1. [After stating facts asset out above, the judgment proceeded:—]
2. The only questions therefore that arise in this appeal are as to the validity of the transaction which falls into two parts; first, the question of the, surrender which is alleged by the respondents to invalidate the whole transaction; and secondly, the question of the sale of the villages as distinguished from the surrender, if that can stand as a separate transaction.
3. Taking first the question of the surrender we are of opinion that the view of the lower Court that the sale of the villages and the surrender formed one transaction is correct. It is contended on behalf of the appellant that if this were a suit for the recovery of consideration, it might be argued that the whole transaction is void. But here we have two promise, one legal and one, according to the other side, illegal. The consideration of the surrender was paid nine months after the sale, during which period the defendant was in possession as a lessee. There can be no doubt that the agreement between the parties was that Venkatrao should sell the villages including his occupancy rights in the sir lands, to the defendant. In this connection we may refer to Exhibit, P. 57, which is a letter from the defendant's father to Venkatrao, dated 3rd April 1913, in which he states: “You have agreed to sell to us your villages (named) with the houses and moveable property (&c.) for Rs. 20,000” Exhibit P. 9 is an agreement executed by the defendant's father to Venkatrao on the same date as the alleged deer), which recites: “We have agreed to purchase three villages (named) including the sir land for Rs. 20,000. Rs. 10,000 have been paid for the villages, and as the sir land cannot be sold without sanction, Rs. 5,000 is kept and will be paid after sanction is received,…. or if sanction is not granted, the occupancy rights should be surrendered and the balance of Rs. 5-000 will be paid with interest.” In these circumstances we have no doubt that the agreement to sell the rights in the sir land and the agreement to sell the villages are all one transaction; although the actual surrender took place nine months after the sale of the villages it must relate back to the date of the sale. There are several leading cases on the point, which have been quoted by the lower Court. We may refer to Mir Dad Khan v. Ramzan Khan(1), which lays down that if a covenant to relinquish the sir lands is part of the transaction of sale or of mortgage, then the agreement to surrender will be void and unenforceable, no matter what ingenious devices may be employed to give colour to it. It is only when a Court is satisfied that there was first of all a transfer by way of sale or mortgage and that the transferee having obtained the status of an ex-proprietary tenant, with knowledge of that fact and of the rights preserved to him by statute, deliberately chooses as a separate transaction to relinquish his ex-proprietary tenancy into the hands of the new proprietor, that the law will not interfere to protect him.
4. The facts of the present case are very similar to those of the case quoted above, and to those of Ikram-Ullah Khan v. Moti Chand(2) which was confirmed on appeal by the Privy Council in Moti Chand v. Ikram-Ullah Khan(3). The mere fact that nine months intervened between the sale deed and the relinquishment of the occupancy rights in the sir lands does not avail the defendant in the present case because it is manifest that the arrangement by which the occupancy rights were to be surrendered dates back to the date of the sale. In this connection we may refer to Ratan Dei v. Durga Shankar Bajpai(4). We are therefore of opinion that the lower Court correctly held that the agreement to relinquish the occupancy rights in the sir lands formed part of the agreement of the sale of the villages, and in view of the decisions quot ed above there can be no doubt that this must be regarded as a device to defeat the Tenancy law and therefore cannot be enforced.
5. It has been contended on behalf of the respondents that part of the consideration being illegal, the whole transaction is void, and anything paid under it cannot be recovered. Reference is made to Bai Diwali v. Umedbhai Bhulabhai Patel(5) and Har Prasad Tewari v. Sheo Govind Tewari(6). The sale of the villages, apart from the cultivating rights in the sir, was so far as the Tenancy law is concerned, a legal transaction apart from what may be said against it under the Hindu law. In the case of Bai Diwali v. Umedbhai Bhulabhai the whole transaction was set aside, but that there was a mortgage of the sir land alone. In Ikramullah Khan v. Motichand the facts of which, as we have said, are very similar to those of the present case, the transaction was held void so far as the relinquishment of the ex-proprietary rights was) concerned, and this was confirmed by the Privy Council as noted above.
6. The respondents rely on Section 24 of the Contract Act, which lays down that “if any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object is unlawful, the agreement is void.” The law, however, appears to be that where the legal and illegal objects, or the legal and illegal transactions, cannot be separated, the whole transaction is void; but it is otherwise where the legal and illegal portions can be separated. The illustration to S. 24 shows that “the promises made by A constitute a single consideration for B's promise to pay and there is no possibility of apportioning the salary”…. So also when the parties lumped together two debts, a lawful and unlawful one and treated them as one: or where the agreement to pay rent was void because the amount fixed exceeded the legal limit, the agreement could not be enforced in part, since that would mean making a new agreement for the parties. But if in the case mentioned above separate salaries or separate prices were agreed upon, the engagement or the sale would be valid so far as regards the lawful part; and generally when there are two distinct promises expressed in one instrument, one of which is unlawful, the lawful promise can be enforced.” cf. Laxmanlal v. Mulshankar(7).
7. In the present case the sale of the villages, which is in itself lawful, except in so far as it may be attacked under Hindu law, can be separated from the sale of the occupancy rights. The consideration has been apportioned between the two objects, that is to say Rs. 15000 for the sale of the villages and Rs. 5000 for the occupancy rights. This appears to be intentionally done by the parties. In these circumstances we agree with the view of the lower Court that the whole transaction is not void, but only that part which relates to the surrender of the occupancy rights.
8. It is contended that in the document itself there is an agreement by Venkatrao that if the defendant is dispossessed by his heirs the consideration would be refunded, and it is contended on behalf of the appellant that the plaintiffs are bound by these promises, the debt not being of an immoral character. It is contended on behalf of, the respondents that this aspect of the case was never put before the lower Court. If the plaintiffs avoid the transaction, the defendant may have a right of action on the covenant in the present suit, but he can have no right of action while the present case is pending. We are of opinion that this transaction as regards the surrender of the occupancy rights in the sir land being altogether void as against the plaintiffs, they are not bound to repay the Rs. 5000 to the defendant.
9. The other part of the case refers to the sale of the villages. The receipt of consideration has now been admitted. The general conclusions of the lower Court as regards the necessity for the transaction are that the reasons assigned by Venkatrao for wishing to get rid of the property, which is now admitted to be ancestral, are not made out. Although the villages are at a distance of nearly 100 miles from Nagpur, there is Railway communication most of the way and they are only a few miles from a Railway Station. The alleged malarial nature of the climate is no ground as Venkatrao did not himself live in the villages, but managed them through agents.
10. The learned Subordinate Judge has disbelieved the evidence regarding the rebuilding of the houses by Venkatrao. He finds that Rs. 1000 were spent shortly after the sals on the thread ceremony of one of the plaintiffs and that Rs. 14000 were lent on mortgage (Ex. D. 28) to one Yeshwant Narayanrao Deshpande, a relative of Venkatrao. There is no evidence that the defendant made enquiries as to the truth of the statements made by Venkatrao and there is no evidence that Venkatrao was in embarrassed circumstances which compelled him to dispose of the villages.
11. It is to be noted that there is no allegation that Venkatrao was an extravagant or thriftless man. On the contrary, it appears that he owned a number of villages which the family still possesses. The case is not one of a man in embarrassed circumstances compelled to sell his property, but rather that of a man who for reasons which seemed sufficient to him, desired to get rid of the outlying portions of his property in order to invest in other forms of property. It appears to us that the fact that out of the consideration of Rs. 15000 received for the sale of the villages, Rs. 10000 were advanced to Yeshwant Narayanrao Deshpande within the same year and Rs. 4000 in the following year, after the remaining Rs. 5000 for the sale of the occupancy rights had been paid, is practically conclusive that Venkatrao was not in embarrassed circumstances. It would appear that there was a balance of Rs. 14000 available to be lent on a mortgage. The question therefore arises whether the alienation in this case was justified.
12. So far as the sale of the villages is concerned it is clear that the question of necessity does not arise, nor has the defendant relied on it. The learned Subordinate Judge has quoted nearly all the leading cases on the subject. There was no pressing necessity for the sale and no danger to the estate to be averted. The fact that the villages were at some distance from Nagpur, though most of the way is served by a railway, or that the climate was malarious cannot be regarded as any justification for the sale. Venkatrao had considerable other property and it is not shown that he could not have met the expenses of the thread ceremony of one of the plaintiffs without selling the villages. The expenses were only Rs. 1,000-0-0. The repairs and rebuilding of the house have not been proved and this point has not been argued in appeal. The plaintiffs' accounts have not been produced and the story of their having been burnt in a fire at Kodgaon can not be accepted in view of Sitabai's statement that the accounts were transferred from the village books to the principal account maintained at Nagpur, which are presumably still in existence.
13. The real fact appears to be that Venkatrao found these villages trouble some to manage and perhap, not profitable and wanted to rid himself of them. It is not necessary as argued by the learned Advocate for the respondents, that there should be a danger to the estate to be averted. The leading case of Hunoomanpersaud Panday v. Mt. Babooes Kunraj Koomveree(8) quoted by the lower Court will show that the transaction will be upheld if it is of benefit to the estate. The other leading cases also quoted will show that the term “benefit” will not include the starting of a new business. The bulk of the consideration Rs. 14,000 was lent by Venkatrao on mortgage to his brother, in law shortly after the sale. It is contended on behalf of the appellant that the interest on this mortgage amounting to Rs. 1,050 per annum greatly exceeds the profits of the villages which are found by the lower Court to be Rs. 280 per annum. It is contended that this does not take into account the wages of the local agents, who Sitabai says were employed, and of the necessary expenses of frequent visits on the part of the owner, which cannot have amounted to less than Rs. 10 per time.
14. We are of opinion that there can be no reasonable doubt that the income of the estate was materially increased by the sale of the villages, as the interest on the mortgage of Despande amounts to at least 3 times the income from the villages. It has not been contended that the security is insufficient. The land mortgaged by Exhibit, D. 28 consists of 93 acres of land assessed at Rs. 191 situated in the Amraoti District of Berar where land is very valuable. The plaintiffs were presumably in enjoyment of the interest.
15. As regards Venkatrao's money lending business Sitabai his mother has deposed that there was ancestral money lending business and she refered to the mortgage of the house of one Mangalmurti. It is not possible for defendant to prove the existence of money lending transactions which are especially within the knowledge of the plaintiffs. We have already referred to the failure to produce the account books which would have thrown light on the question. The explanation that the account books were burned does not seem to be satisfactory. The remarks of the Subordinate Judge regarding the possibility of the discovery of manganese deposits in the estate are pure speculation. There is no evidence that any manganese exists there. To sum up it would appear that Venkatrao was under no necessity to sell the estate but for various reasons he wanted to get rid of it. No enquiry was made by the purchaser. The bulk of the consideration was employed in a loan to his brother-in-law Yeshwantrao Deshpande, on apparently good security. The net result of the transaction was an increase of about Rs. 750 per annum in the income of the family. In these circumstances we are of opinion that the sale resulted in an actual benefit to the family, the advantage of which the plaintiffs are now reaping, and it would be inequitable that they also avoid the sale and at the same time retain the benefit of the mortgage. Every case of this character has to be judged in its own facts and it is impossible to lay down a hard and fast rule as to whether a transaction of this character should be upheld or not: cf. Ram Bilas Singh v. Ramyad Singh(9). In the case of actual pressure or a danger to the estate there is less difficulty in coming to a decision. It is in the case of a real or supposed benefit that the difficulty arises. On consideration of all the circumstances of the present case we are of opinion that the transaction of sale should be upheld.
16. The result therefore is that the decree of the lower Court will be modified by directing that the plaintiffs suit should be dismissed as regards the claim to set aside the sale of the villages and for joint possession of the sir land is confirmed. The cross-objections are dismissed. In the circumstances as each party has been partly successful we direct that each should bear its own costs in both Courts.
17. Decree modified.