J. Babulal and 4 Others. vs T. JayaramaNaidu and Others

K. Sampath, J.—Plaintiffs 2 to 6 are the appellants. One Javanthraj and appellants 2 and 3 filed suit O.S.No.101/72 before the Subordinate

Judge, Chengalpattu, against the respondents for recovery of a sum of Rs.28,719.66. Pending suit the first plaintiff Javanthraj passed away.

Appellants 1 and 2 were recognized as his legal representatives and appellants 3 to 5 were added as his legal representatives. The case as set out

in the plaint was as follows:

The first plaintiff was the father and appellants 2 and 3 were his sons and they were undivided doing money lending business. The first respondent

is the father of respondents 2 and 3 and husband of the fourth respondent. The sixth respondent was the mother of the first respondent and was the

fifth defendant in the suit. All the respondents resided in No/118, Kaja Sahib Street, Pallavaram, as joint family members. They were a trading

family with a number of ventures. For the purpose of convenience the businesses were in the names of one or other joint family members and the

businesses were carried on with joint family funds. Their joint family was also running an agency for sale of cement, apart from a provision shop'' in

the Pallavaram Market. The cement business was run in the name of J.M.Traders at Pallavaram. They had regular money dealings with the

appellants between 15.11.1968 and 17.4.1971 for their joint family business. One or the other of respondents 1 to 3 would receive cash from the

appellants. As on 18.2.1971 the borrowings by the respondents amounted to Rs.17,500/- and on 25.2.71 a sum of Rs.1200/- was advanced and

on 5.4.1971 another sum of Rs.3000/- was advanced and the total amounts advanced as on 5.4.1971 came to Rs.21,700/-. On that date, the

third respondent received a sum of Rs.3000/- and passed a voucher to that effect. Again on 17.4.1971 another sum of Rs.2000/- was borrowed

by the respondents. This amount was received by the second respondent on the instructions of the first respondent and he also passed a receipt on

the same day. Thus in all the appellants had advanced a sum of Rs.23,700/-, which was binding on the respondents. Though the respondents

individually received amounts and passed the vouchers as agent of the respondents, all the respondents were liable. The respondents orally agreed

to pay interest at 6 paise per day for Rs.100/- and they were also paying the same at such rate till 18.7.1971. They were not entitled to any

benefits under Act 4 of 1938 or any other Debt Relief Act since they were assessed to income tax. In spite of demands, the respondents refused

to pay the amount and denied the same or having borrowed any amount from the appellants.

The first respondent filed a written statement and the same was adopted by the fourth respondent. He did not know anything about the family of

the appellants. He did not inherit any ancestral property or any joint family properties. The only property he owned was the business which he had

been carrying on, viz, the provision Stores in the marker originally in his own name till he transferred it in the name of his wife, the fourth

respondent, which he did for sentimental reasons. The other respondents had no interest or right in the property of this respondent or the business

in the provision stores. There was no joint family nor any joint family property. It was not a trading family either. All the respondents were not living

in Kaja Sahib Street house. It was purchased by this respondent with his own funds in the year 1948 even when his father was alive. The fifth

respondent mother was separately living with her daughter. The fourth respondent owned a house in 8/91 in G.S.T.Road. There were shops

attached to that property, which she let out to tenants, of whom this respondent''s second wife was one and she carried on business of her own in

agency for India Cements in the name of her daughter Mala. It was called J.M Traders. The site for the premises No.8/91 was purchased by the

fourth respondent in 1963 with her own fund and she put up a construction thereon. This respondent was not the owner of the premises from

where J.M.Traders operated. The fifth respondent had her own house. This respondent was not carrying on any other business excepting the

provision stores and had no interest in any other business or trade. He did not borrow any money from the appellants at any time for the purpose

of his business or for his family. He had no transactions with the appellants at any time. The appellants had been shifting their stands from time to

time. The notices issued by the appellants had been repudiated by this respondent in his reply notice. The suit as framed was not maintainable. This

respondent called upon the appellants to furnish him with a copy of the accounts of the alleged dealings, which was not done. This respondent was

also not aware of the alleged passing of the vouchers by respondents 2 and 3 to the appellants. He repudiated his liability for the amounts even if

such vouchers had been passed, since respondents 2 and 3 were not authorised by this respondent to borrow money at any time from the

appellants. They did not have any connection with the business carried on by this respondent nor this respondent receive any such money for his

family or for his business. The claim was a fraudulent one. Details about the particular business for which amounts had been borrowed had not

been given. If the accounts of the appellants showed any transaction with this or the other respondents, they should all be fabricated ones. There

was no oral agreement to pay interest at 6 paise per day per Rs.100/- or any other rate. This respondent was not assessed to income tax. He was

paying only sales tax. He never took short term or long term loans for the appellants.

The second and the third respondents filed a separate written statement stating that they were not members of any joint family with the first

respondent, that they were not even family members, that they had no concern or interest with the property in Kaja Sahib Street, or in the

provision stores of the first respondent, that they had not taken or borrowed any money from the appellants nor did they pass any vouchers as

claimed in the plaint either for the family business or for the purpose of any business, that they had no interest in the business of agency for India

Cements, which was carried on by their step mother with her own funds and for her own benefit in the name of her daughter in the shop belonging

to the fourth respondent, that they adopted the written statement of the first respondent, that the second respondent did not receive any notice from

the appellants, that these respondents were never deputed by the first respondent or other respondents to receive any monies from the appellants

and that they were not liable for the claim made in the suit.

The trial court framed the following issues:

(1) Whether the plaintiffs advanced any amount and if so, what amounts, on what dates and to which of the defendants?

(2) Whether or not the defendants are liable for any amount advanced to any particular defendant?

(3) Whether the suit is not maintainable for want of furnishing copies of accounts relied on?

(4) Whether the suit claim against the defendants for such advance is in time? and

(5) To what relief are the plaintiffs entitled?

The learned Additional Subordinate Judge, Chengalpattu, found as follows:

(1) The respondents formed a joint Hindu family;

(2) All the businesses run by the respondents in different names were only joint family business;

(3) The first respondent was in need of funds to run the family ventures.

(4) The respondents borrowed amounts from the plaintiffs as claimed in the plaint;

(5) The suit was maintainable; and

(6) The suit was in time.

Respondents 1 to 4 filed appeal in A.S.No.16/82 before the District Court, Chengalpattu. The lower Appellate Court framed the following

points for consideration:

(1) Whether the respondents advanced amounts as alleged by them and if so, whether all the appellants are liable for the same?

(2) Whether the suit is not maintainable? and

(3) Whether the suit is barred by limitation?

On an appreciation of the material on record, and the evidence, oral and documentary, the learned District Judge found that the respondents were

all living together as joint family having a common mess at No.118, Kaja Sahib Street, that the businesses run in the different names were all joint

family businesses and that they needed hinds during the period 1968 to 1971 for the various businesses. However, the learned District Judge held

that the first respondent had not signed in Exs.A-1 and A-2 and that there was nothing to indicate that the amounts mentioned therein were

received by the respective parties at the instance of the first respondent or for the benefit of all the respondents. So holding the learned District

Judge dismissed the suit so far as respondents 1,4 and 5 were concerned and confirmed the decree of the trial court with regard to respondents 2

and 3. The learned District Judge found that the suit was maintainable and that it was not bared by limitation. The learned District Judge allowed

the appeal to the extent indicated above his judgment and decree dated 12.12.1983.

In so far as the lower Appellate Court had exonerated and dismissed the suit against respondents 1,4 and 5, the Second Appeal has been filed.

At the time of admission, the following substantial question of law was framed for decision in the Second Appeal:

Whether the lower appellate Court is right in holding that defendants 1,4 and 5 are not liable to pay the decree amounts in the absence of any

proof by the respondents that the monies borrowed were not for the joint family business and were received by defendants 2 and 3 in their

individual capacity?

Mr.R.Shanmugham, learned Senior Counsel for Mr.Rathnam Sivakumar appearing for appellants, contended that the lower Appellate Court

found in paragraph 6 of its judgment that all the businesses run in a different names were only joint family business and that the respondents were

living as a joint family and admittedly funds were required for their businesses. Just because the first respondent had not signed the vouchers, the

lower Appellate Court ought not to have dismissed the suit against the first respondent and respondents 4 and 5.

Mr.R.Subramaniam, learned Counsel for Mr.R.Vedantham appearing for the respondents, submitted that both the courts below did not find that

the money stated to have been borrowed from the appellants was utilized for any of the family businesses and in the absence of such a finding, the

decision of the lower Appellate Court had got to be confirmed. He also submitted that the appellants had not established that the first respondent

authorised respondents 2 and 3 to borrow moneys from the appellants for the purpose of the businesses and unless this was established, there was

no question of fastening the liability on the first respondent. Admittedly, according to the learned counsel, the first respondent was the joint family

manager and he had not authorized respondents 2 and 3, the junior members, to borrow for the joint family businesses and the decision of the

lower Appellate Court exonerating the first respondent from liability has therefore to be sustained.

The learned counsel also relied on paragraph 275 at page 239 of N.R. Raghavachariar''s Hindu Law (Principles & Precedents) and also

paragraph 369 in page 625 of Mayne''s Hindu Law 12th Edition. He also relied on the decision of the Calcutta High Court in Mudit Narayan

Singh v. Ranglal Singh (ILR (1902) 29 Cal 797).

Before proceeding further, it has to be stated that the respondents came forward with a very false case that there was no joint family business,

that there was no need to borrow and so on and so forth. The Courts below rejected the defence thus set up by the respondents, though the lower

Appellate Court negatived the claim of the appellants against the first respondent on the ground that he had not signed the vouchers Exs.A-1 and

A-2. Merely because the joint family manager had not signed the relevant vouchers, he cannot be absolved if the joint family was otherwise liable.

In the instant case, it has been established that during the relevant period 1968 to 1971 the joint family of the respondents had the need to borrow

for their businesses.

The paragraph referred to by the learned counsel for the respondents in the Hindu Law Principles and Precedents by N.R.Raghavachariar runs

as follows:

Manager:- So long as the joint family remains undivided, the senior member of the family is entitled to manage the family properties, and the father,

and in his absence, the next senior most male member of the family, is its manager provided he is not incapacitated from acting as such by illness or

other sufficient cause. The father''s right to be the manager of the family is a survival of the patria potestas and he is in all cases naturally, and in the

case of minor sons necessarily, the manager of the joint family property. In the absence of the father, or if he resigns, the management of the family

property devolves on the eldest male member of the family provided he is not wanting in the necessary capacity to manage it...........But a younger

member of a joint family cannot deal with the joint property as manager except in exceptional or extraordinary circumstances, such as in a season

of distress or calamity affecting the whole family, for support of the family or in the absence of the father or the eldest member in a remote country.

Hut the temporary absence of the father or the eldest member from the locality for only a short time is not sufficient to clothe a son or a younger

member with powers of the manager to deal with the family property when there is nothing to show that he is in any remote country or that his

where about are not known or that his return within a reasonable time is out of the question or not anticipated.

Paragraphs 276 runs as follows:

In a Hindu family the Karta or manager occupies a position superior to that or'' the other members in so far as he manages the family property or

business or looks after the family interests on behalf of the other members. He is primus inter pares - first among equals.

The learned Counsel lays stress on the fact that in the instant case, the first respondent had not resigned or that he was not wanting the necessary

capacity to manage it or that he was absent to entitle the junior members to borrow without his express authority.

In Mayne''s Hindu Law, the passages relied on by the learned counsel for the contesting respondent runs as follows:

.....Narada Says: ""What has been spent for the household by a pupil, apprentice, slave, woman, menial, or agent must be paid by the head of the

household."" The rule in Brihaspati is to the same effect: ""When a debt has been incurred for the benefit of the household, by an uncle, brother, son,

wife, slave, pupil or dependent, it must be paid by the head of the family."" Of course, this implies that the persons referred to have acted either with

an express authority, or in circumstances of such pressing necessity that an authority may be implied..... And on the same principle it has been

stated ""that persons carrying on a family business, in the profits of which all the members of the family would participate must have authority to

pledge the joint family property and credit for the ordinary purposes of the business. And, therefore, that debt honestly incurred in carrying on such

business must override the rights of all members of the joint family in property acquired with funds derived from the joint business.

In Mudit Narayan Singh v. Ranglal Singh ILR 29 Cal 797, Junior members of a joint family were put forward as managing members of the

family superseding their father and uncle and they executed documents in favour of third parties and with the money thus obtained debts of the

family were discharged. The family including Kartha and another senior members was benefited by the transaction. The family also continued joint

in food, worship and estate so far as it was practicable under the circumstances. The Bench of the Calcutta High Court held that the alienations by

the Junior members were effected for legal necessity and were valid and binding on all the members of the family.

The learned counsel for the contesting respondent apparently wants to rely on to the fact that in that case the junior members were projected

as managing members of the family superseding the kartha and other senior members and that it is not so in the present case. But the Bench of the

Calcutta High Court has gone on further to say as follows:

The power of a younger member of a joint Hindu family to deal with immovable property belonging to it under circumstances such as we find to

exist in this case is amply borne out by the texts of Hindu Law. The text of Brihaspathi quoted in the Mitakshara, Ch.I, S. 1, v.28, is - ""even a

single individual may conclude a donation, mortgage, or sale of immovable property during a season of distress for the sake of the family.

Vijnanesvara''s commentary on the text is: ""even one person who is capable may conclude a gift, hypothecation or sale of immovable property, if a

calamity affecting the whole family require it or the support of the family render it necessary"". (Ch.I, S.I, v.29) Harita says ""while the father lives the

sons are not independent in respect of the receipt, alienation and recovery of wealth, but if he be prodigal, absent in a remote country or afflicted

with disease, let the eldest son manage the affairs."" (Vivida Ratakar Ch.I.P.4) Sankha and Likhita also say ""If the father be incapable, let the eldest

manage the affairs of the family; or with his consent, a younger conversant with business."" (Vivada Ratnakar, Ch.I, p.4.).

The power of a dependent member of a joint family, who is for some reason or other entrusted with the management of the joint estate, must be

such as would enable him to deal with it for the benefit of the co-parceners in cases of need. The assent of the other members, including that of the

father or grandfather.

if they be alive, would be implied. Brihaspathi, quoted in the Viramitrodya, says: ""should even a dependent member enter into a transaction for the

need of the family, the head of the family should not set it aside.

In the circumstances of the present case I am satisfied that the amounts covered by Exs.A-1 and A-2 were utilized for the joint family business

and notwithstanding the fact that the first respondent had not signed in the said two vouchers, still the family having benefited from the borrowing, it

has to be held that the whole family including the first dependent would be liable to answer the suit claim.

It has been held in Johurra Bibee v. Sreegopal Misser and others (1876 ILR-I-Cal 470 that,

A joint family property acquired and maintained by the profits of trade is subject to all the liabilities of that trade.

In that case, the plaintiff, who was a widow of one Monohur Lall, claimed lien for maintenance on the joint estate and particularly in a Mitakshara

family. She admitted in her plaint that the property, out of which she claimed maintenance, was acquired by her father-in-law partly by money

supplied to him by his father and partly out of the profits of a business for the sale of shawls, silks and Benares piece goods, which he carried on

with moneys, portions of which were given to him by his father and portions received by him from his estate. It was her contention that any interest

which vested in the Official Assignee on the father-in-law being adjudicated insolvent, was subject to her maintenance rights. In that case, the

property was put up for sale by the Official Assignee subject to the plaintiff''s rights to maintenance and was so conveyed. The Calcutta High Court

held that those who claim to participate in the benefits must also be subject to the liabilities of the joint business, and by the plaintiff''s own

admission, the joint family title to the house, in respect of which she claims, would not have existed, except for the profits of the business..........But

the debts being joint business debts and as such, debts for which business creditors could have attached the properties, the whole interest in the

property vested in my opinion in the official Assignee; for the proceedings in insolvency are in fact substituted for separate suits by

creditors...........The effect of such conveyance (by the Official Assignee) is that the purchaser took only such estate as the Official Assignee could

give, but if the plaintiff had no right, the purchaser would take an absolute estate. In my opinion, the plaintiff, under the circumstances of this case,

has no right as against joint creditors to maintenance or residence, out of or in the house of question, and as the plaint is confined to this particular

house, there is no case made for any further enquiry.

...........I am however of the opinion that the plaintiff has no claim, which can be enforced against any part of the joint estate, until after payment of

the joint trade debts.

In Mahabir Prasad Misr v. Amla Prasad Rai and others 1924 ILR 46 Alla 364), dealing with the power of manager to contract debts for the

purpose of carrying on the business, a Bench of the Allahabad High Court held as follows:

Where there exists a family business carried on bona fide for the benefit of the family and with the asset of all the adult members, whether the

business be ancestral or not, it is within the competence of the manager to borrow money from time to time for the purposes of the business and

the lenders will not be bound to inquire into the necessity for each advance that may be made.

In Guruswami Nadar and seven others v. 7.5. Gopalasami Odayar and six others (1919 LLR 42 Mad 629 = 9 L.W.547, where the members

of a devastanam committee sued the members of a joint Hindu trading family to recover money borrowed from the plaintiffs by the managing

member of the family and the defendants failed to produce their account books though summoned by the plaintiffs, it was held that, assuming that

the onus of proving the binding nature of the debt lay on the plaintiffs even in the case of a trade carried on as joint family business it was shifted to

the defendants on account of the presumption arising against them by their omission to produce their accounts called for by the plaintiffs, a

presumption which arises against them whether the plaintiffs have any evidence or not.

It was held that the onus of proving that the debts in question were not incurred for joint family purposes was on the debtors.

The bone of contention of the learned Counsel for the respondents is that both the courts below do not find that the money was utilized for the

family business. It has already been found that the family had been doing a number of businesses and that they were all joint family businesses and

in respect of those businesses, the respondents had been borrowing moneys from the appellants during the period 1961 to 1971. The respondents

cannot try to take advantage of the fact that the vouchers, on which the suit was based had not been signed by the first respondent. The appellants

bona fide thought and it is also in evidence that the first respondent gave oral instructions to the appellants to lend the moneys that the amounts

were required joint for the family business. It is not necessary to see to the application of money, that is to say, whether that money was actually

utilized for the purpose for which it was borrowed as long as the lender bona fide believed that thee moneys were required for joint family

business.

There is high authority in Narada and Brihaspati in the passage quoted by the learned counsel for the respondents himself that when a debt had

been incurred for the benefit of the joint family or the joint family business by an uncle, brother, son, wife, slave, pupil or dependant, it must be paid

by the head of the family. Respondents 2 and 3 had admittedly borrowed moneys from the appellants on the representation that the amounts were

required for the joint family business emergently. The lenders, viz, the appellants believed their word and gave the amounts. The first respondent

cannot escape by merely saying that he had not authorised respondents 2 and 3 to borrow. As has been held in Mahabir Prasad Misr v. Amla

Prasad Rao and others (46 Allahabad 364) the lenders would not be bound to inquire into the necessity for each advance that might be made by

them as long as they entertained a bona fide belief that the borrowing was for the joint Hindu family business. The creditor is not bound to inquire

into the purpose of the debt as long as the business formed the purpose of debt, in order to bind the whole family thereby, because the power to

contract debts is incidental to the carrying on of the business from which the family derives its means of subsistence and support. Raghunathji

Tarachand v. The Bank of Bombay (ILR 34 Bombay 72). In view of the discussion above, I am satisfied that the first respondent cannot escape

liability and for that matter the joint family as it existed during the relevant period cannot escape liability merely on the ground that the first

respondent had not either signed the vouchers or that he has not authorised respondents 2 and 3 in writing to borrow from the appellants. The

substantial question of law raised in the Second Appeal has to be answered in favour of the appellants and the Second Appeal will stand allowed.

However, there will be no order as to costs. RR/VCS.