Ramalinga Padayachi vs Srinivasalu Naidu alias Boorasami Naidu and Others

Rajamannar, C.J.—These are two appeals under the Letters Patent against the judgment of Viswanatha Sastri J. in A.S. No. 602 of 1946,

which was ati appeal preferred against the decree and judgment of the Court of the Subordinate Judge of Cuddalore in O. S. No. 36 of 1944.

That was a suit for possession of properties which had belonged to the first respondent and which had been alicoated by the first defendant acting

as his guardian when the first respondent was a minor. The first respondent alleged that the alienations were not binding on him. The impugned

alienations were four sales of which we are concerned in these appeals with two only, viz, those covered by sale deeds, Exs. D-33 and D-1 dated

18-9-1936 and 20-11-1938 respectively. The properties in suit belonged to the joint family consisting of the plaintiff, first respondent and his

father, one Sundararajulu Naidu who died on 29-12-1928.

Sundararajulu Naidu is alleged to have left a will dated 29-12-1928 appointing the first defendant, a relation, as the guardian of his minor son, the

first respondent, and his properties. The first defendant, it is common ground, managed the affairs of the first respondent during his minority. It was

not disputed before us that the appointment of the first defendant as the testamentary guardian of the first-respondent was not valid in law, and

therefore the status of the first defendant was only that of a de facto guardian. Both the alienations with which we are concerned in these appeals

can be traced to a debt which was admittedly due by Sundararajulu Naidu under a promissory note, Ex. D-28, dated 4-2-1926, executed by him

and the second defendant for a sum of Rs. 4200-2-3.

This promissory note itself appears to have been in renewal of an earlier promissory note, but that is of no consequence. It was alleged, and it has

been found, by both the trial Court and by the learned Judge on appeal, that in respect of this promissory note defendant 2 was only a surety, and

it was the father of respondent 1 who was the principal debtor. After the father''s death, a promissory not was executed by defendants 1 and 2 on

17-10-1930, Ex, D-29 for discharge of the amount due under Ex. D-28. In this promissory note, dcfendent 1 is thus described :

Rangaswami Naidu son of A.S. Veerasami Nayudu, guardian of minor Srinivasulu alias Bhuvanahaswami Nayadu, son of late A.S. Sundararajulu

Naidu.

There were several successive endorsements of this promissory note, till finally it was transferred to one Pankajammal. There were two payments

in October 1933 and March 1934, which were acknowledged by defendants 1 and 2 on the promissory note. On 20-3-1935, defendants 1 and 2

executed a fresh promissory note in favour of the said Pankajammal for Rs. 5898-2-0 in discharge of the debt due under Ex. D-29. This

promissory note, Ex, D-32, was in its turn endorsed to defendant 3 on 15-7-1935. It purports to be executed by the minor represented by his

guardian, defendant 1. Defendant 1 executed a sale deed, Ex. D,33, on 16-9-1936 in favour of defendants, conveying some of the suit items for

Rs. 4000, the consideration going in partial discharge of the promissory note, Ex. D-32.

On 29-11-1938, the first defendant conveyed certain other items in suit to the second defendant himself, Ex D-1, for a sum Rs. 1500, which

amount was paid by defendant 2 to defendant 3, in partial discharge of Ex. D. 33. Respondent 1 impugned these two sale deeds as not binding on

him. The learned Judge, who tried the suit, held that they were binding on respondent 1 and dismissed the suit in respect of these two alienations.

The plaintiff appealed to this Court (A.S. No. 602 of 1946) Viswanatha Sastri J. allowed the appeal in respect of these two sale deeds which he

held were not binding on the plaintiff-respondent. L. P. A. No. 15 of 1951 is by defendant 5, and L. P'' A. No. 26 of 1951 is by defendants 1 and

2 and relate to the two alienations respectively.

On the facts set out above, there appears to us to be no doubt as to the law to he applied, because it has been authoritatively enunciated by the

Federal Court in-- AIR 1949 218 (Federal Court) . The facts of the case before the Federal Court are substantially similar to the facts in the case

before us. There the plaintiff was the adopted son of one Chalamayya. When he was a minor, his estate was being managed by his adoptive

mother. She, as the de jure guardian of the minor, executed on 23-4-1925 a promissory note in renewal of an earlier promissory note which had

been executed by Chalamayya himself in 1923 to the defendant. On the same date, she also executed another promissory note to the defendant tor

the fees due to him for professional work done during the lifetime of Chalamayya. On 23-4-1928, she executed a consolidated promissory note in

renewal of the two previous notes.

She died in November 1928 and thereafter the plaintiff''s natural father, China Seshayya, entered upon the management of the estate. He acted as

the de facto guardian of the minor plaintiff. On 22-6-1931, Seshayya, professing to act as the guardian of the minor plaintiff, purported to renew

the promissory note of 1928. On 2-0-1932, Seshayya conveyed immovable properties belonging to the minor to the defendant in discharge of the

debt due under the promissory note and a sum of Rs. 4596-9-6 paid to another creditor. The plaintiff, after attaining majority, instituted a suit in

which he attacked the validity of this alienation. It was held both bythis Court and by the Federal Court that a de facto guardian of a Hindu minor

could not in law execute a promissory note in the name of the minor even in respect of a debt binding on the minor''s estate''s and a sale by such a

de facto guardian in discharge of such promissory note executed by him would not bind the minor.

In the face of this decision Mr. Ramachandra Aiyar, learned counsel for defendant 5, appellant in L. P. A. No. 15 ot 1951, could not, and did not,

con-tend that the promissory note Ex. D. 32 was binding on the minor, nor that the sale to defendant 3 could be supported on the ground that it

was in partial discharge of that promissory note. He. however, sought to sustain the validity of the sale on two"" grounds. The first ground was

based on Section 68, Contract Act, which runs as follows :

If a person incapable of entering into a contract, or any one whom he is legally bound to support is supplied by another person with necessaries

suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person.

His argument was that the term ""necessaries"" in this section would include a discharge of binding debts in the case of a Hindu minor. But assuming

this is so, I we fail to see how this section can in any way help the appellant to maintain the validity of the sale. No one here has advanced moneys

to discharge any debt binding on the minor to entitle that person to be reimbursed from the property of the minor. Nor does the following passage

from Trevelyan on the ""Law relating to Minors"" Edn. 5, carry the matter any further ;

The circumstance that to meet the necessities oE his ward the guardian has pledged his personal credit, does not disentitle him to charge or sell the

ward''s property, but he can only charge or sell it for the purpose of paying money which the minor was under an obligation to pay.

We have found that the minor is not under an obligation to pay anything under the promissory note, Ex. D-32, to discharge which the alienation

was made. The decision in--''Ranmal Singhji v. Vadilal Vakhat Chand, 20 Bom 01 (B), has no direct bearing on this case. There, a creditor sued

to recover from the minor and his estate a sum advanced by him for the purpose of a pilgrimage undertaken by the minor''s mother and to defray

the expenses of the minor himself. The learned Judges held that the debts were not contracted for necessary purposes, and could not be recovered

from the minor''s estate.

The second ground was based on the principle of subrogation. Certain passages from the judgments of the learned Judges in the decision of the

Federal Court were relied upon by Mr. Ramachandra Aiyar. Kama C. J. observed (page 222) :

In my opinion it is therefore right to hold that when a loan is taken for the purpose of necessity or benefit of the minor''s estate by a de facto

manager, he cannot effect a transaction so as to exclude his own liability. So far as the creditor is concerned, this involves no hardship because he

can proceed against the de facto manager and make the minor''s estate liable on the principle of subrogation.

Fazl Ali J. said at page 226.

There may however be cases in which the minor''s needs have to be met and in such cases, the third principle enunciated by the Privy Council can

come into play, that is to say, the manager or guardian can show that the estate ought to bear the burden which he had taken upon himself. In such

cases, by the principle of subrogation the creditor might be allowed to stand in the shoes of the guardian and invoke the latter''s right to

reimbursement out of the minor''s estate. That right must usually be subject to the estate of accounts between the guardian and his ward.

Mukherjea T. deals with this point at greater length than the other two learned Judges thus (page 237): ""When the guardian himself is party to the

con- tract in his capacity as guardian, a suit can certainly be instituted against him and a decree obtained. But simply because the defendant issued

in his capacity as guardian the estate of the ward cannot be proceeded against in execution of the decree obtained in such suit. In order to bind the

minor''s estate, the. minor must also be made a party to the suit property represented. Now on what basis can a decree be made in such a suit

making the minor''s estate liable for the money borrowed by the guardian ? The minor being incapable of being a party to a contract there could be

no direct contractual liability established against him or his estate. But as the guardian was personally liable under the contract, he would be entitled

to reimbursement from the minor''s estate under the rule of Hindu law if the borrowing was for necessity or benefit of the minor. The creditor in

such circumstances can invoke the equitable doctrine of subrogation in his favour and claim to be placed in the position of the guardian for

enforcement of the latter''s right of reimbursement against the minor''s estate.

Instead of there being two suits, one by the creditor against the guardian and the other by the guardian against the minor, both the reliefs may be

worked out in one and the same suit and thereby multiplicity of litigation could be avoided. This is the Oidy proper way in which the Hindu law

rights of the guardian in the matter of contractual debts for necessity or benefit of the minor could be given effect to in perfect consonance with the

welt established principles of the law of contract and the ordinary rules of procedure in personal actions. The application of this rule would be just

and equitable to the minor also. As the creditor stands only in the shoes of the guardian and can claim the rights of indemnity which the latter can

assert against the. minor''s property it would be open to the minor to show that the guardian himself was in default and would not be entitled to any

indemnity if accounts were properly taken,"" Again, at page 238 :

The position therefore is that in case of contractual debts borrowed either on simple bonds or promissory notes, the creditor can have recourse to

the minor''s estate indirectly on the principle of subrogation, when the guardian has the right of indemnity against the estate of the ward; and he

would have the right of direct reimbursement out of the properties of the infant, only when the debt is for necessaries supplied to the infant,"" In our

opinion, there is no scope for the application of this principle of subrogation in this case. In the first place, there was no pleading raising this

question. And as the learned Judge, Viswanatha Sastri J. points out, there was no attempt to justify a claim based on the right of indemnity

available to a de facto guardian. There was no evidence of the state of accounts as between the de facto guardian and the minor. Under Ex. D-32

in partial discharge of which the sale-deed, Ex. D-33, was executed, the first defendant was not personally liable, ''and this position is accepted by

Mr. Ramachandra Aiyar. He, therefore, fell back on the prior promissory note, Ex. D-29. But the learned counsel for the appellant was unable to

cite any decision in which the principle of subrogation has been invoked successfully to support an alienation by the guardian. We, therefore, agree

with

Viswanatha Sastri J. that the alienation under Ex. D-33 could not bind the first respondent. L. P. A. No. 15 of 1951 is dismissed with costs.

The alienation, which is the subject-matter in L. P. A. No. 26 of 1951 in favour of the second defendant stands on a different footing. As

already mentioned, Viswanatha Sastri J., did not disturb the finding of the trial Court that the primary liability for the debt due under Ex. D. 28 was

of the plaintiff''s father and that the second defendant was only a surety. This finding was not challenged before us. The learned Judge, however,

held that under Ex. D. 29 the second defendant must be deemed to be only a surety for the first defendant and the creditor could not have

enforced the payment of the debt from the plaintiff or his estate under Ex. D. 29 or the later promissory note, Ex. D. 32. Mr. Viswanathan. learned

counsel for the appellant, contended that the second defendant as surety had always a right to proceed against the plaintiff''s father, and after his

death against the plaintiff and his estate, after discharging the debt, and this right would not be lost even if the original liability of the plaintiff''s father

did not subsist on the date of the discharge.

The second defendant was undoubtedly acting within his rights in renewing his liability by executing the two later promissory notes, Exs. D. 29 and

D. 32. The alienation in his favour, Ex. D. 1, must be deemed to be in discharge of the liability of the plaintiff and his estate, to indemnify the

second defendant as surety in the sum of Rs. 1500 which he paid to the creditor. We see considerable force in this contention of the appellant''s

counsel Mr. Venkataratna Aiyar for the plaintiff first respondent urged that there was no evidence that the surety was called upon by the creditor to

pay the debt. But this objection is not tenable in the face of Ex. D. 2, a notice issued by the creditor, the third defendant, on 19-7-1935, calling

upon the plaintiff''s guardian and the second defendant to pay the principal and interest due under Ex. D. 32. Mr. Venkatarama Aiyar then relied

upon the fact that a fresh promissory note was taken by the creditor, Ex. D. 29, the result of which in law be (sic) the extinguishment of the liability

under the prior note Ex. D. 28. He relied upon the following passage in Bashyam and Adiga on the Negotiable Instruments Act :

If the creditor takes a fresh security or a separate'' bill or note from one of several partners who are already his debtors or parties to a bill or note

or otherwise, it has ordinarily the effect of discharging the other co-partner.

But, immediately, we find the following :

But he may reserve his right against the others.

There is no scope in this case for the application of this rule. The creditor did not take a fresh security or bill from one of the debtors. He in effect

took from both the debtors, because it is obvious that the first defendant executed the promissory note as guardian of the minor plaintiff. There is

no intention manifest to discharge either of the debtors. The decision in Subramanian Chetti, V. Muthiah Chetti, 35 Mad 639 (D) has no bearing on

the facts of the case before us.

In our opinion, the first defendant, even as a de facto guardian of the minor was entitled to alienate the minor''s property to discharge an

obligation binding on the minor''s estate, namely, the obligation to reimburse the second defendant in the sum 06 Rs. 1500 which went in partial

discharge of the liability which can be traced to Ex. D. 28, This aspect of the case was not evidently emphasised before Viswanatha Sastri J. In this

view, L. P. A. No. 26 of 1951 must be allowed. The decree against the second defendant in respect of the ''property covered by Ex. D. 1 passed

in A.S. No. 602 of 1946 is set aside and the decree of the trial Court dismissing the suit as against the second defendant is restored. The appellant

second defendant will be entitled to the costs of the appeal here and before Vishwanatha Sastri J.