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Nathuni Mishra And Others v. Mahesh Misra And Others
Factual and Procedural Background
The dispute arises from a suit for specific performance concerning 9 kathas of land. The plaintiff relied on a contract of sale dated 1st Chait, 1352 Fasli (9 March 1955) executed in his favour by defendant No. 1 for Rs. 500. Defendant No. 1 had purportedly executed a sale deed in favour of the second-party defendants on 17 January 1955 for Rs. 400, which was subsequently registered on 16 May 1955. Thus, on its face the sale deed to the second-party defendants preceded the contract in favour of the plaintiff.
The plaintiff alleged the sale deed in favour of the second-party defendants was actually executed after the plaintiff's contract and was ante-dated. Defendants first party denied executing the contract and denied receipt of consideration; they admitted the sale deed to the second-party defendants. The second-party defendants pleaded they were bona fide transferees for value without notice of the plaintiff's contract.
Both the trial court (learned Munsif) and the Subordinate Judge concurrently held the plaintiff's contract of sale genuine, supported by consideration and motivated by legal necessity (marriage expenses of defendant No. 1). They found the sale deed to the second-party defendants was not genuine, was executed after the plaintiff's contract (ante-dated), and that the second-party defendants were not bona fide purchasers and had notice of the plaintiff's contract. Consequently both courts granted the plaintiff a decree for specific performance.
Two appeals from the learned Munsif's judgment were preferred (one by the defendants first party and one by the defendants second party). Both appeals were dismissed by the Subordinate Judge. The present Second Appeal by the defendants challenges those concurrent findings.
Legal Issues Presented
- Whether the contract of sale executed by defendant No. 1 binds minor coparceners absent a demonstrated benefit to the minors, when the contract was said to have been made to meet the marriage expenses of defendant No. 1 (i.e., whether proof of legal necessity alone suffices to bind minors).
- Whether the sale deed in favour of the second-party defendants was genuine or was ante-dated and, relatedly, whether the second-party defendants were bona fide purchasers for value without notice.
- Whether section 11 of the Hindu Minority and Guardianship Act, 1956 (which came into force on 25 August 1956) precludes enforcement of the plaintiff's right arising from a contract of sale executed before the Act's commencement.
- Whether the findings of fact by the lower courts (that the sale deed was ante-dated, no consideration was paid by the second-party defendants, and the transaction was collusive) are open to challenge in this Second Appeal.
Arguments of the Parties
Appellants' Arguments (as presented by Mr. B. C. De)
- The contract of sale was not binding on the minor defendants first party because, under Hindu law, proof of legal necessity alone is insufficient — the plaintiff must also prove that the transaction benefited the minors (relying on Subrahmanyam v. Subba Rao, 75 Ind App 115 : AIR 1948 PC 95).
- Section 11 of the Hindu Minority and Guardianship Act, 1956 operates to forbid disposal of a minor's property by a de facto guardian after the Act's commencement; therefore, the sale deed cannot be executed now in favour of the plaintiff because execution would occur after the Act's commencement.
- The sale in favour of the second-party appellants is protected because they paid consideration and had no knowledge of the plaintiff's prior contract (i.e., they were bona fide purchasers for value without notice).
Respondent's (Plaintiff's) Arguments
- The ground that the contract does not bind minors was not available to the appellants because the defendants first party had appealed from the Munsif's decision to the Subordinate Judge and lost, but did not further appeal to this Court; the appellants are therefore precluded from raising those contentions (relying on Bhup Narain Singh v. Gokul Chand Mahton, 61 Ind App 115 : AIR 1934 PC 68).
- The sale deed to the second-party defendants was ante-dated, had no consideration, and was a collusive transaction; accordingly the second-party defendants had notice of the prior contract and cannot claim bona fide purchaser protection.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Subrahmanyam v. Subba Rao, 75 Ind App 115 : AIR 1948 PC 95 | Noted statement that a guardian's contract must be within his competence and for the benefit of the minor; relied upon by appellants to argue legal necessity alone is insufficient. | The Court held this authority did not support the appellants' broader proposition. The Privy Council had not directly addressed whether legal necessity alone suffices; therefore the decision could not be read as requiring proof of actual benefit in addition to legal necessity. |
| Bhup Narain Singh v. Gokul Chand Mahton, 61 Ind App 115 : AIR 1934 PC 68 | Estoppel by failure to appeal: a subsequent transferee cannot raise contentions which were available to earlier defendants if those defendants failed to pursue an appellate remedy from an adverse finding. | The Court applied this principle to hold the appellants could not raise the defence available to the defendants first party because those defendants had pursued an appeal to the Subordinate Judge (and lost) but did not take further appeal to this Court; thus the appellants were debarred from raising those contentions. |
| Jatadhari v. K.L. Daruka, AIR 1950 Pat 535 | Held that a decree for specific performance against a joint family is binding on all members, including minor coparceners, if the transaction is warranted by legal necessity or confers benefit on the estate. | The Court relied on this decision to conclude that establishing legal necessity (or benefit to the estate) is sufficient to bind minor coparceners; hence actual proof of individual benefit to minors is not additionally required. |
| Bhageran Rai v. Bhagwan Singh, 1962 BLJR 549 : AIR 1962 Pat 319 | Affirms that where the karta/manager of a Hindu joint family enters into a contract for sale for a legal necessity, the purchaser can obtain specific performance even though some family members are minors; the only requirement is a justifying necessity. | The Court cited this authority as confirming the view that legal necessity alone suffices to validate such transactions vis-à-vis minor coparceners, and used it to support its rejection of the appellants' contention. |
Court's Reasoning and Analysis
The Court proceeded through the contesting points methodically:
- Estoppel/Procedural Bar: The Court first accepted the respondent's procedural argument that the appellants cannot raise the contention about minors' incapacity because the defendants first party had already contested that point in the lower courts, appealed to the Subordinate Judge and lost, and did not further appeal to this Court. Relying on the Privy Council authority (Bhup Narain Singh), the Court held the point was not available to the appellants now.
- Interpretation of Subrahmanyam: The Court examined the Privy Council decision relied upon by the appellants (Subrahmanyam v. Subba Rao) and concluded it did not support the proposition that legal necessity is inadequate. The Court reasoned that the Privy Council had not been asked to decide the precise question whether legal necessity alone suffices, and therefore that decision could not be read as establishing a rule requiring proof of actual benefit in addition to legal necessity.
- Reliance on Local Authorities: The Court relied on two direct authorities from this Court (Jatadhari v. K.L. Daruka and Bhageran Rai v. Bhagwan Singh) holding that a transaction by the karta/manager of a Hindu joint family will bind minor coparceners if it is warranted by legal necessity or is for the benefit of the estate. From these, the Court derived that proof of legal necessity alone is sufficient to bind minor coparceners.
- Application to Facts on Minors: Because both lower courts had found the contract was made for legal necessity (marriage expenses), the Court held the contract was binding on the minors and rejected the appellants' contention on this ground.
-
Applicability of Section 11, Hindu Minority and Guardianship Act, 1956: The appellants argued the post-enactment change in law barred enforcement. The Court gave three reasons rejecting this contention:
- Procedural bar: the argument was not open to appellants for reasons already discussed (estoppel/procedural default).
- Substantive inapplicability: section 11 does not deal with disposal of an undivided interest in a joint Hindu family governed by the Mitakshara school; section 12 provides no guardian for such undivided interest, and the karta/manager retains management of coparcenary property, so section 11 cannot reasonably be read to bar sales by a karta/manager for legal necessity.
- Non-retroactivity: the opening words of section 11 show it is not retrospective; the plaintiff's right under the contract arose before the Act, and the sale deed is merely an instrument to implement that pre-existing right; hence section 11 cannot take away the plaintiff's pre-existing right.
- Bona Fide Purchaser Claim: The Court set out the three elements a putative bona fide purchaser must prove: (a) that a sale occurred in his favour; (b) that consideration was paid; and (c) lack of notice of the prior contract. The Courts below had made unanimous findings that the sale deed was ante-dated, no consideration was paid, and the transaction was collusive (the second-party defendants had notice). The Court treated these as findings of fact that were unassailable in a Second Appeal.
- Collusion and Notice: The lower appellate court had found collusion between defendants first party and one of the appellants; the present Court held that where a sale is brought about in collusion and without consideration, the purchasers are imputed with knowledge of the prior contract regardless of any enmity between parties. Thus the claim of lack of notice failed.
- Conclusion on Merits: Given these findings and the legal conclusions above, the Court found no merit in the appeal and dismissed it with costs.
Holding and Implications
Holding: The Court's final decision was to dismiss the Second Appeal. The operative outcome is summarized as follows:
APPEAL DISMISSED.
Implications:
- The concurrent findings of the lower courts that (a) the plaintiff's contract of sale was genuine and supported by consideration and legal necessity, (b) the sale deed in favour of the second-party defendants was ante-dated and not genuine, and (c) the second-party defendants were not bona fide purchasers and had notice of the prior contract are affirmed.
- The decree for specific performance granted in favour of the plaintiff by the courts below stands; the appellants' challenge fails and the appeal is dismissed with costs.
- The Court relied on existing precedents of this Court (Jatadhari and Bhageran Rai) and distinguished the Privy Council decision relied upon by the appellants; it did not purport to lay down any novel legal principle beyond the application and affirmation of those authorities. In the opinion's terms, no new broader precedent was announced beyond the application of the cited authorities and the affirmation of the lower courts' factual findings.
Delivered by Ramratna Singh, J. (with concurrence).
Ramratna Singh, J.:— This Second Appeal by the defendants arises out of a suit for specific performance of contract. In this case there is a competition between a contract of sale and a completed sale deed. The plaintiff had a contract of sale dated the 1st Chait, 1352 Fasli, corresponding to the 9th March, 1955, executed in his favour by defendant No. 1. Defendant No. 1 had contracted to sell to the plaintiff 9 kathas of land for Rs. 500, and this contract of sale was entered into to raise money to meet the expenses of marriage of defendant No. 1 himself. It appears that the defendant No. 1 executed a sale deed in favour of defendants second party on the 17th of January 1955, in respect of the suit land for a consideration of Rs. 400, which was subsequently registered on the 16th of May, 1955. In point of time, therefore, the sale deed in favour of defendants second party was prima facie earlier than the contract of sale in favour of the plaintiff.
2. The case of the plaintiff was that this sale deed was in fact executed after the contract of sale in his favour and was ante-dated. Defendants first party, however, denied that they had executed any contract of sale in favour of the plaintiff, and they denied also the receipt of the consideration. They admitted the execution of the sale deed in favour of defendants second party. The latter also raised the same defence, and in addition, pleaded that they were bona fide transferees for value without notice of the contract of sale in favour of the plaintiff. Both the Courts have concurrently held that the contract of sale in favour of the plaintiff was genuine and for consideration and also for legal necessity inasmuch as the marriage expenses of defendant No. 1 was in law a legal necessity. They also held that the sale deed in favour of defendants second party was not genuine and was in fact executed after the contract of sale in favour of the plaintiff and was ante-dated. They also held that defendants second party were not bona fide purchasers and had notice of the contract of sale and have not also paid the consideration. Accordingly, both the Courts have granted the plaintiff a decree for specific performance of contract. Before I proceed to consider the points urged in this appeal, it will be necessary to mention one more fact. From the Judgment and decree of the learned Munsif two appeals had been preferred, one by the defendants first party and the other by the defendants second party. In appeal defendants first party raised the same contentions as they had urged before the learned Munsif. Both the appeals were dismissed by the learned Subordinate Judge.
3. Mr. B.C De appearing for the appellants contended that the contract of sale was not binding on the minor defendants first party inasmuch as it was not for the benefit of the minors. His contention is that the marriage expenses of defendant No. 1 may constitute legal necessity, but under the Hindu law, in order to bind the minors the existence of legal necessity was not adequate. The plaintiff had further to prove benefit to the minors. In support of his contention he referred to a decision of the Privy Council in the case of Subrahmanyam v. Subba Rao, reported in 75 Ind App 115 : (AIR 1948 PC 95). Learned Counsel on behalf of the plaintiff respondent argued that this ground was not available to the appellants inasmuch as the appeal preferred by the defendants first party from the judgment and decree of the learned Munsif was dismissed, and no further appeal has been taken by them to this Court. And in support of his contention he referred to a decision of the Privy Council in the case of Bhup Narain Singh v. Gokul Chand Mahton, reported in 61 Ind App 115 : (AIR 1934 PC 68). In my opinion, the contention of learned Counsel for the respondent is correct and must be upheld.
4. In that case the plaintiff brought a suit for specific performance of contract for sale of certain immovable property. An agreement was executed by defendant No. 1, who was respondent No. 2 before the Privy Council, as karta of the joint family which consisted of himself and his two sons. Defendant No. 4, who was respondent No. 1 before the Privy Council, claimed the property in suit by virtue of a registered sale deed dated the 22nd December, 1926, for himself and as guardian of his two minor sons. Defendant No. 1 did not appear to defend the suit. But defendants Nos. 2 and 3 put in a written statement by their guardian ad litem, denying the plaintiffs contract, and alternatively, in the event of the contract being held proved, denying that defendant No. 1 was entitled to alienate their interests, as the sale was not for family interest or for their benefit. All the defences of defendants Nos. 2 and 3 were rejected by the Subordinate Judge, and no appeal was taken against that decision to the High Court. The appeal before the High Court was only by defendant No. 4. Before the Privy Council the points ??? defendants Nos. 2 and 3 were reiterated on behalf of defendant No. 4 in order to disentitle the plaintiff to a decree for specific performance of contract. Their Lordships of the Privy Council held that since from the decision of the learned Subordinate Judge against the contentions raised by defendants Nos. 2 and 3 no appeal was preferred to the High Court, the contention raised on behalf of the subsequent transferee, defendant No. 4, was not open and could not be maintained. In fact, their Lordships debarred defendant No. 4 from raising the contentions which were available to and could have been raised on behalf of defendants Nos. 2 and 3 simply because, against the adverse decision of the learned Subordinate Judge, no appeal was taken to the High Court. Similarly, in this case it will appear that, defendants first party had no doubt preferred appeal from the decision of the learned Munsif, and that appeal was dismissed by the learned Subordinate Judge, but no further appeal has been preferred against that decree to this Court. In these circumstances, it is not open to the appellants to raise the contentions which were germane to the defence set up by defendants first party. On this ground alone the contention raised by Mr. De is not tenable.
5. Apart from this, I find no warrant for the proposition of law that in case of a contract of sale the proof of legal necessity is not enough, and that, in addition to the legal necessity, there must be a further proof of actual benefit to the minors. The decision of their Lordships of the Privy Council in the case reported in 75 Ind App 115 : (AIR 1948 PC 95), does not, in my opinion, support the contention of learned Counsel. It is true that in that case it has been mentioned that the contract must be within the competence of the guardian and further that it must be for the benefit of the minor. From this it cannot be argued that the contract, though for legal necessity, is invalid because no actual benefit accrued to the minors. The reason is obvious. This question was not pointedly raised before their Lordships of the Privy Council, and, therefore, the decision in that case cannot be regarded as authority for the proposition that in order to bind the minors in respect of a contract of sale benefit to them must also be established in addition to the existence of legal necessity. There are, however, two direct authorities of this Court on this point in the case of Jatadhari v. K.L Daruka*, reported in AIR 1950 Pat 535, a Bench of this Court held that in a suit instituted against a joint family a decree for specific performance can be passed, and it will be binding on all the other members of the joint family, including a minor coparcener, if the transaction is found to be warranted by legal necessity or for benefit to the estate. In other words, in order to bind the minors what is necessary to establish is legal necessity or the benefit to the estate. If either of the two exists, the minor coparceners will be hound by the contract of sale. The same view has been expressed recently by another Bench of this Court in the case of Bhageran Rai v. Bhagwan Singh, reported in 1962 BLJR 549 : (AIR 1962 Pat 319), in the following terms:
“It is thus settled beyond controversy that, where a manager and karta of a Hindu joint family enters into a contract for the sale of immovable property belonging to the family for a legal necessary, the purchaser is entitled in law to obtain a decree for specific performance of contract, though some of the members of the joint family are minors, in case the manager subsequently refuses to complete the transaction of sale. The only requirement for the validity of such a contract of sale is that there must be a justifying necessity. Indeed, this is true of all transfers effected by the manager and karta of a Hindu joint family.”
6. Therefore, if legal necessity for the contract of sale has been established, it is, in my opinion, enough to bind the minor coparceners also, and it is not necessary in such a case to establish, in addition to the legal necessity, actual benefit to the minors. Both the Courts below have held that the contract of sale was made for legal necessity. From this point of view this contention has no merit and must be rejected.
7. The next contention on behalf of the appellants is that, in any case, the sale deed cannot be executed now in favour of the plaintiff in view of the subsequent change in the law, and reference was made to section 11 of the Hindu Minority and Guardianship Act, 1956. This Act came into force on the 25th August, 1956. Apparently, the contract for sale, or for the matter of that, the sale deed in favour of defendants second party, were executed long before this Act came into force. Section 11 of the said Act provides that after the commencement of this Act, no person shall be entitled to dispose of, or deal with, the property of a Hindu minor merely on the ground of his or her being a de facto guardian of the minor. There are three objections to this contention: first, that this objection is not available to the appellants for the reasons stated above; secondly, that this section does not deal with the disposal of the undivided interest of a minor in a joint Hindu family governed by the Mitakshara school of law. As a matter of fact, Sec. 12 provides that no guardian shall be appointed for the minor in respect of the undivided interest in a joint Hindu family. It cannot reasonably be argued that Sec. 11 bars a sale by a karta and manager of a joint family even though the sale deed is for legal necessity or for the benefit of the estate. I fail to understand how Sec. 11 can be pleaded as a bar to the disposal of joint family property by the manager or the karta of the family for legal necessity. It seems beyond controversy that if the minor is a member of a joint family governed by the Mitakshara Taw, the father as karta or manager is entitled to the management of the whole coparcenary property, including the minor's interest. I may only refer to paragraph 519, page 680, or Mulla's Hindu law, 12th Edition.
8. The third objection is that as the opening words of section 11 show, it is not retrospective in operation. Mr. De, however, contended that the contract for sale in favour of the plaintiff was executed, but the sale deed had not yet been executed in pursuance of that contract. Therefore, the sale deed must be executed, if at all after the enforcement of the said Act. This contention, in my opinion, is wholly misconceived. The plaintiff's right to acquire the property by virtue of the contract for sale arose before the Act came into force, and the sale deed is only an instrument to implement that right. Therefore, this right of the plaintiff which accrued before the Act came into force cannot be taken away by Sec. 11 because of lack) of retrospectivity.
9. Thus taking any view of the case, Sec. III has no application to the facts of the present case.
10. Lastly, Mr. De contended that the sale in favour of the appellants was protected because they had paid consideration and had no knowledge of the contract for sale in favour of the plaintiff. This contention is concluded by the unanimous findings of fact recorded by the Courts below. Three things have to be proved in such a case: first, that there was a sale in favour of the appellants; secondly, that it was for consideration: and thirdly, that they had no notice of the prior contract for sale in favour of plaintiff. On all these three points there are findings of the Courts Below. They have held that this deed of sale was ante-dated; secondly, that no consideration was paid, and thirdly, that it was a collusive transaction and they had notice of the contract of sale. In view of these findings of fact, it is not open to the appellants to contend that they had no notice of the prior contract of sale in favour of the plaintiff. Mr. De contended that notice was inferred by the Courts below from the existence of enmity between the plaintiff and the subsequent transferees. This, in my opinion, is not correct in fact the lower appellate court has held that defendants first party were colluding with Nathuni, one of the appellants. If the sale in favour of the appellants was Brought about in collusion with defendants first party without consideration, they must be fastened with the knowledge of the prior contract, enmity or no enmity. In my opinion, these findings of fact are unassailable and cannot be challenged in Second Appeal. It follows that there is no merit in this appeal, which must be dismissed with costs.
Ramratna Singh, J.:— I agree.
LF/K.S.B
11. Appeal dismissed.
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