Kamta Prasad vs Durga Dat Awasthi

Wort, J.—This is an appeal from the decision of the learned Subordinate Judge of Saran, in an action on three mortgage bonds. The plaintiffs appeal from that part of the judgment and decree by which the learned Judge has disallowed interest at the rate of 2 per centum per mensem compound, with yearly rests and has reduced the interest to 12 certum per annum simple. The defendants appeal from the judgment of the learned Judge except as regards that which relates to interest.

The case of the plaintiffs in the Court below was that after the execution of the mortgage bonds the last of which was in November 1917, defendants 1 to 12, who, up till then, were members of the joint family, separated. Their case also was that the bonds were executed for legal necessity. By his judgment the learned Judge had decided both these questions in favour of the plaintiffs and he in the circumstances granted a mortgage decree. The judgment of the learned Subordinate Judge was supported by the plaintiff-appellants in this Court on the two ponts which I have mentioned, and that, they added the argument that, having regard to the fact that defendants 1 to 2 (who executed the mortgage bonds) mortgaged only those share''s which fell to them on partition and that as partition has now taken place and that as the mortgage decree is sought to be enforced only against those interests, the question of legal necessity is involved, the question of interest cannot be doubted after the decisions of the Privy Council in Nazir Begum v. Raghunath Singh, 1919 P C. 12 = 50 I C 434 = 46 I A 145 = 41 All 571 (P C) and Ram Bhujhawan Prasad Singh v. Nathuram, 1923 P C 37 = 71 I C 933 = 50 I A 14 = 2 Pat 285 (P C). In the view which I take with regard to the matter of legal necessity, the point to which I refer does not arise.

The mortgage bonds were three in number, the first being of 12th June 1914, for Rs. 1,000 by which defendants land 2 mortgaged 9 annas 7 pies odd interest in village Tiar and the same interest in village Shankra, and the same in village Majhaulia. The second bond was dated 16th November 1914, by which defendant 2 executed a mortgage of 1 anna 7 pies 4 karants in the three villages, the interests whereof were mortgaged in the bond of 12th June 1914. By the third bond defendant 1 on 2nd November 1917, mortgaged his 8 annas interest in the three villages which I have named together with the same interest in village Darhla. As I have stated, the interest reserved under these bonds was 2 per centum per mensem compound with yearly rests.

I propose in the first instance to deal with the question of cross-appeal of the defendants with regard to the two matters decided by the learned Subordinate Judge, namely, whether the parties separated after the execution of the mortgages, and whether the mortgages were for family necessity. The plaintiffs in support of their case called a number of witnesses stating the fact that the members of the family had separated. The learned Judge as I have said has come to the conclusion that the separation did take place, but has come to no definite conclusion as regards the date. The witnesses called on behalf of the plaintiffs to prove this fact were Mahadeo Prasad (P.W. 4) a neighbour zamindar and money lender who was a witness to some of the bonds executed in the case and had lent money to defendant 5 in 1921 Sukhdeo Prasad, (P.W. 5), also_a zamindar who had been lending money to the defendants for a period of 14 or 15 years and was a co-sharer with the defendants in another village; Brij Nandan Prasad, again a zamindar who was on visiting terms with the defendants was the scribe of the mortgage bonds in suit and was also a scribe of other bonds executed by defendants and also spoke to the fact of separation. The Judge has discounted the evidence of these witnesses on the ground that none was present at the time when the partition took place. He then proceeds to rely upon a number of documents (mostly mortgage bonds) executed by the defendants from which he draws the inference that a separation did in fact take place. He has stated in his judgment that there was no documentary evidence to prove the fact of partition; and by that we understand him to mean that there was no partition deed.

The most important of the documents relied upon was Ex. 1, a mortgage bond dated 3rd May 1922, where defendant 3 dealt with his specific shares in the properties. Again in the same month defendant 2 executed a bond, one of the purposes of which was to provide money for the Sradh ceremony of the widow of Debi Dat. Debi Dat was the brother of defendants 2 and 3, uncle of Chandrika, (defendant 4), and the cousin of Durga Dat Awasthi (defendant 1). The other bonds dated 17th April 1919, Exs. 2 and 2-a, were relied upon for the reason that a certain share in the two debts which were incurred by the mortgage related to the widow of Debi Dat and that certain members who had been joined in the mortgage bonds gave an indemnity therefor. Ex. 3 which is not before us, but which is another document upon which the learned Judge has relied is dated 10th November 1918, and reliance is placed on this showing that the widow of Debi Dat was described as his heir, which would certainly have been an inappropriate description had the family been joint. This however it is contended by Mr. Parmeshwar Dayal who appears on behalf of the defendants, has no significance having regard to the case which the plaintiffs made out. It is quite clear from the evidence that Debi Dat died about the year 1912 or 1913, and the statement which it is asserted was consistent only with the partition having taken place is obviously inconsistent with the plaintiffs'' case that the members of the family were joint up to the date of the last bond which was in November 1917. Four other documents to which I have already referred, it is contended, are equally consistent with the case of jointness or a case of separation; they arc consistent with the case of jointness, as the idea of the members of a family executing mortgage bonds charging the shares which would fall to them in the event of a partition is by no means uncommon. But in the Court below the deeds were relied upon more for the purpose of showing that the members of the family were by, these transactions raising funds to meet their own particular expenses and that there was thus an indication that there was no common fund from which the expenses of the members of the family would be met. As an instance more particularly of this matter are the bonds executed by defendant 2 on 2nd September 1914, and or 28th October, of the same year wherein he mortgaged his 1 anna 7 pies odd share in village to meet his own personal necessities. Again defendant 3 by the bond of 5th June 1912, mortgaged his share in the property to meet certain antecedent debts. On 12th August 1921 the same person mortgaged his 1 anna 7 pies odd share for his antecedent debts together with maintenance of his own family. It is true, as Mr. Parmeshwar Dayal argues, that the mere execution by these persons of those bonds charging thereunder their particular shares in the family property is not necessarily inconsistent with the state of jointness. However the facts proved by those bonds would give some support to the evidence called by the plaintiffs on the question of separation. It would be difficult for this Court to come to a conclusion with regard to the credibility of the witnesses different from that at which the learned Subordinate Judge has arrived, but the mere fact that the witnesses were not present would not of itself be sufficient to disregard their evidence entirely. The matter of separation may be and often is a question of reputation or notoriety; and the witnesses called by the plaintiffs certainly were competent to state the facts of which they gave evidence. The reasons which the learned Subordinate Judge has given therefore for coming to the conclusion that separation did take place seem to be supported by the oral evidence also.

The other substantial question that remains is as I have already mentioned. The first bond was for Rs. 1,000. The greater part of the consideration was Rs. 930 which was given by the lender in cash, the balance being Rs. 70 for previous dues. There is no very serious argument as regards the Rs. 930 for the expenses of the marriage. It has been established by the evidence that enquiries were made by the lender and the only comment that can be made with regard to the Rs. 70 is (as I have said) that it, went to meet previous dues. It seems to me however that this bond can be supported on two grounds. First of all it has been established not only that enquiry was made by the lender that the money was actually required and was expended for the marriage, but that the lender also made enquiries from the members of the family as regards the Rs. 70 although no enquiry was made from third persons. Either on the ground that the Rs. 70 forms an unsubstantial amount of the consideration or on the ground that enquiries were made of the only persons who could give the lender any information with regard to the matter, legal necessity is established.

The second bond was of 16th November 1914, for a consideration of Rs. 599. This was made up of a previous bond of Rs. 105-8-0 and Rs. 493-8-0 for chhatia ceremony. Mr. Parmeshwar Dayal attacks more particularly the larger amount namely, Rs. 493 for chhatia; but it is not seriously disputed that in a family of the standing of the defendants the chhatia ceremony was usual and could not have been described as unnecessary and in the circumstances there is no serious doubt as to the expenditure on this account. So far as the balance of Rs. 105-8-0 is concerned, the lender satisfied himself as to the existence of the debt.

The third bond was of 2nd November 1917, for Rs. 600 which was made up of various items: two hand-notes of Rs. 50 each together with bahi khata account for Rs. 67 together with Rs. 156 interest. The hand-notes were proved. The comment regarding the bahi khata account was that no bahi khata books were produced. With that I shall deal in a moment. The other sums were mortgage bonds, dated 5th September 1915, for a sum of Rs. 200 a further item of bahi khata account of Rs. 32 making in all with interest Rs. 371 the total being Rs. 600 which includes the amount paid by the lender, to defendant 2 in cash. There is some controversy with regard to what took place as regards this bahi khata account. There seems to be some misunderstanding with regard to the matter. On 27th September 1929, the plaintiff filed these documents whereupon the Subordinate Judge made an order that the inadmissibility or otherwise would be considered when the documents were tendered in evidence, ultimately on 6th June 1929, they were rejected. The plaintiffs contended that they were wrongly rejected; but it is clear from what took place that the plaintiffs merely filed them on 27th May 1929, but, not during the time when the trial was proceeding, did they ever tender these documents in evidence. The trial appears to have come to an end on 5th June 1929. It is quite obvious therefore that the learned Judge was right when he decided that the documents at this stage (that is to say, after the defendants'' evidence was closed) were to be rejected. But even so, that does not necessarily dispose of the point. The plaintiffs so far as the sums due on bahi khata account were necessary to be established was concerned, went into Court without the accounts, at their risk, and, if the Judge accepted their evidence unsupported by documents, the mere fact that the documents were not produced is no reason for now holding that their evidence is not to be accepted. That is the only ground upon which that part of the consideration for the bond of 2nd November 1917, was attacked. It has been proved that the lender satisfied himself by a bona fide enquiry that the debts existed and therefore of the existence of legal necessity. The judgment therefore of the learned Subordinate Judge with regard to legal necessity seems to be one which cannot be attacked. The reasons advanced by the learned advocate on behalf of the respondents do not justify a finding that the learned Judgewas erroneous in the conclusion at which he arrived. That disposes of the two main questions in the appeal.

There remains only the question of interest which was the subject-matter of the plaintiffs'' appeal. It was contended by the plaintiffs (as I have already stated) that as separation had taken place, only the interests of the persons who actually executed the three bonds with regard to their own shares were charged by the mortgage decree and that neither the question of legal necessity as regards the loan itself nor the question of interest arose. The learned Judge in the Court below was not asked to decide that question. In my judgment it is not necessary to decide the contention in this case for the reason that at the time the mortgage was entered into on their own showing the plaintiffs were members of the joint family; and, as they were contracting with regard to the joint family property, it was necessary to show in order to validate the transaction that the joint family necessity for raising the money at the rate of the bond existed. I have already referred to the decision of the Judicial Committee in Nazir Begum v. Raghunath Singh, 1919 P C. 12 = 50 I C 434 = 46 I A 145 = 41 All 571 (P C), which establishes clearly the proposition that it was necessary for the lender to prove that it was not unreasonable to borrow money at the rate of interest reserved by the mortgage bond. The passage of Lord Phillimore''s opinion is to this effect:

It is incumbent on those who support a mortgage made by the manager of a joint Hindu family to show not only that there was necessity to borrow, but that it would not be unreasonable to borrow at some such high rate and upon some such terms, and if it is not shown that there was necessity to borrow at the rate and upon the terms contained in the mortgage, that rate and those terms cannot stand.

The same proposition is to be found in Ram Bhujhawan Prasad Singh v. Nathuram, 1923 P C 37 = 71 I C 933 = 50 I A 14 = 2 Pat 285 (P C) Whether in these cases their Lordships of the Privy Council intended to modify in any sense the principle enunciated in Hanuman Prasad v. Munraj Koonwerri, (1854-57) 6 MIA 393 = 18 W R Sin (P C), seems to be open to doubt. The statement to which I have referred in Nazir Begum v. Raghunath Singh, 1919 P C. 12 = 50 I C 434 = 46 I A 145 = 41 All 571 (P C) was:

It is incumbent upon those who support a mortgage made by the manager of a joint Hindu family to show not only that there was necessity to borrow, but that it was not unreasonable to borrow at some such high rate and upon some such terms.

In Hanuman Prasad v. Munraj Koonwerri, (1854-57) 6 MIA 393 = 18 W R Sin (P C), it was stated that the existence of legal necessity was not a condition precedent to the validity of the charge and that a mere bona fide enquiry as regards the matter would be sufficient. Whether their Lordships intended by the later cases to hold that in the case of interest it is necessary for the lender to prove that the necessity existed, that is to say, apart from a bona fide enquiry, is doubtful; but for the reasons which appear the matter does not arise. In disposing of the matter in this case the learned Judge has dealt with it on two grounds: first of all he has considered the case made by the plaintiffs which was to the effect that the parties agreed to pay the high rate of interest. He characterizes the evidence in this respect as conflicting and appears to come to the conclusion that no such agreement was arrived at but that the lender instructed the scribe who drew up the bonds to state the rate of interest at 24 per cent per annum. Then the learned Judge finds that there was no proof of necessity. The plaintiff in order to establish necessity had relied upon several mortgage bonds entered into by the parties. They were bonds dated 2nd July 1914, 12th September 1914, 28th October 1914, 5th September 1915 and 8th September 1915. The Judge is inaccurate to some extent in saying that these were all of later dates, because it will be seen that the latest of the three bonds in suit was of 1917. The bonds relied upon by the plaintiffs would however be some indication at any rate of the rates upon which the defendants were borrowing money, although as the learned Judge points out, not necessarily evidence of the actual necessity to borrow at that rate. In any event the plaintiffs have not been able to establish the necessity of borrowing at the rate reserved in the bonds nor do the appellants very curiously contend that they have. In my judgment therefore the plaintiffs'' appeal fails as regards the proof of necessity for the members of the family to borrow at this rate.

The only question that remains is the rate at which they were entitled to recover under the bonds. The learned Judge using his own experience with regard to the matter has come to the conclusion that the proper rate in the circumstances would he at 12 per cent per annum simple interest�a view with which this Court concurs. In my judgment therefore both the appeal and the cross-appeal fail and both of which must be dismissed with costs.

Varma, J.

I agree.