Pt. Rajballabh Misir and others vs Bishun Prasad Singh and others

Courtney-Terrell, C.J.—These appeals arise out of a suit by the plain-tins who, at the time of the transactions in question, were minors, to set '' aside alienations by the mother of the plaintiffs who was their certificated guardian acting under the directions of the District Judge. Appeal No. 265 is by a group of defendant (Nos. 8 to 11), Appeal No. 33 is by defendants 1 2 and 3. These defendants also stand in the place of defendant 4 who has transferred her rights to them. Defendants 5 and 6 have not appealed against the decree setting aside the alienations in their favour and defendant 7 is in a similar position. Defendant 12 is a relative of the plaintiffs. The Subordinate Judge found, and there has been no appeal from his finding, that this defendant colluded with or controlled the mother of the plaintiffs and that with a single exception the alienations in question were for the purpose of satisfying his debts for which the estate of the plaintiff was in no way liable.

We have to deal with two separate appeals, and I approach first the case of defendants 1, 2 and 3 which is the subject-matter of First Appeal No. 33 of 1931. Certain points however in common with both cases must first be related. The family to which the plaintiffs and defendant 12 belonged are the descendants of Babu Dayal Narain Singh. This man had two sons, the elder Parmeshwar Nath Singh, who in turn was the father of Babu Basdeo Prasad Singh. Rasdeo died in the year 1910 leaving a. widow Mt. Deolochan Kuer and two sons who arc the plaintiffs, Babu Bishun Prasad Singh, plaintiff 1 and Babu Paraspat Prasad Singh, plaintiff 2 who is still a minor. The younger son of Dayal Narain Singh was named Keshonath Singh and he was the father of Jagdeo Prasad Singh, who is defendant 12. The widow of Babu Basdeo Prasad was appointed by the District Judge guardian of the two minor plaintiffs. Jagdeo Prasad, defendant 12, was the sole adult member of the family. It has been decided by the Subordinate Judge, and the finding is accepted by these defendants, that in point of fact Jagdeo was separate from Basdeo and his branch of the family. It is true that they lived in the same house and that Jagdeo seems to have transacted the family business both on account of his own share and that of the minors and his conduct was such that outsiders might well have believed that he was in fact joint with the minors and the karta of the family.

In the case of defendant 1, 2 and 3 two sale-deeds in their favour arc impeached by the plaintiffs. The first (Ex. SS) is dated 1st August 1918. The transferors are defendant 12 and the widow as mother and Court guardian of the minor plaintiffs. It recites that Jagdeo and the minors are members of a joint family governed by the Mitakshara law; it recites that certain debts are due by the family to the defendants (these will he dealt with later) and it recites that the permission of the District Judge had been obtained to raise money to pay off these debts and for the sale, for a consideration of Rs. 10,000 of, a 4 annas share in a village named Simra and a 4 annas share in another village named Lerua. In point of fact the deceased Basdeo and Jagdeo had between them owned the entire proprietary interest in these villages, each having 8 annas. It is noteworthy that on the same date the same defendants took a zarpeshgi (Ex. M) from Jagdeo. This zarpeshgi is executed by jagdeo alone he purports to execute the deed as karta of the joint family of which he states that he and the miner were members. He recites that he and the minors were in urgent need of money for paying certain debts which are specified and will also be referred to and mortgaged 7 annas out of the entire 16 annas in Mauza Lerua which is recited as the milkiat interest in possession of Jagdeo and the minors of the joint family, so that, whereas under the deed empeached the share of the minors is recited as separate from the share of jagdeo and the guardian is therefore brought in as a necessary party on their behalf, in this deed on the very same date the same transferees treat the property as undivided and treat Jagdeo as the karta of the family and entitled to dead with it. These two methods of treating jagdeo are entirely inconsistent. The defendants seek shelter under the order of the District judge by which tee sale was sanctioned and certain debts were allowed to be paid out of the purchase money as binding upon the minors.

Now, the Subordinate Judge has found, and it is not denied by the defendants, that some of the debts were owed to the defendants who are therefore creditor purchasers. It is also clear that the directions of the District Judge with regard to the sale were not strictly followed. Furthermore many of the debts were clearly incurred by jagdeo not only after the death of Basdeo but after the appointment of the guardian and could not possibly therefore have been binding on the estate of the minors. These defendants do not attempt to disturb the finding of the Subordinate judge that Jagdeo acted fraudulently towards the minors by saddling the minors'' estate with his personal debts and further they admit that the order of the District Judge appointing the mother as guardian and sanctioning the sale in question was obtained at their instigation. Not only are these facts found, but all the debts recited in the deed (with the exception of the first) towards the satisfaction of which the purchase money was devoted do not appear in the schedule of debts upon which the petition for sanction was obtained.

The argument on behalf of the defendants is that they were entitled to rest upon the sanction of the District Judge. One of the debts which was discharged by the defendants cut of the purchase money was a mortgage by jagdeo dated 9th May 1915, to the defendants them selves to secure a loan of Rs. 4,500 on the security of his separate 8 annas scare in Mauza Simra and his 8 annas share in Mauza Lerua, and it is argued that the bona fide of the defendants in taking a sale of the minors'' interest is evidenced by their abandonment of their undoubted right to enforce this mortgage against the separate share of Jagdeo in favour of a sale of the minors'' interest and a weakling of their position and by the fact that in, certain litigation in the year 1929, to which all the parties were then parties, it had been held that Jagdeo and the minors were joint. It is contended that defendants were justified in assuming their jointers. In my opinion, in view of the fact that the defendants were old creditors of Jagdeo and in view of the fact that they themselves insisted on the appointment of the guardian, they were, if not parties to the frauds by jagdeo on the minors, certainly possessed of information which should have put teem on their guard. It is true that the sanction of the District Judge gives a certain measure of protection to the leader of money or the purchaser of a property of a minor. The ordinary law applicable to those who deal with the property of a person under disability is that he must make a proper inquiry to satisfy himself (a) that there is legal necessity for the money, and (b) that there is a necessity for the loan or sale to produce that money. A bona fide lender or purchaser may satisfy ''this obligation to inquire by demanding from the borrower or vendor a certificate from the District Judge that the money is required for a legitimate purpose and sanctioning the loan or sale to supply the need certified. But if he is already aware or has materials in his possession which reasonably put; him on inquiry, he is not entitled to substitute the opinion of the Judge in place of his own opinion. This was made clear by the judgment of the Judicial Committee in Gangaporashad Sahu v. Maharani Bibi, (1884) 11 Cal 879 = 12 IA 47 = 4 Sar 621 (PC):

Their Lordships think that when an order of the Court has been made authorizing the guardian of an infant to raise a loan on the security of the infant''s estate, the lendor of the money is entitled to trust to that order and that he is not bound to inquire as to the expediency or necessity of the loan for the benefit of the infant''s estate. If any fraud or underhand dealing is brought home to him that would be a different matter, but a part from any charge of that kind, their Lordships think that He is entitled to rest upon the order.

In that case the Court had sanctioned a loan of a certain amount, but had omitted to state the rate of interest.. The plaintiff had lent money at 18 per cent. The Court held that the order could not be construed as extending further than a permission to borrow money at a reasonable rate of interest and having held that 12 per cent, was a reasonable rate, they decided that the plaintiff was entitled to recover interest at that rate only. In Sikher Chund v. Dulputty Singh, (1879) 5 Cal 363 = 5 CLR 374, at p. 371, the plaintiffs were a firm of money lenders (as in the case before us) who were sued by the minors to set aside sales by a certificated guardian acting under the orders of the Court of the District Judge. The learned Judge said:

It cannot be denied that a stranger purchasing from a guardian acting under authority from the District Judge, under S. 18, Act 40 of 1853, would be entitled to every protection from our Courts so long as it is not shown that he acted in a fraudulent or collusive manner, knowing that the debts for the liquidation of which the purchase-money would be applied were not debts lawfully binding on the minor. The burden of proof would, in such a case, lie heavily on any one seeking to set aside such an alienation. But where, as in the present case, the purchasers were themselves the creditors of the family whose debts it was the object of these alienations to liquidate, it appears to me that, inasmuch as they have the means of satisfying a Court as to the origin and nature of those debts, and how they are binding on the minor, the burden of proof is shifted on their shoulders as soon as the plaintiff has established a prima facie case.

We should not, in such a case, exact from a plaintiff the same amount of proof as in the case first put. In every one of the cases now before us, the defendants are either the actual purchasers or their heirs. In some of these cases the defendants are men of business, money-lenders or bankers, who may not unreasonably be considered to have at hand evidence of the nature just stated. They may have paid some money in these transactions, but the question before us is, whether they made sufficient and proper inquiry, or had means of knowing, whether the money was to be applied in payment of debts for which the minor''s estate was liable.

To my mind this case is directly in point and the principle enunciated is clearly applicable. It was argued on behalf of the defendants that equity demanded that if we should be disposed to set aside the sale we should restore the position of the defendants as mortgagees in respect of the debt which the sale was intended to discharge and it was contended that as the mortgagors had sold a portion of the security, such equitable condition was no longer possible. To this contention the answer, in my opinion, is that it is only a bona fide purchaser who is entitled to equitable consideration. The defendants abandoned their security under circumstances which entitled them to no protection. If they should have any remedy in respect of the mortgage money they may pursue it in such manner as they may be advised, but we cannot restore their position as mortgagees, nor are they entitled to any equitable condition upon an order which, we must make setting aside this transaction.

These defendants are also concerned with a second deed (Ex. II (e), dated 14th May 1934, which also was executed with the sanction of the District Judge. This was a sale by the mother guardian of the minors of a 1 anna share out of the 4 annas belonging to the minors in Mauza Simra to one Mt. Sabodra Kuer (defendant 4) for a consideration of Rs. 1,575. The interest of this defendant had been bought up by defendants 1 to 3 and she is no longer before the Court. The matter to be investigated is the title of Mt. Sahodra Kuer as a purchaser. The position of defendants 1 to 3 with regard to this deed is no better and no worse than that of defendant 4, had she still been contesting the case. It was contended on the evidence that this was really a benami transaction behind which stood the present defendants. Even if that were the case, it would be necessary to consider the transaction on its own merits. The sale to Mt. Sahodra Kuer, which was sanctioned by the District Judge, was to raise money and to pay off a debt due to one Raja Lal and this money had been required to finance the marriage of a daughter of Basdeo, a sister of the minors. It is clear that if there was such a daughter and if the marriage in fact took place, it was a debt for which the estate of the minors could be made liable, the marriage of a daughter being a'' matter of family necessity. As to the marriage, it took place if at all in the year 1922. The plaintiffs contend that in fact they only had one sister who was married before the death of her father. We have little doubt on the evidence that there was in fact a daughter who was in fact married about the year 1910 and the conflict upon the evidence has turned upon the question of whether there was a second daughter who was married in 1922. The learned Judge came to the conclusion, on the evidence, that the plaintiffs'' story was true that there never had been a second daughter and that of any marriage did take place in the year 1922, it was of the daughter of jagdeo and that Jagdeo raised the money for that purpose and appropriated it to his own use.

I am well aware that an appeal is not in the nature of a rehearing. The Judge heard the evidence and came to his own conclusion and we should not disturb that finding unless it is manifestly incorrect. The impression on my own mind is that his finding was mistaken and that in fact there was a marriage in the year 1922 and that, notwithstanding the denial of the widow of Basdeo, she had in fact two daughters, the marriage of the second of whom was the subject of this loan. But whatever be the correct view of the facts and whether or not Jagdeo was a party to a fraud upon the minors, the question slid remains as to whether the knowledge of the fraud or information sufficient to put them on their guard has been brought home to the defendants. To this part of the question the learned Judge has devoted very little attention. They could hardly be expected to know of the precise number of the female relatives of the minors. It is clear that Jagdeo, notwithstanding the separate nature of his interest, had been behaving in a manner which might reasonably lead outsider to believe that he was at any rate the man of affairs employed by the widow who lived within the pardah. Even if the whole story of Jagdeo was untrue as to the identity of the girl who was to be married, the knowledge of the false identity cannot be imputed to the defendants and the position is not altered even if we held as the plaintiffs contended that the defendants had actually paid off the debt of Raja Lal and had bought up the interest of the purchaser Mt. Sahodra Kuer. In my opinion the case against these defendants in respect of (Ex. 11 (c) fails and the order of the Subordinate Judge setting it aside must be discharged. The consideration of these two matters concludes the case of defendants 1, 2 and 3. Their appeal is allowed as to Exhibit 11 (c) and is dismissed with regard to Ex. SS. Ex. SS is the most serious part of the case and on this part of the case they have lost. To my mind the fairest way of dealing with the costs is that the order for costs awarded by the Subordinate judge as against these defendants will stand, but there will be no order for costs of this appeal.

Appeal No. 265 is by defendants 8 to 11. The plaintiffs seek to set aside a sale-deed (Ex. R) dated 11th March 1927, by which Jagdeo sold to these defendants 7 annas of Mauza Bhagli Khurd bearing Tauzi Nos. 2779 and 2803. In this case the defendants were creditors cither of Jagdeo or of the minors. They actually advanced cash and discharged with the purchase money liabilities which are undoubtedly the liabilities which were contemplated by the District Judge when he sanctioned the sale. The appointment of the mother as guardian long preceded the execution of the sale-deed and there was no evidence of earlier transactions between Jagdeo and these defendants which would give reasonable cause to the defendants to doubt the validity of the sanction given by the District Judge. The 16 annas in the Tauzis was as to 8 annas owned by Jagdeo and 8 annas belonged to the plaintiffs. The scheme originally sanctioned was subsequently slightly modified. It is true that the Subordinate Judge has found, and there is no appeal against that finding, that certain of the debts which were sanctioned by the judge and were discharged with the purchase money were debts which were net binding on the estate of the minors, and it may well be that Jagdeo perpetrated a fraud upon the minors.

The sanction was obtained as a result of an application for permission which was numbered as permission case No. 80 of 1916 in the tile of the District Judge and a number of debts were scheduled to the application dated 25th August 1914, amounting in all to about Rs. 24,000. The particular sale however with which we are concerned realized only a portion of the amount required to satisfy the total indebtedness. It is therefore clear that the whole of the debts could not be paid off out of the purchase money. The third item on the list was undoubtedly a debt of Jagdeo''s due to Gobind Lal and this debt was discharged out of the purchase money and accounted for Rs. 6,952 out of the total purchase money. It was a mortgage on the very property which the purchaser was acquiring and by its payment the minors estate was relieved of the interest. Item Nos. 15, 16 and 17 were hand notes. The creditor had taken a mortgage bond in place of these hand notes, so that the debts instead of being secured by the hand notes were secured by the mortgage bond, and the property mortgaged was the very property which the purchaser was about to acquire, that is to say village Bhagli. The defendants applied part of the purchase money towards the payment of this mortgage bond. That the debt secured by the mortgage bond is identical with that secured by the hand notes is clear and in fact the defendants received the hand notes as one of the terms of the discharge of the mortgage. Similarly, item No. 14, a debt to one Banwari Lal secured by a hand note, has been substituted by a mortgage of village Bhagli executed by jagdeo and this was also paid off by the defendants. They can hardly be blamed for selecting such of the debts as were burdens upon the property they were about to pay purchase for payment. They also paid a sum of Rs. 534 in cash. This sum seems to have been paid to Jagdeo, but it is hardly fair to demand that the defendants should pay this directly into the hands of a pardahnashin woman, and having regard to Jagdeo''s conduct and the way in which he was allowed to manage the lady''s affairs it was not unreasonable for the defendants to accept him as her man of business even if he were not the karta of the family. The balance of the purchase money Rs. 1,070 was employed by the purchasers in the discharge of a mortgage by Jagdeo in favour of Mt. Sahodra Kuer of 2 annas in Mauza Bhagli, the subject of the sale-deed to the defendants.

It is true that another piece of property, the precise nature of which was not clear, was also mortgaged. This mortgage is not part of the scheduled debts, but I do not think that the defendants can be blamed for discharging it, nor can it be inferred from the payment of this particular mortgage that the defendants had any reasonable warning of fraud which Jagdeo was perpetrating upon the minors. More-over the accounts had to be filed as a term of the Judge''s sanction and there is no evidence that the devotion of this part of the purchase money was made the subject of comment. Upon, the evidence, it is perfectly clear that before this transaction there had been no business of any kind between these defendants and the plaintiff, nor were any questions put to the principal defendant as to any participation by him in Jagdeo''s fraud. Whatever be the position of the mother under the Judge''s direction, jagdeo was the de facto guardian of the minors. Jagdeo has all along been looking after her affairs, and although there was no evidence as to his present activities, there is no indication that the plaintiffs have repudiated him or that he is not still in the closest relation with them. It is true that only item No. 3 in the petition is a genuine debt binding on the minors: it is true also that the names of the executants of the deeds creating the other debts are not given in the petition, but the defendants cannot be held to blame for this. The burden of showing that the defendants have acted dishonestly has not been discharged, and in the absence of evidence to that effect it is of no avail to the plaintiffs to show that they were defrauded by Jagdeo.

The plaintiffs also seek to avoid a sale (Ex- Q) to these defendants of a 1 anna share in Mauza Bhagli effected on 22nd November 1922 for a consideration of Rs. 1,503. There had been an original proposal to raise a sum of Rs. 5,000�Rs. 2,500 by sale and Rs. 2,500 by loan. The Judge had ''sanctioned the sale but the amount of the loan had been drastically reduced. The sale-deed in question is executed by the widow in favour of the principal defendant. She recites the authority of the District Judge and recites the previous sale of 11th March 1917, by herself jointly with Jagdeo of 7 annas in Mauza Bhagli as joint property and further recites her need of Rs. 1,500 for the marriage of her daughter, and the sale of the 1 anna share in Bhagli is said to be effected for that purpose. She acknowledges receipt of the Rs. 1,500 at the time of the marriage of the daughter. Her explanation of this transaction is that she knew nothing of it and signed whatever Jagdeo put before her and that she never received the purchase money. It is clear that the money was paid to Jagdeo, who in fact gave receipts but here again the defendant could hardly be expected to force his way into the presence of the lady and there was nothing dishonest in paying it into the hands of Jagdeo, whether or not there was a daughter and whether or not a fraud was played by Jagdeo on the minors, there is no evidence whatever of any complicity by these defendants or any of them in that fraud. Nor in spite of his ultimate conclusion does the judgment of the learned Judge contain an indication of the evidence upon which he holds the defendant responsible. The judgment extends to about 70 printed pages and is certainly a monument of conscientious industry, but the case would have been much shortened and the fabours of the Judge much lightened if he had Held clearly in his mind the burden of proof which rested on the shoulders of the plaintiffs. Had he done this he might have dealt with the case in a comparatively brief manner.

In discussing the preliminary point whether, even assuming that Jagdeo was a fraudulent person, either of the two sets of defendants could reasonably be expected to have knowledge or notice of his conduct. An attempt was made on behalf of the plaintiffs to argue that even in the event of the defendants being held to be entirely innocent, the sale must be set aside because the consent of the District Judge had been obtained by fraud, although it was conceded that in such case the defendants might be entitled to an order in their favour imposing equitable conditions. But I have been unable to find any authority which would justify this argument and indeed the judgment of the Privy Council in Gangaporashad Sahu v. Maharani Bibi, (1884) 11 Cal 879 = 12 IA 47 = 4 Sar 621 (PC), above referred to, indicates clearly that for a sale to be impugned knowledge on the part of, or reasonable notice to the purchaser, must be established as a fact.

In my opinion, the appeal of defendants 8 to 11 must be allowed with costs throughout. There was an application in Civil Revision No. 506 of 1930 by the plaintiffs relating to the matter of costs. It has no merit and is of no importance in view of the decision in the appeals. But it was not made a matter of argument and will be dismissed, but without costs.

Fazl Ali, J.

I entirely agree.