Ramalinga Chetty and Another vs The Vellore Mercantile Bank Ltd.

This appeal arises out of a suit filed by the plaintiff-bank against the defendants for the recovery-;.oi, Rs. 14,523-12-0 alleged to be due on a

promissory note executed; by defendants 1, 6 and 7 and one Venkatesa Chetti (deceased:) son of 2nd defendant for Rs. 10,000 payable with

interest at Rs. 1-6-0 per cent. per mensem. It is alleged that the defendants paid interest amounting to Rs. 262-8-0 and have not paid the balance.

The plaintiff''s case is that defendants 1. and 2 and one Ramakrishna Chetty, the deceased father of defend ants 4 and 5, were undivided brothers

and formed members of a. joint Hindu family governed by the Mitakshara Law, of which; the 1st defendant and the son of the 2nd defendant who

was the second executant of the suit promissory note were the manag-ing members and that the 1st defendant and his deceased brother-

Venkatesa Chetti, had been carrying on a trade for which the suit money was borrowed on behalf and for the benefit of. the joint family including

defendants 2 to 5 along with their part1 ners, and a decree is prayed for for the amount on the ground that if has not been paid.

The appellants in this case are only defendants 4 and 5 They are minors. Their father died several years ago The question is whether the

promissory note executed by defend-ants 1, 6 and 7 and the son of 2nd defendant is binding on the minors. The case for the minors is that the debt

is not binding on them as the 1st defendant and the deceased Venkata tesa Chetti were not the managing"" members of the family of defendants 1 to

5 but it was the 2nd defendant who was manag-ing the family affairs, that the 1st defendant and Venkatesa Chetti had been,carrying on the plaint-

mentioned trade on their own account in partnership with strangers to the family that 1 the said trade was not an ancestral or family trade but speen

dilative one and that no ground is made out for charging. these defendants with the liability. It is also stated that the interest is excessive and

usurious.

The Subordinate Judge held that the family was undivid ed and that the note was binding on the minors. He has given his reasons in paragraph 9

of his judgment. It seems to us that'' he has not really met the various contentions urged and the eve-dcnce, oral and documentary.

The joint family referred to in the plaint consisted of Chinnaswami Chetti, the 2nd defendant herein who was the eldest member,

Narayanaswami Chetti, the 1st defendant herein, and the last brother Ramakrishna Chetti (father of the appellants) who died some years ago. The

family according to the evidence originally owned lands and then began to carry on a business in provisions. The accounts of the business have

been filed as Ex. C. They show that the provisions business was carried on on a small scale, Ramakrishna Chetti, the father of the appellants, being

interested in the business. That business according to the evidence was closed in 1912 and there was a settlement of accounts which is signed

among others by Ramakrishna Chetti. Ramakrishna Chetti according to one witness died about. two years after the close of the business, that is

about 1914, and one or two witnesses put it a little later 1915 or 1916. After the death of Ramakrishna Chetti we find that in 1917 two junior

members of the family, which was st 11 then trading in cloths and provisions on a small scale in Polur and an adjacent village, began to export

ground-nuts to England. The business, according to the plaintiff''s own witness, P.W. 5, was carried on on a very large scale and they were

sending goods to Marseilles and other places to the extent of seven or eight lakhs and the business was conducted entirely by borrowing money

from the plaintiff-bank. The evidence also is that the market was unsteady at the time. He says that the price of ground-nuts was fluctuating every

day and the business ended in a heavy loss. It is clear from the evidence that whereas the family was before and during the lifetime of the father of

the appellants carrying on a small provision business and cloth business in the village of Polur and its hamlets, in 1917, the 1st defendant and his

deceased brother''s son Venkatesa Chetti who were the junior members of the family in partnership with others began this speculative business in

ground-nuts. It is not suggested that any portion of the family property was used for this business. According to the evidence it was carried on

entirely out of borrowed capital. The promissory note was not executed by the 2nd defendant who was the eldest member but by defendants 1, 6

and 7 and by the son of the 2nd defendant. The note does not purport to bind the minors, nor does it state the purpose for which the loan was

taken. On these facts the question is whether the minor appellants (defendants 4 and 5) are liable for the loss incurred in such business. In this case

we are not concerned with the pious obligation of the son to pay off his father''s debts in which case the question as to whether the trade was old

or new does not arise. Atchutam v. Ratnaji (1925) 50 M.L.J. 208. Rajagopal Pillai Vs. P. Veeraperumal Pillai and Others, and Venkatasami

Naicker v. Palaniswami Chettiar (1928) 56 M.L.J. 380 are such cases, namely cases of liability of the son, and the Court held that his liability was

irrespective of the nature of the business started by the father. The present case we think is governed by the ruling of the Privy Council in AIR

1922 237 (Privy Council) and by the decisions in Sanyasi Charan Mandal v. Asutosh Ghose I.L.R.(1914) C. 225., Tadibulli Tammireddi v. Tadi-

bulli Gangireddi I.L.R.(1921) M. 281: 42 M.L.J. 570 Sadasiva Mudaliar v. Hajee Fakeer Mahomed Sait (1922) 44 M.L.J. 396 (P.C.) and D.

McLaren Morrison v. S. Verschoyle (1922) 44 M.L.J. 396 (P.C.). We do not think that it makes much difference in considering the liability of a

minor in respect of a new trade carried on not by his father but by another member of the family whether the family is governed by the Dayabhaga

or the Mitakshara Law, as the principles which govern the decision in this case are not based on any difference between the Dayabhaga and the

Mitakshara Law as to the power of a manager of a joint family where coparceners other than his own sons are concerned. Reference has been

made by the learned Advocate for the respondents to Lakshmiah v. Official Assignee, Madras (1928) M.W.N. 576. and it is argued that the

appellants would be liable for the reason that the trade was carried on by the adult members of the family and consequently that it should be

presumed that it was a trade carried on for the benefit of the family. Some of the important elements which the learned Judge noted are lacking in

the present case. In Lakshmiah v. Official Assignee, Madras (1928) M.W.N. 576 the family property was being used without any objection for

the trade and all the members acquiesced in it, and it was held that under those circumstances the minors were liable. The learned Judges take care

to state that each case must depend on its own facts. We think that case was more a decision on the particular facts than a decision which laid

down any general rule, much less any general rule that would override the principles which govern the ratio decidendi of the cases which we have

already cited. The only observation about that case I wish to make is that the fact that the family was a Dayabhaga family for the purpose of this

question does not seem to make much difference. In all joint families a person who is not the father has the power of management and the criterion

by which the binding nature of such debts should be decided is whether they were borrowed for the benefit of the family and would bind the

minors. It cannot be said in the present case that the carrying on of an entirely new speculative business with borrowed capital on a scale which

was totally incommensurate with any of the family estates, for we find that the family was carrying on only a small business before, by the other

members is an act which would bind the minors. One other feature in this case is that the eldest member is not shown to have executed the

promissory note or taken any part in the ground-nut business. It is argued that the adult members executed two mortgage-deeds Exs. F and F-l

and that it should be presumed that all of them car-ried on this speculative business in ground-nuts. But Exs. F and F-l were executed in 1920

when the business practically ended in a loss and so they would not afford evidence as to the state of the dealings anterior. We are of opinion that

this business which was started by two members of the family in partnership with strangers was not a business which was of such a nature as would

bind the minor appellants. We allow the appeal and dismiss the suit against defendants 4 and 5 and their share in the family property with costs in

this and the Lower Court.