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Bhogaraju Venkatrama Jogiraju And Ors. v. Addepalli Seshayya And Ors.

Madras High Court
Mar 20, 1911
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Structured Summary of the Opinion

Factual and Procedural Background

The plaintiffs are the sons of the sixth defendant and claim as reversioners of lands inherited from their grandfather Ramjogi (Ramjogi died in 1873; the sixth defendant's mother Seshatmma died in 1883). They appealed against a decision of the Subordinate Judge's Court of Ellore. The suit sought a declaration that the decree in Original Suit No. 540 of 1903 (District Munsif of Ellore) was not binding on the first plaintiff (who had been the second defendant in that original suit) and that the decree and the sale under execution could not affect the plaintiffs' reversionary rights after the sixth defendant's death.

Background facts (as stated in the opinion):

  • Exhibit III: A bond dated 3 April 1894 for Rs. 1,200, by the sixth defendant, mortgaging about 98 acres as security for repayment with interest, for repayment in instalments before 10 March 1902. The stated purpose included erecting a house (Rs. 1,035) and discharging sundry small debts.
  • Exhibit II: A renewal bond dated 6 October 1902.
  • Default occurred; the first defendant sued the executants (including the sixth defendant and the then-minor first plaintiff represented by his father). An ex parte decree was initially entered, later set aside, and the case was finally compromised (Exhibit B, the razi petition) for Rs. 3,600 payable in 18 equal yearly instalments without interest on 15 February each year. The compromise included a clause permitting recovery of the whole remaining amount and sale of mortgaged property in case of default of one or two instalments.
  • No instalments were paid; the first defendant caused part of the mortgaged land (26.5 acres) to be sold and himself purchased it for Rs. 1,635. The remainder had not been sold at the date of the present suit.
  • The plaint in the present suit alleged collusion between the first defendant and Venkataramiah (the first plaintiff's next friend in the earlier suit).
  • Defendants Nos. 2 to 5 are impleaded as the undivided brothers of the first defendant.
  • The Subordinate Judge framed issues including (a) whether the decree in Original Suit No. 540 was bad for fraud or gross negligence by Venkataramiah, and (b) the binding character of the debt on the estate. The Subordinate Judge decided these issues against the plaintiffs and dismissed their suit. The plaintiffs appealed.

Legal Issues Presented

  1. Whether the decree in Original Suit No. 540 of 1903 was binding on the first plaintiff (who had been the second defendant in that suit).
  2. Whether the decree in Original Suit No. 540 and the sale in execution thereof could affect the reversionary rights of the plaintiffs after the death of the sixth defendant.
  3. Whether the debt created by the bonds (Exhibits III and II) was binding on the estate (i.e., whether the mortgage could bind the reversioners).
  4. Whether the compromise decree in the earlier suit was vitiated by fraud or gross negligence (collusion) on the part of Venkataramiah.

Arguments of the Parties

Plaintiffs' Allegations / Appellants' Contentions

  • The plaint alleged that the compromise and the decree in Original Suit No. 540 resulted from collusion between the first defendant and Venkataramiah (the first plaintiff's next friend in that suit).
  • The appellants' vakil argued the appeal on the assumption that the decree in Original Suit No. 540 was not invalid on account of any fraud or collusion as alleged by the plaintiffs (i.e., the counsel proceeded on the assumption that fraud/collusion was not established).

Defendants' / Respondent's Arguments

  • The first defendant contended there was no collusion with Venkataramiah, that the compromise was a fair settlement and beneficial to the first plaintiff, and that it was sanctioned by the Court.
  • The first defendant further contended that the debt was binding on the estate represented by the sixth defendant because the loan was taken for payment of a Rs. 200 kist due on the suit lands and for reconstructing a house which belonged to the plaintiff's maternal grandfather and in which the plaintiffs were residing.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Indar Knar v. Lalta Prasad Singh (1882) I.L.R. 4 All. 532 Cited for the principle that a person in the position of the sixth defendant is not entitled to incur debts for objects which, though perhaps beneficial, are risky in character so as to bind reversioners. The Court relied on this authority (along with two others) to support the conclusion that the sixth defendant was not justified in mortgaging the estate so as to bind her reversioners for the construction of a house and similar expenditures.
Radha Pershad Singh v. Mussamut Taloch Raj Kooer (1873) 20 W.R. 38 Same general principle as above regarding limitations on a holder of a woman's estate incurring risky debts that bind reversioners. Used with other authorities to justify the conclusion that the mortgage and the borrowing were not sufficiently necessary or justified to bind reversioners.
Raj Lukshee Dabea v. Gokool Ghunder Chowdhry (1869) 13 M.I.A. 209 Same general principle as above regarding incurring debts by a holder of a woman's estate. Applied with the other cited cases to support the proposition that the sixth defendant could not bind the reversion by such a mortgage for building.
Timmaji Amma v. Javvajee Subbaraju (1910) 20 M.L.J. 204 Authority for the proposition that a decree passed upon a compromise entered into by the holder of a woman's estate can have no higher effect against her successors than the contract entered into by her. The Court invoked this authority (with others) to hold that the compromise decree could not bind the reversioners beyond the contractual effect that the compromise itself would have.
Subbammal v. Avudaiyammal (1907) I.L.R. 30 Mad. 3 Supports the rule that decrees upon compromise entered into by a holder of an estate do not bind successors to a greater extent than the contract itself. Relied on to reinforce the conclusion that the compromise decree did not bind the plaintiffs as reversioners.
Roy Radha Kissen v. Nauratan Lall (1907) 6 C.L.J. 490; Appeal 193 of 1907 decided by this bench Used among authorities to show limits on the effect of compromise decrees against successors. Used as part of the line of authorities to hold the compromise decree non-binding on the reversioners in this case.
Ramasami Naik v. Ramasami Chetti (1907) I.L.R. 30 Mad. 255 Cited for the proposition that a bond executed on behalf of a person who only has a spes successionis (a mere chance of succession) cannot have the effect of binding that reversionary interest. The Court relied on this authority to conclude that the first plaintiff's reversionary interest (a spes successionis) could not be bound by Exhibit II executed on his behalf when he had no present interest.
Aliyamma v. Kunhatnmed (1910) 20 M.L.J. 946 Authority that a guardian has no right to bind a minor by admissions made on his behalf and that the guardian's powers are restricted to management of the minor's property. The Court cited this case to hold that the first plaintiff could not be estopped by admissions made by his guardian in the earlier proceedings and that the guardian had no power to bind the minor's reversionary interest by such admissions.

Court's Reasoning and Analysis

The Court conducted a fact-specific analysis separated between the two plaintiffs and examined the legal effect of the bonds and the compromise decree against reversioners.

Analysis regarding the second plaintiff (who was not a party to the original suit):

  • The Court found no evidence of necessity to borrow Rs. 1,200 at the time of Exhibit III. Witness evidence as to the estate's income was insufficient to show that the estate's income had been exhausted or that borrowing was necessary.
  • There was no satisfactory evidence that the sixth defendant's husband had no means of his own or that the estate's income had been spent for family maintenance.
  • The Court accepted the submission that even if the husband lacked means, the sixth defendant would not be justified in borrowing such a large sum to build a house in a way that would bind the reversioners.
  • The Court held that building the house was not shown to be necessary for proper management of the estate, nor built within the estate premises, and therefore could not be treated as a necessary act that would bind reversioners.
  • The Court observed that the plaintiffs, being minors, could not be held to have elected to keep the house for their own benefit or be taken to have ratified the debt, especially since they repudiated the debt.
  • On the compromise decree, the Court noted it secured payment of a much larger sum to enable instalment payments but contained provisions that could bring the whole amount due on default, exposing the estate to sale for a much larger sum; accordingly, the compromise decree could not be held to bind reversioners beyond what the contract (compromise) itself could legitimately do.
  • The Court concluded that neither the bonds nor the compromise decree or the sale under it were binding on the second plaintiff as reversioner.

Analysis regarding the first plaintiff (who had been a party to the original suit):

  • The Court noted the first plaintiff had only a spes successionis (a mere chance of succeeding to the estate) when Exhibit II was executed on his behalf by his father, and therefore Exhibit II could not bind his reversionary interest (citing Ramasami Naik v. Ramasami Chetti).
  • The Court held that a guardian has no right to bind a minor by admissions made on his behalf, particularly where such admissions are not connected with the proper management of the minor's property, and observed the father received no consideration for binding the minor.
  • The Court observed that there was no evidence (the plaint in Original Suit No. 540 was not before the Court) that the earlier Court intended to do anything unlawful such as directing sale of a spes successionis; nothing in the razi petition indicated that the Court was asked to record an unlawful term.
  • The Court therefore treated the razi decree as directing sale of any interest the first plaintiff then had (which, in law, was nil), and concluded that the decree and sale did not affect the first plaintiff beyond whatever effect Exhibit II itself might have had (which the Court had held was not binding on his reversionary interest).

Holding and Implications

Holding: The decree of the lower Court is reversed.

Direct orders and effect on parties:

  • The plaintiffs are to be given a declaration that the mortgage bond Exhibit II, the decree in Original Suit No. 540 of 1903 on the file of the District Munsif of Ellore, and the sale of the suit lands in execution thereof cannot affect the rights of the plaintiffs as reversioners of the sixth defendant on her death.
  • Defendants Nos. 1 to 5 must pay the plaintiffs' costs both in this Court and in the Subordinate Court.

Implications:

  • The decision's practical consequence is the protection of the plaintiffs' reversionary rights from the asserted binding effect of the bonds, the compromise decree, and the sale. The Court applied established authorities to reach this conclusion.
  • The opinion does not purport to establish a novel legal principle but applies existing case law to the facts; its immediate effect is limited to the rights and liabilities of the parties in this litigation.


Note: This summary strictly reflects only the information contained in the provided opinion and does not add or infer facts beyond that text.

Show all summary ...

1. The plaintiffs who have preferred this appeal against the decision of the Subordinate Judge's Court of Ellore, are the sons of the sixth defendant who inherited the lands in suit and other property from her father Ramjogi, after the death of her mother Seshatmma, in 1883, Ramjogi himself having died in 1873. The suit is for a declaration that the decree in Original Suit No. 540 of 1903 on the file of the District Munsif of Ellore was not binding on the first plaintiff who was the second defendant in that suit, and for a declaration that in any event, the decree and the Court sale in execution thereof of the land in suit could not affect the reversionary right of the plaintiffs after the death of the sixth defendant. Original Suit No. 540 was instituted by the first defendant against the sixth defendant, her husband Venkiah and her elder son the present first plaintiff on a bond (Exhibit II, dated 6th October 1902) which was itself a renewal of an earlier bond (Exhibit III, dated 3rd April 1894). Exhibit III was executed by the sixth defendant for Rs. 1,200 mortgaging about 98 acres of land as security for its repayment with interest at 1 1/8 per cent, per mensem, in eight instalments before 10th March 1902, The purpose of the loan was stated to be for erecting a house (Rs. 1,035) and the discharge of sundry email debts. Exhibit IE was executed by the sixth defendant and by the first plaintiff who was then a minor and was represented by his father. The rate of interest provided was seven-eighths per cant, per mensem, and repayment was to be made within a year after the date of the bond. Default having been made in payment, the first defendant sued both these executants. An ex parte decree was first passed in first defendant's favour, but it was subsequently set aside and finally the case was compromised between the parties. Exhibit B was the razi petition put in by all the parties to that suit. Although the amount claimed in the suit was only Rs. 2,098-1-7 the compromise provided for the payment of Rs. 3,600, but it was to be made in 18 years in equal instalments without interest, on the 15th February of: each year, it contained, however, a provision that

"in case of default of payment of any one or two of the instalments the plaintiffs should recover the whole amount remaining due at the time through Court irrespective of the insfealmerits that have yet to expire, by means of sale of the said mortgage properties, by means of other property belonging to the defendants and on their own personal liability, together with costs of sale."
None of the instalments was paid and the first defendant brought part of the mortgaged property to sale, 26 1/2 acres out of it realised Rs. 1,635, the first defendant himself being the purchaser. The remainder of the mortgage property had not been sold at the date of this suit.

2. The plaint alleges that the compromise and the decree in pursuance of it were the result of collusion between the first defendant and one Venkataramiah, the plaintiff's third witness, who noted as first plaintiff's next friend in that suit.

3. Defendants Nos. 2 to 5 are impleaded as the undivided brothers of the first defendant. The first defendant contended that there was no collusion between him and Venkataramiah, that the compromise was a fair settlement of the suit and beneficial to the first plaintiff and was sanctioned by the Court. He alleged that the debt itself was binding on the estate represented by the sixth defendant as it was borrowed for the payment of Rs. 200 kist due on the suit lands and for the reconstruction of a house which belonged to the plaintiff's maternal grandfather, and in which the plaintiffs were residing.

4. The third issue framed by the lower Court refers to the question of the binding character of the debt on the estate; and the first issue refers to the question whether the decree in Original Suit No. 540 was bad on account of fraud or gross negligence on the part of Venkataramiah. The Subordinate Judge decided both these issues against the plaintiffs and dismissed their suit.

5. The appeal has been argued by the learned Vakil for the appellants on the assumption that the decree in Original Suit No- 540 was not invalid on account of any fraud or collusion as alleged by the plaintiffs. The position of the two plaintiffs in this suit is not exactly similar as the first plaintiff was a party defendant to Original Suit No. 540, while the second plaintiff was not. Both of them are still minors and have instituted this suit through their next friend. As fur as the second plaintiff is concerned, the question is whether the bonds (Exhibits III and II), are binding on the reversions of the sixth defendant I and whether, assuming them to be so, the compromise decree is binding on them. We are of opinion that both these questions must be answered in the negative. There is absolutely no evidence on record to show that there was any necessity for borrowing this sum of Rs. 1,200 at the time of Exhibit III, The defendant's fifth witness, who is a relation of sixth defendant's husband, said that at the time of Exhibit III Ramjogi's estate was yielding an income of Rs. 200 or 300 a year and that the present income would he Rs. 700 or' 800 a year. The sixth defendant had succeeded to the estate more than tan years before the execution of Exhibit III, What portion of the income that was received during that period had been spent and whether Shore were any savings on the date of Exhibit III, there id absolutely no evidence to show. There is no satisfactory evidence as to whether the sixth defendant's husband had any means of his own. It is stated, no doubt, by one of the witnesses that he had given up his share in his own family property and taken up his residence in his father-in-law's house where he continued to live until that house became dilapidated and unfit for copulation. But we cannot accept this evidence as sufficient to show that he had no means of his own, or to justify the inference that the whole of the income from Ranajogi's property had been spent by the sixth defendant for the maintenance of her family. Mr. Ramesam contends that even if her husband was without means the sixth defendant would not be entitled to borrow so large a sura as Rs,' 1,000 for the purpose of building a house so as to bind the reversioner, though she might be entitled to rant a house for the residence of the family. We are inclined to agree with his contention. Some attempt was made to show that the old house of Ramjogi was in a state of disrepair and that it was the duly at the sixth defendant to repair it and to put it in a teuantable condition. But there is no good evidence to support thin view. The defendant's own witnesses support the appellant's contention that the house had completely fallen down and that- there was only a vacant site in existence, The question whether the holder of a woman's estate would be justified in building a house so as to bind her reversioners, assuming that she could do so at all, would depend on the income of the estate and her means of repaying the debt so as not to injure the reversion Mr. Narayanamurti contends that as the house would belong to the reversion the reversioners are bound by the debt borrowed {or building it; but the limited owner has no right to force the house on her reversioners at the risk of the estate itself, or a portion thereof, being brought to sale for discharging the debt. The construction of the house cannot be said to be an act necessary for the management of the estate, There is no evidence in this case that it was required for its proper management, nor was it built within the premises of the estate.' It is urged that the plaintiffs have taken the benefit of the building and that they are still residing in the house. There is no evidence, however, that they were doing so at the time of the suit. The plaintiffs are, moreover, minors and cannot, therefore, be held to have elected to keep the house for 'their own benefit. They would not, of course, be entitled to do so, as they repudiated the debt. A person in the position of the sixth defendant is not entitled to incur debts for an object which may be intended to be beneficial but is risky in its character, See Indar Knar v. Lalta Prasad Singh (1882) I.L.R.4 All. 532, Radha Pershad Singh v. Mussamut Taloch Raj Kooer (1873) 20 W.R. 38, Raj Lukshee Dabea v. Gokool Ghunder Chowdhry (1869)13 M.I.A. 209. Of course, the sixth defendant was at liberty to make use of the income during her life for building a house or for any other purpose she pleased and she might be entitled to charge her future income for any such purpose; but we cannot hold that she was justified in mortgaging the estate so as to bind her reversioners. We must also hold that even if the bond itself could bind the reversioners the compromise decree could not be held to do ho. It secured the payment of a much larger sum than was due on the mortgage in order to give the defendants in Original Suit No. MO the benefit of paying the amount by instalments; but this advantage was secured at the very serious risk of, making the whole of the large amount payable at once in case of default in the due payment of the instalments with the result that the whole of the mortgage property became saleable for the very large sum which the first defendant obtained under the compromise decree. A decree passed against the holder of a woman's estate on compromise between her and her creditor would be binding on the reversioners only in cases where the contract of compromise itself entered into by her would bind them An adjudication against her by a Court, after a fair contest, with respect to a matter relating to the estate represented by her would no doubt be binding on the estate and all who' succeed her as its owners: but a decree passed upon a compromise into which she enters can have no higher effect against her successors than a contract entered into by her; Timmaji Amma v. Javvajee Subbaraju (1910) 20 M.L.J. 204, Subbammal v. Avudaiyammal (1907) I.L.R. 30 Mad. 3, Roy Radha Kissen v. Nauratan Lall (1907) 6 C.L.J. 490; Appeal 193 of 1907 decided by this bench. We are therefore of opinion that neither the decree in Original Suit No. 540 of 1903 nor the sale in execution of it, is binding on the second plaintiff.

6. We have now to consider the case of the first plain till' who was a party both to Exhibit II, the mortgage bond of 1902, and to the decree in Original Suit No. 540. It is contended by the learned vakil for the respondent that first plaintiff is bound by the decree and the sale. We have come to the conclusion that he is not Exhibit II was executed on his behalf, by his father. He had then no interest in the property but merely ft spes successianis or chance of succeeding to the estate if ho survived his mother the sixth defendant. That it cannot have the effect of binding his reversionary interest must now be regarded as well established. See Ramasami Naik v. Ramasami Chetti (1907) I.L.R 30 Mad. 255, and was really not denied for the respondent. It cannot have the effect of estopping him from contending that the debt is not binding on the estate, for a guardian has no right to make such an admission on behalf of his ward: see Aliyamma v. Kunhatnmed (1910) 20 M.L.J. 946. The power of a guardian must be taken to be restricted to the management of the minor's property and it would be dangerous to hold that he has a right to bind the minor by admissions made by him, which have no connection with the present management of the property in his charge. Ho, moreover, received no consideration in this case on behalf of the minor for doing so. It may be that he was actuated by a desire to enable the sixth defendant his own wife to get further time for discharging the debt which she had already contracted under Exhibit III. It remains to consider the effect of the compromise decree as against the first plaintiff. The plaint in Original Suit No. 540 has not been filed as evidence in this case. We are not in a position to know whether the first defendant sought in that case to bring the first plaintiff's reversionary interest to sale for the realisation of his debt. The compromise agreement (Exhibit B) throws no light on the question, We cannot assume that the Court in sanctioning the compromise and passing a decree in pursuance of it intended to do what was unlawful, by directing the sale of a spes succiessionis. As observed in Ramasami Naik v. Rama-sami Chetti (1907) I.L.R, 30 Mad. 255, it is a sound rule that decrees should be considered so far as possible, as being in accordance with law." For aught we know, the first defendant may have been under the impression that the first plaintiff had some sort of present interest in the property in the possession of his mother, and this may have been the reason also why be took Exhibit II from the first plaintiff as well as from his mother. It would be incorrect in our opinion to assume that it was brought to the notice of the Court in the previous case that a part of the terms of the compromise was unlawful and such as could not be recorded by it, especially when nothing of the sort appears in Exhibit B, the razi petition. We must, therefore, hold that the razi decree directed the gale of any such interest in the suit lands as first plaintiff then had and that interest was ' nil' in the eye of the law. The decree and the sale, therefore, do not carry the case of defendants Nob. 1 to 5 as against the first plaintiff any further than Exhibit II itself does.

7. The result is the decree of the lower Court must be reversed and the plaintiff's must be given a declaration that the mortgage bond Exhibit II, the decree in Original Suit No. 540 of 1903 on the file of the District Munsif of Ellore and the sale of the suit lands in execution thereof cannot affect the rights of the plaintiffs as reversioners of the sixth defendant on her death. Defendants Nos. 1 to 5 must pay the plaintiff's costs both in this Court and in the Subordinate Court.