Laxmidas Mathuradas vs Jitendea Mullick

Harries, C.J.—This is an appeal from a judgment and decree of Bose J., dated August 23, 1950, by which lie-dismissed the Plaintiff''s suit for specific performance of a contract.

On January 2, 1946, the shebaits of a certain deity entered into an agreement with the Plaintiff for the sale of certain property known as No. 15/1, Rup Chand Ray Street, in this city. The purchase price was Rs. 30,000, and it was provided that the Plaintiff was to pay earnest money of Rs. 1,001 to the Defendants and that the purchase would be completed within two months from the date of delivery of the title deeds. But the transaction was subject to the vendor''s title being established and also to be subject to the sanction of the court being given for the sale of the said premises. The Defendants undertook to make the application to the court at their own expenses. The Plaintiff paid the earnest money and an application was made to the court for permission to sell the premises for Rs. 30,000. This application was made under the Charitable Endowments Act and was heard by Edgley J., who made an order permitting the sale of the premises to the Plaintiff.

The transaction was never completed and eventually the Plaintiff brought this suit for specific performance of the contract. The contract was made on behalf of the deity by Defendants Nos. 1, 2 and 3, who were the shebaits. Eventually Defendants Nos. 4 and 5 became shebaits when they attained majority and were added as parties and so were Defendants Nos. 6, 7 and 8, who were prospective shebaits, that is, persons who would become shebaits on the death of their: father.

The main defence was that there was no legal necessity for this transaction and in the alternative that it was not a transaction for the benefit of the estate.

Bose J. held that the transaction was not for legal necessity or for the benefit of the estate and was such that the shebaits could not legally enter into. That being so, he was of opinion that no court could order specific performance of the agreement and he, accordingly, dismissed the suit.

The property in suit, No. 15/1, Rup Chand Ray Street, formed part of large properties, which originally belonged to Raja Rajendra Mallik. On February 21, 1887, the Raja made a will and dedicated a number of his properties, including the properties in suit, to certain deities. Defendants Nos. 1, 2 and 3 were the shebaits of the deities when this agreement was entered into. It is to be observed that Raja Rajendra Nath Mallik died a year or two after making his will.

The whole contest in the court below turned on whether this transaction was or was not for legal necessity and for the benefit of the estate. The Plaintiff naturally relied upon the order made by Edgley J. granting the Defendants permission to sell. It is to be observed, however, that earlier in an Originating Summons before Clough J. he had held that this transaction was not for legal necessity or for the benefit of the estate and refused to approve of it. It is to be observed that in the application made to Edgley J., the fact that Clough J. in previous proceedings had held this transaction to be not for legal necessity and for the benefit of the estate was suppressed. Further, in the application which was made to Edgley J., it was stated that the Defendants, the shebaits of the deity, had sold No. 15, Rup Chand Bay Street and that, in consequence, the property in dispute, No. 15/1, Rup Chand Ray Street, was worthless, as the Defendants could have no access whatsoever to it. There had in fact been no sale of No. 15, Rup Chand Ray Street.

There can be no doubt that the facts were not placed fully before Edgley J. and I have very grave doubt, if the whole of the facts had been placed before him he would have made the order which he did. However, it had not been contended that this order is in any way binding or concludes the question of the existence or otherwise of legal necessity or benefit to the estate.

The property in dispute, No. 15/1, Rup Chand Ray Street, forms part of a large property consisting of No. 15, Rup Chand Ray Street, which has a frontage on Rup Chand Ray Street, and No. 15/1, Rup Chand Ray Street, which is open land at the back of No. 15, Rup Chand Ray Street. The whole area, that is Nos. 15 and 15/1, Rup Chand Ray Street, had been let at a rental of Rs. 50 per mensem. But at the date of this transaction the rent which was being obtained for the tenancy was Rs. 200 per mensem.

There was evidence of a Mr. Bhattacharjya, an engineer and surveyor, who had surveyed the property that there would be serious difficulty in building over the greater part of this land. He produced a plan which was proved and that showed that building was only possible on an area which he showed as roughly a square with hatched edges.

The Plaintiff contended that this transaction was clearly for the benefit of the estate and further that there was legal necessity within the strict meaning of that latter term for this transaction It was suggested that the shebaits had borrowed money and that certain of their property was mortgaged and that it was necessary to pay off this mortgage. The evidence, however, disclosed that there was a mortgage, but disclosed that the interest thereon had been paid regularly and further that there had been no attempt whatsoever by the mortgagees to recover the principal amount. There was no pressure on the shebaits to pay this money and Bose J. held that there was no need to sell this land at all to meet any pressure from the mortgagees. Learned Advocate-General on behalf of the Plaintiff Appellant has accepted that finding and has not contended that there was any pressure of any kind on the estate which would necessitate the shebaits selling this property.

The contention of the learned Advocate-General was that the transaction was clearly for the benefit of the debattar estate. It had been suggested in the court below that Rs. 65 per mensem out of the rent of Rs. 200 per mensem, could be properly attributed to this area of land which is now in dispute as rent. That would bring a sum of Rs. 780 per annum, out of which it is agreed that municipal taxes would have to be paid. Further, income tax would have to be paid. The Advocate-General contended that, if this property was sold for Rs. 30,000, that money could be invested in Government promissory notes and there would be a trustee security yielding an annual income of Rs. 900 subject of course to income tax. The net income from the Government promissory notes would be considerably greater than the net income from the land and, therefore, he contended that the transaction was clearly for the benefit of the estate.

In the court below, it had been contended on behalf of the present Respondents that the phrase "benefit of the estate" has a very restricted meaning and Bose J. eventually held, following-decisions of their Lordships of the Privy Council and of this Court that "benefit to the estate" must be interpreted in its special and narrow meaning and the phrase could not be construed in such a manner as to cover any and every contract which might bring-some financial benefit to the estate. Bose J.''s view was that "for "the benefit of the estate" should be construed as practically synonymous with necessity. In other words, a transaction could not be regarded as being for the benefit of the estate unless it was necessary for the protection or preservation thereof.

Reliance has been placed by the learned Judge upon the case of Palaniappa Chetty v. Deivasikamony Pandara (1917) ILR 40 Mad. 709 : : L.R. 44 IndAp 147 and particularly on an observation made by Lord Atkinson, who delivered the judgment of the Board, at p. 155. The learned Judge also relied upon a single Judge judgment of this Court--Nagendra Nath Palit v. Rabindra Nath Deb (1925) ILR 53 Cal. 132 and upon a Bench decision of this Court--Monohar Das Mohanta v. Tarini Charan Nandi (1929) 34 C.W.N. 135.

In those cases the view had been taken, that the phrase "for the "benefit of the estate" was practically synonymous with the phrase "legal necessity".

The learned Advocate-General has strenuously contended that the phrase "for the benefit of the estate" must be given a very much wider meaning than that given to it by the learned Judge. He has relied upon the case of Hunoomanpersaud Panday v. Munraj Koonweree (1856) 6 M.I.A. 393. In that case, their Lordships did hold that a transaction could be justified on the ground of legal necessity or benefit of the estate, though they did not attempt to define in any detail what the phrase "benefit of the estate" meant.

This Court in two comparatively early cases had taken the view that the phrase "benefit of the estate" was not synonymous with the phrase "legal necessity". In the case of Hossein Ali Khan v. Mohant Bhagwan Das (1906) ILR 34 Cal. 249, Sir Asutosh Mookerjee observed at p. 265:

The power of the shebait in this respect has sometimes been compared to that of a Hindu widow in possession of her husband''s estate and at others, it has been regarded as analogous to that of the manager of the property of an infant. The test therefore, to be applied is, was the transaction one for the benefit of the estate? Was the liability imposed such as a prudent owner would undertake for the ultimate protection of the estate?

In that observation Sir Asutosh Mookerjee gave the phrase "for the benefit of the estate" a much wider meaning than a legal necessity. This Court took the same view in the case of Krishna Chandra Choudhury v. Ratan Ram Pal (1915) 20 C.W.N. 645. There a Bench consisting of Sir Asutosh Mookerjee J. and Newbould J. held that the rule laid down by the Judicial Committee in Hunooman-persaud Panday''s case (supra) is not restricted to cases of mortgage or other forms of partial alienation, nor is it restricted in its application to cases of necessity alone, for a "benefit" of the estate is there differentiated from the "need" of the estate as a circumstance justifying alienation.

On the other hand, there is a comparatively recent single Judge case of this Court, Raghumani Ray v. Bibhutibhusan Roy (1936) 64 C.L.J. 65, where Nasim Ali J. took a view contrary to that of Sir Asutosh Mookerjee and held that the phrase "for the benefit of the estate" meant much the same as legal necessity.

It will be seen, therefore, that there is a conflict of decisions in this Court, the earlier decisions being in favour of giving the phrase "for the benefit of the estate" a wider meaning than that given to it by the later cases. If the matter rested there we should have felt ourselves bound to refer this question to a Full Bench. But, having regard to the view which we take of the facts, it will be unnecessary to take that course.

It is to be observed that other High Courts have given the phrase "for the benefit of the estate" a much wider meaning than necessity or preservation or protection of the estate. Hemraj Dattubuva v. Nathu (1935) ILR 59 Bom. 525; Baijnath Prasad v. Binda Prasad Singh (1938) ILR 17 Pat. 549; Sellappa v. Suppan (1937) ILR Mad. 906; and Ram Nath v. Chiranji Lal (1934) ILR 57 All. 605.

The learned Advocate-General also referred us to a decision of their Lordships of the Privy Council in. Kandukuri v. Gade Subbayya (1936) 41 C.W.N. 18 where Sir Shadi Lal used the phrase "legal "necessity" or "for the benefit of the estate" as alternatives though he, did not develop the point any further.

In our view, even if the phrase "for the benefit of the estate" be given the extended meaning, which has been given to it by the Allahabad, Bombay, Patna and Madras High Courts, nevertheless it would be impossible to hold in this case that the transaction was "for the benefit of the estate".

I have set out earlier the argument of the learned Advocate-General that, if the plot in dispute, 15/1, Rup Chand Ray Street, was sold for Rs. 30,000, it would erasure a gross income of Rs. 900 per annum, whereas it is said that the rent which can be properly attributable to this property is at most Rs. 65 per mensem or Rs. 780 per annum from which municipal taxes would have to be paid. Looking at it from that point of view, it might be said that if this property were sold a slightly larger income would be obtained. But it appears to me that other matters will have to be considered before it can be held that this transaction is for the benefit of the estate. It is not enough to show that as a result of the transaction the vendors might receive a somewhat larger income. It was observed by Lord Atkinson in Palaniappa Chetty''s case to which I have made reference already that it had never been suggested that a transaction which would result in a larger income would necessarily be for the benefit of the estate. He summed up the matter in these words:

No authority has been cited giving any countenance to the notion that a shebait is entitled to sell debattar lands solely for the purpose of so investing the price of it as to bring in an income larger than that derived from the probably safer and certainly more stable property, the debattar land itself.

The learned Advocate-General stressed the fact that the purchase price, namely, Rs. 30,000 could be invested in perfectly sound and safe security, namely, Government notes and as that would Jesuit in a greater income we ought to hold that the transaction is for the benefit of the estate. What is overlooked, however, is that the alleged rent of Rs. 65, which is attributed to the land in dispute, is purely notional. The land in dispute is let together with No. 15, Rup Chand Ray Street, as one holding It is true that the land in dispute forms the rear portion of that holding, but as open land in the rear of No. 15, Rup Chand Ray Street, it forms a very valuable part and amenity of the premises of No. 15, Rup Chand Ray Street. If this part was severed from the whole, it would have considerable effect upon the value and the letting value of the remainder of the property now let as a whole. It is suggested that if Rs. 65 is the rent that can be properly attributable to the land in dispute then No. 15, Rup Chand Ray Street, less the land in dispute, would obviously command a rent of Rs. 135 per mensem. But questions of rent cannot be decided by mere mathematics. The premises No. 15, Rup Chand Ray Street, together with this area called 15/1, Rup Chand Ray Street, might form a very valuable property, whereas No. 15, Rup Chand Ray Street, standing by itself without this open ground in the rear might be very much less in value. No evidence at all was given as to what effect the severance of No. 15/1 would have upon the rest of the property which had up to this time been let as a whole. It might and probably would have a serious effect upon the capital value of that property and upon its letting value and, therefore, the income obtained from the Rs. 30,000 might not even compensate the vendors for the loss to the premises Nos. 15 and 15/1, Rup Chand Ray Street, let up to that time as one holding.

It seems to me that the onus of proving that the transaction was for legal necessity or for the benefit of the estate, rested upon the Plaintiff Appellant and the learned Advocate-General has to concede that there is no evidence at all from which the Court could hold that the loss to the estate by severing 15/1 from the remainder of the holding would be more than compensated for by the sum of Rs. 30,000 and the income that could be derived therefrom by investing the same in Government securities.

Further, this property might well increase in value as time goes on. It certainly has increased enormously in value. The previous rent was Rs. 50 per mensem whereas it was Rs. 200 at the time of this transaction. The value of land is increasing and doubtless the value of this land will increase in the future. If it is sold it will be replaced by Government promissory notes and the most that can be hoped with regard to such securities is that they will remain fairly constant in value.

No court has held that a mere change of investment to obtain a somewhat increased yield can ever amount to a transaction for the benefit of the estate. Before it can be held that a transaction is for the benefit of the estate far more than that must be established. The most that can be said here is that the sale might result in a somewhat increased income although that is really by no means clear. It is not established that taking the transaction as a whole it would be a transaction-which would be of real benefit to the estate. That being so even if we were prepared to differ from the later decisions of this Court as to the meaning of the phrase "benefit of the estate", nevertheless we are bound to hold that it has not been established that this sale was for the benefit of the estate even giving it a somewhat wider meaning.

That being so the decision of Bose J. cannot be assailed and the appeal fails and I would dismiss it with costs. Certified for two counsel.

Das, J.

I agree.