Citation Codes

Equivalent Citations

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Judges

Hon’ble Mr.Justice Sir John Francis William James

Acts

provisions of Section 3 of the Transfer of Property Act as amended by Section 4 of Act XX of 1929
SECTION 43 TRANSFER OF PROPERTY ACT

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Smart Summary

Neutral Summary of the Opinion

Factual and Procedural Background

The opinion concerns competing claims arising from a mortgage executed by Gobardhan Lal on 9 February 1918 over a purported 1/6th share in specified property that was partly ancestral and partly descended under a will. At the time Gobardhan had quarrelled with his joint family (consisting of his father Banarsi Lal and uncles Brij Lal and Dularchand) and was engaged in separate business with Janki Rai. The mortgage recited that Gobardhan had demanded partition but the family were unwilling, and that the mortgage money was for antecedent debt and to raise funds for instituting a partition suit. The money was actually used by Gobardhan for his separate business.

After 1918 the family made further joint acquisitions. In 1927, following the death of Banarsi Lal, the surviving brothers executed a mortgage reciting that Gobardhan had cut himself off from the family in their father's lifetime. In 1928 the family made a formal partition (25 September 1928) giving a one-third share to Gobardhan and his brother Girwar (who then partitioned that share between themselves). Gobardhan mortgaged part of his allotted property on 7 December 1929 to Rai Bahadur Kharag Narain and sold a portion on 12 January 1930 to Musammat Lal Pari who redeemed the 1929 mortgage to that extent.

On 11 May 1931 Janki Rai (the plaintiff, mortgagee of 1918) sued to enforce his 1918 mortgage against the property which had fallen to Gobardhan on partition. The suit was contested by Gobardhan's sons and by the later mortgagee (7 December 1929) and purchaser (12 January 1930), who claimed the 1918 bond was colourable, without consideration, unnecessary for family needs, and ineffective because Gobardhan was a joint-family member when he purportedly mortgaged a share. The Subordinate Judge found the 1918 mortgage was for consideration and enforceable: (a) as to Gobardhan's sons, because it was executed for antecedent debt and family necessity; (b) as to the later transferees, because they failed to prove want of notice of the earlier mortgage; and (c) holding that although Gobardhan did not actually separate until 1928 he had represented himself to be separate in 1918 and the plaintiff relied on that representation.

The mortgagee of 1918 obtained an earlier decree and purchased the property while the present suit was pending. The 1929 mortgagee and the 1930 purchaser appealed from the Subordinate Judge's decision. The present opinion disposes of that appeal.

Legal Issues Presented

Whether Gobardhan Lal had in 1918 actually separated from the joint family, and if not, whether his representation of separation in the 1918 mortgage made that mortgage enforceable later when he did separate.
Whether the 1918 mortgage purported to transfer a share in an undivided estate (and therefore was subject to rules on alienations by a joint-family member) or only a share in specific described property, and whether that characterization affects enforceability.
Whether a mortgage of an undivided share by a joint-family coparcener, made while still a member (i.e. before actual separation), is void ab initio or merely voidable and who may impeach it.
Whether Section 43 of the Transfer of Property Act applies to permit the plaintiff (as transferee for consideration relying on a false representation of authority) to have the transfer operate on the interest the transferor later acquired while the contract subsisted.
Whether the appellants (the 1929 mortgagee and the 1930 purchaser) are protected as transferees for value without notice of the 1918 mortgage.

Arguments of the Parties

Appellants' Arguments (as advanced by Mr. Khurshed Husnain)

Attacked the Subordinate Judge's finding that Gobardhan represented he had made an unequivocal announcement of intention to separate in 1918; argued that there was actual separation in 1918, or at least that the representation was not the kind to trigger later enforcement.
Argued the mortgage should not operate on the share that ultimately fell to Gobardhan because the deed purported to convey a share in specific property, not a share in an undivided estate.
Contended that a mortgage of an undivided share by a member of a joint family, made while he was not separate, is void ab initio and therefore the plaintiff cannot enforce it.
Argued that the appellants were transferees for value without notice (i.e., they lacked notice of the 1918 mortgage) and so were protected from operation of Section 43 of the Transfer of Property Act.
Additionally, earlier in the proceedings other parties had argued the 1918 bond was a colourable transaction, executed without real consideration and not necessitated by family needs.

Respondent's / Plaintiff's Arguments (as advanced in support of the decree)

Asserted that the plaint and its translation sufficiently pleaded that Gobardhan "expressed desire" or "announced an intention" to separate — i.e., the representation was pleaded.
Relied on oral evidence (witnesses Bihari Lal and Damri Sao) that Gobardhan announced he was separate prior to executing the 1918 bond and that the mortgagee believed that representation.
Maintained that the 1918 mortgage was made for consideration (antecedent debt and family necessity) and therefore binding, and that subsequent partition in 1928 placed Gobardhan in the position to carry out the alienation he had represented in 1918.
Contended the appellants failed to prove lack of notice of the 1918 mortgage and that under the statutory regime (including registration requirements referenced under Section 3 as amended) the appellants must be deemed to have had notice.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Madan Lal v. Ghidu, (53 A. 31; 128 Ind. Cas. 829; A.I.R. 1930 All. 852)	Established that an alienation made by a member of a joint Hindu family while still a member is not intrinsically void ab initio but is voidable at the option of the other members or any one of them; when successfully impeached it becomes void. Such an alienation cannot be impeached by the alienor himself or by a transferee who has not acquired the interest of the entire joint family (except certain auction-purchasers).	The court relied on this authority to hold that the appellants, appearing as transferees from Gobardhan, were not in a position to impeach the 1918 mortgage on the ground that Gobardhan lacked the requisite capacity at the time; therefore the mortgage was not void ab initio as against them.
Bhup Singh v. Chheda Singh, (18 A.L.J. 807; 58 Ind. Cas. 171; 42 A. 596)	Explained the incident of a mortgage of an undivided share that the mortgagee cannot follow the security into the hands of a co-sharer after partition; instead the mortgage lien transfers to that portion of the joint property which the mortgagor obtained at partition.	The court applied this rule to conclude that when partition occurred on 25 September 1928, the 1918 mortgage lien attached to the property that fell to Gobardhan's share; subsequent transfers by Gobardhan (7 December 1929 and 12 January 1930) were therefore subject to that mortgage lien.

Court's Reasoning and Analysis

The court's analysis proceeds from factual findings made below and from application of statutory and precedent principles strictly as stated in the record.

Facts and findings: The Subordinate Judge found (a) that Gobardhan represented in 1918 that he had cut himself off from the family and that the mortgagee believed that representation, and (b) that actual separation did not occur until 1928. The appellate court accepted both findings: that the representation was made and believed, and that there was no actual irrevocable separation until partition proceedings culminated in 1928.
Pleading and evidence on representation: The court considered the plaint's translated language ("expressed desire" / "announced an intention") sufficient to plead the representation. It relied on testimony of named witnesses and on documentary recitals (e.g., the 1927 deed by other family members) to conclude the representation was both made and relied upon by the mortgagee.
Characterization of the mortgaged interest: The appellants raised for the first time on appeal the contention that the 1918 deed mortgaged a share in specific property rather than an undivided share. The court treated this as a new point not taken in the written statement and noted that if it had been properly raised earlier, evidence could have been led to clarify whether the mortgage covered part or all of Gobardhan's eventual allotted share. Absent such pleading and evidence, the Subordinate Judge correctly treated the 1918 deed as a mortgage of Gobardhan's share in the joint family property (including the property descended under the will).
Voidable v. void ab initio: The court relied on Madan Lal v. Ghidu to explain that an alienation by a joint-family member is voidable at the option of those entitled to challenge it, but not intrinsically void ab initio. Consequently, such alienations can become void only if successfully impeached by a competent challenger; they are not automatically nullities as against all persons. This distinction led the court to conclude that the appellants (as transferees from Gobardhan) were not in principle entitled to impeach the 1918 mortgage for want of capacity in Gobardhan at the time of execution.
Application of Section 43, Transfer of Property Act: Section 43 provides that where a person erroneously represents he is authorized to transfer immovable property and professes to do so for consideration, the transfer shall, at the transferee's option, operate on any interest the transferor may acquire in such property while the contract subsists. The court applied Section 43 to the facts: Gobardhan had represented in 1918 that he was entitled (by his declaration of separation) to mortgage a 1/6th share; when he later, in 1928, actually and unequivocally separated and thereby became entitled to dispose of that 1/6th share, the 1918 mortgage could be enforced to operate on that share.
Effect of partition on mortgage lien: Relying on Bhup Singh v. Chheda Singh, the court held that upon partition (25 September 1928) the mortgagee's lien attached to the portion allotted to Gobardhan. Therefore subsequent transfers by Gobardhan (the December 1929 mortgage and the January 1930 sale) were subject to the pre-existing mortgage lien.
Notice and protection of transferees: The appellants bore the burden to prove lack of notice. The court found they had not done so. Evidence proffered that an appellant (Rai Bahadur Kharag Narain) had "no knowledge" of the mortgage was disbelieved; the court also observed that absent proof of irregular registration or other formal defects under the statutory registration regime (referencing Section 3 as amended by Act XX of 1929), the appellants must be treated as having notice of the earlier mortgage. Therefore they could not claim the status of bona fide transferees without notice.
Conclusion of law applied to facts: Combining the factual findings (representation in 1918; actual separation in 1928), the statutory principle (Section 43), and precedent (treatment of voidable alienations and mortgage lien behavior on partition), the court concluded the 1918 mortgage was enforceable against the property allotted to Gobardhan at partition and against subsequent transferees who failed to prove want of notice.

Holding and Implications

Holding: The appeal failed and was dismissed with costs. The court thereby upheld the Subordinate Judge's decision that the 1918 mortgage was enforceable against the property that fell to Gobardhan on partition.

DISPOSITION: The appeal is dismissed with costs.

Consequences and implications:

The 1918 mortgage, made when Gobardhan represented himself to be separate though actual separation occurred only in 1928, was held enforceable by operation of Section 43 of the Transfer of Property Act: the representation operated on the interest Gobardhan subsequently acquired while the contract subsisted.
On partition, the mortgagee's lien attached to the portion allotted to Gobardhan; therefore later transactions by Gobardhan (the December 1929 mortgage and January 1930 sale) were subject to the pre-existing 1918 mortgage lien.
The appellants failed to establish they were bona fide transferees for value without notice and so could not avoid the prior mortgage; absence of proof of registration irregularity or other evidence meant they were deemed to have notice.
No broader or novel precedent was created by the opinion; the court applied established principles (as reflected in cited authorities) to the particular facts and, where issues were not timely raised below, declined to entertain them in a manner that would affect the outcome.

This summary strictly reflects the arguments, findings, statutory references and authorities as they appear in the provided opinion. No information beyond the opinion has been added.

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Rai Bahadur Kharag Narain And Anr v. Janki Rai And Ors And Gobardhan

1. Gobardhan Lal and his brother Girwar were members of a joint family, with their father Banarsi Lal, and their two uncles Brij Lal and Dularchand. Gobardhan Lal at an early stage began to quarrel with his family and to do business on his own account with Janki Rai. On February 9,1918, he executed a bond whereby he purported to mortgage a share of 1-6th in the property specified, part of which was ancestral property of the family, while part had been bequeathed by Nandu Lal, the maternal grandfather of Banarsi Lal, to his three grandsons Banarsi Lal. Dularchand and Brij Lal. In the mortgage bond there was a recital to the effect that Gobardhan Lal had demanded partition of the family property; but the members of the family were unwilling to make it: so this mortgage was executed in part for payment of antecedent debt and in part to raise money for the purpose of instituting a suit for partition. The money was not utilised for the institution of the partition suit, but it was utilised for a separate business carried on by Gobardhan Lal. After 1918 the three brothers made further acquisitions of joint family property. They did not mention the name of Gobardhan Lal in any deed; but as there is no mention of any sons, this fact would not necessarily be of any significance. If Gobardhan Lal had actually separated in 1918, he would not prima facie have been entitled, when partition was ultimately made, to a share in this property, though he might possibly have been entitled if, while he still remained a tenant-in-common, the property was acquired from the joint fund. On May 21, 1927, after the death of Banarsi Lal, Gobardhan Lal's two uncles with his brother executed a mortgage, wherein they recited that Gobardhan Lal had cut himself off from his family in the lifetime of his father and had ceased to have any right to the family property. The mortgagee, doubtful on this point, obtained another mortgage bond in the following year in the execution of which Gobardhan Lal took part, wherein it was recited that the family was joint. On September 25, 1928, a formal partition of the property was made, wherein a third share went to Gobardhan Lal and his brother Girwar who immediately partitioned this share between themselves. On December 7, 1929, Gobardhan Lal mortgaged part of the property which had fallen to him on partition to Rai Bahadur Kharag Narain. On January 12, 1930, he sold a portion of that property to Musammat Lal Pari who redeemed to that extent the mortgage of Kharag Narain.

2. On May 11, 1931, Janki Rai instituted a suit on the basis of his mortgage of 1918, claiming to proceed against the property which had fallen to Gobardhan Lal on partition. The suit was instituted almost twelve years after the date of payment fixed by the mortgage bond, but within time. It was contested on various grounds by the sons of Gobardhan Lal, and also by the mortgagee of December 7, 1929, and the purchaser of January 12, 1930, who asserted that the bond was a colourable transaction not executed for consideration; that there was no family necessity for the bond; and that since the mortgagor was a member of the joint family when the mortgage was made, nothing was conveyed by the transaction. The Subordinate Judge found that the mortgage was for consideration and that so far as the sons of Gobardhan Lal were concerned, it was binding on them because it was executed on account of antecedent debt and for family necessity. He found that the mortgagor was not separate from his father and uncles at the time when the deed was executed, but that he represented to the mortgagee that he was separate. The learned Subordinate Judge accordingly applied the provisions of Section 43 of the Transfer of Property Act holding that since the mortgagor by actual separation had placed himself in a position to carry out the alienation which in 1918 he had represented himself to be able to do, the mortgage deed must be enforced. The mortgagee of 1929 and the purchaser of 1930 were transferees for value; but the learned Subordinate Judge found that they had failed to prove that they had no notice of the option conferred by the mortgage of 1918, and it could, therefore be enforced against them. Immediately after the institution of the present suit the mortgagee of 1918 instituted a suit on his own mortgage' bond which was apparently disposed of more promptly than the suit with which we are here concerned, so that he was able to obtain a decree and purchase the property in dispute while this suit was pending. The mortgagee and the transferee of January 12, 1930, have appealed from the decision of the Subordinate Judge.

3. Mr.Khurshed Husnain on behalf of the appellants attacks in the first place the finding of fact of the learned Subordinate Judge5 that at the time of the mortgage, the mortgagor represented to the mortgagee that he had made a definite announcement of his intention to separate such as would amount to separation in the eye of Iawi Mr. B.C. De supporting the decree on grounds decided against him in the triple Court argues that the learned Subordinate Judge ought to have found that there was actual separation in 1918 Whatever representation might have been made, Mr. Khurshed Husnain argues that the mortgage should not be regarded as taking effect upon the share which ultimately fell to Gobardhan Lal on partition, because the mortgagor did not purport to transfer a share of an undivided estate but merely a share in specific property. He argues also that the mortgage of an undivided share is void ab initio and no equity can be created by it, such as would call for the application of the provisions of Section 43 of the Transfer of Property Actor of any of cheer equitable Rule V Finally he argues that the appellants are transferees for value without notice of the option arid that they are, therefore, protected from the operation of Section 43.

4. Mr. Khurshed Husnain suggests that there is no averment in the plaint that Gobardhan Lal at the time of the mortgage represented that he was separate. In the translation of the plaint which has been prepared for this Court, the expression "apne khuahish zahir kiya" has been translated "expressed desire" (for separation and partition); but "announced an intention" would be an equally good translation and it cannot be said that the representation has not been pleaded. Two witnesses Bihari Lal and Damri Sao state that Gobardhan Lal actually did make an announcement of the fact that he was separate before the execution of the mortgage; and since it appears to be clear that he was at that time and for a long time afterwards on bad terms with his family and he did actually separate from them, there is no reason why this evidence should not be accepted. The recitals in the bond of May 21, 1927, (Ex. 2) indicate what the rest of the family thought on this matter. This deed executed by the surviving members of the joint family Dularchand, Brij Lal and Girwar Lal, the brother of Gobardhan Lal, recites that Gobardhan Lal the eldest son of Banarsi separated during the lifetime of his father and went to his father-in-law's house in Benares on relinquishing his claim, leaving the executants in possession and occupation of all the property of the joint family. But later we find Gobardhan Lal joining with the other members of the family in executing a mortgage deed and at the time of the partition they described themselves as joint.

5. Mr. Khurshed Husnain argues with some reason that we have not here anywhere a definite unequivocal and irrevocable announcement of intention to separate until the commencement of the actual proceedings for partition. There were attempts to obtain partition; Gobardhan Lal deserted the family home and went to Benares; and the impression which would be conveyed by this evidence is that either of the two parties represented themselves as joint or separate as it suited their convenience. The position of Gobardhan Lal appears to have been uncertain and equivocal and it cannot be said that there was any unequivocal announcement of separation actually effected. On the other hand it appears to be clear that Gobardhan did represent in 1918 that he Tiad cut himself off from his family; although it does not appear from the subsequent conduct of the parties that the representation was regarded by them as irrevocable. I would accept both the findings of the Subordinate Judge: that the representation was made at the time of the mortgage and that the mortgagee believed it; and that there was no actual separation until 1928.

6. The objection that what was mortgaged was not a share in the undivided estate but was a share in specific property, was not taken in the written statement and is now raised for the first time. The plaintiff asserted by his plaint that Gobardhan Lal's 1-6th share in the family property mortgaged to him represented the share which was allotted to Gobardhan at the partition. He distinctly stated in para. 8 of his plaint that the property detailed and specified below in Schedule 2 had been allotted to Gobardhan Lal in lieu of the mortgaged 1-6tn share. We do not know that at the time of the mortgage, the joint family possessed any property other than that specified in the mortgage bond; nor whether the subsequent acquisitions to the joint family were made from the common fund represented by this property. A new point of this kind must not be raised for the first time in appeal. If the point had been taken in the written statement, parties would have entered into evidence on this question; and it would have been possible to ascertain whether what was mortgaged was past of Gobardhan's share or the whole of it. The learned Subordinate Judge has pointed out that at the time of the mortgage Gobardhan's share would not have been 1-6th but 1-9th; but he appears to have been under the impression that he would be entitled to 1-6th on partition, the share to which he would become entitled on the death of his father and which he actually obtained when the partition was made. I consider that the learned Subordinate Judge rightly treated the mortgage as a mortgage of the share of Gobardhan Lal in the joint family property, together with his share in the property which descended to the family under the will of Nanu Lal.

7. Mr. Khurshed Husnain argues that since (gobardhan Lal was not separate at the time of the mortgage, his mortgage of an undivided share was void ab initio. This question was discussed by the High Court of Allahabad in Madan Lal v. Ghidu 53 A. 31 : 128 Ind. Cas. 829 : A.I.R. 1930 All. 852 : (1930) A.L.J. 1528 where it was pointed out that an alienation made by a member of a joint Hindu family is not void but voidable at the option of the other members of the family or of any one of them. It appears that misunderstanding is apt to be caused by declarations that particular alienations are void, which have been made after the alienations have been impeached by persons at whose option they were voidable, when the Court finding that the alienation cannot be supported has declared it to be void. When a voidable contract is successfully imneaclied by a person entitled to challenge it, it becomes void; but this is not a contract of the kind which is in itself void ab initio. The learned Judges in the case quoted pointed out that the alienation cannot be impeached by the alienor himself or by any transferee who has not acquired by transfer or prescription the interest of the entire joint family. They made an exception of the position of an auction-purchaser who may have purchased the interest of a co-parcener in execution of a decree. From that decision it would appear that neither of the two appellants are entitled to impeach this mortgage of Gobardhan Lal on the ground that his interest in the joint family was not such as to entitle him to make it, since they both appeared in the appeal in their capacities of transferees from Gobardhan. For other property in which the appellant Rai Bahadur Kharag Narain had acquired the interests of the entire joint family, his claim has been allowed by the Subordinate Judge; to that extent the plaintiff has failed, and we are not concerned with that property in this appeal.

8. Section 43 of the Transfer of Property Act provides that where a person erroneously represents that he is authorised to transfer certain immovable property and professes to transfer such property for consideration, such transfer shall) at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists. In title 8 Gobardhan Lal erroneously represented that he was entitled by reason of his declaration of separation to mortgage a share of i-6th in the joint family property; and he mortgaged that share to the plaintiff in 1928. When he did in the partition proceedings finally and unequivocally separate from the rest of the family, he became entitled to dispose of the 1-6th share. I need only cite the decision in Bhup Singh v. Chheda Singh 18 A.L.J. 807 : 58 Ind. Cas. 171, 2 U.P.L.R A 45 : 42 A. 596 wherein it is pointed out that it is an incident of the mortgage of an undivided share in joint property that the mortgagee cannot follow his security into the hands of a co-sharer who may" have obtained part of the mortgaged property on partition; the mortgage lien is transferred to that portion of the joint property which the mortgagor had obtained at the partition. As soon as the partition was effected on the September 25, 1928, the mortgage lien was transferred to the property which fell to Gobardhan's share; and the subsequent transfers of December 7, 1929, and January 12, 1930 which were made by Gobardhan Lal were subject to the mortgage lien.

9. Neither of the appellants proved want of notice. The plaintiff said that he approached the appellant trial Bahadur Kharag Narain when he was taking the mortgage from Gobardhan and he demanded his dues from him but the appellant declined to satisfy him. His Karpardaz Munshi Lal stated in evidence that this appellant had no knowledge of the mortgage; but the Subordinate Judge did not believe him. If he was to avoid being charged with notice, it would have been necessary to demonstrate that there was some irregularity in the registration of the bond of February 9, 1918, in view of the provisions of Section 3 of the Transfer of Property Act as amended by Section 4 of Act XX of 1929 : and in the absence of such evidence the appellants must be deemed to have had notice of the existence of a previous mortgage. Neither of the appellants can claim to be in the position of a transferee without notice.

10. The appeal accordingly fails and I would dismiss it with costs.

Courtney-Terrell, C.J.

11. I agree.

Rai Bahadur Kharag Narain And Anr v. Janki Rai And Ors And Gobardhan

Neutral Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellants' Arguments (as advanced by Mr. Khurshed Husnain)

Respondent's / Plaintiff's Arguments (as advanced in support of the decree)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Rai Bahadur Kharag Narain And Anr v. Janki Rai And Ors And Gobardhan

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