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Lal Bahadur And Others v. Ambika Prasad And Another

Privy Council
Jul 23, 1925
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Structured Summary of the Opinion delivered by Lord Blanesburgh

Factual and Procedural Background

The respondents are members of a joint Hindu family governed by the Mitakshara law. In 1895 the joint family property was managed by Ram Din and his brother Pateshwari Din, who executed two mortgages in favour of Chota Lal (a predecessor-in-interest of the appellants): a simple mortgage for Rs. 2,000 and a usufructuary mortgage for Rs. 8,000 over a 4-anna share in the village of Tendwa Takya. Ram Din had two sons, Awadh Behari (about 13 in 1895) and Jantri Prasad (about 3 in 1895). The respondents are sons of Awadh Behari and were unborn in 1895; consequently the two mortgages were always binding on them.

On 12 September 1904 Pateshwari Din and Ram Din executed a registered sale of the same 4-anna share (then in the possession of Chota Lal as usufructuary mortgagee) to purchasers named Ragho, Bindra and Asharfi Lal (apparently nominees of Chota Lal) for Rs. 14,000 free from encumbrances. Of this sum Rs. 2,105-3-9 was paid in cash to the vendors, and Rs. 11,894-12-3 was retained by or left with the purchasers to apply towards: (1) Rs. 1,633-12-3 to satisfy three decretal amounts against the vendors; (2) Rs. 2,261 to pay accrued interest on the simple mortgage of 6 August 1895; and (3) Rs. 8,000 to satisfy the usufructuary mortgage on the property sold. Thus Rs. 10,551 of the purchase money was retained by or paid to Chota Lal.

The respondents sued to impeach the sale. The Subordinate Judge of Gonda (trial Judge) dismissed the respondents' suit on 30 June 1921. On appeal the Court of the Judicial Commissioner of Oudh, by decree dated 20 February 1923, set aside the impugned deed. The defendants (appellants before the Board) appealed to their Lordships.

Legal Issues Presented

  1. Whether the 12 September 1904 sale-deed was binding on the respondents because it was executed for the benefit of the family and for payment of antecedent debts (including the two mortgages of 1895).
  2. Whether the suit was maintainable by the respondents: specifically, whether Ambika Prasad's claim was barred by lapse of time and whether Adita Prasad could maintain the suit given that he was not born at the date of the sale-deed.

Arguments of the Parties

Appellants' Arguments

  • The suit is incompetent or barred in part: Ambika Prasad's claim is barred by lapse of time; Adita Prasad cannot maintain the suit because he had not been born at the date of the sale-deed.
  • The sale was executed for the benefit and needs of the family and for payment of antecedent debts; at least insofar as the payments were applied to satisfy mortgage debts these were secured debts binding on the respondents.
  • As to the cash sum of Rs. 2,105-3-9 paid to the vendors, the appellants produced evidence that it was represented to the purchasers as required for payment of Government revenue, the purchase of bullocks and household expenses, and that it was in fact so applied.

Respondents' Arguments

  • The sale should be impeached because it was induced by no family necessity and therefore did not bind them.
  • Although the mortgages could be binding, the respondents contended (and the appellate Court accepted) that the sums of Rs. 2,261 (interest on simple mortgage) and Rs. 8,000 (principal of usufructuary mortgage) could not be justified as payments of "antecedent debts" that would justify a sale of family property for their liquidation.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Sahu Ram Chandara v. Bhup Singh (AIR 1917 PC 61 and associated reports) Principle that debts are not "antecedent debts" if they were incurred "not irrespective of the credit obtainable from immovable assets which do not personally belong to him, but were joint family property." In other words, debts incurred by relying on joint family assets may not qualify as antecedent debts justifying a sale of family property. The Court of the Judicial Commissioner had relied on this principle to hold that the 1895 mortgages were not antecedent debts and thus the sale could be impeached on that ground. Their Lordships noted this reliance by the appellate Court and discussed its applicability.
Brij Narain v. Mangla Prasad (AIR 1924 PC 50 and associated reports) The Privy Council's subsequent explanation of the Sahu Ram Chandara decision, given on 14 November 1923, which (as described in the opinion) clarified the earlier rule and showed that in circumstances like the present the mortgages could be treated as "antecedent debts." The Board observed that this explanation showed that both of the 1895 mortgages in the present case were antecedent debts which would justify their liquidation by sale of family property. The Board noted this point but ultimately relied on a different, independent ground (that the mortgages were binding on the respondents) to uphold the sale.

Court's Reasoning and Analysis

The Board addressed the substantive defence first (whether the deed was binding because it was for family benefit and to pay antecedent debts), reasoning through the factual and legal elements set out in the record.

1. Factual findings on application of purchase money: The Board accepted the Subordinate Judge's finding that the sums retained or applied from the purchase money (including the cash Rs. 2,105-3-9 and the amounts paid to satisfy decrees and mortgages) were applied as stated. Although evidence was vague due to lapse of time and the deaths of principal parties, the Board declined to disturb the trial Judge's factual conclusions. The Board also regarded as relevant that the respondents' father and uncle had long known the circumstances and taken no steps to impeach the sale; the father's inaction was partly explained by an inability to prove any wrongful diversion by his father.

2. Whether payments in respect of the 1895 mortgages could be justified: The Board identified the central legal question as whether payments of Rs. 2,261 (interest on the simple mortgage) and Rs. 8,000 (principal of the usufructuary mortgage) could be justified as payments of "antecedent debts," thereby validating the sale. The Court of the Judicial Commissioner had held they were not antecedent debts, relying on Sahu Ram Chandara v. Bhup Singh.

3. Effect of later authority: The Board noted that after the appellate judgment (20 February 1923) the Privy Council explained Sahu Ram Chandara in Brij Narain v. Mangla Prasad (14 November 1923). According to the Board, that explanation showed that, in the circumstances of the present case, the 1895 mortgages were antecedent debts which would justify sale for their liquidation.

4. Independent ground: The Board held it was unnecessary to rely solely on that doctrinal explanation: both mortgages were binding on the respondents as successors in the joint family. Therefore a sale of family property otherwise unobjectionable which removed, pro tanto, the encumbrances (i.e., discharged debts that bound the respondents) could not be successfully attacked by those who were bound by the encumbrances. On this independent basis the sale was valid against the respondents.

5. Procedural/technical question (limitation and capacity): The Board considered whether the suit was maintainable by the two respondents. If Ambika Prasad was 21 or more at the commencement of the action his suit would be barred by lapse of time; if Adita Prasad had not been born at the date of the sale-deed the deed was binding on him and his suit could not be maintained. The Board found it was not proved separately that Ambika was not over 21 nor that Adita was over 14, but there was strong evidence that the interval between the brothers was less than six years, so that at least one of them was in a position to maintain the suit. The Board nonetheless assumed, without deciding, that the suit was maintainable by both respondents and proceeded to decide the substantive issue against them.

Holding and Implications

Holding: The Board's final decision was to allow the appeal and restore the judgment of the learned Subordinate Judge. In the Board's words, the appeal is allowed and the judgment of the Subordinate Judge is restored.

Direct consequences for the parties:

  • The sale of 12 September 1904 is held valid as against the respondents; the respondents' suit impeaching the sale fails.
  • The respondents must pay the appellants' costs both in the Board and below.
  • Costs of adding Asharfi Lal as an appellant are to be paid by the appellants in accordance with the order of 25 July 1924, with a set off as regards those costs.

Broader implications: The opinion discusses the application of prior Privy Council authority (the explanation given in Brij Narain v. Mangla Prasad) to the facts, but the Board relied on the independent ground that the mortgages were binding on the respondents. The opinion does not purport to create a new precedent beyond its application to the present facts. The direct effect is as stated above.

Show all summary ...

Lord Blanesburgh.-

Two only of the questions, which in this case were dealt with by the trial Judge remain, for consi deration by their Lordships, and the facts which raise or surround them can be short ly stated.

The respondents are members of a joint Hindu family governed by the Mitakshara law. Ram Din, their grandfather, and his brother Pateshwari, were in 1895 the managers of the joint family property, and on the 6th August in that year they execut ed in favour of one Chota Lal, a predeces sor-in-interest of the present appellants, two mortgages : the first, a simple mortgage of a portion of the ancestral family pro perty to secure and advance of Rs. 2,000 and interest" the second, a usufructuary mortgage for Rs. 8,000 upon another por tion of the family property, namely, a 4-anna share in the village of Tendwa Takya.

Ram Din, one of the joint managers, had two sons : Awadh Behari and Jantri Prasad. In 1895 Awadh Behari was about 13 years old" Jantri Prasad about 3. The respondents, plaintiffs in the suit, are sons of Awadh Behari. In 1895 they were still unborn. This as will later appear, is one of the most important facts in the case. It follows from it that these two mortgage-deeds have always been binding on the respondents. The only joint family estate to an interest in which they succeeded was an estate which to the extent of these two mortgages had already been alienated.

On the 12th September 1904 Patesh wari Din and Ram Din carried out the transaction which it is sought in this suit to impeach, that is to say, a sale by registered deed of the 4-anna share in the village of Tendwa Takya, already the subject of the usufructuary mortgage in favour of Chote Lal and in his possession as such mortgagee. The purchasers under the deed are by name Ragho, Bindra and Asharfi Lal. It would appear, however, that they were one, or some or all of them, nominees of Chote Lal, whose interest in the purchase was throughout his life dominant. The sale is expressed to be a sale to the purchasers of the pro perty in suit for Rs. 14,000 free from en cumbrances. Of the purchase money Rs. 2,105-3-9 are in the deed stated to have been paid to the vendors on its exe cution" while Rs. 11,894-12-3 are stated to have been left with the purchasers for the purpose of making the payments, of which the following is a compendious statement :

(1) Rs. 1,633-12-3 in satisfaction of three decretal amounts recovered against the vendors, and as to one for Rs. 290 by Chote Lal.

(2) Rs. 2,261 in payment of interest then accrued on the simple mortgage of the 6th August 1895, held by Chote Lal on other family property.

(3) Rs. 8,000 in satisfaction of the usufructuary mortgage held by Chote Lal on the property sold.

The result, it will be seen, was that of the Rs. 14,000 purchase money, Rupees 10,551 were retained by or paid to Chote Lal, the mortgagee in possession of the property purchased.

It is now common ground that these sums were, in fact, retained or applied in the manner prescribed. As to the sum of Rs. 2,105-5-9 paid in cash to the vendors, it was given in evidence by the appellants at the trial that it was at the time repre sented by the vendors to the purchasers and, it was said, truly represented that, the money was required by the vendors for payment of Government revenue, under property rent, the purchase of bullocks and household expenses, and that it was, in fact, so applied.

Now, their Lordships are not insensible that this bare statement of the transac tion suggests possibilities which invite inquiry. If in fact it was really one under which a mortgagee and decree-holder in possession had obtained for himself in satisfaction of his decree and mortgage debts a valuable ancestral property in consideration of a relatively trifling sum in cash paid to its joint managers, the transaction would not have belied its appearance as so stated.

But there is no suspicion that the three decrees were not all of them valid and en forceable against the vendors. The res pondents cannot be heard to say that the two mortgages were not valid and subsist ing. It is nowhere suggested in the evi dence that the sale was disadvantageous in the sense that the purchase price did not represent the full value of the property sold" still less that it was an inadequate price. Their Lordships on the evidence must take if" that the price paid was a full price, indeed, the only ground on which, in evidence, the sale was challenged by the respondents was that the transaction was induced by no family necessity, and was, for that reason, not binding upon them, and they analysed the manner in which the purchase money was applied for the pur pose of making good that position.

Of the answers made by the appellants to this attack of the respondents two only, as has been said, remain for consideration by their Lordships. The first answer puts in issue the competency of the respondents to maintain the action at all. So far as Ambika Prasad is concerned the suit, the appellants contend, is barred by lapse of time" so far as Adita Prasad is concerned the suit is not maintainable at his instance for the reason, so, it is said, that he was not in existence at the date of the sale-deed - he had not then been born. The second answer of the appellants goes to the substance of the matter. The sale-deed, they say, was, in fact, executed for the benefit and needs of the family and for the payment of antecedent debts, or, at any rate, so far as these were mortgage debts, for the satisfaction of secured debts by which, as such, the respondents were bound.

Both of these contentions of the appel lants were upheld by the trial Judge, the Subordinate Judge of Gonda, who on the 30th June 1921, dismissed the respond ents' suit with costs. On appeal both were rejected by the Court of the Judicial Commissioner of Oudh, which by a decree of the 20th February 1923, set aside the impugned deed on terms which their Lordships need not at the moment pause to particularise. Against that decree the defendants appeal

Their Lordships will deal first with the answer of substance which the appellants make to the suit. If this answer be well founded the other issue, more technical in character and one upon which the Courts in India were acutely divided, becomes academic.

Was, then, this deed binding on the respondents as having been made for the benefit of the family and for payment of an tecedent debts ? Was it any the less binding upon them even if the mortgages were not antecedent debts, seeing that these mort gages were both of them unchallengeable by the respondents ? The proper answer to these questions, the price obtained for the property sold not being attacked as inadequate, depends upon the propriety of the purposes to which the whole purchase money was here applied. Upon this the points at issue before their Lordships were few. Mr. De Gruyther for the respondents agreed that the Rs. 1,633-12-3 applied in satisfaction of the decrees against the vendors constituted an item of disburse ment to which, in view of concurrent findings against him, he could now take no exception. As to the cash sum of Rs. 2,105-3-9 paid to the vendors, if the money was required and applied for the purposes indicated, it was not suggested that a sale so far as necessary therefor was open to objection. It was contended, how ever, that there was no sufficient evidence that the money had been so applied, and apparently the appellate Judges so thought. Their Lordships, however, are not disposed on this point to interfere with the finding of fact of the learned Subordinate Judge in the appellants' favour, more especially be cause the learned Judges of the appellate Court, while not prepared to accept the learned Judge's conclusions, did not base their judgment appealed from upon their own view of this part of the case.

Their Lordships agree that the evidence is somewhat vague, perhaps necessarily so after this lapse of time and after the deaths of the parties principally concerned. But the evidence is not, they think, insufficient to support the learned Judge's finding and it is also, in their judgment, while consider ing its weight, proper to bear in mind that all the circumstances in connection with the sale were throughout known to the father and uncle of the respondents, who neither of them at any time, although now supporting the respondents in these proceedings, themselves took any steps to impeach the sale on this or any other ground - a reserve all the more striking when accompanied, as it is, by the admission made by the respondents' father in evidence that his inaction was at all events partly attributable to the fact that he could at no time prove that his father, a vendor, had spent the sale consideration after receiving it "in bad company or for illegal purposes."

In the result, if the sale is to be im peached at all by the respondents it must be on the ground that the payment of Rs.2,261 and Rs. 8,000 out of the purchase money, the one sum in discharge of accrued interest on the simple mortgage of the 6th August 1895 and the other in discharge of the principal secured by the usufructuary mort gage of the same date cannot as against the respondents be justified, and the learned Judges of the Court of the Judicial Commis sioner have so held on the ground that these mortgage debts, incurred as they were by the grandfather of the respondents, were not "antecedent debts" justifying a subsequent sale of family property for their liquidation. In the language of the judg ment in Sahu Ram Chandara v. Bhup Singh AIR 1917 PC 61: 39 All 437 : 44 IA 126 : 21 CWN 698 : 1 PLW 557 : 15 ALJ 437 : 19 Bom LR 498 : 26 CLJ 1 : 33 MLJ 14 : (1917) MWN 439 : 22 MLT 22 : 6 LW 213 (PC) these debts had not been "incurred irrespective of the credit obtainable from immovable assets which [did] not personally belong to him, but [were] joint family pro perty." Nor, in the opinion of the learned Judges, was the position affected by the fact that the mortgage debts in question were both of them, as such, bind ing on the respondents. Now their judgment was pronounced on the 20th February 1923, and the learned Judges had not the advantage of having before them as their Lordships now have, the explanation of the case of Sahu Ram Chandara v. Bhup Singh given by the Board on 14th November 1923, in the case of Brij Narain v. Mangla Prasad AIR 1924 PC 50: 46 All 95 : 51 IA 129 : 21 ALJ 934 : 5 LRPC 1 : 28 CWN 253 : 46 MLJ 23 : 5 PLT 1 : 2 Pat LR 41 : (1924) MWN 68 : 19 MLW 72 : 33 MLT 457 : 26 Bom LR 500 : 11 OLJ 107 : 1 PLT 1924 (PC). The effect of that explanation, in their Lordships' judgment, is to show that in the circumstances of this case both of the mortgages of 1895 were "antecedent debts" which would justify for their liquidation a sale of family pro perty not otherwise improper. In the present case, however, it is not, in their Lordships' judgment, necessary to invoke any such doctrine in order to counter the objection to the sale now being dealt with. Both mortgages, as their Lordships observe once more, were binding upon the respon dents. A sale of family property otherwise unobjectionable, which resulted in the removal from what remained of it of the burden pro tanto of these encumbrances, cannot be successfully attacked by those so bound. It follows that, in their Lord ships' 'judgment' the sale in question is valid as against the respondents.

In these circumstances, the other ques tion, so fully dealt with in both of the lower Courts, need not now be discussed at length. The position with reference to it is that if the respondent Ambika Prasad was 21 years old or more at the commence ment of this action, the suit, so far as he is concerned, is barred by lapse of time, and if the respondent Adita Prasad was not born at the date of the sale-deed, that deed is binding upon him, and the suit im peaching it, so far as he is concerned, can not be maintained. In other words, in order to enable the respondent Ambika Pra sad to maintain this suit he must not have been over, say, 21 at its commencement, and in order to enable the respondent Adita Prasad to maintain it, he must not at the same date have been under, say, 14 . What, then, were the respective ages of the two respondents at that date. On this point their Lordships are inclined to agree with the learned Subordinate Judge that it is not proved separately that Am bika Prasad was not over 21, nor is it proved separately that Adita Prasad was over 14 . But there is strong ground for affirming that if Ambika was over 21, then Adita was over 14 , and that if Adita was under 14 then Ambika was also under

21. In other words, there was not bet ween the two brothers an interval of so many as 6 years. While, therefore, it may not be possible to say on the evi dence with judicial certainty by which of the respondents the action is maintainable, the evidence does show that one of them is in that fortunate position.

Their Lordships, however, refrain from pursuing this matter further. They will, in agreement with the judgment appealed from, assume, without deciding, that the suit was maintainable by both respondents. Even so, for the reasons already given it fails.

Their Lordships will accordingly hum bly advise His Majesty that the appeal should be allowed and the judgment of the learned Subordinate Judge restored.

The respondents must pay to the ap pellants their costs here and below" but the costs of adding Asharfi Lal as an ap pellant must, in accordance with the order of the 25th July 1924, be paid by the appellants, and there will be a set off as regards these costs.

Appeal allowed.