Palani Mudaliar v. M. Natarajan

1. The main question to be decided in this appeal is whether the English doctrine of advancement applies to Indian Christians. The rule does not apply to Hindus or Mohammadans. See Gopeekrist Gosain v. Gungapersaud Gosain (1854) 6 M.I.A. 53 Sum Lakshmiah Chetty v. Kothandarama Pillai (1925) 49 M.L.J. 109: L.R 52 I.A. 286: I.L.R. 48 Mad. 605 (P.C.)Bilas Kunwar v. Desraj Banjit Singh (1915) 29 M.L.J. 335: L.R 42 I.A. 202 I.L.R.. 37 All. 557 (P.C.)and Maulvie Sayyud Uzhur Ali v. Mst. Bebee Ultaf Fatima (1869) 13 M.I.A. 232 In Maung Tun Pe v. V. K. Haider (1936) I.L.R. 14 Bang. 242 (F.B.) a Full Bench of the Rangoon High Court held that it did not apply to Burmese Buddhists. In Kerwick v. Kerwick (1920) 39 M.L.J. 296: L.R 47 I.A. 275: I.L.R. 48 Cal. 260 (P.C.)the Privy Council held that the presumption of an advancement does apply to persons who are born in India of English parents and have resided in India all their lives, except for occasional visits to England. . Admittedly there is no decision of the Privy Council or of Indian Courts which has extended the application of the principle.

2. Before discussing further the question whether the doctrine of advancement applies to Indian Christians it will be convenient to set out the relevant facts. The appeal arises out of an application filed by the first respondent in insolvency proceedings in this Court. The insolvent, Ponnamruthammal, is the wife of the first respondent, who applied for a declaration of his title to a half share in a house and its site known as No. 53, Avadhanam Papier Street, Choolai, Madras. This property was purchased on the 29th August, 1938, in the name of the insolvent and one Harryo Daniel, who had married the daughter of the first respondent and the insolvent. The price paid was Rs. 6,500. The first respondent had been employed as a guard by the South Indian Railway Company Limited. He retired in the month of January, 1938, when he was paid the sum of Rs. 7,000 which was standing to his credit in the provident fund of the company, and later a sum of Rs. 2,175, which represented a gratuity for good service. The first respondent's case is that out of the moneys which he received from the railway company he provided altogether Rs. 2,500, and this has been held to be the case by the learned Judge sitting in Insolvency (Krishnaswami Aiyangar, J.). When . the transaction was entered into the first respondent paid Rs. 1,500 and the father of Harry Daniel Rs. 2,000. The balance, Rs. 3,000 was advanced by the vendors on the security of a mortgage of the property. entered into by the insolvent and her son-in-law. The. mortgage was discharged the same year.? Out of the Rs. 3,000 due to the vendors Rs. 1,000, was advanced by the first respondent and Rs. 2,000 was raised on a mortgage in favour of the Madras City Co-operative Bank Limited. This deed of mortgage-is, dated the 5th November, 1938, and was executed by the first respondent, his wife, their son, their two daughters, and their son-in-law.

3. The property was divided into two residences one in which the first respondent and his wife lived and the other in which their daughter and their son-in-law lived. On the 28th November, 1940, the insolvent executed a deed of settlement of her interest in the property in favour of her husband, her son and the daughter who had married Harry Daniel. The consideration was stated to be her natural love and affection for the beneficiaries. The deed contains these recitals:

Whereas the settlor and one Harry Daniel jointly purchased the houses and ground 53, Avadhanam Papier Road, and 4-A, Dharmaraja Koil Street, Choolai, Madras, more particularly described in the schedule hereto by a deed of sale, dated the 20th day of August, 1938, and Whereas the settlor is in possession and occupation of one half of the said properties and Whereas the settlor has been in indifferent health for some time and desires to settle her half share in the said properties in favour of her husband Amalorpavanadhan and her children Louis Victor and Magalamari Ammal, the beneficiaries, out of her natural love and affection and with a view to provide for them.

The insolvent was adjudicated on the 8th April, 1941, and the order of adjudication was based on this deed of settlement. On the 25th April, 1941, the first respondent filed an application in the insolvency proceedings in which he asked for a declaration that he was the owner of half of the property and that his wife was merely a benamidar for him to this extent. He also asked for an order permitting! him to remain in possession of the portion of the house occupied by him and his wife. This is the application which has given rise to the appeal. The learned Judge held that the wife was a benamidar for her husband, but his judgment makes it clear that he did not arrive at this conclusion without hesitation. The evidence, to use the learned Judge's language, is meagre, but it is certainly sufficient to establish the fact that the first respondent did provide Rs. 2,500 of the money required for the purchase of the property. In fact this has not been disputed before us. It is also accepted that if the wife is to be deemed a benamidar the husband is entitled to a half share in the property.

4. The appellants are creditors of the insolvent and they oppose the husband's application. In the first place they say that the Rs. 2,500 must be regarded as a loan by the first respondent to his wife. In the alternative they say that it must be regarded as an advancement to the wife for her own benefit; in other words that he intended to make a gift of the property to her. The first contention calls for little comment. There is no evidence from which it can be concluded that the husband intended to make a loan to his wife. In paying this money he was either intending to benefit his wife or he was using her as a benamidar.

5. I return now to the question whether the English doctrine of advancement applies. Both the husband and the wife are Indians of the full blood and profess the Roman Catholic faith. Being Indians they cannot claim to come within the English rule, unless the Court is prepared to hold that it should be applied on grounds of justice, equity and good conscience. I can see no reason for its application on any of these grounds. The doctrine is entirely unknown to the personal laws of the vast majority of the inhabitants of this country and Indian Courts have persistently refused to apply it to the Hindus and the Mohammadans. In delivering the judgment of the Privy Council in Gopeekrist Gosain v. Gungapersaud Gosai (1854) 6 M.I.A. 53 at 75 Knight Bruce, L.J., said:

It is clear that in the case of a stranger the presumption is in favour of its being a benamee transaction, that is a trust; but it is clear also that in this country, where the person in whose name the purchase is made is one for whom the party making the purchase was under an obligation to provide, the case is different; and it is said that that ought to be deemed the law ' of -India also, not because it is the law of England, but because it is founded on reason and the fitness of things, if I may use the expression, or natural justice, that on such grounds it ought to be considered the law of India. Now, their Lordships are not satisfied that this view of the rule is accurate, and that it is not one merely proprii juris.

Later in this judgment Knight Bruce, L.J., observed:

Various reasons may be urged against the abstract propriety of the English rule. It is merely one of positive law, and not required by any rule of natural justice to be incorporated in any system of laws, recognising a purchase by one man in the name of another, to be for the benefit of the real purchaser. Their Lordships, therefore, are not prepared to act against the general rule, even in the absence of peculiar circumstances; but in India there is what would make it particularly objectionable, namely, the impropriety or immorality of making an unequal division of property among children. This might be more striking where there were more sons than one; but if the objection exists, it does not become less where there is only one son, for the father may have others, and in such a case the same objectionable consequences would follow as where several sons were in, being.

It seems to me that these observations which are embodied in a judgment of the Judicial Committee are fatal to the plea that the English doctrine of advancement can be applied legitimately to Indians. Religious belief is not a factor in the application of the doctrine and therefore there is no reason for making an exception in the case of Indian Christians. Consequently I hold that the presumption which is associated with the doctrine does not arise here.

6. Section 82 of the Indian Trusts Act, 1882, provides that where property is transferred to one person for a consideration, paid or provided by another person, and it appears that the other person did not intend to pay or provide the consideration for the benefit of the transferee, the transferee must hold the property for the benefit of the person paying or providing the consideration. Therefore as the first respondent provided the money for the purchase of a half of the property, a half must be regarded as being his unless the evidence justifies the conclusion that he intended to make a gift to his wife. The appellants say that the evidence does justify this conclusion. They point to the fact that when the insolvent and her son-in-law obtained a loan from the Madras City Co-operative Bank Limited, he allowed them to represent to the bank that they were the owners of the property and to raise money on this basis. Then they point to the fact that he allowed his wife to settle the property on him and their son and married daughter, instead of obtaining from her a declaration that she was merely his benamidar.

7. Are these facts sufficient to establish an intention on the part of the first respondent to make a gift in favour of his wife? Krishnaswami Aiyangar, J., did not think they were sufficient and his decision cannot be disturbed unless it is shown to be wrong. The burden is upon the appellants and I am not prepared to say that the burden has been discharged. It was, of course, improper for the first respondent not to disclose the full facts to the Madras City Co-operative Bank Limited, but he did join in the mortgage which was created in its favour and it is very likely that he thought that this was enough. His wife was an ostensible owner and he was not. Neither do I find the fact that the first respondent allowed his wife to execute a deed of settlement instead of a declaration of his ownership, surprising, having regard to the mentality, which is so often shown by litigants in a similar position. His wife owed money to the appellants who had obtained a decree against her, and it is very probable that he considered that the best method of safeguarding himself was a deed of settlement. The conduct of the first respondent is no doubt blameworthy, but this is not the deciding factor. The question which the Court has to decide is whether the evidence justifies the conclusion that the first respondent intended to make a gift to his wife and for the reasons given I agree with the learned Judge that it is not sufficient for the purpose.

8. The appeal will be dismissed with costs in favour of the first respondent.