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Pandharinath Govind Vani v. Ramchandra Bandu Vani

Bombay High Court
Jul 30, 1930
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Structured Summary of the Opinion (Cross-Appeals concerning sale by widow / rights of minor heirs)

Factual and Procedural Background

The suit was instituted by minor plaintiffs (two brothers) seeking a declaration that a sale deed dated 11 August 1921, executed by their mother Sitabai (a widow and their guardian), in favour of Govind (father of defendant 1), was null and void as against them. The plaintiffs sought delivery of actual possession of the suit house and recovery of mesne profits of Rs. 5 per month as future mesne profits.

Relevant transactions preceding the sale: Sitabai, as guardian, had borrowed sums from Lotu. In November 1920 she executed a mortgage deed for Rs. 200 in favour of Lotu and on 2 December 1920 she executed a promissory note for Rs. 100 (the mortgage having been registered on that date). The mortgage and promissory note together amounted to Rs. 300.

Within about nine months of the mortgage, Sitabai sold the house to Govind for Rs. 500. The judgment records payments made out of the sale consideration to Lotu and to Sitabai, though the opinion includes two differing numerical statements in the narrative: one paragraph records that out of Rs. 500 Govind paid Rs. 830 to Lotu and the balance to Sitabai, while other portions of the judgment describe the distribution as Rs. 330 to Lotu and Rs. 170 to Sitabai. (These differing figures appear in the opinion as printed.)

Trial Court: Held the sale deed null and void as against the minors and ordered recovery of possession on payment of Rs. 100 to the defendants.

First Appeal (District Judge, Baster Khandesh): Upheld cancellation of the sale but increased the amount payable to the defendants from Rs. 100 to Rs. 300.

Subsequent appellate proceedings: Defendants appealed the District Judge's decree (S.A. No. 301 of 1928). The plaintiffs (minor appellants as to the amount direction and mesne profits) filed S.A. No. 425 of 1928. A further appeal (No. 325 of 1928) is mentioned in the court's final directions regarding costs.

Legal Issues Presented

  1. Whether the sale deed dated 11 August 1921 executed by the mother (Sitabai) to Govind is voidable as against the minor plaintiffs on the ground that there was no legal necessity for the alienation.
  2. If the sale is set aside, what monetary repayment, if any, must the minor plaintiffs make to the purchaser (defendants) — specifically whether Rs. 300 (the amount of the prior debt) or some other sum is refundable to the purchaser.
  3. Whether the jurisprudence of the Privy Council (as applied in the cited authorities) precludes the Court from making arithmetical apportionment of sale consideration when part of the consideration is shown to have been required for family necessity.
  4. What are the appropriate determinations as to mesne profits and interest arising from the annulment of the sale and subsequent possession?

Arguments of the Parties

Appellants' Arguments

  • The appellants relied on a line of Privy Council authorities (including Srikrishan Das v. Nathu Ram and others) to argue that where a purchaser gives adequate consideration, acts in good faith, and the bulk of proceeds was to discharge family debts, the question is not susceptible to mere arithmetical calculation; instead the court should consider whether the sale was justified by legal necessity.
  • The appellants contended that in the present case Rs. 300 of the Rs. 500 sale consideration was proved to be required for legal necessity and that the purchaser should therefore be entitled to recover that portion rather than suffer an outright annulment without an apportionment in his favour.

Respondents' Arguments

  • The respondents (and the lower Courts' findings adopted by them) argued that, although the mortgage and promissory note (together Rs. 300) constituted a binding debt, the subsequent sale was a separate transaction and was not shown to be necessitated by any legal necessity.
  • They emphasized factual findings that Lotu was in possession, the mortgage still had four-plus years remaining (a five-year term) and only about nine months had elapsed; there was no evidence of pressing demand for repayment of the Rs. 100 promissory note; and there was no evidence that Sitabai was in need of money such as to justify disposal of ancestral property.
  • It was further argued that the sale deprived the minor heirs of the property in perpetuity and that the circumstances (including correspondence between Sitabai and Govind) suggested Sitabai was trying to divest herself of the property and secure as much price as possible, rather than acting under legal necessity.
  • On mesne profits and interest, respondents argued possession was taken following decree and that the defendants were entitled to interest on the amount directed to be paid by the lower appellate Court; the record, however, lacked clear evidence of the dates of payment and surrender of possession.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Srikrishan Das v. Nathu Ram Where purchaser gave adequate consideration, acted in good faith and the bulk of proceeds was to discharge family debts, the question is whether the sale was justified by legal necessity rather than an arithmetical apportionment; setting aside a sale on condition of refund contrary to this authority. The Court noted the principle but held the case before it did not strictly fall under this precedent because the subsequent sale (second transaction) was found to lack legal necessity; thus the precedent was not applied as a bar to setting aside the sale here.
Suraj Bhan Singh v. Sah Chain Sukh Affirms the same principle from Privy Council decisions; example given where large portion (Rs. 17,000 of Rs. 19,000) of sale was proved to be for legal necessity. The Court observed that in cited Privy Council cases a major portion of the consideration was proved necessary; by contrast, in the present case no necessity for the sale was found, so the precedent did not control the outcome.
Gauri Shankar v. Jiwan Singh Reiterates that the key question is whether the sale itself was justified by necessity. Court accepted the legal proposition but distinguished the present facts: the lower Court found no necessity for the sale, so the decision did not mandate a different result here.
Ram Sundar Lal v. Laohmi Narain (Ram Sunder v. Lachmi Narain) Same point: material question is whether the sale was justified by legal necessity. The Court relied on the principle but emphasized factual distinction: the present matter involves two distinct transactions and the later sale had no proved necessity.
Chimnaji Govind v. Dinkar Dhondev Shows the position of a widow differs from that of a joint-family manager; a widow in possession can act subject to fairness toward expectant heirs. The Court acknowledged the principle but distinguished it because here the widow was not the owner but guardian of the minor owners; thus the precedent did not strictly govern the case.
Venkaii Shridhar v. Vishnu Babaji Beri Followed the principle regarding transactions by widows in possession and necessity considerations. Court noted the authority but held the facts here (guardian widow not owner, separate subsequent sale lacking necessity) made the precedent inapplicable in a controlling way.
Naman Mal v. Har Bhagwan Followed the same principles regarding alienations by widows and necessity. Court observed similarity in principle but distinguished on the facts; no necessity for the sale proved here.
Ragho v. Zaga To support an alienation of joint family property by its manager, it must be shown that the benefit to the estate is protective; benefit does not include alienation for reinvestment; "necessity" implies some external pressure. The Court used the reasoning to support the factual finding that there was no external pressure on Sitabai to sell, reinforcing the conclusion that the sale was not justified by necessity.
Someshvar v. Someshvar Where a minor is benefited to a certain extent by a prior debt payment, that portion is recoverable by the alienee; i.e., the minor must repay to the extent of his benefit. The Court applied this principle to hold that Rs. 300 must be regarded as the amount representing the payment to which the minor was benefited and which the alienee (defendant) is therefore entitled to recover.

Court's Reasoning and Analysis

The Court proceeded by reviewing the factual findings of the two lower Courts and the legal principles invoked. Key elements of the reasoning are:

  1. The Court accepted the factual finding that Sitabai had incurred a debt of Rs. 300 to Lotu (Rs. 200 mortgage + Rs. 100 promissory note) and that this first transaction constituted a binding obligation.
  2. However, the Court emphasized that the subsequent sale to Govind was a separate transaction and that both lower Courts had found there was no legal necessity for that sale. The District Judge's reasons included: (a) the mortgage had five years to run and only about nine months had elapsed, (b) Lotu, being in possession, was not shown to have pressed for repayment or to have been entitled to immediate redress, and (c) Sitabai was not shown to be in financial distress necessitating sale of ancestral property.
  3. The Court analyzed the line of Privy Council authorities cited for the proposition that where a purchaser acts in good faith and the bulk of proceeds was for family necessity, the court should not engage in mere arithmetic apportionment. It concluded that those authorities generally dealt with single transactions where necessity for a substantial part of the consideration had been proved. By contrast, the present facts involved two transactions (mortgage/promise and a later sale), and necessity was proved only for the first, not for the later sale.
  4. The Court also drew an important factual-legal distinction: many precedents involved a widow in possession as heir with a limited estate, whereas here Sitabai acted as guardian for minor owners (her sons) and was not the owner; that difference affected the application of the precedents.
  5. Given the absence of necessity for the sale, the Court accepted the lower appellate Court's conclusion that the sale should be set aside. However, applying the principle in Someshvar v. Someshvar, the Court held that the purchaser (alienee) was entitled to recover the amount to the extent the minors were benefited — here Rs. 300 — and that the plaintiffs must therefore pay that amount to the defendants.
  6. On mesne profits and interest the Court recognized that neither lower Court had fully addressed the mesne profits claim. The Court directed that plaintiffs are entitled to mesne profits from the date when they took possession (to be ascertained in execution). The Court also directed that defendants are entitled to interest at 6% per annum on the Rs. 300 from the date of the suit until payment; interest and mesne profits are to be determined in execution and set off against each other.
  7. Finally, the Court resolved the appeals on costs consistent with concessions and contestation levels: the defendants' appeal (No. 301 of 1928) was dismissed with costs; in S.A. No. 425 the decree was varied as above; in appeal No. 325 of 1928 parties were to bear their own costs; and the Court made no order as to costs in one instance where both parties had made concessions.

Holding and Implications

Holding:

The sale dated 11 August 1921 executed by Sitabai to Govind was set aside as being without legal necessity as against the minor plaintiffs, but the plaintiffs were directed to pay Rs. 300 to the defendants (the amount representing the prior debt and the extent to which the minors were benefited).

Additional final directions and practical consequences:

  • Appeal No. 301 of 1928 (defendants' appeal) — dismissed with costs.
  • Appeal No. 425 of 1928 (plaintiffs' appeal as to amount and mesne profits) — the lower appellate decree was varied: plaintiffs are entitled to mesne profits from the date they took possession (to be determined in execution); defendants are entitled to interest at 6% per annum on Rs. 300 from the date of suit until payment (to be determined in execution); mesne profits and interest to be set off against each other in execution.
  • Appeal No. 325 of 1928 — parties to bear their own costs.
  • The Court made no broader pronouncement of law as a new precedent overriding the cited Privy Council authorities; rather, the Court distinguished the Privy Council line on the specific factual ground that the later sale was not shown to be necessitated and because the widow acted as guardian rather than as owner.

This decision thus (1) annuls the later sale for lack of necessity; (2) applies the equitable principle that an alienee may recover to the extent the minor was benefited (Rs. 300); and (3) leaves detailed quantification of mesne profits and interest to execution proceedings. The opinion explicitly distinguishes the cited Privy Council authority on the factual basis that the present matter involves two transactions and that the second lacked legal necessity.

Disposition: Appeal dismissed (with the specific variations and cost directions noted above).

Show all summary ...

1. In these appeals, which are cross-appeals, the facts are as follows: The plaintiffs, who are minors, sued the defendants for a declaration that the sale deed dated 11th August 1921, passed by their mother to defendant 1's father, was null and void as against them, and that the defendants be ordered to give up actual possession of the suit house and to recover Rs. 5 per month as future mesne profits. The facts are that the plaintiffs were minors under the guardianship of their mother Sitabai, who was a widow, and their mother had to maintain them by labour, and she also borrowed small amounts from one Lotu who was occupying the house in suit which belonged to the plaintiffs' father. In November 1920 she passed a mortgage deed for Rs. 200 in favour of Lotu, and also passed a promissory note for Rs. 100 on 2nd December 1920, on which date the mortgage was registered. The property was thus in mortgage with Lotu, the amount due to him being Rs. 300, Rs. 200 on a mortgage and Rs. 100 on a promissory note. Subsequently Govind, the brother of the present defendant 2 and the father of the present defendant 1, seems to have desired to get this house, and within about nine months of the mortgage Sitabai sold the house to Govind for Rs. 500, out of which he paid Rs. 830 to Lotu, and the balance was paid to Sitabai. The present suit is brought by the plaintiffs, of whom plaintiff 2 is still a minor after the death of their mother, to set aside the sale on the ground that there was no legal necessity for the mother to alienate this ancestral property. The first Court held that the sale deed was null and void as against the plaintiffs, and ordered them to recover possession of the house on paying the defendants Rs. 100. On appeal by the defendants the District Judge of Bast Khandesh upheld the cancellation of the sale, but raised the amount payable to the defendants from Rs. 100 to Rs. 300. Against this decree the defendants have made S.A No. 301 of 1928, and the plaintiffs have made S.A No. 425 of 1928 as regards the amount directed to be paid by them to the defendants, and also raised a question of mesne profits.

2. The appeals have been heard together. The facts are fully set out in the judgment of the lower appellate Court. It would be seen that the plaintiffs' mother Sitabai owed Rs. 300 to Lotu, Rs. 200 on the mortgage and Rs. 100 on the promissory note. It was all really one transaction, as is shown by the District Judge; and then subsequently in August 1921 there was a sale of the house by Sitabai to the father of defendant 1 for Rs. 500, out of which Rs. 330 were paid to Lotu and Rs. 170 to Sitabai. Lotu being in possession he was not entitled to any interest, yet he was paid Rs. 30 nominally by way of interest, but really for damages, as he was deprived of the house before the stipulated period of five years of the mortgage, of which only nine months had run. Now the view taken by the learned District Judge is this After referring to certain evidence as to communications between Sitabai and the father of defendant 1, Govind with regard to negotiations for the sale of the house, the Judge holds that there was no necessity for the sale. Sitabai was not in need of money as she had received Rs. 136-8-0 out of the consideration of the mortgage amount only nine months before, and she entered into the bargain with Govind either because she thought it profitable or Govind prevailed upon her by charging her with a breach of promise in mortgaging the house to Lotu for the same amount which he had offered. Whatever be the motive there can be no doubt that the sale was without any justification and there was no need to raise any further sum on the house. But he held the amount of Rs. 300, which the minors were bound to pay should be paid by the plaintiffs to the defendants. The learned advocate for the appellants has referred to a number of cases decided by the Privy Council, all I think in appeals from the High Court at Allahabad, in which they reprobate the practice adopted by that Court of making arithmetical calculations in cases in which necessity is proved for the major portion of the purchase money in cases of alienations by widows.

3. The first of these cases to which he has referred is Srikrishan Das v. Nathu Ram (1), in which it was held that where it was proved that the purchaser gave adequate consideration and acted in good faith and ascertained that the bulk of the proceeds was to discharge family debts the question is not a matter of arithmetical calculation, but whether the sale was one which was justified by legal necessity; and a decree setting aside a sale on condition of refund to the purchaser of the amount shown to have been required for necessity is contrary to authority. There is a ??? Judgment of the Privy Council in the ??? volume Suraj Bhan Singh v. Sah Chain Sukh (2), and the same principle has been followed by the Privy Council, in Gauri Shankar v. Jiwan Singh (3) and Ram Sundar Lal v. Laohmi Narain (4). The learned advocate has further referred to a case in Chimnaji Govind v. Dinkar Dhondev (5), showing that the position of a widow is different from that of a manager of a joint family and she can do what the body of coparceners can do, subject always to the condition that she acts fairly to the expectant heirs. The same principle has been followed in the case of Venkaii Shridhar v. Vishnu Babaji Beri (6) and in Naman Mal v. Har Bhagwan (7). And the contention is that in the present case out of the total consideration of Rs. 500 for the sale, Rs. 300 are proved to have been for legal necessity, and the Court should not therefore, in the face of these rulings of the Privy, Council pass a decree for the setting aside of the sale on the stipulation that the owners minors should repay to the purchaser that portion of the amount which is proved to be for legal necessity.

4. It has been argued by the learned advocate for the respondents that these considerations will apply if we had only to deal with the mortgage in this case. It has been held by the Courts, below that the mortgage and the promissory note, which may be considered as one transaction, constituted a debt of Rs. 300 which it is agreed was binding on the minors; but we have in the present case to consider also the question of the sale. And it has been found by both the Courts below that there was no necessity whatever for the sale itself. The reasons which led the lower Court to come to this conclusion are that in the first place the mortgage had five years to run of which only a short period had elapsed, apart from the fact that it would have been open to the minors to redeem the mortgage, subsequently. There was therefore no pressure on the widow to sell the house to redeem the mortgage nor is there any evidence in this case that Lotu who was in possession of the house, was ??? for the repayment of the Rs. 100 ??? under the promissory note; and if the widow had again mortgaged the house to somebody else in order to pay off Lotu it would have been very difficult to set aside the transaction on the ground that there was no necessity for it; but so far as the sale itself is concerned it is the deliberate finding of the lower appellate Court that there was no necessity whatever for it. It is not shown that she was in need of money. There was no pressure on the part of the creditor Lotu to repay the amount of Rs. 300, nor is it shown why Rs. 200 further were required. The result of the sale was to deprive the minors in perpetuity of property which they possibly would have been in a position to redeem if the mortgage had continued to subsist. The learned advocate has pointed out that none of the cases which have been quoted on behalf of the appellant will strictly apply to the facts of this case. In each of them, to begin with, the alienation was one by a widow in possession of her husband's property, and moreover in nearly all of them there was a definite finding that there was necessity for at any rate the greater portion of the consideration of the sale. In Srikrishan Das v. Nathu Ram it was held that the bulk of the proceeds was required to discharge family debts. In Suraj Bhan Singh v. Sah Chain Sukh the sale was proved to be for legal necessity for the amount of Rs. 17,000 odd out of Rs. 19,000; but in the present case we have a finding of the Court below that there was no legal necessity for the sale at all.

5. So also in Gauri Shankar v. Jiwan Singh , it was held that the real question that has to be considered is this: whether the sale itself was justified by necessity. In Ram Sunder v. Lachmi Narain the same point was laid down. The material question that has to be considered in such cases is whether the sale itself was justified by legal necessity, whereas in the present case no such necessity is proved. The distinction between the cases which have been quoted and the present case seems to be this: All the cases from the Privy Council which have been quoted are cases in which the transaction itself was impugned, the transaction in which the question of legal necessity arose. The present case stands on a somewhat different footing, because we are dealing here with two transactions. So far as the first transaction is concerned, there was legal necessity as has been held by the Courts below, but we are now dealing with the subsequent transaction arising out of the first transaction, and as regards the second transaction no legal necessity is shown, as has been found by the Courts below, and that is what I meant when I stated in an earlier portion of this judgment that if this case was one to sat aside the alienation to Lotu, the matter would stand on a different footing.

6. Assuming that it was necessary for the widow to borrow these amounts from Lotu and to alienate the property by way of mortgage to him, what we have to consider in the present case is whether within the short period of nine months it was necessary for her to further in cumber the property and to alienate it altogether so that it passed out of the possession of the minor heirs completely. Another distinction is that in the cases which have been quoted; the widow herself was in possession of the family property as her husband's heir, although of course taking a limited estate, whereas in the present case the widow was not the owner of the property, but was acting as the guardian of her minor sons, who were the owners. In these circumstances I am not prepared to hold that this case falls strictly within the rulings of the Privy Council. I am bound to hold that it is not necessary that a purchaser in good faith should have to prove that the whole consideration was devoted to purposes of family necessity. It is sufficient if he shows that be acted in good faith and that the consideration was needed for the purposes of the family but in the present case, as appears from the judgment of the District Judge, the transaction between. Govind and the widow is one rather of a different character. There was no necessity even to pay off Lotu at that particular time, and it is not shown that the widow required the balance of the consideration of Rs. 500 over and above the amount of Rs. 300 which was due to Lotu. And from the references in the judgment of the learned District Judge to the correspondence between the widow and Govind, it would appear that she was trying to get rid of the property and to get as much as she possibly could for it irrespective of any question of necessity, legal or otherwise. The case which has been quoted by the learned advocate for the respondents, Ragho v. Zaga (8), is not very similar on the facts. That lays down that to support an alienation of joint family property by its manager, it must be shown that the benefit to the estate should be of a protective character, and the benefit does not include an alienation of the property for the purpose of investing the proceeds so as to yield a better return, and the term “necessity” involves some notion of pressure from without. That case may be made-use of to show that in the present case there was as a matter of fact no pressure from without on Sitabai to sell the property to Govind, and even if she got a favourable bargain by selling it, which does not seem to me in the case to be proved, still that would not justify the alienation on the ground of benefit. In these circumstances it seems to me that the view which has been taken by the learned Judge of the lower appellate Court is right, and that his judgment should be affirmed.

7. As regards the appeal of the minors, the plaintiffs, as to the amount to be paid to the defendants, the learned advocate for the appellants, viz., the original plaintiffs, has to admit that he cannot press the case as regards the payment of Rs. 300, which must be regarded as the payment to the extent to which the minor is benefited, and which the alienee is therefore entitled to recover, as laid in Someshvar v. Someshvar (9). He further contends that he is entitled to mesne profits from the date of suit to the date of possession which he claimed in the first Court, but that is a point to which neither of the Courts below have devoted any attention. On the other side it is argued possession has already been taken immediately after the decree and though no objection can be taken to the claim for mesne profits from the date of the suit till the date when possession was taken, the defendants are entitled to claim interest on the amount awarded by the lower appellate Court. There is no evidence as a matter of fact on the record as to when possession was taken or when the amount was paid. Presumably the amount was paid before the defendants gave up possession. The amount of mesne profits also is not admitted. The plaintiffs claim more than the defendants admit.

8. The result will be that in appeal No. 301 of 1928, which is the appeal by the defendants, the appeal must be dismissed with costs.

9. In appeal No. 425 the decree of the lower appellate Court will be varied by stating that the plaintiffs will be entitled to mesne profits from the date of their taking possession of the property, the mesne profits to be determined in execution, and the defendants will be entitled to interest at 6 per cent per annum on the amount of Rs. 300 directed to be paid by the plaintiffs to them from the date of suit up to the date of payment whenever that might be. That also will be determined in execution, and set-off against the mesne profits in Appeal No. 425. I think I should make no order as to costs as both parties have made some concession, and the appeal has not been contested.

10. In appeal No. 325 of 1928 the parties will therefore bear their own costs.

B.V/R.K

11. Appeal dismissed.