Madras High Court
A.C.A. Ganapathi Mudaliar And 7 Ors. vs Arumugathammal (Died) And Anr. on 28 July, 1997
Equivalent citations: 1997(3)CTC445, (1997)IIMLJ608
ORDER S.S. Subramani, J.
1. Defendants in O.S.No. 9 of 1984, on the file of Subordinate Judge's Court at Tenkasi, are the appellants. Plaintiff Arumughathammal was the sole respondent in the second appeal. She died and her legal representative has been impleaded as second respondent.
2. Suit filed by the (deceased) plaintiff was one to recover a sum of Rs. 23,248-96. P. by sale of mortgaged properties, and for other consequential reliefs. It is the case of the plaintiff that the first defendant on his own behalf and as legal guardian of defendants 7 and 8, executed a simple mortgage deed on 21.10.1975 for a sum of Rs. 17,000, agreeing to repay the same within a period of three years therefrom. He also agreed to pay interest at the rate of Rs. 1.25P. per Rs. 100 per month on the original principal. It is averred that the transaction was entered into for the benefit of the family and in his capacity as father-cum-manager of the family. Defendants 2 to 6 who are major adult members of the family have also attested that mortgage deed fully knowing that the family property is offered as security. It is said that the liability was incurred for the purpose of the family and, therefore, all the members are personally liable and also from out of the joint family properties. First defendant issued a notice under Ex.A-1, questioning his liability, and this necessitated the filing of the suit.
3. First defendant and defendants 2 to 8 have filed separate written statements, though they have taken similar contentions.
4. In the written statement filed by the first defendant, he said that himself, plaintiff's brother and the Power of Attorney (P.W.I) were doing business jointly, in powerlooms and match factory. In 1961, they entered into a joint business venture, and by the year 1970, the business collapsed. On 31.3.1970, an agreement was executed between P.W.I and first defendant wherein the liability of the first defendant in the loss was fixed at Rs. l 1, 247.47P. which he was bound to pay to P.W.I. The said amount was debited in the accounts of Meenakshisundaram, son of P.W.I, who was running another match factory by name Sundar Match Factory. More than Rs. 6,000 was due towards interest and, therefore, making it a round figure of Rs. l7,000 a simple mortgage happened to be executed in the name of plaintiff. First defendant contended that the document is without consideration and he has not borrowed any amount from the plaintiff. He further contended that in Ex.A-1 dated 21.10.1975, the statement that he has received cash of Rs. 5,925 is a false case. There was no money transaction on that date. Likewise, the further statement in Ex.A-1 that a sum of Rs. 7,075 was reserved with the mortgagee for payment to Meenakshisundaram is also not correct. There is a further statement in Ex.A-1 that a sum of Rs. 4,000 is reserved for discharging a promissory note debt incurred by the first defendant from P.W.l's wife. According to him, there was no such transaction and Ex.A-1 is one without consideration. He further contended that even if there was any transaction, that was before 1970 and when the accounts were settled on 31.3.1970 and by the time Ex.A-1 was executed, more than three years had elapsed and, therefore, there could not have been any acknowledgment of liability. It was further contended by the first defendant that simultaneously with the execution of Ex.A-1, P.W.I has admitted by writing a letter to him of even date that no interest is payable on the amount secured under Ex.A-1. According to the first defendant, since he has not received any consideration for Ex.A-l, the suit is liable to be dismissed.
5. In the written statement filed by defendants 2 to 8, they have taken a similar contention, and further contended that the match factory or the powerloom companies are all first defendant's new ventures, and not a family business. Even if he has incurred any liability, the same is not binding on those defendants, or their right in the family property. They prayed for dismissal of the suit.
6. The trial Court, after suggesting issues, examined P.W.I, the Power of Attorney of plaintiff, who is also her brother. P.W.2 is his son about whom reference has been made in the written statement. Ex.A-1 to A-9 were marked on their side. First defendant got himself examined as D.W.I, and the fifth defendant got himself examined as D.W.2. Ex.B-1 to B-8 were marked on the side of the defendants.
7. Trial Court, after discussing the entire evidence, came to the conclusion that Ex.A-1 is supported by consideration, and the other defendants are also liable to discharge the debt. It came to the conclusion that the debt was incurred for family purposes, and defendants 2 to 6 were also attestors to the documents. Therefore, Ex.A-1 is binding not only the first defendant, but also on all the persons claiming under him. It further came to the conclusion that even if the case of the first defendant is accepted, the document can be said only as one supported by consideration. The trial Court held that even though three years have elapsed as on the date of Ex.A-1, that could be taken as a contract to pay a barred debt under Section 25(3) of the Contract Act, and the same is enforceable.
8. Relying on Ex.B-1, trial Court held that such a letter was written by P.W.I and, therefore, defendants are not liable to pay any interest on Ex.A-1 amount. Since part payments have been made as admitted by plaintiff, a decree was granted for the balance, i.e., plaintiff was allowed to recover a sum of Rs. 5,000 by sale of the mortgaged properties.
9. Aggrieved by the judgment, plaintiff preferred A.S.No. 107 of 1986 and the defendants preferred cross-appeal stating that they are not bound to pay any amount.
10. The lower Appellate Court reconsidered the entire evidence and came to the conclusion that the document is fully supported by consideration. The first defendant is bound to pay the entire amount. Regarding defendants 2 to 8, the lower appellate court held that the first defendant is acting not only as manager, but also father of defendants 2 to 8, and if he has incurred a debt by which the family was also benefited it becomes the liability of the family. The lower appellate court further held that even if the contention of the first defendant is accepted, the liability incurred by the first defendant is binding on defendant 2 to 8 on the principles of pious obligation.
11. Regarding Ex.B-1, the lower appellate court proved that the document is a created one and not binding on the plaintiff. It held that the circumstances are very glaring to come to the conclusion that it is a fraudulent document. The appeal was allowed, and cross-appeal was dismissed. A preliminary decree was granted as prayed for.
12. It is against the judgment of the lower appellate Court, defendants have preferred this second appeal.
13. At the time of admission of the Second Appeal, the following substantial questions of law were raised for consideration:-
"(1) Whether Ex,B-7, Varthamanam letter waiving interest payable under Ex.A-1 is inadmissible for want of registration?
(2) Whether in law the suit mortgage is supported by consideration and whether the alleged discharge of time barred debt could be a valid consideration to bind defendants 2 to 8 as well as the first defendant? and (3) Whether the suit mortgage Ex.A-1 is invalid and unenforceable for want of valid execution and attestation insofar as defendants 2 to 8 are concerned?"
14. I think, all the above questions could be considered together.
15. The first question is, regarding the genuineness and admissibility of Ex.B-1 alleged to have been executed by P.W.I. Ex.B-1 is alleged to have been executed by P.W.I, agreeing that he will not demand interest and also declaring that defendants are not liable to pay interest on Ex.A-1 amount. The lower appellate Court discarded Ex.B-1 as fraudulent creation by defendants and also for the reason that Ex.B-l requires registration. Ex.A-1, though written on 21.10.1975, has been registered about a month thereafter. Ex.B-1 bears the date after Ex.A-1. In Ex.A-1 there are specific recitals that the defendants are bound to pay interest at 1 1/4 % per mensem and that he will discharge the debt within three years. If Ex.B-1 was written on the same date, what was the necessity for inserting such a clause in Ex.A-1. Parties could have simply said, without executing a deed, that defendants are entitled to return the amount within a period of three years without interest. Apart from the same, admitting the execution of Ex.A-1 as it is, the document was registered about one month later. Execution of the document has been admitted by the first defendant before the Sub-Registrar. If Ex.B-1 was in existence or it was really executed by P.W.I, why the first defendant got Ex.A-1 registered one month after the execution on the same terms. No correction is made, and the agreement stands as it was originally written. That is also a suspicious circumstance against the genuineness of Ex.B-1.
16. It is in evidence that two instalments were paid by the first defendant and there were endorsement in that document. First defendant has paid Rs. 8,000 on 27.1.1979 and another sum of Rs. 4,000 on 31.1.1979. The said amounts were paid towards principal and interest. If the defendants are not liable to pay interest why such an endorsement was made is also not explained.
17. Learned counsel for the appellants submitted that Ex.B- 1 has been written on a letter pad belonging to P.W.I and it has also been duly signed by him. The very appearance of Ex.A-1 shows that it is a genuine document. When P.W.I disputes the genuineness of Ex.B-1, it is for the defendants (appellants) to prove the reality of the transaction. It is not disputed that P.W.I and the first defendant were doing business jointly for years together. Merely because the document has been prepared in a letter pad belonging to P.W.I, the same cannot be acted upon as genuine. Circumstances show that the document is fraudulent. Trial Court has accepted Ex.B-1 as genuine without discussing the suspicious circumstance. That mistake was set right by the lower appellate court.
18. The further question that arises for consideration is, whether Ex,A-l is supported by consideration. In Ex.A-1, it is recited that a sum of Rs. 5,925 is received by the first defendant in cash, Ex.A-1 contains admission by the first defendant and attested by other defendants where there is a declaration that he has received that amount. Even though the document might not have any presumption as under Section 118 of the Negotiable Instruments Act, the admission of the first defendant will have to be given primary importance. In view of the admission in Ex.A-1, it is for the defendants to prove that the document is unsupported by consideration. Apart from examining himself as D.W.I, no other evidence was let in. As against the said evidence of D.W.I, P.W.I, has said that there was cash transaction for which Ex.A-1 was executed. Both the Courts below have believed the evidence of P.W.I and held that the amount was borrowed and that the same was used for family expenses. The concurrent finding in that regard is only to be accepted.
19. The second recital in the deed is the receipt of Rs. 7,075. That was not paid in cash to the defendants. But the same was reserved with plaintiff for discharging a debt which was then outstanding with P.W.2. Ex.A-8 shows that the amount received under Ex.A-1 was paid to P.W.2. Learned counsel for the appellants seriously disputed the genuineness of Ex.A-8 by stating that the same has been created for the purpose of the suit. I do not think, the said argument could be accepted. Defendants were indebted to P.W.2 is clear from Ex.A-9 accounts maintained in Sundaram Match Factory. Third page in Ex.A-9 shows that a sum of Rs. 6,643.48P. is due to P.W.2 from defendants as on 31.3.1975. Ex.A-1 was executed on 21.10.1975. Including interest, the entire amount was paid to P.W.2 by plaintiff as per Ex.A-8 dated 11.2.1976. First defendant has also signed page 3 of the accounts. Absolutely no evidence has been let in to show that the said entry in Ex.A-9 is fraudulent. The next entry in Ex.A-1 is adjustment of a debt alleged to have been incurred by the appellants with P.W.l's wife. A sum of Rs. 3,000 was received by the first defendant by executing a promissory note. With interest, totally a sum of Rs. 4,000 was payable. P.W.I has spoken about the money transaction with his wife, and how the amount was discharged. Both the Courts below have held that the evidence has to be accepted. On the basis of the available evidence, adduced by plaintiffs, the only conclusion that could be arrived at is, Ex.Al is fully supported by consideration.
20. If we accept the contention of learned counsel for the appellant that Ex.A-1 was executed in discharge of a prior debt, i.e., on the basis of the settlement dated 31.3.1970, I do not think they will have a case to be argued before this Court. The argument is that when all accounts were settled as on 31.3.1970, it was found that the defendants were liable to pay a sum of nearly Rs. 11,400. Interest was also added to that sum, and thus making it a round figure, Ex.A-1 was executed. The argument of the counsel is that at the time when Ex.A-1 was executed, more than three years had lapsed after the accounts were settled, and, therefore, it was a time-barred debt. Plaintiffs have not paid any amount, and being a time-barred debt, the same is unsupported by consideration.
21. The said argument has only to be rejected. Under Section 25(3) of the Contract Act, even a barred debt is a good consideration. Merely because the right to enforce through a Court of law is barred, that does not follow that the debt itself has been extinguished. Again, it is the right of the manager or father of the family to execute such contracts, and the same will be binding on the members of the family.
22. The question then arises is, how far defendants 2 to 8 are also liable for this debt.
23. It is not disputed by the appellants that they constitute an undivided Hindu Mitakshara family of which the first defendant is the father/manager. The only case of the appellants is that defendants 2 to 6 have not executed the document, but they have only signed as attestors, and so far as the minor defendants 7 and 8 are concerned, they also contend that it was only the first defendant who executed the document during their minority, and it is for the plaintiffs to prove that the document is supported by consideration and that it was for family necessity. It is their further case that these debts were contracted by the first defendant for starting a venture, i.e., a powerloom business as well as a match factory. The business was started by the first defendant as his own, and it was not a family business and, therefore, the debt can be considered only as a personal debt of the first defendant, and not that of the family.
24. As against the said contention, learned counsel for the plaintiffs submitted that the statement in Ex.A-1 is binding not only the first defendant but also all the defendants. There is a statement in Ex.A-1 that the first defendant himself and all persons claiming under him will discharge the debt. There is also a statement in Ex.A-1 that a sum of Rs. 5,925 was received by him for family necessities. All the adult members have attested the mortgage deed. It is with their knowledge and consent, the debt was incurred, and they all know the contents of the deed. That apart, defendants 2 to 8, who are family members, are also bound to discharge the debt under the principles of pious obligation. In this case, the father, who was the manager of the family, has incurred the debt, and, naturally, the sons are also liable to discharge the same. The lower appellate court accepted the arguments of learned counsel for the plaintiffs and decreed the suit. According to me, the conclusion arrived at by the lower appellate court is correct. While dealing with the topic 'Liability for debts' in Chapter 13, in 'Mayne's Hindu Law & Usage' - 14th Edition (1996), at page 692, the learned Author has said thus:-
"The law of debts illustrates a principal which constantly recurring in Hindu taw, viz., that moral obligation take precedence of legal rights, or to put same idea in different words, that legal rights are taken subject to the discharge of moral obligation,"
The learned Author has further said that 'the liability to pay the father's debt arises form the moral and religious obligation to rescue him from the penalties arising form the non-payment of his debts.' It is further said that 'the liability of one person to pay debts contracted by another arises from three completely different sources, which must be carefully distinguished. These are: first the religious duty of discharging the debtor from the sin of his debts; secondly, the moral duty of paying a debt contracted by one whose assets have passed into the possession of another; thirdly, the legal duty of paying a debt contracted by one person as the agent, express or implied, of another, or as having an authority conferred by Hindu law to act on behalf of another.' Thereafter, the learned Author has said at page 693 thus:-
"The liability to pay the father's debt arises from the moral and religious obligation .. .. It follows, then, that when the debt creates no such religious obligation, the son is not bound to repay it, whether he possesses assets or not; and there can certainly be no religious obligation where the debt is of an illegal or immoral character. "The duty cast upon the son being religious or moral, the character of debt being religious or moral, the character of debt should be examined from the stand point of justice and morality", and if at its inception the debt is tarnished or tainted with immorality or illegality, the pious duty ceases to operate and the son is not bound to pay the debt."
At page 700, the learned Author further says thus:-
"The exception of "illegal or immoral purposes" does not extend to transactions which are imprudent, "unconscientiously imprudent" or "unreasonable". So debts contracted for needless and wasteful litigation might attract the plus obligation of the sons.. .. "
At page 701, the learned Author has said thus:-
"It follows from the texts bearing on the subject that the obligation of the son to pay the debt is not founded on any assumed benefit to himself, or to the estate, arising from the origin of the debt; still less is that obligation affected by the nature of the state which has descended to the son, as being ancestral, or self-acquired."
At page 712, the learned Author has summarised the effect of various decisions of the Privy Council and also various courts of India thus:-
" 1. In cases governed by the Mitakshara law, a father may sell or mortgage not only his own share but also the shares of his male issue in family property, for the purpose of satisfying antecedent debts of his own, not incurred for any family necessity or benefit, provided they are not immoral or illegal and the sale of mortgage may be enforced against his sons by a suit or even in proceedings in execution to which they are not parties.
(2) Whether the sale or mortgage passes the father's interest only, or the entire interest of both father and sons in the property sold or mortgaged, depends upon the intention of the parties, to be gathered from the instrument of sale or mortgage and from surrounding circumstances.
(3) A creditor may enforce payment of the personal debt of a father, not being illegal or immoral, by attachment and sale of the entire interest of father and sons in the family property and it is not absolutely necessary that the sons should be parties either to the suit itself or to the proceedings in execution."
From the above propositions, it is clear that sons also become liable for the debt incurred by the father. Defendants 2 to 8 have no case that these were incurred for immoral purpose. Their only case is that it is a personal debt of the father, for which the family cannot be made liable. This contention, according to me, cannot be raised under Mitakshara law so long as the family remains joint. Even if we accept the case of the defendants that the debt was incurred only on 31.3.1970, and no amount was paid under Ex.A-1, the execution of Ex.A-1 will be to discharge an antecedent debt. An antecedent debt has been defined thus:-
"Antecedent debt means an indebtedness of the father prior in time to and independent in origin of the particular dealing with the family property, whether by way of sale, mortgage or other disposition in favour of the original creditor which it is sought to enforce against the son......."
In either way, and looked at from any angle, I do not think defendants 2 to 8 can escape from inability in this case.
25. On question No. 3, learned counsel for the appellants did not raise any arguments. Even otherwise, in view of the findings given above, defendants 2 to 8 become liable, and the schedule properties also can be brought to sale.
26. In the result, all the questions of law are found against the appellants. Judgment of the lower appellate court is, therefore, confirmed, by dismissing the second appeal, however, without any order as to costs.
C.M.P.No. 9369 of 1994: 27. The above petition was filed by the appellants to receive the deposition of P.W.I given by him in another case, namely, O.S.No. 364 of 1990. The purpose of production of the same is to prove that Ex.B-1 is genuine.
28. I do not think I will be justified in receiving this document, a deposition of a living person. It could be used only for the purpose of contradiction. That apart, I do not find any ground to receive the same as additional evidence in second appeal. Whether the provisions of Order 41, Rule 27, C.P.C. applies to second appeal itself is doubtful. In second appeal, the court is concerned only with the question of law, and sufficiency of evidence. That apart, the document produced is inadmissible and irrelevant for the purpose of this case. No grounds also have been made out under Order 41, Rule 27, C.P.C. even if the same is made applicable. The C.M.P. is, therefore, dismissed. No costs.