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Judgment
Patanjali Sastri, J.—These two connected appeals have been brought from a preliminary decree for sale made by the Court of the
Subordinate Judge of Madura for a sum of Rs. 1,82,450-6-7 with interest payable to the first respondent in these appeals, a firm of merchants and
money-lenders at Madura. The third defendant is the appellant in Appeal No. 213 of 1940 and the first defendant and the legal representatives of
the deceased second defendant are the appellants in Appeal No. 346 of 1940.
The firm (hereinafter referred to as the respondent) obtained a mortgage on 14th September, 1921, for a sum of Rs. 50,000 from one Vairavan
Chetti who executed the deed for himself and as the guardian of his then minor son Shanmugham Chetti, purporting to charge five items of property
consisting of two houses in Madura town and certain lands in Madura taluk. The properties are described in the deed as having been purchased
out of the self-acquired funds of Vairavan Chetti and remaining in his undisputed enjoyment. In 1925 the respondent sued Vairavan Chetti and his
son for the recovery of the amount due under the mortgage. In that suit (O.S. No. 114 of 1925 on the file of the lower Court) Vairavan Chetti
pleaded that the mortgaged properties belonged to his joint family which included besides himself and his son, his father and his paternal uncle who
are the first and second defendants respectively in the present suit, and that the mortgage was a colourable transaction unsupported by
consideration brought about to defeat his uncle''s rights in those properties. Shanmugham pleaded that Vairavan Chetti had no right to mortgage the
properties and that the debt must have been incurred for illegal and immoral purposes.
Before the suit proceeded to trial the present defendants 1 and 2 applied by separate petitions to be impleaded as defendants in that suit
impugning the validity of the mortgage, but claiming a right to redeem on the ground that the properties belonged to the joint family, if it was found
to be valid and binding on the family. These petitions were opposed by the respondent on the ground, inter alia, that the petitioners were claiming a
paramount title and that, therefore, they were neither necessary nor proper parties to that suit. The Court upheld the objection and dismissed the
petitions. The decree was subsequently passed against Vairavan Chetti''s interest alone in the hypotheca which was found to be joint family
property, and the suit was dismissed as against Shanmugham on the ground that the debt was not binding on his share in the hypotheca. Appeals
were preferred to this Court, which, concurring with the findings of the lower Court, affirmed the decree so far as Vairavan Chetti was concerned
but set aside the dismissal of the suit as against Shanmugham and passed a money decree on the ground of his pious obligation as a Hindu son to
pay his father''s debt. Vairavan Chetti''s interest in the mortgaged properties was accordingly brought to sale and purchased by the respondent for
Rs. 42,513. As a large sum still remained due under the mortgage the present suit was brought in 1934 against the other members of the family
who were not parties to the earlier suit and against certain alienees of the hypotheca or portions thereof, praying for a declaration that the
defendants have no interest in the properties on the ground that the entire interest of the joint family in the hypotheca must be deemed to have
passed to the respondent at the auction sale held in execution of the prior decree, as Vairavan Chetti was held out by the other members of the
family as the ostensible owner of the properties and the respondent obtained the mortgage bona fide from him, or, in the alternative, for recovery of
the balance still due under the mortgage by the sale of the remaining portion of the hypotheca on the basis that Vairavan Chetti executed the
mortgage on behalf of and for purposes binding on the family. Before the suit was taken up for trial, the respondent, however, gave up the claim to
the declaratory relief and the suit was tried as one brought merely to enforce the mortgage against the defendants for the balance of the mortgage
money. It may be mentioned here that after the institution of the suit Shanmugham''s share in the hypotheca was also brought to sale in execution of
the money decree passed as aforesaid and was purchased for Rs. 24,300, and the respondent agreed that this sum should be deducted from the
suit claim.
Various defences were raised to the suit on the merits of the respondent''s claim and it was also pleaded that the suit was barred by reason of
the earlier proceedings. The third defendant who obtained a mortgage from defendants 1 and C on 9th April, 1926, on the properties in suit and
another item not included in the respondent''s mortgage, besides repelling the respondent''s attack on this mortgage as a colourable transaction
brought about in order to defeat the respondent''s right, claimed that the respondent''s mortgage was not entitled to rank in priority over his
mortgage as the former was obtained on the footing that the hypotheca was the separate property of Vairavan Chetti. As the Madras Agriculturists
Relief Act was passed in March, 1938, when the suit was still pending in the Court below, the defendants also claimed that, in any event, the debt
should be scaled down in accordance with the provisions of the Act. The Court below negatived all the pleas put forward in defence to the suit and
passed a preliminary decree for sale for Rs. 1,82,450 against the first defendant holding that the second defendant had become divided from the
first defendant''s branch before the acquisition of the properties mortgaged to the respondent and was thus not interested in the said properties. As
regards the third defendant''s mortgage the Court found that it was true and supported by consideration and that a sum of Rs. 79,365-12-0 was
due thereunder, but negatived his,claim to priority over the respondent''s mortgage.
In the appeals before us, the appellants did not attack the findings of the lower Court to the effect that the respondent''s mortgage was
supported by consideration, that Vairavan Chetti was the de facto manager of the family and carried on the family trade in groceries at Madura as
the accredited agent of the family, and that the debt was borrowed for purposes binding on the family.
The main contentions raised by earned Counsel for the appellants were, firstly, that Vairavan Chetti having purported to mortgage the properties
in question as his self-acquisitions, the mortgage could not affect the interests of the other members of the family, though Vairavan Ghetti was in
fact the manager and the debt was borrowed for purposes binding on the family; and, secondly, that, in any event, by reason of the prior
proceedings the suit was barred and the respondent was precluded from enforcing the mortgage against the first defendant''s share in the
hypotheca on the basis that Vairavan Chetti mortgaged joint family properties as family manager. In support of the first of these contentions, strong
reliance was placed upon the decision of the Judicial Committee in 16 CWN 577 (Privy Council) and the cases in India where that ruling was
applied. Their Lordships were dealing with a case where the elder of two brothers asserted that the family estate was impartible and as such
descended to him as absolute owner and that his brother was entitled only to an allowance for maintenance. His claim was, however, unfounded,
but in the assumed position of the absolute owner of an impartible estate he purported to mortgage certain villages belonging to the family to secure
sums of money borrowed and applied in discharge of the debts contracted by his father. The younger brother also signed the mortgage deed but it
was found that he was a minor at the time of the transaction. The mortgagee contended that in making the mortgage the elder brother must be
deemed to have acted as the manager of the family for the benefit and protection of the estate and that consequently the younger brother''s share in
the family properties would be bound by the mortgage whether or not the latter was of full age at the time of the transaction. This contention was
rejected by their Lordships on the ground that the elder brother could not be supposed, in the circumstances of the case to have acted as the
manager of the family consisting of himself and his younger brother. This decision was applied in Ammani Ammal v. Ramaswami Naidu (1918) 37
M.L.J. 113 and Nandan Prasad v. Abdul Aziz ILR (1923) All 497 to cases where the guardian of a minor asserting absolute title to the estate in
herself adversely to the minor purported to mortgage the property as owner thereof. In all these cases it will be observed that the transferor was
really asserting an absolute title to the property in himself adversely to another person and could not, therefore, be considered as having
represented that other person in making the transfer, for the position assumed by the former was quite inconsistent with any intention to act on
behalf of the latter whose interest in the property transferred he was repudiating. In the present case, however, the facts are essentially different and
do not, as it seems to us, attract the principle of the decisions referred to above. Vairavan Chetti who effected the mortgage was not in truth
asserting a hostile claim to the property against his father the first defendant. He was managing the business and the properties at Madura with the
consent and acquiescence of the first defendant and borrowed the suit debt for the purpose of discharging liabilities incurred in respect of the
business. It is also in evidence that the first defendant himself discharged one of the liabilities of the business out of the amount borrowed from the
respondent. It is thus clear that far from assuming a position adverse to the family in respect of its ownership of the properties in question, he was
acting throughout as its accredited agent with the consent or acquiescence of the first defendant. It is no doubt true that the properties had been
acquired in the name of Vairavan Chetti and entries in the revenue registers were also made accordingly, but as stated by the latter in the earlier suit
and by the first defendant in his written statement in the present suit, this was done with ulterior motives and not in assertion of a hostile claim by
Vairavan Chetti. In such circumstances the true principle to be applied in determining the quantum of interest that passed to the respondent under
the mortgage executed by Vairavan Chetti is, as it seems to us, what is laid down in Section 8 of the Transfer of Property Act which runs as
follows:
Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the
transferor is then capable of passing in the property, and in the legal incidents thereof.
The words used in the mortgage deed ""all the title, ownership and connection which I have in respect of the undermentioned properties and the
income therefrom"" are words of the widest import and were certainly intended to transfer the entire properties by way of mortgage to the
respondent who was a bona fide transferee for value, and not merely a fractional share therein. This was, indeed, not disputed for the appellants.
Nor was it disputed, on the facts found, that it was competent for Vairavan Chetti to effect such transfer in the circumstances. The contention was
that he did not effectively do so because the deed disclosed that he intended to convey not as manager of the family but as absolute owner. But, as
pointed out already, the words used are of sufficient amplitude to convey the full interest in the properties which Vairavan Chetti was capable of
conveying and this would include the interest and title which he had as the manager of the family if he was conveying for purposes binding on the
family, as has been found to be the case.
This view is supported by the authorities relied on by Mr. Sitarama Rao for the respondent. In (1887) L.R. 14 I.A. 187 (Privy Council) a
mortgage was executed by two members of a joint family who were managing the family business. The deed recited that the property belonged
solely"" to the mortgagors, and that the money was borrowed in order to pay the debts of the business which they were carrying on. The
mortgagee obtained a decree against those members on the mortgage and in execution purchased the property; and the question arose whether the
shares of the other members of the family passed to the purchaser. It was contended for the latter that the members of the family other than those
who were parties to the mortgage and to the proceedings based thereon were bound by the acts of the mortgagors, as they were in management of
the family business, and that, the family having derived benefit from the mortgage, the interests of the other members also in the property passed at
the execution sale. This contention was upheld by the Punjab Chief Court and by the Privy Council who however reversed the decision on another
ground. Their Lordships observed;
The Senior Judge of the Chief Court, Mr. Barkley, says, '' for the purposes of this appeal it may be assumed, though there is no finding on this
point by the Courts below, that the mortgagors were the managers of an ancestral business belonging to the family of which the defendants, who
were minors when the mortgage was effected, were members, and that the mortgage was necessarily entered into, in order to pay the debts of that
business. If this were so, the mortgage would be a valid mort-gage of the entire property, including the rights of the defendants, though it was
erroneously stated that the mortgagors were the sole owners and had no co-sharers. '' Their Lordships think that the learned Judge was correct in
making these assumptions.
The same principle was applied in (1914) L.R. 41 I.A. 189 (Privy Council) where their Lordships held that the title vested in an executor would
pass under a conveyance whereby he conveyed "" all his estate, right, title, claim and demand whatsoever unto and upon "" the property, although it
was not expressly stated in the conveyance that he executed it in his capacity as executor, overruling the contention that only the limited beneficial
interest which he possessed in the property in his own individual right could pass to the purchaser. Reference may also be made as illustrating the
same principle, to Unnamalai Ammal v. Abboy Chetti (1925) 50 M.L.J. 172 where Venkata-subba Rao and Madhavan Nair, JJ., held that a
mortgage, executed by a member of a joint Hindu family consisting of himself and his father and purporting to charge the entire interest in the
property described as absolutely belonging to the mortgagor, conveyed the full interest in the property as the son was the manager of the joint
family at the time of the mortgage and borrowed the debt for family purposes. In a recent decision in K.M. Ramakrishna Mudaliar Vs. V.S.V.
Manikka Mudaliar (deceased) and Others, Varadachariar and Mockett, JJ., after referring to certain earlier decisions, put the matter thus;
The mere fact that properties are described by a member of a family as properties acquired out of his earnings is not the assertion of such a hostile
claim as against the interests of the family or an indication that it was his own personal transaction as to preclude the application of the principle
that, if the purpose was one binding on the family, the transferor might still be regarded as having entered into the transaction in the capacity in
which he could bind the family.
The present case, in our opinion, falls within this principle.
The next contention on behalf of the appellants was that the suit was barred by the previous proceedings. One branch of this contention was
based upon the principle of res judicata embodied in Section 11, Civil Procedure Code, another on Order 2, Rule 2, and a third line of argument
invoked the principles of estoppel and election. We are of opinion that none of these provisions or principles applies so as to bar the present suit.
First, as regards res judicata, it is clear that the former suit (O.S. No. 114 of 1925) was brought against the mortgagors alone treating them as
persons solely interested in property. None of the present defendants was a party to that suit. It is, no doubt, true that the respondent could have
impleaded the present defendants 1 and 2 and prayed for relief alternatively on the footing on which he now seeks relief against them, namely, that
even if the properties mortgaged belonged to the family, the mortgage was binding on the interests of the other members as Vairavan Chetti was
the de facto manager of the family and borrowed the debt for purposes binding on the family. Such joinder would have been justified under Order
1, Rule 3, but that is only an enabling provision and the question is, was the respondent bound to join these defendants and seek relief on this basis
in the former suit so as to attract the operation of explanation 4 to Section 11? It was said that the respondent was bound to do so under Order 2,
Rule 2, which provides that every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action. It
has, however, been held that this provision does not compel a person to join in the same suit every cause of action or every claim which he has, but
compels him to include in the suit the whole of the claim arising out of the cause of action for which the suit is brought--see (1885) ILR 8 362
(Privy Council) . As pointed out in Gangi and Another Vs. Ramaswami, , a cause of action is not an abstraction--something independent of the
defendant against whom the right to relief is alleged to exist. Can it be said, then, that the respondent''s claim in the previous suit arose out of the
same cause of action as his claim in the present suit? As already observed, the persons sued in each case are different. Prima facie, therefore, the
causes of action are also different. It was said that the first; and second defendants must be deemed to have been represented by Vairavan Chetti
in that suit as it is now sought to establish that he was the manager of the family and executed the mortgage in that capacity. But the suit clearly
proceeded on the basis that the property mortgaged belonged to Vairavan Chetti absolutely or, at any rate, to him and his son, and not to the
family of which the present defendants 1 and 2 were members; and we cannot agree that the cause of action for enforcing a mortgage against
Vairavan Chetti as the absolute owner of the hypotheca is the same as the cause of action against Vairavan Chetti and his coparceners regarded as
co-owners of the property. It seems to us, therefore, that neither Order 2, Rule 2,nor Section 11 read with the explanation 4 operates to bar the
present suit against the other members of the family to enforce the mortgage against their shares on the footing that Vairavan Chetti executed the
mortgage as manager for family purposes. This view is supported by the decision in Mohammed Askari v. Radhe Ram Singh I.L.R.(1900) All.
307 the facts of which bear a somewhat close resemblance to those of the present case. It was there held that the cause of action against the
members of the family other than the executant of a mortgage was not merged in a decree obtained in a previous suit to enforce the mortgage
against the executant alone. A similar conclusion was reached by this Court in Venkatareddi v. Kunjappa Goundan (1923) 46 M.L.J.391 : ILR
Mad. 551 where a suit for sale against a person interested in the equity of redemption but not impleaded in a prior suit on the mortgage was held
not barred under any of the provisions of the CPC and this decision has been followed in Chandramma v. Seethan Naidu (1930) 61 M.L.J. 316
and Venkataswami v. Sankaranarqyanan (1934) 69 M.L.J. 566 : ILR Mad. 825.
Reliance was placed for the appellants on the decision in K.M. Avulla v. Kannakurup (1923) 46 M.L.J. 391 : ILR Mad. 551 as supporting
the bar pleaded by them. It was held m that case that a prior suit for redemption brought against the karnavan of a tarwad in his personal capacity
barred a second suit for redemption brought against other members of the tarwad interested in the kanom right. The learned Judges thought that
Order 2, rule a, applied to the case as '''' there would be an unnecessary multiplicity of proceedings and great confusion might arise if a mortgagor
was at liberty to bring separate suits for redemption against several co-mortgagees under the same mortgage."" It is open to doubt whether this
decision can still be regarded as good law in view of the later decision of the Privy Council in (1934) L.R. 61 I.A. 362 (Privy Council) where their
Lordships held that a prior unexecuted decree for redemption did not bar a subsequent suit for the same relief even against the representatives of
the same defendant. It is sufficient to say that we are not here concerned with a suit for redemption, and it is clear from the decisions already
referred to that a prior suit for sale against one person interested in the mortgaged property does not bar a subsequent suit for sale against other
persons having interests therein but not made parties to the prior suit.
It was next urged that the respondent was estopped from enforcing the mortgage against the present first and second defendants by reason of
his having successfully opposed the applications of these defendants in the former suit to be impleaded as parties. It is true that the respondent
asserted in those proceedings that defendants 1 and 2 had no interest in the properties mortgaged as these belonged exclusively to Vairavan Chetti,
and opposed the joinder of ""these defendants as their claim was one of paramount title. It is difficult to see how an estoppel can arise out of what
the respondent said or did in those proceedings. These defendants knew the true position as regards the ownership of the properties and there can
be no question of the respondent having made any representation to them or caused them to believe anything in respect of the title to the properties
of which they were not already aware. Reference was made in this connection to Section 234 of the Indian Contract Act, and it was said that the
principle of that section applied here as Vairavan Chetti was, in effect, an agent of the family according to the finding of the lower Court and the
respondent, by taking up the position that he was suing Vairavan Chetti as the absolute owner of the hypotheca, induced the defendants 1 to 3 to
act on the belief that Vairavan Chetti alone would be made liable. In the first place, so far as defendants 1 and 2 are concerned, the principle
cannot apply for even if the respondent had induced them so to believe, an assumption for which we see no justification, they did nothing
subsequently to alter their position by acting upon such belief. The third defendant no doubt took a mortgage from defendants 1 and 2 subsequent
to the dismissal of those proceedings, but we fail to see anything in the counter-affidavits filed in those proceedings by the respondent which could
reasonably be said to have induced any one to believe that in the event of the mortgaged property being held to belong to the family, he would not
seek to enforce the mortgage against the snares of these defendants. All that he stated was that the mortgaged property belonged to Vairavan
Chetti and that the first and second defendants had no interest therein, a representation which the third defendant obviously did not believe or act
upon, for he nevertheless obtained his mortgage from these defendants. In these circumstances, we see no room for the application of the principle
of estoppel, so as to preclude the respondent from enforcing the mortgage against the present defendants. Nor does the case admit, in our opinion,
of the application of the doctrine of election which presupposes the choice of suing one of two persons on the same facts or cause of action. On
the facts as stated in the previous suit the respondent could sue only Vairavan Chetty and his son, and there was no question of his abandoning his
right to proceed against the present defendants. The right to relief claimed previously against the executants of the mortgage and that now claimed
against the present defendants arise out of different versions of the facts. The case is analogous to the one where a plaintiff having sued a wrong
person subsequently brings the suit against the right person, and no question of election can arise in such circumstances.
There remains only the question relating to the claim of defendants 1 to 3 to have the debt scaled down under the Madras Agriculturists'' Relief
Act. In determining this question it becomes material also to consider whether the second defendant had become divided in status from the first
defendant''s branch before the mortgage in suit, was executed and had thus no interest in the hypotheca, as alleged by the respondent. As
observed already, the Court below has disallowed the claim to relief under the Act on the ground that the family of the first defendant is excluded
from the benefits of the Act under proviso (c) to scection 3 (ii) by reason of having been assessed to house-tax in respect of buildings the
aggregate annual rental value of which exceeds Rs. 600, and it has also found that the second defendant had become divided and was not entitled
to a share in the mortgaged properties. It is admitted that the buildings comprised in the mortgage (items 1 and 2) were assessed to municipal tax
during the relevant period on a total rental value exceeding Rs. 600, but it is argued that, as they stood in the name of Vairavan Chetti alone in the
municipal register, he must be deemed to have been assessed and not the family which, for purposes of the Act, is a different person see Section
3(1). We think this contention is correct and must prevail. It is true that the properties have been found to be joint family properties and that
Vairavan Chetti has been found to be the de facto manager. But it does not follow that the family itself must be deemed to have been assessed by
the municipality in such circumstances in the absence of anything to show that the manager was assessed as such. It was pointed out in Rajoo alias
Doraisami Goundar and Others Vs. Palaniyappa Chettiar and Others, , that in applying proviso (a) to Section 3(if) the distinction between the
assessment of a person in his individual capacity and the assessment of that person as manager of a joint family must be borne in mind. The same
principle has been applied in applying proviso (c) in A.S. No. 35 of 1941, where it was held that, in the absence of any evidence to indicate that
the father, whose name alone appeared in the assessment registers, was being assessed as the manager of the family, the municipality must be
deemed to have assessed him as an individual and not the family of which he was the manager. In the present case also Vairavan Chetti''s name
alone appears in the municipal registers as the owner of the buildings in question and even his family Vilsam (S.T.M.) was not prefixed to his name.
For the respondent reference was made to certain correspondence between Vairavan Chetti and the municipal authorities contained in Ex. F series
as showing that the municipality dealt with Vairavan Chetti as the manager of the family as the latter was addressed as "" S.T.M. "" Vairavan Chetti.
But the correspondence related to the issue of a building licence and had nothing to do with the assessment in question. It follows, on the
authorities referred to above, that Vairavan Chetti must be deemed to have been assessed as an individual and that the joint family is not
disqualified from claiming relief as an ""agriculturist"" under the Act.
The question next arises whether the second defendant was also entitled to such relief as a member of the joint family. His earned Counsel Mr.
Bhashyam made an unconvincing attempt to show that the Subordinate Judge''s conclusion on this issue was wrong. In the first place, he
contended that the question of the second defendant''s divided status, apart from his alleged adoption to his divided uncle, was not clearly raised in
the respondent''s plaint and that his client was prejudiced by the lack of clear pleadings on the point. We see no force in this contention, as issue
12, "" whether the second defendant is an undivided member of the family of the first defendant and the mortgagor or whether he has been adopted
to his divided uncle "" clearly raises the question of the second defendant''s undivided status in the family quite apart from the question of his
adoption to his uncle, and no complaint appears to have been made at the time of the trial on the ground of any surprise due to the absence of clear
pleadings on the point. Secondly, Mr. Bhashyam endeavoured to show that the circumstances relied on by the Court below were not sufficient to
rebut the ordinary presumption under the Hindu law that a member of a family is to be deemed to continue joint unless he is shown to have
separated himself from the family. The learned Subordinate Judge has pointed out that the second defendant had been living in a different village for
a long time till he died during the pendency of the suit, that the first defendant and his son had in various judicial proceedings asserted that the
second defendant had become divided from them long before 1914 and was not a member of the joint family of the first defendant, that the second
defendant was not shown to have had any part or interest in the business carried on by the first defendant''s family either at Tirupattur or at
Madura, that each of these defendants was entering into transactions and executing documents without reference to the other and that the only
transaction in which both of them joined was the mortgage in favour of the third defendant which was executed after Vairavan Chetti set up for the
first time in the previous suit the plea that the first and second defendants were members of a joint family. The learned Subordinate Judge has
elaborately considered the oral evidence bearing on the point and has drawn adverse inferences from the non-production of the family accounts
maintained by the first defendant which might throw light on the matter, disbelieving the story that the said accounts had been lost by fire. There is
no necessity to review all the evidence discussed at length by the learned Judge as we think it is sufficient to say that we entirely agree with his
reasoning and conclusion on this point.
In the result, the appeals succeed only as regards the appellants'' claim to relief under the Madras Agriculturists'' Relief Act. All the interest
outstanding on the 1st October, 1937, being wiped out under the Act, the respondent will be entitled to recover from the first defendant''s share in
the mortgaged properties only half of the principal sum, that is, Rs. 25,000 with interest at 61 per cent. per annum from 1st October, 1937, till the
date fixed for payment which will be four months from this date (see Sections 8 and 14), As it appears that the third defendant has instituted a
separate suit for sale on his mortgage which includes an additional item of property, and as the parties have agreed that the amount properly
payable to him after scaling down that debt may be determined in that suit, the portions of the decree of the lower Court declaring the amount
payable to him and providing for its recovery will be deleted. The decree of the Court below will be modified as indicated above. As the appellants
have failed in their main contentions in the appeals we direct each party to bear his own costs in this Court. The respondent will have his costs in
the Court below, and the costs of the third defendant will be provided for in the decree to be passed in his suit. In other respects the decree of the
Court below will stand. The appellants in A.S. No. 346 of 1940 will pay the court-fee due to the Government.
(These appeals having been set down to be mentioned this day (6th September, 1943), the Court made the following)
ORDER