Andhra HC (Pre-Telangana)
B. Ranga Rao (Died) And Others vs G. Venkata Krishna Rao And Others on 14 April, 1995
Equivalent citations: AIR1996AP5, 1995(2)ALT307, AIR 1996 ANDHRA PRADESH 5, (1995) 1 LS 398, (1995) 2 CIVILCOURTC 28, (1996) 1 HINDULR 337, (1996) 1 BANKCAS 62, (1995) 2 APLJ 129, (1996) 1 CIVLJ 652, (1995) 2 ANDH LT 307
ORDER V. BHASKAR RAO, J.
1. Defendants 5 to 8 in O.S. No. 73 of 1977 on the file of the Court of Principal Subordinate Judge, Vijayawada are the appellants. They filed this appeal assailing the judgment of the learned single Judge in A.S. No. 1770 of 1984 in dismissing the appeal and confirming the decree and the judgment of the trial court.
2. The facts of the case are that the first respondent herein is the plaintiff and he is the son of the second defendant. Defendants 2 and 3 are the sons of the first defendant. Defendant No. 4 is the son of the third defendant. The plaintiff and defendants 1 to 4 are members of Hindu joint family governed by Mitakshara Law. The joint family of the plaintiff and defendants 1 to 4 owned and possessed 9 acres of wet land bearing R.S. No. 141/2 situated at Vanguturu village. The plaint schedule land is a fertile and valuable land and yielding was not less than 20 bags of paddy per acre and 40 tonnes of sugarcane per acre and it adjoins Telaprolu Vuyyuru road. The suit schedule land was being cultivated jointly. While so, when the plaintiff was minor, Ac.2-00 of the suit schedule land was clienated to the fifth defendant under Ex.B-1 dated 20-10-1963 and the remaining 7 acres was alienated to the defendants 5 to 8 under Ex.B-2 sale deed. Defendants 1 to 3 executed Exs.B-1 and B-2 sale deeds. At that time, the plaintiff and the fourth defendant were minors and they were represented by their fathers, defendants 2 and 3. Out of the sale consideration of Rs. 6000/- payable under Ex.B-1, an amount of Rs. 3,000/- was paid at the time of registration and for the balance amount of Rs. 3.000/- the defendants 1 to 4 promised to give security of the lands and promissory notes of Rs. 1,500/- each were executed in favour of the plaintiff and the fourth defendant. Out of the sale consideration of Rs. 21,000/- payable under Ex.B-2, a sum of Rs. 9,575/- was paid at the time of registration, a sum of Rs. 1,850/ - was paid to the Land Mortgae Bank, Gannavaram in discharge of loan and two promissory notes of Rs. 4,787-50 ps., each were executed in favour of the plaintiff and the fourth defendant. The condition was that the amount under promissory notes will be paid only after the execution of a guarantee deed by the guardians of the minors assuring the purchasers that in case the minors challenge the sales on attaining majority their interest will be safeguarded. By the date of the suit, the above stated amounts were not paid to the plaintiff. Therefore, the plaintiff filed the suit to declare the sale deeds dated 20-10-1963 as not valid and binding on the 1/6th share of the plaintiff and direct partition of the suit schedule land into six equal shares alleging that the sales are not for legal necessity and for the benefit of the family.
3. Defendants 1 to 4 remained ex parte. Defendants 5 to 8 disputed the allegations made in the plaint and they stated that the suit land was sold for the legal necessity, payment of debt to the land Mortgage Bank and for the benefit of the family as the family wanted to migrate to Warangal District and puchase properties there.
4. On behalf of the plaintiff, P. Ws. 1 to 12 were examined and Exs. A-1 to A-10 were marked. D.Ws. 1 to 8 were examined and Exs. B-l to B-48 were marked on behalf of defendants 5 to 8. The documents produced by the witness were marked as Exs. X-1 and X-2.
5. The trial Court framed relevant issues and after considering the entire evidence decreed the suit of the plaintiff. The appeal filed against the said judgment was dismissed, by this Court. Hence the present appeal.
6. The learned counsel for the appellants, Sri B. V. Subbaiah, contended that the family of the plaintiff and defendants 1 to 4 was a joint Hindu family on the date of sale and so the Kartha was entitled to sell the land for the legal necessity and for the benefit of the family. He further contended that outstanding debt of Rs. 1800/- was paid to the Land Mortgage Bank out of the sale consideration and further the joint family wanted to purchase lands in Warangal District from out of the sale consideration and in fact third defendant purchased some properties in Warangal District. He also contended that when the sale is for the legal necessity and for the benefit of the family, the sales cannot be said to be illegal even when the properties of minors are sold by Kartha. He submitted that the nature of the burden lying on the purchasers is that they have to find out whether there is any legal necessity and the sale is for the benefit of the family and in the present case the appellants have discharged the burden by proving that the property was sold for the legal necessity and benefit of the family and that the investing of sale proceeds is within the pure discretion of the Kartha of the joint family.
7. Sri M. Chandrasekhar Rao, the learned Counsel for the first respondent, contended that there was no necessity of selling the suit land to discharge loan amount of Rs. 1800/- when yield was 20 bags of paddy per acre and 40 tonnes of sugarcane per acre, and therefore the sale cannot be said to be made for legal necessity. He further contended that the purchasers have not paid the consideration to the minors by the date of the suit even after taking possession of the land, that no other property was purchased out of the sale consideration of the shares of the minors to get better yield and therefore the sale of the property cannot be said to be for the benefit of the family. He also contended that when the property of a minor is sold by the guardian, the purchaser has to take more care and find out that alternative property is purchased and sale amount is paid for that property. He submitted that the extent of care to be taken by the purchaser in the case of legal necessity is that the sale of property of the family is legally necessary and in the case of sale of property for the benefit of the family, the burden is on the purchaser to find out alternative property is purchased or amount is invested for better income yield and till then the burden is not discharged. Thus, there is difference between the two categories. He further submitted that the appellants have not taken sufficient care to find out whether the sale is for the benefit of family, that there are no merits in the appeal and it is liable to be dismissed.
8. In view of the above contentions, the important questions of law that arise for consideration are:
1) Whether the impugned sales are made for the legal necessity and benefit of the family ?
2) What is the nature of responsibility of alienee about the utilisation of the amount realised out of sale of joint family property consisting of minor coparcener governed by Hindu Mitakshara School, where the joint family property is sold for legal necessity or for the benefit of estate of joint family?
9. The plaintiff and defendants 1 to 4 constitute Hindu joint family governed by Mitakshara Law, of which the 1st defendant was the 'Karta'. The case of the plaintiff/ 1st respondent herein is that the plaint schedule land was sold without any adequate legal necessity and not for the benefit of the joint family, particularly when he was a minor; therefore, seeks for partition of the suit land into six equal shares and for delivery of one such share to him together with past and future profits. On the other hand, the case of defendants 5 to 8 is that the suit property was sold to them for legal necessity i.e., for payment of debt to the Land Mortgage Bank and for the benefit of the joint family i.e., they wanted to migrate to Warangal District and purchase properties thereat; therefore, the sale transactions are valid and binding on the plaintiff also.
10. The Manager of a joint Hindu family governed by Mitakshara Law is called its 'Karta'. The manager has got power over the income and expenditure of the joint family. He may alienate the joint family properties for legal necessity or for the benefit of the estate. He has got power to contact debts for maintenance of the members of the joint Hindu family, for marriage expenses of coparceners and for defending the head or any other member of the family in suits or other proceedings. The karta of a joint Hindu family cannot dispose of the joint family property or any portion thereof, except for legal necessity or for the benefit of the estate. In the said cases only, the alienations bind the other coparceners of the joint family. It is settled law that where an alienation is made by the karta of a joint Hindu family for a legal necessity or for the benefit of the estate, the consent of minor coparcener is not required.
11. What is the exact meaning of the word 'benefit' and in what circumstances it could be said that the alienations would be for the advantage or benefit of the estate, has been explained in plethora of precedents, As stated above, Karta has special powers of alienating coparcenary property, which no other person has, provided the alienations are made for legal necessity or for the benefit of the family.
12. As far back as in 1856, the Judicial Committee held in Hanoomanpersaud Panday v. Mussumat Babooee Munraj Koonweree, (1856) 6 Moo Ind App 393 (PC), while considering the power of the manager for alienation of the joint family proeprty, as follows:
"The power of a Manager for an infant heir to charge ancestral estate by loan or mortgage, is, by the Hindu Law, a limited and qualified power, which can only be exercised rightly by the Manager in a case of need, or for the benefit of the estate. But, where the charge is one that a prudent owner would make in order to benefit the estate, a bona fide lender is not affected by the precedent mismanagement of the estate."
13. Considering the burden on the purchaser, the Privy Council in the above case, held that the lender is bound to inquire into the necessities of the loan. In the said case, the Privy Council also observed as follows:
"It (the power) can only be exercised rightly in a case of need, or for the benefit of the estate. But, where in the particular instance, the charge is one which a prudent owner would make in order to benefit the estate, the bona fide lender is not affected by the precedent mismanagement of the estate."
14. The karta of a joint Hindu family should act as a prudent man while exercising his rights as karta in the matter of alienation of coparcenary property.
15. In Palanniappa Chetty v. Sreemath Devasikamony Pandara Sannadhi, AIR 1917 PC 33, the Privy Council while considering the powers of a 'Shebait' in the management of the property entrusted to him, held that a Shebait can alienate endowed property only for legal necessity or benefit of the estate. In the said case, the Privy Council defined the expression of 'benefit to the estate' or 'necessity' as follows:
"the preservation, however, of the estate from extinction, the defence against hostile litigation affecting it, the protection ot it or portions from injury or deterioration by inundation, these and such like things would obviously be benefits."
16. Their Lordships of the Privy Council while considering the duty of the purchaser of a joint family property, which was sold on the ground of alleged family benefit of the joint family in the decision rendered in Sri Krishan Das v. Nathu Ram, AIR 1927 PC 37, held that where the purchaser acts in good faith and after due enquiry, and is able to show that the sale itself was justified by legal necessity, he is under no obligation to enquire into the application of any surplus and is, therefore, not bound to make repayment of such surplus to the members of the family challenging the sale. The said ratio was followed by a Division Bench of Calcutta High Court in Durga Prasad v. Jewdhari Singh, AIR 1936 Cal 116. Similar was the view expressed in Ram Sundar v. Lachhmi Narain, AIR 1929 PC 143 and Suraj Bhan Singh v. Sah Chain Sukh, AIR 1927 PC 244.
17. In Jagat Narain v. Mathura Das, AIR 1928 All 454, a Full Bench of the Allahabad High Court considered the question --whether alienation of family property by the managing member was for the benefit of the estate or not, and held as follows:
"In order to sustain an alienation of joint family property made by the managing member of the family, the transaction must be one which is for the benefit of the estate and such as a prudent owner would have carried out with the knowledge available to him at the time. Transactions justifiable on the principle of "benefit to the estate" are not limited to those transactions which are of a "defensive nature".
The transaction must be judged not by its actual results, but by what might have been expected to be its results at the time it was entered into. The degree of prudence which might fairly be required from a person who was not the sole ownerof the property might naturally be somewhat greater than that be which might expected in the case of a sole owner and might well be held to be that which would be demanded in ordinary cases from a trustee."
18. From the said observations of the Full Bench, it is clear that the Karta of a joint family must exercise utmost care and caution while alienating the property of a joint family for its benefit. In D. J. Prasad v. D. V. Subbaiah, , Justice Obul Reddi (as he then was), speaking for the Division Bench, held that if at the time of the alienations in order to purchase property elsewhere with the sale proceeds, it could be shown by the alienees that the alienor acted as a prudent man ought to, and took every precaution in seeing that there was no risk involved, and the alienations were not to the detriment of the other members of the family, then the alienations made by him, could be said to be to the advantage and benefit to the family.
19. A learned single Judge of the Madras High Court in the matter of A. T. Vasudevan, AIR 1949 Mad 260, held that the manager of a joint Hindu family is competent to alienate joint family property if it is clearly beneficial to the estate even though there is no legal necessity justifying the transaction.
20. In Balmukand v. Kamla Wati, , Justice Mudholkar (as he then was) observed that for a transaction to be regarded as of benefit to the family it need not be of defensive character so as to be binding on the family, that in each case the Court must be satisfied from the material before it that it was in fact such as conferred or was reasonably expected to confer benefit on the family at the time it was entered into and where adult members are in existence the judgment is to be not that of the Manager of the family alone, but that of all the adult members of the family, including the Manager. The same view was taken by Rajamannar, C. J. (as he then was) in Sengoda Goundan v. Muthu Vellappa Goundan, and Medikenduri v. Venkat-ayya, .
21. In Subba Rao v. Narasimha Rao, (1963) 1 Andh LT 329, Seshachalapathi, J. (as he then was) explained the meaning of the phrase 'benefit to the estate', as infra:
"The expression 'benefit to the estate' comprehends also a transaction by the Manager which is neither risky, nor speculative, but is calculated to confer a positive advantage on the family. Where a Kartha of a Hindu joint family sells the ancestral property and applies the proceeds of the sale for the purchase of better land, it cannot be said that the family has not been benefited. In such a situation, the sale would certainly be binding upon the other members of the family, adult or minor. It must, however, be further established first that the proceeds of the sale were actually applied to the purchase of other land, and secondly that the purchaser made bona fide enquiries that the Kartha was selling the property for the purchase of other lands."
The said view was followed in a later decision by a Division Bench of this Court in Peddayya v. Venkayya, ILR.(1963) Andh Pra 99, holding that where the manager of a joint Hindu family sells joint family property, the purchaser is bound to enquire into the necessity for the sale and the burden certainly is on the purchaser to prove either that there was legal necessity in fact or that he made proper and bona fide enquiry as to the existence of necessity and that he did a)l that was reasonable to satisfy himself as to its existence.
22. Similar was the view taken by a Division Bench of this Court in a later judgment rendered in D. J. Prasad v. D. V. Subbaiah, (supra), holding that it is not enough if alienee made bona fide enquiries about the sale of the properties in order to migrate to another village and purchase lands which are more productive, but that the sale proceeds have also been applied for purchasing properties in the other village.
23. In Krishnamoorthi v. Nataraja Iyer, AIR 1949 Mad 67, a Division Bench of the Madras High Court held that it is obvious that the question is essentially one of fact to be decided on a gathering together of all the circumstances surrounding the transaction at the time when it was entered into and that later events particularly if they were unexpected at the time of the transaction should not be taken into consideration.
24. In Radhakrishnadas v. Kaluram, , following the abovesaid judgments of the Privy Council, Justice Mudholkar (as he then was) held "where an alienation, by way of sale, of the family property made by a Hindu father is challenged by his sons on the ground of want of legal necessity then it is now well established that what the alienee is required to establish is legal necessity for the transaction and that it is not necessary for him to show that every bit of the consideration which he advanced was actually applied for meeting family necessity. The Supreme Court also held thus (at p. 576 of AIR):
"It is well established by the decisions of Courts in India and the Privy Council that what the alienee is required to establish is legal necessity for the transaction and it is not necessary for him to show that every bit of the consideration which he advanced was actually applied for meeting family necessity."
25. In Sengoda Goundan v. Muthu Vellappa Goundan, (supra), the question arose was whether the sale of unproductive joint family property at an advantageous price for the purchase of other property fetching income, could be said to be for the benefit of the family or not. The Division Bench comprising Chief Justice Rajamannar (as he then was) and Justice Somsundaram (as he then was) held in the above case that the alienations were not for the benefit of the family and, therefore, were not binding on the plaintiff. The learned Judges also held as follows:
"In the absence, therefore, of any proof of utilisation of the sale proceeds in the purchase of other property for the family, we must hold that the alienations were not for the benefit of the family."
26. In A. Subrahmanian Asari v. Jaya-devan Nair, , while following the ratio in the said judgments of the Privy Council and Madras High Court, it was held "....there is a marked difference between cases where the sale of a property belonging to a joint Hindu family is effected for purposes of necessity on the one hand and for purposes of family benefit on the other. If the sale had been effected for the purpose of necessity, then all that the alienee will have to prove is the existence of the necessity, which implied the vendor to effect the sale..... Onthe other hand, we have another line of decisions, where the obligation of the' alienee to prove the application of the sale price for purposes intended for the benefit of the family, has been set out."
27. In the said case, the learned Judges of the Madras High Court also followed a judgment of Ramanu Ramanujam, J. rendered in Krishnasami Naidu v. Velumani, 1974 TNLJ 139, in which it was held that in case of alienations for family necessity, the alienation can be upheld even if the sale consideration had not been utilised as was expected of the Manager at the time of entering into transaction as the alienee need not look to the proper application of the sale proceeds; but with regard to alienations for purpose of family benefit, the alienee has to prove that the sale consideration was actually utilised for the purpose of purchasing other lands for the benefit of the family and in the absence of such evidence, the alienation cannot be taken to be beneficial for the family.
28. In Chheda Lal v. Ujiarey Lal, , the question arose for consideration was that whether the agreement for sale is without legal necessity ? If so, its effect ? Justice Om Prakash, J. of Allahabad High Court after considering the said decisions of Privy Council and various other rulings, held "What is to be established in this type of the cases by the alienee is that there was a legal necessity to effect sale and that transfer either by mortgage or by lease or by creating a charge could not have satisfied the legal necessity. There is a clear difference between the two things; that there was a legal necessity of transfer and that there was a legal necessity of sale....... but something more has got to be proved by him and that is the transfer by sale and sale alone was for legal necessity and the transfer by any other mode would not have satisfied the legal necessity".
29. All the above cited judgments laid down the following principles:
(1) The Kartha of Hindu joint family has got the power to alienate the joint family property only for legal necessity or for the benefit of the family.
(2) Where the joint family property is sold for legal necessity or for the benefit of the family, the degree of prudence which is required for the Kartha of the joint family, who is not the sole owner of the property is greater than that of the owner, and like a trustee.
(3) When the sale is only for legal necessity, the burden on the alienee is to show that the sale itself was justified by legal necessity and he is under no obligation to enquire into application of sale amount in detail by the Kartha as alienee has no control over him.
(4) Where the sale of joint family property is for the benefit of the family, the alienee has to take reasonable care to find out whether the sale, in fact, was for the benefit of the family on the date of transaction, which includes to find out that the sale was for the purchase of other property or better investment; that the sale consideration was actually utilised for the purpose of purchasing in other lands for the benefit of the family.
30. The alienee, in this case, therefore, had to establish one of the following two things -- (i) the transaction was in fact justified by legal necessity or for the benefit of the estate, or (ii) they had made reasonable and bona fide enquiries as to the existence of the necessity and satisfied themselves that the manager was acting for the benefit of the estate.
31. Bearing in mind these legal principles, we shall now turn to the evidence adduced in the instant case.
32. The case of the plaintiff is that the sale of joint family land was not for the legal necessity or for the benefit of the family, that no amount was paid towards his share till the date of the suit and that his father has not purchased any land or other property as no amount towards his share was paid. 5th defendant was examined as D.W.1. According to him, he purchased 2 acres of plaint 'A' Schedule land and defendants 6 to 8 purchased 7 acres of land and that the debt due by defendants 1 to 4 to Land Mortgage Bank was Rs. 1850/- and it was payable in annual instalments of Rs. 327.75 ps., each and that he did not enquire the 2nd defendant whether he would purchase the land for the plaintiff after impugned sales. The case of the defendants is that 2nd defendant had got 2 or 3 lorries purchased from the sale amount. But, there is no plea in the written statement to that effect. Further, the recitals in Exh. B-1 to B-2 show that the lands were sold to purchase other lands elsewhere. Thus, there is no clinching evidence to prove that out of the sale consideration, any property was purchased for the plaintiff towards his share. From Exs. B-1 and B-2, it is clear that family sold the land to purchase property elsewhere. By the date of sale, there was no decision as to where the property has to be purchased. Further, amount falling to the share of the plaintiff was not paid, even according to the defendants as per the evidence on record. Only two promissory notes were executed for the amount to be paid to the plaintiff. The amount under promissory notes to be paid only after the second defendant executing a guarantee bond giving security to the defendants 5 to 8 that their interest will be protected in case the plaintiff after becoming major disproves the sale. In fact, the amount was not paid to the plaintiff or his guardian. Therefore, the sale cannot be said to be for the benefit of the joint family, particularly for the minor-plaintiff.
33. The burden of a purchaser of joint Hindu family property, where the joint family consists of minor members also, is to find out whether the 'Karta' has purchased alternative property with the sale consideration derived out of the alienation of the joint family property or the amount is invested for getting more income than the income being derived by the joint family from the property on that date. It is contended that the first defendant i.e., paternal grand-father of the plaintiff was the kartha of the joint family and he sold the property, that defendants 3 and 4 purchased some properties at Mulungu of Warangal district and that once some family members purchased property, it cannot be said that the sale was not for the benefit of the family. The pleadings and materials evidence on record show that the property was sold by the family, but the total consideration was divided among the plaintiff, defendant No. 2, defendant No. 3 and defendant No. 4 as it was partitioned and each major was paid his share and in respect of the amount to be paid to the minors including the plaintiff, promissory notes were executed. Therefore, the sale was not effected with an intention to purchase property for the joint family. Further, defendants 5 to 8 failed to establish that the 2nd defendant had purchased the properties at Mulugu of Warangal district, as contended by them with his share of income received from the sale of Exs. B-1 and B-2 lands or invested the said amount to bring-in an income larger than that derived from the property. It is not the case of defendants 5 to 8 that the suit land is unproductive; therefore, the same was sold by the joint family to them. Defendants 5 to 8 failed to discharge their burden to prove that the 2nd defendant, who was the Manager, has acted for the benefit of the estate. For these reasons, we hold that the sale of lands under Exs. B1 and B2 made by the 2nd defendant, are not binding on the plaintiff/respondent No. 1, as they were not made for the benefit ofthe estate.
34. The next aspect is whether the sale is for the legal necessity. According to admitted facts, there was a debt of Rs. 1850/- to be paid by the joint family to the Land Mortgage Bank. The debt was payable in yearly instalments at the rate of Rs. 327.75 ps. per year. No notice for payment of entire debt was issued by the Bank to the family, nor any evidence is adduced to show that the joint family was forced to pay the debt at a time. Debt was paid out of the sale amount because the land mortgaged to the Land Mortgage Bank was sold to defendants 5 to 8. Therefore, it cannot be said that on the date of sale, there was demand for payment of entire amount. At the most, it can be said that an instalment of that year was outstanding. Further, the joint family was receiving 20 bags of paddy per acre and 40 tonnes of sugarcane as produce from the land. It was very easy for the joint family to pay annual instalment of Rs. 327.75 ps., out of the said produce. Therefore, there was no legal necessity for the joint family to sell the disputed land. It is contended that the third defendant purchased lands elsewhere. It is to be noticed that the third defendant purchased the lands for himself or for his branch of family. It is not proved that there was any share to the plaintiff or his father in those lands and so it cannot be said that the said purchase was for the benefit of the entire family. Thus, the sales were neither for the benefit of the joint family nor there was any legal necessity to sell the land. The trial Court and the learned single Judge on appreciation of evidence concurrently found that the sale is neither for the benefit of the family nor there was any legal necessity and the same is pure finding of fact. We, therefore, answer the first question accordingly.
35. The issue regarding limitation has been dealt with by the trial Court as well as the learned single Judge. After scanning through the overwhelming evidence adduced by both sides, we hold that the suit is well within limitation and affirm the conclusions arrived at by the trial Court and the learned single Judge. We have no material to take a different view on the question of limitation.
36. It is also contended that there is alternative plea for a decree for payment of amount and so there is no necessity for a decree for partition and possession and a money decree can be passed.
37. We are not able to agree with the above contention also. It is to be noticed that alternative plea is permissible under Order VI, Rule 2 of C.P.C. Merely because an alternative plea is taken, the same cannot be decreed when it is proved that the plaintiff is entitled for the main relief.
38. In view of the above discussion, the judgments and decrees of f he trial Court and the learned single Judge are confirmed and this Letters Patent Appeal is dismissed. In the circumstances, we direct the parties to bear their own costs.
39. Appeal dismissed.