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  • provision of section 31, paragraph 2 of the Guardian and Wards Act
  • provisions of section 31 of the Guardian and Wards Act
  • section 31 of the Guardian and Wards Act;
  • Section 29 of the Guardian and Wards Act
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Citation Codes
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citation codes
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  • provision of section 31, paragraph 2 of the Guardian and Wards Act
  • provisions of section 31 of the Guardian and Wards Act
  • section 31 of the Guardian and Wards Act;
  • Section 29 of the Guardian and Wards Act
Smart Summary

Factual and Procedural Background

This appeal arises from a judgment of the Subordinate Judge of Monghyr dated 5 June 1905. The respondents sued to enforce a mortgage bond dated 25 September 1905 executed by Wynford Barrow, the certificated guardian of the defendant-appellant (the mahant of Suja asthal), to secure a loan of Rs. 30,000. The background includes succession litigation after the death of Mahant Jagarnath Das in which Sia Ram Das and Mahabir Das were rival claimants; possession had passed to Sia Ram Das and a suit followed. A compromise decree of the Calcutta High Court (18 November 1901) divided the asthal properties and provided that Sarjug Das would be entitled to recover Rs. 31,000 from Mahabir Das and Sia Ram Das. Mr. Barrow was appointed guardian of minor Mahabir Das and, by letter dated 5 May 1905, sought permission to raise Rs. 30,000 to meet various debts (disclosing approximately Rs. 27,000 of specific liabilities). The District Judge of Bhagalpur gave written permission on 14 September 1905 to borrow Rs. 30,000 at specified terms. Pursuant to that order, the mortgage bond in suit was executed on 25 September 1905 and recited specific debts and that Rs. 1,800 was retained by the mortgagee as commission. The defendant challenged enforcement on the ground that most of the items in the mortgage were not supported by legal necessity; alternatively, the defendant asked that, if necessity were found, the Court decline to order sale and instead order realization out of rents, issues and profits by appointment of a receiver.

Legal Issues Presented

  1. Whether the sanction of the District Judge permitting a certificated guardian to raise a loan on a minor's immovable property is conclusive on the question of legal necessity (and thereby relieves a bona fide lender/mortgagee of the obligation to independently prove legal necessity), or whether it is only prima facie and leaves open the question of necessity to be proved by the minor on attaining majority.
  2. Whether the mortgage bond of 25 September 1905 was supported by legal necessity as regards the various items recited (specifically items totalling approximately Rs. 27,000 identified in the guardian's letter, plus other items shown in the mortgage bond).
  3. Whether the plaintiff (mortgagee) may recover Rs. 1,800 alleged to have been retained as commission where it is admitted that the sum was not paid to the defendant.
  4. Whether, assuming legal necessity, the appropriate relief is a decree of sale of the mortgaged (asthal) properties or an order directing realization out of the rents, issues and profits by appointment of a receiver (particularly given religious/endowment character of some asthal property).

Arguments of the Parties

Appellant's Arguments (as presented in the opinion)

  • The appellant's counsel (Sir Sultan Ahmad) contended that, except for items (1) and (2) conceded to be necessary, there was no evidence of legal necessity for the remaining items recited in the mortgage bond and therefore the plaintiff's suit should fail in respect of those items.
  • It was further argued that the District Judge's sanction affects only the onus of proof (prima facie effect) and does not preclude the minor from subsequently proving want of legal necessity; reliance was placed on the Madras High Court decision in Nallaka Venkatasami v. Rajam Viranna.
  • The appellant criticized discrepancies between the figures in Mr. Barrow's 5 May 1905 letter and the items in the mortgage bond (different amounts for several items and an additional item of Rs. 2,900-15-3 appearing only in the bond), contending those differences undermined the supposed inquiry and necessity.
  • On remedy, the appellant submitted that because the properties were asthal (endowment) properties, the court should not order a sale but should direct realization from rents, issues and profits and appoint a receiver (reliance was placed on Niladri Sahu v. Mahanlan Mahant Chaterbhuj Das).

Plaintiff's / Respondent's Arguments (as presented in the opinion)

  • The plaintiff asserted that consideration passed for the loan except in respect of Rs. 1,800 (the commission retained) and that legal necessity was established (or presumed) by the District Judge's sanction permitting the guardian to raise Rs. 30,000.
  • The plaintiff relied on precedent (including Privy Council authority) to argue that a lender is entitled to rely on the District Judge's order, and that absent fraud or underhand dealing by the mortgagee the order is conclusive on the question of legal necessity.
  • With respect to the Rs. 1,800 allegedly retained by the mortgagee, the plaintiff's position (as reflected in argument noted by the judge) included an assertion that the charge might be a gadiana (servants') charge; another point relied upon was the District Judge's sanction of commission to the mortgagee.
  • The plaintiff sought a decree for recovery of the amount lent and, in the alternative (if the Court deemed appropriate), recovery by sale of the mortgaged properties or by realization out of rents through a receiver.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Sikher Chund v. Dulputty Singh Where a sale/alienation of minors' property is made under the authority of a Court order, a purchaser/lender is not required to re-investigate the necessity which the Judge has already considered; the Court assumes the responsibility to inquire. The Court invoked this principle to support the view that a lender dealing on the faith of a District Judge's sanction is entitled to rely on the Court's inquiry and need not re-prove legal necessity.
Ganga Pershad Sahu v. Maharani Bibi (Privy Council) The lender is entitled to trust an order of the Court authorising a guardian to raise a loan; the lender is not bound to inquire into the expediency or necessity of the loan for the infant's benefit, save where fraud or underhand dealing is established. The Court treated the Privy Council's observations as decisive: the District Judge's order is conclusive on the question of legal necessity for a bona fide lender unless fraud or underhand dealing is shown.
Hunnoomanpersaud Panday v. Musst. Babooee Munraj Koonweree (Privy Council) The lender is bound to inquire into the necessity and ensure, honestly, that the manager/guardian is acting for the benefit of the estate; if the lender makes such inquiry and acts honestly, the actual existence of a sufficiently-credited necessity is not a condition precedent to validity of the lender's charge. The Court relied on this authority to hold that a lender who deals honestly on the faith of a judicial sanction is not required to ensure the actual application of the money and that the judicial sanction discharges the lender from proving necessity beyond the Court's order.
Nallaka Venkatasami v. Rajam Viranna (Madras High Court) Holds that District Judge's sanction is prima facie evidence and that a minor may later impeach the transaction by proving it was fraudulent or not for the minor's benefit (burden on the minor). The Court noted this decision but disagreed with the broader inference that sanction only affects onus; the judgment distinguished it and preferred the Privy Council line that the order is conclusive unless fraud is proved.
Maharaja Sir Rameswar Singh Bahadur v. Dhunpat Singh (Calcutta High Court / Privy Council consideration) An order granting permission need only substantially comply with section 31; a mortgage executed by a certificated guardian pursuant to permission obtained by misrepresentation (but not fraud) is nevertheless a valid mortgage and a mortgagee need not go behind the order absent fraud. The Court applied this authority to hold that irregularity in the District Judge's order (for example, omission to recite necessity exactly as required by section 31(2)) did not render the order a nullity and did not free the minor from challenging the transaction absent fraud.
Niladri Sahu v. Mahanlan Mahant Chaterbhuj Das Authority concerning mortgaging by sebait or mohant of endowment property; relied upon in argument to support that realization out of rents may be the appropriate remedy for endowment properties. The Court considered the case but held it did not establish a universal rule that sale is impermissible; it concluded that where a loan is for a necessary purpose, the Court may order sale even in respect of endowment properties.
Prosunno Kumari Debya v. Golab Chand Baboo Authority indicating that the sebait's or manager's authority to charge estate property is analogous to that of the manager of an infant heir (thus sale may be ordered if loan was necessary). The Court relied on this to justify that sale of asthal properties could be ordered if the loan was necessary and the statutory and judicial safeguards had been observed.

Court's Reasoning and Analysis

The Court began by examining the relevant statutory provisions (sections 29 and 31 of the Guardian and Wards Act) which place responsibility for permission to alienate or charge a minor's immovable property upon the Civil Court and require that permission be granted only in cases of necessity or evident advantage. Section 31(2) requires the order to recite necessity or advantage and describe the property.

The pivotal legal question was whether a creditor/mortgagee who lends on the faith of a District Judge's sanction must independently establish legal necessity, or whether the District Judge's order is conclusive (subject to fraud). The Court reviewed authorities (Sikher Chund; Ganga Pershad Sahu; Hunnoomanpersaud; Maharaja Rameswar Singh) and concluded that, as a matter of law and policy, a lender dealing in good faith on the order of a District Judge is entitled to rely upon that order and is not obliged to re-prove necessity. The Court held the District Judge bears the responsibility for the inquiry and that the mere fact of irregularity in form (e.g., omission to recite necessity in the order) does not nullify the order; rather, such irregularity is an irregularity only, not a nullity, particularly where the petition contained the requisite information.

The Court considered and distinguished the Madras High Court decision in Nallaka Venkatasami v. Rajam Viranna, which treated the sanction as prima facie: the present Court rejected the proposition that the sanction only affects the onus of proof and allowed a wider, protective rule for bona fide lenders in line with Privy Council authority.

Turning to the facts, the Court compared Mr. Barrow's 5 May 1905 letter (which disclosed roughly Rs. 27,000 of debts and sought Rs. 30,000) with the items recited in the mortgage bond (showing some differing figures and an extra item of Rs. 2,900-15-3). The Court held that the numerical differences did not demonstrate that the District Judge failed to make a proper inquiry, that the Court did not have the full District Judge file, and that the discrepancies could be explained as approximations in the guardian's initial letter and later precise amounts in the bond.

The Court analysed each material item in the mortgage:

  • Items for Rs. 1,992-5-9 and Rs. 1,561 (decrees for costs and Dalip Narain Singh): the appellant's counsel conceded no case, and the Court accepted their necessity.
  • Item for Rs. 3,500 (Gobind Prasad Sahu): although the plaintiff's evidence was not strong, admissions and evidence that Gobind Prasad paid government revenue and that accounts existed (which the defendant did not produce) permitted the Court to find legal necessity for this item; the failure to produce accounts was material.
  • Item for Rs. 18,245-11-0 (Sarjug Das): there was clear evidence of liability—Calcutta High Court compromise, subsequent suit, sanction by District Judge to compromise, and receipts/account entries showing payment of Rs. 1,000 to the guardian—so necessity was firmly established.
  • Item for Rs. 2,900-15-3 (expenses in prosecuting the Suja Estate case): if the plaintiff bore the onus, it might have failed; but by concession the onus lay on the defendant and there was no proof of lack of necessity. Even if necessity for this item were not proved, the Court was prepared to presume necessity because legal necessity had been established for most other large items.

On the Rs. 1,800 alleged commission retained by the mortgagee, the Court found (from account books and receipt entries) that the sum had been appropriated by the plaintiff and was not paid to the defendant; therefore, the plaintiff could not recover that portion. The Court noted that while the District Judge had sanctioned commission to the mortgagee, the issue here was not necessity but passage of consideration: the payment had not been made to the defendant.

On the relief to be granted, the Court considered whether to order sale of the mortgaged properties or to appoint a receiver to realize the mortgage debt out of rents and profits, given the religious/endowment nature of some asthal properties. The Court rejected the submission that sale is never permissible for endowment properties where the loan was necessary. Practical considerations weighed against appointment of a receiver in this case: some properties had already passed to outsiders by sale, some were in possession of a mortgagee, and multiple creditors existed. Consequently, the Court held that a decree for sale (as made by the Subordinate Judge) was appropriate under the circumstances.

Holding and Implications

HOLDING: The appeal is dismissed except in respect of Rs. 1,800 which the plaintiff cannot recover. The Court granted a decree for the sums properly advanced under the mortgage of 25 September 1905 (as analysed in the judgment) and affirmed that a decree for sale of the mortgaged properties is appropriate in the circumstances.

Consequences for the parties:

  • The plaintiff obtains a decree in respect of the amounts found to be supported by legal necessity and by the District Judge's sanction (the Court treated Rs. 27,000 disclosed in the guardian's letter as established and, on authority, presumed necessity for the balance of the Rs. 30,000 where appropriate).
  • The plaintiff cannot recover Rs. 1,800 which the account evidence shows was retained by the plaintiff and not paid to the defendant.
  • The Subordinate Judge's decree for sale of the mortgaged properties was upheld; appointment of a receiver and realization solely out of rents was refused on the facts of this case.
  • The appeal is dismissed with costs (save as to the Rs. 1,800 point). An account is to be framed to ascertain the exact sum due to the plaintiff.

Implication for law: The Court applied and reinforced the line of authority that a bona fide lender who acts on a District Judge's sanction to a certificated guardian is entitled to rely on that order as conclusive on the question of legal necessity unless fraud or underhand dealing is established. The judgment also confirms that procedural or formal irregularities in the granting order do not necessarily render the permission a nullity where the petition substantially complied with statutory requirements.

    Mahanth Mahabir Das v. Jamuna Prasad Sahu

    Das, J.:— This appeal comes before us from the judgment of the learned Subordinate Judge of Monghyr dated the 5th June, 1905, and arises out of a suit instituted by the respondents to enforce a mortgage executed on the 25th September, 1905, by one Mr. Barrow as the certificated guardian of the defendant-appellant. The defendant is the mahant of Suja asthal. It appears that on the death of his predecessor in title Mahant Jagarnath Das there was considerable litigation on the question of succession to the asthal. One Sia Ram Das claimed the asthal to the exclusion of Mahabir Das and it appears that Sia Ram Das actually took possession of the asthal properties. Thereupon a suit was instituted on behalf of Mahabir Das through one Sarjug Das for declaration of the title of Mahabir Das to succeed to the Suja asthal as a successor of Jagarnath Das and for recovery of possession of the properties belonging to the asthal. Mahabir Das failed in the court of first instance. On appeal a compromise was entered into by the parties in the Calcutta High Court. By the terms of the compromise the asthal properties were equally divided between the contending parties and it was provided by the consent decree of the Calcutta High Court dated the 18th November, 1901, that Sarjug Das would be entitled to recover Rs. 31,000 from Mahabir Das and Sia Ram Das. Mr. Barrow was appointed by the District Judge of Bhagalpur as the guardian of Mahabir Das who was then a minor. The estate of Mahabir Das was heavily involved and on or about the 5th May, 1905, Mr. Barrow applied to the District Judge of Bhagalpur for permission to raise a loan of Rs. 30,000 on the mortgage of the interest of Mahabir Das in the disputed properties to pay off the debts that were binding upon the estate. We have not before us all the proceedings which took place before the learned District Judge; but we have the letter of Mr. Barrow dated the 5th May, 1905, which ought to be set out in full:

    No. 89/9 p., dated Monghyr, the 5th May 1905.

    From—Wynford Barrow, Esq., Manager, and Guardian of minor Mahant of Sooja, Begusarai,

    To—L.C Adami, Esq., i.c.s, District Judge, Bhagalpur.

    This estate owes the following amounts:—

    Rs. (a) High Court decree for costs Rs. 5,000, Minor's share … … … 2,500 (b) Decree obtained by Dalip Narain Singh, Banker, Minor's share … … 2,500 (c) Babu Gobind Sahai about Rs. 8,000, Minor's share … … … 4,000 (d) Compromise decree (Sarjoo Das) Minor's share … … … … 18,000

    I have therefore to provide Rs. 27,000 to clear off the share of the debt due by the minor.

    2. This debt (a) is the amount decreed as costs in High Court case (Sooja Estate v. Tagore Estate), our village of Tikarampur has been attached in execution and the sale is fixed for the 22nd instant.

    (b) Babu Dalip Narain Singh of Monghyr obtained two decrees for about Rs. 5,000 against the estate. One decree was appealed and is under consideration, the other I was not able to appeal as I had not enough money. This latter decree is under election and has to be met.

    (c) Babu Gobind Sahai, Banker of Monghyr, is the Tipdar or Agent for paying Government revenue for this estate. As such he has advanced something like Rs. 8,000 of which Rs. 4,000 is the minor's portion.

    (d) This is the compromise decree amount due to Surjoo Das.

    3. I therefore ask to be allowed to raise a loan of Rs. 30,000 (thirty thousand rupees) on the minor's share of the estate mortgaging villages to that extent.

    4. The loan is absolutely required.

    It will appear from this letter that although Mr. Barrow set out in detail the debts amounting to Rs. 27,000 which had to be immediately paid off, he distinctly alleged that it was necessary for him to raise a loan of Rs. 30,000. Then the next document to which I need refer in this connection is an order dated the 11th May by the District Judge of Bhagalpur and which is to this effect:

    “Letter received from Mr. Barrow, receiver, asking to raise loan of Rs. 30,000 on the miner's share of the estate mortgaging, villages to that amount. Reply asking for full statement as to the means by which the loan is to be raised, i.e, from whom, rate of interest, proposed and also which villages he intends to mortgage. Ask for information by 19th.”

    We have not in the record of this appeal the information supplied by Mr. Barrow; but we have an order in the orders-sheet dated the 14th September, 1905, which runs as follows:

    “Mr. W. Barrow, the manager and guardian of Suja Estate, is permitted to borrow Rs. 30,000 at 12 per cent, interest and 6 per cent, commission on mortgage of the properties belonging to the minor, from Babu Gauri Shanker, Banker of Motihari. The terms of the banker are high especially the commission, but to save the estate and as better terms cannot be got elsewhere the loan is sanctioned.”

    In pursuance of the order of the 14th September, 1905, the mortgage bond in suit was executed on the 25th September, 1905. The mortgage bond recites the following necessities:

    (1) Rs. 1,992-5-9 due on account of a decree for costs which were sought to be realised in execution case no. 712 of 1904 at the instance of Mr. Dunn, receiver of the estate of Piasanna Kumar Tagore. It was stated that the properties belonging to the minor had already been attached and were to be put up for sale on the 25th September 1905.

    (2) Rs. 1,561 due on account of a decree, dated the 23rd December 1904, in favour of Dalip Naraia Singh of Monghyr. It was stated that the properties of the minor had already been attached in pursuance of the decree and were to be put up for sale on the 31st October 1905.

    (3) Rs. 3,500 due to Gobind Prasad Sahu who it was stated was about to institute a suit for recovery of the sum.

    (4) Rs. 18,245-11-0 due to Mahant Sarjug Das in respect of the compromise decree entered into with the sanction of the District Judge.

    (5) Rs. 2,900-15-3 for meeting the expenses in connection with the prosecution of the case of the Suja Estate.

    It was also recited in the bond that Rs. 1,800 was retained by the mortgagee as commission in respect of the loan made.

    Now it will be noticed that there is some difference between the items as set out in Mr. Barrow's letter of the 5th May, 1905, and the items as set out in the mortgage bond and I shall have to deal with the argument that has been founded on this difference. It is not disputed that consideration passed in respect of the transaction which is the subject-matter, of the suit except in regard to the sum of Rs. 1,800 which was retained by the mortgagee as commission. It is contended however that except in regard to items (1) and (2) there is no evidence of any legal necessity and that accordingly the plaintiff's suit must fail except with regard to items (1) and (2). It is alternatively contended that should this Court come to the conclusion that there was necessity to support the transaction of the 25th September, 1905, this Court should not direct a sale of the mortgaged properties but should give the plaintiff a decree for recovery of the amount due to him out of the rents, issues and profits of the Suja Estate and for that purpose this Court may properly appoint a receiver to take charge of the mortgaged properties.

    I will deal with the question of legal necessity. It appears to me that having regard to the sanction of the learned District Judge permitting the certificated guardian to raise a loan of Rs. 30,000 the question is not available to the defendant. It was in the first instance contended that the sanction given I in the case merely affects the question of onus of proof and, does not debar the defendant from raising the question of legal necessity and establishing the want of it by proper evidence; and in support of this proposition Sir Sultan Ahmed relies upon the decision of the Madras High Court in Nallaka Venkatasami v. Rajam Viranna. Before dealing with that case I propose to deal with the provisions of the Guardian and Wards Act and with two decisions, one of the Calcutta High Court and the other of the Judicial Committee of the Privy Council. Section 29 of the Guardian and Wards Act provides that where a person other than a Collector, or than a guardian appointed by will or other instruments, has been appointed or declared by the Court to be guardian of the property of the ward, he shall not without the previous permission of the Court (a) mortgage or charge, or transfer by sale, gift, exchange or otherwise any part of the immovable property of his ward. It is immaterial to quote paragraph (b) of that section. Section 31 provides that permission to the guardian to do any of the acts mentioned in section 29 shall not be granted by the Court except in case of necessity or for an evident advantage to the ward. Paragraph (2) of section 31 is important and should be quoted in full. It runs as follows:

    “The order granting the permission shall recite the necessity or advantage, as the case may be, describe the property with respect to which the act permitted is to be done, and specify such conditions, if any, as the Court may see fit to attach to the permission; and it shall be recorded, dated and signed by the Judge of, the Court with his own hand, or, when from any cause he is prevented from recording the order with his own hand, shall be taken down in writing from his dictation and be dated and signed by him.”

    Now it is obvious that the Guardian and Wards Act throws the entire responsibility for granting permission to the guardian to do any of the acts mentioned in section 29 upon the Civil Court and it is undoubted that the Civil Court, which in this case must mean the Court of the District Judge, must exercise the utmost circumspection before granting permission to a guardian to do any of those acts. It follows, therefore, that a due enquiry by the Civil Court must take place before the permission can be granted by it to the guardian to do any of those acts. The question therefore arises whether having regard to the fact that the statute assumes that the Civil Court will make due enquiry into the necessities before granting the requisite permission, the creditor lending money should require further proof of legal necessity before making the advance. The question was debated at great length in Sikher Chund v. Dulputty Singh. In that case two elder brothers of a family being heavily indebted applied for and obtained from the District Judge an order under section 18 of Act XL of 1858 for the sale of several portions of the ancestral estate and sold them under registered deeds signed by the Judge to one who was the principal mortgagee in respect of the debts for which the properties were sold to him. The plaintiff alleging himself to be the adopted son of one of the brothers brought several suits against the purchasers to set aside the sales and recover back his share of the property, alleging that the two elder brothers had made the sale fraudulently and illegally to satisfy personal debts of their own. The question arose whether in answer to the suit it was necessary for the purchaser to establish, legal necessity. Sir Richard Garth pointed out that before the passing of Act XL of 1858 a purchaser buying immovable property of a minor was bound to enquire into the circumstances which rendered the sale necessary, and to satisfy himself, as an honest man, of the existence of such necessity. He then referred to the terms of section 18 of Act XL of 1858 and said as follows: “It was intended by this section not only to protect the interests of minors, but to throw upon the Civil Courts a large share of the duties and responsibilities which had previously been thrown upon guardians, and to which the latter had been found rule deplorably unequal.” The learned Chief Justice proceeded to say as follows: “If under these circumstances, the Judge, upon whom the responsibility is thus thrown by the law, makes an order for sale, it seems to me in the highest degree unreasonable to say, that a party purchasing under that order is bound to make the same enquiry which the Judge has made, and to determine for himself whether the Judge has done his duty properly, and come to a right conclusion. If this were so, a purchaser buying under an order of the Court would be under the same obligation, and would obtain no better title, than if he had bought direct from an uncertificated guardian. Unless sales made under the authority of the Court are to have to some extent at least the protection which they have in England, it seems to me, that the provisions of section 18 will only be made a sure to delude unwary purchasers; that these sales will be questioned and litigated almost as frequently as they were before the Act passed; and that minor's estate can never be expected to sell (any more than they were before the Act), for anything like an adequate price.” With all respect, I entirely agree with the view which was taken in this case and it seems to me that this view was affirmed in a very conspicuous manner by their Lordships of the Judicial Committee in Ganga Pershad Sahu v. Maharani Bibi. The particular passage to which I am referring will be found at page 383 and it rims as follows: “Their Lordships think that when an order of the Court has been made authorising the guardian of an infant to raise a loan on the security of the infant's estate, the lender of the money is entitled to trust that order, and that he is not bound to inquire as to the expediency or necessity of the loan for the benefit of the infant's estate.” Their Lordships however made it cigar that “if any fraud or underhand dealing is brought home to him that would be a different matter; but, apart from any “charge of that kind, their Lorships think he is entitled to rest upon the order.” I take the decision of the Privy Council as deciding finally that the order of the District Judge is conclusive on the question of legal necessity or which is the same thing of due and honest inquiry by the creditor except in a case of fraud or underhand dealing on the part of the mortgagee or purchaser as the case may be.

    But it is said that the Madras High Court has taken a different view [see Nallaka Venkatasami v. Rajam Viranna] That case, let it be conceded, took the view that the sanction of the District Judge to an alienation of the minor's property by the guardian under the Guardian and Wards Act is only prima facie evidence that the transaction is a good one, but will not cure any inherent defect that may exist in it; and their Lordships pointed out that the, minor may at any future time show that it was fraudulent and improper, and not for the benefit of the minor; but the burden of proof would be upon him to show that it was so. Now if their Lordships intended to lay down that all that is open to a minor afterwards is to show a fraudulent or improper conduct on the part of the mortgagee or a purchaser as the case may be, then I entirely agree with the decision; but if their Lordships intended to lay down that the sanction of a District Judge affects merely the question of onus of proof and that it is always open to the minor on attaining full age to impeach the transaction entered into by the certificated guardian with the sanction of the District Judge by establishing that there was no legal necessity in respect of those transactions, then with all respect I dissent from that decision and in support of the conclusion at which I have arrived, the simplest of reasons may be given. That reason is that it is not necessary for the creditor to establish legal necessity; it is sufficient if he satisfies the Court that he made an honest enquiry into the existence of the legal necessity. The observations of the Judicial Committee in the leading case of Hunnoomanpersaud Panday v. Musst. Babooee Munraj Koonweree will bear repetition. Their Lordships said as follows:

    “Their Lordships think that the lender is bound to inquire into the necessities for the loan, and to satisfy himself as well as he can, with reference to the parties with whom he is dealing, that the Manager is acting in the particular instance for the benefit of the estate. But they think that if he does so inquire, and acts honestly, the real existence of an alleged sufficient and reasonably-credited necessity is not a condition precedent to the validity of his charge, and they do not think that, under such circumstances, he is bound to see to the application of the money.”

    Now if this be the law, as I apprehend it must be, then it follows that it is not necessary for a creditor to make an inquiry if the District Judge has already made it. As I have pointed out, according to the scheme of the Guardian and Wards Act, the entire responsibility for making an inquiry as to the existence, to adopt the words of the Judicial Committee “of an alleged sufficient and reasonably credited necessity” lies upon the District Judge. It is the District Judge who is to conduct that inquiry and it seems to me that a party who enters into a transaction on the faith of an order of the District Judge is entitled to assume that proper inquiry has in fact been made by the District Judge and that the District Judge has been satisfied as to the existence of the necessity. If this were not so, the most obvious injustice might result to persons who act upon the faith of orders that may be passed by District Judges relating to transactions with a minor's estate and I cannot possibly persuade myself to accept the view that the existence of an order by a District Judge affects no more than the question of onus of proof. In my opinion the existence of such an order is conclusive on the question of due enquiry which is all that is necessary to be made by a creditor unless it is shown that the creditor was a party to a fraudulent misre-presentation to the District Judge.

    It was then contended that the order of the District Judge does not comply with the provision of section 31, paragraph 2 of the Guardian and Wards Act and that, therefore, there is no presumption of the correctness of the order and the question of the existence of legal necessity consequently falls to be considered in this case. Now I must point out that it is necessary for the District Judge when giving permission under section 31, paragraph 1 of the Guardian and Wards Act to comply with the provision of paragraph 2 of that section. The Act appears to lay down in specific terms that the District Judge granting permission must comply with the requirements of paragraph 2 and it is difficult to understand on what ground the clear provision of paragraph 2 are not always observed. But that is not the question before us. The question is whether the fact that the learned District Judge has not recited the necessity or advantage for the transaction in the order granting the permission makes the order so open to attack that it is still necessary for the creditor to prove the existence of the legal necessity. There are undoubtedly cases in the books which lay down that a disobedience of the provisions of paragraph 2 to section 31 has the effect of rendering the order of the District Judge null and void; but I am unable to understand on what ground the order can be treated as a nullity. No doubt it is an irregularity and it may be a serious irregularity; but the order exists and the existence of the order cannot be affected by reason of the fact that the learned District Judge forgot to read the provision of paragraph 2 of section 31. Fortunately for the plaintiff in this action a saner view has been taken in many of the cases and especially in the cases decided by the Calcutta. High Court. I will refer to one of those cases, Maharaja Sir Rameswar Singh Bahadur v. Dhunpat Singh. The view taken in that case was that a mortgage executed by a certificated guardian of a minor's property in pursuance of a permission obtained on misre-presentation of fact and not by fraud is a valid mortgage, even though the permission ought not to have been granted; and their Lordships took the view that a mortgagee is not bound to go behind the order of the Court permitting the mortgage, where no case of fraud exists. Dealing with the precise point which I am now considering, their Lordships pointed out that an order granting permission to the guardian to transfer is sufficient if it substantially though not in form, complies with the provisions, of section 31 of the Guardian and Wards Act; and that an order not reciting the necessity for which the loan was required is valid, if the petition on which the order was granted contained the requirements provided in section 31 of the said Act. But Sir Sultan Akmad contends as follows: “Look at the petition upon which the actual order was obtained and look at the mortgage bond.” So far as the petition upon which the order was obtained is concerned, debt to the extent of Rs. 27,000 is disclosed and it was contended that the items of debts as set out in the mortgage bond do not agree with the items as set out in Mr. Barrow's letter of the 5th May, 1905. Now the criticism is true enough; for instance, in the letter of Mr. Barrow it is stated that there was a debt of Rs. 2,500 due in respect of the “High Court decree for costs” whereas in the mortgage bond it appears that Rs. 1,992-5-9 was due in respect of those costs. In Mr. Barrow's letter Rs. 2,500 was said to be due on account of Dalip Narain Singh's decree whereas in the mortgage bond we find that Rs. 1,561 was due to Dalip Narayan Singh. In Mr. Barrow's letter Rs. 4,000 was said to be due to Gobind Prasad Sahu whereas in the mortgage bond we find that Rs. 3,500 was dive to Gobind Sahu and in regard to Sarjug Das' decree, Mr. Barrow's letter shows that Rs. 18,000 was due in respect thereof, whereas we find from, the mortgage decree that Rs. 18,245-11-0 was due in respect thereof; and there is one item which is not to be found in Mr. Barrow's letter at all which is an item for Rs. 2,900-15-3

    “for meeting expenses in connection with the prosecution of the case of the Suja Estate.”

    Now so far as the argument based on the difference in figures is concerned, it is not entitled to succeed at all unless we hold that the minor on attaining majority is entitled to say that the District Judge did not make a proper enquiry into the matter. As a matter of fact there is no necessity to take this extreme view of what the District Judge did in this matter. In Mr. Barrow's letter of the 5th May he was giving the figures approximately and there is no reason to take the view that in response to the order of the learned District Judge Mr. Barrow did not supply the correct figures later on. We have not all the materials before us and in the absence of those materials it is not possible for us to come to any conclusion on this point. I will assume that the enquiry conducted by the learned District Judge was perfunctory in its nature; but that does not help the case of the plaintiff at all for as I understand the law, it is not open to a minor on attaining majority to attack a mortgage transaction entered into on his Behalf by his certificated guardian with the sanction of the District Judge on the ground that he should never have granted his authority. In support of this view. I refer to the decision of the Calcutta High Court in Maharaja Sir Rameshwar Singh Bahadur v. Dhunpat Singh. What then remains? We have debts amounting to Rs. 27,000 disclosed in Mr. Barrow's letter of the 5th May 1905. We have further the assertion of Mr. Barrow in that letter that he wanted Rs. 30,000 to meet all the demands upon the estate. Assume that he disclosed debts to the extent of Rs. 27,000. The mortgage bond must then be good to the extent of Rs. 27,000. There only remains another Rs. 3,000 and upon the latest decision of the Judicial Committee we must assume that there was legal necessity in respect of the small portion not accounted for, for a mortgagee dealing with a certificated guardian cannot be in a worse position than if he had dealt with an un-certificated guardian. If there was no question of the order of the learned District Judge in this case and if the plaintiff had satisfied the Court that there was legal necessity in respect of Rs. 27,000 out of Rs. 30,000 which he had lent, he would on the latest decision of the Judicial Committee be entitled to a decree for the whole of the amount. I hold that so far as Rs. 27,000 is concerned, legal necessity is established upon the order of the learned District Judge and in regard to the balance, the plaintiff must have a decree for that amount on the theory that it bears a small proportion to the total sum raised and legal necessity must be presumed in respect of that small sum. When I say that legal necessity must be presumed in respect of the balance, I must not be understood as meaning that legal necessity must be presumed in respect of the entire amount irrespective of the question whether it had actually been advanced or not. On that question I shall have something to say later on. In my opinion on the provisions of section 31 of the Guardian and Wards Act and on the decision of the Judicial Committee in Ganga Pershad Sahu v. Maharani Bibi, the decision in Sikher Chund v. Dulputty Singh and the decision in Maharaja Sir Rameshwar Singh Bahadur v. Dhunpat Singh I must hold that legal necessity is established in respect of whatever was advanced by the defendant to the plaintiff on the transaction of the 25th September, 1905.

    I do not propose, however, to rest my decision on my view of the law on the point. I propose to deal with the question of legal necessity. Now so far as the first two items are concerned, that is to say, the item in respect of Rs. 1,992-5-9 and the item in respect of Rs. 1,561 Sir Sultan Ahmad concedes that he has no case at all. I now come to the third item, namely, the item of Rs. 3,500 alleged to be due to Gobind Prasad Sahu. The mortgage bond recites that Gobind Sahu was about to institute a suit. Now on this point the evidence on behalf of the plaintiff is not very satisfactory; but if it is taken together with the admission made on behalf of the defendant, then I am of opinion that legal necessity has been established. Now we read in the evidence of Jaipal Maharaj examined on behalf of the defendant that

    “Gobind Sahai used to pay Government revenue and cesses on behalf of Suja Estate for a long time.”

    The witness proceeds to say as follows:

    “I cannot say when and how much money was sent to him from the Asthal. Every year accounts were made between him and the mahanths.”

    It appears then that Gobind Sahai was the person who used to pay Government revenue on behalf of the asthal and that there are accounts which would disclose the exact state of affairs as between the asthal and Gobind Sahu. Dwarka Prasad examined on behalf of the plaintiff says that Mr. Barrow told him that

    “he would get something remitted by Gobind Prasad when the would pay his dues.”

    Jainarain Lal also examined on behalf of the plaintiff says in examination-in-chief that

    “Banke Bihari enquired about the dues of Govind Prashad and he added that

    “Gobind Prasad used to pay Government revenue on behalf of Mahabir Das.”

    In cross-examination he says that

    “Rs. 3,500 was due to Gobind Prasad.”

    Now this is all the evidence so far as this item is concerned. I confess that the evidence is not particularly strong; but there is no doubt on the admission of the witness examined on behalf of the plaintiff that there was an account as between Gobind Prasad and the asthal. Now it seems to me that the defendant should have produced those accounts in this case if he wanted to raise a point as to the question of legal necessity in respect of this item. Having regard to all these circumstanced and remembering Sir Sultan Ahmad's argument that a sanction granted by the District Judge affects the question of onus of proof, I am of opinion in the first place that the defendant has not established the want of legal necessity in respect of this item and secondly the fact that the defendant has not produced the account books in this case and the fact that it is admitted on his behalf that there was an account as between Gobind Prasad and the asthal together with such evidence as has been adduced on behalf of the plaintiff establish legal necessity in respect of this transaction.

    The next item relates to the sum of Rs. 18,245-11-0 alleged to have been due to Mahant Sarjug Das. Now in regard to this item we have complete evidence and there cannot be the slightest doubt that the guardian was under a pressing necessity to raise this sum of money. I have already referred to the litigation between Siaram Das and Mahabir Das. I have also mentioned that suit was instituted on behalf of Mahabir Das through Sarjug Das as his next friend. Now Sarjug Das undoubtedly incurred costs in carrying on that litigation. That litigation resulted in victory so far as Mahabir Das was concerned and the consent decree of the Calcutta High Court does award Rs. 31,000 to Sarjug Das to be paid jointly by Siaram Das and Mahabir Das. Therefore to start with we have the order of the Calcutta High Court sanctioning the compromise on behalf of Mahabir Das who was then a minor and sanctioning the payment of Rs. 31,000 to Sarjug Das as to one moiety thereof by Mahabir Das. Thereafter the money not having been paid, a suit was instituted by Sarjug Das both against Siaram Das and Mahabir. Das for recovery of Rs. 32,000 which appears to have been made up of the principal sum of Rs. 31,000 and interest that had accrued due upon it. No doubt Mr. Barrow put in a written statement on behalf of Mahabir Das in which he took various points more or less of a technical nature; but he considered that the case should be settled and he actually entered into a settlement with Sarjug Das on the 3rd April, 1905, with the sanction of the District. Judge. Now Sir Sultan Ahmad contends in this case that the consent decree passed by the Calcutta High Court was inoperative on the face of it since Sarjug Das was not a party to the suit and therefore no decree could be passed in his favour. Assuming that the position for which Sir Sultan Ahmad contends is a correct one, it cannot be doubted that a large sum of money would be due to Sarjug Das in regard to the costs which had been incurred by him in the litigation which resulted so far as Mahabir Date is concerned in, acquisition of valuable properties. Mahabir Das was undoubtedly liable to Sarjug Das and in these circumstances it would be idle to deny that the guardian was justified in seeking the permission of the District Judge to compromise the case on behalf of the minor Mahabir Das. As I have said the compromise was actually effected on the 3rd April, 1905. The compromise decree was passed on the 22nd June, 1906. One of the clauses of the compromise decree provides as follows:

    “That in consideration of the compromise the plaintiff” that is to say Sarjug Das “agrees to pay to the said minor defendant or to his lawful guardian the sum of Rs. 1,000 within fifteen days of the satisfaction in full of the amount of the decree in this suit and on his failure to pay the same the said minor defendant shall be entitled to recover the same from the plaintiff.”

    It was contended before us that even if we should find legal necessity in respect of this item, we should nevertheless hold that as Sarjug Das never paid Rs. 1,000 to the minor in terms of his undertaking to be found in clause 4, paragraph 4 of the petition of compromise, there was at any rate an absence of legal necessity in respect of this sum of Rs. 1,000. I am unable to agree with this argument for various reasons. To start with, the transaction which is evidenced by the compromise decree of the 22nd January, 1906, is not directly before us; in the second place, there is evidence of a conclusive nature that this sum of Rs. 1,000 was in fact paid by Sarjug Das to the certificated guardian of Mahabir Das. It is sufficient for me in this connection to refer to the receipt Ex. 14 and the entry in the account book, Ex. 15(c). There is not the slightest doubt that this sum of Rs. 1,000 was in fact paid by Sarjug Das to the certificated guardian of Mahabir Das, and that no argument can be founded on clause 4 of paragraph 4 of the compromise decree.

    But then the main argument remains, namely, whether we should find that there was no legal necessity in respect of the sum of Rs. 18,245-11-0. The position is this. In the first place the Calcutta High Court gave sanction to a compromise under which Rs. 31,000 became payable by Mahabir Das and Siaram Das to Sarjug Das. In the second place when Sarjug Das instituted a suit upon the basis of the compromise decree passed in the Calcutta High Court, the learned District Judge of Bhagalpur sanctioned the compromise by which the certificated guardian of Mahabir Das agreed to pay a moiety of that sum to Sarjug Das. In the third place the learned District Judge of Bhagalpur in this case sanctioned the present mortgage to pay off the debt of Sarjug Das. It would, in my opinion, be idle to contend that there is no legal necessity in respect of this item of Rs. 18,245-11-0.

    I now come to the next item, the one for Rs. 2,900-15-3, in regard to the expenses incurred in connection with the prosecution of the case of the Suja Estate. Now if the onus be upon the plaintiff to establish the legal necessity in respect of this item, I am of opinion that the plaintiff has failed to discharge the onus; but on the concession made by Sir Sultan Ahmad the onus is really upon the defendant and there is no evidence on the side of the defendant that there was no legal necessity in respect of this sum of Rs. 2,900-15-3. But assume that it has been established in this case that there was no legal necessity in respect of this transaction. Legal necessity has been established in respect certainly of four of the items—the item for Rs. 1,992-5-9, the item for Rs. 1,561, the item for Rs. 3,500, the item in respect of Rs. 18,245-11-0. In my opinion even if there is no legal necessity in regard to this point, we should assume legal necessity having regard to the fact that legal necessity has been established in regard to most of the items mentioned in the mortgage bond.

    I now come to the question, whether the plaintiff is entitled to recover back Rs. 1,800 with interest thereon although he admits that lids sum of money was not paid to the defendant. Mr. Jayaswal contends that this was really not appropriated by the plaintiff but constituted gadiana charges, that is to say, charges exacted not by the mortgagee but by the servants of the mortgagee. But so far as the account book is concerned, it shows that the money was appropriated by the plaintiff and in my opinion it is conclusively established that this sum of money was in fact not paid to the defendant. Mr. Javaswal no doubt relies upon the order of the learned District Judge who sanctioned the payment of a commission to the mortgagee; but so far as this item is concerned, the question, as I understand it, is not one of legal necessity but one of passing of consideration and as it is established that this sum of money was in fact not paid to the defendant, I am of opinion that the plaintiff cannot recover this sum of money.

    The other question which was argued before us is that having regard to the fact that the properties are asthal properties we should not direct a sale of the mortgaged properties but should put the properties in the charge of a receiver and direct the receiver to discharge the mortgage debt out of the rents, issues and profits. Sir Sultan Ahmad relies upon the decision of the Judicial Committee in Niladri Sahu v. Mahanlan Mahant Chaterbhuj Das; but as I understand that decision, it does not lay down as a point of law that in every case where properties are mortgaged by the Shebait or mohunt of an endowment the only decree which the Court can pass is a decree entitling the plaintiff to realise his claim out of the rents, issues and profits of the estate. In the leading case of Prosunno Kumari Debya v. Golab Chand Baboo it was pointed out that the “authority of the sebait of an idol's estate would appear to be in this respect” that is to say, in respect of charging the properties of the idol, “analogous to that of the manager of an infant heir.” If this be so, then it would follow that although the property devoted to religious purposes rule, inalienable, it is competent to the Court to direct the sale of such property if it is satnsfied that the loan was raised for a necessary purpose. In this case there are unsurmountable difficulties in our way in appointing a receiver to take charge of the mortgaged properties. Some of the mortgaged properties have already passed by sale to outsiders and some of them are in the possession of a mortgagee and it appears that there are various creditors of the estate. In these circumstances, I am of opinion that the decree for sale passed by the learned Subordinate Judge is the proper decree to pass under the circumstances.

    Except in regard to the sum of Rs. 1,800, the appeal fails and it must be dismissed with costs. Another account will have to be framed in this office to ascertain the exact sum of money due to the plaintiff.

    Allanson, J.:— I agree.

    Use AI to get other relevant cases.

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    Mahanth Mahabir Das v. Jamuna Prasad Sahu
    (Jun 7, 1928)