Karuppu Goundan and Others vs Sellammal and Others

The only question in this appeal against the judgment of Rajagopalan, J., in A. S. No. 126 of 1949 is whether an alienation by a Hindu widow is

binding on the reversioners. The properties in suit belonged to one Kali Goundan who died in 1918 leaving him surviving his widow Varadammal

and his two daughters who are the plaintiffs in the suit out of which this appeal arises. Varadammal sold certain properties belonging to Kali

Goundan and which had devolved on her to her father Palani Goundan under Ex. B-l dated 25-3-1921 for a sum of Rs. 2000. The plaintiffs

attacked the alienation on the ground that it was not supported by necessity.

The consideration of Rs. 2000 was made up of the following items : (1) Rs. 922-10-8 due for principal and interest in respect of a mortgage

executed in favour of one Sellappa Goundan by Varadammal on 2-7-1919 for Rs. 800: (2) Rs. 100 being the balance due in respect of the

mortgage executed by Kali Goundan himself in favour or one Veerayi, (3) Rs. 100 being the balance due to Chinna Goundan under a promissory

note executed by Kali Goundan, (4) Rs. 100 due to a Nattukottai Chetti hank at Namakkal borrowed by Kali Goundan and one Ramasi Goundan

and (5) Rs. 777-5-4 which was not paid in cash but for which the purchaser is stated to have executed a mortgage in favour of the vendor. Soon

after his purchase Palani Goundan sold the major part of the property purchased by him to the fathers of defendants 1, 2 and 3.

At the trial, the evidence disclosed that though the sale deed recited the execution of a mortgage by Palani Goundan for Rs. 777-5-4 no such

mortgage was ever executed. The case on behalf of the alienees was that instead, a promissory note was executed which was discharged in due

course and Varadammal advanced the money so collected on a mortgage. Neither the promissory note nor the mortgage alleged to have been

executed in favour of Varadammal was produced. The learned Subordinate Judge held that the sale deed was supported by necessity only to the

extent of Rs. 500.

He therefore passed a decree that on payment of that sum by the plaintiffs into court to the credit of defendants 2 and 3, defendants 1, 2 and 3 do

deliver to the plaintiffs possession of the suit properties. Defendants 1 to 3 filed an appeal to this court, A. S. No. 126 of 1949. That appeal was

heard and disposed of by Rajagopalan, J. The learned Judge held that a sum of Rs. 1022-10-8 represented debts which would support that

alienation on the ground of legal necessity. He therefore varied the decree of the lower Court and held that the plaintiffs would be entitled to

recover possession of the property on payment of Rs. 1022-10-8, Otherwise he dismissed the appeal, the appeal before us is by defendants 1 to

3 against this judgment and decree of Rajagopalan, J.

Mr. K. Bhashyam Aiyangar, learned Counsel for the appellants, did not seriously challenge the finding of the learned Judge that the alienation

was supported by necessity only to the extent of Rs. 1022/10/8. His contention was that as there was legal necessity for the sale it was not

incumbent on the purchaser to prove that the entire sale proceeds were utilised for discharge of debts binding on the estate or were otherwise used

for necessary purposes.

In support of this contention he relied on the well-known ruling of the Judicial Committee in AIR 1927 37 (Privy Council) , which has been

considered in a catena of cases in the several High Courts in India as well as by the Privy Council subsequently. In that case there was an alienation

for a sum of Rs. 3500 out of which Rs. 3000 were applied to purposes of necessity. In the suit to set aside the sale, the High Court made a decree

setting aside the sale conditional upon Rs. 3000 being paid to the purchaser.

Their Lordships of the Judicial Committee held that the suit should have been dismissed. They further held that a decree upholding a sale

conditionally upon the purchaser paying a small part of the price not proved to have been applied to purposes of necessity is also contrary to law.

Their Lordships point out that it is not a matter of arithmetical calculation as regards the part of the consideration not justified as being for

necessary purposes.

The true Question which fell to be considered in each case was whether the sale itself was one which was justified by legal necessity, On the facis

found by the trial Judge in that case it was clear that the impugned sale was made after due enquiry as to legal necessity by the vendee and that the

price was adequate. Their lordships observed that the mere fact that after a long interval of time the appellants have not been able to establish how

the surplus of Rs. 500 was applied is not a sufficient ground in law for setting aside the sale.

In spite of their Lordships in this case pointing out that the principle to be applied should not be based on an arithmetical calcinations, in several

cases following this decision of the Privy Council courts have paid due regard to the proportion between the amount of consideration, which was

for legal necessity and the balance for which there existed no legal necessity. At page 468 of Mayne''s Hindu Law, 11th Edn. under note (f) we

find cases collected which obviously have been decided on She arithmetical basis. These were all cases decided after the Privy Council decision in

AIR 1927 37 (Privy Council) . Summing up the result of the decisions the following statement of the law is in our opinion accurate:

Where the necessity for a particular sale Or mortgage is only partial, in other words, where) the money required to meet the necessary purposes is

Jess than the amount sought to be raised by the sale or mortgage, the true question is whether the sale itself is one which would be justified by legal

necessity. The reason for this is that it is not always possible for the managing member to sell just that share of the family property which Will bring

in the precise sum which is wanted to clear the debts'' which are binding. But in a case where the circumstances only disclose a partial necessity,

the sale will however be valid only where the purchaser acts in good faith and after due inquiry and is able to show that the sale itself is justified by

legal necessity, though he is under no legal obligation to inquire into the application of any surplus.

On the same lines is the following statement of law concerning alienations by a widow : ""Where a purchaser from a Hindu widow acts in good

faith and after due inquiry, pays a fair price for the property sold, so that the sale itself is justified by legal necessity, he is under no obligation to

inquire into the application of the money paid by him and is, therefore, not bound to make repayment of such part of the price as is not proved to

have been applied for purposes of necessity. Where, owing to the alienee''s knowledge or defective inquiry or other circumstances the sale is not

justified by necessity but part of the considerations is advanced by him for a binding purpose, then the reversioner is entitled to have the alienation

set aside on his paying the amount."" We have no hesitation in holding that the easel before us falls in the latter category. It must not be overlooked

that the alienee was no other than Varadammal''s own father who presumably knew all material circumstances, probably more than even the

widow herself. He must have known that there was no necessity for a sale of the property to raise a sum of Rs. 2000. There is no evidence

adduced to show that he had made bona fide enquiries and had been satisfied that the sale was justified by necessity in its entirety.

Another fact of significance is that even this amount of Rs. 1222-10-8 was not paid by Palaniandi Goundan at the time of the execution of the sale

deed. He only undertook to discharge the four debts which aggregated to that sum. It is now common ground that it was the purchasers from

Palaniandi, that is, the first defendant and the father of defendants 2 and 3, who discharged the mortgage in favour of Sellapna Goundan. We have

also the fact that there is a false recital as regards the balance of Rs. 777-5-4.

This sum was not even paid in cash to the widow at the time of the sale deed. All tie circumstances lead to the inference that the transaction is not a

bona fide sale for necessity. Such a sale cannot in law bind the reyersioners and was rightly set aside. At the same time, as there is a finding that a

portion of the consideration was for the discharge of a binding debt and as the estate had the benefit of the discharge of that debt, the alienees

were entitled in equity to he paid that amount. This is all that he is entitled to and that relief has been granted to them.

Mr. Bhashyam Aiyangar argued for a very broad proposition that once there is some legal necessity any sale would be valid, whether the major

portion of the consideration was or was not for binding purposes. Logically it would mean that an alienation of a property worth Rs. 50,000 would

be valid if there is legal necessity for a sum of RS. 5000. The legal necessity must be correlated to the consideration of the sale, though not

arithmetically.

All that AIR 1927 37 (Privy Council) and decisions similar to that lay down is that if there is evidence of bona fide enquiry and the purchaser must

be deemed to have satisfied himself that there was necessity for that particular sale, namely, the sale of a particular extent of property in the

circumstances, then it is not incumbent on the purchaser to prove that the sale proceeds were actually utilised for binding purposes.

In the present case we must hold that the purchaser who was the father of the widow cannot be deemed to be a bona fide purchaser and he can

not rely on the principle which is applied to bona fide purchasers. We agree with the conclusion of Rajagopalan J. and dismiss the appeal with

costs of the plaintiffs-respondents.