related to the claim of the creditors against the junior members and was not intended to decide the question of accountability as between the members of the family and he thinks that in any other view that decision cannot be reconciled with the decision of this Court in S.A. No. 105 of 1932. He also adds that many of the debts that existed in November 1930 must presumably represent the debts that existed in October 1926. It seems to us that this last statement is a gratuitous assumption; if only the learned Judge had remembered how much of outstandings had been collected by defendant 1 during that period it is hardly likely he would have made that statement. He winds up his discussion of this question with the observation that it is not necessary to investigate every item and require the manager to prove its necessity or benefit and that the plaintiff cannot escape the consequence of the business losses unless they are shown to have been the result of management that was not prudent and reasonable. He seems to think that the losses are the results of the ordinary risk of business and that there is no indication of recklessness in defendant 1's management. The learned Judge says at the end of para. 8 that no allegation appears to have been made against the truth of the accounts produced. It is difficult; to reconcile this remark with the elaborate statement of objections filed by the plaintiff in which the genuineness of several payments entered by defendant 1 in his accounts has been challenged, particularly when it is remembered that the Commissioner as well as the Court has upheld this very. objection of the plaintiff in some instances.
35. The question of the liability of the other members of the family for debts incurred by the former manager in the course of business carried on by him after a division in status, has been argued at some length before us, both on general principles and in the light of the directions and observations in S.A. No. 105 of 1932. The learned Counsel for the appellant has relied upon the judgment in Ramsami Chettiar v. Srinivasa Iyer (1936) 23 A.I.R. Mad. 94. in support of his contention that in cases where a manager has been conducting a family business, his power to continue the business on behalf of all the members of the family ceases with the disruption of the joint status and that thereafter all that he is entitled to do is to take such steps as may be necessary for preserving it, but that he has no right to continue it. Mr. Narasimhachar, who appeared for defendant 1, suggested that it is difficult to appreciate the antithesis drawn by the learned Judges between taking steps to preserve the business and continuing the business. We fail to see any difficulty in appreciating that distinction. In the case of a dissolved partnership, for instance, it is well established what kind of transactions it is open to any of the partners to enter into so as to bind the other partners and what kind of transactions it is not open to them to enter into. Similarly in cases where a testator has been carrying on a business, decisions have had to consider the powers of the executor in continuing it. These decisions recognise that in the absence of express authority it is not open to the executor to continue the business except to the extent to which this may be necessary to sell it as a going concern, though it is also established that if the business carried on by the executor brings profit, such profits accrue to the benefit of the estate. It seems to us that a similar limitation on the powers of the former joint family manager is quite intelligible and justifiable in principle. As long as the family remained joint the managing member enjoyed under the law, and not by any contract or arrangement, certain powers in respect of the carrying on of the family business; but on the disruption of the joint status, these powers, so far as they rested only on his status as managing member, must be held to come to an end. It is true that it may be some time before the properties are actually divided between the members; but in the meanwhile, it is the duty of the person in possession or management merely to preserve the estate and not to enter into new transactions unless he is prepared to do so on his own responsibility or the new transactions are necessary merely to fulfil obligations already contracted or to prevent loss to the estate. From the mere fact that even after disruption the old manager continues to do business even if it be the same kind of business as before, it cannot be held that it is a family business or even that he is doing it or intends to do it on behalf of the other members of the family.
36. We see little force in the argument based upon the fact of the omission of the other members to object to his doing business. We do not see what right they have to object. If he at least made it clear that he was doing it on behalf of the rest, some duty might lie on them to repudiate it; but if all that is known is that he did business, we do not see any justification for throwing upon the other members any obligation to repudiate. They might no doubt be running a risk in allowing their property to be dealt with by him in the course of that business but they might well have thought that his share of the assets would be sufficient security for their claims; or for other reasons they might not have cared to object. Such omission will not of itself amount to an authorization or even to a consent to the carrying on of the business on their behalf: See the observations of the Court of Appeal in In re Oxely; Hornby v. Oxley (1914) 1 Ch. 604. In respect of transactions taking place after the disruption of status, the distinction between their status as tenants-in-common and a possible relation of partnership must not be lost sight of. In particular circumstances, the Court might even in the absence of an express agreement infer that in the business carried on after the division of status, the members of the family had agreed to become partners. This will have to be determined like any other case of implied partnership, without laying undue stress on the fact that prior to the division of status there was a joint family business. There is in our opinion, no warrant for the contention that in every case in which there has been a joint family business, the result of the division of status in the family is to make the family members partners in any business that might thereafter be done by the former manager. We do not see any justification for the distinction suggested by the learned District Judge between the position of creditors as against the members of the family and the position of the members of the family inter se. On questions of personal liability of the other members or matters of estoppel and holding out, there may no doubt be a distinction; but on the question whether the debts incurred in the course of the business subsequent to the division of status are or are not binding upon the family estate on the ground of the authority of the manager to carry on the business, we see no reason for applying one test when dealing with the claims of creditors and another test when dealing with the rights and liabilities of the members inter se. For reasons already explained we do not agree with the learned District Judge's view that there is any inconsistency between the decision in S.A. No. 105 of 1932 and the decision in Ramsami Chettiar v. Srinivasa Iyer (1936) 23 A.I.R. Mad. 94. The decision in the second appeal only recognizes the rights and privileges arising out of the situation of co-ownership and does not give countenance of any higher rights in the former manager. We are unable to agree with the learned District Judge that the observations contained in judgments defining the powers of the manager of a joint family business during the time that the family continues joint are applicable to any business which the former manager may do after the joint status has come to an end.
37. It was contended before us that where the family had a joint family business, the division in status alone does not put an end to the managership and that the former manager has independently of any contract or arrangement the same rights as before to continue the family business till he is actually displaced by the appointment of somebody else or by a division by metes and bounds. We see no warrant for this contention. The analogy of a Dayabhaga. joint family was relied on and it was argued that after the division in status, a Mitakshara joint family must merely be assimilated to the Dayabhaga joint family. The analogy seems to us misleading. It is no doubt true that so far as the right of survivorship is determined by reason of the division in status in the Mitakshara family there is some analogy with the Dayabhaga joint family; but the position which the manager has under the law is one which is available to him only during the joint status. It has nothing to do with the existence or non-existence of the rule of survivorship. During the continuance of the joint status, the other persons have ordinarily no right to interfere with his management and are only entitled to demand partition; but, once the joint status is broken up, he has no status under the law as joint family manager and the privileges which attach to his position during the joint status cease; it does not seem to us to make any difference for this purpose that among the assets of the joint family there was also a family business. It is true that it may sometimes prove detrimental to the interests of the family if the family business should be suddenly stopped; but the decision in Ramsami Chettiar v. Srinivasa Iyer (1936) 23 A.I.R. Mad. 94 recognizes a power in the former manager to take all steps necessary to preserve the business. It seems to us a travesty of facts to suggest that what happened in this case between 1926 and 1930 was only an attempt by defendants 1 and 2 to preserve the family business.
38. Mr. Narasimhachar contended that what the learned Judges in Ramsami Chettiar v. Srinivasa Iyer (1936) 23 A.I.R. Mad. 94 meant was that the business should even after disruption be preserved as a 'family business' and this, he argued, could be done only by the former manager continuing it as a family business. This overlooks the clear distinction that they draw between 'preserving' the business and 'continuing' the business. All that they meant was that its value as an asset should not if possible be allowed to be impaired. They might have referred to the preservation of the good will of the business if any and to all steps necessary to avoid loss to the family by breaches of contract already entered into or by omission to take steps to realize the assets of the business and so on. We are unable to agree that they intended to recognize an unlimited power in the manager to enter into new transactions merely on the ground that the transactions are of the same kind as used to be entered into during the joint stage. Where, as in the present case, the nature of the business is undoubtedly attended with risk and involves an element of speculation, the limitation imposed by the learned Judge seems to us all the more necessary. It appears from the evidence in the case as well as the evidence adduced in some of creditor's suits that what defendant 1 did during the years 1927 to 1930 was that either in his own name or in the name of his son defendant 2, he entered into extensive contracts for the purchase of cotton, ground nut, rice and; other commodities and entered into other contracts for their sale. In many instances, especially in the later years, he had to borrow money from marwadis to purchase these goods and the conditions of the market: at the time were such that prices fluctuated much and it turned out that he had to sell at much lower rates than he purchased at. That is how, as pointed out by the Commissioner, defendant 1 and defendant 2: incurred a loss of nearly Rs. 75,000 during these four years. When asked why he continued to do business and even continued to borrow for making these purchases in spite of his having incurred loss and in the then existing market conditions, all that defendant 1 could say was that he merely did what other people were doing and that he could not have otherwise traded.
39. The learned Judge thinks that this was a normal course of business, having regard to the nature of the trade that the family had been engaged in before. It is not easy to concur in this opinion. If a man is dealing with his own moneys and trading at his own risk, he is of course at liberty to incur the risks of trade and investments; but to the extent to which he seeks to bind other people and their property by his transactions, it does not seem to us right to apply the same test, viz., whether from his own point of view he was acting in the usual way of trade or not. It is true that the: Privy Council have laid down that even when there have been losses in the business, the question as to whether the trade is to be continued or not must ordinarily be left to the discretion of the joint family manager; but as we have already observed, this principle cannot be extended to the stage when the joint family has ceased to exist, and the person doing the business is no longer the manager of the joint family. We must accordingly hold that the grounds on which the learned Judge has held the plaintiff to be equally liable with defendants 1 to 3 for the debts referred to in the judgment and decree are not tenable. He must have applied the test of benefit or necessity in the sense in which it is applied in respect of property belonging to co-owners, independently of the special considerations, applicable to the manager of a joint family business or even to partners. He was not right in thinking that it was not necessary to investigate the several items of debts individually. We do not agree in his view that it will involve an impossible burden to insist on such proof in respect of each item of debt. It was certainly the duty of the first defendant in the circumstances so to keep his account as to furnish materials necessary for affording such proof.
40. We have been asked by Mr. Narasimhachar to give his client a further opportunity to prove the binding character of all or at least some of the debts, with respect to the tests now laid down by us. In dealing with this application, we cannot ignore the considerations we have adverted to in an earlier portion of this judgment, as to the way in which defendant 1 has withheld information and help from the Court in the conduct of this case. There is also the fact that from a very early stage the plaintiff's counsel has been insisting that it is only by satisfying this test that defendant 1 can hold the plaintiff liable for the debts contracted by him. This is made clear by the numerous petitions that have been filed on the plaintiff's behalf. Defendant 1 cannot therefore say that he has been misled by anything said or done by the plaintiff. Even before the Commissioner on whose report the final decree was passed, it was stated on behalf of the plaintiff that the question of the plaintiff's liability for the debts must be determined by the Court and the Commissioner accordingly referred it to the Court. It has not been suggested before us that defendant 1 desired to adduce any evidence before the Court and that the Court shut out such evidence. We may also point out that the terms of the directions given in S.A. No. 105 of 1932 clearly throw the onus upon defendant 1; and whatever interpretation may be put upon other parts of the judgment we cannot accept the contention that defendant 1 was left in any doubt as to where the onus lay. We have also had our attention drawn by Mr. Narasimhachar himself to the evidence of defendant 1 in some of the creditor's suits. Those suits relate to some of the items comprised in the total of Rs. 1,12,000 referred to in the lower Court's decree; in none of them was the attempt to connect the later debts with preexisting debts successful. Indeed, we are inclined to think that in view of the course of dealings spoken to by defendant 1, there cannot be anything like a connexion in most cases between old debts and the new. What happened seems to have been that debts were borrowed from time to time either to make purchases of goods or to pay off losses incurred in connexion with the particular contracts. The mere fact that these new transactions were entered into by defendant 1 in the hope that out of any profits that he might make in them, he might pay off the old debts will not by itself connect the new debts with the old, so as to make new debts binding upon the plaintiff on the ground that the older debts might have been binding. There is also the fact that on the date of Ex. I, the debts as shown by the Commissioner were only Rs. 40,000 excluding the charity amount and there were outstandings of considerable value. Defendant 1 has also been in receipt of a decent income from the immovable properties of the family during the interval. Even if in some instances it should be found that moneys had been borrowed to pay off some items of debts that existed prior to November 1926, it would not necessarily follow that the plaintiff is liable for such new debts, unless it can also be shown that the older debts could not have been otherwise discharged. If, for instance, as is clear at least to some extent, defendant 1 should realize the former outstandings and utilize them for his own advantage or for paying off his personal debts and then borrow new debts to pay off the pre-existing debts, it will be difficult to maintain that merely on the ground that the money thus borrowed was utilized to pay off the old debts the plaintiff can be held liable for the new debt. Having given the matter our best consideration, we cannot help thinking that defendant 1 and his advisers could have been under no misapprehension as to what they had to prove but that in the light of what they knew as to the nature of the business and of the transactions entered into by defendant 1 between 1926 and 1930, they must have thought that the only contention which they could possibly hope to succeed on was the line they adopted, viz., that under the law or at least by reason of the directions given by this Court in S.A. No. 105 of 1932 defendant 1 was justified in entering into the transactions that he entered into between 1926 and 1930. As in our opinion this contention cannot prevail, defendant 1 must fail and we see no justification for granting his request for a further opportunity of adducing evidence after the lapse of nine years since the litigation began and after all the investigations that have been made in the meanwhile and the apathy if not obstructiveness which defendant 1 has shown in helping that investigation. In the result, we set aside the declaration that the plaintiff is liable for the debts referred to in para. 3 of the decree of the lower Court.
41. It has been brought to our notice that some proceedings are pending in the lower Courts and that in some of them the creditors seek to recover debts that came into existence even before the date of Ex. I or debts which might otherwise be found to be binding on the plaintiff as well. It is sufficient to say that those creditors are not parties to these proceeding and if the evidence adduced in any particular case proves that the debt therein claimed was also binding on the plaintiff, nothing that we have said in this judgment will prejudice the rights of such creditors. With reference to the amount which by para. 4 of the lower Court's decree the parties are directed to pay in equal shares to the annachatram, it has been brought to our notice that the lower Court was in error in directing interest to be paid from 28th March 1922 and it was said that the correct date from which interest should run is 28th March 1926. Both sides agree to this correction being made. Para. 4 will accordingly be corrected by inserting 1926 in place of 1922. Mr. Somayya complains that as regards the immovable properties allotted to the plaintiff at the partition, some difficulty is being raised in the way of the plaintiff taking possession thereof. Mr. Narasimhachar denies that there is any such difficulty. We do not wish to say anything that may create further difficulties, but we see no objection to granting Mr. Somayya's request that Clause 2 of the final decree may be modified by inserting the words 'possession of' between the words 'take' and 'the immovable property'; and also between the words 'take' and 'the lands' occurring later in the same clause.
42. With reference to the management of the charity, Mr. Somayya asked us to make some provision for his client also participating in the management. We are not disposed to accede to this request at this stage. For one thing, we are not by any means certain as to how far it will be conducive to the interests of the charity to make the plaintiff and defendant 1 joint managers, having regard to the very unfortunate relations that seem to have developed between them in the course of this litigation. We think it better to leave this question of management to be dealt with in appropriate proceedings in which the interests of the charity will be properly represented and safeguarded. A revised decree will be drafted carrying out the directions contained in this judgment. As regards costs, we see no justification for the direction in the lower Court's decree that the plaintiff should pay Rs. 73-2-8 to the defendants. The amount may be small but the direction seems to us wholly unwarranted. We do not however wish to interfere with the lower Court's order except to this extent. The direction that the plaintiff should pay Rs. 73-2-8 to the defendants will be deleted. As regards the costs of this appeal, the position is that the appellant has succeeded in respect of a major portion of his claim in the appeal. Defendants 1 to 3 will therefore pay three-fourths of the costs of the appellant in the appeal. The memorandum of objections is dismissed; but there will be no separate order as to costs therein.