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Attorney(S)
  • P.C.Chatterji
  • G.B.Mohanty
  • B.N.Das
Judges
  • Ray, C.J
  • Jagannadhadas, J.
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citation codes
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Attorney(S)
  • P.C.Chatterji
  • G.B.Mohanty
  • B.N.Das
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  • Ray, C.J
  • Jagannadhadas, J.
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Smart Summary

Authoritative Summary of the Opinion (Jagannadhadas, J.)

Factual and Procedural Background

This is a second appeal by defendants 1 to 3 arising from a suit by the plaintiffs to set aside an alienation (a sale-deed, Ex. C, dated 1 March 1933) and to recover possession of the property sold. The parties are members of the same joint family: defendant 4 and plaintiff 1 are sons of Bhuban Meher; plaintiff 2 is the son of plaintiff 1; defendants 5, 6 and 7 are sons of defendant 4. The land sold (described in Ex. C) is admitted to be joint family property (about 1-5 acres; the plaint mentions 1.56 decimals). The sale-deed purports to have been executed by Bhuban and his two sons (defendant 4 and plaintiff 1); signatures were also given on behalf of minors (plaintiff 2 and defendants 5–7). The alienees under Ex. C are relations of Bhuban Meher (including defendant 3 and the father of defendants 1 and 2). The sale consideration was Rs. 165.

Plaintiffs alleged that plaintiff 1 did not execute the sale-deed (signature on Ex. C alleged to be a forgery) and that he was not a consenting party. Both Courts below found the signature genuine, treating plaintiff 1 as an executant. The lower courts considered whether the sale was valid as against the minors on the ground of legal necessity (Issue 3). They found Rs. 106-7-3 of the sale consideration had been applied to discharge a decree due to Naram Gountia (supported by endorsements on Exs. B and B1). However, the lower courts set aside the alienation because neither actual necessity nor a bona fide inquiry was proved in respect of the remaining balance of about Rs. 60. They decreed possession for the plaintiffs subject to defendants 1 to 3 paying Rs. 106-7-3. Defendants 1 to 3 have appealed to this Court in a second appeal.

Legal Issues Presented

  1. Whether the non-registration of the sale-deed (Ex. C) under Section 46(3) of the Central Provinces Tenancy Act invalidates the transfer vis-à-vis the plaintiffs.
  2. Whether Section 53-A of the Transfer of Property Act (doctrine of part performance/statutory estoppel) protects the alienees as against minors who were parties to the sale-deed through their guardians.
  3. Whether the sale-deed is binding as against the minors on the ground of legal necessity — specifically, whether the transaction was justified by legal necessity in fact or, alternatively, whether a bona fide inquiry by the alienee satisfied the statutory test.
  4. Whether a partial failure to account for all portions of the sale consideration (i.e., some part not shown to be for legal necessity) invalidates the sale as a whole, particularly in a sale as opposed to a mortgage.

Arguments of the Parties

Appellants' (Defendants 1–3) Arguments

  • The judgments of the Courts below are erroneous.
  • Since the major portion of the sale consideration was applied for legal necessity (Rs. 106-7-3), the sale should be upheld.
  • The Courts below did not correctly appreciate the material legal questions relevant to whether the sale was justified by legal necessity or whether a bona fide inquiry had been made.

Plaintiffs' Arguments

  • Plaintiff 1 did not execute the sale deed for himself or as guardian of plaintiff 2; the signature was alleged to be forged.
  • The plaintiffs sought to impeach the alienation and recover possession of the property on that basis.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Subramanyan v. Subba Rao, A.I.R.(35) 1948 P.C. 95; I.L.R. (1949) Mad. 141 Holds that if a minor is a party to a sale deed through his guardian, he is a transferor within the meaning of Section 53-A of the Transfer of Property Act; statutory protection of S.53-A is applicable against such a minor. The Court relied on this decision to conclude that Section 53-A can avail the contesting defendants even as against plaintiff 2 and other minors who were parties to Ex. C by their guardians; accordingly Ex. C is to be treated as a valid sale-deed between the parties for the purpose of title/possession despite non-registration.
Durga Prosad v. Jewdhari Singh, 62 Cal. 733 : A.I.R.(23) 1936 Cal. 116 Decision on issues relating to transfers by limited owners/managers (cited by the Courts below). The Court observed that the lower courts purported to follow this decision but cautioned that the facts of that case (a mortgage) are peculiar and some passages might be misleading if taken out of context; the Court preferred to rely on Privy Council authorities as the controlling principles.
Hunoomm Pershad v. Mt. Babooee Mundraj Koonweree, 6 M.I.A. 534 : 18 W.R. 81n Describes the Hindu-law principles governing the power of a manager for an infant heir to charge estate not his own — limited to cases of need or for benefit of the estate; lender must inquire and act bona fide. The Court treated this case as the "fountain source" on the subject under Hindu law and quoted the passage to extract the test: necessity (fact) for the transaction, or alternatively bona fide inquiry and reasonable satisfaction by the alienee.
Lakshmanna v. Venkateswarlu, A.I.R.(36) 1949 P.C. 278 : 76 I.A. 202 Clarifies the distinction between burden of proof and burden of adducing evidence; the person on whom burden lies need not fail if a satisfactory conclusion can be reached from existing material even in absence of positive evidence by him. The Court relied on this principle to state that the alienee need not necessarily fail merely because he did not adduce positive evidence of inquiry or necessity where the existing material permits a definite conclusion in his favour.
Sri Kishun Das v. Nathu Ram, A.I.R.(14) 1927 P.C. 37 : 49 All. 149 In sales justified by necessity, where some portion of the consideration is unexplained, a presumption may arise that the balance was expended for proper purposes and for the benefit of the family; the test is whether the sale itself was justified by legal necessity. The Court cited this authority (and related Privy Council decisions) to emphasise that in sales the court must judge whether the sale as a whole was reasonably necessary and prudent to raise the amount required for legal necessity, and that unexplained small balances do not automatically invalidate a sale.
Niamat Rai v. Din Dayal, A.I.R.(14) 1927 P.C. 121 : 8 Lah. 897 Privy Council principle on necessity and validity of alienations by limited owners (cited among similar authorities). Used as part of the cluster of Privy Council authorities establishing the correct test for sales by limited owners — whether sale was justified by legal necessity or by bona fide inquiry.
Suraj Bhan Singh v. Sahehain Sukh, A.I.R.(14) 1927 P.C. 244 : 105 I.C. 257 Privy Council authority on the test for legality of alienations by limited owners under Hindu law. Relied upon to reinforce the proposition that the test is whether the sale itself was justified by legal necessity; partial unexplained portions of consideration do not necessarily invalidate a sale.
Thirumalaiyappa v. Nainar Tevan, A.I.R.(9) 1922 P.C. 307 : 74 I.C. 604 Earlier Privy Council authority referred to approvingly in later cases on the standard for assessing sales justified by necessity. Cited (through later Privy Council discussions) to show historical support for upholding sales where the principal necessity was met even though some balance of the price went to other purposes.

Court's Reasoning and Analysis

The Court proceeded in a stepwise analysis, grounded in statutory provisions and authoritative precedents:

  1. Registration under the Central Provinces Tenancy Act: The Court observed that although Ex. C was not registered and Section 46(3) (with proviso) and subsection (5) restrict such transfers, the point was not substantial because under the statute (and Section 47) such a transaction is voidable only by particular persons and within two years of the alienee obtaining possession. Here the alienees have been in possession since 1933 and are those very persons who might have been entitled to avoid; therefore the objection had no merit.
  2. Application of Section 53-A of the Transfer of Property Act: Both lower courts found (and defendant 4 virtually admitted) that the vendees have been in possession since the date of sale. The Court addressed whether S.53-A could avail the defendants as against minors who were parties through guardians. Relying on Subramanyan v. Subba Rao (Privy Council), the Court held that S.53-A applies where a minor is a party through his guardian and therefore the statutory protection of part performance is available against such minors. Consequently, Ex. C must be treated as a valid sale-deed between the parties for purposes of title/possession despite non-registration.
  3. The core question — legal necessity and bona fide inquiry: The Court framed the issue as whether, assuming Ex. C is a valid sale among the parties, the sale is binding as against the minors because it was justified by legal necessity or because the alienees made a bona fide inquiry satisfying the standard applicable to limited owners/managers under Hindu law.
  4. Applicable legal test: The Court reviewed Privy Council authorities (including Hunoomm Pershad and subsequent Privy Council cases) to extract the governing principle: the primary test is the actual existence of necessity (or benefit) for the particular transaction; however, where the alienee has made a bona fide inquiry and is reasonably satisfied that such necessity exists, that bona fide inquiry is an alternative basis for validating the transaction. In other words, bona fide inquiry and reasonable satisfaction are an alternative to actual necessity and not an additional condition to it.
  5. Treatment of partial unexplained consideration in sales: The Court emphasised that in sales (as opposed to mortgages) it is not necessary that every portion of the consideration be justified by legal necessity. What must be demonstrated is that the sale as a transaction was reasonably necessary or that the alienee was reasonably and honestly satisfied of that fact on bona fide inquiry. Privy Council precedents show that unexplained balances do not automatically invalidate a sale if the sale was reasonably necessary to raise the amount required for legal necessity.
  6. Burden of proof and adducing evidence: Citing Lakshmanna v. Venkateswarlu, the Court clarified that while the burden of proof lies on the alienee to prove necessity or inquiry, the burden of adducing evidence is different. The alienee will not necessarily fail merely because he did not adduce positive testimony if the existing material permits a satisfactory inference in his favour.
  7. Conclusion on lower courts' approach: The Court found that the lower courts did not apply the correct test — they required inquiry or proof in respect of each portion of the consideration rather than judging whether the sale as a whole was justified to raise the amount required for legal necessity or whether a bona fide inquiry justified the sale. Consequently, the matter required reconsideration under the correct legal standard.

Holding and Implications

Core Holding: The decree of the lower appellate Court is set aside and the appeal is remanded for rehearing in the light of the principles stated by this Court. Cost will abide the result.

Implications:

  • The Court directed a fresh consideration of whether the sale-deed (Ex. C) was justified by legal necessity for the particular transaction or whether the alienee made a bona fide inquiry and was reasonably satisfied — applying the Privy Council test distinguishing actual necessity from bona fide inquiry as an alternative basis.
  • The Court held that Section 53-A of the Transfer of Property Act applies even where minors were parties to the sale through their guardians (per Subramanyan v. Subba Rao), so the alienees may rely on part performance against those minors provided the statutory tests are satisfied.
  • The immediate effect on the parties is that the earlier decree in favour of the plaintiffs is vacated and the matter is remitted to the lower appellate Court to reconsider the evidence and facts under the correct legal standard; costs are to abide the result.
  • Nothing in the opinion purports to lay down a new precedent supplanting Privy Council authority; rather, the Court relied on and applied established Privy Council decisions and clarified that the lower courts must apply those principles correctly.

Disposition

Decision: The decree of the lower appellate Court is set aside; the appeal is remanded to that Court for rehearing in accordance with the principles and tests explained in this opinion. Costs to abide the result.

Show full summary ...

    Manglu Meher v. Sukru Meher

    Jagannadhadas, J.:— Defendants 1 to 3 are the appellants in this second appeal. It arises out of a suit filed by the plaintiffs to set aside and alienation and to recover the property comprised therein from the possession of the defendants. Defendant 4 and plaintiff 1 are the sons of one Bhuban Meher. Plaintiff 2 is the Born of plaintiff 1. Defendants 5, 6 and 7 are the sons of defendant 4. The alienation sought to be impeached is a sale-deed, Ex. C, dated 1st March 1933 of lands of the extent of 1-5 acres (it may be noted that the plaint mentions lands of 1.56 decimals) which admittedly are the joint family property of the plaintiffs and defendants 4 to 7. The sale-deed purports to have been executed by Bhuban and his two sons defendant 4 and plaintiff 1. Defendant 4 has signed it also for his minor sods 6 to 7 and plaintiff 1 for his then minor son, plaintiff 2. The alienees under the sale-deed are the brothers of Bhuban Meter, viz., defendant 3 and the father of defendants 1 and 2. The consideration for the sale deed is a sum of Rs. 165.

    2. The case for the plaintiffs was that plaintiff 1 did not execute the sale deed either for himself or as guardian of his minor son, plaintiff 2 and that he was not a consenting party to the alienation. The signature of plaintiff 1 appearing on the sale deed, Ex. C, was alleged to be forgery. Both the Courts below have found it to be genuine and that finding having become conclusive, it must now be taken that the plaintiff was also an executant of the sale-deed for himself and his son. Since, however, the sale-deed has been executed on behalf of the then minor plaintiff 2 (as also on behalf of minor defendants 5, 6 and 7 who are still minors, though they have not come forward to challenge the alienation), the question as to whether the sale deed is valid and binding as being justified by legal necessity has been raised in the Courts below and is the subject-matter of Issue 3. The Courts below have found that Rs. 106-7-3 out of the sale consideration was for the purpose of discharging the decree amount due to one Naram Gountia from the plaintiff's family and that the said sum was actually utilised for payment of the said decree, as appears from the endorsements on the decree, marked as Exs. B and B1. Both the Courts however set aside the alienation on the ground that neither the actual necessity nor a bona fide inquiry as to the existence of necessity for the balance amount of about Rs. 60 has been made out by the alienees. They accordingly passed the decree in favour of the plaintiffs for possession of the suit property on condition of the contesting defendants 1 to 3 paying up the sum of Rs. 106-7-3 found to have been applied for legal necessity out of the consideration for the same. It is against this decree that defendants 1 to 3 have come up in second appeal.

    3. It is argued for the appellant that the judgments of the Courts below are erroneous and that since the major portion of the consideration for the sale, deed has been found to have been applied for legal necessity, the sale had to be upheld and that the Courts below have not correctly appreciated the material questions arising in a case of this kind. Before dealing with that matter, it is necessary to notice two other questions that arise in the suit. The suit property is a land situated in the district of Sambalpur of which the plaintiff's family are the occupancy tenants. The sale purported to be by means of a document, Ex. C which has not been registered. It is pointed out that under Section 46(3) of the Central Provinces Tenancy Act, such a transfer is not valid except as covered by the proviso thereto and that the registration of a transfer not covered by the proviso to sub-s. (3) is prohibited under subs. (5). This point, however, is not a substantial one, because it is clear from that sub-section itself as also from S. 47 that such a transaction is only voidable and can be avoided, not by the very transferor themselves, but by the persons who are indicated in S. 47 and that too within two years from the date on which the alienees obtained possession under the transfer. Admittedly the alienees have been in possession from the date of the sale in 1933 and are also themselves the persons being brothers of Bhuban Meher, who might have been entitled to avoid the transfer under S. 47 if the alienation had been in favour of the strangers. This contention has therefore no merit.

    4. The fact that the sale-deed, Ex. C is not registered, raised another difficulty for the contesting defendants, namely, that no title as such has passed to them under the sale deed. They are, however, entitled to rely on Section 53-A of the Transfer of Property Act, inasmuch as it has been definitely found by both the Courts below and virtually admitted by defendant 4 who is an executant of the sale-deed that the vendees have been in possession of the property sold from the date of the sale in pursuance of the same. The question that has been raised is whether S. 53-A would avail the contesting defendants as against plaintiff 2 (and defendants 5 to 7), who were minors at the time of the execution of the sale deed. It may plausibly be contended that since Section 53-A of the Transfer of Property Act, is a statutory recognition of the principle of estoppel embodied in the doctrine of part performance, the same would not avail as against minors since there can be no estoppel against a minor. There is, however, no scope for any such contention in view of the recent decision of the Privy Council in Subramanyan v. Subba Rao, A.I.R(35) 1948 P.C 95 : (I.L.R (1949) Mad. 141) which has authoritatively decided that if a minor is a party to a sale deed, through his guardian he is as much a transferor within the meaning of S. 53-A and that therefore the statutory protection given to the alienee under S. 53-A is equally applicable against him.

    5. The question that arises in this case has, therefore, to be considered on the footing that as between the parties to the document, Ex. C, it is to be treated as a valid sale-deed in spite of the absence of registration in so far as any attempt to recover possession on the basis of want of title in the alienee is sought to be made, by or on behalf of any of the alienor. The question has, therefore, to be considered whether on the footing of its being a valid sale, deed, it is binding as against the minors on accounts of justifying legal necessity. As already ??? above, both the Courts below have held that it is not so binding since a portion of the ale consideration has not been proved of any enquiry that portion was required for legal necessity. In coming to the above conclusion, the Courts below purported to follow the decision in Durga Prosad v. Jewdhari Singh, 62 Cal. 733 : (A.I.R(23) 1936 Cal. 116). The facts of that case are somewhat peculiar and the case itself was one of a mortgage in which different consideration may apply as pointed out is that very case. There are, however, passages in that judgment which taken out of the context are likely to be somewhat misleading. The principles applicable to a case of this kind have been clearly and unmistakably laid down in the privy Council cases and it is unnecessary to go beyond them. The fountain source of the case ??? on the subject of the power of alienation of limited owners and managers or guardians ??? Hindu law is the case in Hunoomm Pershad v. Mt. Babooee Mundraj Koonweree, 6 M.I.A 534 : (18 W.R 81n). The law is stated at pp. 423-424 as follows:

    “The power of the Manager for an infant heir to charge an estate not his own, is, under the Hindoo law, ??? limited and qualified power. It can only be exercised rightly in a case of need, or for the benefit of the estate. But where, in the particular instance, the charge is one that a prudent owner would make, in order to benefit the estate, the bona fide lender is not affected by the precedent mismanagement of the estate. The actual pressure on the estate, the danger to be averted, or the benefit to be conferred upon it, in the particular instance, the thing to be regarded. But of course, if that danger arises or has arisen from any misconduct to which the lender is or has been a party, he cannot take advantage of his own wrong, to support a charge in his own favour against the heir, grounded on a necessity which his wrong has helped to cause. Therefore the lender in this case, unless he is showa to have acted mala fide will not be affected, though it be shown that, with better management, the estate might have been kept free from debt. Their Lordships think that the lender is bound to inquire into the necessities for the loan, and to satisfy himself as well as he can, with reference to the parties with whom he dealing, that the Manager is acting in the particular instance for the benefit of the estate. But they think that if he does so inquire, and acts honestly, the real existence of an alleged sufficient and reasonably credited necessity is not a condition precedent to the validity of his charge, and they do not think that, under such circumstances, he is bound to see to the application of the money.”

    6. It is clear from this passage that the primary test for the validity of an alienation by a limited owner is the existence as a fact of necessity (or benefit) for the particular transaction. But it is not a condition precedent. If the alienee has made a bona fide enquiry and on such inquiry he finds the existence of the alleged sufficient and reasonably credited necessity, this is sufficient and he need not see to the application of the funds. It is, therefore, to be seen that bona fide enquiry as to the existence of necessity and reasonable satisfaction on such inquiry is an alternative to the existence of the necessity but not in addition thereto. That this is the correct view, is clear from the summary of has legal position as mentioned in Mulla's Hindu Law, Edn. 10, p. 285, para. 244, wherein, it is stated:

    “Where the manager of a joint Hindu family ??? as mortgages joint family property, the purchaser or mortgagee is bound to inquire into the necessity for the sale or mortgage, and the burden, lies on the purchases' mortgagee to prove either that there was a legal necessity in fact, of that he made proper and bona fide inquiry as to the existence of such necessity and did all that was reasonable to satisfy himself as to the existence of such necessity.”

    7. It is therefore not correct to assume broadly the both legal necessity in fact, and inquiry, beam to be made out in all cases. What, however, has to be emphasised and appreciated is that the necessity required to be proved is the necessity for the particular transaction as such which is challenged, which is not quite the same as necessity for each individual item of the consideration or for the entirety of the consideration. For instance, in the case of an alienation by way of a mortgage, the necessity for the satire consideration may have been proved but the term may be found to be exorbitant and note justified by the circumstances. The mortgage would then be invalid. In the case of an alienation by way of sale, on the other hand, a parte of the consideration may have been shown not to be for legal necessity but it may be for and that a substantial portion of the consideration was required or applied for legal necessity artel that to raise that amount the particular transaction by way of sale was reasonably prudent and necessary. As pointed out in the Privy Council cases, it may not be possible to sell the exact extent of land that may be required to raise the particular amount of money which is covered by legal necessity. The sale would under those circumstances be valid notwithstanding that no necessity or inquiry for the balance is proved. These principles are clearly laid down in the leading cases of Sri Kishun Das v. Nathu Ram A.I.R(14) 1927 P.C 37 : (49 All. 149) and in Niamat Rai v. Din Dayal, A.I.R(14) 1927 P.C 121 : (8 Lah. 897) and also Suraj Bhan Singh v. Sahehain Sukh, A.I.R(14) 1927 P.C 244 : (105 I.C 257). There it is clearly laid down that the test in each case is whether the sale itself was one which was justified by legal necessity and their Lordships pointed out that it is not the law that the sale will be invalidated whenever part of the consideration is not accounted for which cannot be described as small. It is noteworthy that their Lordships referred in Sri Kishun Dai v. Nathu Ram, A.I.R(14) 1927 P.C 14 : (49 All. 149) with approval to the earlier case of Privy Council in Thirumalaiyappa v. Nainar Tevan, A.I.R(9) 1922 P.C 307 : (74 I.C 604). A perusal of this case shows that the sale therein was for Rs. 6,300 and the necessity was made out for Rs. 4588. It was proved that the balance of about Rs. 712 was appropriated by the widow to a purpose which did not constitute legal necessity. All the same the sale was upheld by the Privy Council and there was nothing to show that there was any inquiry as to the necessity for the balance. Their Lordships say in the case at p. 809 as follows:

    “He (the Sub-Judge) overlooked the fact that Rupees 711-13-10 merely represented the balance of the sale price of Rs. 5300 and that it was not to raise that Rs. 71113-1110 that the property was sold. The sale would not have been invalid no matter what may have been the purpose for which the defendants applied Rs. 711-13.10.”

    8. In Sri Kishun Das v. Nathu Ram, A.I.R(14) 1927 P.C 37 : (49 All. 149), their Lordships laid down the principle as follows:

    “It would rather appear that in any case where the sale has been held to be justified but there is no evidence as to the application of a portion of the consideration, a presumption arises that it has been expended for proper purposes, and for the benefit of the family.”

    9. It is possible that different considerations may apply to cases of mortgages as distinguished from sales, but that is not the question with which we are concerned in the present case.

    10. The present being a case of an alienation by way of sale, what therefore requires to be proved is not that every portion of the consideration is required for legal necessity or that inquiry as to necessity has been made out in respect of that portion not covered by legal necessity. What has to be judged broadly is whether for raising the amount for which legal necessity has been made out, the particular transaction by way of sale of the extent comprised therein was in fact reasonably necessary and prudent or whether the alienees were lea sonably and honestly satisfied that it was so on bona fide inquiry. It is this test that has to be applied to this case and not the test as to whether there was any inquiry as to the necessity for the surplus.

    11. The Courts below not having judged the case from that aspect, the case will have to go back for a fresh consideration of the material on the record in the light of this test. It is necessary further to remark that while undoubtedly, the burden is upon the alienee, it does not men that if the alienee does not speak positively to the existence of the necessity or to his having made an inquiry, it must necessarily follow that he has to fail. As pointed out by their Lordships of the Privy Council in Lakshmanna v. Venhateswarlu, A.I.R(36) 1949 P.C 278 at p. 285 : (76 I.A 202), the burden of proof is not to be confused with the burden of adducing evidence. When the entire evidence is before the Court, and when on the evidence and the circumstances, the Court has no difficulty in arriving at a definite conclusion, the burden of proof recedes to the background and the person on whom the burden to prove lies is not to fail when a satisfactory conclusion can be reached in his favour on the existing material, merely because he has not himself adduced positive evidence. For instance in cases of think kind either the fact that the transaction was legally justified, or that there has been a fair and bona fide inquiry as to the existence of necessity for the transaction is one that may be possible to infer from the evidence and the circumstance in the case. Since, however, the matter is to go back, we do not propose to say anything further as to what are the circumstances for and against which might enable the Court to come to a definite conclusion in the matter on the existing material. The decree of the lower appellate Court must accordingly be set aside and the appeal must be remanded to that Court for rehearing in the light of the above observations. Cost will abide the result.

    Ray, C.J:— I agree.

    D.H

    12. Case remanded.

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    Manglu Meher v. Sukru Meher
    (Dec 17, 1949)