Abbas Husein v. Kiran Shashi Devi

1. A preliminary objection is taken that this appeal is out of time. The latest date for filing appeal is 21st June 1934. An application for leave to appeal in forma pauperis was made on 13th April 1934. The application resulted in an enquiry as to means. The finding is dated 26th July 1935. The application for leave was refused on 2nd October 1936 by Gruer J., but he gave a month in which the appellant was allowed to pay the requisite fee. The fee was paid in that time. Nevertheless it is said that this Division Bench should review Gruer J.'s order. It should be made clear that under the rules of practice then operating single Judges did the interlocutory work relating to certain appellate work that will fall to be finally disposed of by a Division Bench. We will assume that Gruer J., was substantially acting as if he were the Division Bench and that his order could be revised by this Bench. Even on that assumption, we see no reason to revise his order. The preliminary objection accordingly fails. This is an appeal by defendants 4 to 9 who are divisible into two classes. The first class consists of the minor children of Abde Ali and the second of the widow and major daughter of Abde Ali. The suit is on a mortgage effected ad-mittedly by one Hasan Ali, the son of Abde Ali. The subject-matter of the mortgage is a house and a village. It is said that this mortgage is binding on the minors and on the widow and the daughter though they are not parties to the mortgage for two separate reasons, as to the minors because the mortgagor had been appointed Court guardian and this mortgage transaction had been sanctioned, as to the widow and the daughter because they had empowered the mortgagor to mortgage this property under a general power of attorney.

2. The defendants took the point that the sanction of the Court was without enquiry and that the order giving consent to a mortgage was therefore of no effect and therefore that the mortgage transaction is voidable under Section 30 of the Guardians and Wards Act.

3. In support of that proposition, AIR 1924 Cal 420 (’24) 11 AIR 1924 Cal 420 , 81 IC 680 , 28 CLJ 213 and 45 Mad 429 (’22) 9 AIR 1922 Mad 135 , 65 IC 964 , 45 Mad 429 , 42 MLJ 333 have been cited. On the other hand, it is said that where in point of fact the Court has given sanction a person lending money on the faith of that sanction is protected by it, and the Privy Council decision in 11 Cal 3793 at p. 383 is referred to. On the other hand, it is said that decision is under the old law which merely provided that a guardian had no power to mortgage without an order of the civil Court whereas now more detailed provisions are to be found in S. 31 as to what the civil Court has to do and it is provided inter alia that the Court must be satisfied that there is a case of necessity and that it is for the benefit or advantage of the ward. Therefore it is said, as is held in AIR 1924 Cal 420, (’24) 11 AIR 1924 Cal 420 , 81 IC 680 , 28 CLJ 213 that there is a duty imposed on the Court to make an enquiry. If the Court makes no enquiry although its sanction is not null and void one is in the same position as though it had not been granted; that is to say, the transaction is voidable but is not absolutely void. In our opinion, one should be slow to hold that when a Court has granted sanction that sanction does not protect a subsequent lender of money who lends on the faith of that sanction and who is in no way a party to any slackness or fraud in obtaining that sanction. Here, however, the plaintiff-mortgagee is in the unfortunate position of having lent money for purposes somewhat different from those that were sanctioned. The actual order sanctioning is very vaguely worded. It merely says:

This is an application of one Hasan Ali, guardian of Abbas Hussain and others, for sanction to mortgage house No. 232/1 situate at the Kotwali Bazar, Jubbulpore and village Manera in order to pay off the debts incurred by minor's father. I accord my sanction to the mortgage of the house and the village Manera as I am satisfied that it is for the benefit of the minor.

4. It will be noted that the Court understood that the mortgage was in order to pay the debts of the minor's father and refers to an application. If the application is referred to, it will be seen that the representation was that there were four debts that had to be paid off and that had been incurred by the minor's father, those debts being Rs. 2400, Rs. 1863-10-0, Rs. 2100 and Rs. 451-8-0. It is of course of the essence here that the debts were the debts of the minor's father because this is a Mahomedan case and the father's estate passes to his heirs subject to the debts and the debts have to be paid out of that estate. According to Sir Dinshah Mulla's Principles of Mahomedan Law (11th Edn.), para. 263, a mortgage by a legal guardian of a minor can be authorized where there are debts of the deceased and no other means of paying them. Accordingly the application represented that there was no other property out of which these debts could be paid. On the evidence given in this case, it is quite obvious that representation was untrue and it is also obvious from the evidence given in this case that the debts were not the debts of the minor's father. Unfortunately the plaintiff appears to have felt the need to put the fraudulent mortgagor in the witness-box and to support this transaction by that fraudulent mortgagor's own books which disclose the above state of fact, and there is simply no evidence to the contrary. Curiously enough, the creditors who are supposed to have been paid off have not been called. They were not called even though it appeared at any early stage in this case — many months before the evidence stage was concluded—that the mortgagor was actually saying that the debts were not the father's debts, in other words, that a fraud had been committed. Further the mortgage transaction did not even purport to be the same as fl the sanctioned transaction. The mortgage was expressed to be for Rs. 7000 whereas what was sanctioned was Rs. 6815-2-0. According to the sanction the money borrowed was to be used in paying the above-mentioned debts. According to the mortgage it was to be used in paying three of them (that is to say, the debts for Rs. 2400, Rs. 2100 and Rs. 451-8-0) and for running the family shop. It appears to be reasonably plain, and an a fortiori case to 46 ALL 620 (’24) 11 AIR 1924 All 751 , 79 IC 556 , 46 All 620 , 22 ALJ 493 that this transaction was not the same as the sanctioned transaction and accordingly is not covered by the sanction. One is therefore, at best, thrown back to the position of a mortgage by a guardian without the sanction of the Court. The transaction can be avoided, and the minors and the ladies avoid it.

5. When the minors or principals' avoid the transaction they can be held liable to restore what they have gained as a consequence of it. Did it appear from the evidence here that they had gained anything from it we might perhaps have ordered an amendment. There is however nothing in the evidence to prove that they gained anything. As to the minors they were not responsible for the debts that were paid; neither was the widow, nor the major daughter. It has been urged that although the consent may not be effective to support the whole of this transaction it is effective to support part of it. As to the part used for the business it is urged that is good because the Rs. 2048-8-0 was borrowed for a purpose that was necessary and beneficial to the minors who have been maintained out of the profits from the family shop. This case has not been pleaded, and in our opinion, the only way that the plaintiff could recover, granted that the sanction is ineffective, would be by way of restitution in accordance with the principles laid down in the following cases: 9 all 340, (’87) 9 All 340 , 1887 AWN 62 22 Mad 2896 at p. 290, 21 CWN 63 (’17) 4 AIR 1917 Cal 235 , 37 IC 380 , 21 CWN 63 at p. 65, 16 CWN 7158 at p. 717, 25 ALL 59, (’02) 25 All 59 , 1902 AWN 192 8 ALJ 754,10 50 ALL 218, (’28) 15 AIR 1928 All 77 , 108 IC 728 , 50 All 218 , 25 ALJ 1017 34 IC 916 (’16) 3 AIR 1916 Lah 285 , 34 IC 916 , 24 PR 1916 at p. 917 and 54 IC 846 (’20) 7 AIR 1920 Oudh 53 , 54 IC 846 at page 848.

6. The argument that the sanction can cover that part of the transaction relating to three debts that is the same as the sanctioned transaction falls to the ground, in our opinion, for two reasons: (1) because the Judge sanctioned the transaction he did sanction, it cannot be predicated that he would have sanctioned the transaction that was in fact put through which was substantially a different one; (2) this transaction is not the sanctioned transaction and is accordingly not covered by the sanction: 46 ALL 620. (’24) 11 AIR 1924 All 751 , 79 IC 556 , 46 All 620 , 22 ALJ 493 In our opinion, therefore, so far as the minors are concerned, the appeal succeeds.

7. Appeal allowed.