C.V. Kumaraswami Sastri, J.
1. This is a suit filed by the minor plaintiff represented by his mother as his next friend for a partition against his father the 1st defendant.
2. Defendants Nos. 2, 3 and 4 are mortgagees from the 1st defendant.
3. The plaint sets out that the plaintiff and the 1st defendant constitute a joint undivided Hindu family, that Gurumurthi Iyya, the father of the 1st defendant and grandfather of the plaintiff was a Subordinate Judge and died in about 1903 leaving considerable properties, mostly immoveable, of the value of Rs. 2,37,000, that the 1st defendant was only six years of age when his father died and was under the guardianship of his mother till about the year 1918, that even before he attained majority he fell into bad company and was leading a very dissolute and immoral life, that the 1st defendant attained majority in 1918, and has been borrowing monies very recklessly for illegal and immoral purposes and has incurred considerable debts to the extent of Rs. 1,00,000, that the joint family possesses considerable immoveable properties, the income where from is more than sufficient to meet the requirements of the joint family and would even leave a large surplus, if properly managed, that there was no necessity for the 1st defendant to borrow any money for family purposes, that the moneylenders were fully aware of the youth and inexperience and the immoral habits of the 1st defendant and were equally reckless in advancing money at high discount, that most of the transactions are unconscionable in their nature, that the debts are not binding on the plaintiff and the joint family estate, that the 1st defendant's conduct in recklessly borrowing and alienating the properties and not looking after the interests of the family has rendered it necessary in the interest of the minor plaintiff to place the estate in the hands of a Receiver and that the plaintiff's share should be delivered to him.
4. Defendants Nos. 2, 3 and 4 are made parties as they hold mortgages in respect of certain properties belonging to the joint family.
5. The plaint contains the usual prayers for an account of the assets and liabilities of the joint family, for a declaration that the debts incurred by the 1st defendant are not binding on the plaintiff or the joint family estate and for further reliefs.
6. The mother of the plaintiff was added as the 5th defendant and his minor sister as the 6th defendant on the ground that they are entitled to maintenance and that the 6th defendant is also entitled to her marriage expenses.
7. The 1st defendant filed no written Statement.
8. The 2nd defendant filed a written statement pleading that he is not aware of the allegations in the plaint as to the 1st defendant leaving a very dissolute and immoral life or borrowing monies or alienating properties for illegal and immoral purposes, that he lent money to the 1st defendant for the purpose of discharging antecedent and other debts binding on the family, that the consideration for his mortgage went towards discharging prior mortgage debts due by the 1st defendant and the plaintiff to N.R.K. Thathachariar, High Court Vakil, Madras, S. Rathnavelu Chetti, Dubash, Messrs. Best & Co. and Madhavji Govindji and a simple debt to P.A.N. Annamalai Chetti and other sundry debts and for necessary purposes, that he paid the above creditors directly and obtained vouchers for the discharge of these debts, that he made due enquiries as to the necessity for the loan, that the 1st defendant executed a registered deed of mortgage on the 28th of November, 1919, for Rs. 58,000 agreeing to re-pay the same with interest at 12 per cent. per annum within the 31st of December, 1920, that the mortgagees binding on the minor and that the suit as framed for taking an account of the joint family properties with mesne profits and for a declaration that the debts incurred by the 1st defendant are not binding on the plaintiff is not maintainable.
9. The 3rd defendant filed a written statement denying the allegations in the plaint as to the illegality and immorality of the debts contracted by the 1st defendant and pleading that he is a mortgagee with possession under a deed of mortgage deed, dated the 16th of July, 1919, of items Nos. 1 and 4 of the plaint to secure the re-payment of Rs. 6,500 advanced to the 1st defendant, that the 1st defendant subsequently received another sum of Rs. 1,000 and executed a further charge on the said properties on the 18th of September, 1919, that both the mortgages were executed for full and adequate consideration and for purposes binding on the plaintiff and not for any illegal or immoral purpose, that at any rate he was not aware that the monies were borrowed for such purposes, that Rs. 6,500 is due for principal and Rs. 772-14 for interest on the first mortgage and Rs. 1,000 for principal and Rs. 156-5-4 for interest on the second mortgage and that he has no objection to the partition asked for by the plaintiff provided provision is made for the payment of the money due to him.
10. The 4th defendant filed a written statement pleading that he is not aware of the allegations made in paras. 5 to 10 of the plaint and knows nothing of the alleged dissolute and immoral habits of the 1st defendant, that the 1st defendant applied to him for a loan for the purpose of discharging antecedent debts and to redeem family jewels and he lent the 1st defendant Rs. 10,000 for that purpose, that he is not a money-lender by profession, that he advanced the money after careful enquiry and bona fide, that the debt is binding on the plaintiff and that the plaintiff's suit is not maintainable.
11. The 5th defendant filed a written statement stating that she has been living apart from her husband, the 1st defendant, since February, 1921, for the reasons given by her in her written statement filed in C.S. No. 946 of 1921 Which was filed by the 1st defendant for restitution of conjugal rights and which was withdrawn by the plaintiff therein that she is entitled to live separately and to claim separate maintenance and that an adequate provision of Rs. 50 a month should be made for her maintenance the same being created a charge on the joint family properties.
12. The 6th defendant filed a written statement through her guardian ad litem claiming maintenance at Rs. 50 per mensem and Re, 5,000 for her marriage expenses.
13. As there was no dispute raised as to the necessity for a partition between the plaintiff and the 1st defendant and as it was suggested that the property which would fall to the share of the 1st defendant would be sufficient to meet all the debts created by him irrespective of any question of necessity, the suit was referred to the Official Referee to suggest a scheme for partition and he submitted an interim report on the 26th of September, 1921 wherein he estimates the total value of the house properties at Rs. 90,000 and as regards the land in Perambore he states that there was evidence given before him at the enquiry showing that there was a bona fide offer for Rs. 1,25,000 and that in making the oiler the person who was making the offer was not putting a fancy price on the property. He made a proposal that pending the final adjustment of the rights of the parties the house properties in Madras should be allotted to the 1st defendant as against his share in the family properties, that the properties should be sold free from the encumbrances created by the 1st defendant and the proceeds brought into Court and applied towards the discharge of the mortgage debts contracted by the 1st defendant and the balance towards the discharge of other debts and that the other matters outstanding between the parties including the determination of the value of the Perambore land (item No. 1 in the plaint) should be adjourned till the sales were effected. It appears that the Counsel for the defendant accepted the proposal but the Counsel for the plaintiff felt doubtful whether he would be justified in accepting the proposal on behalf of the minor plaintiff The matter came on before me for consideration and I passed an order on the 27th of September, 1921, in which after setting out the report of the Official Referee I observed as follows:
In these circumstances I think the best thing will be to direct that the houses in Madras be sold by the Official Referee free from encumbrance at the earliest possible date and that the sale proceeds be brought into Court, the mortgagees and plaintiffs having the same rights over the monies as they now have on the properties. The question of the binding nature of the mortgages will be determined later on. The 1st defendant will bring the sale proclamation at once, and have the conduct of the sale, and bear the necessary expenses in respect of the same. The Receiver will pay the necessary funds to the 1st defendant for bearing the Court expenses in connection with the sale..
14. An order was passed on the 26 th April, 1921, directing the Official Referee to advertise and call for claims against the 1st defendant and to take an account of the liabilities due by the 1st defendant in respect of such claims and the Official Referee submitted his report on the 23rd of August, 1921. The concluding portion of his report sets out the names of the claimants and the amount allowed by him in respect of each claim. Objections were filed to this report and I confirmed the report with certain modifications in my order dated the 4th of October, 1921. One other claim--the claim of Kishanchand Chellaram was asked to be disposed of by the Official Referee and he submitted his report on that matter on the 2nd of May, 1922.
15. Sales were held in pursuance of my order referred to above of the Madras properties. As regards the debts due by the 1st defendant, irrespective of the question of their legality and illegality and their binding nature on the plaintiff, there would have been probably no necessity to enquire into the nature of those debts or their binding nature of the plaintiff but for the very heavy fall in prices which took place very shortly after the report of the Official Referee. The basis of his report as regards partition being thus swept away and as it is admitted by all parties that the present value of all the properties is much lower than the value put by the Official Referee, it is necessary to enquire into the binding nature of the debts.
16. So far as the factum of some of the simple debts incurred by the 1st defendant is not much disputed before me and the trial mainly related to the necessity for and the binding nature of those debts so far as the minor plaintiff was concerned.
17. Before dealing with the evidence adduced I think it is necessary to refer to certain facts as to which there is no dispute. The plaintiffs grandfather Mr. Gurumurthi Ayya was a Subordinate Judge and died on the 30th of July, 1903, leaving the 1st defendant his only son. In 1904 the 1st defendant was about seven years old. The 1st defendant's mother obtained a Succession Certificate from the District Court of Tanjore on the 17th of October, 1903, and applied to this Court in 1904 to be appointed guardian of the person and property of the minor and her petition (O.P. No. 6 of 1904) has been filed as Ex. G in this suit. The value of the properties in 1904 after deducting the debts was said to be Rs. 24,130 5.4 and it was also stated that the minor would be entitled to certain bazaars in China Bazaar Road and to some houses situate in Malayaperumal Street and Anderson Street which were in the name of his mother. The value of the properties is as given in 1904 and there can be no doubt that having regard to the fact that properties went on increasing in value they would be worth a great deal more now. The Official Referee Valued the properties at over two lakhs, in 1921. An order was passed on the 15th of March, 1904, appointing the mother of the 1st defendant as guardian of his person and property allowing Rs. 75 a month for the expenses of maintenance and directing the guardian to file accounts. Accounts were filed from time to time. An order was obtained by the guardian permitting her to borrow Rs. 3,000 from the My lapore Fund and this amount was borrowed and the debt has subsequently been discharged. Accounts were filed in Court from time to time and it is not suggested that the income was insufficient to meet the needs of the family or that it was necessary to borrow any more monies during the period of the 1st defendant's minority. The age of the 1st defendant as given in the petition, Ex, G, is not disputed by any of the parties and there can be no doubt as to its correctness. The 1st defendant became a major in 1918 and it is not disputed that at the time the value of the properties left by his father increased considerably and the properties were worth over a lakh and half and that the rents which the properties were yielding also increased. It is clear from the evidence which I shall refer to later on that the 1st defendant began to lead a vicious life even during his minority and that he borrowed moneys for immoral purposes before he was a major.
18. Meenambal Ammal, plaintiff's first witness, is the mother-in-law of the 1st defendant. She states that her daughter was married to the 1st defendant in 1912 and she joined him in 1914, that in 1917 she came to know that the 1st defendant was drinking and leading an immoral life and was keeping a Eurosian woman in his house and that he was visiting Bangalore, the Nilgris and other places with that woman. She states that the property was then yielding Rs. 500 a month; that Rs. 150 was the income that his mother was getting from her own properties, that the only members of the 1st defendant's family who had to be maintained were himself, his wife, his mother and an infant son and a daughter, that the house in which the family was living was the property of the 1st defendant's mother and, therefore, no rent was being paid and that the expenses of the family would not be more than Rs. 80 a month. She states that in 1917 the 1st defendant went to Malabar and brought a woman from there, and that she was living with the 1st defendant for about a year, that the Eurosian lady Mrs. C. came to live with the 1st defendant in his house and she was kept upstairs from the year 1918 or 1919 and that the lady left the 1st defendant only after the institution of the suit in 1921. Plaintiff's 2nd witness Swarnammal who is the wife of the 1st defendant states that she joined her husband in 1914, that the monthly income of the 1st defendant at that time was Rs. 600, that she first came to know of the 1st defendant's bad ways in 1917 when he borrowed monies and went to Octacamund and Malabar and brought a woman from Malabar with him and that subsequently Mrs. C was living with the 1st defendant in his house, meals being brought to her from Harrison and Co. Plaintiff's 3rd witness Subba Rao who is a Medical Practitioner states that he has known the 1st defendant from 1916, that he knew the 1st defendant in the company with Mrs. C in 1st defendant's house and that he treated the 1st defendant for gonorrhea. He also states that he saw bottles of whisky in 1st defendant's house. Vadivelu Mudaliar, plaintiff's 4th witness, states that he has known the 1st defendant since he was a student, that the 1st defendant went to Malabar and brought a Malayalee woman With him and kept her in Royapettah, that he was borrowing monies and squandering the same, that after sometime he got a Eurosian lady and kept her in his own house and that he was borrowing monies to go to Pondicherry, the Nilgris, Bombay and other places with the lady. Raymond Victoria, plaintiff's 5th witness, states that he was formally employed as an accountant in Morrison and Co. and has known the 1st defendant from about 1918, that Mr. C. was employed for sometime in Morrison and Co. that in 1918 the 1st defendant became intimate with Mrs. C. when she was living in Dents Gardens, that the 1st defendant afterwards brought her and kept her in the upstairs of his own house and that she ultimately left the 1st defendant in the latter part of 1921 after the present suit was filed and a Receiver was appointed. He also states that Mr. C. threatened proceedings and that he was paid Rs. 3,000. He produces certain letters written by Mr. C. to the 1st defendant which I shall refer to later on. He states that the 1st defendant borrowed monies on the pledge of his wife's jewels which he redeemed subsequently. He gives details of the sordid attempts which the 1st, defendant made to keep Mr. C. ignorant of his intimacy with Mrs. C. and the ultimate buying off of Mr. C. by payment of money. He also states that the 1st defendant purchased a motor-car for Mrs. C. for Rs. 1,400 and that he used to go out of Madras to various places the Nilgris, Pondicherry with Mrs. C. and borrow monies for that purpose. He states that the 1st defendant was addicted to drink and produces letters written to the 1st defendant complaining that he could not get even a drop of whisky. He also states that Rs. 3,000 was paid to a relation of the Malayalee lady who threatened trouble. He also produces bills from various firms which were given to him by the 1st defendant. He refers to various mortgages and other debts. I shall deal with his evidence in detail in regard to those items later on.
19. Exhibit A is a letter dated the 25th of September, 1919, from Mr. C. to the 1st defendant wherein Mr. C. states that the conduct of the 1st defendant has been most despicable and that the 1st defendant has bean the cause of ruination of his domestic happiness. He also states that he has a good mind to take criminal proceedings against the 1st defendant. Exhibit A-2 is a letter dated the 20th of December, 1919, written by the 1st defendant to Mr. Victoria from Bangalore in which he says 'What about Mr C. He has not come. Please give us the real truth as to the affairs of Mr. C. if starting. Because you wrote that he was coming I had to send all of them away for two days. Enquire every day and in case he is starting please wire. Do not fail.' The 1st defendant evidently refers to Mrs. C. and her children in this letter and wants to know of Mr. C's movements. Exhibit A-3 is a letter, dated the 20th September, 1920, written by the 1st defendant to Victoria in which he says: 'To-day Mrs. C. took a run down to Madras about the Ally Brother's affairs and I believe he was not there. In the end he had to go to Vadiveloo Mudaliar and get Rs. 10 and buy me a bottle of W. (meaning whisky), and a few little things for Re. 1-8-0 and come back again to the destination. One other thing that worries me is that when Mrs. C. was coming to the bungalow one Brahmin chap followed her at a distance and waited a little while and went away again.' Exhibit A-4 is a letter dated the 13th of September, 1920, in which the 1st defendant asks Victoria to tell the manager of Y.M.C.A. Resturant not to worry Mr. C. and his people, for the boarding fees and that he the 1st defendant would pay the same on Wednesday morning. Exhibit A-5 is a letter dated the 5th of November, 1920, written by the 1st defendant from Pondicherry to Victoria in which he says: 'As for food we have got rice and other things in stock but, only thing is for mutton and wisky. There is no whisky for to night and moreover I cannot go and ask Mr... for the simple reason that unless I return his Rs. 25 cannot borrow from him.' One of the Ex. A-10 series is a bill of 1920, showing dress materials purchased for Mrs. C. of the value of Rs. 144 of which Rs. 100 was paid on the 10th of June, 1920, and the balance still remains to be paid. Another bill dated the 8th of March, 1921, relates to a Piano hired for Mrs. C. Exhibit A-12 is a letter dated the 9th of January, 1921, written by the 1st defendant to Victoria wherein the 1st defendant refers to Mrs. C. having taken Rs. 75 from him and having gone from Bombay and to Mrs. C. taking a divorce from her husband. He also refers to Mrs. C. going to Madras and from there to Bombay and to her writing to her husband for money.
20. These letters and the evidence adduced on behalf of the plaintiff make it clear that the 1st defendant was leading a shameless and immoral life even before he attained his majority that he was addicted to drink, that he was so utterly beatitude of any sentiments of honour or respect for the members of his family, that he actually brought Mrs. C. and made her live upstairs in his own house while his mother and his wife were living downstairs and that he had to buy of Mr. C. fey payment of money to him. Mrs. C. left the 1st defendant only after the present suit was filed and after he had run through a very large portion of his fortune and was in a desperate state for a few rupees. First defendant was admittedly carrying on no business. The family was not large, consisting only of himself, his wife who was young girl, his mother and two children. The plaintiff was born in 1917, and his sister later. He had to pay no house rent as he was living in the house belonging to his mother. There was, therefore, absolutely no necessity for the 1st defendant to borrow any monies and the evidence which I shall refer to later on shows that with the exception of the amounts due to persons from whom he brought provisions and cloth for himself and the members of his family, all the other monies which he borrowed went to meet the expenses which were occasioned by his profligate life. I have no hesitation in coming to the conclusion that the way of his living was so notorious that anybody who had made the slightest enquiry would have known that not only was there no necessity for the 1st defendant to borrow any money but that the monies borrowed by him were borrowed to meet the expenses incurred during the few years of his shameful life.
21. I shall now deal with the mortgages created by the 1st defendant. On the 19th of November, 1919, about one and a half year after he attained majority he executed a mortgage for Rs. 58,000 in favour of the 2nd defendant, Lakshmanan Chetty. The mortgage deed has been marked as Ex. 6. It purports to be executed by the 1st defendant for himself and on behalf of his minor son the plaintiff and the consideration of Rs. 58,000 is recited as follows:
1. Rs. 16,000 reserved with the mortgagee for the payment and discharge of the equitable mortgage of Rs. 15 000 carrying interest at 9 per cent. per annum created by the 1st defendant in favour of N.R.K. Thathachari by executing a promissory note and depositing the deeds on the 4th of April, 1919.
2. Rs. 16,000 reserved with the mortgagee for the purpose of discharging the principal sum of Rs. 15,000 and interest due on the mortgage executed by the 1st defendant in favour of S. Rathnavelu Chetty for Rs. 25,000, dated the 12th of June, 1918.
3. Rs. 10,000 reserved with the mortgagee for the purpose of discharging the debt due on a registered mortgage executed by the 1st defendant in favour of Madhavji Govindji for Rs. 9,250 carrying interest at 9 per cent. per annum.
4. Rs. 7,000 reserved with the mortgagee for the discharge of a promissory note, dated the 7th of June, 1919 executed by the 1st defendant in favour of P.M.P.A.N. Annamalai Chetty for Rs. 7,000 carrying interest at 12 per cent per annum; and.
5. Rs. 6,000 and Rs. 3,000 paid to the mortgagors in cash. The mortgage deed stipulated that interest at 12 per cent. per annum was payable every three months and that the principal amount was payable on or before the 1st of December 1920.
22. The Vakil for the 2nd defendant admits that out of the above consideration, a sum of Rs. 6,000 was not paid to the 1st defendant and that another sum of Rs. 1,040 which was retained by the mortgagee for the discharge of a mortgage dated the 18th of September, 1919, in favour of one Udai Kawar was also not paid.
23. As regards the sum of Rs. 16,000 alleged to be due to Mr. N.R.K. Thathachari, the evidence of Mr. Thathachari who is a Vakil of this Court, is that helent Rs. 15,000 on Ex. I dated the 4th of May, 1919, to discharge the debt due to one Govindaraja Iyengar and that he paid the amount directly to Govindaraja Iyengar.
24. [His Lordship referred to the evidence and continued:].
25. The whole transaction of Thathachari and Govindaraja Iyengar appears to me to be very suspicious.
26. The mortgage executed in favour of Mr. Rathnavelu Chetty is dated the 12th of June, 1918. In the letter Ex. 3-B dated the 26th of July, 1918, the 1st defendant writes to Mr. Rathnavelu Chetty not to pay Rs. 10,000 out of the mortgage amount to Govindaraja Iyengar as he had made other arrangements to pay him and to give him (1st defendant) credit for Rs. 10,000 on the mortgage document. As I said before, Govindaraja Iyengar has not been called and there is nothing to show for what purpose he lent the money to the 1st defendant. Mr. Thathachari makes no enquiries when he says he paid the amount of Rs. 15,000 to Govindaraja Iyengar and the agent of the 2nd defendant Rangasami Iyengar states that he was satisfied with the promissory note that Mr. Thathachari handed to him and that he made no further enquiries.
27. As regards the sum of Rs. 15,709 said to have been paid to Mr. Rathnavelu Chetty the mortgage, Ex. 2, is dated the 12th June, 1918, and is executed by the 1st defendant very shortly after he attained majority. The consideration for the mortgage viz., Rs. 25,000 is said to be the discharge of a debt of Rs. 10,500 borrowed for discharging the equitable mortgage dated the 31st of May, 1918, in favour of V.E.V.R. Lakshmanan Chetty; the payment of Rs. 1,500 borrowed on the 4th of June, 1918, from Ekambara Iyer on a mortgage, the payment of Rs. 8,000 being the principal sum due to Govindaraja Iyengar and his wife Singarammal on a mortgage and Rs. 1,000 due to them on a promissory note Rs. 9,000 being the sum retained by the mortgagee for payment of the principal and interest due to Govindaraja Iyengar and his wife as above stated and Rs. 3,000 received in cash for family expenses and for commission business carried on by the 1st defendant. It is not even suggested by any witness called that any commission agency or other business was carried on by the 1st defendant and this recital is obviously false. The mortgage-deed Ex II bears an endorsement dated the 30th November, 1919, which runs as follows:--'Consideration of Rs. 15,709 received by cheque of V.E.V.R. Lakshmanan Chetty on behalf of Hon. Mr. S.R.M.M.C.T. Muthiah Chettiar as per letter of date of P.S. Subramaniam the executant herein. This document cancelled and returned to the agent of the said HoN.S.R.M.M.C.T. Muthiah Chettiar together with all its enclosures.
28. The promissory notes and documents in favour of Madhavadoss Govindaji have been marked as Ex. 4 series. Exhibit 4-A is a promissory note dated the 12th of December, 1918, for Rs. 5,000. The amount purports to have been borrowed for die-charging decree and other debts. Exhibit 4-B is a promissory note dated the 2nd January, 1919, for Rs. 2,000 said to be borrowed for paying the price of a motor-car and for meeting Court and other expenses. Exhibit 4-C is a promissory note dated the 16th of September, 1919, for Rs. 125. The purpose for which the money was borrowed is not stated in the promissory note. Exhibit 4-D is a mortgage deed dated the 4th of February, 1919, executed by the 1st defendant for himself and on behalf of his minor son the plaintiff in favour of Madhavadoss Govindaji for Rs. 9,250. The deed recites the amount due on the above promissory notes and a further sum of Rs. 2,000 advanced. The document bears an endorsement dated the 2nd of December, 1919, which runs as follows:--'Consideration received and the document cancelled and returned.' This transaction was on the security of the title-deeds of certain properties belonging to the 1st defendant. Exhibit 5 series are vouchers in respect of debts which the 1st defendant had to discharge. As regards one of these vouchers which relates to money required for paying the price of a motor car the evidence adduced on the plaintiff's side is that the money was borrowed for purchasing a car for Mrs. C. and it is likely that Madhavadoss Govindjee would have been aware of this fact if he made enquiries. It appears from the evidence of the second defendant's agent that a sum of Rs. 10,309 was paid to Madhavadoss Govindajee. So far as Madhavadoss Govindajee's claim is concerned there can be little doubt that the 1st defendant did borrow money from him though probably as is usual with sowcars a portion of the alleged commission and advance interest were deducted, I have little doubt that the debts contracted by the 1st defendant were for his immoral purposes neither Madhavadoss Govindajee nor any person connected with him having been called. As regards the sum of Rs. 7,000 reserved with the mortgagee for discharging a promissory note dated the 7th of June, 1919, executed by the 1st defendant in favour of P.M.P.A.N. Annamalai Chettiar for Rs. 7,000 I am of opinion that there was no debt in favour of Annamalai Chettiar and that this sum was put in for the purpose of swelling the consideration The 2nd defendant's agent states that Rs. 7,000 was paid to Annamalai Chettiar and his debt was discharged. He admits in cross-examination that he has no personal knowledge of the payment to Annamalai Chettiar but that Lakshmanan Chetti (2nd defendant) told him (the witness) that he paid the amount to Annamalai Chettiar. It appears from the evidence of the agent that the 1st defendant complained before the Registrar that the full consideration was not paid. So far as Annamalai Chettiar's alleged debt is concerned the only document filed is the promissory note, Ex. X, dated the 7th of June, 1919. It bears the endorsement 'cancelled' and is signed by the 1st defendant but bears no date. The 1st defendant who was examined before the Official Referee stated that the consideration for the mortgage was only Rs. 50,960. He now wants to support the 2nd defendant's agent and says that Rs. 58,000 was received by him but I do not think it is possible to place any reliance on the 1st defendant. His condition is such that he would say anything if he gets a few rupees to satisfy his craving for drink and women. During the course of the trial I had considerable doubts as to the genuineness of Annamalai Chetti's claim and I thought it is probable that this was a bogus transaction entered into to swell the consideration. It is not unusual for money-lenders to recite fictitious debts and support them by promissory notes. I wanted the accounts of Annamalai Chetti and Lakshmanan Chetti to be produced which would show the payment. While other payments are made by cheques there is nothing to support this payment except the statement of Lakshmanan Chetti and no accounts were produced to support this payment.
29. [His Lordship discussed the evidence and continued:].
30. This evidence leaves little doubt in my mind that Muthayya Chettiar had a great deal to do with this transaction. In the inception it is clear from the endorsement on the mortgage bond Ex. II that it was Muthayya Chettiar who was realy acting in the matter and that Lakshmanan Chetti was only his agent. Subsequently for some reason or other the document was taken in Lakshmana Chetti's name. It is not necessary for me to find that Lakshmanan Chetti is a benamidar as it has now been settled by their Lordships of the Privy Council that even a benamidar can sue in his own name and that the fact of the transaction being benami is no defence to the claim It is, however, important when testing the nature of this transaction and the bona fides of the parties.
31. As regards the mortgage in favour of the 3rd defendant Udaya Kawar, Mr. Thirunarayanachari, Counsel for the 3rd defendant, states that he would be satisfied with a decree against the share of the 1st defendant in the mortgaged properties as the share of the 1st defendant would be ample to cover the amount due to him. It is, therefore, unnecessary to discuss the evidence as regards the binding nature of that debt. Were it necessary to do so I would hold that it is not binding on the plaintiff and that the evidence as to consideration is of a very doubtful nature. There is no dispute as to the amount which would be due on the mortgage so far as the first defendant is concerned.
32. As regards the mortgage in favour of Chockalinga Chetti, he is now dead and his estate is now vested in the Official Trustee. The mortgage in favour of Chockalinga Chetti is dated the 2nd August, 1920, and is marked as Ex. XII. It states that a sum of Rs. 10,000 was borrowed for the purpose of discharging certain unsecured debts, for redeeming certain jewels belonging to the family and for other purposes necessary and beneficial to the family. The rate of interest fixed is 18 per cent. per annum.
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33. I have little doubt that the 1st defendant received only Rs. 3,500 and that the usual trick played in such cases was followed--the cheque being given and the money taken back. I find that this mortgage is supported by consideration only to the extent of Rs. 3,500. I am of opinion that this sum was borrowed to meet the immoral necessities of the 1st defendant.
34. [His Lordship then dealt with the claims of some minor creditors whose claims were contested and continued:].
35. As regards Batchmain Sahib, he claims Rs. 263-12-0 being the premium paid by him to the 1st defendant in respect of the lease of some property. This is found against by the Official Referee as under the lease the arrangement is that the premium has to be worked off by deductions from the monthly rent. This disposes of the claim made before the Official Referee. Except the claims I have specifically held to be binding on the 1st defendant and claims in respect of creditors referred to in the Official Referee's report not disputed before me I hold the other claims not binding on the plaintiff and his share in the family properties. The question as to subrogation has been raised by the 2nd defendant who claims priority in so far as he has discharged the debt due under Ex. II the mortgage in favour of Rathnavelu Chetti. So far as the claim of Udai Kawar is concerned, I have already stated that Mr. Tirunarayanachari, Counsel for the 3rd defendant, stated that he would be satisfied with a decree against the half share of the 1st defendant. The two mortgages in favour of the 3rd defendant are dated the 16th of July, 1919, (Ex. VIII) and the 18th of September, 1919, (Ex, IX). The mortgage in favour of Rathnavelu Chetti is dated the 12th of June, 1918, (Ex. II). The mortgage in favour of Lakshmanan Chetti is dated the 29th November, 1919, (Ex. VI). It is argued that as the mortgage Ex. VI in favour of Lakshmanan Chetti was created, inter alia, to discharge the debt due to Ratnavelu Chettt under Ex. II, Lakshmanan Chetti should be subrogated to the rights of Rathnavelu Chetti and that he should thus have priority over the mortgages in favour of Udai Kawar (Exs. VIII and IX) to the extent to which Rathnavelu Chetti's mortgage was discharged.
36. The question of subrogation is really one of intention and has to be gathered with reference to the terms of the various documents though of course there is always the presumption that a person discharging a prior mortgage intends to keep it alive for his benefit. Where a person, raises money to pay off a prior mortgage and the mortgagee pays as the agent of the mortgagor there can be no question of subrogation. In Malireddi Ayyareddi v. Adusumilli Gopalakrishnayya 79 Ind. Cas. 592: A.I.R. 1924 P.C. 36 : 19 L.W. 215 : 26 Bom. L.R. 204 : (1924) M.W.N. 290 : 28 C.W.N. 1025 Their Lordships of the Privy Council at page 167 Page of 46 M.L.J.--[Ed.] observe as follows:
It is now settled law that where in India there are several mortgages on a property, the owner of the property subject to the mortgages may, if he pays off an earlier charge, treat himself as buying it and stand in the same position as his vendor or to put in another way, he may keep the encumbrance alive for his benefit and thus come in before a later mortgagee. This rule would not apply if the owner of the property had covenanted to pay the later mortgage debt, but in this case there was no such personal covenant. It is further to be presumed, and indeed the Statute so enacts (Transfer of Property Act, Section 101), that if there is no indication to the contrary the owner has intended to have kept alive the previous charge if it would be for his benefit.
37. In Ex. VI, the mortgagor, has added a clause at the end which runs as follows:
As regards items Nos. 2 to 5 in Schedule B,a sum of Rs. 1,640 out of charging a further charge with possession in those properties, of one Udai Kawar executed on the 1st September, 1919. After the discharge, there is only one mortgage left with Udai Kawar dated 16th July 1919, and there are no other encumbrances.
38. It is argued by Counsel for the 3rd defendant that where a mortgagee undertakes to discharge a previous mortgage out of the moneys which he lends to the mortgagor and thus puts himself under a personal liability to pay and where the mortgagee expressly states that of all the previous mortgages there is only one mortgage left undischarged, the fair inference is that the parties intended, that all the other mortgages should be treated as die charged and not kept alive for the benefit of the mortgagee. I do not think it can be said from the tenor of the mortgage-deed in favour of the 2nd defendant that he intended to give up any right he had to use the mortgage in favour of Ratna Chetty as a shield against subsequent encumbrances. The mere fact that a mortgagee keeps money in his hands to pay off a prior encumbrance an d does not run the risk he would other wise incur if he pays money to the mortgagor to pay off the prior encumbrance and he does not do so will not make the mortgagee an agent of the mortgagor. The recital in Ex. VI that only one mortgage is outstanding simply means that the other mortgages have been paid off. It does not mean that the claim to subrogation, should it arise, is intended to be negatived. I think the 2nd defendant is entitled to subrogation to the extent to which he discharged Ex. II Rathnavelu Chetty's mortgage. It is, however, clear that Udai Kawar will be entitled to marshall the properties under Section 81 of the Transfer of Property Act. As I have already shown, there can absolutely be no doubt that the 1st defendant even before he attained majority began to lead a reckless and immoral life and began to borrow monies recklessly and that there was absolutely no necessity for any loans being raised for his own ordinary personal family expenses. The 1st defendant was carrying on no business and the recital in some of the documents that he was carrying on business or that moneys were required for family expenses is false. An ordinary enquiry set on foot by a person who wanted to lend money to the 1st defendant would have disclosed not only that there was no necessity for the 1st defendant to borrow any money but that he was leading a grossly immoral life. He had a Eurasian woman living in his own house which is situate in one of the busy and central parts of Mylapore, and there can be little doubt that the 1st defendant's mode of life must have been notorious. The evidence which I have alluded to shows that though the 1st defendant attained majority only on the 16th of May, 1918, he borrowed from Govindaraja Iyer, Rs. 8,000 on the 1st of October, 1917, a year before he attained majority, and another sum of Rs. 1,000 on the 5th of April, 1918, immediately before he attained age. On the 12th of June, 1918, i.e., a month after he attained age, he executed a mortgage in favour of Rathnavelu Chetti for Rs. 25,000 I have already referred to the recitals in that mortgage. On the 4th of May, 1919, almost within a year of his attaining majority, he creates an equitable mortgage in favour of Mr. Thathachari for Rs. 16,000. In December, 1918, within six months of his attaining majority he again borrows Rs. 5,000 from Madhawaji Govindji on an equitable mortgage. On the 16th of July, 1919, he borrows from Udai Kawar Rs. 6,500 alleged to be for the purchase of jewels none of which were for his wife or any member of his family and on 18th of September, 1919, Rs. 1,000. On the 29th November, 1919, about 1 1/2 years after attaining age he executed a mortgage for Rs. 58,000 in favour of Lakshmanan Chetti. The various other simple debts which. I have referred to were all contracted between 1918 and 1919. So that within two years of his attaining majority the 1st defendant borrowed over a lakh of rupees. I have already given my reasons for holding that almost all the debts contracted by the 1st defendant were for no necessity, but for the purpose of meeting the expenses necessary for his illegal and immoral habits. It is clear from the evidence that the lenders made no enquiries and were merely satisfied with the fact that there were antecedent debts or with statement of the 1st defendant that he wanted money for family expenses. That bona fide enquiries are necessary is clear. See Saravana Tevan v. Muttayi Ammal 6 M.H.C.R. 371 Savumian v. Narayanan Chettiar 23 Ind. Cas. 248 The question is whether in the circumstances I have referred to and on the facts I have found these debts are binding on the plaintiff. The law is clear that in the case of a joint family the sons are liable for their father's debts even if the debts are contracted by the father for his own benefit without any legal necessity so long as the debts are not incurred for an unlawful or immoral purpose. The difficulty often arises out of a limitation imposed by some decided cases which finds no place in the Smirities or ancient commentators that the lendor must have notice of the purpose for which the loan was made. Some cases go to the length of holding that direct connection should be shown between the debt and the necessary purpose for which it was borrowed. I think that constructive notice or the absence of any enquiry would be sufficient in cases like the present. Where a father carries on some business or trade, or where there is reasonable ground for thinking that the loans were required for purposes which though not necessary would still not be immoral or illegal the son seeking to evade liablility has to show that the creditor knew that the money borrowed was going to be used for immoral purposes. The position however is different where a young man who has justattained majority and who has inherited valuable property which would yield an income more than sufficient to keep him in comfort having regard to the position the family and its requirements, leads an openly reckless and immoral life and borrows large sums of moneys, which will not in the ordinary circumstances be necessary for any lawful purpose. In the case of expectant heirs and young men who had just attained majority borrowing money from money-lenders, Courts have thrown the burden of proving the factum of the loans upon the money-lenders. I need only refer to Moti Gulabchand v. Mahomed Mehdi Tharia Topan 10 Ind. Dec. 807, Sundarammal v. Subramania Chettiar 30 Ind. Cas. 971, Sami Sah v. Parthasarathy Chetty 31 Ind. Cas. 739 and Official Assignee of Madras v. Sambanda Mudaliar 60 Ind. Cas. 205 : 28 M.L.T. 258. In such cases I think that a lender to a young man in the circumstances above mentioned who is the father of minor children who cannot protect themselves, cannot get the protection which is usually given to bona fide lenders, unless he proves that he made reasonable enquiries. In the present case I am of opinion that the 1st defendant who is a young man, and who had recently attained majority, got into the hands of unscrupulous money-lenders who took advantage of his youth and vicious habits, lent him moneys, got documents for larger sums than those he actually received and put in fictitious recitals and they have not made out even a shadow of a claim for protection as bona fide lenders without notice, or that they have any reasonable belief that the moneys which the 1st defendant borrowed were borrowed for lawful purposes.
39. Numerous authorities were cited on both sides, and it is not easy to reconcile all the views taken. I think the law as to fixing creditors with notice of the illegality or immorality is correctly laid down in the cases which I shall refer to.
40. In Sundara Goundan v. Arumuga Goundan 59 Ind Cas. 390 Sir Abdur Rahim and Moore, JJ., observed as follows:
It would no doubt be difficult in many cases to prove that a particular debt was incurred for some specific immoral or illegal purpose and it may be sufficient if the evidence is such that the Court would be in a position to infer that the debt incurred by the father must have been incurred for immoral purposes.
41. That seams to be the principle underlying the decision in Bhaqbut Pershad Singh v. Girja Koer, 15 I.A. 99 In Bhagat Mal Sahu v. Abdul Karim 34 Ind. Cas. 23 : 2 P.L.W. 430 the learned Judge observed:
We think that while you need not have direct proof that the money was raised to be spent on any particular person, one must be reasonably satisfied that the father was a man of vicious, extravagant and lustful habits and that he raised the money for the purpose of applying it for immoral purpose. In some way, by reasonable legal proof, it must be shown that there is a connection with the debt and the immoral purpose.
42. In Maharaj Singh v. Balwant Singh 3 A.L.J. 274 : (1906) A.W.N. 117 Sir John Stanley C.J., and Justice Sir William Burkitt observe as follows:
The evidence irresistably leads us to the conclusion that there was no necessity for those debts or any of them other than that which the gratification of his vicious habits created. He had more than ample income for the maintenance in luxury of himself and his family. There is not even a suggestion of the existence of any family necessity for the loans. Under all the circumstances we think the appellant has made out his case. The facility with which Hindu fathers can obtain loans from money-lenders on the security of ancestral property has proved disastrous to many respectable and well-to-do families in these Provinces... It is common experience that money lenders readily advance loans on any class of landed security taking considerable risks, but charging high if not exorbitant rates of interest. It is no easy matter for sons to satisfy the heavy onus which lies upon them in impeaching loans obtained for immoral purposes, but it would, we think, be the death-blow to the rule of Hindu Law which gives immunity to sons when defending their title to ancestral property from liability to their father's immoral debts, if it were the law that in order to absolve themselves from liability the sons must prove, not merely the purpose for which such loans were contracted, but also that the lenders knew of the immoral purpose of the loan.
43 In Babu Singh v. Behari Lal 5 A.L.J. 175 Banerjee and Richards, JJ., observed that the passage above referred to was obiter but with great respect I think it correctly sets out the law. This case went on appeal to the Privy Council but the decision of the High Court was confirmed on another point. In Ram Nath v. Bulaqi Ram 17 Ind. Cas. 735 the learned Judges observed as follows:
But it would, in our opinion, equally be sufficient to prove that the borrower was at the time living a licentious life, beyond his means, indulging in drink, riot, prostitution and debauchery, and that at the same time he was without any business or occupation upon which the money might legitimately have been spent, without showing on which particular act of immorality the money was spent. In fact, if it is proved clearly that at the time the borrower was notoriously wasting his substance on riotous living, and spending large sums beyond his income and above his station in life in this way only, a loan contracted in the midst of such living and spent upon it would be a loan contracted for immoral purposes. Indeed, it can hardly ever, if ever, be possible and must always be extremely difficult to prove specific expenditure on one specific act of immorality.
44. I am, therefore, of opinion that the mortgages referred to in my judgment are not binding on the plaintiff but are only enforceable against the half share of the 1st defendant. The mortgagees who have taken out the moneys will, therefore, bring into Court the one half share of the plaintiff. I have already given my views as to the simple debts and decree. As regards the properties which have not yet been sold and which are subject to mortgages the mortgage claims will be enforceable against the one half share of the 1st defendant and those properties will be sold and the half share of the plaintiff will be paid into Court.
45. As regards the debts which I have found to be binding on the minor plaintiff they will, in the first instance, be paid out of any surplus, if any, that may remain to the credit of the 1st defendant after the payment of the mortgage debts and any balance will be paid out of the minor's share in Court. As regards creditors whose claims have been held not to be binding, they will be paid out of any surplus standing to the credit of the 1st defendant after the mortgagees are satisfied. As regards the maintenance to be awarded to the plaintiff's mother and sister, I think that the matter can best be disposed of after it is ascertained what is the net amount that will remain to the credit of the plaintiff. As regards the costs of the suit the costs of the plaintiff will be paid out of the estate and the defendants will bear their own costs.
46. Having regard to the difficulty of the case, I allow fees for two Vakils.